Fortnox AB
STO:FNOX
Fortnox AB
Fortnox AB, nestled in the heart of Sweden, has carved a remarkable niche in the realm of cloud-based solutions, catering predominantly to small and medium-sized enterprises (SMEs). Born out of the necessity to simplify and streamline cumbersome business processes, Fortnox offers a spectrum of software services that facilitate accounting, invoicing, payroll, and much more. At its core, the company operates on a subscription-based model, which not only ensures a steady stream of recurring revenue but also allows its customers to customize their usage based on unique business needs. This adaptability and the convenience of cloud services provide Fortnox’s clients with the freedom to manage their business affairs with unparalleled ease and efficiency, from anywhere at any time.
Emphasizing integration and user-friendliness, Fortnox thrives on the principle of connectivity—partnering seamlessly with various banks and financial institutions. This interconnectedness enhances the company’s appeal as it transforms financial data management into a more streamlined, automated process, fostering greater agility for its customers. By continuously evolving its product offerings and incorporating cutting-edge technological advancements, Fortnox ensures it remains at the forefront of innovation within the crowded financial technology sector. As businesses increasingly migrate to digital platforms, Fortnox cleverly positions itself as more than just a service provider; it becomes an indispensable partner in the digital transformation journey, effectively creating an ecosystem that encourages growth and innovation for SMEs across Sweden and beyond.
Earnings Calls
In Q1 2025, Fortnox demonstrated impressive performance with 25% organic revenue growth and a 33% increase in EBIT. The average revenue per customer climbed to SEK 304, surpassing the SEK 300 target. Despite gaining 14,000 new customers, total customer count fell slightly below last year's figures due to previous acquisitions. The EBIT margin was strong at 44%, contributing to an overall sustainable business model. The company is focusing on improving customer usage and values rapid growth in its financial services segment, with factoring revenues up 43%. Overall, Fortnox maintains a robust outlook amid a challenging macro environment.
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Good morning, everyone, and very welcome to Fortnox Q1 2025 Report Presentation. My name is Mia Nordlander, and I'm Head of Investor Relations. With me here in the studio today in Vaxjo, I have our acting CEO, Roger Hartelius.
The agenda for today is that we will start here in Roger presenting the Q1 numbers, followed by some business highlights, and then we will have time for questions. You can either call them in to us here in the studio by dialing +468-559-313-37 or you can send them to us here in the chat.
So once again, very welcome, and over to you, Roger.
Hi there, and thank you, Mia. So first, a short summary of the first quarter. So Q1 showed 25% organic growth and 33% EBIT growth. And ARPC target of SEK 300 was surpassed, and we reached SEK 304 million. And our focus on strategic changes aligned with the new direction continues.
So looking into the numbers. We saw a customer growth with 14,000 customers, in line with Q4 previous year, but yes, and a little bit lower than previous year. And in Q1 last year, we acquired Boardeaser, which added 3,000 customers. We had a growth in ARPC with SEK 6, and that made us surpass our target of SEK 300 per month. The revenue growth was 21% and adjusted for acquisitions and divestment, the organic growth reached 25%. We had an EBIT margin of 44%. And looking at Rule of Fortnox growth and margin combined, we hit 64%. So a stable and strong first quarter in 2025.
And looking at customers and average revenue per customer, we have seen a stable development towards our target that we set up in 2020, where we said that we should double the number of customers and double the average revenue per customer and now reaching the average revenue per customer and -- but we are slightly below on the numbers of customers. The combination though is of usage, which we measure in average revenue per customer and the number of customers are, as said previously, still a focus and also crucial for our revenue growth.
And as a result of the new direction, we focus more on increased usage, and we see significant growth opportunities to getting more usage among our existing customers. But I would like to remind you that the combination of the 2 targets, the number of customers and the average revenue per customer remains in place, which is based on the business plan established in 2020. And looking at the development over the last 4 years and closing Q1 with net sales of SEK 563 million and organic growth by 25% and EBIT of SEK 246 million and EBIT growth of 33%, we think that it proves a sustainable business model.
