Good afternoon and welcome to Enento's First Quarter Earnings Webcast. My name is Henrik Soras and I'm the Head of Investor Relations and Strategy for Enento Group. Today I'm joined by our CEO, Jeanette Jäger, and our CFO, Elina Stråhlman. Jeanette will start by providing an overview of our first quarter results, key highlights, and updates from our business areas. Elina will then share more detailed insights from a financial perspective. After that, Jeanette will close with the 2025 priorities for strategy execution. Following the presentation, we will open the floor for questions. Feel free to submit your questions at any time using the webcast tool. Without further ado, I will now hand it over to Jeanette to get us started.
Thank you very much, Henrik. Thank you very much and also good afternoon to everyone. It is great to have you joining our webcast. Let's dive into our 2025 first quarter highlights and key figures. After that, I will be presenting the usual business area updates. During this first quarter, Nordic consumer and corporate lending markets remained rather stable. In the mortgage markets, there were signs of gradual recovery, but these represent a small share of our volumes. Global trade disputes did not have any significant direct impact on our business during the first quarter. However, these disputes increase uncertainty and can weaken, for example, economic growth as well as companies' and consumers' sentiment for investments and spending. Moreover, regulatory pressure persists in Sweden on consumer credit, and I will cover this topic in more detail later in the presentation.
One of the quarterly highlights was our top line as net sales grew for the first time in over two years. We see good progress in the strategic growth areas as we continue to penetrate the markets in new services and new customer verticals. Especially compliance services continue to demonstrate strong growth rate during the quarter. Moreover, we continue to drive efficiency actions to address lower volumes in the Swedish consumer credit business. We achieved several important milestones during the quarter. The IT infrastructure serving transition is nearing completion in Finland, and Sweden is on track for completion in H1. We also continued to introduce new innovative services to the market. In Sweden, we have launched company ownership data and PEP and sanction services, and we see very good customer interest towards these services.
In Finland, we launched a new advanced consumer credit service called Rating Odin and ESG company rating service.
We also extended our Finnish ESG real estate climate risk with a flooding risk service. Besides service development, we focus on go-to-market and commercialization to capture benefits from our investments. When it comes to our key figures for our first quarter, our net sales grew by 1% at comparable exchange rates due to the continued good sales growth in Business Insight in Finland, Norway, and Denmark. Consumer Insight sales saw a slight decline due to the muted demand for consumer credit information, although the rate of decline was lower than in the previous quarters. The share of net sales from new services was 11%. Many new services, for example, in compliance and real estate information, continue to perform well. The year-on-year has, as expected, a slight decline driven by timing impact.
Some larger products are now being excluded from KPI as it covers new services launched within the past 36 months. Our adjusted EBITDA was stable year-on-year and reached € 12.4 million, which resulted in an adjusted EBITDA margin of 33%. Profitability was supported by sales growth and cost savings, while lower production for own use due to the IT infrastructure consolidation continued to pressure the margin. Also, decline in the high-margin Swedish consumer credit information business impacted our margin negatively. Free cash flow, however, continued to be good at € 7 million, resulting in a cash conversion of around 67%. Let's then review the first quarter highlights from our business areas. Business Insight continued to grow in Q1 2025 compared to the previous year. Net sales were € 22.8 million, growing by 2.9% at comparable exchange rates.
Business Insight sales growth exceeded 5% in Finland and was double digits in Norway and Denmark. Compliance services continued to perform very well. We see very good customer interest and growth opportunities, especially in Finland and in Sweden. I will share more insights on this as next topic. In Finland, we launched an ESG company rating service. Our customers have appreciated the service's simplified and easy-to-understand approach to a complex topic. Moreover, we extended our real estate climate risk services from Sweden into Finland with flooding risk. This service is already being applied by a large customer and demonstrates our ability to scale services across the Nordic countries. We continue to see good growth opportunities in property and mortgage data related to energy classification, certificates, and climate risks.
This is driven by stricter European Central Bank guidelines for banks, real estate portfolio reporting, stress testing, and also asset quality assessment.
