Inderes as an investment - CEO Q&A

[börsen84]

Thank you Mikael for the excellent response!

You have good analysis and investment-related material, and I also believe that your employees are doing well.

Your communication is good, but sometimes myself and others have wondered what exactly Inderes does. Could you please explain in very simple and brief terms what Inderes does? I feel like this may not be clear to everyone. Your analysis and investment-related material are well known, of course.

I have read your website and done some research, but I think I will understand better if you can explain it succinctly and clearly.

I’m sorry to bother you, and thank you in advance for your response!

[mikaelrautanen]

This is a very very good question. I often struggle with this one, since there is no existing category or comparison for Inderes. We like to say that we build our own category instead. But yes, there is work to be done in simplifying and clarifying what we actually do!

I try to be brief here giving overview with a “Simon Sinek approves” -style:

WHY: democratize Nordic investor information
HOW: connecting investors and listed companies
WHAT: our products and services for investors and listed companies

The products, where most of our revenue comes from, we can simplify to four main products where the buyer is the listed company investor relations:

• Commissioned research
• IR Events (productions of quarterly events, CMDs and other hybrid&online events you see for example on inderesTV)
• AGMs (end-to-end production including our software)
• IR Software (the software every listed company needs like IR website and tools and press release system)

The products are linked to the Inderes platform through which the listed company IR can reach relevant target groups in a democratic way. This gives us a differentiation against many competitors operating in each of the specific product areas. The platform is developed by our inhouse team and in close cooperation with the end users: the investor. All services focus on serving the investor community. For investors the services you see are mainly free and in addition we have some premium services for more advanced investors.

Hope this clarifies, keep shooting as this also helps our work

[börsen84]

This is not an important question, but I’m slightly curious about how many employees you have? Additionally, I’m interested in knowing the distribution of employees across different functions, such as analysts, “IR people,” etc.

This question might help me understand the overall picture better. I think many people perceive Inderes as just an “analyst house,” even though you nicely communicate the variety of work you do.

No need to rush with the response.

Thank you in advance for your answer!

[mikaelrautanen]

@börsen84

This is not an important question, but I’m slightly curious about how many employees you have? Additionally, I’m interested in knowing the distribution of employees across different functions, such as analysts, “IR people,” etc.

Hi! the latest number (Q1) was 115 employees. This is the last distribution we’ve shown from two years ago, it’s not updated but it gives the flavor on the distribution. In two years, basically all of the areas have grown. “Flik” represents the IR Events business which has grown both organically and through Financial Hearings + Streamfabriken acquisition (these people include event producers, account managers technicians, designers etc).

[mikaelrautanen]

Here’s my presentation “Why you should not invest in Inderes” from Avanza Börsdag today. Thank you Avanza and our Sweden team for great event!

Like I promised in the presentation, I’m here to answer any questions

Avanza Börsdag : Inderes as an investment

[börsen84]

@mikaelrautanen

Hi! the latest number (Q1) was 115 employees. This is the last distribution we’ve shown from two years ago, it’s not updated but it gives the flavor on the distribution. In two years, basically all of the areas have grown. “Flik” represents the IR Events business which has grown both organically and through Financial Hearings + Streamfabriken acquisition (these people include event producers, account managers technicians, designers etc).

Thank you, Mikael!

I appreciate that you are here actively answering questions.

I believe those who are not familiar with Inderes will be surprised by how big and diverse your company is.

[mikaelrautanen]

Our strategy update for 2023-2027 is now published ahead of the CMD, I’ll share the full release here:

–

Inderes updates its strategy for 2023-2027

Inderes’ Board of Directors has approved an updated strategy for the period 2023-2027. Since the IPO in 2021, the company has made investments that shift the focus of its strategy towards international growth.

The core idea of Inderes is to democratize Nordic investor information by connecting investors and listed companies. A key trend underpinning this is the increasing transparency and openness of capital markets demanded by investors. Inderes’ products for investors and listed companies are built around the Inderes platform developed by the company. A growing number of listed companies linked to the platform enables better services for investors. The Inderes community of investors strengthens competitive advantages and attracts new listed companies to Inderes products. The strategy will continue to be based around this network effect that supports growth.

