Welcome to today's event where we have the pleasure to present Inderes. The occasion of this presentation is, of course, your half-year report that you released this morning. As always, we are joined here by Mikael Rautanen, CEO, to take us through your results and, of course, answer questions. I think we will take the main part of the questions in the end. To that part, there's a box down below. You, as a viewer, do feel free to ask a lot of questions there, and then we will take them in the end. For now, I think I will hand the call over to you, Mikael.
Thank you, Michael. Good afternoon, everyone. Let's go through the first half of 2025 of Inderes. The first half was, in a way, two-folded. On the positive side, we did double-digit growth in Finland. We continued to strengthen our market position in Finland, and the business in Finland is really solid. I think this is a reflection that Inderes can still grow despite the strong market position. We can still grow in Finland, so we haven't fully tapped that potential. That part we're happy with. On the negative side, international revenue did not grow in the first half internationally, while international revenue is the area where we are putting most of our investment and where we are seeking the growth. We are not satisfied with that, and that has been the challenge. We have been aware of them.
The root cause comes down to our previous strategy, which we, in the May Capital Markets Day strategy update, said that the previous strategy, there were some hypotheses that proved out not to be correct. We have revised our strategy on the international side. We did a thorough strategy work during the spring, and we also did some restructuring related to the Swedish operation, reorganizing some old contracts and the operating model. We're kind of like now going to the second half. I would say we have a clean table. We have a fresh, updated strategy. We have already made the kind of like difficult part of getting the new strategy going. Now, going to the second half, we can put more focus and energy into what is really important and what really matters: customers, growth. Winning new customers and growing existing customers.
A bit of building the foundation for the new strategy, the first half, while running solid business in Finland and getting the foundation for international growth. Profitability-wise, adjusted EBITDA at the same level as last year, revenue grew by 5%. If you look at the reported numbers, the restructuring cost, €0.6 million, of course, had a significant impact on the second quarter numbers. Those are one-time items. Part of them will bring immediate cost savings for us, and the other part will bring us some more flexibility and efficiency to our delivery model. These are related to both efficiency and cost savings here. Diving into the business units, research, events, and software, that's in line with the new strategy, these three business areas. Research business, this business area remains extremely resilient in a tough market. We are growing slightly.
We're continuing to do good, solid profitability here, even though the number of the contract portfolio decreased a bit. That's because of delistings while the new customer acquisition has been challenging for us. Basically, that means internationally because in Finland, we don't have many customers we could anymore win because we have so strong position in Finland. Here we are, we have been changing our go-to-market tactic, namely in Sweden. That change we did at the end of last year. Now we're seeing what kind of results we get from that. Do we get any positive traction? If not, then we'll continue to pivot and test new go-to-market models. This is really about finding the go-to-market recipe in new markets, to get the crowd going. We just need to work hard to find that recipe.
Part of that is, we are investing and exploring really actively on how we can obviously leverage AI in the go-to-market recipes, in localizing our research content, in transforming how we do equity research, and in doing equity research in more efficient ways. Also internal efficiency here. Business Finland granted us some funding also for this type of AI-related project, which gives us more muscles and more capabilities to invest and explore these areas. That project is full speed ongoing. On the Inderes platform, basically, really stable performance in terms of the reach of our platform and the investor side activity. Going to the events business, first half very much categorized by successful AGM season. AGM production is a big part of this business in the first half. Really strong performance in Finland. In Sweden, weak project sales driving down the figure, profitability at the solid level.
The first half on this business is usually a solid one in terms of profitability. In Finland, we've been able to grow by expanding our footprint in the clients beyond the investor relations needs. That growth is going forward actually really, really nicely. Once we get in, especially to the large-scale enterprise clients, and we do good work, it often opens up doors to expand to other event, hybrid event communications needs of the companies. That expansion has been successful in Finland and part of our strategy. In Sweden, that transformation is at a very, very early stage. Obviously, long term, we're seeking growth from this area as well. In Sweden, in the first half, we implemented some organizational changes, changing the delivery model there. Given these changes, now we're better positioned to get the events business growing internationally. Software growing 22%, and profitability on a break-even level.
