Q Quarterly Report

Transcription

1 Q Quarterly Report

2 Positive net results for 3Q09 24SevenOffice ASA had a positive operating profit before depreciation (EBITDA) of MNOK 1.5 compared to MNOK 0.1 for 2Q09, and a positive net result. Operating revenue year to date 2008, up 60 % compared to YTD The company's operating revenue in 3Q09 was MNOK Highlights 3Q 2009 Positive net results for 3Q09. Operating revenue YTD 2009, up 60 % compared to YTD 2008 Operating revenue in Sweden up 231% from 3Q % growth in software revenue, compared to 3Q08. Approximately 90% of the company's revenue is based on recurring income. Continue to deliver positive EBITDA according to earlier announced plans. Ongoing cost reduction program has achieved full effect. Continuous focus on cost efficiency. Listed on Deloitte Technology Fast 50 program. One of the foremost technology award programmes, ranking of the country s 50 fastest-growing technology companies, based on percentage growth over five years. The fast 50 programme honours business growth, technological innovation and entrepreneurial spirit.

3 Financial Review - Third Quarter 2009 Operating revenue reached MNOK 17.2 in 3Q09. YTD09 operating revenue, up 60 % compared to YTD08. Total operating expenses ended at MNOK 16 in 3Q09 compared to MNOK 18.1 in 2Q09. This resulted in a positive EBITDA of MNOK 1.5 in 3Q09 compared to MNOK 0.1 in 2Q Operating expenses 4 EBITDA All numbers in MNOK The company continues to deliver positive EBITDA according to earlier announced plans, and additionally delivers a positive net result due to summer vacations and hence lower personnel cost. Ongoing cost reduction program initiated in 4Q08 has achieved full effect and the company continues its focus on cost efficiency and profitable growth. Cash and cash equivalents were MNOK 5.8 at the end of 3Q09. Segment Information In the software segment, operating revenue from software licenses totaled MNOK 8 in 3Q09, up 21% from 3Q08. Due to summer vacation and as a result of the global financial crises there has been a decrease in our income related to consultants and start up fees. This market is now steadily improving, and further improvement is expected for the next quarter. In the service segment, operating revenue totaled MNOK 7.5 in 3Q09, unchanged from 3Q08, due to closure of two unprofitable departments in Evje and Bodø, initiated by our cost reduction program. In the Integrated systems segment, operating revenue totaled MNOK 2.7 in 3Q09, up 23% from 3Q08. Operating revenue in Sweden totalled MNOK 1.6 in 3Q09, up 231% from 3Q08.

4 Trend graphs Operating revenue* Invoiced customers including accounting customers** No. customers Average sales per invoiced customer COGS*** per customer software segment NOK NOK *Q109 adjusted for extraordinary revenue due to annual reports and tax papers for accounting customers. Lower revenue in 3Q09 due to close down of two unprofitable departments in Evje and Bodø. All numbers in MNOK **Companies invoiced directly by the company and accumulated customers including accounting customers through partners ***COGS means Cost of Goods Sold

5 Business Update Robust Business Model 24SevenOffice s revenue is based on recurring revenue in all business segments and is less dependent on new sales than the rest of the IT market. All services delivered in all segments are in the outsourcing industry, which is predicted to benefit in economic recession as companies try to find ways to save expenses. The negative impact in today s market is an increased number of bankruptcies among existing customers and an increase in downgrades of number of users on customer contracts due to general employee reductions among SMBs. Consolidation and Synergies The focus going forward is to integrate the acquired businesses in order to realise synergies of cross-sales, know-how, technology, administration, costs and routines. Cost Reduction Program The company introduced a cost reduction program in 4Q08. Main focus has been to consolidate acquired business units, centralize and close down small departments outside major cities. The cost reduction program has now achieved full effect, but the company continues its focus on cost efficiency. About 24SevenOffice ASA Group 24SevenOffice has three independent business units, with significant synergy to each other and with services to the same customer segments: small and medium-sized businesses (5-300 employees). Customers are mainly small businesses (5-30 employees) in all sectors and medium-sized enterprises ( employees) in the market segments: business knowledge and service industries. The business units are: 1. IT business solution with a complete system portfolio of ERP, CRM, project and collaboration tools to the SMB market delivered as "Software as a Service" (SaaS). 2. Telecom solution delivered as an Internet service (SaaS). Includes switchboard services and IP telephony value-added services, through integration with the company's business solution. In addition, the unit offers mobile telephony solutions with value-added. 3. Accounting and payroll services, including financial advisory services for the SMB market. We offer accounting services for the Norwegian and Swedish market, currently employing about 45 accountants.