Real estate information also had a good quarter. Sales grew for the fourth consecutive quarter, driven by improving housing market volumes and the successful introduction of new services in both Finland and Sweden. When it comes to apartment information, we continue to see growth opportunities, for example, in data related to maintenance fees, renovation, and maintenance history and loans. This then is connected to Finland. Back to compliance. Compliance services are one of the key strategic growth priorities for Enento across the Nordics. Demand for compliance solutions is increasing, driven by regulation and industry demand. Our customers are looking for better ways to evaluate risks in onboarding and then also credit and due diligence.
We see that AML and KYC needs are growing, especially in understanding companies' ownership structures and asset freezing lists, which are significant pain points for many companies and require proprietary data solutions.
Better compliance solutions also help to detect and prevent criminal activity such as fraud. Compliance is also a significant administrative cost for financial institutions, and they are looking for intelligent and automated solutions. Our current compliance offering is particularly competitive in Finland, where we are one of the leading compliance service providers and have grown over several years. In Sweden, we have a more limited compliance presence and business size, but we have a nicely growing offering and good customer interest. Our key growth pockets are especially in the beneficial ownership data, where we are strong in Finland and are currently expanding in Sweden. In the future, we see potential also more cross-Nordic ownership data. Our core target group is strategic and large customers, especially banks and financial institutions.
Small and mid-sized companies are also looking for compliance solutions to support, for example, risk management in sourcing and sales processes.
Consumer insight then. Consumer insight and net sales were € 14.8 million in Q1 2025 and reflecting a decline of -1.8% at comparable exchange rates. This decline was due to the slightly year-over-year decline in consumer credit information in both Sweden and Finland. In Sweden, consumer credit information, the loan broker segment, continued to decline as loan brokers have limited their growth actions, such as marketing, while the consumer confidence also has decreased. On the other hand, we continue to see good growth outside the loan broker segment within new customer verticals and also housing-related credit information. Overall, the outlook in Sweden for consumer credit remains still rather muted. Fraud continues to be a growing problem across the Nordic societies, and especially in Sweden.
Safeguarding consumers from evolving digital fraud has become a priority for governments and financial institutions.
At the Swedish Anti-Money Laundering Days, we saw great interest towards our fraud prevention solutions from many financial sector customers. Also, fraud issues have created good interest towards our direct-to-consumer ID protection services in both Finland and Sweden among our partners. We are working hard on commercial activities and see opportunities to bundle our anti-fraud service with credit information and compliance services. Consumer credit information demand remained relatively stable in Finland, and sales decreased by low single-digit rates. Consumer confidence continues to be low in Finland, and our sales mix is still weaker due to a higher share of more basic credit information services. Our customers are, though, looking for new and unique data points, higher predictive power, and efficiency.
Our recently launched advanced credit rating service called Rating Odin responds to these needs. We are gaining customer interest but are still in the early phase of commercialization.
We have also seen gradual signs of improving consumer credit demand outlook, especially in housing, and some of our customers are re-entering the consumer credit market in Finland. However, the market environment remains still uncertain and could be further impacted by global trade and economic issues. Regarding the regulatory development in Sweden, we have not experienced significant impacts from the regulations that took effect primarily on 1 March 2025. We expect these regulatory measures to impact the high-interest rate lenders, which are not our main customer group, and borrowers with weaker credit profile. Other regulatory measures like interest rate deduction limitation will impact a more wide range of consumers. We anticipate that Swedish consumers will become more cautious about taking unsecured loans as the credit terms are less favorable for them.
Additionally, the regulatory measures proposed in January 2025, which would restrict the provision of consumer credit and loan broker services to only companies with a banking license, are already affecting the growth activities and prospects for loan brokers in Sweden. Our Q1 2025 loan broker segment-related sales were roughly on the same level as in Q4 2024 and continue to decline year-over-year. These legislative changes are proposed to come into force on 1 July 2025, with a transition period until 1 July 2026 for consumer credit institutions already operating under the current legislation. There has been some debate about the regulatory measures being proposed, but we still believe that this will be approved during this year. Now let's continue with the financials. You know, Elina, please go ahead. Thank you.
Thank you, Jeanette. Yes, let's start with repeating the key figures for the first quarter, starting from the net sales. Our net sales turned to growth for the first time in two years and grew by 1% at comparable effects rates, reaching € 37.7 million. This growth was driven by continued good performance in Business Insight, particularly in Finland, Norway, and Denmark, where the growth for the second quarter in a row exceeded 5%. However, consumer insight sales continued to be in decline due to muted demand in consumer credit information services. Although the rate of decline was significantly lower than in previous quarters, our adjusted EBITDA was stable year-over-year and reached € 12.4 million, resulting in an adjusted EBITDA margin of 33%.
