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1© FINEOS Corporation Ltd FY24 Results Presentation Michael Kelly (Founder and CEO) and Ian Lynagh (CFO) 26 February 2025
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2© FINEOS Corporation Ltd We help our customers care for the people they serve through the delivery of superior insurance technology Purpose “Global market leader in core systems for group and individual Life Accident and Health insurance on a single technology platform” FINEOS Mission PROTECTION PREVENTION CARE A world where protection from illness, injury and loss is accessible to everyone Vision The FINEOS Playbook – A powerful culture with a singular focus
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3© FINEOS Corporation Ltd FY241 Financial Highlights Subscription Revenue €69.9m Total Revenue €133.2m Cash Position €19.8m at 31 December’24 EBITDA €20.2m EBITDA margin 15.2% Gross Profit €100.4m GP margin 75.4% ARR €71.2m at 31 December’24 Up 6.9% on CY23 Up 6.6% on CY23 Subscription revenue now represents 52.5% of total revenue Up 9.0% on 31 December 2023 GP margin up from 70.8% in CY23 EBITDA margin up from 7.6% CY23 No debt FINEOS transitioning to a higher quality subscription revenue business with improving margins 31. FY24 represents the new financial year of 12 months to 31 December 2024. 2. “CY23” (calendar year 2023) represents the 12 months to 31 December 2023.
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4© FINEOS Corporation Ltd FY24 Operational Highlights FINEOS Absence for Employers ready for market FINEOS Absence for Employer now live with 2 large US employers since Q3 and Q4 2024 respectively Success in growth and cost efficiency continues to improve operating margins Further cost and automation efficiencies planned in FY25 FINEOS NB/U available for sale – now an integral component of FINEOS AdminSuite Won 2 new name US deals for FINEOS Absence (IDAM) in H2 2024 – Voya & Equitable Further strengthens FINEOS Absence and FINEOS Claims as the market leader NA Growing partnerships with North American system integrators FINEOS New Business & Underwriting product rewrite was completed as SaaS cloud native completed in Q4 2024 Guardian live on FINEOS AdminSuite New York Life - GBS launched Voluntary Benefits on FINEOS AdminSuite Working with 2 SI's to implement our 2 new deal wins in FY24 Important Customer Success milestones for the FINEOS Platform for Employee Benefits
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5© FINEOS Corporation Ltd Our People – Key asset of the business 66.6% 12.3% 21.1% EMEA APAC North America 32.6% 9.0% 51.7% 1.5% 5.2% Product Consulting Cloud Ops R&D Sales & Marketing General & Admin Employees by Region Employees by Function 1,022 People 85% Utilisation >90% Employee Retention ▪ Average Product Consulting utilisation for the period was 85% (CY23: 87%) ▪ Employee Retention of over 90% ▪ Scaling of FINEOS India continues across Cloud Operations, Product Consulting and R&D functions. ▪ Move to hiring in lower cost regions a major focus as part of cost efficiency program ▪ 14.9% are contract resources in FY24 down from 15.3% in CY23
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6© FINEOS Corporation Ltd 4.1% 16.5% 79.4% FY24 revenue by region EMEA APAC North America 5.1% 17.6% 77.3% CY23 revenue by region Geographic mix of revenues Aligned with our investment strategy North America continues to remain the dominant regional source of revenue at 79.4% of total revenue in FY24 • North American revenue represents 79.4% of total revenue, up from 77.3% in CY23 • APAC overall revenue increased by 0.3%, in line with CY23 • Europe region down 14.4% on CY23 as new client acquired in Q4 2022 has moved into business-as-usual mode Changes to revenue growth by region
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7© FINEOS Corporation Ltd FY24 – Financial Slides
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8© FINEOS Corporation Ltd Income Statement • Total Revenue €133.2m (CY23: €124.7m) o Subscription revenue grew by 6.6%, driven by a mix of new name acquisitions, existing FINEOS Clients migration to the FINEOS Platform and expanded product footprint with existing clients o Services revenue up 6.0% on CY23, due mainly to ongoing project activity across customer base and funded evaluation studies by prospective clients o Cost of sales decreased by €3.6m (9.9%) on CY23 due to a reduction in contractor costs of €2.6m (lower contractor headcount), a reduction in employee cost of €1.7m offset by an increase in AWS cost of €0.7m o Gross profit of €100.4m / 75.4% (CY23: €88.3m / 70.8%) • EBITDA of €20.2m / 15.2 % (CY23: €9.5m / 7.6%) o EBITDA increase due to a reduction in costs offset by i) lower other income (€2.8m related to gain on Spraoi earnout in CY23); and ii) increase in FX loss in FY24 (€0.8m). Income Statement FY24 CY23 % Change €m €m Subscriptions 69.9 65.6 6.6% Services 62.2 58.7 6.0% Initial licence fees 1.1 0.4 198.5% Total revenue 133.2 124.7 6.9% Cost of sales (32.8) (36.4) (9.9%) Gross profit 100.4 88.3 13.8% Gross profit margin 75.4% 70.8% Total operating expenses (80.2) (78.8) 1.8% EBITDA 20.2 9.5 112.8% EBITDA margin 15.2% 7.6% Depreciation (1.6) (1.8) (15.0%) Amortisation (25.6) (23.5) 9.2% EBIT (7.0) (15.8) (55.8%) Net interest expense 0.3 (0.4) (182.9%) Loss before tax (6.7) (16.2) (58.6%) Income tax credit 0.9 2.5 63.5% Loss after tax (5.8) (13.7) (57.8%) Profit after tax but before amortisation 19.8 9.8 103.5%
