Slide 1: Presentation of financial results Q2 2023
24 August 2023 Presentation of financial results Q2 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: Q2 2023 Highlights - Zalaris is now a EUR 100 million run rate company
Q2 2023 Highlights - delivering on milestone - Zalaris is now a EUR 100 million run rate company! Strong growth: Revenue increased 33% YoY to NOK 280 million with Net Revenue Retention of 109% EBIT improvement program on track: adj. EBIT of NOK 22 mill (8.1%) excluding investments in building APAC u
Slide 6: Market success continues with new signings in Q2
Market success continues with new signings in Q2 New signings of ~NOK 6m during the quarter delivering H1 Annual Contract Value (ACV) sold to approximately 90% of 2023 sales budget needed to support continued 15% annual growth in Managed Services. Pipeline of Multi-Country Peoplehub new name and ups
Slide 7: Managed Services grew 34% YoY to NOK 204 million
Managed Services grew 34% YoY to NOK 204 million and 73% of total revenue. Revenue NOK 204.0m (+34.5%) Revenue in Managed Services grew by +34% 34,5% YoY (+22.5% growth YoY when adj. for 204.0 positive currency effects) 186.0 186.7 185.8 56% of growth came from customers that were customers in Q2 la
Slide 8: Professional Services grew 25% and continued being strong contributor
Professional Services grew 25% and continued being strong contributor to Zalaris’ overall success and Managed Services growth Revenue NOK 72.3m (+24.7%) Revenue in Professional Services grew by 25% +25% YoY (+7.3% when adjusted for positive currency 72.3 effects) 70.5 In local currency, revenue in U
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 Projects 49% 46% 43% 52% 53% ~57 % of Professional Services revenue is recurring, or recurring like, and based on AMS 54% 57% 51% 48% 47% l
Slide 10: People metrics are developing in the right direction
People metrics are developing in the right direction Total headcount vs % near-/offshore and % external consultants 39.2% 37.4% 35.5% % near-/offshore Use of near-/offshore resources has increased with 32.2% 32.7% 7 percentage points to 39,2% driving resource costs downward. 1,115 1,139 Headcount De
Slide 11: EBIT improvement program targeted to increase annual EBIT by NOK 40-50m
EBIT improvement program targeted to increase annual EBIT by NOK 40 - 50m by end-23 starting to show effects EBIT improvement initiative Status 1) Improve customer margins in Northern Europe through full implementation of Zalaris 4.0 Completed operating model and near-/offshoring by end of 2023 resu
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 global payroll and human capital management solutions delivered through software as a service, outsourcing, or consulting delivery mode
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
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 20% for the quarter YoY in local currency
Revenue increased by 20% for the quarter YoY in local currency Revenue NOK 280.5m (+33.5%) +33% +20% Revenue growth (as reported) for the quarter YoY: +33.5% 280.5 Revenue growth +19.9% YoY in constant currency 260.8 250.6 252.1 MS +34.5% to NOK 204m • 56% of growth came from customers that were 223
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 232m 80 (+26%) vs. FY 2022, based on signed contracts (assuming no 84
Slide 20: 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 (%) 8.2% 8.1% Adj. EBIT (ex APAC) NOK 22.3 (NOK 10.2m) +119% 6.4% 4.9% 5.2% Adj. EBIT (ex APAC) margin 8.1% (+3.2pp) 21.0 22.3 15.9 10.2 11.4 EBIT improvement program to increase an
Slide 21: Condensed Profit and Loss
Condensed Profit and Loss 2023 2022 2023 2022 2022 (NOK 1 000) Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Revenue 280 530 210 187 541 329 418 627 892 743 License costs 25 857 20 647 49 866 40 416 80 198 % of revenue 9,2 % 9,8 % 9,2 % 9,7 % 9,0 % Personnel expenses* 153 310 124 051 292 705 234 809 483 8
Slide 22: Strong cash position
Strong cash position Development in cash balance (NOKm) -6.3 -9.8 Positive cash flow from operating 40.3 -2.1 -3.4 activities before interest of NOK 12.8m -4.7 ~NOK 16m in annual bonus/sales 124.1 -20.6 commission paid had a negative impact on 113.6 net working capital in the quarter -3.9 Capex rela
Slide 23: Outlook
Outlook Simplify work life. Achieve more.
Slide 24: Continuing building Zalaris to a Global Player
Continuing building Zalaris to a Global Player Key milestone delivered in becoming a EUR 100 Million run rate company Next milestone of delivering 10% EBIT in Q4 within reach as EBIT improvements and increased scale gradually takes place Signings in H1 and strong pipeline support continuing existing
Slide 25: Q&A
Q&A Simplify work life. Achieve more.
Slide 26: Save the date: Capital Markets Day
Save the date: Capital Markets Day Tuesday, 19 Sep. 2023 (09:00 – 11:00 CET) Place: Hotel Continental, Oslo + webcast Agenda: Presentation of strategy, goals and operations by key members of Zalaris’ executive management team 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.