And looking at Rule of Fortnox, which is an important metric for us to balance growth with margin. We hit 64%, and that gives us 16 consecutive quarters above 60%. Some net sales highlights then. Net sales increased by 21% and organic net sales by 25% and the major growth drivers are still existing customers, but also new customers and price adjustment. And the divestment we did last year impacted subscription negatively by 7% and the organic growth in subscription was 23%.
In Business Platform, which is responsible for our core SaaS offering, we had a growth of 18%. And within Financial Services, which is responsible for our payments and financial offer, we had a growth of 34%. On the right, you see the product per revenue type, our largest product per revenue type. And our product invoicing that stands for just above 20% of our subscription revenue had a growth by 30%. And the second largest product within subscription is bookkeeping.
Invoice service, where we help our customer to send invoice, send out reminders and also collect money stands for almost 30% of the transaction-based revenues. We had a growth of 29%. And the second largest there is capturing supplier invoices. Within lending based, our factoring product stands for over 75% of the revenue, and the growth there was 43%. And the other product there is corporate loans.
So on the income statement, I've highlighted some nonrecurring items. The warrants received in Mynt, which are expected to be converted into shares now in the second quarter were revaluated and led to a positive impact of SEK 17 million, whereof NOK 5 million impacted the other income and the other NOK 12 million impacted the financial income. We also had some costs for advisory service related to the public offer on the same level, NOK 5 million. So taken together, we have a positive effect of NOK 12 million on profit before tax. But on operating profit and on EBIT margin, we had no effect on the one-off items.
On the balance sheet, I've highlighted the growth in factoring, and we now have one row for the factoring as previously reported as purchase receivables and receivables factoring. And on the cash flow, highlighted also there that factoring continues to grow, but also highlighted the free cash flow adjusted for lending and acquisition, which grew by 57% in the first quarter.
So looking at some business highlights. These numbers represent our focusing on offering financing and payments as a part of our -- of the core flows in the platform. So looking at the first number, in March, we surpassed NOK 500 million of monthly value through our factoring product. And as you saw, the financial service is currently the fastest-growing business area within Fortnox. And on the right, we have more than NOK 100 million in spending that was carried out using our business card in March. And during Q1, we have more than 8,000 customers using our business card.
And here's another number that more reflects our focus on usage and users, where Fortnox ID now has more than 800,000 users. And to describe it briefly, Fortnox ID is a personal single sign-on solution for all products and all the companies or organizations within Fortnox and linked to the same user, and it offers a smoother experience and higher security for the user. But it also contributes to a seamless experience when you are inside the Fortnox ecosystem or the Fortnox platform. So the user perceives our offering as more than one -- yes, more as one Fortnox and workflows instead of different isolated products.
So to summarize the first quarter, given the macro environment, we once again proven our sustainable business model with 25% organic growth. In 2020, we set 2 kind of aggressive targets, and now we reached one of them by doubling the average revenue per customer reaching SEK 304. And we continue our focus on the strategic changes aligned with the new direction. And we continue to work towards improved user friendliness, increased usage and for one Fortnox with seamless workflows and including them payments and financing as a natural part of those workflows. Thank you.
So thank you so much, Roger. It's time for questions. And as I mentioned, you can dial-in to us by using +468-559-313-37 or send them to us here in the chat. So do we have any questions? I think this is -- I don't have any in my computer here. Maybe this will be the fastest quarter presentation in our history. Give them a few more minutes. But maybe -- yes, we have here actually, Joachim Gunell.
So congratulations on reaching this 5 year targets ahead of time. But I mean, it's impressive to see grow at this scale and in this recessionary backdrop, right? But in all honesty, that target didn't include price hikes nor M&A at the start, right?
We haven't -- we didn't set up the goal in that detail. So we had a goal of the 2 in combinations. Of course, the number of customers and the revenue per customer is important for the growth. So it wasn't in that detail.
All right. Anyway, that wasn't really what I wanted to ask about. I just wanted to hear your just thoughts, Roger, with regards to what extent you envision being a private company will allow Fortnox to really accelerate and take the next step, whether that is through, say, international expansion or to invest more to grow even faster, which perhaps the public setting is not that forgiving to.