For the period 2023-2027, the strategy will focus on four selected main products (Equity Research, IR Events, AGMs, and IR Software) and three selected geographical markets (Sweden, Finland, and Denmark). The company is working towards its objectives through three selected key themes: productization and sales, Sweden, and international Inderes.

The choices are based on the Inderes team’s current assessment of where the company can focus its resources to create the most value for its employees, community, customers, and shareholders. Moreover, the choices focus on market segments where the company already has, or can achieve in the future, a competitive advantage that enables strong profitability.

“At the heart of Inderes is to act as a challenger that reforms the structures of the financial sector. The new strategy will put us back in the position of a challenger in selected target markets that are significantly larger than the Finnish market. Our long-term goal is to do the same that we have done in Finland in the selected countries," says Mikael Rautanen, CEO of Inderes.

Selected products of the strategy

The strategy focuses on four main products, targeting listed companies’ investor communications:

• Equity Research. Independent equity research that serves all investors. Current client base of over 140 listed companies.
• IR Events. Broadcasts of earnings calls, capital markets days and other events as online and hybrid events on Inderes channels. Current client base of over 300 listed companies.
• AGMs. Implementation and software for physical, virtual, or hybrid meetings. Current client base of over 100 listed companies.
• IR Software. Mandatory software solutions required for investor communications. Current client base of over 40 listed companies.

Inderes’ product offering covers all the key solutions required by a listed company for investor communications. The products combine expert work, Inderes’ technology platforms and Inderes’ investor media. During the strategy period, the company will focus its R&D efforts on the further development of these four main products. In addition to the further development of the main products, Inderes will continue to actively pilot new concepts together with the investor community and listed companies. The aim of the products is to make investor communications for listed companies effective, transparent, and investor-friendly.

Inderes has the role of an independent information service in the market and has no plans to expand into the investment banking business.

Selected target markets for the strategy

During the strategy period, Inderes’ primary target market will be Nasdaq-listed companies in Sweden, Finland, and Denmark. Inderes estimates the market potential of its main products in this market to be over EUR 120 million. The target market currently comprises more than 1,100 listed companies, of which more than 400 companies are connected to the Inderes platform through one or more product areas.

The company’s long-term goal is to build the full Inderes operating model in selected markets: a comprehensive product offering for a listed company, Inderes investor media and a local community.

• Sweden will be the company’s main growth market during the strategy period.
• In Finland, the company aims to expand its product offering in its existing client base and actively develop the domestic IPO market.
• In Denmark, Inderes operates through its strategic partner and associate HC Andersen Capital (HCA). HCA operates the inderes.dk investor service locally and aims to introduce the Inderes product range to its listed company clients.

Through the Nordic operating model, Inderes will be able to offer investors more comprehensive content, which will enhance the Free and Premium services offered to investors. Furthermore, listed companies will be able to reach a wider Nordic audience through Inderes, which will improve the service for existing customers. In addition to the selected target markets, the company can pilot other markets with individual products.

Inderes’ competitive advantages and strengths

The strategy builds on the following strengths and competitive advantages, which the company will continue to strengthen during the strategy period:

• Inderes media: Inderes is a unique platform that enables the listed company to reach a wide range of target groups, from private investors to professionals.
• Comprehensive product offering: Inderes is the only service provider that can offer a listed company all the solutions needed to provide quality service to its shareholders.
• Investor-centricity: Inderes was created to serve investors and develops its activities in close cooperation with the investor community.
• Organization: Inderes has built an organization that attracts experts in the field, combining wholeness, agility, creativity, and disciplined execution.

Key strategic themes and identified obstacles

As part of its strategy work, the Inderes team has identified the following obstacles to international growth:

• Low awareness of Inderes in markets outside Finland
• Building a product offering and sales models in Sweden
• Developing an international organization culture
• Building investor communities in markets outside Finland

The strategy is guided by three key themes to overcome obstacles and support the company on its way to achieving its goals. The key themes are productization and sales, Sweden, and international Inderes.

The aim of the productization is to make the products Inderes offers to listed companies easier to buy, deliver, and sell. In-house software development strengthens product automation and scalability and frees up resources for growth. The company is strengthening its sales organization and capabilities to support international growth.

