Slide 1: Presentation of financial results Q2 2022
25 August 2022 Presentation of financial results Q2 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 2022 Page 3
Slide 4: Highlights
Highlights Simplify work life. Achieve more.
Slide 5: Q2 2022 key takeaways
Q2 2022 key takeaways Accelerated growth: Revenue growth of 15 percent (constant currency) Successful new-sales: Strong inflow of new contracts in Q2, including a 7 year contract with StoraEnso Good outlook: Solid pipeline of new business for second half 2022 Investing in ramp-up and expansion: Stab
Slide 6: Continued development in new signings driving recurring revenue streams
Continued development in new signings driving recurring revenue streams Several new landmark deals and extensions signed securing continued growth in 2023 Pipeline of Multi-Country Peoplehub powered opportunities strong and potential of another year of record sales Peoplehub package powered by Succe
Slide 7: Managed Services grew by 22% in the second quarter, in local currency
Managed Services grew by 22% in the second quarter, in local currency Revenue NOK 151.7m (+20.6%) +22% higher revenue when adj. for currency effects 151.7 153.2 146.5 143.0 137.5 The inclusion of ba.se added +9.5%, while +12.5% relates to 133.3 132.5 new customers and volume increases 127.4 128.4 12
Slide 8: Professional Services had marginally lower revenue compared to last year, in local currency
Professional Services had marginally lower revenue compared to last year, in local currency Revenue NOK 58.0m (-2.7%) Revenue in Professional Services was approx. in line 66.0 with last year when adjusted for negative currency 65.1 64.3 effects 62.4 62.9 61.9 59.6 58.7 58.0 58.6 Significant PS capac
Slide 9: Majority of Professional Services revenue is recurring and supports a continuous presence with customers
Majority of Professional Services revenue is recurring and supports a continuous presence with customers Distribution of Projects vs long term AMS based revenue ~55 % of Professional Services revenue is recurring, or recurring like, and based on long Projects 49% 50% 46% 45% 49% term agreements and
Slide 10: First major contract signed in APAC – targeting positive EBIT in Q3
First major contract signed in APAC – targeting positive EBIT in Q3 Clear strategic rational for APAC expansion Support European-based customers as 64% of deals with European origin include APAC coverage* APAC one of fastest growing markets for Multi Country Payroll Vendor consolidation opened oppor
Slide 11: vyble® business reorganised and focused on SaaS – seeking partner to fund growth
vyble® business reorganised and focused on SaaS – seeking partner to fund growth Strategic rationale German market for HR and Payroll solutions for Medium market and below estimated at EUR 3’200 million pa Fragmented supplier market with no clear leader in payroll space vyble® with modern cloud nati
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 Our vision: Supporting multi-national companies manage HR and payroll across borders Zalaris today: The leading European headquartered Global provider of payroll and human capital management solutions
Slide 14: Zalaris offering is built around Peoplehub – covering the whole employee life cycle
Zalaris offering is built around Peoplehub – covering the whole employee life cycle Benefits Country Specific Employee Organizational Employee Professional Service (Advisory, Analytics, Technology, Implementation) Document Management Localizations Self Services Structures Co2 Footprint Archive Busin
Slide 15: Payroll and HR partner to mid- and large size organizations
Payroll and HR partner to mid- and large size organizations MANAGED SERVICES (MS) PROFESSIONAL SERVICES (PS) Comprehensive Outsourcing of HR, Payroll and Travel Expenses (BPaaS) Zalaris is responsible for SAP Cloud Services all end-to-end • SuccessFactors • Fieldglass transactional HR Managed payrol
Slide 16: Significant European player with Germany largest entity
Significant European player with Germany largest entity Revenue per country Q2 2022 (%) UK Other Poland 4,8% 2,2% 7,8% Germany Finland 34,5% 7,3% Denmark 8,5% 13,5% Sweden 21,5% Norway © zalaris 2022 Page 16
Slide 17: Diversified customer base across a wide range of industries
Diversified customer base across a wide range of industries BAN K, INSUR AN CE & HEALT H AND LIFE INFR AST RU CT U RE & FINAN CI AL SERVICES SCIENCES T RANS PO RT AT IO N IT , T ECHNO LO G Y & PRO DUCT S & O FFSHO RE & ENERG Y T ELECO M INDUST RI ALS PUBLIC SERVICES AN D RET AIL SERVICE INDUST RIES
Slide 18: Financial Review
Financial Review Simplify work life. Achieve more.
