Zalaris Asa · OSL:ZAL
Zalaris Asa — Q3 2020 Earnings Presentation
25 slides from Zalaris Asa's earnings presentation, Oct 29, 2020
Slide 1: Presentation of interim financial results | Q3 2020
Presentation of interim financial results | Q3 2020 29 October 2020
Slide 2: Agenda
Agenda 1. Highlights 2. Financial Review 3. Markets and Outlook Hans-Petter Mellerud Gunnar Manum 4. Q&A Founder and CEO CFO © zalaris 2020 Page 2
Slide 3: Third quarter 2020: Continued EBIT improvement
Highlights Q3 Presentation 2020 Third quarter 2020: Continued EBIT improvement • #teamZalaris continued weathering the Covid-19 storm delivering on all customer commitments and maintaining stable revenue levels • Strong positive development in EBIT resulting in all time high Q3 EBIT since IPO in 201
Slide 4: Positive margin development continuing during the quarter
Highlights Q3 Presentation 2020 Positive margin development continuing during the quarter Revenue Adj. EBIT* Adj. EBIT margin #FTEs NOK 190m (0%) NOK 13.3m (+49%) 7.0% (+2.4pp) 713 (-11.2%) 13.3 7,0% 798 803 190.7 189.7 176.3 713 8.9 4,6% -2.8 -1.4% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 5: European Payroll & HR Solutions that Value People
Highlights Q3 Presentation 2020 European Payroll & HR Solutions that Value People Zalaris – Local presence with one global platform • Zalaris is a leading European provider of Payroll and Human Capital Management Solutions delivered through Software as a Service, Business Process as a Service, or Co
Slide 6: Diversified customer base with Germany largest market facing unit
Highlights Q3 Presentation 2020 Diversified customer base with Germany largest market facing unit Diversified across industries and sectors Revenue per country Q3 2020 (NOKm) Health UK Other Industry Retail Not for profit Poland 9,3 organizations 4,8 and Public 13,0 Germany Bank & Finland sector Ins
Slide 7: Signed several new agreements and expansions
Highlights Q3 Presentation 2020 Signed several new agreements and expansions • Several new BPO contracts and extensions signed during recent weeks, which will generate recurring revenue from H1 2021 • Break-through in UK with multi-country payroll deal with leading software Agreement with Danske Ban
Slide 8: Significant margin improvement in Managed Services
Highlights Q3 Presentation 2020 Significant margin improvement in Managed Services Revenue EBIT NOK 127.4m (-2.3%) NOK 14.8m (+39.6%) ▪ Only small reduction in revenue compared to Q3 last year despite Covid-19 effects 14.8 131.5 130.4 127.4 ▪ ~NOK 3-4 reduction in revenue due to lower volume of trav
Slide 9: Grew Professional Services during the quarter
Highlights Q3 Presentation 2020 Grew Professional Services during the quarter Revenue EBIT NOK 62.4m (+3.5%) NOK 6.8m (-25.3%) ▪ Continued good revenue growth to 60.3 62.4 new and existing customers in Poland and UK&I 9.1 ▪ Reducing management layer and 44.7 6.8 reorganization in German organization
Slide 10: More than 60% of Professional Services revenue is recurring
Highlights Q3 Presentation 2020 More than 60% of Professional Services revenue is recurring and supports a continuous presence with customers Distribution of Projects vs long term AMS based revenue • ~60% of Professional Services revenue is recurring and based on long term agreements and relationshi
Slide 11: Agenda
Agenda 1. Highlights 2. Financial Review 3. Markets and Outlook Hans-Petter Mellerud Gunnar Manum 4. Q&A Founder and CEO CFO © zalaris 2020 Page 11
Slide 12: Stable revenue y-o-y
Financial Review Q3 Presentation 2020 Stable revenue y-o-y Revenue Adj. EBIT Adj. EBIT margin NOK 190m (0%) NOK 13.3m (+49%) 7.0% (+2.3pp) • Revenue for the quarter approx. in 13.3 7,0% line with Q3 last year, with some lower 190.7 189.7 volumes (e.g. travel expense processing 176.3 and change order
Slide 13: EBIT margins gradually improving
Financial Review Q3 Presentation 2020 EBIT margins gradually improving Adj. EBIT (NOKm) and margin (%), quarterly Adj. EBIT (NOKm) and margin (%), LTM • Adj. EBIT increased by 49.4% compared to last year 7,0% 6,7% 5,5% 6,4% • Adj. EBIT margin (%) increased by 2.3 5,0% 5,0% percentage points compared
