Enento Group’s Interim Report 1.1. – 31.3.2023: Positive start to the year with steady profitable growth trajectory continuing
ENENTO GROUP PLC, STOCK EXCHANGE RELEASE 24 APRIL 2023 AT 12.15 P.M. EEST
Enento Group’s Interim Report 1.1. – 31.3.2023: Positive start to the year with steady profitable growth trajectory continuing
SUMMARY
January - March 2023 in brief
- Net sales amounted to EUR 40,0 million (EUR 40,7 million), a decrease of 1,7% (at comparable exchange rates an increase of 2,3%).
- Net sales growth excluding the impact from the discontinued Tambur service was 2,3% at comparable exchange rates.
- Adjusted EBITDA excluding items affecting comparability was EUR 14,7 million (EUR 13,5 million), an increase of 8,6% (at comparable exchange rates increase of 12,3%).
- Adjusted EBIT excluding items affecting comparability and amortization from fair value adjustments related to acquisitions was EUR 12,0 million (EUR 9,5 million), an increase of 26,6%.
- Operating profit (EBIT) was EUR 6,9 million (EUR 6,1 million). Operating profit included amortization from fair value adjustments of EUR -2,4 million (EUR -3,1 million) related to acquisitions and EUR -2,6 million (EUR -0,3 million) items affecting comparability mainly arising from restructuring and other efficiency program related costs.
- New services represented 8,3% (5,9%) of net sales.
- Free cash flow amounted to EUR 10,1 million (EUR 7,1 million). The effect of items affecting comparability on free cash flow was EUR -1,2 million (EUR 0,1 million).
- Earnings per share was EUR 0,18 (EUR 0,18).
- Comparable earnings per share were EUR 0,26 (EUR 0,28)1.
- The efficiency program targeting at least 8-million-euro efficiencies by the end of 2024, has progressed according to the plan. The measures implemented by the end of first quarter are estimated to have an annual run-rate impact on the profitability of around EUR 4 million.
1 The comparable earnings per share does not contain amortisation from fair value adjustments related to acquisitions or their tax impact.
KEY FIGURES
| EUR million | 1.1. – 31.3.2023 | 1.1. – 31.3.2022 | 1.1. – 31.12.2022 |
| Net sales | 40,0 | 40,7 | 167,5 |
| Net sales growth, % (comparable fx rates) | 2,3 | 4,4 | 5,1 |
| Net sales growth, % (reported fx rates) | -1,7 | 2,6 | 2,5 |
| Operating profit (EBIT) | 6,9 | 6,1 | 25,8 |
| EBIT margin, % | 17,3 | 14,9 | 15,4 |
| Adjusted EBITDA | 14,7 | 13,5 | 61,2 |
| Adjusted EBITDA margin, % | 36,8 | 33,3 | 36,6 |
| Adjusted operating profit (EBIT) | 12,0 | 9,5 | 49,1 |
| Adjusted EBIT margin, % | 29,9 | 23,3 | 29,3 |
| New services of net sales, % | 8,3 | 5,9 | 4,6 |
| Free cash flow | 10,1 | 7,1 | 33,9 |
| Net debt to adjusted EBITDA, x | 2,1 | 2,3 | 2,2 |
FUTURE OUTLOOK (UNCHANGED)
The general macroeconomic environment remains uncertain and unpredictable and is expected to impact negatively on the growth outlook of the Group. The weakening demand for sales and marketing and direct-to-consumer services is expected to negatively impact the net sales development. Enento expects increased demand for risk management and compliance services, which together with the introduction of new services will offset the decline. The discontinuance of the Swedish housing transaction service Tambur from second quarter onwards is estimated to have a negative impact up to -1.5% of the Group’s net sales at comparable exchange rates.
Enento expects cost inflation to increasingly burden the profitability level of the Group and is mitigating the impact by the introduction of the efficiency program.
GUIDANCE (UNCHANGED)
Net Sales: Enento Group expects net sales in 2023 to grow between 0% - 5% excluding the impact from the discontinued Tambur service at comparable exchange rates as compared to 2022.
Adjusted EBITDA: Enento Group expects its adjusted EBITDA margin to be in the range of 36,0% - 37,0%.
Comparable exchange rates mean that the effects of any changes in currencies are eliminated by calculating the figures for the previous period using current period’s exchange rates.
JEANETTE JÄGER, CEO
As we look back on the first quarter of the year, it is with great satisfaction that we report on a strong start to the year. Enento has maintained a steady profitable growth trajectory, fueled by our commitment to deliver value-added data and analytics services and solutions to our customers, and supported by the successful implementation of our efficiency program.
