OCTOBER – DECEMBER 2023, IFRS
- Net sales increased 15.3% and were EUR 7,437 thousand (6,449)
- EBITDA was EUR 2,512 thousand (2,287), 33.8% (35.5) of net sales
- Adjusted EBITDA was EUR 2,028 thousand (2,301), 27.3% (35.7) of net sales
- EBIT was EUR 2,119 thousand (2,037), 28.5% (31.6) of net sales
- Adjusted EBIT was EUR 1,811 thousand (2,142), 24.3% (33.2) of net sales
- Profit of the review period was EUR 1,729 thousand (1,594), 23.2% (24.7) of net sales
JANUARY – DECEMBER 2023, IFRS
- Net sales increased 16.8% and were EUR 26,344 thousand (22,550)
- EBITDA was EUR 8,215 thousand (7,332), 31.2% (32.5) of net sales
- Adjusted EBITDA was EUR 7,951 thousand (7,589), 30.2% (33.7) of net sales
- EBIT was EUR 6,890 thousand (6,594), 26.2% (29.2) of net sales
- Adjusted EBIT was EUR 7,195 thousand (7,054), 27.3% (31.3) of net sales
- Profit of the review period was EUR 5,349 thousand (5,128), 20.3% (22.7) of net sales
Key Figures, IFRS
| EUR 1,000 | 10-12/2023 | 10-12/2022 | Change | 1-12/2023 | 1-12/2022 | Change |
| Net sales | 7,437 | 6,449 | 15.3 % | 26,344 | 22,550 | 16.8 % |
| SaaS | 5,076 | 4,581 | 10.8 % | 19,146 | 16,989 | 12.7 % |
| Transaction | 857 | 308 | 178.0 % | 2,265 | 1,172 | 93.3 % |
| Consulting and other | 1,503 | 1,560 | -3.7 % | 4,933 | 4,390 | 12.4 % |
| | | | | | |
| Gross margin | 6,826 | 5,798 | 17.7 % | 23,285 | 19,982 | 16.5 % |
| Gross margin, % of net sales | 91.8 % | 89.9 % | | 88.4 % | 88.6 % | |
| EBITDA | 2,512 | 2,287 | 9.8 % | 8,215 | 7,332 | 12.0 % |
| EBITDA, % of net sales | 33.8 % | 35.5 % | | 31.2 % | 32.5 % | |
| Adjusted EBITDA | 2,028 | 2,301 | -11.9 % | 7,951 | 7,589 | 4.8 % |
| Adjusted EBITDA, % of net sales | 27.3 % | 35.7 % | | 30.2 % | 33.7 % | |
| EBIT | 2,119 | 2,037 | 4.0 % | 6,890 | 6,594 | 4.5 % |
| EBIT, % of net sales | 28.5 % | 31.6 % | | 26.2 % | 29.2 % | |
| Adjusted EBIT | 1,811 | 2,142 | -15.5 % | 7,195 | 7,054 | 2.0 % |
| Adjusted EBIT, % of net sales | 24.3 % | 33.2 % | | 27.3 % | 31.3 % | |
| Profit (Loss) of the period | 1,729 | 1,594 | 8.4 % | 5,349 | 5,128 | 4.3 % |
| Profit (Loss) of the period, % of net sales | 23.2 % | 24.7 % | | 20.3 % | 22.7 % | |
| | | | | | |
| Equity ratio, % | 61.9 % | 69.7 % | | 61.9 % | 69.7 % | |
| Net debt | 1,010 | -8,661 | | 1,010 | -8,661 | |
| Gearing, % | 3.3 % | -32.9 % | | 3.3 % | -32.9 % | |
| Earnings per share (EPS) | 0.09 | 0.09 | 7.4 % | 0.29 | 0.28 | 3.3 % |
| Return on invested capital, % (ROIC) | 5.7 % | 7.0 % | | 18.1 % | 22.5 % | |
| Return on equity, % (ROE) | 6.1 % | 6.6 % | | 18.1 % | 21.2 % | |
| Number of employees at the end of the period | 208 | 184 | 13.0 % | 208 | 184 | 13.0 % |
| Outstanding shares at the end of the period | 18,562,005 | 18,393,440 | | 18,562,005 | 18,393,440 | |
| Average outstanding shares during the period | 18,562,005 | 18,393,440 | | 18,527,914 | 18,343,559 | |
CEO Jan-Erik Lindfors
2023 was a year of market uncertainty and difficult macroeconomic conditions in Finland. At Lemonsoft, we tackled these headwinds by taking actions focused on taking care of our customers as well as making our organization more resilient and efficient. We were again able to deliver good, profitable growth, our net sales grew by 16.8% and our adjusted EBIT margin was 27.3%. Most of the growth came from acquisitions, as our organic growth rate through the year did not develop according to our targets. We made one acquisition during the year, adding Finvoicer Group products to our product/service portfolio. This was our largest acquisition to date and the one with the clearest synergies and upsell/cross-sell potential.
