Penneo achieves 25% year-on-year ARR growth in H1-2023

Company Announcement No. 27-2023
Copenhagen, 17 August 2023
Interim financial report for the period 1 January 2023 - 30 June 2023

H1-2023 performance highlights

• ARR increased by 8.3M DKK to 79.2M DKK corresponding to 25% year-on-year (YoY) growth at the end of the quarter
• ARR increase from Newbiz amounted to 4.3M DKK compared to 4.8M DKK in H1-2022
• ARR increase from Uplift amounted to 5.3M DKK compared to 4.0M DKK in H1-2022
• ARR lost to Churn amounted to 1.2M DKK compared to 0.7M DKK in H1-2022
• ARR from foreign markets increased by 2.4M DKK compared to 3.3M DKK in H1-2022
• EBITDA amounted to negative 10.3M DKK compared to negative 9.7M DKK in H1-2022
• Free Cash Flow (FCF) amounted to negative 14.3M DKK compared to negative 18.0M DKK in H1-2022

Guidance

ARR
Penneo continues to assume an ARR level of 87-95M DKK at the end of 2023 corresponding to an ARR growth rate of 23-34%. 

EBITDA
The expected EBITDA level for 2023 continues to be in the range from negative 10M DKK to negative 15M DKK.

The outlook is based on currency exchange rates per end of 2022. Penneo reports ARR based on actual currency exchange rates end-of-quarter.

Business summary

In H1-2023, Penneo made good progress achieving a year-on-year ARR growth of 25%. ARR increased by 8.3M DKK compared to 8.0M DKK in H1-2022, and reached a total ARR of 79.2M DKK by the end of H1-2023.

This result was achieved in spite of a negative currency related ARR impact of 0.9M DKK which is due to the recent down-trend of the SEK, and especially the NOK which is currently at a low level when viewed against the DKK. Penneo reports ARR based on actual currency exchange rates end-of-quarter. In a hypothetical scenario where exchange rates remained constant, Penneo would have observed an increase of 9.1 million DKK in ARR during H1-2023 which corresponds to year-on-year growth of 26%. 

During H1-2023, Penneo’s sales teams continued navigating in a market characterized by a cautious buying behavior that has persisted from the second half of 2022. This applies especially to our new customers and has resulted in lower deal sizes due to smaller initial sales commitments and longer sales cycles. Nevertheless, Penneo has improved its sales and customer acquisition capabilities, successfully bringing onboard a total of 253 new customers in H1-2023. This surpasses the number of new customers acquired in the same period last year, which stood at 201. Specifically, 142 of these new customers joined us during Q2-2023, indicating an upward trend compared to the 103 new customers onboarded in Q2 of the previous year. During H1-2023, Penneo also maintained a low year-on-year ARR churn rate of 4% and observed a continued healthy uplift from existing customers based on increased engagement with Penneo Sign and cross-selling of Penneo KYC.

Another key achievement in H1-2023, was the continued ARR growth in new business from foreign markets. 48% of our ARR from new business in H1-2023 originated from foreign markets, primarily due to our continued success in Belgium. For instance, during Q2-2023 alone, we successfully acquired 28 new customers in Belgium, resulting in a 299% increase in ARR compared to the end of H1-2022. Since expanding into new markets while simultaneously nurturing existing ones is a key part of our growth strategy, this is a development we are particularly pleased with.

Penneo's guidance for 2023 remains unchanged. The guidance is based on continued cautious buying behavior in 2023. Looking further ahead Penneo expects solid demand for its solutions due to increased focus on digitalization and stricter regulatory demands, especially in industries regulated by anti-money laundering (AML) regulation.

Presentation

The H1-2023 report is available to read here and will also be presented at an online conference hosted by Penneo today, 17 August 2023 at 10:00 CET and a webinar hosted by HC Andersen Capital at 13.00 CET (conducted in Danish). The conference call hosted by Penneo will be conducted in English and can be attended live here. Participants are also able to dial in via phone (DK) +45 70 71 42 81 and enter PIN: 152 714 396#. Prior to the event, investors and interested parties can also submit and up-vote questions to Penneo’s management team via Stokk.io, a QA platform that can be found here. During the live event, Penneo will answer questions posted on this platform after responding to questions from analysts.

The webinar hosted by HC Andersen Capital can be attended live by registering here.

Further information

CEO, Christian Stendevad
Mobile (+45) 27 29 50 02

About Penneo A/S

Penneo is a provider of Software-as-a-Service (SaaS), and was initially established for the purpose of assisting businesses with digital document signing and digitizing workflows. Today, the company has developed into an eco-system of digital solutions which automate work routines within for example anti-money laundering (AML) - a RegTech software that offers businesses an efficient and cost-saving way to comply with legislation. 

The original and widespread product "Penneo Sign", which helps customers secure easy online signing of documents, is still continuously developed by the company - while at the same time new products appear, such as Penneo KYC (Know Your Customer) - a product that digitizes the work-flows in businesses and contributes to complying with legal requirements in connection with onboarding and identification of customers. Penneo holds a strong position across the geographical markets it operates in. 

In total, 1.8 million individuals signed documents electronically with Penneo in 2022 across all of the markets we operate in. In April 2022, Penneo was listed on Nasdaq Copenhagen following a listing on Nasdaq First North in June 2020. This transition contributes to strengthening the company's focus on European expansion. 

For information about Penneo, please visit https://penneo.com/investor