Milestone achieved both growth and improved profitability in 2023 where the impact of an increase in inflation and interest rates, as well as the impact from the geopolitical security situation in Ukraine and the Middle East were great challenges.
Invoiced revenue amounted to DKK 1.9 billion, corresponding to an increase of 8.6 percent. After adjustments for revenue deferrals and the impact of cash flow hedging and sales incentives, net revenue was DKK 1.7 billion. This is an increase of 13.4 percent compared with 2022. Net income amounted to DKK 77 million, an increase of 729.5 percent. Milestone considers this satisfactory considering the business impact of the challenging macroeconomic factors globally.
Looking at results in our markets, 2023 has been challenging due to slowdown
in the economy caused by increasing interest rates and the business impact related to the security situation unfolding in Ukraine, as well as the Middle East region. However, the demand for our solutions continues to be strong despite the challenging market conditions.
Invoiced revenue in the Americas region amounted to DKK 904 million, corresponding to a 11.7 percent increase compared with 2022.
Looking at results in our markets, 2023 has been challenging due to slowdown in the economy caused by increasing interest rates and the business impact related to the security situation unfolding in Ukraine, as well as the Middle East region. However, the demand for our solutions continues to be strong despite the challenging market conditions. Invoiced revenue in the Americas region amounted to DKK 904 million, corresponding to a 11.7 percent increase compared with 2022.
The growth is driven mainly by positive development in verticals such as education, government administration and manufacturing. The market demand has been significantly impacted by the increase in interest rates and inflation.
LATAM business continues to grow. In 2023 it grew 22.0 percent. Brazil grew 62.0 percent compared to 2022. During the year, Milestone has signed several key projects within different industries, including transport, public sector & critical infrastructure.
APAC invoiced revenue grew 6.2 percent in 2023, to DKK 207 million. Key projects won within transport, critical infrastructure & manufacturing. South Pacific has seen the most impact from the inflation and interest rate increases, with a negative growth. In Asia and India, the growth has been 23.2 and 22.6 percent and continues to see a very positive development.
In Asia, hardware sales increased with 116.2 percent compared to 2022.
In EMEA, the business climate has improved significantly. Milestone had a good year in the region, invoiced revenue amounted to DKK 770 million in 2023, representing an increase of 6.1 percent compared to the same period last year. Continued growth in verticals such as government administration, logistics and critical infrastructure were recorded.
On the product side, the performance was mainly driven by Care growing 17.7 percent, followed by Software growing 10.5 percent.
Operating expenses totaled DKK 1,424 million compared with DKK 1,344 million in 2022, representing an increase of 6.0 percent.
The increase is primarily explained by added headcounts within Sales and Business Support functions as part of our growth strategy. Despite having increased our headcounts, operating expenses measured in percentage of revenue decreased to 84.4 percent in 2023 compared with 90.3 percent in 2022, which is due to increased efficiency in the delivery model. Another reason for this is that Milestone has made some organizational adjustments in 2023 to be fit for the future.
Research and development expenses amounted to DKK 356 million compared with DKK 355 million in 2022. This corresponds to a growth of 0.1 percent keeping cost at status quo.
Total research and development expenses correspond to 21.1 percent of net revenue in 2023, a decrease compared to 23.9 in 2022. The decrease mainly relates to reclassification of cost related to IT licenses to administration cost in 2023. Research and development are a vital part of our strategy, and we expect to keep investing in this area, which also aligns with our new Tech Strategy launched in 2023.
Distribution and sales costs amounted to DKK 904 million, compared to DKK 871 million in 2022, which represents an increase of 3.8 percent.
The cost increase is primarily explained by an increased headcount to support growth ambitions particular in the Americas, a growth enabler program optimizing sales processes. Some of this is offset by a reclassification of cost related to IT licenses to administration cost in 2023.
Total distribution and sales costs corresponded to 53.6 percent of net revenue, a decrease from 58.6 percent in 2022.
Administrative expenses amounted to DKK 164 million compared with DKK 117 million in 2022, which corresponds to an increase of 40.2 percent.
Total administrative expenses correspond to 9.7 percent of net revenue, an increase from 7.9 percent in 2022.
The increase is explained by added headcounts in early 2023, reclassification of cost related to IT licenses from research and development, usage of external consultants strengthening our support organization and the increased need for compliance due to the global nature of Milestone’s business activities.
An operating income (EBIT) of DKK 105 million was recorded for the year, compared with DKK -21 million in 2022.
Turning a negative EBIT in 2022 into a positive EBIT in 2023 is in line with the expectations we set out in last years annual report and was achieved through hard work and collaboration with our valued partners.
Profit before tax was DKK 110 million in 2023, compared to DKK 11 million in 2022, corresponding to an increase of 895.2 percent. The increase in profit before tax is primarily due to the development in EBIT with a larger increase in sales than cost. Furthermore the impact of financial items are limited due to the net impact of MDKK 5.
The total value on our balance sheet as of December 31, 2023, was DKK 2,078 million, compared with DKK 1,858 million on December 31, 2022.
The total equity amounted to DKK 896 million at the end of 2023, compared with DKK 799 million at the end of 2022. Cash at bank and in hand as of December 31, 2023, was DKK 292 million, compared with DKK 194 million on December 31, 2022.
The increase in cash and bank and in hand is mainly due to the positive result for the year. Milestone’s financial position is considered strong and healthy.
The Executive Leadership Team continues to believe that there are good business opportunities for Milestone particularly within cloud and video analytics as well as market consolidation. Expectations for 2024 is growth in both revenue and EBIT compared to 2023.
Our financial targets reflect our business’ ambitions to secure profitable growth while growing market leadership by investing into the key strategic and operational areas. Focus on sales efficiency, transforming our business and optimizing our structure are some of 2024 focus areas.
Some uncertainty remains in regard to the interest rate and inflation, as well as the impact and uncertainty from the geopolitical security situation in Ukraine and the Middle East.