Slide 19: Revenue increased by 15% for the quarter in local currency
Revenue increased by 15% for the quarter in local currency Revenue NOK 211m (+13%) +13% +15% Revenue growth +15% YoY in constant currency 210.2 212.5 Revenue growth (as reported) for the quarter YoY: +13.4% 209.7 203.5 201.7 198.4 195.4 • From new entities (ba.se and vyble): +6.4% 192.8 189.7 185.4
Slide 20: New BPO contracts will result in significant revenue increase going forward
New BPO contracts will result in significant revenue increase going forward Revenue development over time based on signed MS contracts (NOKm) Total annual revenue expected to increase by NOK 87m 241 (+11%) by Q2 2023 vs. LTM Q2 2022, based on signed 60 contracts (assuming no material churn) 7 51 905
Slide 21: Revenue deferred as part of transformation projects for new BPO contracts continues to show a high activity level
Revenue deferred as part of transformation projects for new BPO contracts continues to show a high activity level Deferred revenue and employee hours capitalised, LTM (NOKm) Significant potential revenue generating capacity utilised on implementing new 70 BPO contracts, which will generate recurring
Slide 22: Adj. EBIT (ex. APAC) for Q2 impacted by onboarding of customers and recruitment and training
Adj. EBIT (ex. APAC) for Q2 impacted by onboarding of customers and recruitment and training of new resources to handle increased volumes Adj. EBIT* excluding APAC (NOKm) and margin (%) Adj. EBIT (ex APAC) NOK 10.2m (NOK 11.4m) -10.5% 7.2% 6.2% Adj. EBIT (ex APAC) margin 4.9% (6.2%) 7.1% 5.1% Adj. E
Slide 23: Condensed Profit and Loss
Condensed Profit and Loss 2022 2021 2022 2021 2021 (NOK 1 000) Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Revenue 210 187 185 415 418 627 378 193 775 265 License costs 20 647 16 188 40 416 31 763 67 481 Personnel expenses 118 864 98 961 223 614 205 023 405 949 Other operating expenses 49 819 48 497 105
Slide 24: Continued strong cash position
Continued strong cash position Development in cash balance (NOKm) 134,7 3,0 Cash balance at 30 June of NOK 117m -7,6 -6,5 Dividend payment of NOK 7.6m (NOK -4,3 0.35 per share) -3,0 116,8 0,5 Investments relates mainly to internal system development including projects partly financed through SkatteF
Slide 25: Markets and Outlook
Markets and Outlook Simplify work life. Achieve more.
Slide 26: 57% of European senior stakeholders from global enterprises expect the use of HR Outsourcing to grow
57% of European senior stakeholders from global enterprises expect the use of HR Outsourcing to grow © zalaris 2022 Page 26
Slide 27: Well positioned in most attractive market segment
Well positioned in most attractive market segment Above 10% 2018-2023 growth (CAGR) for the multi-country segment Multi country scope 13% 10% 9% CAGR 3% sweet spot Single country Global (>2 Multi-region Multi-country regions) (>1 region) (>1 country within a region) 2023 Market size ($bn) 18.8bn 0.9
Slide 28: 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 29: Leaving Q2 continuing growth with aim of delivering on margin expectations
Leaving Q2 continuing growth with aim of delivering on margin expectations Communicated growth of 10%+ within sight and annualized revenue of NOK 900+ million by Q1 2023 Maintain target EBIT of 10% as revenue from projects under implementation are recognized and cost reductions from Zalaris 4.0 in p
Slide 30: Q&A
Q&A Simplify work life. Achieve more.
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.