The Swedish market will be Inderes’ main growth market during the strategy period. To build awareness among listed companies and the investor community, Inderes will initiate research coverage on selected interesting Swedish companies and pilot other products with free models. Short-term growth will come from the events business, where the company has growth opportunities by replicating proven concepts. The aim is to become a well-known investor media and IR partner for listed companies in Sweden during the strategy period.

Inderes has historically been strongly built around a local operating model and to succeed in international growth, the company needs to build internationalization capabilities. Inderes will continue to actively develop the people-centered culture and co-lead organization model described in its Playbook to support international growth. In the second half of 2023, Inderes will upgrade its technology platform, which is at the core of the operating model, to a modern platform that supports the international operating model. In addition, the company will unify its brand portfolio during the strategy period.

Financial objectives

The long-term economic objective of Inderes is to:

• Financial objective: to maintain a combined revenue growth rate and profitability (EBITA%) of 30-50%
• Payout policy: annually increasing absolute payout, including dividends and share buybacks

In Finland, the company is aiming moderate growth and strong profitability in the strategy period 2023-2027. In Sweden, the focus is on growth. Profitability in Sweden is expected to be break-even or slightly positive in the coming years during the ramp-up phase of the business and to improve towards the end of the period. In Denmark, the company operates on a partner model, where sales are based on HC Andersen Capital’s growth-based license fees.
Acquisitions

During the strategy period, Inderes may evaluate potential acquisition targets to accelerate growth, competitive advantage, or market entry in one or more main product areas. However, acquisitions are not considered necessary for the implementation of the strategy.

In Denmark, Inderes and HC Andersen Capital are evaluating a merger as a strategic option for the long term, provided that certain conditions are met. Inderes currently owns 20% of HCA.

Capital Markets Day May 26, 2023
Inderes will present its updated strategy at the Capital Markets Day on May 26 from 9:30 am to 11:30 am (EEST). You can participate in the event at CMD 2023

[mikaelrautanen]

Thanks to everyone attending the CMD!

Here are brief answers to the questions we did not have time to take during the event:

Q: What is the role of language in community expansion? As Peter Sergel mentioned one big thing is educate companies and train people to present. Would that be possible New revenue stream for FLIK?

With languages we need to listen to the local community and our clients. Eventually they will decide which formats (reports, news, videos, presentations etc) go with which languages. We need to go with the language that best connects that particular company with its target groups and shareholders.

As part of our holistic offering in IR Events we help our clients in many ways how to deliver their messages, in this we can also use our partner network, but we are not looking to grow a business from training.

Q: Usually you get What you Measure. How do Inderes Measure strategy, and are The results public?

We like to look it this way:

• Employees: employee net promotor score and our organisation survey
• Community: number of active users (and several other engagement and reach metrics)
• Customers: client satisfaction, average revenue per client, number of listed company clients
• Shareholders: growth, profitability, total shareholder return

In our investor relations, we continuously evaluate which metrics we present publicly in our reporting so that investors can also evaluate our progress.

Q: Are you planning on selling software globally or only in the Nordics

In this strategy period, we are focusing our limited resources to the Nordics and building on our strength of very close relationship we have with the clients. Building a global software business would require a very different strategy and a lot of capital. We are not there yet as a company, and we still have a lot of work in our home markets as the software business is still at a start-up / scale up phase. We will of course not say no to potential clients (we do have handful of software clients outside Nordics) and we might experiment low-risk ideas in an opportunistic way. But for our shareholders our message is will not allocate a lot of capital and take significant risks in building global software business in this strategy.

Q: Do you still have the 3d studios in flik that you invested about two years ago? What the investment has looked like?

A: Yes, our Ruoholahti studio can be used for both traditional production and a green screen virtual world production, it’s a two-in-one studio. We converted the studio to enable both as part of the overall upgrade investment, which was not significant. We have been using the studio for both, of course the volume is on the traditional side as the virtual productions are more on the high-end of the market.

Q: Given the high market shares in Finland in most product categories - Do you see opportunity to hike prices for example in research and AGMs?

