Source: Heeros Oyj
Heeros Oyj: Heeros Oyj’s half-year financial report 1 January–30 June 2021 (unaudited): Contract revenue continued growing in a recovering business environment
Heeros Oyj: Heeros Oyj’s half-year financial report 1 January–30 June 2021 (unaudited):
Contract revenue continued growing in a recovering business environment
Sharp customer focus contributed to a 90% increase in orders
This is a translation of the summary of Heeros Oyj’s half-year financial report 1 January–30 June 2021, published today. The full report, including tables is attached to this report as a pdf file and is also available on the company’s website https://www.heeros.com/sijoittajille/tiedotteet/.
January–June 2021 summary
- Revenue increased by 2% from the previous period to EUR 4.4 million (1–6/2020: EUR 4.3 million).
- Recurring revenue (contract and transaction revenue) increased by 1% to EUR 4.2 million (4.1). Contract revenue increased by 7% to EUR 2.7 million (2.5).
- Customer orders, in terms of Annual Recurring Revenue (ARR), were over 650 thousand euros, an increase of more than 90% compared to the same period last year.
- EBITDA grew by 116% to EUR 0.7 million (0,3).
- Adjusted operational cash flow was EUR 0.6 million (0.6).
- Combined EBITDA margin and revenue growth percentage (Rule of 40) was 17.7% (9.6%).
- During the review period, Heeros and a Finnish technology company Qvik signed a partnership agreement, to develop the best mobile experience in the industry for corporate customers.
- Heeros maintains its outlook for 2021 unchanged: 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.
April–June 2021 summary
- Revenue increased by 6% from the comparison period to EUR 2.2 million (4–6/2020: EUR 2.1 million).
- Recurring revenue increased by 5% to EUR 2.1 million (2.0). Contract revenue increased by 11% to EUR 1.4 million (1.3).
- Customer orders, in terms of Annual Recurring Revenue (ARR), were almost EUR 370 thousand, an increase of more than 70% compared to the same period last year.
- EBITDA was EUR 0.4 million (0,6).
- Adjusted operational cash flow was EUR 0.2 million (0.4).
- The combined EBITDA margin (EBITDA, % of revenue) and revenue growth percentage (Rule of 40) was 21.3% (24,4%).
Key figures
| EUR THOUSANDS | Q2/2021 | Q2/2020 | Change % | H1/2021 | H1/2020 | Change % | Vuosi 2020 |
| Revenue | 2,243 | 2,126 | 6% | 4,430 | 4,335 | 2% | 8,752 |
| Recurring revenue1 | 2,134 | 2,039 | 5% | 4,190 | 4,136 | 1% | 8,325 |
| Contract revenue | 1,406 | 1,270 | 11% | 2,710 | 2,525 | 7% | 5,070 |
| Transaction revenue | 728 | 770 | -5% | 1,480 | 1,610 | -8% | 3,255 |
| EBITDA | 353 | 605 | -42% | 688 | 319 | 116% | 1,429 |
| EBITDA, % of revenue | 15.8% | 28.5% | 15.5% | 7.4% | 16.3% | ||
| Adjusted EBITDA2 | 399 | 605 | -34% | 734 | 773 | -5% | 1,901 |
| Adjusted EBITDA, % of revenue | 17.8% | 28.5% | 16.6% | 17.8% | 21.7% | ||
| EBIT | 45 | 295 | -85% | 62 | -301 | 204 | |
| EBIT, % of revenue | 2.0% | 13.9% | 1.4% | -6.9% | 2.3% | ||
| Adjusted EBIT2 | 91 | 295 | -69% | 108 | 153 | -29% | 676 |
| Adjusted EBIT, % of revenue | 4.0% | 13.9% | -71% | 2.4% | 3.5% | -31% | 7.7% |
| Profit for the period | 22 | 273 | -94% | 14 | -343 | 22 | |
| Profit for the period, % of revenue | 1.0% | 12.9% | 0.3% | -7.9% | 0.2% | ||
| Adjusted profit for the period2 | 59 | 273 | -80% | 51 | 111 | -59% | 494 |
| Adjusted profit for the period, % of revenue | 2.6% | 12.9% | -81% | 1.1% | 2.6% | -60% | 5.6% |
| Basic earnings per share (EPS), EUR | 0.01 | 0.06 | -94% | 0,00 | -0.08 | 0,00 | |
| Diluted earnings per share (EPS), EUR | 0,00 | 0.06 | -94% | 0,00 | -0.07 | 0,00 | |
| Operational cash flow | 224 | 1,170 | -81% | 364 | 1,813 | -80% | 1,715 |
| Adjusted operational cash flow3 | 178 | 436 | -59% | 637 | 625 | 2% | 1,393 |
| Equity ratio, % | 37.1% | 24.0% | 34.0% | ||||
| Return on Equity (ROE), % | 1.9% | -20.1% | 1.2% | ||||
| Rule of 40, % | 21.3% | 24.4% | 17.7% | 9.6% | 18.0% |
1 Recuring revenue is divided into two parts: Contract revenue (usage fees and service agreements) and transaction revenue.
