Talenom Oyj · OMXHEX:TNOM
Talenom Oyj — Q3 2024 Earnings Presentation
38 slides from Talenom Oyj's earnings presentation, Oct 31, 2024
Slide 1: Business Review Q3 2024 and updated strategy
Business Review Q3 2024 and updated strategy CEO Otto-Pekka Huhtala, CFO Matti Eilonen and Christian Dieroff, Country Manager Sweden Talenom Plc 31 October 2024
Slide 2: Contents
Contents • Updated strategy • Software project in Sweden • Summary of the review period • Financial development • Outlook and guidance
Slide 3: Updated strategy
TALENOM Updated strategy
Slide 4: Growth. Target state
Target state Growth. We want to focus on our core expertise and promote scalable growth.
Slide 5: Key market trends that accelerate growth
Key market trends that accelerate growth • 02. 01. Legislation and market 02. Customer behavior is 03. Digitalisation is happening trends are driving changing towards digital now: choices between digitalization (PSD2, e- platforms. platforms are being made invoicing, e-receipts, EU and the barrier t
Slide 6: The European accounting market and its evolution
The European accounting market and its evolution • Market size is around EUR 100 billion, of which Finland represents ~1%, Sweden ~2%, Spain ~10% and Italy ~10%. • The digitalization is accelerated by many structural changes: • Labour shortages together with increasing regulation forces us to seek m
Slide 7: Updating the strategy
Updating the strategy A. The core remains unchanged: B1. First change: B2. Second change: Ease, automation and care will We separate the software We focus on our core expertise by continue to be the foundation business into its own company transferring all non-accounting of our business. and begin o
Slide 8: The core remains unchanged: Ease, automation and care
A. The core remains unchanged: • Our foundation is to consider the entire value chain. We understand the needs of both entrepreneurs and accountants. Ease, automation and care will • We focus on our core expertise: continue to be the foundation • Ease: we make life easier for entrepreneurs with soft
Slide 9: The core remains unchanged: continued
A. The core remains unchanged: • ONE Talenom is a management concept for the accounting business that includes, e.g., management, process development, digitalization, continued… automation and maintenance services. • The concept describes best practices that have been measured and proven to work in
Slide 10: Separating the software business will accelerate scalable growth
B1. Separating the software • A unique market approach • The strength of Talenom's software is based on business will accelerate understanding the entire value chain from both the end user and the provider's perspective, with over two decades of scalable growth. experience. • The software has been d
Slide 11: Non-accounting services offered through a partner ecosystem
B2. Non-accounting services and • We only develop core services and software. We do not compete with our partners. products are offered to clients • We want to be the most recommended partner for financial through a partner ecosystem. management, and services such as banking, collections and financi
Slide 12: Talenom's software unit
Talenom's software unit • To be separated into its own company. • Net sales in estimated to be around EUR 15-20 million in Finland. • The updated strategy will result in a lower cost base: • The system architecture renewal has progressed, and it can be utilized by external accountants. In addition,
Slide 13: Our values
Updated strategy is focused Ease Most preferred financial on the core expertise management partner Automation “We help entrepreneurs succeed” Our values Courage Care Will Care
Slide 14: Updated strategy in a nutshell
Updated strategy in a nutshell • Talenom will focus on strengthening its core expertise and grow its accounting services and software business: • continuing to develop excellent accounting services as before • launching software sales to strengthen growth opportunities • seeking growth through a par
Slide 15: The future
The future • We focus on our current markets. • With the updated strategy, we will remove the previous medium-term targets for 2023-2025. • Our long-term target is annual net sales growth of more than 20% in the software business and more than 10% in the service business. We will provide guidance fo
Slide 16: Software project in Sweden
TALENOM Software project in Sweden
Slide 17: Proven strategy and strong historical evidence
Proven strategy and strong historical evidence 140 25% 120 20% 100 15% 80 10% 60 5% 40 0% 20 -5% 0 -10% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 * Net sales, EUR million EBIT % (comparable) 2000 2016 2021 − − − 2015 2020 2025 Replicating a proven concept on international mark
Slide 18: Talenom Online and Talenom Accounting
Talenom Online Talenom Accounting Developed for customers, together with Developed for accountants by accountants customers
Slide 19: Benefits of the new systems for the customer
Benefits of the new systems Control - everything in one place for the customer Designed for the customer Simple, easy to use Digitalized and automated Saves time Easy access to accountants and support Real-time accounting enabled by automation New market-leading features • One-click payments • Autom
Slide 20: Benefits of the new systems for the accountant
