Talenom Oyj ($TNOM)

Good morning, everyone, and warmly welcome to join this Talenom's Q1 2026 business review. My name is Juho Ahosola, and I'm the CEO of Talenom, and I started in my position in the beginning of March, as well as my colleague, Matti Sakkinen, CFO, who's here today with me.

Good morning, everyone, and welcome also from my behalf.

Thank you. Okay. Let's roll out then. So here's the agenda for this review. So I will start with a short strategy recap. And after that, I will comment review period. And then after me, Matti will talk in a bit more detailed level about financial figures and financial performance and then outlook and guidance. And at the end of this session, there's time for questions as well. And you can ask questions with the chat during the presentation as well. Okay. But let's start then with a strategy review. And basically, the big thing of this first quarter and review period was this demerger with Easor. So company started in last fall, last September, a strategic review of the potential separation of the Easor software business into an independent stock-listed company. And after a couple of different stages, we are finally here that there are 2 independent companies, Talenom and Easor and both are operating with own managements, own Boards, own growth strategies and no cross ownerships or structures like that. And this was basically the biggest thing of this review period, and we're super happy and excited that this is now finalized and we can move on as an independent service company. The reasons behind this demerger, as a reminder, so basically, we had 2 main drivers or 2 different drivers for this big move. So first of all, both companies, Talenom and Easor, can operate from a software perspective much more flexibly and also grow faster in the long run. Easor, they can acquire clients through other accounting firms or other channels they found working. And we, in Talenom side, we are no more kind of like dependent on one single software solution in any level, and we can always use the best available tools and solutions to support our clients. And secondly, from investor perspective and also from operational perspective, it is much more clear case, it gives a lot of focus, and we here in Talenom side, we can focus fully on our clients in creating great customer experience with services. And to be clear, with our software strategy, we always use best-in-class solutions for our clients. Sometimes it's Easor or sometimes it could be some other solution. Then if we move on and think about this new Talenom as we say here internally, so this new start. So what do we do? What's our thing, so to say. So we are a service company. First of all, we help our clients, entrepreneurs usually with different kind of accounting, consulting, payroll services. And we are operating in 3 countries: Finland, Sweden and Spain. And in our growth, we combine 2 pillars. So first of all, organic growth, which is super important for us and where we want to deliver and then selective acquisitions. And how we work? What is kind of the core of our strategy? So we combine strong local ownership, local expertise with the scalable ONE Talenom concept. And combining these 2 elements, we believe that we will achieve great long-term growth. And this ONE Talenom concept is a really important part of our strategy, and we have seen that it affects positively in our main business outcomes like employee experience, customer experience and profitability as well. So that's the new Talenom. Then a couple of words of our operating areas and organizational structure as well. So we are operating in 3 countries. Company has been started in Finland, 1972, more than 50 years history, a strong growth history and a solid organization. In Sweden, we started 2019 through first acquisition and in Spain 2021. And here on the right-hand side, you can see this from financial statement our personnel is located in different countries and offices. And important thing or part of our strategy is that we are not in the near future looking to expand to new countries. We believe that we have massive growth opportunities in these existing markets. Also worth mentioning when it comes to this Easor split that during previous year, we built organizations in both like organizations, Easor and Talenom. And also in Talenom side, we gather management team and local management teams as well in countries. And that's important that we have now structures in place. When it comes to our revenue sources, revenue sources of new Talenom, so the main part of our revenue comes from our core services. So accounting services, payroll services, account receivable services. These are highly or almost completely recurring. And that's, of course, important and easy to forecast as well. And then in addition to these core services, we have value-added services, for example, CFO services or HR services and business intelligence services. And we see that these are important source of growth in the future, and we are also focusing on this. And then secondly, they are supporting our customer experience. So affecting positively on customer experience, and in that way, customer retention. Also worth mentioning that we have industry-focused teams for some selected sectors, and there we can give even deeper like knowledge and service for our clients. But revenue, mostly recurring, and that's important and comes from services. If we then look into our markets where we operate, so we have 3 markets. And basically, the structure of markets, it's pretty much the same. So there's a lot of fragmentations, a lot of small companies and players in the field. And then we can also recognize this consolidation trend in all our operating countries. And the main point here is that when we are looking at our market shares in Finland, where we have a really established organization, strong history. We have roughly 5% market share in Sweden, more or less 1%; and in Spain, 0.1%. So when we are looking at those pie charts, we can see that there's a lot of growth opportunities and potential in these, our existing markets. So that's basically the reason why we are not looking to expand to new countries in the near future. We have great opportunities in these existing ones. Next, I will walk us through the key elements of our strategy, 3 main areas. So first of all, starting from ONE Talenom concept. So this is the core of this new Talenom's strategy. And ONE Talenom is our concept. It combines our processes, best practices, ways of doing things, way to lead basically this organization. And we have built this concept. And then, of course, we are further developing it and testing it. And we can see that when we are applying the concept, it affects positively in our business outcomes in terms of employee experience, customer experience and profitability as well. And this is very important part of our strategy for upcoming times, and we really believe and we have seen that this works for us. Second point of our strategy is M&A. So we have done a lot of acquisitions in the past and also during this review period. So I would like to say that we have, first of all, learned a lot when it comes to acquisitions. So we have found our way to acquire companies and like found good companies to acquire. And we want that companies that are joining us are growth-minded, they really believe in this ONE Talenom concept and approach as well. And then they can build that organic growth in the future, which is important for us. And maybe something I want to highlight here is that we are not doing this kind of like volume acquisitions at