We are every day making better products that create more value for our clients and in the long run we will monetize this to build a healthy, growing business, which in turn enables us to continue building better products. In some areas we see that we are creating significant value against price (and competition) and we might have some long term opportunities, and in some areas we are a challenger that needs to proof its position. Monetizing the Flywheel is art, you need solid monetization to build great services for investors and listed companies, but if you monetize too aggressively and risk losing either side of the platform, you will quickly slow down the Flywheel.

Q: In yesterday’s release you flagged the possibility of a merger with HC Andersen – Could you talk a bit more on this and the certain conditions that needs to met?

We are evaluating that as a strategic option for the long term. HCA has a great team and good customer base. Inderes has great IR products and the platform through which serve the investors. Our collaboration works in a strategic partnership model but we wanted to be transparent that we have also this option on the table.

Q: How significant market penetration in Sweden are you expecting to achieve during the strategic period in the whole flywheel space?

Our target is to get the Flywheel spinning, I can’t say in advance what this means in exact numbers. Enough growth to enable new career opportunities for our people. Large enough community and investor reach to become a relevant investor media. Enough customers to establish a position as a known IR partner in the market. Enough growth and profitability to create shareholder value.

Q: If we think about your long-term financial guidance: This year you are supported by acquisitions to reach the long-term financial target, but how much are you ready to sacrifice your profitability this year and after this year to invest in long-term growth?

We are aiming for balance of profitable mature growth products/markets and start-up products/markets to drive profitable growth for short, medium and long term.

Q: Does expanding to nordics fight against your endless goal; Rather being small and excelent than big and okay business?

A good question we need to ask ourselves all the time. To go deeper, we need to ask ourselves are we seeking growth for the sake of growth? Do we grow because of some external pressure or does it come from within the organization? Does Nordic operating model make us a better company, are there enough cross-country synergies to justify a Nordic model? Will this benefit our people, community, customers and shareholders? These are questions we’ve been asking ourselves for a long time and will continue asking. We actually had been holding back international expansion for several years because we felt were not ready for it as an organization (we needed to proof this model in Finland first and focus our energy on that), now I can say it comes from within the organization. We believe that taking this model to Nordic scale will make us a better company.

Q: Earnings & earnings growth reporting: are you going to report these geographically and by business divisions regularly? And if, what information regular reporting will include number of customers from geographically and by business divisions ? Thank you

At this point I can only say we’ll continue to develop our reporting in a way that best serves our targets and investors. With this we need to take into account the resources and cost related to reporting new metrics in a continuous way. Also, our internal structures are on a constant change and the reporting should stand the test of time, so what we come up with today should be relevant in 2027 as well.

Q: Was the stake in HCA good investment from capital allocation perspective?

The partnership and strategic investment is our go-to-market choice to start building position in Denmark. At the end of the strategy period we can probably evaluate if this was the right choice.

[börsen84]

You are followed by tens of thousands of people in Finland, maybe even more.

Can you say if some larger entities, such as pension funds, investment companies, etc., make use of your analyses?

This is a funny and unnecessary question, but out of curiosity, I’m wondering if you have any information on how entities other than individual investors utilize your analyses or other analytical materials?

Feel free to answer this question even if it’s not the CEO, as they are probably on vacation at the moment.

I apologize for asking silly questions!

[mikaelrautanen]

Hi, yes most of institutional investors who invest especially in Finnish small/mid cap sector utilize our research. Many of them are in close dialogue with our analysts. I’m on holiday, soon disconnecting, and we are on silent period when I get back so next time I’ll be available is after our Q2 release. Have a relaxing summer

[börsen84]

As a small investor, I appreciate this; I can engage in discussions with:

1. Analysts
2. Other staff members
3. The CEO

So, thank you, Mikael and Inderes, for being active and engaging with us investors! I truly benefit a lot from being able to talk with industry professionals, i.e., the people at Inderes.

Thank you, and have a great summer!

[mikaelrautanen]

Our first half results is out. Revenue up 40 % and EBITA by 104 %, driven by both organic and non-organic growth. 400 listed company clients milestone reached.

Link to H1 presentation can be found here: https://group.inderes.com/files/documents/20230815_Inderes%20Oyj_H1%202023_presentation.pdf

[mikaelrautanen]

Here’s the presentation of the H1 results, hosted by HC Andersen Capital

Inderes – Presentation of Half-Year 2023 report

[börsen84]

Sara och VD Mikael Rautanen diskuterade Mikaelens ägda aktier.