2 The adjusted figures include an adjustment of EUR 37 thousand for nonrecurring expenses related to the assessment of inorganic growth. EBITDA H1 / 2020 includes EUR 454 thousands of nonrecurring restructuring costs incurred during the period; No similar adjustments have been made to the H1 / 2021 EBITDA.
3 Adjusted cash flow from operating activities includes an adjustment for tax and earnings-related pension payment arrangements made during 2020, as well as nonrecurring restructuring costs.
MIKKO PILKAMA, CEO:
“In accordance with our strategy, our focus this year is on gradually accelerating Heeros’ revenue growth.
Heeros’ first half of 2021 was twofold: the first quarter was quiet but during the second quarter the business operations clearly picked up, and we gained great momentum in customer orders. I am pleased to note that Heeros’ profitability continued to strengthen although we simultaneously invested more in sales and marketing to drive business growth.
At the beginning of the year the COVID-19 restrictions and general economic uncertainty contributed to reduced invoicing volume-based transaction revenue, but during the second quarter of the year the volumes grew clearly by approximately 5% when compared to the first quarter. However, the number of transactions during the review period remained below the level of the first quarter of 2020.
Sales continued strong and contract revenue grew promisingly
Revenue grew by 2% during the first half of the year compared to the corresponding period last year. Contract renewals and focused sales efforts contributed to a contract revenue increase of 7% against the corresponding period last year. During the second quarter the 11% increase in contract revenue compared to the corresponding period last year was especially strong. The net revenue retention of our existing customers was above 100% at the end of the review period.
Strong sales efforts continued during the first half of the year, and the ARR (Annual Recurring Revenue) doubled to EUR 650,000 during the review period. In May to June, we succeeded especially well in sales to new customers and the undelivered order backlog in ARR was therefore record strong at approximately EUR 550,000.
Our focus on medium-sized corporate customers bore fruit as we gained significant new customers during the second quarter. The number of customers increased by nearly 1,500 corporate customers from the beginning of the year and by more than 2,600 corporate customers (i.e., approximately 20%) compared to last year. At the end of the review period, Heeros had more than 16,300 end customers. Demand was particularly strong for our accounting and payroll administration services.
Heeros’ operational profitability continued to improve during the first half of the year. This provides us with a sound basis for investments required to accelerate growth. The second quarter EBITDA includes an adjustment of EUR 37,000 in non-recurring items. These items are one-off expenses related to the assessment of inorganic growth as well as to the shutdown of the subsidiary in Sweden, which is expected to bring tax benefits during 2021.
The primary goal of Heeros is to grow organically, but profitable business operations also provide possibilities for company acquisitions. In accordance with our strategy, we will continue to actively consider acquisition opportunities in digitizing financial administration market.
I am pleased that we managed to achieve a positive net result already during the first part of the year. Due to the seasonal nature of our business operations, the financial performance of the second half of the year is usually stronger than the performance during the beginning of the year, which means that I look towards the end of the year with confidence.
Strong growth efforts continued
During the review period, Heeros and the Finnish technology company Qvik signed a partnership agreement, which strengthens the consumer-oriented and user-friendly mobile experience provided by Heeros. As a result of this partnership, Qvik’s impressive expertise in mobile application development will support Heeros’ aim to offer easy-to-use mobile financial administration processes to its customers. The renewal of mobile services, which began at the beginning of the year, progressed well during the spring, and moves well forward in close cooperation with our customers and partners. Our aim is to launch Heeros’s new mobile services during the third quarter of this year.
During the second quarter, we continued the implementation of our 2021 product roadmap with great determination. We launched several significant improvements in Heeros interfaces and increased automatisation, for example, through interface development. We are also eagerly waiting for first customer feedback to our latest AI-based automated posting solution, which has been developed in cooperation with our partner Snowfox.
During the first half of the year, we also updated the Heeros brand to support our mission to make tomorrow’s financial management easy. One of the visible changes is the launch of new product names which will further simplify the purchase and use of Heeros’ services. We have received positive feedback about this from our customers.
During the review period, Heeros signed a new strategic partnership agreement with its e-invoice operator OpenText. The new partnership will open up a sales channel to target new SME sector customers in Europe, it will enable expansion of services to new markets, and it will improve the services of existing customers. In the next few years, our goal is to accelerate our international growth especially on our current markets in the Nordic countries and the Netherlands, based on our purchase and sales invoice solution. We will pursue growth particularly among international medium-sized companies through direct sales and partner distribution channels.
The combined EBITDA margin (EBITDA, % of revenue) and revenue growth percentage (Rule of 40) increased strongly to 17.7% during the review period. In the second quarter the combined sum was 21.3%. Due to the seasonal nature of our business, the financial performance of the second half of the year is usually stronger than during the beginning of the year. The seasonal nature of our business, our skilled employees and our customers’ growing need to streamline, digitalize and automate financial administration supports us in reaching our annual goal.”
OUTLOOK FOR 2021
Heeros’ outlook for 2021 remains unchanged: 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 ON 11 AUGUST 2021 AT 14:00 (EET
A news conference regarding the 2021 first-half financial report will be held for investors, analysts and the media on 11 August 2021 at 14:00 (EET). In the meeting, the management of Heeros will present the result and comment on the business development. 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
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