all. So only because of revenue, we never acquire. So if we don't find suitable ones, then we don't buy. So that's an important part that we are really, really selective. That's something that I want to highlight. And then third part, organic growth. So in addition to acquisitions, this organic growth is really important for us, and we believe that it's the most challenging part of growth in all organizations. And there's basically 2 parts. First of all, acquiring new clients, selling to new customers. And we have in all our countries sales teams, marketing teams, organizations for doing new customer acquisition. We are doing a lot of marketing, digital marketing. We have a strong local footprint in areas where we operate, and we do a lot of activities around new customer acquisition. Worth mentioning that in Spain, especially, it's not that normal in this industry to actively sell for new clients. And we are doing that and see that as an important part of our strategy and way of doing things. Then secondly, as I mentioned, we have different kind of consulting services. And we believe that this is one like area where we can grow and we see that it's important in a couple of ways. First of all, revenue-wise, we see that it's a good source for growth. But then it's also important in terms of customer experience and it supports retention. So the clients that are buying more services are usually those who are the heaviest ones. But organic growth, it's definitely one of our focus areas. If we then move into this first quarter, so Q1. And here's a couple of highlights from the review period. So first of all, as I mentioned, this demerger split with Easor was basically the biggest thing. And at this point, I also want to thank our personnel and, of course, personnel in Easor. Easor as well organization did a lot of work around this and it was a really massive exercise. And now we are super excited that this is completed and we can focus in developing this new Talenom as a service company. And this is important that we are finally here, super excited. Then during the review period, we also continued to work with our strategy and growth strategies, ONE Talenom, and it's been a good start that way. I'm happy with the work that the organization is doing and proud of the organization, how we have started with the strategy and this new era. Then third point, as I said, we are now in this software-neutral environment, so to say. So we can really choose softwares that we are using. I want to emphasize that Easor is an important partner for us in the future as well. That's obvious. But in the long run, we believe that when we can acquire now clients with other softwares as well, that is opening doors for us and opening significant growth potential. So that's something that we are working with right now. If we then look into those priorities which we have set for us for this year 2026. So we have 3 areas. First of all, this implementation of the new strategy as we have started 1st March as a new company or like new Talenom, it's important that we work a lot around this implementation of new strategy and ONE Talenom concept, especially. Then secondly, super important to us, we want to show profitability and profitability improvement, both Sweden and Spain. That's something where we are focusing whole this year. This is important for us that we have 3 countries that are EBITDA-wise profitable. Then third one, implementing growth strategies in all countries, where a lot of working around growth. And then also, as I said, these acquisitions are part of this third focus area. So these 3 areas. And here's a couple of points how it's going with those. So first of all, with strategy. As I said, we have been working with implementation of ONE Talenom concept in all countries, and I'm happy when I'm seeing how it's going. Management in all countries is doing good work in my opinion. And maybe something I would like to highlight here is that we have measured during this review period employee satisfaction and customer satisfaction. Good results from Finland. It's not mentioned here. But in Sweden and Spain, we had, I would like to say, that really remarkable improvement. And that's really, really good. I'm happy with the figures that we are seeing. It's definitely going to right direction. And usually, it tends to go in that order, that, first employee satisfaction goes to right direction, then customer satisfaction. And then we can see finally those improvements in financial figures as well. That's usually the order. Then when it comes to profitability in Sweden and Spain, I want to highlight that this is extremely important for us that we can succeed in all our countries and be EBITDA-wise profitable. That's obvious. In Sweden, we moved slightly into right direction, and I'm happy with the trend that we are seeing. And we have taken a lot of actions during last year and then also in the beginning of this year during this review period. And we believe strongly that we will deliver that positive EBITDA during this year from Sweden. Management has done a lot of work locally with profitability, and I believe that we will deliver. Then when it comes to Spain, profitability was weak. And reasons behind the figures, basically a lot of integration-related costs. So that's maybe the main topic I would like to say. Then we increased some investment in sales and marketing. And that's also important, that, in Spain, we want to keep this growth track and focus on organic growth because we see a lot of potential. So we have not been cutting from sales and marketing costs that way. And then also because of this demerger, some software-related costs. And then like when it comes to this integration costs, it's both like operational costs and then personnel costs as well. And we have a clear detailed plan for the rest of year, for the whole year, how to work with development of and improving profitability in Spain. So really a detailed plan for that. Then thirdly, implementing growth strategies. This is important for us as we want to be a growth company. And we have been working a lot with like these software strategies. It's important element for us, and we believe that in the long run, it will open us remarkable opportunities. In the short run, we don't see that we will see effects in our figures. But in the long run, it's really, really important and offers a significant growth potential. Then something that I want to also emphasize is that in Finland when we are looking at this like market conditions, it's really challenging. And actually, accounting market declined previous year and we believe that it will remain really challenging for this year as well. But at the same time, like our approach is that we want to be a little bit better every day. We work really hard with growth strategies, with actions, and we focus where we can. So it doesn't make any sense to focus on those market conditions or challenges. We focus on our actions, and we believe that over time that it's right approach. And in Spain, also when it comes to growth, acquisitions are an important part of it, and we completed a couple of acquisitions in the beginning of review period, and one after as well. So it's going according to plan. Here are the financial figures and highlights from there. So as we know, net sales -- when it comes to net sales, it grew a bit, driven by Finland and Spain. And then EBITDA and operating profit-wise, it decreased a bit as we were expecting as well. But Matti will next go through financial figures in more detailed level, and then it's time for questions. Thank you at this point.

