Welcome everybody to our pre-silent call. The concept is as usual, so Jeanette will give an overview of our market and business and drivers first, and then Elina will then comment a bit more about the kind of financial development and focus, of course, on how the year has started and how things are progressing. Without further ado, I hand over to you, Jeanette.
Okay, thank you very much, Henrik, and nice to see you all again. If I start up with the market and give a few highlights on the market, there are, as we all know, no real macroeconomic changes, and the market environment in Q1 2025 is more or less, you know, just kind of keep on staying the same. The economic growth is rather low. Inflation has continued quite moderately, and so far there are no significant changes in the consumer loan demand either. The consumer confidence continues to be low in Finland. We did have somewhat of an increase in Sweden, but it has dropped again in the Swedish area. All in all, I would just like to say that from a market perspective, it is very much the same during Q1.
Now, we have earlier also shared with you the new measures approved by the Swedish government, which was shared in November 2024 to prevent overindebtedness, and those have now started in March here in 2025. We also had the new suggestion that there would also be a banking license. That process is still continuing, ongoing. There has been some criticism towards that, that it was a quite stringent, if I may say so, decision or at least suggestion to take, but so far we can just conclude that the process continues and the government stands firm also when it comes to license of loan brokers forward. When it comes to performance, we see modest growth, and this is again now driven by growth in Business Insight, and the areas are familiar: Finland, Norway, Denmark.
Many services are growing well, and those are, for example, compliance and real estate, also well known to you since earlier. There are also good customer interests, just to note, when it comes to also new areas. We have the ESG new credit scoring in Finland. We have then also the open banking in Sweden, Master Data Sweden, meaning that we are serving our clients with data in new ways of delivering the data, like APIs, like queries, etc. There continues to be good traction, and there continues to be good interest in the new services that we have invested in, developed, and which are also now in place. When it comes to Consumer Insight , the Consumer Insight sales, that one continues to be pressured due to low underlying volumes in consumer credit information.
That is as well as also, and we're repeating on the margin, this is high margin. This is very much of a fixed cost base, meaning it also continues to pressure our margin. We are acting upon this margin pressure both with cost efficiencies and as well also with additional revenue activities. When I now continue on the next, because I'm kind of thinking that I would move over to what goes well, what are our challenges before I leave the word to Elina.
I would continue to say that cost efficiencies, even though we are not sharing them as an official program as we have done before, it is very much in focus for us, as well as, may I also add, how we are commercializing new services to get the new revenue and drive the execution of the strategy that we communicated in the middle of 2023, which also includes how we continue to develop also our pricing strategy forward. What is going well? Real estate information continues to grow. Compliance services continue to grow. Norway, Denmark, as mentioned, good growth, BI, Business Insight connected. When we look at the challenges, I would summarize them as the profitability and margin being pressured by the Consumer Insight or Consumer Insight , consumer credit volumes. Another challenge is also the transformation program we are doing on this Sweden challenge action.
That is something you can then, of course, discuss what is the headline. It is definitely a transformation that needs to be done. We are very much now coming closer to the action of that one. What does that mean? That means that we are now also starting to transfer customers, both in-source and transfer customers to new sales partners. That is an example of an action that is ongoing. That, of course, means that you're coming closer to the actual execution of this transformation, which always is a challenge then on that you also have risks in connection to those. We are standing firm on that this is the right thing to do. We are standing firm on that we will also, in midterm now, see that we will have a better margin on this business forward.
With that said, I think I'll close there and give the word to you, Elina.
Yes, I think, Jeanette, you covered it already quite well that where we are in terms of our financial performance as well, because we haven't seen that much changes compared to the last quarter overall. On the revenue side, we are seeing flattish development in the first quarter, where we continue to perform well is especially the Business Insight Finland, Norway, Denmark, similar performance that we already saw in the last quarter last year. As Jeanette mentioned, many areas growing very well, including compliance and real estate in Finland. Where we continue to see challenges is the Consumer Insight business in both countries, Finland and Sweden. In Finland, we are heavily impacted by the low consumer confidence and macro that impacts then negatively the volumes.
It also impacts negatively the margin within that business because we are seeing the demand trending towards more basic services in that area. In Sweden, the volumes continue to be pressured by the lower demand for broker segment in general. However, in Sweden, the rate of decline is reducing, but clearly the broker segment continues to be pressuring our figures as well. This then, of course, impacts the profitability, which obviously then continues to be pressured as well when we are seeing decline in our high margin business in Sweden. At the same time also in Finland, the margin levels of that consumer credit business are declining. For example, data costs connected are increasing.
