SaveLend

Q4 - 1 October - 31 December 2023
Amounts in parentheses refer to the same period the previous year.

• Net revenue for the period was MSEK 42.3 (44.7).
• EBITDA was MSEK -8.8 (5.5).
• EBIT was MSEK -14.9 (-0.1).
• Net result was MSEK -5.7 (-3.2).
• Earnings per share before dilution were SEK -0.11 (-0.06).

Period 1 January - 31 December 2023

• Net revenue for the period was MSEK 169.8 (150.3).
• EBITDA was MSEK 3.7 MSEK (-4.0).
• EBIT was MSEK -20.5 MSEK (-24.3).
• Net result was MSEK -11.6 (-28.1).
• Earnings per share before dilution were -0.22 SEK (-0.55).
  

Events during Q4

• SaveLend Group strengthens the management team by recruiting Björn Johnson as Chief Credit Officer and Peter Balod as Chief Commercial Officer.
• SaveLend Group AB launches Project Finance – A new way for investors to actively choose their investment projects.
• SaveLend Group AB appoints Jenny Gabrielsson as new CFO.
• SaveLend Group presents new financial targets – aims to achieve a revenue of at least MSEK 450 by 2027.
  

Events after the quarter

• SaveLend Group AB's CEO, founder, and board member Ludwig Pettersson is leaving his position due to illness and shortly thereafter passes away. The Company's Chief Commercial Officer Peter Balod is appointed the role of acting CEO.

CEO COMMENTS

Now that the last quarter of 2023 has closed, SaveLend Group is wrapping up another year. As the newly appointed acting CEO, I can only state that the company has achieved an incredible amount over the past year. From an outsider's perspective, observing the pace at which projects are completed and launches are conducted, and seeing the results already beginning to show, one can't help but be impressed by both the company and its employees.

During the year, the company launched new savings strategies on the platform and a very promising new product segment in 'Project Finance.' In addition, the company has successfully completed the comprehensive acquisition of Lendify, which has introduced a large number of new investors to the platform and a new, strong brand that will fit perfectly into the product mix in 2024.

The management has also made several important, and not least long-term, decisions that will take the company towards the financial goals of 2027. It takes courage to make changes that affect profitability negatively in the short term to achieve long-term goals, especially in a turbulent external world where the savings platform model has truly been tested. Despite macroeconomic challenges, the company has delivered expected returns to investors in the savings strategies, continued growth, and improved profitability for the year.

Of course, SaveLend Group faces a significant challenge in that Ludwig Pettersson, the founder and long-time CEO, tragically passed away in February from the cancer he had been fighting since 2021. Ludwig was a fantastic entrepreneur, leader, colleague, and friend who will be forever missed. When it came to building the company, he left nothing to chance, and with the past year's great work and the outlook for 2024, I am convinced that the company will be able to manage Ludwig's legacy and develop the business to both reach and exceed the financial goals set through 2027.

Writing this so shortly after Ludwig's passing, it feels odd to celebrate an anniversary, but it's worth mentioning that SaveLend will be 10 years old in 2024. It has been 10 years largely characterized by a low-interest environment combined with a high economy where SaveLend has delivered positive returns to customers year after year. 2023 proved to include rising inflation, sharply raised interest rates, tightening in the capital markets, large layoffs, and a significant increase in corporate bankruptcies. All of this has put our savings offering to the test in a way that has not happened before. It has also tested the organization's ability to quickly adapt to the current market situation.

Looking back at 2023, we are pleased to note that we have savings products that continue to deliver positive returns even in the current market situation, and with a good margin over the return levels found in traditional interest savings. Since the strategies' launch in June through December 2023, 'Balanced' has returned 4.07% and 'Yield' 4.78%. This means that after seven months, both are on track to meet the target returns of 6.5-7.5% and 8-10% respectively over twelve months. While we always strive to exceed our customers' expectations, we are somewhat grateful that our model has been able to prove itself during challenging macroeconomic conditions.

We have come a long way in developing our new product, 'SaveLend Fixed,' our fixed-rate account which we intend to launch in the first half of 2024. At launch, we will offer an interest rate of 6% on two different terms, 12 and 24 months. Both terms aim to offer the highest returns compared to other fixed-rate accounts on the Swedish market. Looking ahead, I see 'SaveLend Fixed' as a very important part of our offering as it opens up for a new type of investor on the platform. A target group that we assessed would not otherwise have invested in, for example, our savings strategies. This new product means that we can seriously compete to provide better returns to hundreds of thousands of Swedes who collectively have several hundred billion SEK in traditional savings accounts with low or no interest. Money shouldn't sleep!

In the fourth quarter, we launched the 'Project Finance' product, which gives our customers the opportunity to make their investment decisions in individual projects. The interest in the projects that have been published has been high, and we have also seen several customers significantly increase their savings with us as a result of this. We have also succeeded in activating some accounts that had not previously made any investments with us, including customers who came through the acquisition of Lendify.

The 'Project Finance' product allows us to fill larger credits faster than we can through the strategies. It is also a natural step as we have a wide customer base with very different needs and desires. It is important to have a product on the platform that can offer higher returns to investors who are willing to forego the risk-minimizing diversification that the strategies offer. We also ensure that all customers choosing to invest in 'Project Finance' have passed the crowdfunding knowledge test. The latest project we launched on the platform in January was fully subscribed within 27 minutes, clearly indicating demand, but this also places high demands on which projects we approve for publication, as well as how we work with ongoing monitoring of brokered credits. In this context, it therefore feels very good to have brought in such an experienced Chief Credit Officer as Björn Johnson, who will also continue the work of developing our credit business overall.