Thanks, Juho. Okay. Let's jump to the financial figures. And in my presentation, I will focus on comparable figures in our continuing operations. At first, let's look at group's net sales. It was EUR 30.3 million in Q1, and our growth was 4.5%. This growth came from Finland and Spain. And in Sweden, we had negative growth. Our group's EBITDA, it was EUR 5.5 million and 18% of net sales. The development in Finland and Sweden had positive impact on profitability in euros. On the other hand, this development in Spain impacted negatively to our profitability. Operating profit was EUR 2 million and 6.5% of net sales. In addition to this a little bit lower EBITDA, we had a little bit higher depreciations and amortizations in the period. And now we jump to the country-specific key figures, and we start from Finland. In Finland, we continued stable performance. Our net sales was EUR 20.2 million and our growth was 3.7%. And this growth, it was entirely organic. But still, we want to say that this general economic situation is continuing challenging. We see lots of bankruptcies in Finland and also companies are closing down the businesses. We estimate that this will also impact to our growth during the rest of the year. EBITDA in Finland, it was EUR 5.9 million and 29.2% of net sales. This EBITDA improved due to the revenue growth. On the other hand, as we have commented earlier, our relative costs are higher after this demerger and it was impacting negatively to our profitability and especially this relative profitability. In Sweden, our net sales was EUR 5.4 million and decline in net sales was almost 9%. The previous year high customer churn was impacting negatively to our net sales development. We have continued our efforts to reduce customer churn and acquire new customers. And we still see that this net impact of the new and lost customers, this trend is going to the right direction, and we estimate that it will also help our net sales development in the future. Profitability in EBITDA, it was minus EUR 100,000, so a small improvement there. Of course, this decline in the net sales was challenging our profitability development. But we have continued these cost adjustments, and we still estimate that we can achieve positive EBITDA in Sweden in 2026. In Spain, we had a strongest growth. It was 31.8%. And our net sales was EUR 4.6 million. This growth, it came mainly from the acquisitions. We have made 4 acquisitions after the comparison period. So this was good growth for us. In EBITDA -- so the profitability in EBITDA, it was minus EUR 300,000. And as Juho commented earlier, we had some integration costs and increased investments in sales and marketing and also higher cost in software. So these were impacting negatively to our profitability. But we are continuing our efforts in terms of profitability development and we estimate that we can turn this on the right trend during the rest of the year. And then let's look at outlook and guidance. Our guidance is unchanged, meaning that we estimate that our net sales will be from EUR 110 million to EUR 120 million and comparable EBITDA will be from EUR 18 million to EUR 22 million. That's all from my side. And now it's time for the questions.

