Talenom (Helsinki:TNOM) Q3 2026 Earnings Call

0:00 Good morning everyone and welcome to join Talenom's Q3 review 2026. My name is Juho Ahosola and I'm the CEO of Talenom and with me here today is as usually our CFO Matti Säkkinen.

0:16 Good morning everyone and welcome also on my behalf.

0:20 Thank you. Okay, let's kick off. So here is the agenda for this today's review. So I will start with a short brief about Talanom, if we have some new investors online, and then I will comment highlights of review period as well as our development during this review period Q3. And then after me, Matti will comment financial performance in a bit more detail level as well as outlook and guidance. And at the end of this session, there's time for questions as well. Okay, let's then start. So a couple of comments about Talenom. We have some new investors online.

1:05 So comments about post-emerge Talenom. So first of all, what is Talenom? What do we do? So we are a service company. First of all, we are providing financial management services such as accounting, payroll and consulting services. And our mission is to help entrepreneurs succeed. And we are operating in three countries in Finland, Sweden and Spain as well. and we combine in our growth both organic growth and then selective acquisitions. And our approach as a company is to combine strong local expertise, strong local ownership with scalable one talent concept.

1:52 And we also want to use best-in-class digital solutions, technologies, software and AI as well. And that's our way to create value for our clients and then also for owners. Then if we look briefly in our products or services or revenue streams from investor perspective, starting from our core services. So our core services are accounting, payroll and account receivable services. And these services are almost completely recurring. So revenue that comes from these services is recurring. and in addition to these core services, we also have different kind of value-added services, quite a large range of these. And there we could mention, for example, HR services or legal services or BI services.

2:49 And these value-added services, they are important also like for two reasons. Basically, from revenue perspective, we see there are a lot of growth opportunities and then they are also supporting our... Customer Experience. And then in all our operating countries we have also industry-specific teams and solutions for our clients. But that's our service portfolio. Then a short comment about markets that we operate. So basically the market structure in all our operating countries is pretty similar. So there's high fragmentation, a lot of small companies, small players, and then we can also recognize this consolidation trend in all our operating countries. And then if we look into our market shares in these three countries starting from Finland, our market share is roughly 5% and market size 1.4 billion euros.

3:54 In Sweden, slightly bigger market and our market share is roughly 1%. And in Spain, as we can see, this size of the bubble illustrates the size of the market, massive market and then market share 0.1%, so quite remarkable growth opportunities. and we are not looking to expand to new countries in the near future and basically reason is here that in all countries including Finland where we have a long history we have really massive growth opportunities. But that's what we do, that's our services summarized and markets where we operate. Let's then move into this review period and comments about that.

4:46 First of all, a couple of highlights about Q3. First of all, this was quite a solid performance from the Talenom team, I would like to say. We progressed well with our strategy and things are going pretty much as planned right now. What it comes to figures, our group sales that grew a bit and then comparable EBITDA improved in all our operating countries, which is really positive. Then short comments about countries starting from Finland, from Finnish team really good performance, especially profitability wise, strong profitability and This Finland's strong profitability and cash flow creates really solid foundation for the whole group as we know.

5:39 In Sweden, our most important goal for this year is to improve profitability, create profitability turnaround. And as we can see from figures, it's going to the right direction and progressing as planned. So we are really happy with development profitability-wise in Sweden. And Team Sweden has done really good work here. and in Spain we have continued our acquisition driven growth and profitability is also now step by step developing into right direction. And then also worth mentioning that during the review period and also here in Q4, we are really focusing on AI and we can see that that creates a lot of good opportunities for us to create even more client value. I will comment that a bit later.

6:35 But overall, quite solid performance from the team, I would like to say. Then comments about our focus areas. So we have named three focus areas for this year 26. First of all, implementation of the new strategy as we have finalized this with ISOR in early March. So since then we have been working as an independent company and implementing our strategy in all our countries. Then also super important, improving profitability in Sweden and Spain. That's our second focus area. And third one is implementation of growth strategies, so working with growth in all countries.

7:25 And then comments about these areas. So first starting from strategy implementation. I would like to say that no big news from here. We are making good progress with strategy. Two main components basically here is one Talenom concept. We are implementing that across all teams at Talenom. And then we're also working a lot around this, our software neutral strategy. in all all countries and no big news this time things are going pretty much as as planned strategy wise then what it comes to profitability in Sweden and Spain starting from Sweden so profitability trend is right and we have continued actions with profitability and it's developing definitely to the right direction and our Swedish team has done really good job around these.