Also good to mention, as a specific topic that we already saw in Q4, we have infrastructure consolidation project ongoing, which is impacting also our ability to develop our services, which then negatively impacts production for own use specifically. This is something we saw already in Q4 figures, and similar impacts are expected now to be seen in Q1 in that area. Of course, that program overall is targeting to achieve significant savings already in the second half, but then of course in the longer term as well. Important program, but it in the short term impacts our development activities negatively. As you, Jeanette, also mentioned, we do not have an official efficiency program ongoing, but we are continuously working on with various efficiency topics to secure the profitability. However, simultaneously, we continue to also invest in the new sales and growth.
We have, for example, had a high amount of sales activities now in the Q1 to support the future growth. Free cash flow, still mentioning that it also continues to be on healthy level overall. Thank you. This was what I had to say about the financial performance at this stage.
Thank you, Jeanette and Elina. I currently see now there is one hand. Sanna, please go ahead.
Hi, thanks a lot. I have a couple of questions. Firstly, you mentioned, if I remember correctly in Q4, that you had signed some new customer contracts. Are they contributing to Q1 already? If you could remind us.
Yeah, several of those contracts that I mentioned in Q4 are contracts which is then revenue from Q1 and forward. We should remember that the revenue of those are on a monthly basis. The value for us and why I'm raising those are very much in connection to giving you confidence that we also have traction in the new areas. Meaning that the open banking investment we have done in Sweden where we also need to see that we stay relevant and that we can also be competitive on these new services which are close to our core of consumer credit. We are now gaining new customers on this. We have three ones as of now. We have a fourth one we are discussing with.
Another reason why I mentioned that is also so that you see that we get the traction in fraud, that we get the traction in compliance, etc. All of these areas where we haven't been seen as a strong player in the Swedish market. This is about sharing with you that the execution of the strategy is now coming to a commercial phase. Even though, of course, the revenue to really drive growth will take some time because it's building. It's building up. Therefore, yes, Sanna, they're coming into place, but to see them making a change versus the decline of how we see the volumes are doing in the consumer, that will take some time. I still hope that I got through the message so you can see that we're actually on track building our second leg, which I've discussed earlier.
Right, thanks. That was clear. Yeah, sorry.
Yes, and just to comment that technically we haven't seen the, if we think about run rate impact of this contract. We didn't see full potential in Q1 yet. Not everyone started using the service with full speed in first of January, but during Q1 those have started. Small impacts in that sense.
Small impacts, revenue.
Yes.
Big win strategy-wise.
Yes, exactly.
Perfect. Thanks. That was very clear. You mentioned the still very low consumer confidence in Finland, but how do you see the housing market activity, especially in Finland during Q1? Have you seen any meaningful or even slight pickup there?
Overall, the housing markets in Finland, we have seen somewhat mixed signals already last year and some positive signals also now in the beginning of this year. Overall, where we have seen positive impacts in our offering is the real estate side already last year. We grew with double-digit rates in that area, and it was driven by overall slightly increased volume levels, but especially the new services that we implemented to the markets. In that sense, we have actually seen continuing growth in the real estate area now in the beginning of the year as well. We have not seen any drastic changes in the volume levels yet, and there seem to be mixed signals and variances between months. In some months, it seems that the volumes are picking up, and then it may go a bit backwards again and so forth.
Not a clear trend, so to say, in that sense, but we have seen very positive development in our real estate offering as such.
Right, thanks. That's clear. Lastly, you talked about the margin pressure, and I'm thinking how should we view this compared to last year? How much pressure do you see on the margin in Q1 compared to the level of Q1 2024? It was already lower than the year before, but not that low. How do you see that?
If you look at the Q4 drivers, for example, and how we performed there year on year, you can expect the development to be similar in that sense, that we continue to be pressured in the same areas. Our data acquisition costs are increasing following the price increases that government in Finland implemented. Actually, two times last year, but the latest one in September for population register data. In the other operating expenses, we continue to invest in growth, meaning that we will expect to see growing other operating expenses in that sense that we are investing in various marketing activities at this stage and have been already. As mentioned, the production for own use continues to be pressured by the infrastructure consolidation project.
If you sort of see and take a look at how the year-on-year development looked like in Q4, you can expect to see a similar trend going forward in Q1 as well.
Perfect. Thank you. I'll let others continue.