Yes, there's quite many questions from online. We are starting from Finland. So strong growth, 3.7%. And where did it come from concretely? What was the contribution from pricing and volume and so on?

Yes, it was mix of the customer base and also, of course, the price increases are impacting positively to our growth in Finland. But as we commented, yes, it was good growth in Q1. But still, we see that this economic situation is a little bit challenging our growth efforts. And of course, as we said, we estimate that the rest of the year, we will see like these continuing challenges about this region.

Yes. So how about the trend in this growth? Are we seeing that it's going to be at the same level upcoming quarters? Or what is our point on that?

Yes, I could comment on that. I would like to say that this was quite a strong quarter. And as we -- when we are looking at the situation now and looking into the future, I would like to say that it might be challenging to keep that track going. But we are working hard around the growth. But as said, when looking towards future, it's challenging market conditions.

Yes. Then we go to Spain. Here is breakdown in Spain growth in Q1. How much was the organic and how much M&A driven?

It was mostly inorganic. Some organic growth as well. But at the same time, when we are looking at our like sales and churn figures, we expect that we will have support from organic growth during this year. So team is doing good work around like new customer acquisitions. And I would like to say that churn is also well under control in Spain. So when thinking Spain, in general, we don't see that kind of like trends that we saw in Sweden at the same time with the story. So like Spain is doing well, yes. And now I meant how it was in Sweden back in a couple of years ago.

Yes. So in Sweden -- positive EBITDA for full year 2026 in Sweden would require clearly positive EBITDA in Q2 and Q4. Q2 is seasonally strong. But do you expect to be profitability in Q4 and Q4 -- Q3 and Q4?

Of course, we know that we have some seasonality changes between the quarters. But if you look at the full year profitability, we estimate that it will be positive in EBITDA-wise.

And our actions are in line with that market.

Yes. Then the guidance for 2026. Was Q1 in line with your expectations? And are you ahead or behind the assumed development?

I'm glad to say that things are going in line with our guidance. And of course, that -- like Finnish figures were quite strong in Q1. But like in general, it's going according to the guidance and plan.

Yes. So then the asker wants to know about the seasonality and how the accounting high season goes in Spain and Sweden like compared to Finland?

Yes. Usually, like the high season, it's a bit different in Spain. So basically, this Q1 is not usually that strong in Spain. And it's -- like Q2 and then also July actually is part of that high season like invoicing-wise. And usually in Spain, like the holiday season is a bit later or later than in Nordics. So it's usually like in August. So that plays also important role here. But it's -- the high season is longer than in Finland and Sweden.

Yes. So there's also some questions in Finnish. The one -- I'll try to translate it because we are speaking English here. So we have more offices compared to revenue in Spain and Sweden. Any plans to grow the number of offices in those countries at low costs, yes?

Yes, it's true. Especially, in Sweden, we have a lot of small offices. And of course, that's like one element that we are like considering what is the right way to organize our office network, both to support our profitability, but then also to support our growth. But when it comes to costs, our -- like we have plans in both as this -- like improving profitability in Sweden and Spain is important objective or target for us. So our plans are aligned with that. And of course, this like office network is one element to consider.

Yes. There's still one question on Spain. So the profitability improvement plan, what are its concrete actions? And which quarter do you expect them to start showing in numbers?

I could comment first. So there's a lot of like -- first of all, like software-related costs, like when we have acquired companies and then we are integrating those companies to our IT system. So when like changing environment. That's one thing. Then we are implementing new ERP system. So a lot of costs from there. And then also some personnel costs. And we have clear really detailed level plans how to work with those costs. But I think it's quite normal that in this kind of speed of acquisitions, there's kind of like double costs. So trying to reduce those, first of all. And then at the same time, we have been investing in sales and marketing, which is important that -- because we want also to keep this like positive trend in terms of new customer acquisition on the right track. It's important that like we keep that growth going, I mean, organic growth. But yes, like those operational costs, IT costs and then, of course, costs in terms of personnel.

Yes. So there is still one question regarding to Sweden. There's - revenue decline of 8.9% was steeper than expected. So has churn stabilized in Q1? Or is there still a [ lot of ] decline coming through?

It's from previous year. So we had high churn previous year as we have commented. But now definitely it's looking good and trend is really positive and we are like happy with the figures that we have seen in the beginning of this year. Then also worth mentioning that those like customer experience results and then also results from employee survey were really high, and it gives a lot of trust. So like operational figures are definitely going the right direction in Sweden and management is there doing really good work.

Yes. Thank you. That was all the questions for now.

Thank you.

Thank you very much.

Thank you very much.