Zalaris Asa · OSL:ZAL
Zalaris Asa — Q4 2022 Earnings Presentation
31 slides from Zalaris Asa's earnings presentation, Feb 28, 2023
Slide 1: Presentation of financial results Q4 2022
28 February 2023 Presentation of financial results Q4 2022
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation doe
Slide 3: Agenda
Agenda Today’s presenters • Highlights • Company in brief • Financial review • Markets and outlook • Q&A Hans-Petter Mellerud Gunnar Manum CEO and Founder CFO © zalaris 2023 Page 3
Slide 4: Highlights
Highlights Simplify work life. Achieve more.
Slide 5: Q4 2022 key takeaway
Q4 2022 key takeaway Accelerated growth: Revenue growth of 22 percent year-on-year (constant currency). EBIT improvement program on track: Will increase annual EBIT by NOK 40 – 50 million from current level by end-2023 from costs improvements and contribution from signed contracts Successful new-sal
Slide 6: Continued development in new signings and strong pipeline of multi-country contracts
Continued development in new signings and strong pipeline of multi-country contracts in final contracting stage Several new deals and extensions/renewals signed securing continued growth in 2023 and 2024 Pipeline of Multi-Country Peoplehub powered opportunities strong, and potential for another year
Slide 7: Managed Services grew by 28% in the fourth quarter, in local currency
Managed Services grew by 28% in the fourth quarter, in local currency Revenue NOK 186.0m (+30.1%) +28.5% higher revenue when adj. for currency effects 186.0 183.8 Strong growth from new customer and up -sale/additional 160.6 volume from existing customers: +30.1% (as reported) 146.5 151.7 New contra
Slide 8: Professional Services continue being strong contributor to Zalaris overall success
Professional Services continue being strong contributor to Zalaris overall success and Managed Services growth Revenue NOK 61.9m (+5.5%) Revenue in Professional Services grew by 2.2% 66.0 when adjusted for positive currency effects 64.3 62.9 61.9 61.9 61.3 60.0 Significant PS capacity still being ut
Slide 9: Majority of Professional Services revenue is recurring
Majority of Professional Services revenue is recurring and supports a continuous presence with customers Distribution of Projects vs long term AMS based revenue ~47 % of Professional Services revenue is recurring, or recurring like, and based on long Projects 49% 50% 46% 45% 49% 52% 53% term agreeme
Slide 10: EBIT improvement program to increase annual EBIT by NOK 40-50m by end-23
EBIT improvement program to increase annual EBIT by NOK 40 - 50m by end-23 Improve customer margins in Northern Europe through full implementation of Zalaris 4.0 operating model and near-/offshoring by end of 2023 resulting in NOK 8 - 10m annualized cost savings Implement Zalaris 4.0 operating model
Slide 11: Targeting 15-20% EBIT margin per country - significant margin potential in Germany
Targeting 15-20% EBIT margin per country - significant margin potential in Germany Germany is the largest market, but lowest margin… …with several detailed measures initiated Revenue per geography FY 2022 (NOKm) 2% EBIT margin (FY 2022) in Germany vs. UK&I and Norway at 306 23% and 21%, respectively
Slide 12: Company in brief
Company in brief Simplify work life. Achieve more.
Slide 13: Payroll & HR solutions that enable digital organizations
Payroll & HR solutions that enable digital organizations One global IT platform with local presence Geographical footprint Zalaris is a leading European provider of payroll and human capital management solutions delivered through software as a service, outsourcing, or consulting delivery models Supp
Slide 14: Zalaris' Product offering covering the full employee life cycle
Zalaris’ Product offering covering the full employee life cycle HR system Benefits Country specific Employee self Organizational Employee Co2 Document management locations services structures footprint archive Payroll Cloud Global Payroll Payroll payroll payroll hr-automation HR-transformation Workf
Slide 15: Services delivered by two integrated business units with majority recurring revenues
Services delivered by two integrated business units with the majority of revenues being recurring of nature Managed services (MS) Professional services (PS) Zalaris’ cloud solution and comprehensive payroll and HR outsourcing services Consulting services including delivery of traditional consulting
Slide 16: Diversified customer base across a wide range of industries
Diversified customer base across a wide range of industries Customer traits Bank, Insurance & Financial services Health & Life Science Infrastructure & Transportation Managed services >1,000 employees >2 countries IT, Technology & Telecom Offshore & Energy Product & Industrials Software agnostic Pro
Slide 17: Financial Review
Financial Review Simplify work life. Achieve more.
