Zalaris Asa · OSL:ZAL
Zalaris Asa — Q3 2021 Earnings Presentation
24 slides from Zalaris Asa's earnings presentation, Oct 28, 2021
Slide 1: Presentation of interim financial results Q3 2021
28 October 2021 Presentation of interim financial results | Q3 2021 Simplify work life. Achieve more.
Slide 2: Agenda
Agenda • Highlights • Financial Review • Markets and Outlook • Q&A Hans-Petter Mellerud Gunnar Manum Founder and CEO CFO © zalaris 2021 Page 2
Slide 3: Third quarter 2021: Higher revenue and EBIT for the quarter
Third quarter 2021: Higher revenue and EBIT for the quarter Revenue of NOK 195.4 million for Q3 (+3%) Adjusted EBIT of NOK 14.1 million (+6%) Adjusted EBIT margin of 7.2% (+0.2pp) New BPO contracts awarded with expected ARR of NOK 9 million in Q3 and NOK 81 million year-to-date Completed the acquisi
Slide 4: Higher revenue and EBIT for the quarter
Higher revenue and EBIT for the quarter Revenue Adj. EBIT* Adj. EBIT margin #FTEs* NOK 195m (+3.0%) NOK 14.1m (+6.0%) 7.2% (+0.2pp) 773 (+8.4%) 803 195.4 773 190.7 189.7 7,2% 14.1 7,0% 713 13.3 4,6% 8.9 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q
Slide 5: Payroll & HR Solutions that Enable Fully Digital Organizations
Payroll & HR Solutions that Enable Fully Digital Organizations Zalaris – Local presence with one global IT platform Zalaris is a leading European provider of Payroll and Human Capital Management Solutions delivered through Software as a Service, Outsourcing, or Consulting delivery models Supporting
Slide 6: Significant European player with Germany largest market facing unit
Significant European player with Germany largest market facing unit Revenue per country Q3 2021 (%) UK Other Poland 4,9% 1,9% 7,1% Finland Germany 6,1% 35,3% Denmark 8,3% 11,9% Sweden 24,5% Norway © zalaris 2021 Page 6
Slide 7: Diversified customer base
Diversified customer base 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 EL ECO M INDUST RI ALS PUBLIC SERVICES AN D RET AIL SERVICE INDUST RIES O T HER INST IT UT IO NS © zalari
Slide 8: Managed Services with all time high new signings
Managed Services with all time high new signings currently in the implementation phase with limited revenue recognized Revenue* EBIT NOK 132.5m (+4.0%) NOK 17.2m (+NOK 2.4m) 16.4 Higher revenue mainly due to the inclusion of ba.se, partly 132.5 14.8 offset by currency movements. Revenue approximatel
Slide 9: Continued strong development in new signings and pipeline
Continued strong development in new signings and pipeline Several new BPO contracts and extensions signed during Q3 Platform based deals utilizing existing capacity with higher incremental margin Pipeline of BPO opportunities continue developing positively in all geographies as companies are reevalu
Slide 10: Professional services delivered revenue growth of 4% when adjusted for currency movements
Professional services delivered revenue growth of 4% when adjusted for currency movements Revenue EBIT NOK 62.9m (+0.8%) NOK 4.1m (-NOK 2.7m) 9.1 Revenue in Professional Services increased by 4.2% 63.9 62.4 62.9 year-on-year when adjusted for negative currency movements (NOK -2.1m) 6.8 In local curr
Slide 11: 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 ~50 % of Professional Services revenue is recurring, or recurring like, and based on long Projects 44% 46% 45% 49% 50% term agreements and
Slide 12: Financial Review
Financial Review Simplify work life. Achieve more.
Slide 13: Higher revenue and EBIT for the quarter
Higher revenue and EBIT for the quarter Revenue Adj. EBIT* Adj. EBIT margin NOK 195m (+3.0%) NOK 14.1m (+6.0%) 7.2% (+0.2pp) Higher revenue (+NOK 5.7m) for the 195.4 190.7 189.7 7,0% 7,2% quarter vs. last year, mainly due to 14.1 13.3 inclusion of ba.se, partly offset by currency movements 8.9 4,6%
Slide 14: Significant ARR build-up YTD in Managed Services through new BPO contracts
Significant ARR build-up YTD in Managed Services through new BPO contracts Expected ARR* in MS (NOKm) High sales activity within Managed Services, resulting in 72 a continued build-up of future ARR through several new 17 71 BPO agreements and extensions during the second quarter 565 510 439 Total ne
Slide 15: Significant increased investment in future revenue through transformation projects
Significant increased investment in future revenue through transformation projects for new BPO contracts Deferred revenue and employee Deferred revenue and employee hours capitalised, quarterly (NOKm) hours capitalised, LTM (NOKm) Significant potential revenue generating capacity utilised on impleme
Slide 16: Higher EBIT and margin – margins expected to improve with scale
Higher EBIT and margin – margins expected to improve with scale Adj. EBIT (NOKm) and margin (%), quarterly Adj. EBIT (NOKm) and margin (%), LTM EBIT and EBIT margin higher YoY 7,8% Increased EBIT and EBIT margin in NE, through 7,0% 7,1% 7,1% 7,1% 7,0% 7,2% 7,2% operational improvements resulting in
Slide 17: Condensed Profit and Loss
Condensed Profit and Loss 2021 2020 2021 2020 2020 (NOK 1 000) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec Revenue 195 376 189 748 573 570 588 804 792 326 License costs 17 200 18 337 48 962 51 572 72 517 Personnel expenses 98 730 99 439 303 753 324 149 430 733 Other operating expenses 51 676 41 672 142
Slide 18: Positive cash flow from operations during the quarter and strong cash position
Positive cash flow from operations during the quarter and strong cash position NOK million 211,3 13,4 Cash balance at 30 September of NOK 169m -42,5 -8,4 168,8 -3,3 -1,7 Positive cash flow from operations of NOK 13.4m in line with last year Initial cash payment for acquisition of ba.se of NOK 42.5m,
Slide 19: Markets and Outlook
Markets and Outlook Simplify work life. Achieve more.
Slide 20: European multi country payroll and multi process HR outsourcing markets are growing
European multi country payroll and multi process HR outsourcing markets are growing at healthy rates Multi-Country Payroll Outsourcing Multi Process HR Outsourcing © zalaris 2021 Page 20
Slide 21: Trend shift and strong sales in Germany and UK
Trend shift and strong sales in Germany and UK as the Zalaris brand is increasingly being recognized Inclusion in Gartner Multi Country Payroll Market Guide Listed as major player in Everest, Nelson-Hall and various payroll associations market guides Increased visibility through digital marketing St
Slide 22: 94% of sales Target FY 2021 delivered with strong relative growth in DACH and UK
94% of sales Target FY 2021 delivered with strong relative growth in DACH and UK MS YTD Q3 YTD Sold ACV Q4 2020 ACV as % of 2021 sales budget to deliver 10% Annualized MEUR Annualized growth to come entirely from Revenue Sold to date revenue growing Managed Services with MEUR 14,5% = ACV of EUR 8,5
Slide 23: With roadmap to margins on track we turn our attention to realizing the full growth potential
With roadmap to margins on track we turn our attention to realizing the full growth potential of our organization Net Promoting Customers - and Employees Realize roadmap to EBIT >10% Grow Managed Services with 15% and Professional Services with 5% Focus on Peoplehub powered multi country payroll sol
Slide 24: 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.