Financial Statements Bulletin 2021 (published 24 February 2022)
CEO Jens Krogell
Acquisitions have strengthened Bilot’s position as a comprehensive service provider and a pioneer in e-commerce customer experience
“For Bilot, 2021 was a significant year for building the conditions for future growth. The company reformed its organisation and management team, enhanced sales by establishing teams covering different phases of service development, and clarified its marketing message.
Bilot is a pioneering company in the e-commerce customer experience. We understand our customers’ business operations and know to recommend and build systems for them. During the last year, we have deepened this area of expertise in particular. I believe we are now an even stronger strategic partner for our customers.
The acquisitions have significantly expanded Bilot’s know-how over the past year and a half. CastorIT, acquired in late 2020, expanded Bilot’s service portfolio to include SAP ERP platforms and continuous maintenance, as well as the ability to provide SAP ERP customers with a successful transition to the new SAP S/4HANA. In autumn 2021, the acquisition of Motley Agency, which specialises in digital strategy, brand and service design, and e-commerce user experience, strengthened Bilot’s position as a comprehensive supplier of digital commerce and business development. With the acquisition, I also moved from being a Motley entrepreneur to becoming the CEO of Bilot.
With Motley, Bilot gained about 40 new talented professionals, and at the end of the year, we already had about 240 employees in Finland, Sweden, and Poland. Our customers have welcomed the acquisitions. The Motley integration is progressing, and joint customer projects started smoothly immediately at the end of the year.
Bilot, CastorIT, and Motley’s competencies complement each other well. Bilot provides its customers with a competitive advantage created from digital business and customer experience and integrates the solutions from the customer interface into core systems. The best customer experience is created when service design, online platforms, data and analytics, and back-end systems work together seamlessly. Bilot is currently the only company that can provide this.
Implementation of the growth strategy progressed
With an increasingly broad range of expertise, Bilot is still steadily on the path to achieving its economic goals: EUR 50 million revenue by 2024 and a 10% operating profit margin adjusted for goodwill amortisation (EBITA) in the medium term.
In 2021, we returned to our strong growth path after the negative effects of the pandemic in the previous year. Our revenue increased by 49% to approximately EUR 27.1 (18.2) million in 2021. Revenue growth was a combination of the growth created by acquisitions and organic growth, which was boosted by things such as good sales in e-commerce, analytics and ERP projects, and the improved market conditions. While the pandemic continues to cause global uncertainty for companies around the world, there are signs of market recovery and of customers releasing their accumulated investment needs. The demand in the market is good, and there are lots of calls for tender. The covid pandemic has accelerated the digitalisation process. In particular, the demand for Bilot’s special expertise in e-commerce solutions seems to be growing.
In addition to new business, our growth in sales volumes in 2021 was supported by continued cooperation with several long-term customers. In spring 2021, our contract extension with the Wihuri Group on the development and maintenance of information systems was an excellent example of the success of cross-selling between Bilot and CastorIT, and of our ability to provide our customers with comprehensive services, and of our role as a strategic partner for our customers. The total value of the contract is estimated at over EUR 7 million in 2021–2024. In Sweden, we agreed on a major digital commerce solution development project with our other long-term partner, SSAB.
Our business result before amortisation of goodwill (EBITA) for 2021 was lower than in the previous year, approximately EUR 0.4 (0.8) million. Despite this, our operational performance improved, as adjusted for non-recurring expenses related to key personnel changes and acquisition processes, EBITA was higher than in the comparative period. Our treasury is strong and the company is almost debt-free, which creates a strong basis for future growth, as well.
Our growth strategy progressed successfully in the review year. We expanded our solutions and technology portfolio with, for example, Product Information Management (PIM) services. These can effectively promote sales and guide the end customer’s user experience by, for example, directing traffic to the customer’s website, helping customers compare information, and enabling personalisation and product recommendations. In addition, we increased the role of customised software development in our selection.
We continued to strengthen our market position in our current markets in Poland and Sweden. I am particularly pleased that the Swedish business has started well; this year looks promising in Sweden.