Slide 14: Condensed Profit and Loss
Financial Review Q3 Presentation 2020 Condensed Profit and Loss 2020 2019 2020 2019 2019 (NOK 1 000) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec • Significant improvement in adj. EBIT margin (%) compared Revenue 189 748 190 672 588 804 570 571 776 792 to last year – 7.0% vs. 4.7% License costs 18 337 15
Slide 15: Positive operating cash flow during the quarter
Financial Review Q3 Presentation 2020 Positive operating cash flow during the quarter NOK million • Operating cash flow for the quarter -8,0 of NOK 21.3m, before a payment of 21,3 -5,0 deferred VAT (Covid-19 relief) of NOK -5,8 8.0m 129,0 -16,5 116,3 • Repayment of interest-bearing debt 1,3 in Germa
Slide 16: Condensed Balance Sheet
Financial Review Q3 Presentation 2020 Condensed Balance Sheet 2020 2019 2019 • Cash and cash equivalents of NOK 30.Sep 30.Sep 31.Dec 116.3m (NOK 1 000) Fixed and intangible assets 356 428 362 994 354 184 • Lease liabilities relate to right-of-use Trade accounts receivable 132 225 151 377 148 614 ass
Slide 17: Agenda
Agenda 1. Highlights 2. Financial Review 3. Markets and Outlook Hans-Petter Mellerud Gunnar Manum 4. Q&A Founder and CEO CFO © zalaris 2020 Page 17
Slide 18: Productizing existing solutions to better scale value of HR Technology IP
Q3 Presentation 2020 Productizing existing solutions to better scale value of investments in own HR Technology IP as customers increasingly are moving solutions to the cloud Solution Included in Sold on a BPO services standalone basis EasyHR – digital forms and workflows √ Opportunity Workforce Mana
Slide 19: Organizing solution offering into unit to develop scalable distribution channels
Q3 Presentation 2020 Organizing solution offering into unit to better visualize potential and develop scalable distribution channels independent of our existing offerings Target market: SAP customers • SuccessFactors Employee Central users: 4’000 and growing • “The global human capital fast manageme
Slide 20: Selling our first platform multi-country deal in the UK
Q3 Presentation 2020 Selling our first platform multi-country deal in the UK leads the way of realizing the potential of having access to a market 7x that of the Nordics • Strengthened Central Sales Function to more effectively support payroll and HR outsourcing sales to large accounts in UKI, Germa
Slide 21: Landmark deal with Stadtwerke Krefeld in the German market
Q3 Presentation 2020 Landmark deal with Stadtwerke Krefeld visualizes the potential in the German market cooperating with SAP • City of Krefeld is one of the first wins together with SAP in the sector • Stadtwerke Krefeldt GmbH employees approximately 3’000 employees serving the city with energy and
Slide 22: Q3 exemplifying #BestingOurselves
Summary Q3 Presentation 2020 Q3 exemplifying #BestingOurselves • Continue improving margins towards our communicated 10% target through organizational simplification, increased productivity, automation and utilization of our near- and offshore assets • Deliver our 20th year of uninterrupted growth t
Slide 23: Support #teamZalarisNorseman raising funds to combat cancer
Q3 Presentation 2020 Support #teamZalarisNorseman raising funds to combat cancer in support of #AktivMotKreft and #5KYourWay The sponsorship of #teamZalaris for Norseman supports key Zalaris’ values – Aiming High and Team Spirit! Together, our four-member team will help to raise funds for Aktiv mot
Slide 24: Agenda
Agenda 1. Highlights 2. Financials 3. Markets and Outlook Hans-Petter Mellerud Gunnar Manum 4. Q&A Founder and CEO CFO © zalaris 2020 Page 24
Slide 25: Thank you!
“ We simplify HR and payroll administration, and empower you with useful information so that you can invest more in people. Hans-Petter Mellerud, CEO & Founder Thank you! Gunnar.Manum@zalaris.com Hans-Petter.Mellerud@zalaris.com Zalaris ASA | +47 4000 3300 | www.zalaris.com