Our customer base expanded even further to 12,600 customers. Revenue churn rate in 2023 was -5.4% (-3.5% in 2022) and Net Revenue Retention rate (NRR) at 101.3% (102.6% in 2022). The long-term potential of this customer base is a significant upsell opportunity and during the year we invested in developing our sales and delivery capability, scaling up for 2024.
We are a SaaS-product company and as such, our wide product portfolio is our competitive advantage. Having a well-integrated product offering covering our customers’ business-critical needs drives quicker time to value. Going forward we see excellent opportunities to deliver even more value to customers by helping them with data insights, ESG reporting and automating routine tasks using AI.
In 2023 we at Lemonsoft were able to develop our products, our customer relationships, and our organizational capabilities in the right direction. We have a strong foundation of great products, loyal customers and a dedicated team working together for the purpose of making our customers’ business better. Our business is stable, profitable and growing and we intend to scale it even further during 2024.
Group Financial Development
Group financial result and profitability
October – December 2023
Net sales for the review period were EUR 7,437 thousand (6,449). Net sales increased by EUR 988 thousand, 15.3%. Organic growth of the review period was -3.7% due to the challenging market situation. Especially consulting and other income remained at a lower level than in the comparison period. Organic growth of the recurring revenue was positive. Net sales increased due to the acquisitions of Duunissa.fi business (2022), whose net sales were not included in the comparison period in October – November, and Finvoicer Group Oy (2023), whose net sales were not included at all in the comparison period.
The share of SaaS income was 68.3% (71.0), the share of transaction income 11.5% (4.8), and consulting and other income 20.2% (24.2). The share of transaction income increased especially due to the acquisition of Finvoicer Group Oy.
EBITDA was EUR 2,512 thousand (2,287), 33.8% (35.5) of net sales. Adjusted EBITDA (adjustments specified in the Alternative performance measures section) was EUR 2,028 thousand (2,301), 27.3% (35.7) of net sales.
EBIT was EUR 2,119 thousand (2,037), 28.5% (31.6) of net sales. Adjusted EBIT (adjustments specified in the Alternative performance measures section) was EUR 1,811 thousand (2,142), 24.3% (33.2) of net sales.
Profit for the review period was EUR 1,729 thousand (1,594), 23.2% (24.7) of net sales.
Cash flow from operating activities was EUR 2,214 thousand (2,834).
January – December 2023
Net sales for the review period were EUR 26,344 thousand (22,550). Net sales increased by EUR 3,794 thousand, 16.8%. Organic growth of the review period was -2.0% due to the challenging market situation. Especially consulting and other income remained at a lower level than in the comparison period. Organic growth of the recurring revenue was positive. Net sales increased due to the acquisitions of Logentia Oy (2022), whose net sales were not included in the comparison period in January – May, Finazilla Oy (2022), whose net sales were not included in the comparison period in January – June, and Duunissa.fi business (2022), whose net sales were not included in the comparison period in January – November, and Finvoicer Group Oy (2023), whose net sales were not included at all in the comparison period.
The share of SaaS income was 72.7% (75.3), the share of transaction income 8.6% (5.2), and consulting and other income 18.7% (19.5).
