SaveLend

Q2 - 1 April - 30 June 2022
Amounts in parentheses refer to the same period the previous year.

• Net revenue for the period was MSEK 35.0 (21.1)
• Adjusted EBITDA totaled MSEK -6.8 (-2.1 MSEK)
• EBITDA was MSEK-6.9 (-10.8)
• EBIT was SEK -12.0 MSEK ( -12.9)
• Net result was MSEK -12.2 (-13.1)
• Earnings per share before dilution were SEK -0.24 (-0.46).

Six months - 1 January - 30 June 2022

• Net revenue for the period was MSEK 64.8 (40.2 MSEK)
• Adjusted EBITDA totaled MSEK-9.8 (-2.8)
• EBITDA was MSEK -10.6 (-11.5)
• EBIT was MSEK -20.1 ( -15.5)
• Net result was MSEK -20.4 (-16.0)
• Earnings per share before dilution were SEK -0.41 (-0.99).

Events during the quarter 1 April - 30 June 2022

• Erik Penser Bank initiates coverage of SaveLend Group
• At the annual general meeting on April 26, 2022, Kaj Rönnlund was elected as a new board member of SaveLend Group and former board member Helena Möller declined re-election. The meeting also decided to, for the time until the end of the next annual general meeting, choose PricewaterhouseCoopers i Sverige AB as audit firm.
• SaveLend is appointed Sweden's best p2p platform by Veckans Affärer (Placeringsguiden, May 2022).
• Continued European expansion for SaveLend Group through license passporting
• SaveLend Group's incentive programs have been fully subscribed
• The savings platform gets a new institutional investor when SaveLend Group enters into an agreement with the fixed income specialist nordIX AG

Events after the period 1 April - 30 June 2022

• A subsidiary of SaveLend Group has applied to the Finansinspektionen to operate alternative investment funds.

CEO COMMENTS

The best P2P platform in Sweden!
I am very pleased being able to open this interim report with a note about the excellent public recognition the company received from the Swedish investor magazine Privata Affärer. They publish an independent monthly Placeringsguide (Investment Guide) where the May 2022 issue highlights SaveLend Group as the best P2P platform in Sweden. I will humbly claim this distinction identifies one of the company’s primary achievements – that SaveLend has not had a single negative monthly yield on the platform level since 2016. This kind of publicity is always satisfying, but certainly not surprising considering all we’ve accomplished so far.

A quote from the accompanying article says: “the more varied borrowers you have for your capital, the lower the risk.” This also highlights SaveLend Group as having the broadest offering with a wide diversity of credit types and maturities. I also feel proud that the Placeringsguide mentioned the function of our proprietary built Smart Invest, which we developed to help savers optimize spreading risk.

The entire test is available (in Swedish) at:
https://bit.ly/3A7dIIC

Turbulent times but continued stable yield
Once again we are experiencing turbulent times, and particularly equity market uncertainty. My experiences during the global financial crisis in 2007–2008 were my motivation for creating SaveLend. My objective, then as now, has been for SaveLend to be a strong addition to equity markets, and a safe harbor for investors, particularly in uncertain times with broad market instability. I am therefore especially heartened in being able to state that SaveLend has withstood this year's turbulence, as it has previously. Looking back at these twelve months, from July 2021 to June 2022, I can note that SaveLend has delivered +8.77% average yield after credit losses and fees, while the OMXSPI has shown a negative yield of 20.40% over the same period. Yield in SaveLend has also not been negatively impacted by the pandemic, inflationary times, the invasion of Ukraine, and the otherwise variable, uncertain world. This convinces me that credits should be included in anyone’s savings and our results over the last year show this, not least in relation to equity markets.

Unfortunately, though, I can also note that Swedes’ sleeping savings continue to increase. Today, over SEK 2,000 billion is parked in savings accounts across Sweden, essentially not earning any yield. Savings are naturally a good thing, but at today’s inflation rates all these savers should look for better options.

Records and scalability
We reached new record levels for our forward looking KPIs. Capital on the platform totaled MSEK 876 (373, Q2 2021) and we processed 1,052,687 billing transactions (810,101, Q2 2021).

Profitable growth for Billecta
Billecta continues to grow with profitability. The platform software upgrade we've worked on this last year enables processing volumes several times higher than currently. This means we can now welcome larger new customers who will contribute to stronger margins.

Our platforms are scalable, and we've demonstrated we can refocus on profitability at any time. I therefore wanted to take the opportunity to describe more deeply the details of our income statement to show how we anticipate costs will decrease over time and profitability will thereby be achieved to then continue rising.

