Fortnox AB (publ)

Forum. My name is Josephine Seder and I will be your host today. Unfortunately, none of our analysts could be here today, so this time I will also take on the role as moderator. Our guest in the studio is, of course, Fortnac CEO Tommy Eklund. This stream will be about an hour long. The first part is dedicated to the quarterly results, which will be presented by Tommy. This will be followed by a question and answer session. You can submit your questions to Tommy anytime during the stream using the chat. Here is Tommy Eklund with 2024's first quarter results. Hi there.

So welcome to the session. So let's start this so that we can focus on Q&A. As I always do, I keep it kind of short and then we'll focus on your questions. So quarter one in numbers. Again, a very stable net ads of customers, 20,000 compared to 15,000 quarter one, 2023. So a really good net ads in the quarter, despite the macro environment. And also our customers continuing to increase the usage of the platform, the ARPC, which is the average revenue per company in the platform. It increased with eight Swedish kronor. So that also a stable growth, which means that our customers are using more and more of our products in the platform. So both numbers stable in the quarter. Growth, as we have reported, we have an impact on the growth connected to the macro environment, but it's kind of stable. So we see no positive signs. So it's not changing, but there is no negative signs either. So it's pretty much on the same level. So the impact is pretty much on the same level as it has been now quarter three, quarter four and quarter one. So we don't get anything for free, but we're getting there. So 26% in growth is a stable quarter despite the macro environment. And again, a really solid scalability regarding EBIT. So now we're delivering over 40% in a quarter one, which we have never done before. So this is the highest EBIT margin that we have had in a quarter one. So again, the business is showing scalability in all aspects. Yes, so if you just dig into the numbers and look back a bit, this is actually the highest net ads regarding customers that we have ever had, 20,000. About 2.6 of them came from BoardEaser, so they had about 6,000 customers. And in the Fort Knox environment, that became 2.6 because we had some customers already in the platform. So a really solid number, especially with the headwinds we have in fewer started companies and also bankruptcies. So a really good quarter in all aspects. And as I said, our customers are increasing the usage of our platform. So they're increasing the number of products that they're using or number of seats, which is shown in the ARPC. So again, an increased ARPC, which is showing that we're continuously delivering customer value. And this is a good measuring of how valuable our platform is since our customers are increasing the usage of the platform. In this context, we are a bit ahead of our plan. As some of you might know, the five-year target on the ARPC is 300. That was originally 150 when we started the business plan period. We have the goal of doubling the ARPC during the five-year business plan period. Now we're delivering a bit better than what we have in the business plan 2025. Yeah, as I comment, you know, 26 percent is a really good quarter, but we definitely are impacted by the macro environment, something that we have been now quarter three, quarter four and quarter one. We especially see it in the marketplace segment, which we have seen, especially in the oferta business, but we are impacted in all segments, I would say. And also, for instance, since it's fewer started companies, also the lager-belag business is impacted, and that has also impact, not only net ads, it also has impact on the revenue. So, really good quarter, but of course there are some obvious headwinds in the growth of the net sales. But a solid EBIT anyway. And again, you know that we're always working with the combination of EBIT and growth. So when EBIT, if growth goes down, EBIT should go up. So that's, you know, the rule of Fort Knox. The international definition is rule of 40. And as you might know, we have our own definition, which is rule of Fort Knox, which is rule of 60. So when you add EBIT and net growth, we have an internal target on an annual basis we want that to be healthy over 60. So this was another quarter that we healthy delivered at so we were capable of having good balance between EBIT and growth. As we normally do in these presentations, there are some fun facts from the platform. We released our new product Fortnox Insight, which we have developed now for two or three years. So it's a really important product going forward because it gives so much customer value. to our customers. And now when we're officially releasing the product, it's actually 20% of all accountants that are using the product on a monthly basis. So quite a big usage, although the product is fairly new. and we are delivering we are developing uh new products for the micro segments so it's basic versions of our other products which is addressable the micro segment which is zero to four employees so and now those products are starting to to pick up so in the quarter the basic payroll which is the The payroll product addressing the micro segment, it actually grew with 45%. So also those products are picking up right now. And usage is really important for us in general. We know that engagement and usage in the