During the first quarter, Enento has demonstrated strong business performance, despite the ongoing challenges in the economic environment and the hard decisions we had to make to reduce the number of employees as part of the efficiency program. Our financial results for Q1 were satisfactory, with net sales increasing by 2,3% at comparable exchange rates compared to the same period last year. This was driven by the solid performance by Business Insight (+4,7%), particularly by Enterprise Solutions and Freemium Solutions. Obviously, the increased economic uncertainty impacts our customers in all industries and in some markets more than others, but simultaneously it has a positive impact on the demand of our risk management offering as the counterparty risks are something most of our customers closely monitor. This is reflected in the good performance of Enterprise Solutions, and we believe the trend will continue. The performance in Consumer Insights was more modest (+2,2%), and consumer lending volume growth especially in Sweden is clearly slowing down as higher interest rates and inflation are impacting consumer behavior. The net sales of Digital Processes (-10,8%) was impacted by the negative development in housing transaction volumes, but partially mitigated by successful sales efforts from value-added real estate information services and supported by double-digit growth from compliance services in Finland.
Our profitability improved significantly during the quarter, with adjusted EBITDA increasing by 12,3% at comparable exchange rates. This was a result of our efforts from profitability improvement actions to optimize our operations, while maintaining our focus on delivering high-quality services to our customers. We continue to operate with a strong balance sheet, and our financial position remains stable, allowing us to invest in growth and modernization initiatives. Overall, we are pleased with our business performance for the past quarter, but at the same time we remain cautious and are closely following the overall economic development in our operating markets.
The share of new services from net sales started improving according to our plans and was 8,3% during the period under review as several customers successfully implemented the daily credit register in Sweden. We are proud of the milestones achieved during the first quarter of the year. Among these highlights, we successfully launched new services in our business information offering. Our expansion in Norway continues to new customer segments and verticals as we launched a new credit API, which makes it easy to consume our data with an integrated solution. In Sweden we have onboarded our first customers to our brand new business information API to further support integration with Enento’s high quality data and insights. In Finland we renewed and improved the Rating Alfa company rating model, the most well-known and used company rating model in the Finnish market, which is now even more accurate and includes ESG data. Digital Processes business area launched a service for energy efficiency information of housing associations and buildings in Finland. These new products launched by the different business areas demonstrate our commitment to innovation and customer-centricity and represent our ambition to further strengthen our presence in the Nordic region. We also recognize the importance of real-time data in today's business environment, and we will continue to invest in these areas to enhance our offerings. In this regard, we are excited to announce the launch of our new web user interface of Account Insight solution, which will provide our customers with an enhanced user experience and streamlined access to our PSD2 services in Finland.
In addition, we made good progress in the execution of our efficiency program, which we launched on 26 January 2023. The change negotiations were completed in Finland, Sweden, and Norway and simultaneously, we also made some smaller organizational adjustments. The new organization started on 1 April 2023. We are also proceeding according to plans with the pre-study to evaluate how and with whom should we partner up concerning the application development and maintenance in Sweden.
Furthermore, we are committed to sustainability and responsible business practices. We will continue to work towards reducing our carbon footprint and improving the sustainability of our operations. We recognize the importance of social responsibility and will continue to prioritize diversity, equality, and inclusion in our workplace and business practices. Enento also agreed on sustainability targets linked to our long-term financing agreement, which is an important milestone for us in our sustainability journey.
We are confident that our strategic focus on delivering customer value and investing in selected growth initiatives will continue to drive Enento’s success in the coming quarters. In addition, we are closely monitoring the ongoing economic situation and its potential impact on our business. We will remain agile and adapt quickly to changes in the market environment, while ensuring that we continue to deliver high-quality services to our customers. In conclusion, we are pleased with the progress made during the first quarter of the year and remain confident in our ability to deliver sustainable growth and value to our shareholders, customers, and employees.
WEBCAST AND CONFERENCE CALL
Webcast for analysts, investors and media will be arranged on Monday, April 24, 2023, starting at 2.00 p.m. (EEST). CEO Jeanette Jäger and CFO Elina Stråhlman will present the results in English.
The webcast can be followed at:
The presentation material and the webcast recording will be available on Enento’s investor website.
Helsinki, 24 April 2023
ENENTO GROUP PLC
Board of Directors
For further information:
Jeanette Jäger
CEO
Tel. +46 72 141 00 00
Distribution:
Nasdaq Helsinki
Major media
enento.com/investors
Enento Group is a Nordic knowledge company powering society with intelligence since 1905. We collect and transform data into intelligence and knowledge used in interactions between people, businesses, and societies. Our digital services, data and information empower companies and consumers in their daily digital decision processes, as well as financial processes and sales and marketing processes. Approximately 421 people are working for Enento Group in Finland, Norway, Sweden, and Denmark. The Group’s net sales for 2022 was 167.5 MEUR. Enento Group is listed on Nasdaq Helsinki with the trading code ENENTO.
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