Generally, we can say that all our products on either the savings platform or the billing
platform demand most resources for implementation and sales activities. As an example, any new credit originator coming to the savings platform requires technical resources and project management before these new operations can be initiated. The same applies to any larger new customer on the billing platform. When the customer is fully implemented, subsequent automatic processing requires little in terms of resources or staff activity.

The cost of selling and implementation is therefore high initially, but over time total cost drops to very low levels. We prioritize maintaining a high gross margin, which we aim to keep at over 85% for the savings platform and over 70% for the billing platform.

Marketing is an expense that we’ve invested significant amounts in historically. As brand recognition and volumes increase, our marketing efforts show greater impact, whereby we get more value for our spending. For the coming year, we plan to invest approximately 30% of revenues in marketing and customer acquisition. The data we hold shows that this is an effective tool that can be adjusted quickly as market conditions change.

Other external expenses includes expenses for leases, IT services, internal and external audits, and fees for permits. We have now reached a cost plateau where these expenses no longer increase substantially.

Staff expenses are part of our more significant historical investment which has involved building a highly competent staff and stable organization. Such an organization is a requirement for any financial platform under supervision of Finansinspektionen, and also necessary for continued growth. In addition to our financial targets, my view is that with a staff of 100 employees, the company is fully capable of SEK 3 million in sale per employee
by 2025.

Clarity in report after report
We anticipate important items in our cost base to stabilize after this report. External expenses have already stabilized for this report. We anticipate that staff expenses will also stabilize after the next interim report, and finally marketing expenses will begin to approach 30% of revenues in the coming year.

Records in revenue
Revenue for Q2 this year totaled MSEK 35 and adjusted EBITDA was MSEK -6.8. Our assessment remains that the company will achieve positive cash flow by year-end. As I wrote in my first CEO comments after listing the company, our investment decisions, for products and acquisitions, will not be driven by short-term market expectations, but rather by our long-term vision. This position is clearly demonstrated in our conscious decision the previous quarter which did have negative impact on growth then, but will have short and long term positive impact going forward. We can see some of this positive impact in Q2 as the company returned to significant growth. Of course, the expectation is not that these long-term initiatives always will have such immediate positive impact, but our consideration is always what is best for our shareholders in the long-term, even though this will at times have negative impact in the short-term.

Savings platform
The increase in capital on the savings platform is driven by all customer segments. The greatest growth is however accounted for by private savers, whose capital more than doubled during the quarter compared to the previous year. We see increasing interest from institutional capital, signified by signing on our largest customer to date, the German fixed income specialist nordIX AG. Half of the agreed amount has been invested at the time of publication of this report, and the remainder will be activated shortly.

I want to be clear that our primary focus is on private investors and on developing the best savings platform for credit. With a broad offering of various types of credit and maturities, and SmartInvest to optimize risk diversity, we offer a strong alternative to traditional savings which typically offers no or low interest rates. Moreover, I will note that we are receiving increasing interest from investors requesting lower yield at a lower risk. And the company will therefore launch additional offerings for these. Money shouldn’t sleep!

Additional investment opportunities through AIF
Shortly after the quarter-end, we submitted an application to establish and manage an alternative investment fund (AIF). This fund will broaden our ability to reach new investors and also relieve the balance sheet in regard to collection portfolios since the AIF will primarily invest in both new and old consumer credits. I anticipate that the first operational activities for the fund will come during the last quarter, and that the SaveLend Group balance sheet will then begin to diminish.

Billing platform
The billing platform experienced another stable quarter of growth – from both current and new customers. Our partnerships continue to show good growth also, as seen in Pigello, Trippus, and not least Mobility46, who welcomed Corem and others as new customers during the quarter.

Through the Generic Mobile partnership, we participated in the live TV broadcast of the Swedish UNICEF Gala where over 3,000 new monthly donors were brought in during the two-hour broadcast – with support from the Billecta API. This assignment was an honor, but also proved an important stress test which we passed without a hitch.

Growing with our current customers is part of our growth strategy and something we have thankfully been able to rely on during the Billecta upgrade. This project demanded significant resources that left little leeway for welcoming new large customers. Now that the upgraded
platform is on track again, we can pursue several interesting discussions that we look forward to adding new partnerships in the near future.

To conclude
Over the last twelve months we’ve engaged in hard, intensive work moving many internal processes forward. This involved everything from recruitment to platform migrations, and two acquisitions. Still, we have grown revenue, both organically and through acquisition, by 65.6% over that time. When I now see the conclusion of these sizeable projects so we can fully concentrate on our customers, I feel a sense of excitement looking forward to a period of high ambitions for growth and efficiency.

Welcome back to our next report!