Efecte Plc activity report from 1-3/2022 – SaaS +24%, EBITDA margin 3%

GlobeNewswire
2022-04-29

EFECTE PLC — ACTIVITY REVIEW — APRIL 29, 2022 at 1:00 p.m.

Activity report of Efecte Plc from 1-3/2022 – SaaS +24%, EBITDA margin 3%

1-3/2022:

  • Total net revenue increased by 20% to €5.0 million (4.2)
  • SaaS increased by 24% and international SaaS by 38%
  • EBITDA was €0.1 million (0.2) and EBIT €0.0 million (0.1)
  • EBITDA margin was 3% (4%)
  • Services grew 16% driven by demand from existing and new customers
  • Strategy has been updated, including higher growth ambitions

Orientations for 2022 (unchanged):

SaaS revenue is expected to grow more than 20% and EBITDA to be positive, excluding potential costs from inorganic businesses.

Group key figures

1000 euros 1-3/2022 1-3/2021 2021
Net sales 5,036 4,212 17,764
EBITDA 145 185 935
EBIT 12 70 431
RMR SaaS 1,054 855 992

CEO Niilo Fredrikson:

The first quarter was a good start to the new year. Our growth continued at a healthy pace as we also updated our strategy and began to deliver on the lofty ambition we set for ourselves: to become the undisputed #1 in our space, the best European alternative in service management. This can only be achieved by a world-class team, and so we were particularly pleased with the continued success in recruiting top talent as well as the attrition remaining at a low level.

Accelerated SaaS Growth

We’ve grown SaaS by 24% and the cumulative effect of its steady growth of over 20% – now already 18 consecutive quarters – is starting to show. Our total net sales increased by 20%, also supported by a 16% growth in services. We have invested revenue growth in our long-term growth plan in line with our updated strategy. The increase in full-time equivalent staff compared to the previous year is significant at 23%. Thanks to strong sales growth, continued cost control and the recruitment schedule, we were able to generate a positive EBITDA margin despite growth investments. The full impact of the recruitments made during the 1st quarter will naturally be visible in the payroll expenses of the following quarters.

Finland performed very well in the first quarter and the growing contribution from new markets was the highlight of our international operations. We signed three new clients in new markets, two in the UK and one in Poland. We have been very focused on helping existing partners sell, while continuing to selectively recruit new ones. A new direct market pilot has been launched for the Spanish market, executed by Spanish-speaking staff based in Finland.

Strengthen our differentiation

A key part of our strategy is to invest in product development to further strengthen our differentiation. During the first quarter, we achieved this by hiring more internal staff and increasing outsourcing. Progress has been good with particular focus on user experience, product quality and identity governance and administration (IGA).

Our next-generation self-service interface has reached the beta release phase and is now ready for customer piloting. When ready, the new interface will allow our customers to offer their end users a completely renewed self-service experience including many customer-requested features. We’ve also delivered over 30 smaller quality and security enhancements, including enhancements to our Virtual Coach artificial intelligence feature, expanded Excel reports, improved process control reports, and numerous usability enhancements and accessibility. These in turn help the thousands of computer scientists and other specialists who use Efecte every day as their main tool to carry out their work. For these heavy users, the little details matter – and we strive to give them the best possible experience.

With IGA, we had another intensive quarter including several customer and partner engagements, marketing activities and continued product development. We saw further evidence of product market fit for the new IGA Starter offering with multiple customers deployed in record time.

Our priorities in a changing world

As the world around us changed again with Russia’s invasion of Ukraine, a successful first quarter put us in good stead to execute on our full year plan. We strongly condemn Russia’s actions and have supported the Ukrainian people in many ways, including through donations. Efecte’s activity is not directly impacted, as we have no customers or partners in Russia, Belarus or Ukraine.

We reconfirm the guidance for this year and will continue to invest for long-term success. We’re in the business of helping people digitize and automate their work, and we’ve seen that customer demand remains strong despite some customers’ operating environment changing dramatically. In line with our strategy, we will focus on growth, products, people and M&A as we continue to move step by step towards our vision of becoming Europe’s leading service management alternative.

Other developments

Our cash position evolved favourably, with cash and liquid assets of 8.6 million euros (6.5) and no interest-bearing financial debt at the end of the period under review. Over 12 rolling months, the recurring gross margin was 82% (78%), the gross churn 3.8% (3.7%), the net retention rate 115% (112%) and the LTV/ CAC of 10.6. Total recurring revenue (SaaS and maintenance) amounts to 67% of net revenue (66%).

The number of full-time equivalent employees at the end of the review period was 134 (109). Of these, 110 (90) were in Finland, 7 (8) in Sweden and 14 (11) in Germany. The average number of full-time equivalent employees during the first quarter was 129 (106). Our central team in Finland operates globally supporting customers, partners and sales in all markets and includes the workforce responsible for our operations in new markets.

Long-term financial goals

By 2025, grow organically to achieve total net revenue of EUR35m, maintain average SaaS growth above 20% and achieve double-digit EBITDA margin.

Through organic growth and acquisitions, to eventually become Europe’s largest service management provider with total net revenue of over €100 million and an EBITDA margin of over 25%.

Orientations for the year 2022

SaaS revenue is expected to grow more than 20% and EBITDA to be positive, excluding potential costs from inorganic businesses.

Next publication of results

Efecte will publish the half-year report 1-6/2022 on July 19, 2022.

Further information:

CFO Taru Mäkinen, +358 40 507 1085
CEO Niilo Fredrikson, +358 50 356 7177

Authorized adviser: Evli Oyj, tel. +358 40 579 6210

This version is unaudited. The amounts indicated in this report have been rounded off from exact figures.

A webcast for analysts, investors and the media will be held on April 29, 2022 at 3:00 p.m. Finnish time. All participants can register and follow the event on https://efecte.videosync.fi/2022-q1. The webcast will be in English and written questions can be presented on the webcast portal. A registration and presentation materials will then be made available on the company’s investor pages at investor.efecte.com.

Effect Plc

Efecte helps people digitize and automate their work. Customers across Europe leverage our cloud service to operate with greater agility, improve end-user experience and reduce costs. Use cases for our solutions range from managing IT services and ticketing to improving employee experience, business workflows and customer service. We are the European alternative to the global goliaths in our space. Our head office is located in Finland and we have regional centers in Germany and Sweden. Efecte is listed on the Finnish Nasdaq First North Growth Market.

www.efecte.com