Sustainable corporate culture, successful recruitment, a positive employer image, and high job satisfaction are also our strategic priorities. In the review year, we continued active recruitment and worked on building a common culture and way of working after the acquisitions. For us, well-being at work is a particularly important theme in the context of long-standing remote work, acquisitions, and organisational changes. We invested in this by training Bilot employees to become each other’s well-being mentors and developing team leaders’ human resource management skills. Our spring 2021 personnel issue was oversubscribed, which, in my opinion, also shows that our staff have strong confidence in Bilot’s future success.
The planned merger lifts us into a new league
In 2021, we accelerated the change towards becoming an increasingly comprehensive and diverse Bilot. The pace will accelerate further if everything goes according to plan and the merger with Vincit is realised. After the end of the financial year, on 3 February 2022, we announced that we had signed a merger agreement under which Bilot would merge with Vincit. The merger is scheduled to take place in July 2022 if all the conditions for the implementation of the merger are fulfilled and if the merger is approved by the general meetings of the companies.
I am naturally very excited about the plan. The combined expertise of Bilot and Vincit covers digital business, customer experience and human-oriented design, data utilisation, software development, and technology platforms, and with this broad selection, we can achieve a genuine competitive advantage in Europe and the United States. Our complementary clientele, target markets, and selection make us a completely new kind of operator. As a single company, we also have a better chance of offering our employees even more extensive career opportunities, as well as a more diverse work community, and attracting more of the best experts in the field. Even though the name changes, our amazing story continues.”
Jens Krogell, CEO
Half-Year Report 2021 (26 August 2021)
CEO VILLE HIMBERG: ON A FIRM GROWTH TRACK DESPITE THE UNCERTAIN BUSINESS ENVIRONMENT
“We are satisfied with the first half of 2021 after the tough comparison period, which was hit by the coronavirus pandemic. Although our operating environment remains exceptional, we estimate that our customers are clearly more prepared to carry out investments than they were a year ago. Our clientele consists mainly of large companies that have recovered reasonably well from the impacts of the coronavirus crisis.
Digitalization is still powering ahead in our business environment. The pandemic fast-forwarded consumer behaviour into the future. Our customers have an ever-stronger need to move their business operations into online environments. Another growth driver I could mention is the mass transition of SAP ERPs towards a modern, cloud-based S/4HANA solution. This also involves a mounting need to develop digital sales, knowledge management and other core processes in the value chain – that is, both commercial and operational capabilities.
Now that the first half of 2021 is behind us, we are firmly on our way towards achieving our objective of increasing Bilot’s revenue to EUR 50 million by 2024, both organically and through strategic acquisitions. We have successfully recruited skilled and motivated employees, and are continuing our proactive recruitment efforts in all our offering areas and markets.
Bilot is a digital business powerhouse
Bilot is an end-to-end technology supplier that serves large and medium-sized companies. We master the interplay of user experience, analytics, the best software and cloud platforms, customized off-the-shelf software, smooth processes and the value chains between companies. In other words, Bilot specializes horizontally. This means that we provide our customers with tried-and-true practices that we have learned in different sectors: e-commerce, ERP, product information management and analytics.
Our roots are firmly in corporate ERPs and core processes, consumer and B2B online stores built on them, digital services as well as data and analytics that enable them. By smartly combining these elements, we ensure satisfied end-customers and their commercial success, even in exceptional times.
Our customers are leading companies in their field in Finland, Sweden and Poland. We usually have very long relationships with our customers., and our services are related to the continuous development and maintenance of the commercial core processes of our customers. We can serve our customers in even the most demanding projects in all our main markets. One good example of this is the major partnership with SSAB that our Swedish subsidiary announced in May 2021, which involves the development of digital commerce solutions.
Thanks to the acquisition of CastorIT a year ago, Bilot’s service portfolio expanded to include SAP ERP platforms and their continuous maintenance and the capability to enable SAP ERP customers to successfully transition to the new SAP S/4HANA. Our extensive agreement on information system development and maintenance for the Wihuri Group – which was signed in March 2021 and runs until 2024 – is an excellent example of the importance of our broader service range and successful cross-selling.