Content: 00:00 Introduction 00:25 Investing strategy 03:50 Biggest positions 06:02 New positions 06:15 Aallon Group 07:53 WithSecure 09:38 Loihde 11:08 Sells

Mikael's Stock Portfolio

[mikaelrautanen]

Progress in a tough market!

Find our Q3 business review summary here

Join the English webcast presentation tomorrow:

Inderes – Presentation of Q3 2023 financial results

[börsen84]

Förlåt, min avsikt är inte att vara otrevlig, men:

Det finns ganska få analyser och placeringsrelaterade artiklar på svenska. Varför är inte Inderes annorlunda och vågar göra analyser på svenska?

Placeringsrelaterade ämnen är ofta utmanande även på ens eget modersmål.

Tack för svaret i förväg och trevlig jul!

[mikaelrautanen]

tack för bra frågan!

vilket språk skulle du föredra? som en ”community-driven service” försöker vi optimera tjänsten för att på bästa sätt tjäna största möjliga gemenskap. Vi måste också balansera behoven hos våra kunder som ofta vill tjäna sina internationella ägare. Just nu är det mesta av vårt innehåll på engelska eftersom vi ännu inte har så mycket resurser för att göra lokaliserat innehåll. I det långa loppet tror jag att vi kommer att ha mer och mer lokaliserat innehåll (video, text och raportter) eftersom detta helt klart har varit en framgångsfaktor för Inderes i Finland. Särskilt om det är detta som lokalsamhället is Sverige efterfrågar!

Jag hoppas att det här svaret var förståeligt då min svenska inte är särskilt bra

[mikaelrautanen]

Here’s a recent English podcast where I discussed Inderes story and history, and a bit my personal philosophy on entrepreneurship and life. Hugo is a great podcast host with genuine interest in founder stories.

Founder Radio | Mikael Rautanen of Inderes on Investing, Longevity and...

[börsen84]

Jag tackar återigen för den utmärkta svaret!

Tack för att du berättar direkt och ärligt. Du har utmärkta argument, varav en stor del jag kunde gissa, men jag ville ändå fråga och säkerställa.

Jag tror att ni vet vad ni gör.

Jag känner egentligen ingen annan investerare i min närhet som nödvändigtvis behöver analyser på sitt eget modersmål. “Alla” kan numera engelska riktigt bra, även om jag själv inte kan det, men nu för tiden hjälper artificiell intelligens med läsningen och… skrivandet.

Inga fler frågor, du svarade så bra!

[mie]

Inderes is expected to report its Q4 2023 financial results on 6 February 2024. Inderes’ CEO Mikael Rautanen will present the Q4 2023 results on the following day, 7 February 2024, at 13:00 (CET) in a virtual live event followed by a Q&A session.

Sign up for the event here: Inderes – Presentation of Q4 2023 financial results.

In the first nine months of 2023, Inderes grew revenue 35% (10% organic growth excluding acquisitions). The organic growth was primarily driven by its commissioned research and AGM activities, partly countered by a muted IPO market and a macro environment affecting the event business outside the IR area. Inderes’ 2023 guidance was maintained, i.e., revenue is expected to be above EUR 17m and its EBITA margin is expected to improve from its 2022 level (9.4%). The assumptions behind the guidance are that target markets in the company’s main product areas are not expected to grow, and IPO activity remains low. The monthly sales updates for October and November showed 35% and 11% growth, respectively, implying that even a flat growth in December should bring them in line with its current guidance.

Besides the Q4 results, the focus will be on the guidance and outlook for the coming year, hereunder assumptions for market growth, after a year with expected flat development due to low IPO activity, as well as the cost side after a period with high investments in growth initiatives and development of its platform.

Disclaimer: HC Andersen Capital receives payment from Inderes for a Digital IR/Corporate Visibility subscription agreement. Inderes and HC Andersen Capital are strategic partners, and Inderes holds 20% ownership in HC Andersen Capital. A number of HC Andersen Capital employees own shares in Inderes. /Michael Friis 16:16, 09 January 2024. (Posted on forum 17 January 16.58 by Mie Halse).