Profitability was supported by sales growth and cost savings, while lower production for own use pressured the margin due to our limited ability to develop services during the IT infrastructure consolidation. Additionally, the decline in the high-margin Swedish consumer credit information business impacted our sales mix and margin negatively. Adjusted EBIT development was in line with adjusted EBITDA, resulting in slightly growing development, and financial position remained strong. Continuing with a deep dive into revenue development and starting from Business Insight. Business Insight generated € 22.8 million in revenue, growing by 2.9% at comparable effects rates in Q1. As mentioned, we saw good over 5% growth in Finland, Norway, and Denmark. The highest growing areas were real estate and compliance, where new services supported the development.
Enterprise delivered solid growth and was supported by good demand for business credit services in Finland.
Also, Norway development continued strong, like we've seen now many quarters backwards as well. This is very much thanks to successful sales efforts. The overall development continued to be muted by declining development in Sweden. In Consumer Insight, Consumer Insight generated € 14.8 million in revenue in Q1 and declined by 1.8% at comparable effects rates, following the continuingly challenging situation in the consumer credit business and in our operating environment. In Sweden, as Jeanette mentioned, usage of broker segment continued to decline, offsetting the good development in housing and e-commerce. Whereas in Finland, consumer credit volumes overall remained on a low level following the low consumer confidence. Good continuing growth in consumer marketing services in Finland supported the development but was not obviously enough to offset the decline in consumer credit.
The outlook for consumer credit remains muted, and we do not currently see signs of growing volumes in either country in this area. Looking at the quarter-to-quarter development, first we want to highlight that despite the challenging macroeconomic environment and development, we have been on the growth side in Business Insight for one year in a row now. That is definitely something positive. Whereas in Consumer Insight, the revenue in euros has been rather stable since Q1 last year, with rate of decline clearly decreasing now in Q1 when we start facing lower comparisons. Overall, of course, repeating that while the rate of decline has decreased, we do not currently see volumes picking up in this unstable economic and regulatory environment. Moving on to profitability development.
Adjusted EBITDA, as mentioned, landed flat at € 12.4 million and 33% margin, respectively, and was positively impacted by sales development and savings, while at the same time margin was pressured by weaker sales mix, increased data costs, and lower speed in development. Looking at the line-by-line development, materials and services, those were impacted by the sales mix, meaning growing variable data costs connected to good growing sales in real estate and consumer marketing services in Finland. They were also impacted by the price increases in governmental data in Finland, where government took high price increases in place during last year. Personnel expenses, those were lower than prior year, mainly following the savings actions taken, and then production for own use, meaning the capitalized development hours.
Those were, on the other hand, impacted by infrastructure consolidation projects that basically hinder us from developing services at the normal speed during this significant transition. We expect to finalize the infrastructure consolidation project by the end of the first half of this year, but we expect the development hours also to be impacted now in the second quarter of the year. Free cash flow remained flat on a good level. Operating cash flow was slightly declining, but on the other hand, investments were on a slightly lower level than prior year. Operating cash flow was negatively impacted by payments related to items affecting comparability, meaning the infra, which is then visible in adjusted free cash flow, where these one-off items are excluded, which then again improved compared to prior year.
I will mention, of course, that now in April, we have paid the first € 0.50 of the dividend for this year, and our cash-generating capabilities continue to be strong, and we expect the second payment of € 0.50 to take place in Q4. Regarding key indicators, we had some € 50 million of cash at our hands, and net debt to EBITDA remained on a 2024 level at 2.7 times, and our ability to serve financial debt remains good. We have also added here a new revised indicator called adjusted EPS that reflects our earnings per share, excluding overvalued depreciations from acquisitions and items affecting comparability. This KPI is now aligned with our adjusted EBITDA and EBIT metrics and is also more aligned with our industry peers.
Adjusted EPS that was in slight decline following the increased finance costs, and those are then due to unrealized exchange rate losses. Now let's continue with looking ahead to the remaining year of 2025. Jeanette, please go ahead.