So we are here running our business plan as for now, and we have our own. And so we haven't discussed that or thought about that so much. So we are -- we think that we have been able to do [ what we ] wanted to in this context. So yes, let's see. So no, I won't comment. We haven't discussed it.
And of course, we continue to work and making Fortnox and our customers even more successful and of course, creating great companies out there. So the work continues, right.
Yes.
Great. And then just one more question from my end. From a product perspective, you highlight here in your CEO letter, the strategic importance of payments and financing, and we are seeing this coming through into the numbers. But can you just highlight where your attention will primarily be over the, say, coming year to really realize the opportunities, especially within payments?
Yes. So we think that it is a natural part of the workflows where our customers are. So for example, in the supplier -- when you receive a supplier invoice, we have great solutions for that. We make the capturing of data automatically. We do the bookkeeping automatically. We have an improvement flow that is easy to use. But we haven't done that much on the payments that is the next step in that flow. So we believe that to get those workflows seamless, we can add much more value, and we have then the transactions and the data in real time, which we can use then to bring back value to our customers. So in more than one flow, the payments is a natural part. So that is what we are trying to aim for.
And if this is the last waltz as a private company, I wish you the best of luck on your future endeavors.
Next on the line, we have Mark from Morgan Stanley.
Can you hear me okay?
Yes.
Yes.
Perfect. Congrats on a good first quarter. I've got a few questions, if that's okay. The first one, just on the EBIT margin result which was, I think, quite a bit stronger than expected for the first quarter versus consensus. It looks to me like that was mainly driven by lower employee costs. Look how my maths to be up about 11% year-on-year. That's quite low growth versus history on that cost line. So could you just give us a few more details on what was driving this? Is there any one-off factors to be aware of in the first quarter? And how should we think about employee costs for the remainder of the year, please? That's the first one. We got a couple more after that.
Yes, we have a small growth in number of employees, but it's nothing that we have been driven. So we are still employing and still growing, maybe some effects since we did the reorganization last year. So to some extent, that have been, yes, fewer employments during that period. But otherwise, we are growing as we have done before.
Okay. That makes sense. And I appreciate the disclosure on the Fortnox card, very impressive numbers. I think if I remember correctly, in the past, you've said you make about 1% on card volumes. So at SEK 100 million per month, that imply kind of annualized run rate of about SEK 12 million per year. Firstly, is that the right way to think about the magnitude of revenue contribution? And could you just tell us how fast those volumes are growing either on a year-on-year basis or a month-on-month basis? Just to kind of help us gauge how fast that's growing?
So yes, you're right with the calculation on the revenue side. And we have been -- yes, we have had, I think, for 1 year or a little bit more, but it was first in October that we had the full solution. So the accounting firm also could use it with the full approvement flow and so on. So we have had a stable growth, and we believe there is still great potential in that product.
Yes. And we're focusing on teaching our customers the benefits of this card. And of course, that takes time, but we feel secure that this will be very successful. And again, that's why we wanted to show this number how it's growing from a steady base.
Perfect. And then just finally, kind of on the take private offer in the press release, there's a few mentions of international expansion, something that, I guess, hasn't been discussed that widely in the past. Has there been any change in strategy here? Is this something that you're exploring in the next business plan period? Any details would be helpful in terms of how you think about that going forward?
No, of course, no details. We are in the middle of creating the new business plan. But of course, it's been -- we're looking at different opportunities. And yes, and we have been looking at M&As as well during this business period. But as I said, during this period, we have seen greater potential within Sweden. And for the next period, let's see.
I have a question here from the chat. Roger, can you give an update on the offer from EQT and the next steps? And do we anticipate any delays regarding regulatory approvals required?
So no, I can't comment on that offer. That's up to the consortium. So no information, no comments.
Yes. And just to remind everyone, if you have questions regarding the offer, there is a website, omega-offer.com. You can find that address on the website as well. So yes, please talk to them regarding this.
Let's go to next question. Have you said anything how many cards have been issued to your customers since the launch? I don't think that's an information we have given, right?
No. So we've given more than 8,000 customers using the card in Q1.
Thank you. It looks like that was it for today. Thank you, everyone, for listening in to us here this morning. As always, if you have more questions, feel free to reach out to me and IR department. I hope you will have a very good day, and thank you very much.