ADMICOM OYJ BUSINESS REVIEW Q1 1.1.-31.3.2024: Growth in a challenging market, ARR growth +10 %

Unofficial translation of the company release on April 10, 2024 at 9 AM EEST. In case the document differs from the original, the Finnish version prevails.

Welcome to join an investor call on Admicom's Q1 results on 10 April 2024 at 11.00 EEST. You can register for the event via this link: https://us06web.zoom.us/webinar/register/WN_xN6ug9BvTgatFJ9Quq7_VA.

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

January-March 2024 (Q1):

• Annual recurring revenue (ARR)¹⁾ grew by 10.0% to EUR 33.8 million (30.7).
• Recurring revenue²⁾ grew 7.4 % and was EUR 8.1 million (7.5).
• Revenue grew 4.8 % and was EUR 8.6 million (8.2).
• Adjusted EBITDA³⁾ was EUR 2.7 million (3.0), 30.9% of revenue (36.7%). Adjustments to EBITDA were EUR 80 thousand.
• Adjusted EBIT³⁾ was EUR 1.7 million (2.3), or 19.9% of revenue (27.6%).
• Earnings per share were EUR 0.21 (0.32).
• Admicom strengthened its forerunner position in construction technology solutions by acquiring asset management and IoT-solution company Trackinno Oy. Trackinno has been consolidated in the Group financials from the acquisition date 19 Jan 2024. In the first quarter, Trackinno generated EUR 117 thousand to Group’s revenue and EUR 551 thousand to Group’s ARR.
• Helena Marjokorpi (MSc) was appointed as Head of People Operations and a member of Admicom Oyj’s Leadership Team as of 1 January, 2024.

¹⁾ Annual Recurring Revenue = Monthly recurring revenue (MRR) at the end of the period multiplied by 12 and added with revenues from annual adjustment fees and financial statement fees during last twelve months.

²⁾ Recurring Revenue = Monthly recurring revenue added with revenues from annual adjustment fees and financial statement fees.

³⁾ Admicom reports Adjusted EBITDA and EBIT as alternative performance measures to improve comparability between periods. Adjustments are material items outside the normal course of business. They can include costs related to mergers and acquisitions, gains and losses from material divestments, restructuring costs, impairment losses and other unusual, one-off items.

Key figures

ADMICOM GROUP (EUR 1,000 unless otherwise stated)	1-3/2024	1-3/2023	Change-%	2023
ARR, MEUR	33.8	30.7	10.0%	32.5
Revenue	8,605	8,208	4.8%	34,321
Recurring revenue	8,054	7,496	7.4%	31,936
Adjusted EBITDA	2,657	3,009	-11.7 %	12,800
% of revenue	30.9%	36.7%		37.3%
EBITDA	2,577	3,009	-14.4%	12,800
% of revenue	29.9%	36.7%		37.3%
Adjusted EBIT	1,713	2,263	-24.3%	8,823
% of revenue	19.9%	27.6%		25.7%
EBIT	1,633	2,263	-27.8%	8,823
% of revenue	19.0%	27.6%		25.7%
Profit for the period,	1,071	1,595	-32.9%	6,317
% of revenue	12.4%	19.4%		18.4%
Earnings per share, EPS, EUR	0.21	0.32	-32.9%	1.27
Employees at the end of the period	279	258		271

CEO Petri Kairinen:

In the first quarter of 2024, we continued the determined execution of our growth strategy. As unified Admicom, we are now building a product suite that seamlessly integrates with each other to improve productivity in the construction and real estate sectors. The latest addition to the product family was Trackinno Oy, which was acquired in mid-January. Trackinno’s modern cloud-based asset management solution further widens our offering and market potential.

Our annual recurring revenue (ARR) increased by 10% year-on-year, where Trackinno's impact was approximately 1.7%-points. Our new sales was reasonably good considering the circumstances, and we gained clearly over one hundred new customers, from which an increasing amount procured several of our products. The market situation in the Finnish construction sector continued to be difficult. Although the peak in interest rates is estimated to be behind us, there is still no significant improvement in sight in the construction sector. Churn remained at higher-than-normal level as predicted, and bankruptcies continued to stand out. Happily, in terms of the total value of contract terminations, the first quarter was lower than any of the quarters in 2023.

In accordance with our guidance, this year will be a year of modest growth for us, and especially in the second quarter, the amount of volume-based annual adjustment fees from customers will be lower than last year, which will also erode profitability. The profitability of the whole year will be maintained by the second and third quarters which are typically strong due to seasonality. Profitability is further supported by tight cost control and the flattening of personnel numbers. The increase in personnel in the first quarter is mostly due to the acquisition of Trackinno.

We will continue to build the foundation of our growth strategy with steady steps, aiming for the next phase of accelerated growth starting in 2025. As visible steps for customers, we introduced a modern and customizable dashboard view for Ultima customers in the beginning of April. This new front page, which is based on single sign-on and combines views of different products, will be shared by the Admicom product suite and is adaptable to the customer's role. This and other improvements that will be launched during the year to improve the user experience and deepen the integrations between the products are the results of the increased R&D investments in line with our strategy. We have also launched the first AI-based application for pilot use and will publish more AI solutions before the summer. In the medium term, combining these with the data of our products will create a significant competitive advantage in our products.

In terms of acquisitions, we are constantly researching targets that fit our strategy both in Finland and internationally. We still expect the overall market to start looking brighter in the second half of the year.

Outlook

Financial Guidance 2024

Financial guidance given in relation to financial statements release on January 19, 2024 remains unchanged.

Annual Recurring Revenue (ARR) is expected to grow in 2024 by 5-10%. ARR in 2023 was 32.5 million euros.

Total revenue is expected to grow from 2023 level. Total revenue in 2023 was 34.3 million euros.

Adjusted EBITDA is expected to be 32-37% of revenue.

Themes affecting revenue and profitability

The company sees significant growth opportunities in its software solutions as well as upsell and cross-selling to existing customers, but the economic downturn in the construction industry causes uncertainty in the development of new sales in 2024 and keeps customer churn high especially due to insolvencies. The company continues to transfer capability from external software development services to its internal use, which also reduces revenues.

The pricing of Admicom Ultima product (formerly Adminet) and accounting services is based on a monthly fee determined by the customer's revenue. Invoicing is reviewed when the customer's actual revenue of the financial year deviates from the forecast. This annual adjustment fee item is typically invoiced five months after the end of the customer's financial year. Due to the decreased customer revenues, we estimate that annual adjustment fees will be approximately EUR 1.5 million in 2024 (EUR 2.3 million in 2023). This change will weaken the company's growth and relative profitability.

Adjustments for adjusted EBITDA are material items outside the normal course of business related to e.g. acquisitions or other one-off transactions.

Financial publications:

The company will publish the H1 report on July 9, 2024 and Q3 interim report on October 9, 2024.

Admicom Oyj
Board of Directors

Additional information:

Petri Kairinen
CEO
petri.kairinen@admicom.com
+358 40 832 1832

Satu Helamo
CFO
satu.helamo@admicom.com
+358 45 633 7710

Approved advisor:

Oaklins Merasco Oy
+358 09 612 9670