Qliro

The quarter in brief April – June 2022 (April – June 2021)

• Total operating income increased by 7 percent to SEK 105.4 million (98.2)
• Total operating expenses increased by 15 percent to SEK 104.1 million (90.4). Operating expenses excluding items affecting comparability increased by 4 percent
• Net credit losses amounted to SEK –35.1 million (–22.7). The increase was driven by increased provisions of the credit portfolio that is not under ongoing sales agreement, and increased provisions in line with IFRS 9 due to increased uncertainty
• Operating profit was SEK –33.9 million (–14.6). Operating profit excluding items affecting comparability amounted to SEK -23.6 million (-14.9)
• Net profit for the period was SEK –27.4 million (–12.2) and earnings per share amounted to SEK –1.52 (–0.68)

The period in brief January – June 2022 (January – June 2021)

• Total operating income increased by 9 percent to SEK 211.4 million (194.6)
• Total operating expenses increased by 9 percent to SEK 190.7 million (175.3) Adjusted for items affecting comparability, expenses increased by 6 percent
• Net credit losses amounted to SEK –63.2 million (39.4). The increase was driven by increased provisions of the credit portfolio that is not under ongoing sales agreement and increased provisions in line with IFRS 9 due to increased uncertainty
• Operating profit was SEK –42.4 million (–20.1). Operating profit excluding items affecting comparability amounted to SEK –37.1 million (–20.1)
• Net profit for the period was SEK –34.6 million (–16.7) and earnings per share amounted to SEK –1.92 (–0.93)

Important events in the second quarter 2022

• The company launched a new strategy, “Safe and simple payments,” with a new graphic identity
• Qliro AB (publ) (“Qliro”) received information that the Consumer Ombudsman (“KO”) will file a lawsuit with the Patents and Market Court at Stockholm District Court against Qliro’s marketing of consumer credit
• During the Annual General Meeting Patrik Enblad was elected as the new Chairman of the Board of Qliro, and Mikael Kjellman was elected as a new Board member
• The Annual General Meeting approved a directed issue to Patrik Enblad with a maximum of 550,000 new shares
• Christoffer Rutgersson was appointed by the Board of Directors as the new CEO of Qliro AB
• The Board of Directors of Qliro AB decided on a number of profitability measures intended to reduce Qliro’s costs and increase revenues. The aim is for Qliro to be profitable on an EBT level in the full year 2023

Important events after the end of the period

• Qliro AB’s extraordinary general meeting on July 1, 2022 approved the Board of Directors’ decision on a directed share issue and warrant issue to Christoffer Rutgersson. Subscription is conditional on a supervisory review by the Swedish Financial Supervisory Authority

Comment from Jonas Arlebäck, acting CEO of Qliro AB

Qliro continues to grow in a turbulent world
In summing up the second quarter of 2022, Qliro’s income continued to grow despite an overall decline in e-commerce. Income amounted to SEK 105.4 million, up 7 percent compared with the second quarter 2021. The increase was again driven mainly by our payment solutions, which benefited not least from more customers with active accounts. It is worth stressing that this growth was achieved despite a very strong second quarter 2021, at the same time that e-commerce sales generally are on the decline.

On the credit side, we saw increased credit losses after having increased the provisions for loan portfolios not covered by ongoing sales agreements with external parties such as debt collection agencies. Due to growing uncertainty about the future, a provision was also allocated in accordance with IFRS 9 in the quarter, which further increased credit losses. Our underlying credit losses, adjusted for these two effects, amounted to SEK 26 million, compared with SEK 22.7 million the corresponding quarter last year. We can also say that Qliro is well positioned with respect to the interest rate hikes in the market, which neutralizes the impact on Qliro’s net interest income.

Positive response to our new strategy
The response we have received to our new strategy and graphic identity, which were presented in the second quarter, has been unequivocally positive. Interest in Qliro has markedly increased and during the quarter we added two new e-merchants. Our pipeline of new e-merchants is larger than it has been in two years.

Well-positioned in a declining e-commerce market
According to Svensk Handel’s (Swedish Trade Federation) indicator, e-commerce sales in Sweden fell by 13 percent in the period January-May. For Qliro, this has meant smaller volumes in the form of actual payment transactions. In the first six months of 2022 the share of customers who chose to partially pay for purchases increased, however. For these customers, growth in unique accounts was approximately 9 percent, raising Qliro’s income and offsetting the lower invoice volumes.

Accelerated effort to reach profitability in 2023
As communicated in June, the Board of Directors of Qliro has decided to implement a program to achieve profitability (positive earnings before tax) in 2023. This will be achieved, among other things, by accelerating the implementation of our strategy with a stronger focus on payments, digitalization of customer communications and reduction of external costs. We are pleased that we are already in the first phase of this work and we will start to see the effects of the actions we are now taking in 2023.

In the shorter term, the measures involve one-off costs for implementation and asset revaluation. For the second quarter, this meant costs of SEK 5.6 million, of which SEK 2.6 million came from an increased rate of amortization of previous technology investments, and SEK 3 million was attributable to costs directly linked to the execution of the profitability measures such as consultancy costs.

Further costs for the profitability program are expected to amount to a maximum of SEK 55 million and are expected to be incurred before the end of the year. Of these, SEK 9 million relates to an accelerated amortization rate on previous technology investments.

In addition to cost reductions, the acceleration of our strategy through the profitability program involves the acceleration of a technology shift to increase the scalability of our platform which we are now implementing, strengthening Qliro for the future to continue to be an attractive partner to merchants, and scaling up growth initiatives through the recruitment of more developers and salespersons.

The goal is for the profitability measures to reach full impact in 2024, with the majority expected to be realized in 2023.

Revenues growing faster than costs
In addition, an additional SEK 4.6 million in non-recurring costs were incurred in the quarter, including severance payment to a former member of the management team and a provision for legal costs related to the dispute with KO. Adjusted for all these one-off costs and the one-off costs related to the profitability program, we delivered in line with our targets in the quarter, where we grow revenues faster than costs.

Christoffer Rutgersson new CEO of Qliro
I would also like to take this opportunity to welcome Christoffer Rutgersson as the new CEO of Qliro and at the same time thank you for these months I have had the pleasure to lead the company as Acting CEO. Christoffer will providing valuable experience from fast-growing companies in payment solutions and the tech sector in general as well as being involved in the launch of Qliro’s profitability program. It will be very exciting to follow Qliro’s development and I am convinced that Christoffer, together with the rest of the staff, will succeed in the continued efforts to grow Qliro profitably. Christoffer takes over on October 1, at which point I will be leaving Qliro.

Presentation of the interim report

Media, analysts and investors are invited to a conference call on the 19th of July at 10 am when Acting-CEO Jonas Arlebäck and CFO Robert Stambro will present the results.

After the presentation there will be a Q&A session:

Telephone:
Sweden: +46 8 505 583 51
United Kingdom: +44 333 300 92 60
United States: +1 833 526 8 83

Link to the webcast: tv.streamfabriken.com/qliro-q2-2022

You can also follow the presentation on:
www.qliro.com/en/investor-relations/presentations