Talenom Plc, Stock Exchange Release 30 January 2025 at 9:00 EET
Talenom Plc's Financial Statement Release 2024: Moderate net sales growth, improving EBITDA and software business separation marked year 2024
January-December 2024 in brief
- Net sales EUR 126.2 (121.7) million, growth 3.7% (19.2)
- EBITDA EUR 34.8 (31.9) million, 27.5% (26.2) of net sales
- Comparable operating profit (EBIT)* EUR 11.4 (11.1) million, 9.0% (9.1) of net sales
- Operating profit (EBIT) EUR 11.4 (7.9) million, 9.0% (6.5) of net sales
- Net profit EUR 6.1 (3.4) million
- Earnings per share EUR 0.13 (0.07)
- The Board of Directors proposes a maximum dividend of EUR 0.20 (0.19) per share, of which EUR 0.10 per share would be paid after the AGM and a maximum of EUR 0.10 per share at a later date at the discretion of the Board of Directors
October-December 2024 in brief
- Net sales EUR 29.2 (29.7) million, decrease -1.7% (12.8)
- EBITDA EUR 6.1 (7.0) million, 20.7% (23.7) of net sales
- Comparable operating profit (EBIT)* EUR 0.06 (1.6) million, 0.2% (5.4) of net sales
- Operating profit (EBIT) EUR 0.06 (1.6) million, 0.2% (5.4) of net sales
- Net profit EUR 0.1 (0.8) million
- Earnings per share EUR 0.00 (0.02)
Key figures
| Group | 1-12/2024 | 1-12/2023 | Change, % | 10-12/2024 | 10-12/2023 | Change, % |
| Net sales, EUR 1,000 | 126,231 | 121,728 | 3.7% | 29,207 | 29,716 | -1.7% |
| Net sales, increase % | 3.7% | 19.2% | -1.7% | 12.8% | ||
| EBITDA, EUR 1,000 | 34,754 | 31,884 | 9.0% | 6,060 | 7,029 | -13.8% |
| EBITDA of net sales, % | 27.5% | 26.2% | 20.7% | 23.7% | ||
| Operating profit (EBIT), EUR 1,000 | 11,417 | 7,948 | 43.6% | 55 | 1,598 | -96.5% |
| Operating profit (EBIT), as % of net sales | 9.0% | 6.5% | 0.2% | 5.4% | ||
| Comparable operating profit, EUR 1,000 *) | 11,417 | 11,107 | 2.8% | 55 | 1,598 | -96.5% |
| Comparable operating profit, as % of net sales | 9.0% | 9.1% | 0.2% | 5.4% | ||
| Return on investment (ROI), % (rolling 12 months) | 7.8% | 6.0% | ||||
| Cash flow from operations, EUR 1,000 | 29,225 | 28,628 | 2.1% | |||
| Interest-bearing net liabilities, EUR 1,000 | 87,618 | 75,843 | 15.5% | |||
| Net gearing ratio, % | 161.1% | 135.9% | ||||
| Equity ratio, % | 30.6% | 31.8% | ||||
| Net investments, EUR 1,000 | 22,724 | 39,944 | -43.1% | 5,353 | 9,056 | -40.9% |
| Liquid assets, EUR 1,000 | 8,669 | 10,254 | -15.5% | 8,669 | 10,254 | -15.5% |
| Earnings per share, EUR | 0.13 | 0.07 | 80.0% | 0.00 | 0.02 | -85.2% |
| Weighted average number of shares during the period | 45,472,919 | 45,175,668 | 0.7% | 45,477,972 | 45,410,852 | 0.1% |
| Net profit, EUR 1,000 | 6,090 | 3,361 | 81.2% | 149 | 831 | -82.0% |
*) Operating profit excluding software-related write-downs
Financial guidance for 2025 (published on 13 December 2024)
Talenom estimates that 2025 net sales will be around EUR 130-140 million and EBITDA around EUR 36-42 million.
CEO Otto-Pekka Huhtala
We proceeded systematically with our targets, even though the more challenging general economic situation impacted 2024:
- Improving profitability was our main goal. We improved the absolute EBITDA by 9%, i.e. EUR 2.9 million, but we missed our target mainly due to the economic cycle in Finland and Sweden.
- In Sweden, we managed to migrate the remaining targeted 50% of customers to our accounting system during the latter part of the year. Systematic accounting production for these customers will begin in 2025. We expect systems, operating models, processes and One Talenom benefits to be visible in Sweden as improving financial performance during the second half of 2025.
- Our third goal was to accelerate organic growth. Overall, we succeeded in acquiring new customers and generating additional sales to existing customers as targeted. Despite record-high new sales, the economic slowdown significantly impacted net sales development, as the average net sales per customer decreased and customers' business closures reached record levels while other churn remained at a normal level. To develop our long-term scalable growth capability, we began incorporating our own software and offering it to customers outside Talenom's accounting firm clientele.
Strategy
Our competitive advantage is based on a comprehensive approach that covers the entire value chain through own software and service. This approach has broadened our expertise over the years, making the entrepreneur's life as easy as possible, automating the accountant's routines, and enabling a conceptualized service that takes care of customers. In the updated strategy, our comprehensive approach remains unchanged.