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9© FINEOS Corporation Ltd ▪ North America Cloud Subscription revenue up 21.3% to €20.7m ▪ >10 times since the FINEOS IPO on the ASX in August 2019 Subscription Revenue continues to dominate over Services Revenue Total Revenue €m • Total Subscription Revenue of €69.9m grew by 6.6% versus CY23. Driven by a mix of new name sales, existing clients upgrades to FINEOS Platform and expanded product footprint with certain clients. • ARR of €71.2m up 9.0% compared to 31 December 2023, despite the headwind of client churn post Limelight Health acquisition, M&A activity in Australia, and the loss of a non- strategically aligned client in the UK • Services Revenue up 6.0% on CY23 due mainly to ongoing project activity across customer base and funded evaluation studies Breakdown of FY24 Revenues: Up-sell expansion initiatives and new customer wins has seen subscription revenue growth consistent with FINEOS’ strategy 33.1 47.5 58.5 65.6 69.92.2 1.2 2.8 0.4 1.164.6 72.5 62.0 58.7 62.2 109.5 139.3 149.9 143.4 141.5 CY20 CY21 CY22 CY23 FY24 Subscription ILF Services Costs +16.1% Subscription Fees CAGR 99.9 121.2 123.3 124.7 133.2
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10© FINEOS Corporation Ltd Operating Expenses Operating expenses FY24 CY23 % Change €m €m Research & development (23.3) (23.5) (1.1%) Sales & marketing (3.4) (6.2) (45.5%) Product consulting (21.8) (19.2) 13.5% Cloud operations/support (14.2) (16.0) (11.5%) General & administration (18.6) (17.7) 5.6% Other income 1.1 3.8 (71.9%) Total operating expenses (80.2) (78.8) 1.8% % of total revenue 60.2% 63.2% 0m 20m 40m 60m 80m 100m CY20 CY21 CY22 CY23 FY24 Total Operating Expenses €M R&D costs are down €0.2m (1.1%) on CY23 linked mainly to a lower contractor cost, lower holiday accrual, higher capitalised R&D costs offset by higher employee cost and restructuring cost. Sales & marketing costs decreased €2.8m (45.5%) on CY23 mainly due to lower headcount and marketing activities offset by restructuring cost. Product consulting costs increased €2.6m (13.5%) on CY23, driven by lower cost of sales allocation (utilisation) Cloud operations/support costs decreased €1.8m (11.5%) driven by lower staff cost due to move to hiring in lower cost regions and lower software cost. G&A costs increased €0.9m (5.6%) on CY23. Factors contributing to the increase: staff cost (€0.8m), software cost (€0.4m) offset by a reduction in the share option charge (€0.3m) Other income decreased €2.7m (71.9%) on CY23 due to a once off gain on Spraoi earnout in CY23 and lower R&D tax credit offset by higher interest income on bank deposits
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11© FINEOS Corporation Ltd ▪ North American SaaS revenues continue to be underpinned by adoption of the FINEOS Platform for Employee Benefits, plus migration to Cloud ▪ Services revenue reduced primarily driven by one large customer moving into a strategic partnership on product feature investment R&D investment spend leveling off & decreasing as a % of revenue 21.0 25.1 27.4 26.5 28.5 13.4 17.5 20.1 20.7 20.8 34.4% 35.1% 38.5% 37.9% 37.0% CY20 CY21 CY22 CY23 FY24 R&D investment €m R&D Capitalised R&D Expensed R&D as % of Revenue 47.247.5 49.3 42.6 34.4 Ongoing investment being made in R&D to continue to drive subscription revenue growth • 37.0% of Revenue invested in R&D in FY24 versus 37.9% in CY23 • R&D investment up 4.6% on CY23, reflecting additional investment in FINEOS Absence for Employer and Limelight rewrite. • Scale of R&D investment reflects customer demand and confidence in our market growth opportunity. R&D will reduce as a precentage of total revenue in coming years. FINEOS is changing the profile of its R&D spend to focus more on digital and data related work
