Enento Group’s Interim report 1.1. – 30.9.2024: Solid performance in Business Insight and cost efficiencies, but continued decline in consumer credit information

SUMMARY

July – September 2024 in brief

• Net sales declined by 2,4% at comparable exchange rates (at reported exchange rates decrease of 1,3%) amounting to EUR 36,8 million (EUR 37,3 million).
• Adjusted EBITDA was EUR 13,8 million (EUR 14,5 million), a decrease of 5,0% (at comparable exchange rates decrease of 6,0%).
• Adjusted EBITDA margin was 37,5% (38,9%), a decrease of 1,5 pp (at comparable exchange rates decrease of 1,4 pp).
• Adjusted EBIT was EUR 10,9 million (EUR 11,8 million), a decrease of 7,1% (at comparable exchange rates decrease of 8,0%).
• Operating profit (EBIT) was EUR 7,2 million (EUR 8,9 million).
• The efficiency program targeting at least 10-million-euro efficiencies by the end of 2024 has reached more than 100% of the targeted efficiencies by the end of the third quarter.

January – September 2024 in brief

• Net sales declined by 3,5% excluding the impact from the discontinued Tambur service at comparable exchange rates.
• Net sales amounted to EUR 112,6 million (EUR 117,0 million), a decrease of 3,8% (at comparable exchange rates decrease of 3,9%).
• Adjusted EBITDA was EUR 40,3 million (EUR 43,7 million), a decrease of 7,8% (at comparable exchange rates decrease of 7,9%).
• Adjusted EBITDA margin was 35,8% (37,4%), a decrease of 1,6 pp (at comparable exchange rates decrease of 1,5 pp).
• Adjusted EBIT was EUR 31,2 million (EUR 35,5 million), a decrease of 12,1% (at comparable exchange rates decrease of 12,3%).
• Operating profit (EBIT) was EUR 20,2 million (EUR 24,5 million).
• The Board of Directors has on 29 October 2024 decided on the basis of the authorization by the Annual General Meeting 2024, to pay a second instalment of dividend of EUR 0.50 per share with the record date of 6 November 2024 and the payment date 25 November 2024. The first instalment of dividend amounting to EUR 0,50 per share payment was paid on 5 April 2024.

In July-September 2024, the items affecting comparability amounted to EUR -1,8 million (-0,5 EUR million) and in January-September 2024 to EUR -4,8 million (-3,8 EUR million), including mainly restructuring and other efficiency program-related costs.

In July-September 2024, the amortization from fair value adjustments amounted to EUR -1,9 million (EUR -2,3 million) and in January-September 2024 to EUR -6,1 million (EUR -7,2 million).

* The share of new services of net sales is calculated as net sales of those services introduced within the past 36 months. The calculation formula has been revised from 1st January 2024 onwards. Before, the net sales of new services was calculated as net sales of those services introduced within the past 24 months. The comparison figures have been restated. With the previous calculation formula, the net sales from new services would have been in July-September 2024 EUR 2.1 million (EUR 3,7 million) and in January-September 2024 EUR 7,6 million (EUR 11,4 million). The share of new services of net sales-% would have been in July-September 2024 5,6% (10,0%) and in January-September 2024 6.8% (9,8%). See note 1 Alternative Performance Measures.
** Comparable earnings per share does not contain amortization from fair value adjustments related to acquisitions or their tax impact.

FUTURE OUTLOOK AND GUIDANCE (UNCHANGED FROM 16TH OF JULY 2024)

The Company’s operating environment remains challenging due to uncertainty in the general economic situation, which is expected to continue to affect Enento’s financial performance. Enento’s Swedish consumer credit information sector continues to face a challenging operating environment, but Enento expects the environment to stabilize during the second half of the financial year. Enento will continue to prioritize cost control to maintain profitability.

Enento expects demand in its markets to stabilize during the second half of the year. The Company’s year-on-year revenue development is consequently expected to improve in the second half of the financial year compared to the development in the first half of the year. For the full year 2024, Enento expects revenue to decline compared to 2023 (at comparable exchange rates and excluding the impact from the discontinued Tambur service).