EBITDA was EUR 8,215 thousand (7,332), 31.2% (32.5) of net sales. Adjusted EBITDA (adjustments specified in the Alternative performance measures section) was EUR 7,951 thousand (7,589), 30.2% (33.7) of net sales.
EBIT was EUR 6,890 thousand (6,594), 26.2% (29.2) of net sales. Adjusted EBIT (adjustments specified in the Alternative performance measures section) was EUR 7,195 thousand (7,054), 27.3% (31.3) of net sales.
Profit for the review period was EUR 5,349 thousand (5,128), 20.3% (22.7) of net sales.
Cash flow from operating activities was EUR 4,286 thousand (6,439).
Balance sheet, financing and investments
The balance sheet total at the end of the review period was EUR 48,885 thousand (38,194 at the end of the year 2022). The acquisition of Finvoicer Group Oy on 1.6.2023 increased the balance sheet total significantly.
The Group has capitalized development expenses of EUR 1,653 thousand during the year 2023. At the end of the review period, the Group's balance sheet included capitalized development expenses totalling EUR 2,352 thousand (849 at the end of the year 2022).
Total equity was EUR 30,422 thousand (26,292 at the end of the year 2022), equity increased EUR 4,129 thousand.
Equity ratio was 61.9% (69.7 at the end of the year 2022) and interest-bearing debt was EUR 8,399 thousand (3,031 at the end of the year 2022). Interest-bearing debt increased with the acquisition of Finvoicer Group Oy.
Cash and cash equivalents at the end of the review period were EUR 7,389 thousand (11,692 at the end of the year 2022).
Personnel
The Group number of employees was 208 (184) on 31 December 2023. We reported our Group personnel as follows:
- R&D 93 employees
- Customer functions 101 employees
- Other functions, a total of 14 employees
Shares and shareholders
Share capital and number of shares
The company has one series of shares, and all shares have equal rights. At the end of the review period, Lemonsoft Oyj’s share capital consisted of 18,562,005 (18,393,440) shares. The average number of outstanding shares during the review period October – December was 18,562,005 (18,393,440).
The company's share is traded on the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki Oy. During the review period October – December, the highest share price was EUR 6.14 and the lowest EUR 4.53. The closing price on 31 December 2023 was EUR 6.02. The market value of the company at the closing price of the review period was approximately EUR 111.7 million. Average daily trading volume during the review period was 7,117 shares (EUR 36,544).
On 31 December 2023, the company had a total of 2,469 shareholders. The company's largest shareholders can be found on the company's investor website at https://investors.lemonsoft.fi/osakkeenomistajat/.
Authorizations of the Board of Directors
Lemonsoft Oyj has decided in its Annual General Meeting on 4 April 2023 to authorize the Board of Directors to decide on the repurchase of the company’s own shares on the following terms and conditions:
- By virtue of the authorization, the Board of Directors is authorized to decide on the repurchase of a maximum of 1,800,000 of the company’s own shares. The proposed maximum number of shares to be repurchased corresponds to approximately 9.7% of all the company’s shares. The authorization includes the right to accept the company’s own shares as a pledge.
The authorization is valid until the 2024 Annual General Meeting, but not beyond 30 June 2024.
The Annual General Meeting authorized the Board to decide on a share issue against payment or a share issue without payment and the granting of special rights (as defined in Section 1, Chapter 10 of the Limited Liability Companies Act) in one or more instalments with the following terms and conditions:
- By virtue of the authorization the share issue may be a maximum of 2,000,000 shares. The authorization applies to both issuing new shares and to transferring of treasury shares held by the company. The authorization may be used to fund or complete acquisitions or other business transactions, for implementation of share-based incentive schemes, to develop the company’s capital structure, and for other purposes decided by the Board.
- The authorization entitles the Board of Directors to resolve on all the conditions of the issuance of shares and the issuance of special rights entitling to shares, including the right to deviate from the shareholders’ pre-emptive subscription right.
The authorization is in force until the next Annual General Meeting; however, no longer than until 30 June 2024, and it replaces the previous authorizations granted regarding a directed share issue and the issuance of special rights entitling to shares.