6 All solutions and applications are SaaS based. SaaS technology (also described by the term "Cloud Computing") gives you access to all applications and services through the web browser, and hence there is no need to invest in expensive hardware or software licenses. The business model is lease-based service agreements. 90% of the company's revenue is recurring income from one year to the next, and the company's future earnings is, therefore, more predictable and secure than other software and IT service providers who are dependent on significant new sales of licenses and development projects to achieve profitability. We have more than 10 years of experience of delivering SaaS applications over the Internet, and our combination of SaaS-technology, system portfolio and the integration of Internet services to the SMB market make us the leading company in Europe in our segment. Software as a Service (SaaS) SaaS is short for Software as a Service and is the term used for software where an application is hosted as a service provided to customers across the Internet through the web browser. This delivery model eliminates the need to install and run the application on the customer's own computers and servers, thus freeing resources normally used to software maintenance, ongoing operation, it-consultants, and support. Using SaaS also reduce the up-front expenses and capital investments of software purchases, through less costly, on-demand and pay-as-you-go pricing where the customer pay a fixed monthly fee per user per month. IDC analytics predicts that: The SaaS market will increase by 27 % annually during the next four years, contrary to traditional local software installations which are predicted to grow by only 4 % annually during the same period. Enterprise resource planning applications (ERP) represented 55 % of the total SaaS market in 2008 and are predicted to share an equal share in The global SaaS market revenue was 9 billion USD in 2008 and is predicted to grow to 23 billion USD in 2012 Gartner analytics predicts that: Approximately 65% of all European companies has started to use at least one SaaS application by 2010 SaaS will be a common part of companies IT architecture by 2010 SaaS usage will double for small and medium sized companies by 2010 Dedicated costs to SaaS will increase more than 25% annually 30% of all new software in the business market will be delivered as SaaS by 2012 NetSuite ( and Salesforce ( are two well known SaaS companies based in USA. NetSuite is the first and largest SaaS based integrated CRM and ERP system and listed at the New York Stock Exchange. Larry Ellison (Oracle) is the major share holder in Netsuite, which is the company with a product portfolio and strategy most comparable to 24SevenOffice. Salesforce is the first and largest SaaS based CRM system and listed at the New York Stock Exchange. The company is the largest SaaS company and one of the key drivers of the SaaS market space. The company offers a standalone CRM application, thus offering

7 less functionality than 24SevenOffice. Visit for useful reports, etc on SaaS. Peer Comparison 24SevenOffice, Netsuite and Salesforce are compared on valuation based on price/sales and growth rate year over year. The comparison is based on latest published quarterly results. Salesforce results are from quarter ended August , Netsuite results are from 2Q09 and 24SevenOffice results are from 3Q09. 7 Peer valuation vs growth 25 % % Valuation P/S % 10 % 5 % Per cent growth - Salesforce Netsuite 24SevenOffice 0 % Valuation P/S Year over year growth Quarterly results are multiplied with 4 to estimate comparable yearly sales for each company. Valuation is based on market cap Aug divided by estimated sales. USD exchange rate is based on rates NOK=USD Aug Growth is measured year over year with same quarter last year. There are many factors influencing a company s valuation. Estimated valuation based on price / sales and growth shows significant differences between 24SevenOffice and the two main competitors in the SaaS industry. Financial Calendar 24SevenOffice will present its 4Q09 figures on February 18 th Oslo, October 26 st 2009 The Board of Directors 24SevenOffice ASA

8 Profit and loss statement (all figures in NOK 1.000) Q YTD 2009 Q YTD Revenue Operating Revenue Other Income Expenses Cost of sales Wages and salaries Other operating expenses Total operating expenses EBITDA (3 692) (1 233) (9 823) (20 599) Depreciation, amortisation & write-down EBIT 254 (7 418) (2 357) (12 467) (24 447) Financial income (51) (161) (145) (714) (965) Financial expenses EBT 110 (7 998) (2 245) (11 943) (23 777) Taxes (839) (1 056) (1 647) Net profit / loss 63 (8 088) (1 407) (10 887) (22 130) Attributable to: Minority Interests 60 (451) Equity holders of the parent 3 (7 637) (1 714) (11 258) (22 499) Average no. Of shares Basic EPS 0,00-0,55-0,13-0,85-1,69

9 Balance Sheet (all figures in NOK 1.000) ASSETS Non current assets Deferred Tax Asset Development cost Goodwill Customer bases Brand name Equipment Other non-current assets Total non current assets Current assets Inventory Trade receivables Other current receivables Cash and short-term deposits Total current assets TOTAL ASSETS EQUITY AND DEBT Equity Share Capital Other reserves Translation reserve Retained Earnings Equity before minority interest Minority Total equity Capital Liabilities Debt to credit institutions Sellers Credit Deferred taxes Total non current liabilities Accounts payable Deferred revenue Public duties payable Debt to credit institutions Other current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES

