Arkistot: MFN News Items

OCTOBER – DECEMBER 2024, IFRS

• Net sales increased 3.2% and were EUR 7,672 thousand (7,437)
• EBITDA was EUR 1,776 thousand (2,512), 23.2% (33.8) of net sales
• Adjusted EBITDA was EUR 1,777 thousand (2,028), 23.2% (27.3) of net sales
• EBIT was EUR 1,257 thousand (2,119), 16.4% (28.5) of net sales
• Adjusted EBIT was EUR 1,506 thousand (1,811), 19.6% (24.3) of net sales
• Profit of the review period was EUR 943 thousand (1,729), 12.3% (23.2) of net sales

JANUARY – DECEMBER 2024, IFRS

• Net sales increased 9.7% and were EUR 28,911 thousand (26,344)
• EBITDA was EUR 7,329 thousand (8,215), 25.3% (31.2) of net sales
• Adjusted EBITDA was EUR 7,522 thousand (7,951), 26.0% (30.2) of net sales
• EBIT was EUR 5,404 thousand (6,890), 18.7% (26.2) of net sales
• Adjusted EBIT was EUR 6,444 thousand (7,195), 22.3% (27.3) of net sales
• Profit of the review period was EUR 4,031 thousand (5,349), 13.9% (20.3) of net sales

Key Figures, IFRS

*The calculation of key figures has been changed for other operating income and the comparison periods have been changed accordingly.

CEO Alpo Luostarinen

The fourth quarter remained slightly subdued in terms of revenue and profitability. Our revenue amounted to €7.7 million, with a revenue growth of 3.2%. The adjusted operating profit was €1.5 million, and the adjusted operating profit margin was 19.6%. The weak sales in the spring and summer were reflected in both recurring revenue and consulting revenue towards the end of the year. However, our development efforts, particularly in sales, technological transitions, and organizational development, progressed according to plan.

The general market situation in our key industries, manufacturing and wholesale trade, showed cautious recovery towards the end of the year. After more than a year and a half of economic downturn, the market is gradually turning in a positive direction, though strong growth has not yet materialized. The financial situation of our customers is generally stable, but as the weaker economic cycle persists, payment delays increased towards the end of the year.

Regarding new sales, the quarter ended on a promising note. Sales of ERP solutions, particularly in the manufacturing and wholesale trade sectors, reached their highest level of the year. Additionally, we have focused on cross-selling within our extensive product portfolio. A more unified sales approach has resulted in more frequent joint deals, where customers opt for multiple solutions from our selection. Revenue churn, which was slightly elevated at the beginning of the year, showed a downward trend towards the end of the year and stood at 4.4% for the entire year, compared to 5.4% in 2023. The retention of recurring revenue from our existing customer base (Net Revenue Retention, NRR) was 97.6% for the year (101.4%), reflecting a challenging year for our customer companies.

Technological transitions progressed during the fourth quarter. The Azure migration is crucial for the company's future and will continue into the spring. The costs associated with this transition have negatively impacted Lemonsoft’s profitability in 2024, and this effect will continue into the first months of 2025. After this, the impact on profitability is expected to be clearly positive. The transition to a new e-invoicing operator was successfully completed well ahead of schedule in the fall, and we are now focusing on improving the overall service quality for our customers.

In recent years, we have made significant investments in the comprehensive development of cybersecurity, data protection, and risk management. Before the turn of the year, Lemonsoft’s information security management system was awarded the ISO/IEC 27001 certification. This system aims to futher enhance service security and continuous availability while protecting the data of our customers, partners, and employees in the best possible way. The transition to the Azure platform also strongly supports this goal.

With the system, we aim to further enhance the security and continuous availability of services, as well as protect the data of our customers, partners, and staff in the best possible way.

During the last quarter, we also launched a share buyback program. One of the key objectives of this program is to improve capital efficiency and earnings per share, thereby creating shareholder value.

Lemonsoft’s management team and organization have undergone significant changes in 2024. In addition to a change of CEO, the leadership team has been updated, particularly the roles of Chief Technology Officer and Chief Commercial Officer. In addition to developing the sales process, the Chief Commercial Officer aims to enhance the tangible value of our extensive product portfolio for customers. The Chief Product Officer is responsible for improving efficiency and quality in launching new products and further developing the existing product portfolio. At the same time, various initiatives have been implemented within the organization to elevate our operations to a whole new level.

The year 2024 was a period of significant changes for the entire Lemonsoft Group. In 2025, our goal is to return to a profitable growth trajectory, supported by these transformations.

Group Financial Development

Group financial result and profitability

October-December 2024

Net sales for the review period were EUR 7,672 thousand (7,437). Net sales increased by EUR 235 thousand, 3.2%. Organic growth of the review period was -4.1%, but organic growth of the recurring revenue remained positive. Consulting and other income remained at the lower level than in the comparison period. Net sales increased due to the acquisition of Atmotics Oy (2024) and Applirent Oy (2024), whose net sales were not included in the comparison period.

