Fortnox AB (FRA:9E80) Q3 2024 Earnings Call Highlights: Record Customer Growth and Revenue ...

GuruFocus News
3 min read

In This Article:

  • Customer Growth: Increased by 13,000, the highest for the third quarter.

  • Average Revenue Per Customer (ARPC): Increased by SEK8 to SEK293.

  • Revenue Growth: 26% increase compared to last year.

  • Operating Margin (EBIT Margin): 45%, or 48% excluding non-recurring costs.

  • Rule of Fortnox: Combined growth and margin at 71%, or 73% excluding non-recurring costs.

  • Net Sales: SEK523 million.

  • EBIT: SEK235 million.

  • Customer Base: 585,000 customers at the end of the quarter.

  • Free Cash Flow: Record high in Q3.

  • Lending Growth: Increased by 43%, with significant growth in payment upon invoicing.

  • Price Adjustment Contribution: 7% of net sales growth in the quarter.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Fortnox AB (FRA:9E80) reported a stable quarter with all main KPIs in line with or better than the same period last year.

  • The company achieved a customer growth of 13,000, marking the highest increase for the third quarter.

  • Average revenue per customer increased by SEK8, indicating a positive trend in revenue generation.

  • Net sales grew by 26%, with the highest growth observed in the lending segment, which increased by 43%.

  • Fortnox AB's platform enhancements, such as the ability for accountants to submit reports and the automation of transactions, have led to significant efficiency gains for customers.

Negative Points

  • The company faces challenges in reaching its 2025 target of 700,000 customers, indicating potential difficulties in customer acquisition.

  • There were non-recurring costs related to changes in the executive management team, impacting the operating margin.

  • The macroeconomic environment is holding back growth, affecting both customer activity and transaction-based revenues.

  • The deconsolidation of Offerta is expected to result in lower revenue in the next quarter, though the P&L impact is minimal.

  • Organic growth is trending softer, attributed to the ongoing recession and macroeconomic headwinds.

Q & A Highlights

Q: From an ARR perspective, this was the first quarter where it was sequentially down since 2018. Is this a hiccup or a trend? A: Roger Hartelius, Deputy CEO and CFO, explained that the ARR development aligns with subscription increases, and there is no significant deviation. Tommy Eklund, CEO, noted that comparing ARR is challenging due to growth in transaction-based revenue and changes in business models, such as payroll.

Q: Can you comment on the increased product adoption driving high single-digit growth in Q3? A: Roger Hartelius stated that increased product usage is a major focus, driven by efforts in product development and marketing, but there is no specific factor responsible for the growth.

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