Talenom Plc Business Review for January-September 2024: Strategy was updated, recession hampered growth and profitability improved
Talenom Plc, Stock exchange release on 31 October 2024 at 9:00 EET
Talenom Plc Business Review for January-September 2024: Strategy was updated, recession hampered growth and profitability improved
January-September 2024 in brief
- Net sales EUR 97.0 million (92.0), growth 5.4% (21.4)
- EBITDA EUR 28.7 million (24.9), 29.6% (27,0) of net sales
- Operating profit (EBIT) EUR 11.4 million (6.4), 11.7% (6.9) of net sales
- Comparable operating profit (EBIT) EUR 11.4 million (9.5), 11.7% (10.3) of net sales
- Net profit EUR 5.9 million (2.5)
- Earnings per share EUR 0.13 million (0.06)
July-September 2024 in brief
- Net sales EUR 29.1 million (28.3), growth 2.7% (20.0)
- EBITDA EUR 9.0 million (7.6), 30.8% (27.0) of net sales
- Comparable operating profit (EBIT) EUR 3.0 million (2.4), 10.3% (8.4) of net sales
- Operating profit (EBIT) EUR 3.0 million (-0.8), 10.3% (-2.7) of net sales
- Net profit EUR 1.2 million (-1.7)
- Earnings per share EUR 0.03 million (-0.04)
Key figures
| Group | 1–9/2024 | 1–9/2023 | Change, % | 7–9/2024 | 7–9/2023 | Change, % |
| Net sales, EUR 1,000 | 97,024 | 92,012 | 5.4% | 29,053 | 28,292 | 2.7% |
| Net sales, growth % | 5.4% | 21.4% | 2.7% | 20.0% | ||
| EBITDA, EUR 1,000 | 28,695 | 24,855 | 15.5% | 8,954 | 7,627 | 17.4% |
| EBITDA of net sales, % | 29.6% | 27.0% | 30.8% | 27.0% | ||
| Operating profit (EBIT), EUR 1,000 | 11,362 | 6,350 | 78.9% | 3,006 | -772 | 489.3% |
| Operating profit (EBIT), as % of net sales | 11.7% | 6.9% | 10.3% | -2.7% | ||
| Comparable operating profit, EUR 1,000 *) | 11,362 | 9,509 | 19.5% | 3,006 | 2,387 | 26.0% |
| Comparable operating profit, as % of net sales | 11.7% | 10.3% | 10.3% | 8.4% | ||
| Return on investment (ROI), % (rolling 12 months) | 8.8% | 6.8% | 8.8% | 6.8% | ||
| Interest-bearing net liabilities, EUR 1,000 | 87,763 | 71,368 | 23.0% | 87,763 | 71,368 | |
| Net gearing ratio, % | 162.1% | 130.1% | 162,1 % | 130,1 % | ||
| Equity ratio, % | 30.7% | 31.6% | 30,7 % | 31,6 % | ||
| Net investments, EUR 1,000 | 17,371 | 30,888 | -43.8% | 4,245 | 6,040 | -29.7% |
| Liquid assets, EUR 1,000 | 8,456 | 14,895 | -43.2% | 8,456 | 14,895 | -43.2% |
| Earnings per share, EUR | 0.13 | 0.06 | 132.8% | 0.03 | -0.04 | 173.6% |
| Weighted average number of shares during the period | 45,471,240 | 45,096,411 | 0.8% | 45,477,972 | 45,279,665 | 0.4% |
| Net profit, EUR 1,000 | 5,941 | 2,530 | 134.8% | 1,249 | -1,689 | 174.0% |
*) Operating profit excluding software-related write-downs
Guidance for 2024 (updated on 9 October 2024)
Talenom estimates that 2024 net sales will be EUR 126-129 million, EBITDA EUR 34-37 million and operating profit EUR 11-14 million.
CEO Otto-Pekka Huhtala
We continued to implement this year’s strategic priorities, of which our main objective was to improve profitability. We succeeded in doing so despite the challenging economic environment. Our second focus area was the software project in Sweden. In Sweden, we have migrated around 40% of our customers to our own platform. The target we set for this year is 50%. At the same time, we have implemented an organizational and operational reform in Sweden. Based on the experience in Finland, the introduction of Talenom's uniform processes and approach, as well as the platform enables reducing routine work time by up to 75%. These investments have substantially strained the financial performance in Sweden this year. We believe that the economic benefits will become visible from the second half of 2025, although the customer transfer project will continue throughout 2025.
