Heeros (HEEROS) Q3 2024 earnings summary

Executive summary

• Q3 2024 results were solid and aligned with expectations, with systematic work over the past 18 months driving improved profitability, operational efficiency, and sales momentum.

• Sales and profitability targets were met, despite continued decline in transaction volumes impacting revenue growth.

• Product updates for the new Finnish VAT rate were successfully implemented, receiving positive customer feedback.

• The company is now net debt-free, supported by strong operational profitability and one-time loan forgiveness.

• New customer acquisition showed positive momentum, with ARR from new contracts up 16% year-over-year.

Financial highlights

• Q3 2024 revenue was €2.8 million, flat year-over-year; contract revenue grew 3% in Q3 and 4% for the nine months, while transaction revenue declined 16% in both periods.

• Q3 EBITDA rose 42% to €1.2 million (44% margin), positively impacted by a €524k–€1.5 million loan cancellation; adjusted EBITDA declined 10% to €0.9 million (31% margin) due to higher bonus and holiday salary provisions.

• Adjusted EBITDA for January–September grew 26% year-over-year to €2.3 million (28% margin), reflecting cost savings and efficiency improvements.

• Operating cash flow for the nine months more than doubled to €2.5 million.

• Net debt position improved from negative €1.5 million at end of 2023 to net debt-free.

Outlook and guidance

• Revenue and EBITDA for 2024 are expected to improve compared to 2023.

• Strong sales momentum and a substantial contracted revenue backlog (~€27k/month at end of September) will drive growth, with most new revenue recognized in Q4 2024 and Q1 2025.

• Most customer implementations to be delivered in November and December 2024, securing growth for Q1 2025.

• Sales cycle for larger deals typically takes 4–6 months, with revenue impact lagging behind sales activity.

• Internal targets for profitability, operational efficiency, and new ARR intake have been met.