First half, again, quite a lot categorized by the AGM season. That revenue is really weighted on the first half from the AGM product, while the other business is more recurring-based. On the AGM part, successful deliveries in Finland, we are reaching quite a mature stage in Finland. That growth percentage is slowing down, still growing, and the other products are growing faster than the AGM part. Basically, all products growing, we are increasing and gaining market position in Finland and internationally also getting the first wins and international growth, but that's early stages. On product development side, we are putting our investor relations software portfolio under one user interface, into an easy-to-use platform that we call IR Suite. Basically combining all these different products so that we don't sell just point solution.
We sell one platform through which the investor relations can operate all the key functions to run the IR operations. Also, that interface combines all the data related to all Inderes products into one easy-to-use platform. That's kind of like a big strategic initiative that is now going live. We're migrating the first clients as we speak to this new platform. That's the overview of Inderes and the different business units. Next, I would dive a bit deeper into the numbers, unless you have any questions at this stage, Michael.
No, let's take them in the end, Michael. Let's go through the numbers, and then we can collect all the questions there.
All right. On the profit and loss statement, revenue €10.5 million, up by 5%, recurring revenue 5% growth, project revenue 4% growth. Here, I could highlight that international revenue not growing, Finland growing 10%. That's one number to pick up from here, successful success on the other front and not reaching the targets on some areas. Cost structure fairly stable if we exclude the non-recurring items, €0.6 million from the cost structure, except the material and services cost has been increasing because of the service costs related to large-scale AGM season productions that we implemented in the first half. Adjusted EBITDA at last year's level or slightly above, €1.13 million. Adjusted EPS €0.55, up from €0.50 last year. Because of the one-time items, obviously reported numbers are significantly weaker than the adjusted.
On the bottom line, as a reminder, Inderes operates under Finnish accounting standards, which means that the acquisitions we have made, we amortize the goodwill from them every quarter. That's an accounting item that keeps tracking our bottom line down. That's why we are reporting, adjusting these purely accounting items from our EPS as well. Second quarter, revenue growth 4%, profitability slightly up from last year, 12.7% compared with 11% last year. The one-time items obviously took down the reported numbers here as well as most of them were timed for the second quarter. Balance sheet remains strong. Because of the goodwill amortizations, our balance sheet is kind of like becoming lighter and lighter in every report as we are amortizing the goodwill part there. Big picture, strong balance sheet, debt-free, all good on this front. Cash flow down from last year when it was extremely strong.
We had some working capital change tailwind in the cash flow in the comparison period. Cash flow after investments €1 million. CapEx during the quarter was slightly up. We did some business as usual upgrades to our studios and offices, which was a bit reflected on the CapEx side. Basically, nothing major or significant either on this front. Guidance remains unchanged. This is the same guidance we started the year with, expecting revenue to grow from last year and relative profitability to improve from the previous year. Guidance background. We're not expecting our markets to grow. We expect to grow ourselves while the markets don't grow. That's the underlying assumption and why we are growing, driven by the new products and expansion to new markets. We keep making investments and push to get the international revenue to grow. Obviously, that's reflected in our profitability as well.
Perhaps, actually, on the cash flow side, one thing to note is that if you look at the report, we've been increasing our R&D spend quite a bit in the first half. R&D spend is something that we take in as a cost. We are not activating that to the balance sheet at all. Financial targets. We updated financial targets, very minor update on the Capital Markets Day strategy update in May 2027. Previously, we said revenue growth and profitability combination of 30- 50. Now we're saying over 30. Relatively minor, I would say, simplification to the targets and continue to expect or continue to target annually increasing payouts, including dividends and buybacks. This year, we have done both buybacks and dividends. That's basically the big picture for the first half.