platform, even if it's not always connected to subscriptions, increased usage and engagement always drives revenue over time. And then it's important in the app usage is, of course, important for our long-term strategy. And in March, it was actually over 300,000 unique users only in the app in March. So quite an impressive number now. And a couple of product and business highlights from the quarter. As I said, we released the Insight product. It's something that we have worked on for two, three years now. So our AI team has worked on taking advantage of all the data that we have in the platform and giving back insights and guidance on what you should do to improve your business. It's a product that has been developed together with accountants. And now we're comfortable that, yes, we're delivering the product to the whole market right now. And the business model is that so accountants can work and of course, customers can work with insights as well. But if you want to share an insight, then that receiver. So if it's an entrepreneur, they need to have access to the bookkeeping. bookkeeping product. So that's the business model. So now it's really easy to share insights with whoever is interested in it. But of course, it's often accountants that share insights with the entrepreneur, and then the entrepreneur needs to have access to the bookkeeping product. So I think that will give a lot of customer value and a strategic product that we have worked on for quite some time. And we also officially released assignment agreements, which is, of course, an interesting product for our accountants because you always need an assignment agreement to work with a client. And it's something that you, you know, it's an administrative burden and it's kind of, you know, it's a lot of manual things to get that information inside the platform. Now it's very efficient. to just distribute that digital and all of the data that you need from the assignment agreement is automatically transferred to the Fortnox platform. And also a very positive side effect. Again, we're working with onboarding more and more users. So when you're distributing an assignment agreement like this, then you're also on board the entrepreneur, which is important because we know that, again, increased engagement from all different stakeholders when you run a company is important for the success of the company. And of course, out of the Fort Knox context, that also has a big impact on the ARPC. So increased usage and a lot of value for the accountants. So kind of a small product, but really a lot of customer value in it. Yeah, so we did an acquisition during the period in quarter one. So this is a product that we had or a company that we have gotten to know for quite some time now. And we have sold their products white labeled to our customers for quite some time now. And we really like the team behind BoardEaser and their products are superior. And it's products that it's areas that Fort Knox hasn't been that strong in before, because this is something that you normally need when you are a bit bigger. So this is the needs of, you know, consolidation, board portal and report and analysis is things that you normally need. have greater needs for when you become a bigger company. So this is a really good strategic fit product-wise because it's something that we haven't been that strong before. And it's a really good team. They are superior in what they're doing. And it's also important for our strategy to go for the mid-market, to go upwards and to offer value also to bigger organizations. Then these types of products are crucial to get there. So strategic and a really good team. Recurring invoicing, it's something that we have now released in the quarter. So if you have recurring things that you need to invoice, for instance, rents or subscriptions or things like that, now it's really easy to do that in the invoicing product. And we have also, when we released that, it's pre-installed. So when you're doing... Recurring invoicing now, the default is to also use invoicing service and the payment checkout. So now we're combining our invoicing capabilities with invoicing service, finance services and payments. so when you're doing this everything is automatically done so it's really easy for our customers when they have recurring invoicing they can do that one time and then we do everything for them so we're distributing invoicing we're doing reminders we're offering payments to their customers so it's it's another example where we're taking the position that we have in the platform and just doing it better for everyone and also capturing more and more of the usage and the money flow So last but not least, only a few seats left. So I encourage you to sign up for the Capital Market Day in May 23rd. So with that, thank you.

Great. That concludes the first part of the stream, and we'll now move on to the question and answer section. Don't forget, you can still submit your questions in the chat, and we're going to move on to the first question. And it's a long one, so be prepared. As Småföretagarnas bästa vän, or the small business owner's best friend, Fort Knox has gained substantial market share by offering modern software at an attractive price point. However, as far as I understand, your pricing on factoring roughly aligns with competitors, despite Fort Knox having a more efficient solution. Would it make sense to offer a more attractive price point to drive usage?