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!