Qliro

The quarter in brief January-March 2023 (January-March 2022)

• Total operating income increased by 7 percent to SEK 113.7 million (106.0)
• Total operating expenses decreased by 8 percent to SEK –80.1 million (–86.6). Excluding items affecting comparability items, costs decreased by 12 percent to SEK -80.1 million (–91.5)
• Net credit losses amounted to SEK -32.5 million (–28.0)
• Earnings before tax (EBT) was SEK –1.1 million (–8.6). Operating profit excluding items affecting comparability amounted to SEK 1.1 million (–13.5)
• Profit for the period was SEK 1.1 million (–7.2) and earnings per share amounted to SEK 0.06 (–0.40)

Significant events in the first quarter 2023

• Qliro signed agreements with Timarco, Sängfabriken and Happy Day, all of whom are in the large merchants segment (“Enterprise”)

Significant events after the end of the period

• Qliro announced on April 12, that the company achieved profitability in the first quarter of 2023

Comment from Christoffer Rutgersson, CEO of Qliro AB

It was a successful first quarter. During the quarter we gained three new merchants and signed agreements with three new merchants in the Enterprise segment. The profitability program that we launched in June 2022 started showing results in the first quarter, when profit before tax (EBT) increased to SEK 1.1 million, an increase of SEK 14.6 million compared to the first quarter of 2022 adjusted for items affecting comparability. This means that Qliro has achieved profitability for the first time since the company was listed. In line with our previous communications, EBT is expected to be positive for the full year 2023, but may vary over the remaining quarters.

Profitability and stable growth in the first quarter of 2023
Within the scope of the profitability program, several initiatives were implemented to streamline and digitize the business to drive operational excellence while creating space to, in parallel, invest in the commercial organization to enable increased growth. As part of the streamlining, the organization has been strengthened, external suppliers renegotiated and office space reduced. Within the scope of the digitalization initiatives, the company has focused on customer communication and the implementation of new systems and processes in customer communication, customer support, onboarding of new customers, marketing, sales and finance. The implementation of our digitalization initiatives has been somewhat faster than expected, while providing us with more scalable and efficient processes for future growth.

As communicated at the end of 2022, a total of 70 percent of leaders in the company are new in their roles, with a mixture of internal promotions and external recruitments. Now that the new team has got up to speed, it is clear that today we have an agile team with experience of payments and fast-growing technology companies. As a result, important initiatives have progressed faster than expected and we have also been able to scale down on consultants, which has reduced consultancy expenses.

Total operating expenses decreased during the quarter to SEK 80.1 million, and by 12 percent adjusted for items affecting comparability.

We continued to grow our income in the first quarter despite a decline in e-commerce. Income grew by 7.3 percent to SEK 113.7 million. This was primarily driven by Payment Solutions, where we see an increase in both BNPL volumes and Pay Now volumes. This compensates for a decline in invoice volumes within Payment Solutions and reduced income in Digital Banking Services.

Earnings before tax (EBT) amounted to SEK 1.1 million (-8.6), which is in line with the preliminary profit published on April 12, 2023. In addition, in the first quarter of 2022 an item affecting comparability had a positive impact on EBT of SEK 4.9 million. Adjusted for this effect, Qliro’s EBT increased from SEK -13.5 million to SEK 1.1 million, an increase of SEK 14.6 million. Our goal of making the company profitable at EBT level for the full year 2023 still stands, although the earnings may vary over the remaining quarters.

New performance measures in line with the growth strategy
To more clearly explain the potential and dynamics of our Payment Solutions business, we are adding further performance measures to our reporting in order to shed light on our entire business and all the volumes we handle. We have previously only addressed our Pay After Delivery volumes, which amounted to SEK 1.4 billion for the quarter. In the future, these will be referred to as “Pay Later” volumes, which consist of invoice volumes and BNPL volumes, which are also presented as new performance measures, as BNPL volumes in particular are important for profitability.

As we have expanded our position as a payment provider by providing all the payment methods requested by our merchants in the Nordics and northern Europe, our direct payment volumes have grown to significant levels. For this reason, going forward we will also recognize these volumes as Pay Now volumes, which amounted to SEK 1.3 billion in the quarter. This means that as of this interim report, we will address the total volumes that we handle for our e-merchants, which will be referred to from now on as Total Payment Volume.

