Fabrity Holding Group (formerly K2 Holding) has maintained its high growth rate in operating income. The ongoing review of strategic options for the marketing segment is scheduled to be completed in the second half of the year.
In the first half of 2023, Fabrity Holding Group excluding the marketing segment (subsidiaries Agencja K2 and K2 Precise were classified as assets held for sale) reported a 26% YOY increase in service revenue to PLN 31.5 million, and a 28% YOY increase in operating income to PLN 28.4 million. EBITDA, on the other hand, declined by PLN 0.5m to PLN 3.7m, and operating profit by PLN 0.4m to PLN 2.5m. The second quarter saw a significant strengthening of the zloty against the euro, which is the settlement currency for roughly half of Fabrity’s software house revenue. Accounting standards have additionally necessitated the revaluation of receivables not yet invoiced. In addition, several of the software segment’s larger projects were in the preparation phase for implementation, which naturally reduced their profitability.
“This was only a temporary situation, and for the second half of the year we expect a clear increase in the results generated. We employ around 220 people, all of whom are involved in individual projects, and we do not incur costs of keeping staff on the bench. This shows our advantages and business strength, even in a slowing software-development market. We are still able to grow dynamically and carry out very interesting projects for large, stable customers,” points out Tomasz Burczyński, CEO of Fabrity and Vice President of Fabrity Holding S.A.
In the chatbot segment, the past months have been full of new milestones reached. Testing of the PerfectBot GPT product, based on OpenAI language models, began in the second quarter of this year. Tests covered nearly a hundred clients from the USA, Canada, Great Britain, Australia, and New Zealand.
“Artificial intelligence and large language models have created new opportunities for our PerfectBot. Customers testing an early version of PerfectBot GPT include medium-sized online shops based on the Shopify platform, and PerfectBot is currently focusing on developing the product based on the feedback it collects from them. Commercialization is already scheduled to start in the fourth quarter,” says Paweł Wujec, CEO of Fabrity Holding S.A.
Fabrity Holding Group recorded in the first half of the year, together with the marketing segment, a similar YOY level of service revenue (PLN 56 million), a 16% increase in operating income to PLN 38.1 million, and a decrease in EBITDA to PLN 4.8 million and operating profit to PLN 3.6 million. The decline in the marketing segment’s overall revenue is a direct result of the change in revenue structure: the marketing segment shows an increasing share of revenue from the sale of professional digital services (SEO, social media, MarTech) with a decrease in the importance of media campaign brokerage and external productions.
“We present the results of the subsidiaries K2 Precise and Agencja K2 in the consolidated financial statements as the result of the group of assets held for sale, while we recognize the net result of PerfectBot in the consolidated financial statements using the equity method, which results from taking into account Fabrity Holding Capital Group’s 50% share in the capital of this company,” points out Artur Piątek, Vice President of Fabrity Holding S.A.
K2 Precise, which specializes in providing end-to-end marketing support services, recorded a slight decrease in profit in the first half of the year, mainly due to investment in strategically important growth directions—the company is focusing on synergistic media, SEO and content marketing, and MarTech.
At its subsidiary Agencja K2 Sp. z o.o., which operates under the K2 Create brand, the first half of the year was characterized by a temporary downturn in the advertising market. The company has undertaken numerous initiatives to acquire new clients, and these activities have already resulted in the first new contracts. In the first quarter of this year, this included Amnesty International, for which the image campaign “Human rights are violated in silence” was realized. During this time, the company continued to deliver communication projects for its largest clients, including Carrefour and Netflix. In addition, Agencja K2 has launched projects within the fast-growing vertical video trend (TikTok, Instagram Stories, Facebook Reels).
In the second quarter of this year, following the unveiling of OpenAI’s new ChatGPT-4 language model, there was a significant increase in interest in artificial intelligence in the market. Experts from Fabrity Holding Group have prepared a report on the practical aspects of using AI in various business sectors. The study is an up-to-date resource on artificial intelligence, presenting scenarios for its use in advertising agencies, media houses, and software houses.