Next, I would like to go through a very brief summary of the updated strategy that we announced in May. I highly recommend to watch the Capital Markets Day recording that we had on May 27, 2027. That recording is available on our investor relations website. I will just summarize the key points from the updated strategy here. This is how we are organized around the new strategy. Three different business units, all with a very disciplined focus on the investor relations category and clear strengths within that category: research, events, and software. Here you can see the growth in the first half and the growth and the relative size of the business in 2024. On the research business, our ambition for 2030 is to build the most influential Nordic equity research team.
What means influential is that we measure it with the number of our covered companies and the investor reach. Here we are seeing clear need in the market for a commissioned research player for us. We have demonstrated that we can solve the problems in the market in Finland. Now we just need to find a recipe to scale it internationally. Not an easy one, but we'll crack the code. Events, we're building the leading Nordic IR-focused events agency. This is agency business. Not that scalable, but here we have shown that we can really create shareholder value and build strong, profitable business in this area with the strict investor relations focus that we have and the competitive advantages we have here. Most of the competition here is like generalist events agencies who don't have investor relations at their core like we do.
We see that there's a clear need to create a strong player in this category in the Nordics, leveraging the same technology platform, leveraging the same distribution network, leveraging the same investor relations understanding, and the understanding of the investor, the customer's customers, the audience. I think we have really strong advantages in this area as well. The software part, our youngest business area, is something that went from a startup phase into scale-up phase over the past years, now becoming more and more significant business. We aim to build the software into the third pillar of Inderes, which means that we want to build a strong international software business here. We see that there's a clear need for our solutions in the market. I mean, the listed companies, their investor relations, they need to live with these challenges every day.
There are not that many service providers who would look at this from an investor relations perspective with a really strong focus on the investor relations market. The listed companies really need help here, and we have the solutions to solve these problems. Liquidity is a big problem for basically most of the listed companies. To improve liquidity, you need better communications because if investors don't have information, they don't trade. What brings liquidity is also the retail investors who are an active part of the company cap table, usually. Analyst coverage is a huge problem in basically all EU countries except Finland. Small and mid-cap companies don't have or lack appropriate analyst coverage, and we have a solution for that. Digital channels, so the investor communications, that part is also transforming from the kind of like old closed ecosystem into the open digital world.
IR needs to find new ways to communicate in the digital age with the new tools and new channels and new generations also coming to the stock market. They need help with this, and we have the solutions for that. The increasing complexity and cost. I mean, we're a publicly listed company ourselves. I mean, the life of being a listed company just has to be more simple. It has to be made simpler. It has to be made less costly if we want to get this market ecosystem working for the benefit of all. If we want to get more companies and smaller companies to IPO, we need to work on this with the whole market ecosystem. We have a strict focus on the investor relations category, and we see that there's a clear need for a specialized player in this area.
Most of the competition we're seeing is basically, we would call them generalists, some sort of generalist communications companies, for example, who do a lot of communication stuff, but also investor relations. On the other hand, we have many times investment banks who might indirectly or directly compete with some of our product areas, but not that big of an overlap. We kind of like where we position us, falls between the investment banking and the communications industry. We see that there's a clear niche for us in the market. We have this focus, and on the non-core side, we seek partnerships. The recipe we're playing continues to be the same, combining three elements in our products. Starting with the expertise, the deep understanding of both the investor relations, but also the investors. Inderes was born to serve and help investors.
That is really relevant when you do investor relations products. You not only understand deeply the life of the customer, but the customer's customer, the investor. I think that's a big strength and differentiator for us. Then our platform. The whole offering is integrated to a single platform, a technology platform that we're building in-house. This platform provides the reach to the digital channels where we can help the investor relations to reach the target audiences, meaning the investor community of Inderes and our distribution and partner network. Looking forward, until 2022, Inderes was more or less a Finland play, a domestic play. 2023, 2024, we started to build the foundation for taking this company international, pretty much learning years those years. The strategy we started with, some parts of it were not the right ones. This spring, we revisited the strategy. We changed it quite a bit.