All right. I think it's Matti, your turn.
Yes, thank you. A couple of questions. First of all, when you started to speak, Elina, I think you were saying something like flattish development quarter over quarter. Was that related to Business Insight?
That was the overall group revenue. We are seeing growth in Business Insight, whereas the decline in Consumer Insight is continuing. However, the Swedish decline is somewhat flattening, so to say, again. It supports that development if you compare trend-wise where we have been. Overall, on group level, we expect flattish revenue development. Business Insight, as we stated in Q4, good growth in Finland, Norway, Denmark. We expect that to continue and have seen good development there.
Okay. Flat group-wise from Q4.
Flattish.
Roughly. Flattish, whatever that might mean. Okay, fair enough. Good. Then you talked about the growing segments in your service categories. I heard real estate, compliance, master data. I did not catch ESG. Was that also growing?
I wouldn't say that we are in a growing path yet, depending on how you see. We have ESG real estate data, which has been doing nicely. In that sense, yes. Real estate ESG data, yes. We have some new service also in place. I just wanted to make sure that we didn't misunderstand that. The new ESG score in Finland is just released. Good traction, but not.
Yeah, good traction. If we talk about growth, we have seen definitely growth there, but it's so small figures that you will not see it coming through in group level. Yes, we have gained good traction there as well.
Okay. When you talked about transferring the customers to new sales partners, that is within Business Insight. I mean, that is the previous, let's say, old plan to make that change in order to get better contracts and better margins from that segment, where the previous contract was quite not that good for you. Is that now when do you expect that that work would be completed? Is it something that will take many quarters, or will it be more quick?
Yeah. I'm expecting it in the execution phase to take like a year. It is a very big number of customers and products. It is a transformation project which is significant to make happen.
Right. What kind of margin improvement should we expect from that exercise? I know that you were pretty not pleased with the previous contract, so it needs to be better, but just what is the kind of magnitude of that improvement?
Let us come back on that one on the margin improvement in one of our coming dialogues. We will, of course, touch upon this even more forward. Let's say that we are expecting the margin to improve significantly, while we also see that the top line decrease is of second priority.
You are basically willing to let that happen in order to just improve the profitability in that segment?
It is valuable and worthy to increase the margin. Under the circumstances, I think it is realistic to see top line at risk during the transformation period. On the other hand, to get a little bit more complex, I am also expecting us to see less churn when we have done the move. I am also expecting us that when we are also investing in new growth forward, we will not only have a higher margin out of that, but as mentioned on the churn, we will also have a sales efficiency cost in connection to that, as we will also be able to better keep the customers.
Of course, during a transformation of this, I think it's also wise to recognize that maybe some products could be canceled instead of investing in the transformation of those in order to release resources for the growth areas, which we also now see we have good traction in. I think it is unfair to take the risk of top line during the transformation to conclude.
All right. Fair enough. Finally, when you talk about the data acquisition costs in Finland and the two increases in 2024, are you saying that there would be more increases that are in the foreseeable future in 2025? When you talk about data acquisition costs increasing, you mean that year over year, there are still quarters where it affects negatively?
Exactly. Yes, we talk about year-on-year development. For example, in Q1, we are seeing the full impact of the two price increases that took place last year, one in spring and one in September. Yes, we talk about year-on-year development. Currently, I mean, government can basically do what they decide to do, but based on the discussions we have had, we are not currently expecting further price increases based on these discussions. You are right, year-on-year development.
All right. I think your plan was to raise your prices accordingly, of course, with certain lag. But are you not also now benefiting from the already made price increases to react to those state-related price hikes? Is the impact really so negative on Q1 as well? I mean, if the ongoing prices that you charge have already been raised as well.
Yes. In that sense, you are right. We have been able to take the price hikes in the data cost one to one then to revenue. Of course, when you look at the margin percentage-wise, it is impacted. What has happened on top of that in the Finnish business specifically now in consumer credit is that the sales mix within that business line, consumer credit Finland, has weakened simultaneously. Our customers have needed to use less value-added data. They have been able to make credit decisions only based on basic data. That is then impacting our profitability overall. Yes.
It is a sales mix.
Yeah, it's a sales mix. If you then look at our profit and loss line by line, you will continue to see increased materials and services, even though revenue line is overall flattish, so to say.
All right. Good. Thanks. I have nothing further.
Thank you.
All right. Jaakko.
