Heeros Oyj    Press release    11 February 2021 at 8:45 a.m. (EET)


Heeros Oyj’s financial statement report 1 January–31 December 2020: Strong increase in profitability, success in implementing changes and improving order intake lay solid ground for future growth

This release is a translation of the summary of Heeros Oyj’s 2020 Financial Statement Release, published today. The complete 2020 Financial Statement Release, including tables, is attached to this report as a pdf-file and on the company’s website at https://www.heeros.com/sijoittajille/tiedotteet/. The complete 2020 Financial Statement Release is available in Finnish only.

January–December 2020 summary:

• Recurring revenue increased by 4% from the previous year to EUR 8.3 million (2019: EUR 8.0 million).
• EBITDA increased by 56% to EUR 1.4 (0.9) million. Adjusted EBITDA increased by 108% to EUR 1.9 (0.9) million.
• Adjusted operational cash flow increased by 259% from the previous year to EUR 1.4 (0.4) million.
• Adjusted profit for the period was EUR 0.5 (-0.3) million.
• Organizational change and other improvement measures increased operational efficiency and supported the positive financial performance in 2020. 
• The combined adjusted EBITDA margin and revenue growth percentage was 23% in 2020.
• The Board of Directors proposes that no dividend shall be paid out for the 2020 financial period.
• Heeros is expecting to increase the combined EBITDA margin (EBITDA, % of revenue) and revenue growth percentage (Rule of 40) to 30% level for the 2021 financial period.
  
  

July–December 2020 summary:

• Recurring revenue increased by 3% from the previous year’s corresponding period to EUR 4.2 million (7–12/2019: EUR 4.1 million).
• EBITDA increased by 101% to EUR 1.1 (0.6) million. Adjusted EBITDA increased by 104% to EUR 1.1 (0.6) million.
• Adjusted operational cash flow was EUR 0.8 (0.0) million.
• Adjusted profit for the period was EUR 0.4 (0.0) million.
• Heeros announced its new strategy and financial goals for 2021–2023 on 29 October 2020.
• Order intake ARR (Annual Recurring Revenue) increased to over EUR 300,000 in the fourth quarter. In July–December ARR grew by 40% compared to the previous year.
• Sales partnership with OpusCapita Solutions Oy opened a new sales channel to small- and medium-sized segment customers.
  

KEY FIGURES

MIKKO PILKAMA, CEO:

“2020 was an exceptional year in many ways. The COVID-19 pandemic had wide-ranging effects on business activity, while it also accelerated digitalisation of financial administration. 2020 also marked the 20th anniversary of Heeros and, on a personal note, my first year as the company’s CEO. We developed Heeros’ processes and management into more customer driven direction, made changes to our management team and streamlined our operations throughout the organisation. Our goal was to improve profitability but, first and foremost, to achieve quality service that better meets our customers’ needs.

I am proud of Heeros’ employees and their capacity to see the change through at a fast pace. We met our improvement targets set for 2020 and managed to turn operational cash flow and EBITDA positive faster than expected. Reaching a positive result for the period was a great achievement, given the fact that Heeros faced financial performance challenges during the last couple of years. 

As a result of the COVID-19 pandemic, our revenue growth remained modest. However, 2020 EBITDA increased by an excellent 56% compared to the previous year, with significant improvement towards the end of the year. The October–December 2020 EBITDA increased by an impressive 103% compared to the corresponding period last year.  Our relative profitability improved, with the adjusted EBITDA for the year reaching 21.7% (10.6%) of revenue. Operational cash flow was also strong. Without the effects of the pandemic on revenues, I believe that we would have seen an even stronger result improvement.

We have now laid the foundation for accelerating our revenue growth, in line with our new strategy announced in October. Our objective for 2021-2023 is to move from an investment phase to profitable revenue growth in the growing financial management software market.  As an indication of investors’ interest in our strategy, the number of Heeros shareholders increased by more than 70% during 2020.