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12© FINEOS Corporation Ltd • Cash at bank in line with our forecast and movement reflects investment in the period • Trade receivables rose 37.6% mainly due to the issue of some significant invoices in December 2024 combined with lower cash receipts from customers in quarter 4 of FY24. • Deferred tax asset increased €1.3m predominantly due to the increased provision for offset of tax losses against future taxable profits • Right of use building decreased by €1.0m due to asset depreciation • Right of use software decreased by €0.1m due to asset amortisation • Development expenditure increase explained by R&D capitalised spend (€28.5m) being ahead of amortisation (€23.0m) in the year • Goodwill increased by positive FX movement of €2.0m on retranslation to closing rates • Deferred revenue increase of €2.6m (21.7%) primarily driven by the growth in subscription revenue during the year. • Trade payables and accruals decrease of €0.6m (5.4%) influenced by the timing of receipt of supplier invoices. Balance sheet Statement of Financial Position 31 Dec 24 31 Dec 23 % Change €m €m Cash at bank 19.8 28.1 (29.5%) Trade receivables 11.4 8.3 37.6% Other current assets 8.2 8.4 (2.8%) Total current assets 39.4 44.8 (12.1%) Right of use assets 2.7 3.8 (27.9%) Development expenditure 90.3 84.8 6.5% Goodwill 33.6 31.6 6.4% Deferred tax asset 10.4 9.1 14.3% Other non-current assets 21.4 22.2 (3.9%) Total non-current assets 158.4 151.5 4.6% Total assets 197.8 196.3 0.8% Trade payables and accruals 11.0 11.6 (5.4%) Deferred revenue 14.7 12.1 21.7% Other current liabilities 1.9 1.9 0.7% Total current liabilities 27.6 25.6 7.8% Deferred R&D tax credit 2.7 3.3 (19.0%) Lease liabilities 3.0 4.1 (26.6%) Total non-current liabilities 5.7 7.4 (23.2%) Total liabilities 33.3 33.0 0.8% Net assets 164.5 163.3 0.7%
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13© FINEOS Corporation Ltd • Net cash generated from operating activities of €18.8m increased 119.7% compared to CY23 reflecting improved cash collection and cost management • Net cash used in investment activities of €28.9m in FY24 represents spend on intangible assets of R&D (€28.5m), contract costs (€0.6m) and tangible fixed assets (€0.5m) offset by interest income (€0.6m) and grant income (€0.1m) Statement of Cash Flows Statement of Cash Flows FY24 CY23 % Change €m €m Net cash generated from operating activities 18.8 8.5 119.7% Net cash used in investing activities (28.9) (27.1) 6.7% Net cash generated from financing activities 0.0 23.6 (100.1%) Net movement in cash and cash equivalents (10.1) 5.0 (303.0%) Effect of movement in exchange rates 1.8 (0.9) (318.4%) Cash & cash equivalents at the beginning of the year/period 28.1 24.0 17.3% Cash & cash equivalents at the end of the year/period 19.8 28.1 (29.5%)
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14© FINEOS Corporation Ltd FY25 Outlook & Key Priorities
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15© FINEOS Corporation Ltd Existing clients • FINEOS penetration is at 10-15% • Up-sell white space to expand lines of business supported • Cross-sell opportunity for FINEOS AdminSuite, Insight & Engage New logos within SAM • Significant white space for new name sales – 60% of SAM is white space and legacy • FINEOS Absence for Employer & States Expanded SAM • Further opportunity to expand our TAM through additional lines of business in NA • Expansion in Non-NA Geographies Source: AM Best; FINEOS market research. Total Employee Benefits Market (AM Best) US$200b premium FINEOS Target Market US$156b premium Serviceable Addressable Market (SAM) US$125b premium FINEOS clients US$50b premium Significant growth opportunity for FINEOS in North America
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16© FINEOS Corporation Ltd © FINEOS Corporation Ltd. 16 ✓ Achieve positive FCF for FY25 and cash generative thereafter ✓ Progressively embed AI within the FINEOS Platform for improved performance and outcomes ✓ Guardian Life - 1/1/2026 Phase 2 go live on FINEOS AdminSuite to enable further scaling ✓ Continue to invest in Customer Success to scale and move FINEOS clients off their legacy core systems ✓ Increase new business sales as well as cross sell more FINEOS AdminSuite to our existing FINEOS clients ✓ Continue to grow and build our partnerships with key System Integrators ✓ Build pipeline and deal conversions for FINEOS Absence for Employer ✓ Continue to improve operational efficiencies to gain greater margins ✓ Execute our mission: global market leader in group, voluntary and absence employee benefits FY25 Key Priorities
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17© FINEOS Corporation Ltd © FINEOS Corporation Ltd. 17 • FY25 (1 January – 31 December) revenue to be in the range €138m - €143m • Guidance reflects ongoing work on large programs and the lengthy sales cycles • On track for successful delivery of key projects to replace legacy systems with several large carriers to maximise product subscriptions • Continue strategy of cost savings through operational efficiencies. FY25 total costs expected to decrease (versus FY24) • Continue to expect positive free cash flow in FY25 in aggregate • Pipeline remains strong as the FINEOS Platform for Employee Benefits market reputation grows Outlook & Guidance for FY25 1. All guidance provided is calculated based on the assumption of a EUR:USD fx rate of 1:1.0837. 2. Guidance should be read in conjunction with the risks set out on page 19 of the annual report.