Yes. Hello everyone. Most of the questions have already been asked and answered. Thank you for that. This is activated a bit. What is the share of mortgage-related revenue or housing transaction-related revenue of your total sales? I recall you saying roughly 10%, but was it roughly 10% on consumer insight or the overall?
I mean, in Consumer Insight and consumer credit information, the largest part of the revenue is driven by unsecured lending. We have not stated exact percentage of the impact of the mortgages. It, of course, then varies between times as well. You can say that clearly more than half of the volumes are dependent on unsecured lending volumes. Mortgages are a smaller factor in that area. Of course, the real estate revenues that we have are then also dependent and driven by mortgage volumes, so to say. Not only that, because we have climate risk services, so it is also used, and valuation services. These services are also used for, for example, risk management, bank risk management and valuation, collateral valuations, and so forth. Not purely volume-driven.
The real estate business then overall in the group is clearly less than 10% of the revenues.
To add to that, Jaakko, you could then look at it that we have revenue connected to real estate, and that can be connected to different kinds of, for example, reports where we have been digitalizing and making it more effective within the real estate. That is not necessarily connected to mortgage loans. We also have revenues in real estate, which is connected to the climate risk report, for example, which we have a good belief in for the future and for future growth. Those are not connected to mortgage in any way either. Those are more connected to valuation of real estate. It is connected to risk assessment of real estate, which can then be the base behind the credits of, for example, a bank.
If you look at our Q4 reporting, we shared with you there the consumer credit and how our volumes are divided into brokers and non-brokers in Sweden. As you can see in the Q4, I think we are around now, was it 37% on brokers? If I do not remember, it is incorrect. The broker volumes are not mortgage volumes. Those are more or less like unsecured lending and consumer loans, which is not mortgage loans. Actually, you can take the conclusion that mortgage loans as such, yes, it has a nice impact, but not necessarily it cannot be seen as what is actually driving our revenues connected to real estate sector necessarily. We can have good revenues anyhow.
Okay, good. Thanks. Yeah, the slide from the Q4 package was very helpful. Thanks for that. Perhaps another one. I know it's a bit early days, but now that the new regulation is in force in Sweden, consumer credit market, have you seen any first weeks' impact on business volumes at this stage yet?
I wouldn't say that we have seen any significant changes like that. We and I expect that changes have already started to affect the market when they are communicated. In addition, what makes this a little bit difficult to analyze and conclude into what is what is, of course, also at the same time the macroeconomic uncertainties in the market. As we just heard, or as I shared with you, we also see consumer confidence, which is also in Sweden somewhat, if I may call it, unstable. In that sense, a little bit difficult sometimes to understand what is what.
All right. Rather gradual change in the market activity then can be expected, and that has already been visible in the previous months or quarters.
Yes.
All right. Fair enough. Thank you very much. That's all from my side.
Sorry, my laptop got a bit frozen. Before we go to the questions, I remind that we have five minutes left. Let's try to keep the timeline. I think, Daniel, you are next.
Yes. Yes. Just a couple of very quick ones, being mindful of the time here. Maybe these are for Elina, just these type of housekeeping questions. I mean, these PPA depreciations, can you sort of remind us, will there be any further decline on these this year? Or is this run rate from Q4 something that maybe we should use in our modeling this year?
There is a slight decline, no major stepwise grading downwards. We can take it offline as well in more detail with Henrik.
Okay. The second question in these one-offs that you have had, quite major ones over the past few quarters, is this what magnitude should we expect? I recall that you will still have some one-offs started in the start of the year. Yeah.
Yes. We are heavily driving the infrastructure consolidation. It is actually one of the key quarters to proceed with that. That will continue to impact the one-offs. You can expect similar level than was seen in Q4.
Maybe a quick comment on that. Bear in mind H1, not just Q1.
Yes. Exactly.
All right. I guess that's all from my side. Thank you.
Roni, I think it's you next.
Yeah. Just maybe one last quick question. In Q4 report, you mentioned about the broker segment and non-broker segment in the Consumer Insight. Could you talk about if the trend has continued now in Q1 that the broker segment is still declining and non-broker, has it continued on a growing trend?
I would say that the trend that we described in Q4 is relevant also forward. I think we can also expect it to continue to be relevant forward.
Okay. No further questions from me.
All right. I do not see any further questions or hands up. I guess we are done. Thank you, everybody, for the good pre-silent call. We wait to see you then in the Q1 earnings day. Have a good day.
Yeah. Thank you very much.
Thank you.
Bye-bye.
Thank you.