The real estate sector has been hit extremely hard by the macroeconomic situation over the year, and we are seeing major losses among several large players. This situation has also affected investors in the real estate loans brokered via our acquired company Svensk Kreditförmedling, and unfortunately, we are seeing an increasing number of defaulted credits in that portfolio. However, for investors who have invested through our strategies or via our interest rate robot, the exposure is limited. During the autumn, necessary resources have been allocated with the aim of managing potential losses for all our investors, whether they have made their own direct investment decisions or invested via the interest rate robot. We have also gone a step further and provided extra resources to the external agent to ensure that information and updates about existing loans and securities reach the investors more effectively.

I have a very positive view of SaveLend Group, but of course, there are also challenges. One of them is that in its pursuit of growth, it has expanded into new markets without, in my opinion, having a sufficiently strong foundation. Therefore, I welcome the decision taken in the fourth quarter to focus all resources on two markets; Sweden and Finland. This means that we will be ending our credit origination operations in Poland. We see no significant difference in revenue going forward as a result of this, but rather positive effects from a clearer focus for the business and reduced cost base.

In the Finnish market, we have implemented a similar credit assessment model that has been used successfully in Sweden for a long time. The goal is thereby to have a product that is better suited to today's interest rate climate also on the Finnish market. The initial metrics of the new model have been positive, and our partner NordIX has therefore decided to expand their cooperation with us by initially investing 1 million euros in Finnish consumer credits. Our joint objective is for this to increase over time, just as they have done with investments in Swedish credits. We have also made further adjustments so that the Finnish operation will focus exclusively on consumer credits going forward. With these changes, together with the new national credit register being launched in the Finnish market in April 2024, we have a clear plan and strategy for how to turn the Finnish operation profitable.

The revenue for the last quarter of 2023 amounted to MSEK 42.3, which is in line with the previous quarter. Excluding acquired revenue, we observe growth from the previous quarter, underscoring the strength of our core business. EBITDA amounted to MSEK -8.8, a result of changes we have made during the quarter aimed at reaching our new financial goals. The gross margin continues to strengthen, while the cost development for other external, personnel, and marketing expenses, adjusted for active measures during the quarter, evolves according to plan. For the full year, revenue amounted to MSEK 169.8, an increase of 13% compared to 2022. This is despite all the changes made during the year aimed at increasing the share of recurring revenue and strengthening profitability in the long term. The fact that gross profit increases from MSEK 127.9 in 2022 to MSEK 151.3 in 2023, an increase of 18%, is a result of this. It also pleases me to see that EBITDA for the full year 2023 amounts to MSEK 3.7, which is a clear improvement compared to MSEK -4.0 in 2022.

Ludwig has previously communicated that we aim to achieve a positive net result early in 2024. As we continue to deliver competitive returns to our investors, in combination with broadening our target group through the launch of SaveLend Fixed, I am convinced that we will continue to grow the capital on the savings platform. This will lead to increased revenues without a corresponding increase in the cost base, thereby enhancing our profitability. Therefore, I agree with Ludwig in his analysis and see that we have very good opportunities to achieve a positive net result in the first half of 2024. We have previously communicated that, as we approach profitability, we will begin to reverse our tax loss carryforwards. Therefore, as of the end of December, we have reversed the loss carryforwards for the Swedish operations, which positively contributes MSEK 9.7 to the period's results.

During the fourth quarter, we presented our new financial targets for the period 2024-2027. We have taken a number of actions to give ourselves the best possible starting point to achieve these goals. The decisions we have made are consistently aimed at creating a clearer business focus towards our Swedish home market and a restart in the Finnish market. We see it as necessary to focus in order to be able to deliver high returns both to our customers and shareholders. Our growth strategy starting in 2024 is as follows:

• Continue to improve our savings offering by providing a wider product portfolio, thereby increasing our addressable market, like through 'Project finance' and the fixed-interest account.
• With a new credit organization in place, thoroughly examine all parts of our internal and external credit brokerage to ensure long-term sustainable returns for investors combined with good profitability.
• Continue to establish more partnerships with originators to increase diversification for investors on the savings platform.
• Improve the operating margin through margin effects on increased volume and a strategy based on high cost control with Sweden as the core market.
• Continue the initiative to make the billing platform Billecta an autonomous operation within SaveLend Group with its own growth agenda, which will lead to increased focus on selected customer segments and thereby continued volume and margin growth.

The start of 2024 will internally at the company be marked by the tragic passing of our beloved Ludwig. He built this company from the ground up and was more than a manager and colleague to everyone working at SaveLend Group. At the same time, it is important to emphasize that Ludwig did not make this journey alone. Unfortunately, he was also well aware that the day could come when he would no longer be with us. Hence, Ludwig was involved in practically all recruitments, and the team in place today are the people he chose to continue building on his life's work.

In 2024, we will lean even more forward with a sharpened sales organization, and with 2023 behind us, we can be confident that our platforms scale and can deliver in different market conditions. I see that the transition to a more long-term model that began last year should continue to evolve, and especially that the investment made in the business up to now is ready to be harvested. This will also start to be clearly reflected in the income statement going forward.

2024 will be a strong year for SaveLend Group, and together, the board, management, and staff will give their all to honor Ludwig's memory!

Peter Balod,
Acting CEO