We made the necessary restructurings to get the new strategy going. Now we're starting the second half from a more clean table, I would say. The market is not easy, but we still see that there's a need for the solutions that we provide in the market. We have the tools and capabilities to fill those needs and solve the problems for our customers, and through that find a way to also make profitable growth and shareholder value. That's it for the first half summary. Shall we go to the?
Yeah, shall we jump through the questions? You ended up on the Swedish business here. What are the main changes you have made in the Swedish business? If you can maybe go a little bit more into details than so on, the main changes you made there?
In the first half, there were two things. The first one was reorganizing and changing the delivery model of the events business. That brings us, we're shifting to use more the partner network that we have for the deliveries. That brings us flexibility to manage especially the seasonality and the peak seasons of the business. The second part was reorganizing some old partnership contracts that fell outside the scope of the new strategy. Basically, that part is taking in cost one time, cost that we would have otherwise incurred in the future. More of an.
You had some partnerships where you needed to pay, and now you buy them out and say, is that how we should understand it? An up payment for further payments in some partnerships?
In a way, these were all contracts that kind of like we figured that fell outside the scope of the strategy. It's better to kind of like get a really strict focus for the new strategy. From a shareholder perspective, it's taking in cost now, future cost saving, basically.
On the research side, I think that has been one of the tougher ones also with the Swedish markets being, let's frankly call it, a little bit of a marketing market on the research side, and you're doing fundamental research. You are clashing there. Have you had any thoughts on how to do that, or is it still trying to push through your model into a market that had another way of maybe being served in the old days and currently?
Yeah, it's really working on finding the go-to-market recipe. Like we said at the end of last year, we've shifted our focus a bit from doing tactical sales, getting in a lot of trying to get in a lot of customers, and then they are disappointed as we are not that positive always in the research and then losing those customers that didn't work out. We need to take a longer perspective here, start building long-term relationships with the companies, teach and help them understand the way we work, why it's good for both the investors and the companies to work the way we work, and really educating the market with our approach to equity research and taking a bit more longer-term perspective.
Also, acknowledging that this perspective will not bring us fast growth and immediate sales, this is the way we need to approach the market if we want to build this successfully for the long term. That work has been ongoing, and we're, of course, keeping our finger on the pulse on what kind of traction we get here. Yeah, it's a challenge. You need to work on both the investor side and the company side in educating the market. I think everyone agrees that we are solving a relevant problem for both the companies and the investors, and everyone sees that, yes, there is a need for this. We just need to get it going.
I read through your report and couldn't find it, and maybe you don't want to share that, but normally, how big a cost saving is those €0.6 million giving you? Sometimes you say, and we have a run rate of half of that or the next many years. I don't know whether you have published that, the cost savings you have.
Yeah. No, we didn't publish. It's not that material on an annual level because the cost would have spread out to several years for the future.
It is more easing the operating model. I understand. How far are you with the AI tools? Just to give you your point of view, you know there's such a much discussion on whether they will soon write the 50-page reports. Can they get a good opinion? Maybe how far are you with these tools? From where you are sitting, how good are they at the current?
I'm trying to be really careful with the AI stuff, not to hide it. I'd prefer that we come out and communicate when we have something concrete to show. That's why I'm trying to keep my foot down while at the same time being super excited, of course, with all the opportunities opening up. So far, it's been bringing a lot of efficiency to what we already do, localizing the research content to new languages, and those sorts of initiatives that we have also published as a press release. When we get stuff out that is meaningful, we'll communicate that in the future. Strategically, it's a really interesting question. How should equity research companies approach AI? What's the role of the human analyst in the future? The supply of AI-generated equity research is going to be infinite soon, but where's the demand? Who wants to read opinions of AI?
What's going to be the role of this content? What's going to be the role of the super professional deep dive equity analyst in the future? How are these going to blend together? It's a huge question that we are working on with the team all the time. I'd say that I'm trying.