The share of SaaS income was 71.1% (68.3), the share of transaction income 11.0% (11.5), and consulting and other income 17.9% (20.2).

EBITDA was EUR 1,776 thousand (2,512), 23.2% (33.8) of net sales. Adjusted EBITDA (adjustments specified in the Alternative performance measures section) was EUR 1,777 thousand (2,028), 23.2% (27.3) of net sales. EBITDA and adjusted EBITDA were lower than the comparison period due to the timing of certain development projects.

EBIT was EUR 1,257 thousand (2,119), 16.4% (28.5) of net sales. Adjusted EBIT (adjustments specified in the Alternative performance measures section) was EUR 1,506 thousand (1,811), 19.6% (24.3) of net sales. EBIT and adjusted EBIT were lower than the comparison period due to the timing of certain development projects.

Profit for the review period was EUR 943 thousand (1,729), 12.3% (23.2) of net sales.

Cash flow from operating activities was EUR 1,973 thousand (2,102).

January – December 2024

Net sales for the review period were EUR 28,911 thousand (26,344). Net sales increased by EUR 2,567 thousand, 9.7%. Organic growth of the review period was -0.8%, but organic growth of the recurring revenue remained positive. Consulting and other income remained at the lower level than in the comparison period. Net sales increased mainly due to the acquisition of Finvoicer Group Oy (2023), whose net sales were not included in the comparison period in January – May and due to the acquisition of Atmotics Oy (2024) and Applirent Oy (2024), whose net sales were not included all in the comparison.

The share of SaaS income was 71.9% (72.7), the share of transaction income 11.4% (8.6), and consulting and other income 16.7% (18.7).

EBITDA was EUR 7,329 thousand (8,215), 25.3% (31.2) of net sales. Adjusted EBITDA (adjustments specified in the Alternative performance measures section) was EUR 7,522 thousand (7,951), 26.0% (30.2) of net sales.

EBITDA and adjusted EBITDA were lower than the comparison period due to the timing of certain development projects and termination agreement with the CEO.

EBIT was EUR 5,404 thousand (6,890), 18.7% (26.2) of net sales. Adjusted EBIT (adjustments specified in the Alternative performance measures section) was EUR 6,444 thousand (7,195), 22.3% (27.3) of net sales. EBIT and adjusted EBIT were lower than the comparison period due to the timing of certain development projects and termination agreement with the CEO.

Profit for the review period was EUR 4,031 thousand (5,349), 13.9% (20.3) of net sales.

Cash flow from operating activities was EUR 5,353 thousand (3,880).

Balance sheet, financing and investments

The balance sheet total at the end of the review period was EUR 53,862 thousand (48,885 at the end of the year 2023).

The Group has capitalized development expenses of EUR 804 thousand during the year 2024 (1653 thousand during the comparison period 2023). At the end of the review period, the Group's balance sheet included capitalized development expenses totaling EUR 2,734 thousand (2,352 at the end of the year 2023).

Total equity was EUR 32,526 thousand (30,422 at the end of the year 2023), equity increased EUR 2,105 thousand.

Equity ratio was 60.4% (61.9 at the end of the year 2023) and interest-bearing debt was EUR 10,405 thousand (8,399 at the end of the year 2023).

Cash and cash equivalents at the end of the review period were EUR 7,650 thousand (7,389 at the end of the year 2023).

Personnel

The Group’s number of employees was 228 (208) on 31 December 2024. We reported our Group personnel as follows:

• R&D 112 employees
• Customer functions 102 employees
• Other functions, a total of 14 employees

Share-based incentive plan

The Board of Directors of Lemonsoft Oyj has established a new share-based incentive plan for the key employees of the company in March 2024. The aim of the new plan is to align the objectives of the shareholders and the key employees in order to increase the value of the company in the long-term, to encourage the management to personally invest in the company’s shares, to retain the target group at the company, and to offer them a competitive incentive plan in which the participants may earn shares as a reward for performance and their personal investment.

The new Performance Matching Share Plan 2024 – 2028 includes three performance periods, covering financial years 2024 – 2026, 2025 – 2027 and 2026 – 2028. The Board will decide annually on the commencement and details of a performance period. The prerequisite for participation in the plan and receiving the reward is that the person allocates freely transferable Lemonsoft Oyj shares held by him or her to the plan or acquires the company’s shares in a number determined by the Board.

The rewards from the plan will be paid partly in the company’s shares and partly in cash. The rewards will be paid by the end of May in the year following the end of the performance period. The cash proportion is intended for covering taxes and tax-related costs arising from the reward to the participant. In general, no reward will be paid if a participant’s employment or service in the group ends before the reward payment.