Slide 18: Revenue increased by 22% for the quarter in local currency
Revenue increased by 22% for the quarter in local currency Revenue NOK 250.6m (+24.2%) +24% +22% Revenue growth +21.8% YoY in constant currency 250.6 Revenue growth (as reported) for the quarter YoY: +24.2% 245.6 • New contracts/up-sale/volume changes: +15.0% 223.6 • Increased change orders in MS: +
Slide 19: Strong revenue visibility through 2023 and beyond
Strong revenue visibility through 2023 and beyond - signed BPO contracts will result in significant revenue increase Revenue development based on signed MS contracts (NOKm) Total annual revenue expected to increase by ~NOK 112m 248 (+13%) by Q1 2024 vs. FY 2022, based on signed contracts 69 (assumin
Slide 20: Increase in adj. EBIT (ex. APAC) for the quarter, year-on-year
Increase in adj. EBIT (ex. APAC) for the quarter, year-on-year Adj. EBIT* excluding APAC (NOKm) and margin (%) Adj. EBIT (ex APAC) NOK 15.9 (NOK 10.2m) +56% 7.1% 5.1% 6.4% 5.2% Adj. EBIT (ex APAC) margin 6.4% (+1.3pp) 4.9% 14.8 15.9 10.2 10.2 11.4 EBIT improvement program to increase annual EBIT by
Slide 21: New contracts and EBIT improvement program to increase annual EBIT
New contracts and EBIT improvement program to increase annual EBIT by NOK 40-50m by end of 2023 EBIT, NOKm Contribution margin from already contracted and secured revenue ~90-100 100 3 1-5 5 9 8-10 30 7 6-8 11 19 46 FY 2022 adj. EBIT1 Add contribution (margin) Improve customer margins Implement Zala
Slide 22: Condensed Profit and Loss
Condensed Profit and Loss 2022 2021 2022 2021 (NOK 1 000) Oct-Dec Oct-Dec Jan-Dec Jan-Dec Revenue 250 551 201 695 892 743 775 265 License costs 19 077 18 518 80 198 67 481 Personnel expenses 140 032 102 196 483 824 405 949 Other operating expenses 59 096 57 487 222 537 199 886 Amortization implement
Slide 23: Continued strong cash position
Continued strong cash position Development in cash balance (NOKm) Cash balance at 31 Dec of NOK 100m -9,8 19,8 Positive cash flow from operating -5,1 -0,8 99,7 activities of NOK 20m from changes in 95,6 working capital Investments relates mainly to internal system development including projects part
Slide 24: Markets and Outlook
Markets and Outlook Simplify work life. Achieve more.
Slide 25: 57% of European senior stakeholders expect the use of HR outsourcing to grow
57% of European senior stakeholders from global enterprises expect the use of HR outsourcing to grow Decrease Neutral Increase IT application development and maintnance 14% 22% 64% IT cloud and data centre services 14% 22% 64% IT infrastructure services 21% 22% 57% Analytics 7% 29% 64% Industry-spec
Slide 26: Zalaris is well positioned in the most attractive and fastest growing market segment
Zalaris is well positioned in the most attractive and fastest growing market segment Expected growth of +10% in Zalaris’ core market with multi-country focus Comments 2023 Market size CAGR (’18-’23) Multi-country scope Zalaris focus on delivering HR outsourcing 18.8 bn 0.9bn 2.7bn 2.3bn services to
Slide 27: Well protected to changes in global macro picture
Well protected to changes in global macro picture Higher inflation Most long-term contracts have a provision for annual indexation based on salary and CPI increases Experiencing some pressure on salary levels in a competitive market for resources Fear of recession Zalaris performed well during the f
Slide 28: Leaving 2022 with continuing growth and aim to deliver on margin expectations
Leaving 2022 with continuing growth and an aim to deliver on margin expectations through EBIT improvement program Communicated growth target of 10%+ and becoming a NOK 1 billion company in 2023 Maintain our target EBIT of 10%, as revenue from projects under implementation are recognized and EBIT imp
Slide 29: Q&A
Q&A Simplify work life. Achieve more.
Slide 30: If your dreams don't scare you, they are not big enough
“If your dreams don’t scare you, they are not big enough” That was the way in which Germany’s 2014 IRONMAN and two-time IRONMAN 70.3 World Champion, Sebastian Kienle, announced the news last week that one of the aims for his final season in the sport is to win the 2023 Zalaris Norseman Xtreme Triath
Slide 31: Thank you!
We simplify HR and payroll administration, and empower you with useful information so that you can invest more in people. Thank you! Zalaris ASA | +47 4000 3300 | www.zalaris.com Simplify work life. Achieve more.