Zalaris Asa · OSL:ZAL
Zalaris Asa — Q1 2023 Earnings Presentation
30 slides from Zalaris Asa's earnings presentation, Apr 27, 2023
Slide 1: Presentation of financial results Q1 2023
27 April 2023 Presentation of financial results Q1 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 • 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: Q1 2023 key takeaway
Q1 2023 key takeaway Strong growth: Revenue growing 25% (as reported) and 17% percent in constant currency year-on-year to NOK 261 million EBIT improvement program on track: EBIT of NOK 21 mill (8,2%) excluding investments in building APAC up from NOK 14,8 (7,1%) last year Significant new-sales: Lan
Slide 6: All time high value of new sales in Q1 and strong pipeline of several contracts
All time high value of new sales in Q1 and strong pipeline of several contracts in final contracting stage Sold new agreements with annual contract value (ACV) of approximately NOK 72 million representing 72% of the annual sales budget for 2023. Landmark 7-year agreement for payroll and HR services
Slide 7: Signed landmark 7-year contract for payroll and HR services for ~46 countries
Signed landmark 7-year contract for payroll and HR services for ~46 countries world-wide with ARR of ~EUR 5m 7-year contract with Innomotics, a spin-off, from Siemens, Germany Zalaris will deliver a HR solution based on SAP SuccessFactors seamlessly integrated with Zalaris PeopleHub outsourcing serv
Slide 8: Managed Services grew by 20% in the first quarter, in local currency
Managed Services grew by 20% in the first quarter, in local currency Revenue NOK 186.7m (+27.4%) +20.4% higher revenue YoY when adj. for positive currency effects 186.0 186.7 176.4 Strong growth from new customer and up -sale/additional 160.6 volume from existing customers: +27.4% (as reported) 146.
Slide 9: 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 Revenue in Professional Services grew by 3.7% when NOK 70.5m (+13.9%) adjusted for positive currency effects 70.5 In local currency, revenue in UK grew by 87%, from consulting work
Slide 10: 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 ~54 % of Professional Services revenue is Projects 45% 46% recurring, or recurring like, and based on long 49% 52% 53% term agreements and
Slide 11: 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 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 17% for the quarter YoY in local currency
Revenue increased by 17% for the quarter YoY in local currency Revenue NOK 260.8m (+25.1%) +25% +17% Revenue growth (as reported) for the quarter YoY: +25.1% 260.8 Revenue growth +17.1% YoY in constant currency 250.6 243.9 MS +27.4% to NOK 187m 223.6 • New contracts/up-sale/volume changes in MS: +26
Slide 19: Strong revenue visibility through 2023 and 2024
Strong revenue visibility through 2023 and 2024 - newly signed BPO contracts will result in significant revenue increase Revenue development based on signed MS contracts (NOKm) 248 Total annual revenue expected to increase by ~NOK 201m 77 (+23%) vs. FY 2022, based on signed contracts (assuming no 10
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 (%) 8.2% Adj. EBIT (ex APAC) NOK 21.0 (NOK 14.8m) +42% 7.1% 6.4% 4.9% 5.2% Adj. EBIT (ex APAC) margin 8.2% (+1.1pp) 21.0 14.8 15.9 10.2 11.4 EBIT improvement program to increase annual EBIT by
Slide 21: Condensed Profit and Loss
Condensed Profit and Loss 2023 2022 2022 (NOK 1 000) Jan-Mar Jan-Mar Jan-Dec Revenue 260 799 208 440 892 743 License costs 24 008 19 770 80 198 Personnel expenses 139 394 110 757 483 824 Other operating expenses 64 900 49 222 222 537 Amortisation implementation costs customer projects 5 834 8 021 31
Slide 22: Continued strong cash position
Continued strong cash position Development in cash balance (NOKm) Cash balance at 31 March NOK 124m 124.1 5.3 Negative cash flow from operating activities of NOK 4.1 from changes in working capital 40.0 93.5 -4.1 -4.8 -5.8 Investments relates mainly to internal system development including projects
Slide 23: Markets and Outlook
Markets and Outlook Simplify work life. Achieve more.
Slide 24: Zalaris APAC operations – nucleus to drive regional growth in place
Zalaris APAC operations – nucleus to drive regional growth in place after 12 months from green field inception KEY NUMBERS & PROGRESS ASIA PACIFIC 18 Zalaris employees – certified across all SuccessFactors modules 4 countries with ability to provide service across the entire region 20+ years of comm
Slide 25: APAC placed for Strong Growth targeting neutral EBIT from Q2
APAC placed for Strong Growth targeting neutral EBIT from Q2 REVENUE BY QUARTER (EUR) ADDRESSABLE MARKET SALES BOOKINGS (EUR) 900 800 2,809 Number of Companies > 1,000 EE’s 2.52M 700 600 8.9B Total Addressable Market > 1,000 EEs Thousands 500 1.1M 400 300 10 Number of APAC HQ Fortune 500 Comp. 200 1
Slide 26: Zalaris Sustainability report published in Q1
Zalaris Sustainability report published in Q1 – Building sustainability thinking into products and services Three ESG related products were launched. • Automated Business travel CO2 calculation integrated into PeopleHub Travel • My Carbon Footprint maps employee commute. • Dashboard for easier repor
Slide 27: Starting the year with a bang and with a continued potent outlook
Starting the year with a bang and with a continued potent outlook – growth outside the Nordic is increasingly driving the business Accelerating past our communicated 10%+ growth target with large new strategic signings and on track becoming a NOK 1 billion company in 2023 Maintain our target EBIT of
Slide 28: Q&A
Q&A Simplify work life. Achieve more.
Slide 29: "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 30: 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.