Thank you, Elina. Looking ahead to this year, 2025, the demand for business information services remains good, but especially our Swedish consumer credit information business faces uncertainty due to the new regulations and also structural changes. The uncertain global trade and political environment also limits the visibility on generic economic activity. We will balance driving growth with particular focus on Sweden while driving efficiencies. We will also simultaneously continue to invest in competitiveness and prioritize growth opportunities to capture opportunities in the markets. We have identified several key areas to drive our strategy forward.
Firstly, we aim to retain our number one position in our core credit and business information services. Our trusted brands UC in Sweden, Asiakastieto in Finland, and Proff in Norway and Denmark, along with our mission-critical products, will continue to be the foundation of our success. Secondly, we will continue our efficiency actions and improve business resilience. This includes streamlining our operations, optimizing our cost structure, and enhancing our IT infrastructure to support scalability and agility. Moreover, we are executing and planning various counteractions to mitigate headwinds related to the structural changes in the Swedish consumer credit market. Thirdly, we will continue to grow in strategically important new services and customer segments across our operating countries. A lot of focus is on growing compliance, fraud prevention, PSD2, and ESG real estate-related services.
These services address the evolving needs of our customers and open new revenue streams, especially for the Swedish markets, where we want to grow a profitable second leg beside the core consumer credit business. We will also focus on growing market penetration in new verticals and mid-sized customers, especially in Sweden and Norway. This involves expanding our customer base and leveraging our existing core and new offering to serve a wider range of clients. Lastly, in Sweden, we are taking actions to transform our premium business, where we have around 28,000 small-medium customers. We are still in the planning phase, and our aim is to shift towards a new sales model with a higher share of in-source customers, new sales channels and distributors, subscription-based model, and a refined offering.
In the shorter term, it means that some of our Swedish premium sales is at risk, but we are taking retention and new sales actions to mitigate, and the mid-to-long-term impact will be positive, with higher customer satisfaction, more recurring revenue, and improved profitability. Overall, our 2025 focus areas are designed to ensure we drive growth and maintain cost efficiency. With that, we say thank you for the presentation, and we open up for the questions. Please join me.
All right, time for the Q&A, and we will first start with any potential audience questions.
Roni Peuranhiemo from Inderes. Hi. Maybe first about the new regulation in Sweden. Has the rather neutral impact been a positive surprise for you, or what kind of impact did you—what was your base scenario originally?
It is, I would say, according to how we have expected it to be. We do see that the regulation does have an impact. We have also expected that impact to already be partly in place. I would say that we do not in any way say that the regulations are already taken into account and now this is it. I think that we will see this regulation gradually also change the credit market in Sweden, and that we have taken into account. Of course, we have the banking license for the brokers coming in later on. I would say that this development, to summarize, is as expected.
Maybe one more about compliance, where you saw strong growth driven somewhat due to regulation. Do you see a risk of deregulation in the EU- level as a risk since that has been somewhat discussed?
You could, of course, see that that could be seen as a potential risk as a driver, but at the same time, I would say that the compliance data is also having other drivers, and other drivers are also growing. Drivers to know who you are dealing with, who you are making business with, that kind of driver is growing. In that sense, I think that we feel quite confident about that this will continue to be an area of growth.
All right, thank you. No further questions at this point.
Thank you.
All right, we have a few questions in the webcast tool, and I will first start with the consumer credit outlook in Finland. Have we seen improvement, and how are the volumes year on year?
I can start with that one. We haven't seen improvement in consumer credit volumes in Finland in general. We have seen some picking up in the housing side, which is then visible also in good development in real estate business, but in consumer credit, we have seen very muted volumes, and we believe that it is very much connected to low consumer confidence here in Finland.
Good. There is a question related to quantifying what we mean by solid growth, strong growth, and good growth.
Good question. We have not officially defined any ranges for these metrics, so to say, but if I would put them into some ranges, I would say that when we talk about solid, then we talk about something that is clearly less than 5% good growth. We talk growth around or more than 5%, and, of course, strong growth needs to be close or over 10%. That is probably in general how we tend to use these terms.
Actually, currently I don't see any further questions in the webcast tool. Maybe I give it a few seconds still more to see if it uploads.
Okay. I was just passing on all the questions to Elina here. I didn't know that we were running out of questions.
There doesn't seem to be any further questions.
It has been clear then. Let's hope we have been clear in our communication then.
All right. Thank you, everyone.
Thank you.
Thank you.