Progress in Qliro’s strategy transition with a focus on Payment Solutions
Qliro’s strategy transition partly involves an increased focus on payments. As part of this, we now target both large and small e-retailers with a strong offer with a flexible and modular checkout, our checkout, which contains all relevant payment methods in both Pay Now and Pay Later. At the same time, we can offer a good post-purchase experience for consumers who use our own Pay Later products via Qliro’s App & Web.

Despite a decrease in the company’s total costs during the quarter, over the past year Qliro has tripled its sales capacity in Payment Solutions and established a new merchant success team. The merchant success team focuses on improving Qliro’s support to merchants and speeding up the onboarding of new merchants. This coincides with our ambition to focus on growth in Payment Solutions and on creating the market’s best experience for merchants and partners and helping them to grow.

We have focused strongly during the past year on establishing our service to become a Collecting Payment Service Provider (“Collecting PSP”). We are now technically ready to start handling card payments, and we will trial this service with selected merchants and plan to launch the service in the second quarter. This is an important step in our journey of becoming an even better payment partner. It will also enable us to capitalize more on our growing Pay Now volumes, particularly in SME. Additional payment methods within Pay Now are planned to be included in our Collecting PSP in the future.

Continued growth in Payment Solutions
Total income in Payment Solutions increased by 9.8 percent to SEK 95.2 million. According to Svensk Handel’s (Swedish Trade Federation) e-commerce indicator, Swedish e-commerce sales fell 6 percent in the same period. Our Total Payment Volume totaled more than SEK 2.7 billion in the quarter, which is a fall of only 2 percent year-on-year. This indicates that we are continuing to win market shares.

In 2022, we noted a trend in consumer preferences where more consumers are choosing to pay for their purchases through part payment. Meanwhile, we made our Pay Now offering more attractive by launching Vipps, MobilePay and Swish in 2022, which has resulted in more consumers choosing to pay for their purchases immediately. This has had a positive effect on Qliro’s BNPL-volumes and Pay Now volumes, which both increased by 8 percent during the quarter. At the same time, invoice volumes dropped by 17 percent, which is compensated by the growth in our BNPL volumes. This is a favorable trend for Qliro since BNPL volumes include fees to customers, unlike invoice volumes.

Although income generation from Pay Now volumes are considerably lower than for Pay Later volumes, the total sales volumes reflect our position in the market and will become increasingly relevant as we grow as a payment partner and strengthen our ability to capitalize on these volumes, including in Pay Now through our “Collecting PSP” service, which is currently being tested with the first merchants for card payments and is planned to be launched to all new SME customers in the second quarter.

Decline in Digital Banking Services continues, while loan book begins to stabilize
Digital Banking Services continues to decline, with income falling to SEK 18.5 million (19.3). However, our loan book began to stabilize and amounted to SEK 855 million, compared with SEK 879 million at the end of 2022.

Stabilization of credit losses since year end
During much of 2022 we carried out solid work with our credit portfolio and the credit assessment of a new Pay Later volume with the aim of strengthening the portfolio ahead of 2023. This resulted in impairments, among other things. In the first quarter we saw a continued increase year-on-year, but a decrease compared to the fourth quarter of 2022. Reported credit losses amounted to SEK 32.5 million (28.0). The increase is primarily due to an increase in absolute terms in the loan book for Payment Solutions, as well as increased FLI provisions due to macroeconomic uncertainty.

Well-positioned for commercial success in 2023
During the quarter we achieved profitability, gained new merchants, test-launched our Collecting PSP service and continued to win market shares despite a decline in e-commerce. Overall, this makes me feel comfortable with our profitability goal for the full year and our ability to continue growing our position as a partner to merchants.

Presentation of the interim report

Media, analysts and investors are invited to a conference call on 3 May 2023 at 10 am (CET) when CEO Christoffer Rutgersson and CFO Robert Stambro will present the results.

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

Participate via webcast:
https://ir.financialhearings.com/qliro-q1-2023

Participate via conference call:
https://conference.financialhearings.com/teleconference/?id=200706

You can also follow the presentation on:
https://www.qliro.com/en-se/investor-relations-2/presentations/

This press release is published in Swedish and English. The Swedish version is the original and shall apply in any instance where the two versions differ.