As part of the completion of the acquisition of Finvoicer Group Oy, Lemonsoft Oyj’s Board of Directors decided on a directed share issue, in which a total of 23,986 (EUR 196 thousand) new Lemonsoft Oyj shares were offered for subscription by Finvoicer Group Oy's shareholders transferring to Lemonsoft Oyj. As a result of the share issue, the total number of Lemonsoft Oyj’s outstanding shares increased to 18,562,005 shares.
Significant short-term risks and uncertainties
The deterioration of the economic situation, the impact of inflation and events with a global impact, such as the war in Ukraine, may have direct and indirect effects on Lemonsoft's business. These may be reflected in the business operations of Lemonsoft's customer companies, for example, in reduced investments by industrial manufacturing companies and decreased needs of subcontracting chains, as well as business and bankruptcy risks. In turn, customers' business challenges may affect Lemonsoft's new customer acquisition, upsells from existing customers, and customer retention.
In the longer term, the biggest challenge for our industry is the availability of skilled personnel. Success of the Group and opportunities for growth depend largely on how well we can recruit, motivate, and engage more skilled personnel and develop our expertise.
In Lemonsoft's cost structure, the single most significant factor is personnel costs, and an increase in the general price level may increase the pressure to increase personnel costs. Lemonsoft constantly monitors the development of the situation from a risk management perspective and strives to ensure the continuation of profitable growth by optimizing its cost structure and pricing.
The ERP market is generally a highly competitive market, and the industry is fragmented. Smaller players are primarily focused in a specific sector of SMEs and larger players do not compete directly for customers in the same market. However, competition in Lemonsoft's operating markets may intensify due to existing competitors or agile new entrants.
Risks related to information security and the IT systems of service providers are a significant factor affecting the security and continuity of the Group's business. Lemonsoft constantly invests in high reliability and high security systems and strives to ensure the high quality of the services it purchases by selecting leading players in the industry as its key partners. European data protection regulations may also bring unexpected risks to Lemonsoft's operating environment.
Success in acquisitions and related integration work is a key factor for Lemonsoft's growth. The company has made several acquisitions in recent years and aims to continue to grow through acquisitions. There may be unexpected risks associated with target companies and their integration into Lemonsoft.
Board of Director’s proposal for dividend
At the end of the financial year 2023, the Group's parent company’s distributable funds were EUR 30,833 thousand and the net result of the Group's parent company for the financial year was EUR 3,563 thousand. There have been no material changes in the company's financial position since the end of the financial year.
Lemonsoft Oyj’s Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.14 (0.14) per share will be paid for the financial year ended 31 December 2023, i.e. a total dividend would be approximately EUR 2.6 million.
Events after the review period
There were no significant events after the review period.
Outlook 2024
Lemonsoft's goal is to continue growth, both by increasing the number of software modules offered to its existing customer base and by expanding its customer base with new customer acquisition. The company estimates that the prevailing economic situation will continue to restrain the growth of new sales and the current customer base.
Profit forecast for 2024
Lemonsoft estimates that the net sales for the financial year 2024 will increase by 10-18 percent compared to the financial year 2023, and that adjusted EBIT will be 23-28 percent of net sales in 2024.
Financial information and Annual General Meeting in 2024
Lemonsoft Oyj will publish the following financial information in 2024:
- Interim Report January – March 2024 on Thursday, 25 April 2024
- Half-year Report January – June 2024 on Thursday, 8 August 2024
- Interim Report January – September 2024 on Tuesday, 5 November 2024
The company's annual report for the financial year ending 31 December 2023 is scheduled for publication in the week beginning 18 March 2024.
Lemonsoft's Annual General Meeting is scheduled to be held on Tuesday, 9th of April 2024.
Webcast for investors and media
Lemonsoft will host a live webcast for investors and the media in English on February 15, 2024 at 1:00pm EET. The webcast can be followed online live via this link:
https://lemonsoft.videosync.fi/2023-results
A recording of the event and the presentation material will be available after the event at https://investors.lemonsoft.fi/.
Lemonsoft Oyj
Board of Directors
Distribution
Nasdaq Helsinki Oy
Principal media