The software business will form a second strategic pillar going forward and we will start offering our software also to other accountants, accounting firms and their customers. While we will focus clearly on growing our accounting services and software business in the future, we will transfer other service areas outside our core business to our strategic partners, and our customers will receive comprehensive services through our partner ecosystem in the future. With this change, we focus our operations on further improving our profitability. With the updated strategy, we abandoned debt collection services in late 2024 and renewed the cooperation agreement for banking services to correspond with the strategy. In addition, we separated the software business into its own company and conducted related change negotiations.
Financial performance
Net sales for the full year were EUR 126.2 million (121.8). The growth was 3.7% (19.2), which was subdued compared to history. The market environment was challenging, especially in Finland and Sweden. In Finland, the volume-based decline in net sales levelled off towards the end of the year, and general economic indicators suggest the worst is over. In Spain, the economic cycle has continued to be positive and demand for our services is good. We grew there both organically and through acquisitions in 2024.
We succeeded in improving profitability measured by EBITDA. In 2024, EBITDA was EUR 34.8 million (31.9) and comparable operating profit was EUR 11.4 million (11.1). Most of the EBITDA improvement came from Finland and Spain. Development in Sweden slowed down the improvement in the Group's profitability as net sales in Sweden remained below the comparison period. The Group's comparable operating profit improved slightly, but its development was slowed by increased amortisation of software investments and one-off costs related to the formation of the software business.
The Group's profitability weakened in the last quarter. The one-off cost impact of the change negotiations was estimated to be EUR 0.5 million. Furthermore, the placement of public holidays in December and vacation days reduced the actual number of working days in December. Profitability development was also slowed down by net sales development, especially in Sweden, as well as the ongoing implementation of the company's own software, which kept the cost level higher than normal, especially in the last quarter.
The change negotiations carried out in the last quarter will lower the level of software investments in 2025 by approximately EUR 2.3 million, which will have a positive impact on cash flow and a mitigating effect on the increase in depreciation in 2025. The impact of the new investment level on depreciation will start to be more clearly visible in the coming years. We have invested very determinedly in the development of our systems for a long time. Now our overall system has reached a level that allows us to permanently reduce investments in it.
We look positively to the future. In recent years, we have invested heavily in internationalisation and we believe it will bear fruit in the near future. In 2025, our focus is on improving profitability in Sweden through more systematic implementation of our own software, processes and the best practices of ONE Talenom. In Spain, the entry into force of the e-invoicing Directive enables, in addition to properly leveraged organic and inorganic growth, an increase in software sales. In the software business, we focus on building sales channels and developing SaaS capabilities. The updated strategy focuses our operations. This allows us to focus our energy on our long-built core competencies: growing the accounting firm service and software business. The expectation of the economy turning to growth in Finland and Sweden in 2025 also enables faster growth and profitability development, alongside other factors.
I would like to thank our customers for their trust during the past year, our excellent personnel for their commitment to building Talenom, and our partners for creating joint growth.
Board of Director's proposal concerning the result for the period
The Board of Directors proposes that the parent company's profit for the financial year EUR 9,071,090.14 is transferred to the retained earnings/loss account. The Board of Directors proposes that a maximum dividend of up to EUR 0.20 (0.19) per share will be paid. The proposal suggests that a maximum dividend of 0.10 euros to be paid on a date decided by the Annual General Meeting. In addition, the Board proposes that the Annual General Meeting authorize the Board of Directors to decide, at its discretion, on the distribution of the remaining maximum dividend (a maximum of 0.10 euros per share) at a later date. The authorization would be valid until the beginning of the next Annual General Meeting.
The company's financial position has not changed substantially since the end of the fiscal year.
Webcast
CEO Otto-Pekka Huhtala and CFO Matti Eilonen will present the main points of the release in a live webcast today on 30 January 2025 at 10:00 EET (in Finnish) and at 12:00 EET (in English). Recordings of the events will be published on Talenom's website https://investors.talenom.com/fi/ and https://investors.talenom.com/en
You can watch the webcast live in Finnish at 10:00 EET at https://talenom.videosync.fi/q4-2024
You can watch the webcast live in English at 12:00 EET at https://talenom.videosync.fi/q4-2024-eng
The presentation materials will be published before the start of the briefing on the company's website.
Talenom Plc
Further information:
Otto-Pekka Huhtala
CEO, Talenom Plc
+358 40 703 8554
otto-pekka.huhtala@talenom.fi
Talenom in brief
Talenom is an agile and progressive accounting firm established in 1972. Our business idea is to help entrepreneurs succeed by making their daily lives easier with the market's easiest-to-use digital tools and highly automated personal services. In addition to comprehensive accounting services, we support our customers' business with a wide range of expert services and our partners' services. Our vision is to be the preferred partner in financial management.
Talenom's growth history is strong - average annual net sales growth was approximately 17% between 2005 and 2023. In 2023, Talenom's net sales was some EUR 122 million and the company had 1,560 employees in Finland, Sweden, Spain and Italy at the end of the year. Talenom's share is quoted on the Main Market of Nasdaq Helsinki. Read more: investors.talenom.com/en
