ADMICOM OYJ BUSINESS REVIEW 1.1.-30.9.2022: Growth accelerated to +30 % with excellent profitability, strategy refresh started

ADMICOM OYJ BUSINESS REVIEW 1.1.-30.9.2022: Growth accelerated to +30 % with excellent profitability, strategy refresh started

Unofficial translation of the company release on October 3, 2022 at 12:00 AM EEST. In case the document differs from the original, the Finnish version prevails.

July-September 2022 summary(comparable period July 1, 2021 – September 30, 2021): 

• Revenue of July–September amounted to EUR 8.039 million (6.164), resulting in +30.4% growth from the comparison period. Of the growth, +12.3 percentage points were organic and 18.1 percentage points were inorganic growth related to acquisitions.
• EBITDA grewby 16.2% in July–September to EUR 3.806 million (3.275), amounting to 47.3% of revenue. EBITDA growth was positively impacted by strong revenue growth and strong relative profitability of core businesses.
• Operating profit grewby 1.0% to EUR 2.925 million (2.895). Profit for the period decreased by 5.0% to EUR 2.139 million (2.251). The growth of operating profit and profit in relation to the growth in EBITDA was significantly slowed down in July-September by the significant increase in group goodwill amortization due to the acquisition of shares in Aitio Finland Oy, Hillava Oy, PlanMan Oy, Kotopro Holding Oy and Kotopro Oy.

January-September 2022 summary (comparable period January 1, 2021 – September 30, 2021):

• Revenue of January–September amounted to EUR 23.576 million (18.528), resulting in +27.2% growth from the comparison period. Of the growth, +13.0 percentage points were organic and 14.2 percentage points were inorganic growth related to acquisitions.
• EBITDA grew by 21.4% in January-September to EUR 11.166 million (9.197), amounting to 47.4% of revenue. EBITDA growth was positively impacted by strong net sales growth, significant growth in annual adjustment fees invoicing, especially in the second quarter, and strong relative profitability of core businesses.
• Operating profit grew by 11.4% to EUR 9.021 million (8.094). Profit for the period, in turn, grew by 7.0% to EUR 6.736 million (6.295). The growth in operating profit and profit relative to the increase in EBITDA was slowed down during the review period by the significant increase in group goodwill amortization due to the acquisition of shares in Aitio Finland Oy, Hillava Oy, PlanMan Oy, Kotopro Holding Oy and Kotopro Oy.
• The Group's number of personnel at the end of the review period was 238 (187). The increase in the number of personnel was mainly due to acquisitions.
• As announced in February Petri Kairinen started as CEO of Admicom Oyj as of 20.6.2022.
• The Group carried out two acquisitions during the review period. In May, the entire share capital of the software company PlanMan Oy was acquired, and in June, the entire share capital of the software company Kotopro Oy and Kotopro Holding Oy.
• The financial guidance for 2022 remains unchanged. Admicom guides for the 2022 financial year over 20% revenue growth and profitability to be 40-50% in terms of EBITDA.

Key figures

ADMICOM GROUP	7-9/2022	7-9/2021	Change-%	1-9/2022	1-9/2021	Change-%	2021
Revenue, EUR 1 000	8 039	6 164	30.4%	23 576	18 528	27.2%	24 857
EBITDA, EUR 1 000	3 806	3 275	16.2%	11 166	9 197	21.4%	11 862
% of revenue	47.3%	53,1%		47.4%	49,6 %		47.7%
Operating profit, EUR 1 000	2 925	2 895	1.0%	9 021	8 094	11.4%	10 374
% of revenue	36.4%	47,0%		38.3%	43.7%		41.7%
Profit for the period, EUR 1 000	2 139	2 251	-5.0%	6 736	6 295	7.0%	8 054
% of revenue	26.6%	36,5%		28.6%	34.0%		32.4%
Earnings per share, EPS, EUR	0.43	0,46	-6.1%	1.35	1.28	5.7%	1.63
Employees at the end of the period	238	187		238	187		209

The figures from the interim report are unaudited and in FAS format.

CEO Petri Kairinen: 

"Dear owners, customers and Admicom’s employees! The past quarter was my first as CEO of Admicom. I am very impressed with the passion and dedication with which Admicom’s employees do their work and the feedback from our customers on the value of our solutions. At the outset, I would like to thank our customers for your trust and Admicom’s employees for your contribution.

Admicom's growth and profitability development continued in the third quarter at a level consistent with the targets for the strategy period, with revenue increasing by 30% and EBITDA by 16%. Revenue growth was accelerated especially by acquisitions, but our organic growth rate (+13%) also strengthened clearly from the comparison period. Although the acquired businesses have a negative impact on the Group’s relative profitability, due to the strong profitability of the core businesses we maintained an excellent level of 47% in the EBITDA margin.

