Slide 1: Presentation of financial results Q3 2023
26 October 2023 Presentation of financial results Q3 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 2023 Page 3
Slide 4: Highlights
Highlights Simplify work life. Achieve more.
Slide 5: Q3 2023 Highlights – delivering all time high EBIT
Q3 2023 Highlights – delivering all time high EBIT Strong growth: Revenue increased 24% YoY to NOK 277 million with Net Revenue Retention of 106% EBIT improvement program on track: all time high adj. EBIT of NOK 25.6 million (9.4%), excluding investments in building APAC, up from NOK 11.4 (5.2%) las
Slide 6: Market success continues with new signings in Q3
Market success continues with new signings in Q3 New signings of ~NOK 20m during the quarter Pipeline of Multi-Country PeopleHub new name and upsell opportunities grew 27% YoY to NOK 810 million ACV Notable Wins German pharma Nordic customer APAC German Public 5-year agreement with 5-year PeopleHub
Slide 7: Managed Services grew 25% YoY to NOK 200 million and 72% of total revenue
Managed Services grew 25% YoY to NOK 200 million and 72% of total revenue. Revenue NOK 200.0m (+24.5%) Revenue in Managed Services grew by +25% 24.5% YoY (+15.3% growth YoY when adj. for 204.0 200.0 positive currency effects) 186.0 186.7 185.2 58% of growth came from customers that were customers in
Slide 8: Professional Services grew 19% and continued being strong contributor
Professional Services grew 19% and continued being strong contributor to Zalaris’ overall success and Managed Services growth Revenue NOK 73.1m (+19.1%) Revenue in Professional Services grew by 19% +19% YoY (+4.1% when adjusted for positive currency 73.1 effects) 72.3 70.5 In local currency, revenue
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% Projects 52% 53% ~59 % of Professional Services revenue is recurring, or recurring like, and based on 54% 57% 59% AMS 48% 47% l
Slide 10: Right shoring continue to develop in the right direction
Right shoring continue to develop in the right direction Use of near-/offshore resources as % of total headcount improved with 1% since Q2 Trend expected to continue towards Zalaris 4.0 target of 50%. © zalaris 2023 Page 10
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 One global IT platform with local presence Geographical footprint Zalaris is a leading European provider of global payroll and human capital management solutions delivered through software as a service, outsourcing, or consulting delivery mode
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 13% for the quarter YoY in local currency
Revenue increased by 13% for the quarter YoY in local currency Revenue NOK 277.5m (+24.1%) +24% +13% Revenue growth (as reported) for the quarter YoY: +24.1% 280.5 277.5 Revenue growth +13.4% YoY in constant currency 260.8 250.6 253.5 MS +24.5% to NOK 200m • 58% of growth came from customers that we
Slide 18: Strong revenue visibility through 2024
Strong revenue visibility through 2024 - newly signed BPO contracts will result in significant revenue increase Revenue development based on signed MS contracts (NOKm) 292 Total annual revenue expected to increase by ~NOK 112m (+10%) vs. LTM Q3’23, based on already signed contracts 81 99 (assuming n
Slide 19: Significant increase in adj. EBIT (ex. APAC) for the quarter
Significant increase in adj. EBIT (ex. APAC) for the quarter, year-on-year Adj. EBIT* excluding APAC (NOKm) and margin (%) 9.4% 8.2% 8.1% Adj. EBIT (ex APAC) NOK 25.6 (NOK 11.4m) +125% 6.4% 5.2% Adj. EBIT (ex APAC) margin 9.4% (+4.2pp) 25.6 21.0 22.3 15.9 11.4 EBIT improvement program to increase an
Slide 20: Condensed Profit and Loss
Condensed Profit and Loss 2023 2022 2023 2022 2022 (NOK 1 000) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec Revenue 277 459 223 564 818 788 642 191 892 743 License costs 23 482 20 704 73 348 61 120 80 198 % of revenue 8,5 % 9,3 % 9,0 % 9,5 % 9,0 % Personnel expenses 138 853 120 179 431 558 354 988 483 82
Slide 21: Strong cash position
Strong cash position Development in cash balance (NOKm) -4.4 Positive cash flow from -9.6 operating activities before 43.8 -2.8 -2.8 -4.2 interest of NOK 24.8m -10.8 -2.1 120.7 Capex relates mainly to internal 113.6 system development including projects partly financed through SkatteFunn Cash balanc
Slide 22: Outlook
Outlook Simplify work life. Achieve more.
Slide 23: Ambition to grow to NOK 1.5 billion by 2026
Solid revenue growth last 2 years and ambition to grow to NOK 1.5 billion by 2026 (+10% p.a.) 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 const
Slide 24: Increased focus on operating cash flow conversion and capital allocation
Increased focus on growing operating cash flow conversion and prudent capital allocation Targeted long-term operating cash flow conversion* of 70% Achieved mainly through: Working capital improvements Transformation projects for new customers to be minimum cash neutral Target Target EBIT 2026 Target
Slide 25: Twenty-three years of continued growth combined with scalable solutions
Twenty-three years of continued growth combined with scalable solutions deliver value short - and medium-term value 1) Zalaris PeopleHub is increasingly in favour by mid-market and large customers seeking to digitalize their Payroll & HR processes resulting in 24% reported growth in Q3. We are now a
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.