Q1 - 1 January - 31 March 2022
Amounts in parentheses refer to the same period the previous year.
- Net revenue for the period was MSEK 29.8 (19.1).
- Adjusted EBITDA totalled MSEK -3.0 (-0.6). Items affecting comparability impacted profit/loss by MSEK 0.8.
- EBITDA was MSEK -3.7 (-0.6).
- EBIT was SEK -8.1 (-2.6).
- Net result was MSEK -8.2 (-2.9).
- Earnings per share before dilution were SEK -0.17 (-0.84).
Events during the quarter 1 January - 31 March
- SaveLend Group strengthens the management team and recruits Olle Asplund as Chief Product Officer.
- SaveLend Group AB enters into an agreement to acquire Svensk Kreditförmedling AB.
- SaveLend Group AB conducted a directed share issue totalling 1,760,563 shares and raising proceeds of approximately MSEK 15.
- SaveLend Group completed the acquisition of capital and credit originator Svensk Kreditförmedling AB.
Events after the quarter
- SaveLend Group AB's annual report was published on 1 April.
- Erik Penser Bank initiated coverage of SaveLend Group.
- The AGM for SaveLend Group AB was held on 26 April 2022.
New record in capital and increased focus on profitability
The invasion of Ukraine has left few unaffected – resulting in greater uncertainty in the business climate. What this uncertainty leads to over time is also difficult to predict. However, it will certainly have a wider impact.
The capital on the platform continues to grow
Despite this uncertainty, though, the capital on our platform continues to increase. We have parried this event better than during the first months of the Covid pandemic, when we experienced net outflows of capital. Capital on the platform is a forward- looking key performance indicator, and it is important that it increases while we maintain high investment rates on invested capital. The total Q1 investment rate for private savers averaged above 93%. And we are very satisfied to have accomplished this in the period when the company also set a record level of total capital on the platform at MSEK 694 (301).
Loan notes, as an asset class, are less volatile than shares – but with high inflation and rising interest rates impacting borrowers’ repayment capabilities, the risk of credit losses will increase. To better meet the current circumstances, we therefore choose to slightly rebalance the company's credit offering to focus our internal lending origination onto longer maturity credit. These loans have reduced risk for credit losses since borrowers of this type of loan generally have higher creditworthiness. This rebalancing naturally leads to a somewhat longer earning period for us, but it will also contribute to better risk diversity for our savers, and lower marketing costs to acquire loan volumes. This is one of the reasons behind the increase we see in capital on the savings platform, in combination with slightly lower revenues and costs.
The billing platform continues to grow, driven by a broad base of medium sized customers and partners. Transactions for the quarter totalled 1,014,961 (391,082), which is also a new record.
Q1 revenues were MSEK 29.8 (19.1), an increase of 55.9% YoY, though it is 1.7 % lower than the record level of the previous quarter. Adjusted EBITDA totalled MSEK -3.0.
Shift of focus
Considering the uncertainty in the world we could easily blame any decline in revenue growth in the quarter solely on external factors. But I choose to concentrate on the factors we can control ourselves. This includes our management and decisions (even though these partly involve responding to global uncertainty). In addition to steering our internal loan origination towards longer maturity credit, there are two more underlying reasons for the hitch in the revenue curves. These are the migration of Fixura Finland technology platform as well as reorganizing operations in Poland. Activities to transfer the Fixura origination operations to our proprietary technology was more complex than expected. And during this time, we chose to hold back on issuing new lending. To start the quarter, we redirected operations in Poland to exclusively partner with external credit originators and this external origination did not make up for the loss of internal credit origination activities. These decisions therefore had negative impact on revenues for the quarter, but our focus was rewarded with continuing good growth in the capital on the platform, which will also impact future revenue growth. In April, we see that we are back on the growth journey by 22% higher brokered volume than the average per month for the first quarter. This is driven by all originators on the savings platform.
Due to the changing world situation, we will prioritize profitability higher than before. I assess that the ongoing business will generate a positive cash flow during the latter part of the year and that the company business is developing in line with the previously communicated financial goals.
Important progress and closer to Europe
Naturally, we have succeeded on several fronts during the quarter bringing us closer to our financial targets. We concluded the acquisition of Svensk Kreditförmedling AB, for which we expect to complete migration of customers after the summer. Our project to upgrade the Billecta billing platform is now essentially completed, enabling us to restart onboarding larger customers and develop new functions, all of this using greater developer resources.
We are preparing for continued expansion into the euro area with the savings platform. We therefore passported our payment initiation service permit to 13 European countries. Jointly with the verification services provided by ZignSec and a smooth link to Trustly, we plan to be ready to take in investors from all of these countries in Q2. Simultaneously, we will also launch Fixura as a credit originator on the platform for lending denominated in euro, whereby we will have both supply and demand ready.
Institutional capital continues to increase
The third institutional investor has invested in the platform showing how our targeted sales activities are now producing results. We are currently engaging in several promising discussions regarding additional investing in the platform, and expect these to contribute significantly soon. What I hear in discussion with potential customers is an interest in risk adjusted yield and our excellent automated investing.
The institutional investor I mentioned in the previous report has increased their involvement, and we have concluded an investment agreement that should enable us to call in capital if uninvested capital on the platform became insufficient. This agreement significantly reduces the risk that available funding to finance new lending would become inadequate.
As of this report, we divide our accounting into two segments, the savings platform and the billing platform. This along with our two main key figures, capital on the savings platform and billing transactions, will make it even easier to follow our growth journey.
The bus is almost full
We succeeded in recruiting Olle Asplund as CPO, and with his extensive experience in the financial regulatory frameworks we operate under, he will have a vital role in our expansion journey and in developing new products.
The SaveLend Group bus is now nearly full with the additional recruitment we completed during the quarter. As Jim Collins writes in his fantastic book, Good to Great, it is important to “get the right people on the bus first” before you can figure where the bus is headed. Now I feel confident in having our course laid out, and the right people onboard.
Several additional new colleagues will join us in the coming quarters, but we have not had this few recruitment adverts out in over a year. This means the organisation has matured well in a short time. Naturally, it will take some time for these new hires to begin delivering at their full capacity, but we will see staff expenses begin to stabilize in the near future. It is a privilege to be able to work with my colleagues every day and as their leader, I am extremely satisfied with our entire team and confident in the financial targets we are aiming to exceed.