Breaking Down Karnov Group AB (publ) Financial Health: Key Insights for Investors

Karnov Group AB's 2025 performance demands a close read: net sales climbed to SEK 673 million in Q1 and stayed resilient with SEK 649 million in Q2 and SEK 654 million in Q3, underpinning roughly SEK 2.6 billion in revenues for the first nine months as organic growth ranged from 3.9% to 7.7%; profitability improved materially - adjusted EBITA margins of 26.0% (Q1) and 26.3% (Q3) lifted the nine-month margin to about 25% - while balance-sheet and leverage metrics show total assets of SEK 6.7 billion, total liabilities of SEK 4.2 billion, total equity of SEK 2.4 billion and total debt of SEK 2.1 billion (debt-to-equity 87.2%), an interest coverage of 2.5x, adjusted free cash flow swung from SEK 245 million in Q1 to negative SEK 36 million in Q3, currency effects subtracted 2.4% from Q3 sales, and strategic moves like the Q3 divestment of the Spanish legal training business plus AI-platform rollouts and EUR 18 million in run-rate synergies frame both near-term risks and growth levers for investors to weigh

Karnov Group AB (0A39.L) - Revenue Analysis

Karnov Group AB reported steady top-line growth through the first three quarters of 2025, driven primarily by organic e-commerce strength in Region North and strategic acquisitions. Key quarterly and year-to-date revenue data show resilient organic expansion despite adverse currency effects and a portfolio adjustment in Q3.

• Q1 2025 net sales: SEK 673 million - growth +6.5% (organic +2.7%, acquired +4.2%)
• Q2 2025 net sales: SEK 649 million - organic growth +4.6%, fueled by strong online sales in Region North
• Q3 2025 net sales: SEK 654 million - organic growth +3.9%; currency headwind of -2.4% on net sales
• First 9 months 2025 total revenues: ~SEK 2.6 billion - consistent organic growth across quarters (range 3.9%-7.7%)
• Divestment: Spanish legal training business sold in Q3 2025 - expected to improve future margins

Notable revenue drivers and implications:

• Online growth in Region North is a recurring positive contributor to organic sales expansion.
• Acquisitions contributed materially to year-over-year increases in Q1 and cumulatively to nine-month revenues.
• Currency translation reduced reported net sales in Q3 by ~2.4%, masking underlying organic momentum.
• Divestment of the Spanish legal training business (Q3 2025) should help margins by removing a lower-margin segment.

Further reading: Exploring Karnov Group AB (publ) Investor Profile: Who's Buying and Why?

Karnov Group AB (0A39.L) - Profitability Metrics

• Adjusted EBITA margin Q1 2025: 26.0% (vs 22.7% in Q1 2024)
• Adjusted EBITA margin Q2 2025: 22.8% (1.7 percentage points higher than Q2 2024)
• Adjusted EBITA margin Q3 2025: 26.3% (4.2 percentage points higher than Q3 2024)
• Adjusted EBITA margin first nine months 2025: ~25.0%
• Primary drivers: operational leverage, cost-efficiency initiatives, Region North improvements, and the Q3 2025 Spanish legal training business divestment

• Region North: notable margin expansion due to scale benefits and targeted cost programs.
• Divestment impact: the sale of the Spanish legal training business in Q3 2025 is expected to further lift adjusted EBITA margins going forward by removing a lower-margin business and improving group mix.
• Operational focus: continued emphasis on process efficiency and variable cost control to sustain margins.

Karnov Group AB (0A39.L) - Debt vs. Equity Structure

• Total debt (Q3 2025): SEK 2.1 billion
• Total shareholder equity (Q3 2025): SEK 2.4 billion
• Debt-to-equity ratio: 87.2%
• Interest coverage ratio: 2.5x
• Leverage: 2.5x EBITDA (Q2 2025), below the company's financial target
• Leverage expressed vs. operating profit: ~2.4x EBITA after recent deleveraging

• Balance: Equity exceeds debt, limiting solvency risk relative to peers with higher gearing.
• Interest coverage at 2.5x indicates earnings can cover interest but leaves moderate sensitivity to earnings declines or rising rates.
• Leverage at ~2.5x EBITDA (below target) gives headroom for organic investment or targeted M&A while supporting debt servicing.

Karnov Group AB (0A39.L) - Liquidity and Solvency

Karnov Group AB (0A39.L) shows mixed short-term cash generation and a solid balance-sheet solvency position. Quarterly adjusted free cash flow (AFCF) swings highlight seasonality and timing of subscription renewals, while the balance sheet metrics point to conservative leverage.