JEANETTE JÄGER, CEO

During the third quarter of 2024, Business Insights continued its solid performance, and we reached our Efficiency Program target. However, the consumer credit market in Sweden remained tough through the third quarter of 2024 due to the weak market environment. Consumer credit volumes were also muted in Finland and consumer confidence remains low. The challenges in our Swedish and Finnish consumer credit information services resulted in lower net sales at the group level.

Net sales were EUR 36,8 (37,3) million, representing a decrease of 2,4% at comparable exchange rates. Our Adjusted EBITDA was EUR 13,8 (14,5) million, decreasing by 6,0% at comparable exchange rates, resulting in an adjusted EBITDA margin of 37,5% (38,9%). Our free cash flow was strong at EUR 10,7 (7,1) million and cash conversion improved to 88,8% (50,4%). This enables us to continue attractive capital allocation to shareholders and our Board decided today on the payment of second dividend instalment of EUR 0,50 per share. The Efficiency Program progressed well as we surpassed 100% of the targeted EUR 10 million run-rate saving by the third quarter’s end. Our remaining key focus in the Efficiency Program is streamlining IT infrastructure by consolidating vendors. However, due to declining consumer credit information sales and weaker sales mix, our Adjusted EBITDA and margin declined. The volumes in Sweden are showing signs of stabilization, but weaker sales mix, high price increases impacting data costs as well as product renewals and commercialization activities will continue to pressure our margin in the short-term.

The share of net sales from new services reached 16,6% (12,9%). The improvement was driven by new services related to Swedish daily credit register, premium and real estate information.

In Business Insight, sales growth was strong in Norway while Finland demonstrated stable development. In Sweden, revenue continued to decline. In connection with driving our Nordic growth story, we are renewing and harmonizing our SME online sites, to drive scalability, faster time-to-market and improved profitability. As part of this project, we have just launched a new version of Allabolag.se for SME customers. On top of the platform benefits, the new Allabolag.se is enriched with several new features, improving customer experience and optimizing sales opportunities.

Consumer Insight experienced another difficult quarter with declining consumer credit information volumes and net sales significantly below the previous year level. In Sweden, consumer lending market recovery continues to be slow as loan broker channel activity and transaction volumes have remained low. However, we have seen stabilizing signs in Sweden. In Finland, lower volumes and weaker sales mix with more basic services impacted our sales negatively. Our services connected to the Finnish government’s positive credit register continue to be relevant for our customers and the impact to our sales has been neutral at this stage. Fraud is an increasing problem in consumer credit markets, especially in Sweden. To support our lenders in fraud prevention, we have launched a new anti-fraud score for the Swedish market to help our customers to identify potential fraud before loans are even granted.

At the end of August, the Swedish Government introduced new legislative measures aimed at enhancing consumer protection and preventing over-indebtedness. Several measures are proposed, but in the government proposal it is also stated that they will not proceed with a public register of debt and credit information. Overall, we believe that the Swedish regulative proposal is a good outcome for the Swedish society and for Enento over time. The new legislative proposal means that Enento will continue to be an essential part of the credit ecosystem in Sweden, and this enables us to further develop and invest into our consumer credit information business and service quality also in the long-term. In the short-term, the new measures have a negative impact on consumer credit market volumes especially for unsecured lending with high interest rates.

Our current strategy continues to be valid, and we remain fully committed to delivering sustainable, profitable growth once the market conditions improve. We continue to closely monitor the market situation and anticipate that the difficult situation in consumer credit information continues in Sweden. We have seen stabilization in consumer credit volumes on a quarter-to-quarter basis in 2024, but it is not yet turning into sales growth. We face margin pressure due to muted volumes, price increases of data, and sales mix impacts as we see highest growth in services that come with variable costs. The situation in Finland is also tough for consumer credit information, but development in Business Insight is more stable and helps to offset this. We have the right direction in our strategy execution and expect demand to stabilize, and hence keep outlook and guidance unchanged for 2024.

WEBCAST

Webcast for analysts, investors and media will be arranged on 29 October 2024, 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: https://enento.videosync.fi/q3-2024/register

The presentation material and the webcast recording will be available on Enento’s investor website.

Helsinki, 29 October 2024

ENENTO GROUP PLC
Board of Directors