Net sales grew by 5.4% (21.4) to EUR 97.0 million (92.0) in January-September. Compared to the comparison period, the acquisition pace has been significantly slowed down in line with plans. The prolonged economic downturn affected net sales accrual especially in Finland, as the business volumes of our customers decreased, and business closures and bankruptcies increased. We compensated for the effects of the weak economic cycle with new customer acquisition.
Profitability improved significantly. In January-September, EBITDA increased by 15.5% to EUR 28.7 million (24.9), while operating profit increased by 78.9% to EUR 11.4 million (6.4). Growth in comparable operating profit excluding software write-downs made last year was 19.5%. In Finland, we improved profitability through efficiency measures. In Sweden, the introduction of proprietary software and change projects weighed on profitability. In Spain, we improved profitability clearly as EBITDA increased by more than EUR 1 million from the comparison period. We expect positive profitability development and growth to continue in Spain also in the future.
We estimate that 2024 net sales will be EUR 126-129 million, EBITDA EUR 34-37 million and operating profit EUR 11-14 million. The guidance also includes the non-recurring costs of the updated strategy and reorganization. After the review period, we updated our strategy on 9 October 2024, and we withdraw our medium-term financial targets.
We published our updated strategy to accelerate growth and make it more scalable. Our key competitive advantage is to make the everyday life of an entrepreneur as easy as possible, automate accounting routines, and our conceptual operating model that takes care of our customers. We still believe in these. We want to focus on our strengths and also build our future on them.
There are two major changes in the strategy update:
- We are planning to separate the software business into its own company and start offering our software to other accounting firms and their customers. We will seek an international software business expert to lead the company, and until then the unit will be led by Antti Aho, Executive Vice President of Talenom.
- We are planning to focus on our core competencies by transferring all non-accounting services and products like debt collection, banking and financial services to our partners.
To respond to the new strategy, we will initiate change negotiations regarding the planned separation of the software business. The negotiations concern around 180 people in Finland and may lead to the termination of up to 35 employment contracts. We are seeking total annual savings of approximately EUR 2-3 million in investments and direct costs with the reorganization.
In 2025, we will focus on further improving profitability in Sweden and Spain, and on building sales channels for the software business. We aim for stronger and more profitable growth with two pillars, based on very easy-to-use software for entrepreneurs and accountants, as well as the accounting firm business in line with the uniform ONE Talenom concept. We believe in the indispensability of the services business as a financial partner for SMEs now and in the future. We have honed the ONE Talenom concept for decades, and it has achieved very high customer and employee satisfaction with a highly profitable business. We want to continue the international growth of the service business and believe we have good conditions for this. The software business has grown from an internal support business into a commercially viable business. Our updated strategy is largely based on core capabilities developed over a long time. We believe it is clear to customers, employees and investors.
Webcast
The company's CEO Otto-Pekka Huhtala, CFO Matti Eilonen and Christian Dieroff, Country Manager for Sweden, will present the main points of the review and updated strategy in a live webcast today on 31 October 2024 at 10:00 EET (in Finnish) and at 12:30 EET (in English). Recordings of the events will be published on Talenom’s website https://investors.talenom.com/fi/ and https://investors.talenom.com/en
You can watch the webcast live in Finnish at 10:00 EET at https://talenom.videosync.fi/q3-2024
You can watch the webcast live in English at 12:30 EET at https://talenom.videosync.fi/q3-2024-en
The presentation materials will be published before the start of the briefing on the company’s website.
Talenom Plc
Board of Directors
Further information:
Otto-Pekka Huhtala
CEO, Talenom Plc
+358 40 703 8554
otto-pekka.huhtala@talenom.fi
Talenom in brief
Talenom is an agile and progressive accounting firm established in 1972. Our business idea is to help entrepreneurs succeed by making their daily lives easier with the market's easiest-to-use digital tools and highly automated personal services. In addition to comprehensive accounting services, we support our customers’ business with a wide range of expert services and our partners' services. Our vision is to be the preferred partner in financial management.
Talenom’s growth history is strong – average annual net sales growth was approximately 17% between 2005 and 2023. In 2023, Talenom’s net sales was some EUR 122 million and the company had 1,560 employees in Finland, Sweden, Spain and Italy at the end of the year. Talenom’s share is quoted on the Main Market of Nasdaq Helsinki. Read more: https://investors.talenom.com/en/