Milestone achieved a satisfying outcome in 2022 given the continued impact of COVID-19 on our business throughout the year. During the year, Milestone continued to invest in future growth following our updated strategic ambition.
Invoiced revenue amounted to DKK 1.7 billion, corresponding to an increase of 39 percent. After adjustments for revenue deferrals and the impact of cash flow hedging and sales incentives, net revenue was DKK 1.5 billion.
This is an increase of 30 percent compared to 2021. Net income amounted to DKK 9 million, a decrease of 90 percent. Milestone considers this satisfactory considering the business impact of the challenging macroeconomic factors globally.
Results in our markets
Looking at results in our markets, 2022 was challenging due to slow recovery from the COVID-19 pandemic in some regions, in addition to structural obstacles such as component shortages, supply chain challenges, and increasing inflation.
However, the demand for our solutions continues to be strong despite the market conditions. In particular, our Milestone Husky IVOTM series overperformed sales expectations in all regions and was well received in the market, growing 182 percent compared to 2021. In June 2022, Milestone had an all-time record high month, with DKK 264 million invoiced revenue.
Invoiced revenue in the Americas region amounted to DKK 809 million, corresponding to a 30 percent increase compared to 2021. The North American market continues to grow, and Milestone had a strong close to 2022 with record sales in December.
The Latin American market grew 80 percent, with business growing again after restrictions were lifted. During the year, we signed several key projects within different industries, including transport, the public sector, and healthcare. The strong sales were positively affected by the USD/DKK exchange rate which was partly responsible for the increase in invoiced revenue.
During 2022, Milestone increased its presence in the Americas region, and this will continue into 2023.
In the APAC region, we continued to be challenged due to a volatile COVID-19 situation which caused difficulties in market recovery for some territories, for example North Asia, Taiwan, and Japan. Furthermore, we have seen a market supply chain interruption and shortage of IT hardware and chips. APAC invoiced revenue grew 10 percent in 2022 to DKK 195 million despite the challenges mentioned. During the year, key projects were won within transport, critical infrastructure, and manufacturing.
In EMEA the business climate has improved significantly, with most COVID-19 restrictions lifted, and as a result, Milestone had a strong year in the region. Invoiced revenue amounted to DKK 726 million in 2022, representing an increase of 29 percent compared to the same period last year.
We were negatively impacted by the war in Ukraine and we halted our activities in Russia and Belarus after the invasion. Markets in Middle East, North Africa, Turkey showed 37 percent growth. Similarly, key projects within government, security and healthcare were signed.
Operating expenses totaled DKK 1,344 million compared to DKK 995 million in 2021, representing an increase of 35 percent. The increase is mainly driven by higher costs for personnel as a consequence of pursuing Milestone’s growth strategy.
The growth strategy includes an increased focus on marketing activities, investment into a regional presence in the North American market, and continuing to drive an innovation agenda.
In addition, the winding down of COVID restrictions meant an increase in travel, in-person meeting activities, consultancy, and other staff-related costs that were limited during the pandemic.
We had our first face-to-face partner events, MIPS, after COVID-19. One took place in the US, and one took place in Dubai. Operating expenses amounted to 90 percent of revenue compared with 87 percent of revenue in 2021.
Research and development
Research and development expenses amounted to DKK 355 million compared to DKK 297 million in 2021.
This corresponds to a growth of 19 percent as a result of investments in the number of full-time employees and increasing costs for consultants.
Total research and development expenses correspond to 24 percent of net revenue in 2022, compared with 26 percent in 2021, a testament to our ambition of continuous investment in software development to make our competitive position stronger.
Distribution and sales costs
Distribution and sales costs amounted to DKK 871 million, compared to DKK 596 million in 2021, which represents an increase of 46 percent.
Milestone has continued to add new members to our regional sales teams. The main investment has been in the North American region as a part of the adjusted strategy.
Costs related to travel, meeting, and marketing activities increased compared to 2021. This was not least due to the two face-to-face MIPS partner events. Total distribution and sales costs corresponded to 59 percent of net revenue, an increase from 52 percent
Administrative expenses amounted to DKK 117 million compared to DKK 101 million in 2021, which corresponds to an increase of 16 percent.
The increased investment is driven by strengthening the support organization with special focus on legal, internal IT and responsible technology.
In addition, Milestone has continued focusing on being a People First organization and the project to create “the workplace of the future.” Total administrative expenses correspond to eight percent of net revenue, a decrease from nine percent in 2021.
Distribution and sales
Research and development
Income and balance sheet
An operating income (EBIT) of DKK -21 million was recorded for the year, compared to DKK 93 million in 2021.
The decrease of 123 percent was a consequence of increased costs related to the new organization and initiatives to support the adjusted strategy and investment in new headcounts to fuel future growth.
Profit before corporate tax was DKK 11 million in 2022, compared to DKK 122 million in 2021, corresponding to a decrease of 90 percent. The decrease in profit before corporate tax was predominantly a consequence of the change we saw in EBIT.
Milestone delivered a satisfactory financial result with profits slightly below expectations despite the uncertainties as a result of the COVID-19 pandemic, the general geopolitical situation, and increased cost relating to executing the strategy.
The total value on our balance sheet as of December 31, 2022, was DKK 1,858 million, compared with DKK 1,636 million on December 31, 2021. The total equity amounted to DKK 799 million at the end of 2022, compared with DKK 788 million at the end of 2021.
Cash at bank and in hand as of December 31, 2022 was DKK 194 million, compared with DKK 155 million on December 31, 2021. The increase in cash at bank and in hand is mainly due to payment received on a loan given to Canon Inc. of DKK 51 million. Milestone’s financial position is considered strong and healthy.
The Executive Leadership Team believes that there are good business opportunities in 2023. EBIT for 2023 is expected to be higher than in 2022 as a result of the anticipated profitability increase from our strategy.
As a global company with customers around the world, Milestone is subject to varying market conditions. Potential lockdowns and mobility restrictions could continue to impact customers, partners, and employees in 2023.
In addition, challenges such as component shortages, supply chain disruption, and the global macroeconomic situation mean that our assumptions are more uncertain than normal.