• Primary driver of AFCF in Q1 2025: renewals of annual subscriptions to online solutions.
• Q2-Q3 2025 cash outflows reflect quarterly timing differences and ongoing operating investment.
• Cash buffer of SEK 44.9m covers near-term working capital but is limited against larger quarterly outflows.

Key solvency and coverage implications:

• A solvency ratio of ~62.7% indicates a relatively strong equity cushion versus total assets (SEK 6.7bn assets vs SEK 4.2bn liabilities).
• An interest coverage ratio of 2.5x shows earnings can cover interest expense, but the margin is moderate-sensitive to earnings volatility.
• Seasonal AFCF means monitoring rolling 12-month cash generation is important rather than single-quarter snapshots.

For additional investor context and shareholder activity related to Karnov Group AB (0A39.L), see: Exploring Karnov Group AB (publ) Investor Profile: Who's Buying and Why?

Karnov Group AB (0A39.L) - Valuation Analysis

• Market capitalization: ~SEK 10.6 billion
• Total assets: SEK 6.7 billion
• Total liabilities: SEK 4.2 billion
• Solvency ratio (Assets / (Assets + Liabilities)): ~62.7%
• Debt-to-equity ratio: 87.2%
• Interest coverage ratio: 2.5x
• Adjusted EBITA margin - Q1 2025: 26.0% (vs 22.7% in Q1 2024)
• Adjusted EBITA margin - first nine months 2025: ~25%

• The SEK 10.6 billion market cap implies that investors are pricing in continued margin improvement and revenue resilience in the legal/technical information niche.
• A debt-to-equity of 87.2% signals moderate leverage; combined with an interest coverage of 2.5x, it suggests debt service is manageable but not without exposure to earnings fluctuations.
• The solvency ratio near 62.7% demonstrates a healthy asset base relative to liabilities, supporting balance-sheet stability for ongoing investments and possible M&A activity.
• Improving adjusted EBITA margins (26.0% in Q1 2025 and ~25% for the first nine months) strengthen valuation justification, as higher operating profitability typically supports higher EV/EBITDA and P/E multiples.

Karnov Group AB (0A39.L) Risk Factors

The following risk factors materially affected Karnov Group AB (0A39.L) financial performance in Q3 2025 and may influence near-term investor outcomes.

• Currency fluctuations: negative FX impact reduced net sales by 2.4% in Q3 2025, eroding reported top-line growth and compressing margins.
• Regional weakness - South: net sales declined by SEK 40 million year‑over‑year in Region South, driven primarily by weak offline sales channels.
• Country-specific operational risks: French and Spanish businesses experienced declines in book sales and training course revenues, reducing contribution from these markets.
• Portfolio changes: divestment of the Spanish legal training business in Q3 2025 introduces short-term revenue volatility and transitional costs.
• Leverage and coverage: debt-to-equity ratio stands at 87.2%, indicating moderate financial leverage that may limit capital flexibility; interest coverage ratio is 2.5x, adequate but below some peers.

Key operational and market sensitivities to monitor:

• FX exposure across reported revenues and the potential for further negative translation effects if SEK weakens.
• Recovery trajectory in Region South-offline sales trends and effectiveness of remediation actions.
• Stabilization of French and Spanish book and training revenues after structural adjustments and the Spanish divestment.
• Debt servicing under an 87.2% debt-to-equity structure and the ability to improve the interest coverage ratio from 2.5x via margin improvement or deleveraging.

For broader context on corporate strategy that may mitigate some of these risks, see Mission Statement, Vision, & Core Values (2026) of Karnov Group AB (publ).

Karnov Group AB (0A39.L) - Growth Opportunities

• AI platform timetable: launch of a common AI platform across all markets in H1 2026 to standardize AI-driven features and scale R&D efficiencies.
• Product-market fit: mission-critical local legal content positioned as a data moat for training proprietary models and enabling high switching costs.
• Customer relationships: long-term B2B contracts and high retention rates support recurring revenue growth from AI-enabled add-ons.
• Margin tailwind: Q3 2025 divestment of the Spanish legal training business expected to improve group margins going forward.

• Synergies: management reports EUR 18m annual run-rate synergies achieved, ahead of schedule toward the EUR 20m target by end-2026-this supports near-term margin improvement and free cash flow generation.
• Revenue growth profile: roughly SEK 2.6bn through nine months with consistent organic growth (3.9%-7.7%) indicates resilient demand for core content and digital services.
• Profitability: adjusted EBITA margin of ~25% for the first nine months of 2025 shows sustained operational leverage that can be reinvested into AI rollout and market expansion.