Busy year in product development

Active product development efforts in close cooperation with our customers has yielded results. During the third quarter we launched the new Heeros Purchase Invoices (HPI) solution in the Finnish and Dutch markets. Using automation and machine learning, it makes processing of purchase invoices significantly faster. Heeros HPI solution is also available to international customers, enabling Heeros to grow outside Finland.

During 2020 we gave our payroll solution a complete upgrade and in January 2021 we launched a new version of our ePalkat (eSalaries) solution with a new user interface integrated with accounting. Outsourcing the development of the eSalaries solution to a separate eSalary Evolution Oy-company in October 2020 helped to speed up the launch of the new version. 

We have also streamlined the process for setting up new customer accounts. A new user interface allows main users of accounting firms and client companies to easily create new accounts and to take new services in use on the Heeros service platform. We will continue to develop a better user experience, software automation and improved integration during 2021.

Record breaking customer order intake

Customer order intake was on a record high level at the end of 2020. The fourth quarter was particularly strong as we gained new customers and increased sales to existing customers. Our customer base increased by more than 1,300 customers, the majority of them accounting module users.

Sales were supported by the changeover of the Tikon accounting software, which is about to reach the end of its lifecycle, and sale of the new HPI solution to accounting firms and small and medium-sized businesses. As the support for the Tikon software will end in 2022, software replacement will continue to create growth opportunities for Heeros and lay foundation for additional sales in 2021.

Towards the end of 2020 we strengthened our sales team to boost growth and signed a partnership agreement with OpusCapita Solutions Oy which opens a new sales channel to customers in the small and medium-sized segment.

Solid foundation to accelerate growth

As a financially healthier company Heeros has now laid solid ground for accelerating growth. In the short and medium term, the COVID-19 pandemic may slow down Heeros’ growth rate. On the other hand, we believe that the shift to remote work in financial management services will eventually significantly contribute to growing demand for SaaS services.

In line with our strategy, in 2021 we will focus on accelerating our growth primarily in Finland where we aim for a position among the top three financial management software providers by the end of 2023. In the next few years, our objective is to accelerate international growth primarily in Heeros’ current markets the Nordics and the Netherlands. The 2020 financial result is a good foundation that supports this growth ambition. Going forward, we will focus on improving the user experience, especially of Heeros’ mobile client and developing our services and products that support customers’ business outcomes.”

OUTLOOK FOR 2021

The ongoing COVID-19 pandemic creates uncertainty in forecasting of Heeros’ financial development in 2021. Despite of the uncertainties Heeros’ outlook for 2021 is as follows:
Heeros is expecting to increase the combined EBITDA margin (EBITDA, % of revenue) and revenue growth percentage (Rule of 40) to 30% level for the 2021 financial period.

NEWS CONFERENCE FOR INVESTORS, ANALYSTS AND MEDIA ON 11 FEBRUARY 2021 AT 14:00 (EET)

A news conference regarding the 2020 Financial Statement Release will be held for investors, analysts and the media on 11 February 2021 at 14:00 (EET). In the meeting, management of Heeros will present the 2020 financial result and the outlook for 2021. The meeting will be held in Finnish as a Teams-meeting. The link to the Teams meeting has been sent to participants who have registered for the event in advance. The event materials are available after the event on the company’s website at https://www.heeros.com/sijoittajille/. For additional information, please contact: Mikko Pilkama, CEO, tel. +358 (0)40 828 3717, email: mikko.pilkama@heeros.com

Additional information:
Mikko Pilkama, CEO, tel. +358 (0)40 828 3717, mikko.pilkama@heeros.com
Certified Advisor: Alexander Corporate Finance Oy, tel. +358 (0)50 520 4098
Distribution:
Nasdaq Helsinki
Essential media outlets
www.heeros.com/sijoittajille
As a forerunner in cloud-based solutions for financial management, Heeros’ mission is to make tomorrow’s financial management easy. Established in 2000, Heeros’ shares are listed on Nasdaq First North Growth Market Finland (trading ID: HEEROS). www.heeros.fi

Liite

• Tilinpäätöstiedote Heeros 2020