In addition, you cannot overemphasize the significance of user interfaces in online stores – a smooth purchasing process is reflected directly in sales figures. Tailoring off-the-shelf software for our customers is another of our differentiating factors. Our winning recipe is to combine technologically cost-effective and functional off-the-shelf software with a suitable degree of customization – without neglecting the user experience.
Bilot’s extensive range of services thus extends from application development to lifecycle services – from one end of the process to the other. Bilot’s responsibility as an end-to-end supplier is more extensive than that of traditional application developers or ERP suppliers.
We are building the future on a robust foundation
We are fortunate to have been able to serve our customers for a long time and gain their trust – my heartfelt thanks! We work close to our customers and their core business, seeking to be sensitive in reacting to their needs and providing them with durable, high-quality solutions. In line with this principle, we will keep improving our service and developing our offering in strategy design, architecture and digital business – to benefit our customers.
Our culture is the key factor in our next phase
As a newcomer to the company, it is easy to see its corporate culture with fresh eyes and in a clear light. I have been delighted to observe that Bilot’s good reputation is based on facts.
The continuous development of our service capabilities is deeply embedded in our culture. In an ever faster-paced market, customers need a responsive partner that can quickly make the leap from situation analyses to solutions. Rapid progress from ideas to implementation without superfluous intermediate steps is one of our special strengths.
Bilot’s success, both now and in the future, is based on humble service-mindedness and proud professionalism. Our tightly unified teams are our strength. We believe that to succeed, you need a powerful team. A message can be heard from different parts of our organization: sharing tacit knowledge is important, and so, too, is an uncompromising service attitude.
Success in the long term requires a shared will to win. This spirit is generated by our drive to achieve positive changes in the business operations of our customers. Our commitment to this is already strongly evident – and we also emphasize it when hiring new Bilot employees.
Bilot has been called the best-kept secret on the stock exchange. Our aim for the next phase in our company’s evolution is to raise awareness of Bilot among customers, investors and job applicants alike. One of our near-term goals could be that our experts will no longer need to spell out our email address to new customers.
Financial Statements Bulletin 2020: THE PROFITABILITY IN THE SECOND HALF RECOVERED FROM A DIP CAUSED BY COVID-19 AS REVENUE RETURNED TO GROWTH TRACK
Our operating environment in 2020 was very exceptional due to the global pandemic, and it weakened our revenue and profitability. The impact on our profit as significant, but in our view only temporary. After a challenging start to the year, the demand situation improved later in the autumn, and our sales picked up towards the end of the year. The market is still characterized by uncertainty caused by the COVID-19, but hopefully the worst is behind us.
Our revenue in January–December was almost at the previous year’s level at EUR 18.2 (18.5) million. Operating profit excluding goodwill amortization (EBITA) was clearly lower than in the previous year and was approximately EUR 0.8 (1.7) million. Due to the pandemic, some of our customers had to postpone their development projects and temporarily reduce their IT investments, which was reflected in a decline in our profit. However, the pandemic did not affect our service production, the active development of our offering or the recruitment of personnel nor did remoteworking reduce our productivity.
Listing of shares and successful integration of the acquisition support us in moving towards the profitability target
Our listing on the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki in March, at the very beginning of the COVID-19 pandemic, was comparable to a situation where a carefully prepared ski jumper defies conditions and jumps resolutely into thick fog. Our successful initial public offering (IPO) showed that the jump was worthwhile. The IPO was oversubscribed by more than fivefold and brought some 4,000 new shareholders to Bilot. Thanks to the listing, we have, among other things, been able to complete the largest acquisition in our history.
Our medium to long-term growth prospects remain strong. Our financial target is to achieve a revenue of EUR 50 million by 2024, growing organically and through selected acquisitions both in Finland and internationally, and by expanding our target markets and services. During the year, we strengthened our position in Sweden and Poland through recruitments. From Poland, we served customers also in Finland and Sweden.
