Penneo achieves 21% year-on-year ARR growth in H1-2024 and strong improvement in EBITDA

Company Announcement No. 15-2024
Copenhagen, 28 August 2024
Financial report for the period 1 January 2024 - 30 June 2024
 

H1-2024 performance highlights

Strong new business performance and continued uplift from existing customers due to increased engagement, though negatively impacted by temporary downgrades, churn, and adverse currency fluctuations in H1-2024. Additionally, there was a strong improvement in EBITDA.

• ARR increased by 6.2M DKK compared to 8.3M DKK in H1-2023
• ARR increase from Newbiz amounted to 6.6M DKK compared to 4.3M DKK in H1-2023
• ARR increase from uplift amounted to 1.6M DKK compared to 5.3M DKK in H1-2023
• ARR decrease from churn amounted to 2.0M DKK compared to 1.2M DKK in H1-2023
• ARR from foreign markets increased by 3.1M DKK compared to 2.4M DKK in H1-2023
• ARR amounted to 95.6M DKK at the end of H1-2024 compared to 79.2M DKK at the end of H1-2023 (21% year-on-year growth) 
• ARR from foreign markets amounted to 29.8M DKK at the end of H1-2024 compared to 22.0M DKK at the end of H1-2023 (35% YoY growth)
• EBITDA improved to negative 2.2M DKK up from negative 10.3M DKK in H1-2023

2024 Guidance

ARR

Penneo continues to assume growth in ARR and guides ARR at the level of 105-112M DKK at the end of 2024 corresponding to an ARR growth rate of 18-25%.

The outlook is based on currency exchange rates at the end of 2023.

EBITDA

Penneo continues to assume an EBITDA at a level between 5M DKK to 10M DKK.

Business summary

In H1-2024, the company continued its growth pattern ending with a year-on-year ARR growth of 21%. EBITDA in H1 2024 has improved compared to H1 2023, aligning with expectations. 

Despite challenges in the first quarter, Penneo experienced continued strong momentum in New Business. Growth in this area surged to 6.6M DKK, up from 4.3M DKK in H1-2023, continuing the strong momentum from last year. 

In addition, Penneo saw a continued uplift from existing customers due to increased engagement. In the first quarter, Penneo experienced lower ARR growth than usual due to churn, currency fluctuations, and temporary downgrades related to few specific customer cases. However, in the second quarter, the company managed to regain 1.7M DKK in uplift. Despite these obstacles, the total Annual Recurring Revenue (ARR) reached 95.6M DKK. 

In the first half of 2024, fluctuations in the exchange rates of NOK and SEK against DKK negatively impacted the ARR by 0.2M DKK, indicating that currency fluctuations masked a slightly more positive ARR development. Penneo reports its ARR using the currency exchange rates at the end of each quarter. In a constant currency rate scenario, Penneo would have achieved a total ARR of 95.7M DKK, compared to the reported result of 95.6M DKK.

The share of new business ARR from foreign markets was 66% by the end of H1-2024. This growth was driven by Belgium, where 120 new clients were acquired in the first quarter, compared to 57 the previous year. Penneo is preparing for continued international expansion, with plans to launch the highly requested KYC product in Belgium this fall. The expansion into Germany has already started, marked by the signing of a major German accounting, tax, and corporate law firm in early July.

At the end of H1-2024, Penneo’s cash position was 29.2M DKK. As we move forward, our approach is to invest the cash that is available and continuously ensure that we have a clear path to a cash positive position given the cash available. At the end of 2024, we expect to reach a position where our ARR will exceed our overall cost base, positioning us to achieve at least a cash neutral status on a yearly basis by 2025 according to our current projections.

Presentation

Penneo’s H1-2024 financials will be presented at an online event hosted on 28 August 2024 at 10:00 CET. The call hosted by Penneo will be conducted in English and can be attended live here. Participants can also dial in via (DK) +45 70 71 41 69‬ PIN: ‪815 087 448‬#. 

Before the event, investors and interested parties can also submit and upvote questions to Penneo’s management via Stokk.io, a Q&A platform found here. During the live event, Penneo will answer questions posted on this platform after responding to analyst questions. 

On 28 August, Penneo’s financials will also be presented at a webinar hosted by HC Andersen Capital at 13.00 CET. This event is conducted in Danish and you can sign up here.