SaveLend

Q3 - 1 July - 30 September 2024
Amounts in parentheses refer to the same period the previous year.

• Net revenue for the quarter was MSEK 37.3 (MSEK 42.4).
• EBITDA was MSEK 4.6 (MSEK 6.3).
• EBIT was MSEK -3.4 (MSEK 0.1).
• Net results was MSEK -4.0 (MSEK -0.1).
• Earnings per share before dilution were SEK -0.07 (SEK -0.00).

Period 1 January - 30 September 2024

• Net revenue for the period was MSEK 119.1 (MSEK 127.4).
• EBITDA was MSEK 5.9 (MSEK 12.2).
• EBIT was MSEK -12.4 (MSEK -5.6).
• Net results was MSEK -14.6 (MSEK -5.9).
• Earnings per share before dilution were SEK -0.27 (SEK -0.11).
  

Events during Q3

• The shares from the directed share issue that was communicated in the second quarter were registered. The number of shares in SaveLend Group AB as of July 18 amounted to 57,286,016 shares. The share capital has increased by SEK 84,834.57, from SEK 1,217,119.34 to SEK 1,301,953.91.
  

Events after the quarter

• In October 2024, Billecta AB, a subsidiary of SaveLend Group AB, entered into a direct agreement with the Swedish Medical Association for continued membership billing. The contract term is 36 months.
• SaveLend Group has entered into a non-binding letter of intent regarding the sale of all shares in its wholly-owned subsidiary Billecta and is now in a due diligence process with a potential buyer. The goal is for the transaction to be completed before the end of the year.

CEO comments
Overall, Q3 has shown continued positive results from the efficiency work we began to see in the previous quarter. However, the growth of capital on the savings platform is still not quite where we want it, though we did see a marginal increase compared to Q2. The Riksbank continues to lower the policy interest rate, which we see as entirely positive for both our competitiveness and our savers' ability to invest long-term. We have launched a new and very promising credit product on the platform, improved overall credit quality, and managed to maintain a good turnover in the secondary market. Last but certainly not least, we achieved the best quarterly results of the year in both EBIT and EBITDA, with the latter improving by over 100% from the previous quarter.

Macroeconomic situation
Our external environment continues to change. To address the current slowdown in the Swedish economy, the Riksbank made two adjustments to the policy interest rate during the quarter, each by 25 basis points. Following the second monetary policy decision in September, the policy rate was left at 3.25%. Just as in Q2, the banks’ deposit rates have followed the development of the policy interest rate. After the policy interest rate cut in Q2, consumers were able to open new fixed-rate accounts, covered by the state deposit guarantee, with interest rates of up to 4.35%. Currently, the best offer from competitors is 3.80%. With continued expected rate cuts and the government's proposal for additional stimulus measures in the form of reduced mortgage amortization requirements, we are optimistic about the future. This outlook is driven both by the competitiveness of our savings products and by the improved financial situation of our savers in terms of available savings capital. All else being equal, this is likely to reduce withdrawal volumes and increase deposit volumes.

Savings platform
The total capital on the platform has increased by approximately MSEK 4 during the quarter, a modest increase of around 0.2%. We have faced challenges in boosting deposits during the summer months, and particularly in July, experienced significant repayments from real estate projects. We were unable to counterbalance these repayments with new project financing opportunities, which led to withdrawals from the platform.

In Q3, we relaunched Factoring as a credit product on the savings platform, which has been positively received by our savers. The initial factoring credits financed are expected to yield an annual return of over 8%, which will contribute to improving the overall strategy returns, given the anticipated low credit losses. The primary advantage of factoring as a credit type lies in its short terms, averaging 1-3 months. Combined with a more robust secondary market, this will make it easier for savers to reduce their holdings or free up liquidity to invest in other projects.

The Balanced strategy continues to perform in line with expectations, but Yield has, for the first time over the past 12 months, fallen below the expected target return. Yield has a higher risk profile than Balanced, and one explanation for the return level is the credit losses that have impacted the strategy. The volatility that this risk profile entails is the reason why Yield has a longer recommended investment horizon compared to Balanced. Since the savings strategies are central to our offering, extensive analyses have been conducted, and we also see a more technical explanation. Specifically, smaller portfolios, with less than SEK 10,000 invested in the Yield strategy, are affected by limited diversification due to the size of the capital. However, for portfolios with holdings over SEK 10,000 in Yield, these follow the target return. This issue does not occur in the Balanced strategy as the two strategies differ in their composition. Therefore, we will adjust how we communicate and market Yield in order to set the right expectations, which we aim to meet and, in the best case, exceed going forward.

Billing platform
Billecta set a new record during the quarter in the number of billing transactions and delivered a growth of 17% compared to the same quarter last year in terms of net revenue. The strategic review announced in the second quarter is ongoing, and as recently communicated, we have entered into a non-binding letter of intent regarding the sale of all shares in the wholly-owned subsidiary Billecta.

Billecta has been successful in identifying customer segments where they deliver particularly clear value, and even during this quarter, Billecta, together with partners, participated in two procurements. This time, within the banking and insurance sector as well as the public sector. It is an excellent way to test the bidding process and the competitiveness of the offering.

Results
Net revenue has decreased in Q3 compared to both the same period in 2023 and the previous quarter this year. The decline can primarily be attributed to the challenge we faced in finding and offering enough real estate projects on the savings platform during the third quarter. This has had a significant impact on revenue in the current period under the existing model. The second factor contributing to the reduced net revenue is a lower volume of new consumer loans. This is a natural effect of a larger portion of the capital volume being allocated to the secondary market, as well as the increased requirements for new borrowers to improve the quality.

On the cost side, we continue to see positive effects from our efficiency efforts. Overall, for other external costs, marketing, and personnel, we have reduced expenses by 13% compared to Q3 2023. Adjusted for changes in accrued vacation pay, which had a positive impact on the quarter, we observe a reduction of over 1 MSEK in personnel cost compared to Q2 of this year. This naturally results in clear impacts, with EBITDA landing at MSEK 4.6, an improvement of 112% from the previous quarter, indicating a continued positive trend.

Looking ahead
We are continuing with the strategic review of Billecta, aiming to complete it during Q4. The reason this process has taken longer than initially expected is ultimately positive, as it reflects the high level of interest in the company.

For the group as a whole, I consider the overall Q3 results strong. As previously communicated, our primary focus is not on top-line growth but on profitability and improving efficiency. Therefore, I view it as highly positive that in the third quarter of the year, we are seeing the third consecutive EBITDA improvement, with an increase of 112% from the previous quarter. We do have some one-time effects, such as credit loss provisions, which, while not alarming in themselves, mean that EBIT does not improve to the same extent as EBITDA. Despite this, we are delivering the best quarterly EBIT result of the year.