ADMICOM OYJ BUSINESS REVIEW 1.1.-31.3.2023: Revenue growth +12%, EBITA 36%, implementation of renewed strategy started

Unofficial translation of the company release on April 5, 2023 at 9 AM EEST. In case the document differs from the original, the Finnish version prevails. 

Figures in parenthesis refer to the comparable period in the previous year, unless otherwise stated. 

January-March 2023 summary (January 1, 2022 – March 31, 2022): 

• Revenue totalled EUR 8.208 million (7.323), an increase of 12.1% year-on-year.  Comparable organic recurring revenue totalled EUR 6.999 million, an increase of 12.3% year-on-year. 
• EBITDA was EUR 3.009 million (3.292), or 36.7% of revenue (45.0%).  
• Operating profit before amortization of goodwill (EBITA) amounted to EUR 2.982 million (3.184), or 36.3%of revenue (43.5%).   
• Operating profit was EUR 2.263 million (2.729).  
• Earnings per share were EUR 0.32 (0.41). 
• The company appointed Pekka Pulkkinen as the Admicom Chief Growth Officer and as a member of the Leadership Team as of 2.5.2023. 
• The financial guidance for 2023 remains unchanged. 

 

Key figures  

ADMICOM GROUP	1-3/2023	1-3/2022	Change-%	2022
Revenue, EUR 1000	8 208	7 323	12.1%	31 615
EBITDA, EUR 1 000	3 009	3 292	-8.6%	14 115
% of revenue	36.7%	45.0%		44.6%
Comparable organic recurring revenue, EUR 1 000 (1)	6999	6 232	12.3%	27 944
% of revenue	85.3%	85.1%		88.4%
EBITA, EUR 1 000 (2)	2 982	3 184	-6.3%	13 735
% of revenue	36.3%	43.5%		43.4%
Operating profit, EUR 1 000	2 263	2 729	-17.1%	10 811
% of revenue	27.6%	37.3%		34.2%
Profit for the period,   EUR 1 000	1 595	2 059	-22.5%	7 975
% of revenue	19.4%	28.1%		25.2%
Earnings per share, EPS, EUR	0.32	0.41	-22.5%	1.60
Employees at the end of the period	258	211		241
ARR (3), MEUR	30.7	25.1	22.3%	30.0

1) Comparable organic recurring revenue includes recurring software revenue and revenue from recurring accounting services.PlanMan Oy has merged into Tocoman Oy on 31.12.2022 and is reported as part of organic revenue as of 1.1.2023.

2) Operating profit before amortization of consolidated goodwill and goodwill and impairment.

3) The annualised recurring revenue has been calculated by converting the end-of-period monthly recurring revenue (MRR) to the annual level and adding the revenue generated during the last 12 months of the annual adjustment and financial statement fees. 

 

CEO Petri Kairinen: 

"During the Capital Markets Day at the end of January, we announced in more detail our strategy, according to which we see the greatest future opportunities in the digitalisation of the construction industry. In line with the strategy, we focused our efforts on the development of the product suite of software solutions and operating model serving the construction and real estate value chain. We see great opportunities, especially in the development and analysis of the data contained in our software, to improve productivity in the construction industry. We also announced that we will finalise our strategy for Admicom's international expansion during 2023. Our strategy period is divided into two phases, during the first phase “Focus for Growth” in 2023-2024 we will strengthen our foundation and create the conditions for accelerating growth as the recession in the construction industry eases and internationalization is underway.  

Our new sales at the end of the year were reasonably strong and this led to 12.3% increase in comparable organic recurring revenue in line with our targets in the first quarter. In line with our plans the profitability was lower than in the comparison period (EBITA 36.3% of revenue cf. 43.5%), this was affected by the relatively weaker profitability of the acquired businesses and due to our strategic investments in product development and other growth projects. 

The impact of the downturn in the construction industry on our sales began to be visible in the first quarter in the form of longer sales processes and postponed decisions. Customer churn also increased clearly. The combined effect of these will be visible in revenuefrom second quarter onwards. In the second quarter, we will increase our investments in sales and marketing, which will be led by Pekka Pulkkinen, who brings international knowledge of the construction software market at the beginning of May.  

The impact of the recession has been taken into account in our strategy and in the medium long term, we believe that the inevitable digitalisation of the construction sector will create strong growth potential. One of the factors that fuels growth in Finland is the approval of the Building Act 2025 in Parliament at the beginning of March.The act promotes and requires digitalisation. The development and integration of our product portfolio has progressed according to plan and we released new integrations for our customers between Kotopro and Adminet, as well as Adminet and Tocoman solutions. We will continue our determined work to increase the speed of our product development and develop a comprehensive, integrated software family. 

The development of Admicom's operating model has progressed and we have clarified the roles and goals of different units and individuals. To my delight, our employee satisfaction at the beginning of the year had increased from last year and the main points of our strategic direction have been understood among the personnel. At the beginning of March, the Annual General Meeting elected the members of our previous Board of Directors to continue their work, and in addition, on the proposal of the Nomination Board, Tomi Lod and Camilla Skoog joined the Board of Directors, who will bring with their experience and professionalism significant support in the implementation of our strategy.” 

 

Outlook 

Financial guidance 

Comparable recurring revenue in 2023 will grow organically by 8-15% and EBITA will be 35-40% of revenue. 

Comparable recurring revenue is defined as a sum of recurring software revenue and revenue from recurring accounting services. Admicom's comparable recurring revenue in 2022 was approximately EUR 27.9 million. EBITA is defined as operating profit before amortization and impairment of group goodwill and goodwill.  

Themes affecting revenue and profitability 

The company sees significant growth opportunities in the Group's software solutions and in expansion revenue and cross-selling to existing customers, but the nascent economic downturn is causing uncertainty in the development of new sales in 2023 and raising the risk of customer churn. In addition, the growth in revenue in 2023 will be slowed down by the growing use of Aitio Finland Oy's software development resources for Admicom Group's internal product development projects and the change in the business model implemented in the Lakeus business towards the end of 2022. Strategic investments in growth, growing R&D investments and structural changes in the business weaken the development of profitability.    

Financial publications 

The company will publish the H1 report on July 5, 2023 and Q3 interim report on October 5, 2023. 

 

Admicom Oyj
BOARD OF DIRECTORS

 

Additional information:

Petri Kairinen
CEO
petri.kairinen@admicom.fi
+358 50 303 4275

Petri Aho
CFO
petri.aho@admicom.fi
+358 44 724 176