8:24 And overall, the situation is that churn-wise, we are really happy with the development and churn is now reaching or is at like sustainable level and we are happy with that. And now we want to focus more on sales and creating growth through sales. And we have also made some organizational changes there to support our growth. But overall, we are happy with this profitability development and with growth. We are working extremely hard in Sweden. Spain, we are going to the right direction. Profitability improved slightly. And what is challenging us is still these integration costs and higher software costs for this 2026. And we have a plan how to reduce these integration costs.

9:17 Thus, we know the history in Spain. conducted quite many acquisitions in short period of time and because of that we have a lot of these integration costs in but we have a plan how to reduce those and we are working with that and now we can see that development profitability wise is right. And also want to highlight that we see a really great potential in Spanish market over time as well as in Sweden of course. And then third point, implementation of growth strategies. A couple of comments from here. First of all, of course, we have been working a lot around systematic sales and marketing efforts and also leveraging AI in marketing and sales. and then also this software strategy that's pretty important for us. And we can see, I would like to say, that quite promising results there with this new software neutral strategy.

10:21 So these are basically the main elements that we are working with growth right now. But overall, this strategy progress or how it's going with these three components, I would like to say that Pretty much as planned and no big news this time from strategy field. Then last comment what it comes to our operations and actions is about AI and we were thinking that this is important to open for investors as well how we think in terms of AI. So Talenom has a long history as a digital frontrunner in our field and we have always used best tools, technologies, software and we have a long history in this digital frontrunnership so to say. And of course, AI is important for Talenom and important part of our strategy. And we can see that we can leverage it in multiple ways.

11:22 First of all, in our everyday work, we have quite many people at Talenom helping our clients. So in that our everyday work, we can use it in multiple different ways. Then secondly, as we know, there's different processes in this work. and we can use AI there as well in pretty many, many ways. And last but not least, creating new customer value, like how we prepare meetings, what kind of reporting we can do for our clients. There's several ways to use AI in good ways and to create customer value. And what is the important thing or most crucial element when it comes to AI is that our customer need has not changed.

12:10 So for a long time, our clients haven't been paying for this routine work or manual accounting or payroll work. It's about that. Peace of mind, someone takes care, someone takes responsibility, anticipation what it comes to future, elements like that. So it's not about manual work and this is why our clients choose us. So when we are acquiring new clients, they come to Talenom because of this, not because of that manual work. and we believe that this need will remain the same and our clients need someone who really looks after, helps them, looks towards the future and creates with that service, that peace of mind and AI can support us in this customer need.

12:57 And then a short comment about our financial figures. So when it comes to net sales, that increased a bit, 3.6%. And then EBITDA, it was relatively strong during this review period. that increased 19.6% and as well as this operating profit improved to the right direction. But Matti will comment now financial figures in a bit more detailed level and then it's time for questions. Thank you at this point.

13:36 Thanks, Juho. Okay, let's jump to financial key figures and I will... Focus on comparable figures and also the continuing operations. And let's start with groups comparable net sales. Our net sales was 25.4 million euros and growth was 3.6%. We had positive growth in Finland and Spain and in Sweden we had negative growth. Our comparable EBITDA was 5.8 million euros and this improvement was almost 20%.

14:23 The quarter's profitability was strong and I'm happy to say that we improved all this profitability in all our operating countries. Operating profit development was in line with EBITDA development. We had only small increase in our depreciation level. And operating profit was 2.2 million euros and improvement there was 55%. And now with some of the country specific key figures and we start with Finland. In Finland our growth was 2% and net sales was 16.2 million euros.

15:10 This growth was totally organic and during Q3 we didn't see any significant changes in this general economic environment compared to the previous quarter. We still see positive news for this market. Overall and we hope that this will impact also to the activity level of the companies. And of course it would open more growth opportunities for us also in the future. Despite this low revenue growth in Finland, our comparable EBITDA increased. It was 5.4 million euros and improvement was over 10%.

16:03 During the year, we have actively managed our cost level with this challenging growth environment. And of course, happy to see this strong profitability in Finland in Q3. Then we go to Sweden. In Sweden our growth was minus 10.4 percent and it was approximately at the same level with H1. Net sales was 3.9 million euros. This high churn level in 2025 is still impacting to this our net sales development and this good thing is that as Juho said we have now stabilized our customer churn in the acceptable level and now we are more and more focusing to sales activities and we expect that it will support our growth in the future.

17:08 Despite negative growth in Sweden, our comparable EBITDA improved well. It was 0.1 million euros. This has been one of our high priority in Sweden during this year and very happy to see this positive trend is continuing at the moment. We still are on the track to achieve positive EBITDA this year in Sweden. In Spain we had the strongest growth. It was 23% and we ended up to 5.4 million euro net sales. We have made five acquisitions after the compression period and this growth came mainly from these acquisitions.