An important step towards our growth target was the merger with CastorIT, a company that specializes in SAP solutions, we announced in August. We started to operate as one organization from the beginning of October. At the same time, we strengthened our position as strengthen their market position as a full-stack developer of digital business and a recognized expert in ERP systems and business processes. In the futute, this combination will be even more relevant for Bilot and will make us even more competitive as a digitization partner for large and medium-sized companies, in particular. The integration and our common offer have been received positively by our customers.
The integration of CastorIT and Bilot has progressed as planned, although we have lived in exceptional circumstances and worked almost entirely remotely. Our values and the way we operate are very close to each other, which provides a good basis for reconciling corporate cultures: We both have the courage to be pioneers and are committed to an excellent level of service. We have reformed our management team so that we can more closely weld the expertise of Bilot and CastorIT together and create a common operating model in which we want to incorporate best practices from both companies.
I look forward to the future with confidence. We believe that the software development and digital business markets are gradually recovering from the corona pandemic. In the long run, the digitalisation leap accelerated by the pandemic will further strengthen demand for Bilot’s offering based on digital business, customer experience, and process and platform excellence. With CastorIT, our expanded customer base and service offering also better protect us from market disruptions.
The positive feedback we have receive from our customers provides an excellent starting point for 2021. It shows that we have succeeded in our goal of being an enabler of change and a strategic partner for our customers. Our mission is to improve our customers ’commercial excellence by developing a superior service experience. We are well on our way to our vision of being an internationally recognised pioneer in the digital customer experience. I would like to express my warm thanks for the past year to our customers, employees and shareholders. The year 2020 showed our strength and ability to cope with difficult conditions. At the same time, we also initiated a lot of new things, which will take us far into the future.
The Half-Year Report 20.8.2020: MEDIUM-TERM OUTLOOK AND GROWTH TARGETS UNCHANGED IN SPITE OF THE PANDEMIC
“Our listing in early March on the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki Oy fulfilled our expectations in spite of the coronavirus pandemic: the initial public offering (IPO) was oversubscribed by more than fivefold and brought some 4,000 new shareholders to Bilot. Our personnel were also active in participating in the IPO.
The successful IPO was proof that investors have confidence in our strategy as well as the future outlook of the IT industry and the business opportunities presented by the digitalisation, even in these exceptional times.
While the long-term outlook for our industry remains strong, the coronavirus pandemic created a market disruption that also affected Bilot’s financial performance. Our revenue and profitability for January–June decreased compared to the corresponding period last year.
Among our customer base, the cost saving programs and cautious approach to new investments caused by the pandemic slowed down the implementation of our growth strategy. The execution of the company’s internationalization strategy continued in Poland and Sweden in spite of the pandemic.
The coronavirus crisis has driven many industries to initiate adjustment measures and cuts in external service purchasing, and some of Bilot’s customers have also been forced to postpone decisions on starting projects due to the prevailing uncertainty. Projects have mostly been delayed and services have been temporarily adjusted, which means that agreements have not been definitively cancelled. I want to take this opportunity to thank our customers for their cooperation and flexibility in the face of the mutual challenge. One positive aspect of the coronavirus spring is that it reinforced our view of the strong relationship of trust between Bilot and its customers. Much of the credit also belongs to Bilot’s employees, whose commitment, flexibility, and ability to take responsibility were further highlighted in the exceptional circumstances.
The pandemic has affected demand to varying degrees in different customer segments. In certain customer segments, the decline in the demand for IT services began suddenly already early in the spring, while in others, the effects of the global crisis were barely noticeable even at the end of the review period, as projects continued largely as before. We believe that the situation will return to normal gradually as the market recovers and we expect demand to recover at slightly different rates in different industries. The suspension of development projects due to the pandemic has created a backlog in development projects among our customer base. Based on our experiences from previous economic downturns, we expect that this backlog will start to clear rather quickly when investment confidence among customers returns, provided that the restrictions caused by the coronavirus pandemic are gradually lifted. Early signs of this were already evident toward the end of the review period.
