Interim report, July - September 2020
• Net sales increased by 29% Y-O-Y adjusted for exchange rate fluctuations
• Consolidated net sales ended at 41,485 (SEK 000s)
• EBITDA totaled to 4,166 (SEK 000s) (10% margin)
• Operating profit, EBIT, was 1,740 (SEK 000s)
• Profit after tax was 179 (SEK 000s)
• Earnings per share SEK 0.003
CEO’S COMMENTS
Again, I must say that I am proud of the 24SevenOffice team and its performance during the second full quarter in the Covid-19 pandemic. The effort by the team in this tough and uncertain market environment really shows the culture of the company. Our original plan was to move to profitability at the end of 2020. However, by adjusting the profitability and growth target in the Covid-19 situation our adjusted strategy continues to deliver positive EBITDA with a margin of 10% in the quarter. At the same time we managed to keep our high revenue growth at 29% year over year, adjusted for the extraordinary currency fluctuations between Norwegian and Swedish kroner due to the market situation in the quarter. Currency adjusted revenue for the quarter was 45,7 million SEK with an EBITDA of 4,7 million SEK. The company aims to balance the relationship between growth and profitability according to established SaaS metrics.
World class SaaS unit economics
As a SaaS company the unit economics are among the most important key performance indicators to follow closely and adjust the business. Our unit economics are continuing to improve as a result of getting return on the investments we have made during the previous year. Our new hires have been trained and are continuing to improve their productivity. The lifetime value to CAC (customer acquisition cost) ratio increased to 10.8 and we are recovering the CAC after 9.8 months of subscription. With the investments in new employees last year we have the foundation for growing without increasing the people count at the same level as last year which means we can grow with profitability going forward and having world class unit economics.
Covid-19 update
Even though we are delivering a strong quarter it is still too early to say that we are out of the Covid-19 crisis and that our results will not be affected by the pandemic in the coming quarters. We are currently experiencing that governments in Norway and Sweden are implementing tougher restrictions to fight a potential second wave and it is too early to tell if the effect on the economy will be worse during the coming quarters with an increase in bankruptcies and slower sales cycles that can affect the subscription base. We are, however, monitoring the development and possible impacts closely, and are prepared to adjust the business accordingly. As previously communicated, we might experience a lower revenue growth rate as a result of the pandemic and shift to a more profitable growth strategy.
On the positive side we do see an increase in companies wanting to digitize and automate their business administration with 24SevenOffice, especially in the enterprise market with larger businesses. These processes, however, have a longer sales cycle and implementation time. It might as well be this effect that will continue to drive growth in the coming quarters.
Good traction in the enterprise market
In the enterprise market we have closed an important deal with NSD, a state enterprise organisation in Norway with a contract value of approximately 3 million kroner over 3 years. The implementation has started and the financial effect from this customer win will be from Q1 2021. 3
We have also signed a strategic cooperation agreement with ECIT AS, which is one of the largest accounting firms in Scandinavia with 1,400 employees and close to 1,6 billion SEK in revenue. ECIT establishes a strategic business unit specialized on 24SevenOffice technology including AI accounting, and best practice. ECIT will through that business unit acquire new accounting firms mainly in Norway and Sweden where all portfolio companies will use the 24SevenOffice accounting/ ERP system. ECIT has a proven track record acquiring accounting firms. I believe that accounting firms basing their business on 24SevenOffice AI accounting platform will benefit from this cooperation as a potential exit strategy for their company, giving us a competitive advantage in the market.
Huge opportunities with Fintech
24SevenOffice has been one of the pioneers in integrating the accounting and ERP system with the banks allowing customers to pay their invoices and receive payments directly from the accounting system. We were also the first to launch financial services where companies can sell their invoice and get paid immediately and launched small business loans during the Corona crisis.
Traditional banks have substantial revenue from payment transactions alone. With the PSD2 regulative and new technology the banking industry is open for disruption. We are already working closely together with the technical and commercial team in Optin Bank, where we recently invested, to launch new, automated and embedded banking services in 24SevenOffice providing customers relevant banking products seamlessly integrated into our services, more efficiently, cheaper and faster, with expected launch within the first half of 2021.
Empowering businesses for the future
Companies that want to be competitive in today’s markets must have efficient accounting systems, invoicing systems, access to a CRM system, project management, time accounting etc. As a company that delivers an efficient, highly automated and fully integrated cloud-based ERP software for the corporate market, 24SevenOffice is very well positioned.
I believe more companies are currently experiencing that their systems need to be available outside the office, and therefore switch to cloud-based systems. They will also see the importance of investing necessary time and take the required steps to switch to a both efficient and automated ERP system. As a consequence of the covid-19 situation we might see an increase in demand for cloud-based software solutions that both digitalises and streamlines companies and thereby, empowering them for the future.
This disclosure contains information that 24SevenOffice Scandinavia AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 11-11-2020 07:15 CET.
For further information please contact:
Ståle Risa, CEO
Tel: +46 70-023 63 03, str@24sevenoffice.com
24SevenOffice in brief
24SevenOffice's vision is to empower businesses for the future, through delivering world class cloud based business systems to small and medium-sized companies in the Nordic region. The system is currently used by 56,200 companies in the Nordic region, with PwC and KPMG, among others, as accounting partners. The business system is module-based, where the modules are provided independently or packaged as complete solutions. For more information see www.24sevenoffice.com