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18© FINEOS Corporation Ltd © FINEOS Corporation Ltd. 18 Following a 3-Year period of above ‘industry normal’ R&D investment levels to meet positive demand from Tier 1 North American carriers, coupled with R&D investment required to automate the SaaS features of the FINEOS Platform to drive greater efficiency and an improved client self-service experience, R&D is expected to level off and positively improve Gross Margin and EBITDA as the FINEOS Platform is now sufficiently scaled and proven We expect … • Subscription fees to increase as a percentage of total revenues to 65% in FY27 and 75% in FY29 • R&D investment to decrease as a percentage of total revenue to 30% in FY27 and 25% in FY29 • Gross Margin will increase to 75% in FY27 and 80% in FY29 • EBITDA will increase to 25% in FY27 and 40% in FY29 Outlook & Guidance for beyond FY25 1. Guidance should be read in conjunction with the risks set out on page 19 of the annual report.
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19© FINEOS Corporation Ltd © FINEOS Corporation Ltd. 19 Disclaimer This presentation has been prepared by FINEOS Corporation Holdings PLC (Company or FINEOS). By accessing or attending this presentation, you acknowledge that you have read and understood the following statements. NO OFFER OF SECURITIES Nothing in this presentation should be construed as either an offer or a solicitation of an offer to buy or sell securities in the Company in any jurisdiction or be treated or relied upon as a recommendation or advice by the Company. NOT FINANCIAL PRODUCT ADVICE Nothing in this presentation constitutes legal, financial, tax or other advice or any recommendation by the Company. The information in this presentation does not take into account the particular investment objectives, financial situation, taxation position or needs of any person. You should not rely on the presentation and in all cases, you should conduct your own investigations and analysis of the financial condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Company, and the contents of this presentation and seek legal, financial, tax and other professional advice. FORWARD-LOOKING STATEMENTS This presentation may contain certain forward-looking statements, forecasts, estimates, projections, beliefs and opinions (Forward Statements). Forward-looking statements can be identified by the use of 'forward-looking' terminology, including, without limitation, the terms 'believes', 'estimates', 'anticipates', 'expects', ‘projects’, 'predicts', 'intends', 'plans', 'propose', 'goals', 'targets', 'aims', 'outlook', 'guidance', 'forecasts', 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology. Forward Statements involve elements of subjective judgment and analysis, and are subject to known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future, assumptions which may or may not prove correct, and may be beyond the Company’s ability to control or predict. No representation or guarantee is made by the Company or any other person that any of these Forward Statements or forecasts will be achieved or proved to be correct. Readers are cautioned not to place undue reliance on Forward Statements and the Company assumes no obligation to update such statements (except as required by applicable regulations or by law). PAST PERFORMANCE Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon (and is not) and indication of future performance. FINANCIAL INFORMATION All financial values contained in this presentation are in Euros (€) unless otherwise stated. This presentation contains a number of non-IFRS financial measures. The Company believes this information provides useful information for investors and form key performance indicators for the Company. Financial information in this presentation including totals and percentages may be subject to rounding. THIRD PARTY INFORMATION AND MARKET DATA This presentation contains information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, reliability, adequacy or completeness of the information. This presentation should not be relied upon as a recommendation or forecast by the Company. NO LIABILITY OR RESPONISBILITY The information in this presentation is provided in summary form and is therefore not necessarily complete. To the maximum extent permitted by law, the Company and each of its subsidiaries, affiliates, directors, employees, officers, partners, agents and advisers and any other person involved in the preparation of this presentation disclaim all liability and responsibility (including without limitation, any liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use or reliance on anything contained in, or omitted from, this presentation. The Company accepts no responsibility or obligation to inform you of any matter arising or coming to its notice, after the date of this presentation, which may affect any matter referred to in this presentation. This presentation should be read in conjunction with the Company's other periodic and continuous disclosure announcements lodged with ASX.