The impact of customers' annual adjustment fees on revenue growth remained positive in the third quarter of the year (+3pp), which reflects the turnaround in the development of net sales in our customer industries over the last year. Based on Statistics Finland's data, growth in customer industries has also continued to be strong in 2022.

Our operating environment is currently affected by a number of uncertainties. The war in Ukraine has no visible direct impact on our business. Indirectly, however, the war affects our business through the weakening of general economic development or possible denial-of-service attacks affecting the operational reliability of cloud services. The growth in uncertainty in our industries is indicated, for example, by the confidence indicators of construction and manufacturing enterprises reported by the Confederation of Finnish Industries, which have made a clear downturn during 2022. We are confident in the stickiness of our customer base even in an economic downturn, but client decision making on new orders and thus organic growth can be slowed down by the recession. On the other hand, our solutions specifically enable our customers to improve their business efficiency and improve visibility.

During the third quarter, we took the first steps in the integration of the PlanMan and Kotopro acquisitions made in the spring. Through acquisitions, we significantly strengthened the competitiveness of our software entity, especially in the areas of scheduling, project management, data collection and documentation that are critical to the development of our customers' productivity. In addition, the acquisitions will significantly increase Admicom's customer base and target markets, thus opening up new opportunities for organic growth, internationalization, new services, and the development of sales and distribution channels.

Admicom has transformed from a company operating around a single product into a supplier of several software solutions serving the construction industry. At the same time, the teams that have joined Admicommunity have encountered each other's partly different cultures and ways of working. We have started to clarify our strategy with the aim of defining a common direction and way of working for our Group. It has become clear to me during the process that we have many excellent opportunities to strengthen our growth in the future. One of our strengths is our enthusiastic and competent personnel, who value Admicom as a workplace. Now we are jointly defining a clear focused direction and operating model to accelerate our growth.

As a part of this clarification, we will make significant investments in projects and recruitments that support growth, competence, and competitiveness in the second half of 2022. It is clear that we need to continuously sharpen the competitiveness of our software and invest more and more in the service of our existing customers. At the same time, we will strengthen cooperation and economies of scale between the Group's businesses and streamline the Group's administrative and legal structure.

When the ongoing strategy work is completed, we will announce the strategic choices and targets and organize a Capital Markets Day to open up our growth strategy more broadly."

Outlook

Financial guidance

The financial guidance given alongside with the publication of the annual report on January 21, 2022 remains the same: In line with the Group’s financial targets for the 2021-2023 strategy period, the Company guides for the 2022 financial year over 20% revenue growth and profitability to be 40-50% in terms of EBITDA.

Themes affecting net sales and profitability

In the second half of 2022, net sales growth is supported especially by acquisitions completed at the end of 2021 and early summer 2022. However, the weakening of the demand outlook of our customer industries and the risk factors related to general economic development create uncertainty on organic revenue growth and increase the risk of customer churn. We estimate that acquisitions, development investments planned for the end of the year and the use of Aitio Finland Oy's software development resources more strongly to the Group's internal use will have a clearly negative impact on relative profitability in the second half of 2022.

Financial publications

The Company will publish the annual report of 2022 approximately on January 13, 2022.

Admicom Oyj
BOARD OF DIRECTORS

Additional information:

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

Petri Aho
CFO
petri.aho@admicom.fi, +358 44 724 1767

Approved advisor:

Oaklins Merasco Oy
+358 09 612 9670

Admicom Oyj  

Admicom, established in 2004, is a Finnish forerunner and provider of cloud-based ERP solutions for construction, building services engineering and manufacturing companies and a comprehensive partner in software and accounting services. The Company’s cloud-based SaaS ERP solution Adminet helps small and medium-sized companies enhance their competitive advantage by automating manual processes of production site and office seamlessly all the way to accounting. 

The cost calculation and the production management software developed by our daughter company Tocoman Oy have a long history and a stable position on the market. Combining the product strengths of Tocoman with the strengths of Adminet creates by far the most extensive cloud-based solution for the construction industry. 

The subsidiary Aitio Finland Oy provides its customers and Admicom with software solution development services, as well as related integration and maintenance services, mobile applications and cloud service solutions. The subsidiary Hillava Oy, on the other hand, develops and markets a cloud-based ERP system especially for planning and directing field work. The subsidiary Kotopro Oy is developing a browser-based documentation and information management software aimed especially at the construction and real estate sectors, which facilitates the everyday life of the construction site and improves the flow of information between the parties.  

The company has more than 230 employees in its offices in Jyväskylä, Helsinki, Tampere, Oulu, Seinäjoki and Turku. Further information: https://investors.admicom.fi/