18:01 New customer acquisitions continue also steady performance and it will support our growth in the future. Spain's comparable EBITDA was 0.3 million euros and it went forward slightly. These integration costs and also higher software costs are slowing down our profitability improvement. But we continue our efforts around these profitability improvement actions and also implement this one Talenom concept and we expect that we can improve our profitability step by step in the future.

18:54 And now let's look at our outlook and guidance. Our guidance for 2026 is unchanged. We expect that net sales will be between 110 and 120 million euros and comparable EBITDA will be between 18 and 22 million euros. And now it's time for the questions. Hi, and for the start I kindly inform you that I'm combining the similar questions so we don't ask those twice.

19:43 So, Juho and Matti, the first question. How has AI increased competition, lowered prices or changed pricing models in accounting?

19:54 That's a good question. I think here it's important where the client value comes from. So basically for those accounting offices who are invoicing hourly based from manual work and manual accounting, manual payroll, it's not about service. I think those players will be in quite remarkable challenges with that. With AI. But for us, I think it's about the client value that we create. And I want to emphasize that now when clients choose us, they are not thinking about like how we do or what is the way to do that manual work. It's about that client value, anticipation, future orientation, basically the value that we create for our clients. And of course, when it comes to this manual work, there will be...

20:39 Thank you very much. Thank you very much. So then we go to Sweden. Have you considered leaving Sweden if the growth doesn't improve?

21:14 No, we don't have such plans now and we are working hard around growth and as we can see from the figures profitability is definitely going in the right direction and we are happy with that and turn-wise we are in good position and the team has done really good work and now we're focusing more and more in sales and we have made some changes also around that to support that future growth. And including the same question, would it make sense to invest in Spain and Finland instead of Sweden? Because there are many more opportunities here and more growth.

21:52 Yeah, good question. I could comment and maybe you could then combine. So if we are looking over investments recently or during couple of past years, we have invested most in Spain. with acquisitions basically. So I think we are not that massively investing in Sweden. We are more like running that business there and those costs are mostly in P&L, but maybe Matti, you could...

22:22 Yes, and of course we are all the time estimating that what are the best country to invest in and also where the best profit for our investments.

22:34 And that's what we are doing all the time, thinking what kind of investments create most value for our owners in the long run. So how much free cash flow can Talenom generate annually after all investments and lease payments?

22:49 Good question and we will report our cash flow in the final sales statement release. Yes. So again in Sweden, does the planned focus on growth in Sweden require meaningful investments? Are you spending new sales and marketing in the country currently?

23:08 Yeah, I think we are doing sales and of course we are investing that way in sales and marketing and we also in the future want it to be that way that we have a Like foundation where we can grow. So of course we are doing things around sales and marketing in all our operating countries because we want that over time we are having organic growth in all countries. Yes, so then we go to Spain. Could you provide a concrete example of a Spanish accounting firm acquired two or three years ago and what was the EBITDA marking at the acquisition time and what is today and what showed the improvement?

23:52 Being big picture, I could comment first. Because we are integrating those to Talenom and we have like centralized support functions, it's a bit challenging to say it that way. But Matti, do you have something?

24:09 Yeah, as we have commented that we have a little bit like some double costs after these integrations and We are all the time like going forward with this cost level and all the time we believe that with this hard work around this one talent concept we will also improving our profitability in all units and offices.

24:33 Definitely and still for us Spain is super attractive market because of this low digitalization and we see a lot of potential there and we can also see that these elements that we are working with they are working in team level but that said of course because we have these centralized functions and then we have these like integration costs it's a bit hard to answer that specific question. So we stay in Spain, so credit control may be the main topic here. So have you fixed the credit control issues in Spain? Can we be confident that there won't be any other big write-off, like we have like different Guju or that kind of stuff coming?

25:19 Good question. We have improved our processes in Spain and we really believe that we have good trust for the future in terms of accounts receivable management.

25:29 Yeah, and overall in Spain, of course, like as we have been integrating, we have at the same time building multiple processes. So this work that we are now doing in terms of integrations and building these processes, it creates a solid foundation for the future, which is important as we want to grow in Spain. And same asker is asking that are we mainly buying revenue rather than profitable growth in Spain?

25:56 I think we have been doing selective acquisitions so we want always to find good acquisition targets and it's also important that we are selective so we We have said no also multiple times. So that's important. So good companies with good people and good local management. So that's what we are acquiring. And then also this growth orientation. So we want to have offices which are growing in the future as well. So answer what we are buying is good accounting offices. And one last question. What was the organic growth rate in Spain?

26:36 Good question. We have not reported the exact figures in organic growth, but as we commented, the main part of this growth came via acquisitions, but there was also small organic growth. Thanks, Juho and Matti, and I hope we have all the questions answered now. So thank you so much. Thank you very much. Thank you. Thank you very much.