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20© FINEOS Corporation Ltd © FINEOS Corporation Ltd Thank you
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21© FINEOS Corporation Ltd Appendices
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22© FINEOS Corporation Ltd Detailed Statement of Financial Position Statement of Financial Position 31 Dec 24 31 Dec 23 % Change €m €m Cash at bank 19.8 28.1 (29.5%) Trade receivables 11.4 8.3 37.6% Unbilled receivables 0.5 1.0 (47.5%) R&D tax credit 0.3 0.7 (55.1%) Prepayments and other receivables 7.4 6.7 8.8% Total current assets 39.4 44.8 (12.1%) Fixed assets 0.7 0.8 (16.1%) Right of use assets 2.7 3.8 (27.9%) Deferred tax asset 10.4 9.1 14.3% Development expenditure 90.3 84.8 6.5% Contract costs (commissions) 0.9 0.7 24.4% Goodwill 33.6 31.6 6.4% Technology and customer relationships 19.8 20.7 (4.4%) Total non-current assets 158.4 151.5 4.6% Total assets 197.8 196.3 0.8% Trade payables 2.3 3.2 (26.5%) Deferred revenue 14.7 12.1 21.7% Deferred R&D tax credit 0.8 0.9 (2.3%) Lease liabilities 1.1 1.0 3.2% Accruals 8.7 8.4 2.4% Total current liabilities 27.6 25.6 7.8% Deferred R&D tax credit 2.7 3.3 (19.0%) Lease liabilities 3.0 4.1 (26.6%) Total non-current liabilities 5.7 7.4 (23.2%) Total liabilities 33.3 33.0 0.8% Net assets 164.5 163.3 0.7%
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23© FINEOS Corporation Ltd FINEOS DEI - Embrace DEI Commitments Engage and educate our employees. Key Successes Future Focus Recognised through industry awards for the embrace program Embedded our DEI Awareness Campaign program Women in Tech Employee Interest Group (EIG) • AI and Data Analytics • Move to the Innovate Stage of RAP (Reconciliation Australia Action Plan) • Continue to enhance DEI competence • Readiness for Pay transparency requirements 03 04 Our FINEOS Embrace DEI mission statement is that “as a company, we are committed to recognizing the value of diversity among our employees, which includes intentionally building a work environment where all employees feel included and valued both irrespective to and because of their differences. 01 02 Reconciliation Action Plan (RAP) Reflect stage executed B!G Idea Mentorship program Inclusive Communications Program launched
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FINEOS ESG Strategy ESG Pillars Key Successes Future Focus Training and Development Focus on CSRD preparation • CSRD mandatory reporting strategy and roadmap • Ongoing focus on Sustainability Governance • Carbon emission reduction • Data Centre strategy and roadmap At FINEOS ESG enables our FINEOS Growth Strategy and the key areas of focus across the three pillars for our ESG strategy are: •Maintain a low carbon footprint and support initiatives to further reduce •Support our people through diversity and inclusion, community initiatives and professionaldevelopment •Have clear and visible governance from the Board right throughout the company in ourpolicies, procedures, with a critical focus on information security and data privacy GOVERNANCE • Board Independence, Structure and Tenure • Data Security and Privacy • Audit Risk and Oversight • CSRD Reporting SOCIAL • Diversity, Equity and Inclusion • Community • Employee Engagement and Wellness ENVIRONMENTAL • Alignment with investor, customer and regulatory ESG requirements • Optimising impacts on profitability, product and operating model Risk Management • Maintain / enhance reputation with investors and customers • Maintain / grow business • Avoid fines and penalties • Minimise negative impact on operational efficiency and cost Secured funding from Enterprise Ireland Successfully implemented employee-led Corporate Social Responsibility initiatives