Enento Q4'24 preview: Subduedness persists

Translation: Original published in Finnish on 2/10/2025 at 7:15 am EET.

Enento will publish its Q4 results on Friday at 12.00 noon EET. The operating environment has remained sluggish and we expect this to be reflected in Enento's Q4 results. We have made small negative revisions to our Q4 forecasts and expect revenue to be in line with the weak comparison period. We expect EBIT to decline slightly year-on-year, as the company’s cost structure faces pressure from several directions. Interest in the report is focused on the outlook for the current year, where we do not expect much to celebrate, at least in the first half of the year. Our current forecasts expect the company to return to moderate growth this year, but there is considerable uncertainty, especially given the credit market turmoil in Sweden. 

Stabilization expected in revenue development

We expect Enento's Q4 revenue to be 38.9 MEUR (was 39.3 MEUR), in line with the comparison period, which would mean an end to the declining revenue trend seen during the past year. However, this is mainly due to a weaker comparison period, as no real recovery in the demand environment has yet taken place. By segment, we expect the situation to remain as before: Demand for Consumer Insight has been weak in both Sweden and Finland and we expect the business area's top line to continue to decline. Business Insight's performance has been weak in Sweden, but much better in Finland, where we expect the business to grow moderately. We expect the Norwegian and Danish businesses to have performed significantly better than the larger countries, but their impact on the Group's figures is still small.

Pressure on the cost side

Following the cut in our revenue forecast, our earnings forecast for Q4 also decreased slightly, and our latest forecast expects Enento's adjusted Q4 EBIT to have been 9.9 MEUR (was 10.1 MEUR), which would mean a slight year-on-year decline (Q4’23: 10.5 MEUR). With our revenue forecast at the same level as last year, we expect the company to face significant cost inflation. We believe this was due to factors such as higher material acquisition costs (which put pressure on gross margins), increased marketing efforts for new products and moderate wage inflation. At the same time, the efficiency program completed earlier this year will deliver some savings, but on balance we expect cost pressures to slightly exceed savings. We expect reported EBIT to have been 6.2 MEUR (Q4’23: 5.9 MEUR), which is weighed down by one-off items related to the company's technology platform transition (forecast: -1.8 MEUR), in addition to continued PPA amortizations. The company has commented that these will continue at least until H1'25. 

As last year, we expect that Enento's Board of Directors will propose a dividend of EUR 1.0 per share. The dividend would exceed the company's reported and adjusted earnings per share (and free cash flow) and would therefore not be sustainable at current earnings levels. However, in our forecasts, 2024 is the bottom year, which means that a slightly higher dividend in one year would not be particularly dramatic in our view, although a dividend cut could also be a well-justified solution. If the Board of Directors decides to propose a dividend of EUR 1.0, it is expected that it will be paid in two installments, as was the case last year, with the payment of the second installment to be decided by the Board of Directors at a later date.

There is still considerable uncertainty about the outlook for the current year

In the financial statements, the focus is on guidance and the outlook for the current year. We now forecast Enento's revenue to grow by 3% to 157 MEUR this year. In other words, the guidance should show growth, but we think there is still a lot of uncertainty around the growth forecast at this point. In general, we have not yet seen any signs of a recovery in the demand environment in the company's comments, and the new regulations likely to come into force in Sweden this year (e.g. tightening of interest rate caps and cost caps on loans) will create headwinds for the Swedish credit market and thus also for the demand for Enento's credit information services. At the same time, however, the fall in interest rates should support the recovery in consumer credit information services, at least in Finland, and we expect Business Insight to continue its moderate growth, partly through new product launches. Given the uncertainty surrounding the outlook, it is also possible that the company will initially refrain from providing guidance, as it did last year (guidance was only provided in connection with the Q2 results). We expect adjusted EBIT to improve moderately to 43.6 MEUR (27.9% of revenue). However, the moderate earnings growth we forecast will require a return to revenue growth unless the company makes significant new adjustments to its cost structure. At the beginning of the year, market conditions are unlikely to provide significant support for growth. However, we believe it is realistic to expect that market conditions will more clearly support a return to growth as the year progresses.