Egde Consulting sold less in 2025 and still swung from a loss to a profit

Less revenue, a better result

Egde Consulting AS is an IT consultancy based in Grimstad in southern Norway. AS is the Norwegian limited company, roughly the equivalent of a Czech a.s. or a British limited company. The figures cover the company on its own, for calendar years, in Norwegian kroner.

In 2025 the company took NOK 130m in revenue, down 13.6% from NOK 150m in 2024. That is NOK 20.4m of work that was no longer billed. In the same year the bottom line reversed. A net loss of NOK 8.6m in 2024 became a net profit of NOK 6.9m in 2025.

The operating result, which is profit from running the business before interest and tax, moved even further. It went from a loss of NOK 10.8m to a profit of NOK 8.6m, an improvement of NOK 19.5m. The operating margin, the share of revenue left after running costs, rose from -7.2% to 6.7%, a change of 13.9 pp.

The arithmetic leaves only one reading. When revenue falls and operating profit rises, operating costs must have fallen by more than the revenue that was lost. Egde Consulting did not grow its way out of the loss. It shrank its way out.

The revenue history makes this sharper. Revenue was NOK 150m in 2023, the same level as in 2024. So the company held its sales flat from 2023 to 2024 while losing money, then sold less in 2025 and made money.

Where a consultancy keeps its costs

A consultancy has a simple cost structure. Most of the money goes to people: salaried consultants, and subcontractors hired in when a contract needs more hands than the payroll has. Offices and software matter, but much less.

That makes a loss year easy to explain in principle. Usually one of a short list of things is going on. Consultants sit on the bench, paid but not billed. Or the firm resells subcontractors at a thin markup, which adds revenue but little profit, and sometimes less than nothing once the account management is counted. Or the year carries one-off charges, such as severance, an office lease ended early or a write-down.

Each of these fits a year with less revenue and more profit. Fewer people on the bench means lower salary costs and, if those people were billing a little, slightly lower revenue. Dropping low-margin resale work cuts revenue and costs almost equally, but removes the part that was eating profit. And if 2024 carried one-off charges, 2025 looks better simply because they did not recur.

The first two are durable improvements, as long as demand holds. The last is not an improvement at all, only the absence of a bad item. The accounts do not separate personnel costs, purchased services and one-off charges clearly enough to say which applies here, and those are exactly the lines that would settle it.

What the figures do settle is the level at which the change happened. The usual worry with a swing like this is that it rests on something below the operating line, such as a financial gain or a tax effect. Here the operating improvement of NOK 19.5m is larger than the net improvement of NOK 15.5m. The recovery happened at the operating level, not in interest, investments or tax, although that alone does not say how much of it will recur.

The company also has a new daglig leder, the Norwegian title for the managing director, a new board chair and several new board members. I would not credit the 2025 result to them. The 2025 result is the base the new management inherits, and that base has only one year behind it.

Back in profit, still behind its peers

A return to profit is not the same as a healthy margin. Across 8 Norwegian companies in the same industry, the median operating margin in 2025 was 12.2%. Egde Consulting, at 6.7%, sat 5.5 pp below it.

The peer group is wide. Abacus IT made 3.9% and Devoteam 3.0%, so a thin margin is not unusual in this trade. At the other end, Geomatikk made 25.9% and Epinova 12.6%. On net margin the picture is similar: 5.3% at Egde Consulting against a peer median of 9.1%.

So the turnaround lifted the company into profit but left it in the lower half of the table. That is real progress, and it is also a reminder that the improvement still has room before it looks like a normal year for this industry.

The profit did not stay in the company

One more line deserves a look. Equity at the end of 2025 was NOK 6.7m, against NOK 6.7m a year earlier, a change of just NOK 10.1k. A net profit of NOK 6.9m would normally add roughly that amount to equity. It did not.

Something of about the same size left equity during the year. In Norwegian companies that is most often a dividend or a group contribution, a transfer between companies in the same group that Norwegian tax rules allow. The accounts do not show which applies here.

The effect shows elsewhere on the balance sheet. Total assets grew to NOK 41.3m from NOK 36.7m, while equity stood still, so the equity ratio fell from 18.1% to 16.1%. Cash slipped by NOK 373k to NOK 3.5m. A company coming out of a loss year usually keeps its first profit as a cushion. This one ended 2025 with a thinner cushion than it started with, measured against the size of its balance sheet.

What to check in your own company

If your own result has changed sign, from loss to profit or the other way, the most useful time you can spend is on separating what recurs from what does not. It can be done with the income statement and the general ledger.

Start with the operating result for both years. List every item that will not come back: restructuring costs, severance, write-downs, released provisions, one-off grants, gains on sold equipment. Add the charges back and take the gains out. Compare the adjusted results. If most of the improvement disappears, your new profit is the absence of last year's costs, not a better business.

Next, split revenue into work delivered by your own people and work resold from subcontractors, and work out the gross margin on each. If revenue fell and profit rose, find out which of the two shrank. Losing resale work at a thin markup is often a good trade. Losing your own billable hours rarely is.

Finally, compare the year's net profit with the change in equity. If they differ, find out where the difference went. A profit that is paid out in the same year it is earned leaves the balance sheet no stronger than before, and the bank will notice that before you do.

Only after these steps would I let the new result become the base for budgets, bonuses or a conversation with the lender.

Egde Consulting did the harder half of a turnaround in 2025: it fixed the operating line while its revenue was falling. It has not yet shown that the fix repeats, it still earns less per krone than most of its peers, and it paid away the cushion that its first profit could have built. One good year proves the costs can be cut. The next one will show whether they stay cut.