10 Statement of changes in equity (all figures in NOK 1.000) Q Attributable to equity holders of the parent Share Share Translation Retained Minority Total capital Premium Differences Earnings Total Interest Equity Equity Currency translation differences Equity Issue Equity Issue expenses Changes due to acquisitions Net profit for the year Equity Attributable to equity holders of the parent Share Share Translation Retained Minority Total capital premium Differences Earnings Total Interest Equity Equity Equity issue Currency translation differences Own shares Changes due to acquisitions Net loss for the year Equity Q Attributable to equity holders of the parent Share Share Translation Retained Minority Total capital Premium Differences Earnings Total Interest Equity Equity Currency translation differences Transactions with own shares Equity Issue Changes due to acquisitions Net loss for the year Equity

11 Cash Flow Statement (all figures in NOK 1.000) YTD YTD Operating Activities Operating earnings before interest and taxes (EBIT) Depreciation, amortisation & write-down Net financial items Cash earnings in operations (4 272) (9 299) (19 928) Changes in working capital Cash flow from operating activities (9 554) (17 154) (19 061) Investment activities Development costs to balance sheet Net cash flow from aquisitions Net investments in tangible fixed assets Net cash flow from investment activities (1 975) 358 (1 345) Financing activities Increase (decrease) long-term Debt Net deposited equity Increase (decrease) short-term Debt Net cash flow from financing activities (958) (138) Cash and bank deposits at Net changes of cash and bank deposits Cash and bank deposits at

12 Notes to Q3-09 Interim Financial report (all figures in NOK 1.000) Note 1 - Segment information Q Integrated Business segment Software Services Systems Elimination Total Operating Revenue (883) Other Income Operating Expenses (883) Operating profit before depreciation Depreciation (18) Operating Result YTD Integrated Business segment Software Services Systems Elimination Total Operating Revenue (2 781) Other Income Operating Expenses (2 781) Operating profit before depreciation (6 327) (169) - (3 692) Depreciation (141) Operating Results (8 094) (758) 141 (7 418) Q Integrated Business segment Software Services Systems Elimination Total Operating Revenue (1 022) Other Income Operating Expenses (1 022) Operating profit before depreciation (2 162) (1 233) Depreciation Operating Result (2 826) (2 357) YTD Integrated Business segment Software Services Systems Elimination Total Operating Revenue (2 402) Other Income Operating Expenses (2 402) Operating profit before depreciation (11 084) (9 823) Depreciation Operating Results (12 234) (434) (12 467) 2008 Integrated Business segment Software Services Systems Elimination Total Operating Revenue (4 103) Other Income Operating Expenses (3 563) Operating profit before depreciation (19 256) (735) (68) (540) (20 599) Depreciation Operating Results (20 853) (2 528) (526) (540) (24 447) Operating revenue by Geographical Area Q YTD Q YTD Norway Sweden Total

13 Notes to Q3-09 Interim Financial report Note 2 - Financial Framework and Accounting Principles The accounting principles applied are the same as those used for the Group's 2008 Consolidated Financial Statements.These statements were prepared in accordance with the international accounting standards published by the International Accounting Standard Board. The interim accounts have been prepared in accordance with Oslo Axess rules and regulations and IAS 34 - "Interim Financial Reporting". Please refer to attachment, where the accounting policies are described in detail. Note 3 - Estimates The preparation of interim accounts involves the use of estimates and assumptions. These estimates impact the amounts stated for assets, obligations, revenues and costs. Actual results may differ from these estimates. Note 4 - Accounting changes and error correction. A correction has been made to a previous error in the consolidation of acquired companies. This has resulted in a revision of comparative financial figures in Note 5 - Active 24 24SevenOffice has received law suit from Mamut ASAs subsidiary Active 24 with an unspecified claim for compensation for its cancellation of a cooperation agreement signed in January SevenOffice view is unchanged from previous statements communicated to the stock exchange. Note 6 - Accountonit Sweden Accountonit established in Sweden, through a joint venture with the Swedish accounting firm Klara Papper. Note 7- Stock option program The Board has initiated a stock option program for key employees. Total cost accrued for the program per is NOK Note 8 - Events after There have been no material events subsequent to the end of the interim period that have not been reflected in the Group's third quarter financial statement.

14 Q Quarterly Report Published by: 24SevenOffice ASA Østensjøveien Oslo Investor Relations: Phone: Fax: