Interim Report Q1 2024 for SaveLend Group AB

Q1 - 1 January - 31 March 2024
Amounts in parentheses refer to the same period the previous year.

• Net revenue for the period was MSEK 40.2 (44.6).
• EBITDA was MSEK 1.6 (4.5).
• EBIT was MSEK -4.9 (-1.1).
• Net results was MSEK -5.6 (-1,2).
• Earnings per share before dilution were SEK -0.11 (-0.02).
  

Events during Q1

• SaveLend Group AB's CEO, founder, and board member Ludwig Pettersson steps down from his position due to illness and passes away shortly thereafter. The company's Chief Commercial Officer, Peter Balod, is appointed as acting CEO.
• NordIX AG Increases their engagement with SaveLend.
• SaveLend Group AB is launching its fixed interest account, SaveLend Fixed, offering a 6% annual fixed interest rate for 12 and 24 months at launch.
  

Events after the quarter

• SaveLend Group's subsidiary Billecta sets new record with over 500,000 handled billing transactions in March.
• The annual general meeting of SaveLend Group AB was held on April 25.
• Acting CEO Peter Balod becomes permanent CEO of SaveLend Group AB.
• The Ministry of Finance has introduced a new bill aimed at strengthening consumer protection in the credit market. According to this proposal, activities related to the mediation and issuance of consumer credits can no longer be operated by a consumer credit institution. Instead, such operations will require licensing as either a bank or a credit market company. This legislative proposal is still in the early stages, and even if passed, it includes transitional provisions. If enacted, these provisions would allow current operators of consumer credit activities to continue their existing operations until the end of July 2026. The management of SaveLend Group does not believe that this potential change poses a significant risk to the group's operations. SaveLend will continue to operate as a savings platform that generates returns through diversified interest investments. The business is well positioned to adapt to the possible new regulations over the coming years, and the board and management are jointly investigating potential paths forward.

CEO COMMENTS
The first quarter of the year has concluded, and SaveLend Group has continued the process of transitioning to long-term profitability, a shift that was initiated last year. The total AUM on the savings platform and the number of transactions on the billing platform show growth from the previous period, which is key to achieving our financial goals for 2027. The increase in these KPIs is lower than we had aimed for, but we are still in line with our plan for net sales and are taking an important step in the right direction by returning to positive EBITDA for the quarter.

Compared to the previous quarter, we see a decrease in net sales by 10% with an improved gross margin of 91%. The decline in revenue is mainly driven by decreased sales volumes within the consumer credit segment, a result of the company's changes in credit assessment and scoring aimed at further improving credit quality, thereby ensuring continued high and stable returns for investors.

It is very pleasing and positive to see a clear improvement in the group's results as we move from a negative EBITDA in Q4 2023 of MSEK -8.8 to a positive EBITDA of MSEK 1.6 in Q1 2024. We are already seeing clear results of the efficiency work that has begun, with both lower marketing and staff expenses, collectively showing a cost saving of just over 14%.

The billing platform alone shows strong development with an 131% increase in EBITDA (including internal provisions income) compared to the previous quarter and a positive EBIT of MSEK 0.4. The fine result is largely driven by continued growth in the number of billing transactions, which for the first time reached over 500,000 in a single month during the quarter. Churn remains very low (<1%) which means that Billecta does not lose customers once they start using the service and that each new customer contract creates significant long-term value. The work to reduce consultant dependence and increase focus on the development of the commercial organization has progressed faster than expected, allowing the strategy adopted in December to accelerate.

Looking at the savings platform's products, the ‘Balanced’ and ‘Yield’ strategies launched during Q2 2023 continue to grow both in number of savers and total capital. Additionally, as we now approach a full year's data, we can see that ‘Balanced’ is tracking over 7% in annual return and ‘Yield’ towards just over 8%, which is completely in line with the target.

In the middle of March, we launched our latest savings product 'SaveLend Fixed' to our existing customers. The product was received with great interest and the first months' issues began to fill up right after launch. It is always very enjoyable to launch new technical solutions to customers because it then provides a very clear and direct result. Several iterations and updates have already been made and more will be done during the year to reach expected volume and targets.

During the quarter, resources were also allocated to prepare and develop our Finnish operation to be ready for the new credit registry launched on the first of April. The credit registry is a national register that collects information about credits and incomes for Finnish individuals with the aim of avoiding over-indebtedness and facilitating credit decisions and regulatory monitoring. It is a welcome initiative, and we see a long list of benefits for Finnish originators offering their products on our platform, which in turn will lead to better returns for our savers.

With the results of Q1 behind us, we see a positive development in our efficiency efforts but also that the growth in revenues on the savings platform is taking slightly longer than expected. Our biggest and foremost focus is to create high and stable returns for our savers, and to ensure this, we see a need to further broaden the diversification of various credit types on the platform. We are in the midst of this process, and during a transition period, we therefore see limited growth in revenues, which affects the result development. However, our long-term goal towards 2027 remains firm, and we will have even better opportunities to both achieve and exceed the set goals thanks to the changes now being made.