We will continue to operate in accordance with our strategy and ensure that customer deliveries and our operating activities continue with minimal disruption. To protect the health of our employees and customers, we switched to remote work at all of our offices in mid-March. The shift to remote work has not had a significant impact on our productivity or service production.
To prepare for the potential prolonged uncertainty, we initiated temporary adjustment measures concerning our personnel in April. This took the form of part-time temporary layoffs that concerned part of our personnel, and no employees were made redundant.
We continued the active development of our offering and services under the exceptional circumstances. While the dip in our customers’ investment activity was reflected in the project business, we also won new accounts. In the spring, we also started the largest acquisition process in our history, leading to an agreement signed by Bilot in August on acquiring the share capital of CastorIT. This acquisition will make us even more competitive, particularly as a digitalization partner for large and medium-sized companies. The use of our own shares to pay the acquisition price helps engage the commitment of the key employees of the acquired company and leaves the company’s strong cash reserves to be used for potential future acquisitions.Predicting the coming months is difficult: the market situation remains challenging and a potential second wave of the coronavirus pandemic may still lead to uncertainty in the short term. Nevertheless, our medium-term outlook and competitive advantages remain unchanged in spite of the impacts of the COVID-19 pandemic.
We are confident that Bilot is in an excellent position to achieve profitable growth in the future. We have a large and growing customer base, a diverse service portfolio and strong partnerships. Our employees are leading experts in their field. In addition to benefiting from internationalization and operating in a high-growth market, the CastorIT acquisition will bring in more than 60 new colleagues and an even more diverse service portfolio, enabling us to offer an even broader range of digitalization services and solutions for various stages of the customer path.”
The Marketing Brochure IPO 2.3.2020: CEO’S GREETINGS
Nine years ago, I got the opportunity to get involved in a unique journey to develop Bilot which was promisingly poised for growth.
Bilot was born in 2005 out of a passion for creating the best workplace for the best talent within the industry. The core concept was to found a software and IT services company where people work genuinely together as a team and committed to helping clients accomplish their goals without feeling overwhelmed by the responsibilities of a forerunner.
It was easy for me to relate to the company’s enduring values, customer-centricity and committed attitude. At that time, Bilot already had a respectable number of large and loyal customers for whom we implemented demanding IT projects by improving decision maker’s data excellence and enabling better sales and business processes.
After 15 years of profitable growth, the customers we had then are still with us. Our strong foothold in the Finnish IT services market is testimony of the appreciation of our broad, loyal and expanding customer base and of our good reputation.
Our recipe for success works also abroad. In 2014, we started our internationalisation in Poland, where we entered a large and rapidly developing market with growing demand for Bilot’s offering. Last year, we launched our business activities in Sweden and our start there has been promising.
Despite all this, we are not widely known. We have focused on our core business while letting others make a racket. We are humbly proud of our success but we feel that it is simply the result of delivering on our promises and being trusted on. We are known for our top-level expertise and for tackling even the most challenging projects without compromises.
Our vision is to be an internationally renowned forerunner in digital customer experience as well as a strategic partner to our clients. We want to be known for our ability to identify the most important innovations and translate into competitive advantage for our customers. We have systematically expanded our range of solutions and services focusing market-leading software. We have executed on our growth strategy with steady determination and the IPO is the next logical step in making our vision a reality.
We are well poised for the next growth phase in an industry that has enormous potential for leveraging online trading between businesses, digital customer experience, data, artificial intelligence and advanced analytics.
Our versatile expertise and broad service portfolio, growing customer base, strong partnerships and our clear growth strategy are excellent qualifications for success. Above all, our success stems from our outstanding experts. Approximately one third of our personnel also own shares in the company. We are committed to actively developing the company in the future as well.
The first and most important goal of the IPO is to support our strategic growth, facilitate our internationalisation, support the expansion of our service offering, improve our recognition and to sustain our reputation.
I invite you to join us in writing the next chapter in the company’s growth story. So seize the opportunity and invest in digital business!