Benefits of the new systems Delivery of accounting material for the accountant • Simple • Electronic • Real-time • Daily processing of payments Rule- and AI based automation for accounting processes Automated checks and documentation for month-end closing Streamlined, easy-to-manage workflow More ti
Slide 21: Current status and next steps in Sweden
Current status and next steps in Sweden • The rollout of our own platform is progressing well, with 40% of the customer base already migrated. Our target for this year is to reach 50%. • Talenom Online is now included as part of our new customer acquisition strategy. • Customers are generally please
Slide 22: Summary of the review period
TALENOM Summary of the review period
Slide 23: Strategy was updated, recession hampered growth and profitability improved
Strategy was updated, recession hampered growth and profitability improved Growth slowed down due to Profitability was improved by the Strategy was updated in October lower acquisition activity level efficiency measures in Finland and and economic downturn higher business volumes in Spain Net sales
Slide 24: Internationalization progressed; focus on current target countries
Internationalization has progressed as planned. We focus our business on our current target countries: Finland, Sweden, Spain and Italy. Net sales distribution 1-9/2022 Net sales distribution 1-9/2023 Net sales distribution 1-9/2024 1% 6% 12% 18% 21% 20% 73% 68% 81% Finland Sweden Other countries Fi
Slide 25: Strategy progress 1–9/2024
Strategy progress 1–9/2024 01. Improving operational efficiency • Profitability was significantly improved in Finland through efficiency measures started in 2023 and increased business volumes in Spain. • Significant integration projects that engaged personnel have been completed in Sweden. After th
Slide 26: Finances
TALENOM Finances
Slide 27: Growth of Group net sales slowed down
Growth of Group net sales slowed down due to lower acquisition activity level and economic downturn Net sales January-September (EUR million) Net sales July-September (EUR million) 5.4% 40 2.7% 120 100 30 97.0 80 92.0 29.1 28.3 75.8 23.6 60 20 61.1 19.4 40 48.7 14.8 10 20 0 0 1–9/2020 1–9/2021 1–9/2
Slide 28: Group profitability improved due to efficiency measures in Finland
Group profitability improved due to efficiency measures in Finland EBITDA January-September EBITDA July-September 40 34.5% 40% 10 34.5% 30.8% 40% 33.6% 29.6% 30.8% 27.0% 8 27.0% 9.0 30 30% 30% 7.3 7.6 28.7 6 6.7 20 25.4 24.9 20% 20% 21.1 4 10 10% 10% 2 0 0% 0 0% 1–9/2021 1–9/2022 1–9/2023 1–9/2024 7
Slide 29: Net sales development in Finland
Net sales development in Finland Net sales development January-September Net sales development July-September (EUR million) (EUR million) 80 -1.4% -0.5% 25 60 67.0 66.1 20 61.2 20.3 20.2 18.8 53.1 15 16.8 40 10 20 5 0 0 1–9/2021 1–9/2022 1–9/2023 1–9/2024 7–9/2021 7–9/2022 7–9/2023 7–9/2024 • The do
Slide 30: EBITDA development in Finland
EBITDA development in Finland EBITDA development January-September EBITDA development July-September 30 50% 10 50% 40.1% 41.4% 38.0% 38.9% 36.0% 38.1% 38.1% 26.5 40% 8 36.9% 40% 24.1 8.3 23.8 7.7 20 20.2 30% 6 7.0 30% 6.4 20% 4 20% 10 10% 2 10% 0 0% 0 0% 1–9/2021 1–9/2022 1–9/2023 1–9/2024 7–9/2021
Slide 31: Net sales development in Sweden
Net sales development in Sweden Net sales development January-September Net sales development July-September (EUR million) (EUR million) -9.8% -1.8% 25 6 5.5 20 5.0 19.5 19.2 4 4.3 15 13.6 10 2 2.5 7.8 5 0 0 1–9/2021 1–9/2022 1–9/2023 1–9/2024 7–9/2021 7–9/2022 7–9/2023 7–9/2024 • The decline in net
Slide 32: EBITDA development in Sweden
EBITDA development in Sweden EBITDA development January-September EBITDA development July-September 2 15% 0,4 15% 12.6% 11.3% 12.3% 7.2% 0.3 0.3 10% 1,5 1.7 0,2 10% 6.6% 1.4 5% 1 0 -0.03 0.9 5% 7–9/2021 7–9/2022 7–9/2023 7–9/2024 0% 0,5 -0,2 -0.5% -0.4% -5% 0% 0 -0.1 -0,4 -0.5-10.0% -10% 1–9/2021 1–
Slide 33: With automation Sweden's EBITDA is expected to rise to the Finnish level
With automation Sweden's EBITDA is expected to rise to the Finnish level 50% 40% • Our strong software expertise has enabled a highly efficient and automated accounting process in Finland. 30% • The difference between the EBITDA in Finland and Sweden is explained especially by the difference in the
Slide 34: Net sales development in other countries
Net sales development in other countries Net sales development January-September Net sales development July-September (EUR million) (EUR million) 15 114.2% 56.3% 5 4 11.8 10 3.9 3 2 2.5 5 5.5 1.0 1 0.2 0.4 0.2 0 0 1–9/2021 1–9/2022 1–9/2023 1–9/2024 7–9/2021 7–9/2022 7–9/2023 7–9/2024 • Net sales gr
Slide 35: EBITDA development in other countries
EBITDA development in other countries EBITDA development January-September EBITDA development July-September 1 20% 0,3 20% 9.1% 0,5 10% 0,2 10% 0.5 0.2 4.5% 5.5% -0.03 -0.1 -2.6% 0 0% 0,1 0% 1–9/2021 1–9/2022 1–9/2023 1–9/2024 -7.3% -0.6 -0.04 -0.07 -0,5 -10% 0 -0.03 -10% -11.5% 7–9/2021 7–9/2022 7–
Slide 36: Outlook and guidance
TALENOM Outlook and guidance
Slide 37: Outlook and guidance for 2024
Outlook and guidance for 2024 Guidance (updated 9 October 2024) • Net sales EUR 126–129 million • EBITDA EUR 34–37 million • Operating profit EUR 11–14 million Background for the updated guidance • The prolonged economic downturn has especially affected Talenom's net sales in Finland more than expec
Slide 38: Thank you
Otto-Pekka Huhtala CEO +358 40 703 8554 otto-pekka.huhtala@talenom.fi Matti Eilonen CFO Thank you +358 40 753 4335 matti.eilonen@talenom.fi