The performance criterion in the first performance period 2024 – 2026 is the Total Shareholder Return of the company’s share (TSR). The achievement of the required TSR levels will determine the proportion out of the maximum reward that will be paid to a participant. The target group of the plan consists of 4 persons (the CEO and three members of the Management Team). The gross rewards from the first performance period 2024 – 2026 correspond to the value of an approximate maximum total of 77,000 Lemonsoft Oyj shares, including the proportion to be paid in cash. The final number of shares depends on the number of shares acquired by participants and the achievement of the TSR levels. The reward to be paid on the basis of Plan will be capped if the limits set by the Board for the payable reward from the performance period 2024 – 2026 are exceeded.

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 18,656,702 (18,562,005) shares. The average number of outstanding shares during the review period October-December was 18,664,000 (18,562,005). At the end of the review period, Lemonsoft Oyj held 14,930 shares.

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 6.65 and the lowest EUR 5.35. The closing price on 31 December 2024 was EUR 5.70. The market value of the company at the closing price of the review period was approximately EUR 106,4 million. Average daily trading volume during the review period was 3,620 shares (EUR 21,129).

On 31 December 2024, the company had a total of 2,297 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 9 April 2024 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 the company’s shares. The authorization includes the right to accept the company’s own shares as a pledge.
• The company’s own shares can be repurchased otherwise than in proportion to the existing shareholdings of the company’s shareholders (directed repurchase).
• The company’s own shares can be repurchased at the Nasdaq First North Growth Market Finland marketplace or outside of the marketplace.
• Own shares can be repurchased at a price formed on First North Growth Market Finland on the date of the repurchase or at a price otherwise determined by the markets.
• The shares shall be repurchased using the company’s unrestricted equity.
• The shares shall be repurchased for the purpose of financing or carrying out acquisitions or other arrangements, to implement the company’s incentive schemes, to develop the company’s capital structure, or for other purposes as decided by the Board of Directors.
• The Board of Directors shall decide on the other conditions related to the repurchase of the company’s own shares.

The authorization is valid until the 2025 Annual General Meeting, but not beyond 30 June 2025. The authorization shall replace the authorization granted to the Board of Directors by the Annual General Meeting of 4 April 2023 regarding the repurchase of a maximum of 1,800,000 of the company’s own shares.

The Annual General Meeting authorized the Board to decide on an ordinary or bonus issue of shares and the granting of special rights (as defined in Section 1, Chapter 10 of the Limited Liability Companies Act) in one or more instalments:

• This issue may total a maximum of 2,000,000 shares corresponding to a maximum of approximately 10.8% of all shares of the company. The authorization applies to both new shares and treasury shares held by the company. The authorization may be used to fund or complete acquisitions or other business transactions, for offering share-based incentive schemes, to develop the company’s capital structure, or for other purposes decided by the Board of Directors.
• The authorization entitles the Board of Directors to resolve on all conditions of the issuance of shares and special rights entitling to shares, including the right to deviate from the shareholders’ pre-emptive right.

The authorization is in force until the next Annual General Meeting; however, no longer than until 30 June 2025, and it replaces the previous authorizations.

Lemonsoft Oyj's Board of Directors has decided on February 15, 2024 directed share issue and deviation from the shareholders' preemptive right based on the authorization given by the Annual General Meeting on 4 April 2023.The share issue is related to the acquisition of Finvoicer Group Oy, which Lemonsoft announced on June 1, 2023. New shares a total of 17,986 (112 thousand euros) were registered in the trade register on April 15, 2024. As a result of the share issue, the total number of Lemonsoft Oyj’s outstanding shares increased to 18,579,991 shares.

Lemonsoft Oyj's Board of Directors has decided on June 29, 2024 directed share issue and deviation from the shareholders' preemptive right based on the authorization given by the Annual General Meeting on 9 April 2024.The share issue is related to the acquisition of Applirent Oy, which Lemonsoft announced on July 1, 2024. New shares a total of 91,641 (570 thousand euros) were registered in the trade register on September 3, 2024. As a result of the share issue, the total number of Lemonsoft Oyj’s outstanding shares increased to 18,671,632 shares.

Significant short-term risks and uncertainties

The deterioration of the economic situation and geopolitical changes 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 2024, the Group's parent company’s distributable funds were EUR 31,148 thousand and the net result of the Group's parent company for the financial year was EUR 3,957 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 2024, 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.

Profit forecast for 2025

Lemonsoft estimates that the net sales for the financial year 2025 will increase by 0-10 percent compared to the financial year 2024, and that adjusted EBIT will be 18-24 percent of net sales in 2025.

Financial information

Lemonsoft Oyj will publish the following financial information in 2025:

• Interim Report January – March 2025 on Friday, 25 April 2025
• Half-year Report January – June 2025 on Thursday, 14 August 2025
• Interim Report January – September 2024 on Friday, 31 October 2025

The company's annual report for the financial year ending 31 December 2024 is scheduled for publication in the week beginning 17 March 2025.

Lemonsoft's Annual General Meeting is scheduled to be held on 9th of April 2025.

Webcast for investors and media

Lemonsoft will host a live webcast for investors and the media in English on February 20, 2025 at 1:00pm EET. The webcast can be followed online live via this link: https://player.videosync.fi/lemonsoft/2024-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