At current times, you're pretty optimistic it will drive efficiencies. I have been in ours.
Yeah.
Oh, the legacy partnership contracts.
Yeah, that's obvious. What are the unknowns? That's something you need to think through all the time.
Yeah, I do agree. In the end, it's the opinion who matters, but it's how you get to it.
You need to put yourself in the shoes of the investor. What is the content that investors trust in the world of more and more content, more and more AI-generated content? What do you trust and what do you want to read or consume as an investor is an interesting question.
Yeah, because I was a little bit interested because now you actually put your brand up as one of your strategies, right? To be a well-known brand in your investor relations strategy. I guess that's in an AI world, you are thinking a little bit ahead there and say you need some kind of a brand probably and known for something in an AI world or else, yeah, you might be obsolete.
Trust and brand, I think those are kind of like timeless things that you always need to focus on and build.
Perfect. Any new signals around the IPO activity in Finland? Are you seeing your, you have a pipeline and working with a lot of, is there some movement? Because we are starting to see something in the U.S., and normally they lead, right?
Yeah, it was like this year started off with some positive vibes in the IPO sentiment. Then we had the Liberation Day, and it went quiet again. Now we've had the summer holidays and the summer, and after the summer, it has remained quiet. We are not seeing at least big activity in the IPO front in Finland at the moment. Even though the stock market has recovered, it has remained quiet. Not expecting many IPOs for the rest of the year.
That’s kind of indicated in your flattish market growth expectation, is that you also haven't built in some IPO activity.
Yes.
Is that correctly understood? Perfect.
Yeah.
There's a question about the share buyback program. Is that something that's on the table again this year? As you mentioned, you ran one at the end of last year and into this year. Is that something that is on the table?
That is something that the board has in the toolbox all the time. We are ready to move if we so decide.
I had a question to some of the strategy. You said you wanted to be the leading IR on the research side. Should I understand that if I take the biggest investment bank right now and count how many reports they do, that's kind of a benchmark you have set. Is that correctly understood? Is that a measuring tool that the biggest investment bank in the Nordic has so and so many companies under, and that is what you want to beat? Is that correctly understood?
How we look at it is two things: the number of covered companies and the reach of the research. What kind of impact? I will leave it for the reader to make further analysis about that.
Check. Regarding your IR Suite, I guess it must have been rolled out to some customers right now. Have you had some initial feedback? I was seeing the traction. I guess what you want to see here is that it eases the IR's thing or workload, meaning that it's with your products inside all the areas. I guess that must be the attack mode. Have you had any feedback, any customer test, any customer success by someone implementing the IR Suite?
Yeah, it's the first customers we are migrating as we speak. It's really early stages with the starting off with the software customers in Finland. Of course, the version we are going out right now is the 0.1, and we are all the time bringing more and more features and data to the platform. Of course, so far, the initial feedback is positive because customers see that we continue to build better and better products and develop our services. It's super easy to use, an intuitive interface. That's also one thing where we get a lot of positive feedback. Long term, the vision is that we would integrate all, whether you use one or several products of Inderes, you would primarily operate them through the IR Suite. You would be exposed to the whole offering through the platform.
Establishing, in addition to our strong human-to-human customer relationship with our clients, also a digital interface towards the clients that we have in a way lacked so far.
It will be possible when they don't have all your products still to run this, but with the external products going in, is that correct? There's some kind of an API to some of your competitors' products or something like that. It is an IR tool, but you don't need to run all your products to use it. Is that correctly understood?
Yes, we can also integrate partner products to the platform. That's one part of the vision. Meaning that, let's say a company is using our events product to check their event statistics after the event, the customers would log into IR Suite to see the data and analytics around, for example, their event viewerships or how their research has been consumed and so forth. That's the idea. They would also be exposed to the other products.
Perfect. I think that was the last question from me, Mikael. Thank you for taking us through your results and answering questions. May everybody have a nice day.
Thank you, Michael. Thank you.