Zalaris Asa · OSL:ZAL
Zalaris Asa — Q4 2023 Earnings Presentation
27 slides from Zalaris Asa's earnings presentation, Feb 29, 2024
Slide 1: Presentation of financial results Q4 2023
29 February 2024 Presentation of financial results Q4 2023
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 • Outlook • Q&A Hans-Petter Mellerud Gunnar Manum CEO and Founder CFO © zalaris 2024 Page 3
Slide 4: Highlights
Highlights Simplify work life. Achieve more.
Slide 5: Q4 2023 Highlights – delivering on growth and EBIT target
Q4 2023 Highlights – delivering on growth and EBIT target Strong growth: Revenue increased 24.7% YoY to NOK 312 million with Net Revenue Retention in MS of 104% EBIT margin >10%: all time high adj. EBIT of NOK 33.4 million (10.7%), up from NOK 15.3 (6.1%) last year EBIT improvement program delivered
Slide 6: Market success continues with new signings in Q4
Market success continues with new signings in Q4 New signings and upsell in MS with Annual Contract Value of ~NOK 22m during the quarter Significant pipeline of Multi-Country PeopleHub new name and upsell opportunities Notable Wins Global Retailer Heinemann State of NRW German Public 5-year Master S
Slide 7: Managed Services grew 23% YoY and 73% of total revenue
Managed Services grew 23% YoY to NOK 229 million and 73% of total revenue. Revenue NOK 228.9m (+23.1%) Revenue in Managed Services grew by +23% 23.1% YoY (+14.2% growth YoY when adj. for 228.9 positive currency effects) 211.7 51% of growth came from customers that 204.0 200.0 were customers in Q4 la
Slide 8: Professional Services grew 22% and continued being strong contributor
Professional Services grew 22% and continued being strong contributor to Zalaris’ overall success and Managed Services growth Revenue NOK 75.3m (+21.6%) Revenue in Professional Services grew by 21.6% +22% YoY (+7.2% when adjusted for positive currency 75.3 effects) 73.1 72.3 70.5 66.3 In local curre
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 46% 43% 41% 42% Projects 53% ~58 % of Professional Services revenue is recurring, or recurring like, and based on 54% 57% 59% 58% AMS 47% l
Slide 10: X-shoring continue to develop in the right direction
X-shoring continue to develop in the right direction reducing onshore with four percentage points over the last months Use of near-/offshore resources as % of total headcount improved with 4% over the last twelve months Trend expected to continue towards Zalaris 4.0 target of 50% © zalaris 2024 Page
Slide 11: Company in brief
Company in brief Simplify work life. Achieve more.
Slide 12: Payroll & HR solutions that enable digital organizations
Payroll & HR solutions that enable digital organizations © zalaris 2024 Page 12
Slide 13: 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 14: Services delivered by two integrated business units
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 15: 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 16: Financial Review
Financial Review Simplify work life. Achieve more.
Slide 17: Revenue increased by 14% for the quarter YoY in local currency
Revenue increased by 14% for the quarter YoY in local currency Revenue NOK 312.4m (+24.7%) +25% +14% Revenue growth (as reported) for the quarter YoY: +24.7% 312.4 Revenue growth +14.1% YoY in constant currency 280.5 277.5 285.8 MS +24.5% to NOK 229m 260.8 • 51% of growth came from customers that we
Slide 18: Strong revenue visibility through 2024
Strong revenue visibility through 2024 - new BPO customers to go live will result in significant revenue increase Revenue development based on signed MS contracts (NOKm) 312 Total annual revenue expected to increase by ~NOK 170m (+15%) vs. FY 2023, based on already signed contracts 108 96 (assuming
Slide 19: Significant increase in adj. EBIT for the quarter, year-on-year
Significant increase in adj. EBIT for the quarter, year-on-year Adj. EBIT* (NOKm) and margin (%) Adj. EBIT NOK 33.4 (NOK 15.3m) +118% 10.7% Adj. EBIT margin 10.8% (+4.6pp) 8.5% EBIT-improvement program to increase annual EBIT 7.1% 7.2% has delivered +NOK 55m by end-23 (vs. Q3’22 as 6.1% 33.4 base li
Slide 20: Condensed Profit and Loss
Condensed Profit and Loss 2023 2022 (NOK 1 000) Oct-Dec Oct-Dec Revenue 312 421 250 552 License costs 26 179 19 078 % of revenue 8,4 % 7,6 % Personnel expenses 152 766 128 836 % of revenue 48,9 % 51,4 % Other operating expenses 81 131 70 291 % of revenue 26,0 % 28,1 % Amortisation implementation cos
Slide 21: Strong cash position and positive cash flow from operations
Strong cash position and positive cash flow from operations of NOK 33.7 million, up from NOK 12.4 million last year Development in cash balance (NOKm) -6.3 Positive cash flow from -9.9 -2.7 operating activities before 55.3 -10.0 1) 2.3 1) reclassification of NOK 33.7m -9.8 -3.6 136.0 Cash balance at
Slide 22: Outlook
Outlook Simplify work life. Achieve more.
Slide 23: Current growth trajectory supports ambition of NOK 1.5 billion company in 2026
Current growth trajectory supports our ambition of being a NOK 1.5 billion company in 2026 Development in revenue >10% annual organic revenue growth driven by: NOKm ~11% CAGR 2023E–2026E Growing HR and payroll market New large multi-country/global long-term contracts ~14% CAGR 2021–2023E in constant
Slide 24: Reaching target 2026 revenue shows operating cash flow potential
Reaching target 2026 revenue combined with prudent capital allocation show operating cash flow potential in the range of 190-250 million per annum Targeted long-term operating cash flow conversion* of 70% Achieved mainly through: Working capital improvements Transformation projects for new customers
Slide 25: In summary: 2023 delivered above communicated targets
In summary: 2023 delivered above communicated targets. Well positioned to continue positive development over the medium and long term. • Solid baseline from delivering 2023 above target with Q4 Growth of 24.7% to annualized revenue of NOK 1.25 billion with 10.7% EBIT • Growth to continue as backlog
Slide 26: Q&A
Q&A Simplify work life. Achieve more.
Slide 27: 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.