Atte interviewed the company’s CEO Kimmo Herranen regarding the Q1 results 
Topics:
00:00 Introduction
00:11 Performance in the early part of the year
01:30 Customer churn and project delays
02:16 Decline in profitability
02:54 Assumptions behind the outlook
03:43 Sarastia’s business operations
05:00 Sarastia’s profitability
07:19 Sarastia’s growth profile
I browsed through the December 2021 listing prospectus and my own notes. In the video interview, the CEO’s core message was that profitable growth would continue and that we would indeed achieve that 24% EBITDA margin. Based on these premises, I participated in the IPO as the steps for the future and the profitability target sounded good.
Now in 2026, it can be noted that revenue is growing mainly only through acquisitions, and once acquisitions are made, there is customer churn and revenue is at risk of melting away every quarter. Failed and/or overpriced acquisitions have been made (Adner etc.). The accounting services were supposed to be a money-making machine with a 24% EBITDA margin; that hasn’t materialized. Additionally, they bought staffing services and other businesses where revenue has eroded. Of course, the Finnish economic situation is a factor—the starting shot for all this misery was the eastern neighbor’s invasion of Ukraine.
Now, in a state of fear, one is left waiting to see if the Sarastia takeover succeeds, whether revenue stays stable, if its near-zero profitability improves, and what the future brings. As a wild card, there is still AI, which over the next 5 years could significantly streamline the company’s operations or lead to a situation where the majority of the company’s employees have to be laid off and revenue dives (if a 1,000 euro accounting service can be had for 100 euros per customer in the future with the help of AI). The share price is now around -50% from the IPO price. Analysis hasn’t helped much when the actual development has been something other than the baseline assumption at the time of listing. At least that’s how it looks from outside the company.
The company has now brought in a heavyweight Chairman of the Board; the glimmer of hope is that at least everything possible is being attempted for the sake of the company.
Evli has shared their fresh thoughts on Administer
Administer’s Q1 results came in clearly below our expectations, with net sales declining 6% and EBITDA dropping sharply by 41% y/y. The miss was driven by unexpected weakness in Silta (customer contract terminations) and EmCe (delayed project starts), while cost savings have yet to flow through fully. Company issued FY26 guidance of EUR 105-115m net sales and EUR 6.5-9.0m EBITDA.
Atte has published a company report on Administer following the Q1 results
Administer’s Q1 results fell clearly short of our expectations, but the full-year outlook remained broadly in line with our estimates. However, we have revised our forecasts to be slightly more cautious, and our earnings forecast for the current year is closer to the lower end of the company’s guidance range. There is clear potential in Administer’s share for the coming years, provided the company succeeds in the Sarastia integration and in improving the profitability of its other businesses. After a soft Q1, the company still has plenty to prove regarding these matters, and we remain in a wait-and-see position regarding the stock.
Quote from the report:
Our forecasts expect a clearly more moderate improvement in Sarastia’s profitability compared to Administer’s own targets. If Sarastia’s profitability improves better than our expectations in the coming years, the earnings leverage at the EPS level would also be very strong. Large M&A transactions always involve risks, and the upcoming amendment to the Public Procurement Act could also mean larger-than-expected customer losses for Sarastia as the market opens up to competition. Naturally, the change also offers new opportunities.
Here are Atte’s comments regarding Administer’s recent acquisition in Sweden
Administer announced on Monday that its subsidiary Silta is acquiring an 80% majority stake in the Swedish payroll company Passion for Payroll Stockholm AB. With this transaction, Silta takes a strategic step into the Swedish market, supporting the group’s ability to serve international clients across borders. The acquired company’s revenue of approximately EUR 2 million is quite small on Administer’s scale, but it strengthens the company’s Nordic footprint. The purchase price of the arrangement was not disclosed in the release, but our understanding is that Administer paid a fair price for a very profitable business. We will include the acquisition in our forecasts in connection with our next update. Our recent update following the Q1 report can be read here.
Atte has published a new equity research report on Administer.
We reiterate our Reduce recommendation for Administer and a target price of EUR 2.4. We have updated our forecast model to preliminary account for the company’s transition to IFRS reporting. At the same time, we have factored in the relatively small acquisition in Sweden made by Silta in May. Although the transition caused changes to earnings forecasts at the EBITDA and EBIT levels, the forecasts remain largely unchanged in the big picture in terms of cash flow. We will refine the forecast model in connection with Administer’s Q2 report, when figures according to the new reporting method will also be available for H1 of this year.
Here are Ate’s pre-earnings comments ahead of Administer’s Q2 results next Thursday
We expect the company’s revenue to have grown significantly following the Sarastia acquisition completed in April. We forecast that Sarastia’s earnings impact was still very marginal, and as such, the acquisition has diluted Administer’s relative profitability at this stage. We will be closely monitoring the company’s comments regarding the progress of Sarastia’s takeover and integration. The company has also just transitioned to IFRS reporting and will report its figures in the future through new segments (Private Sector, Public Sector, and Staffing Services).
Here are Atte’s quick comments on Administer’s morning earnings release
This morning, Administer published its first earnings report in accordance with IFRS reporting and its new segment structure. The group’s net sales grew almost in line with our expectations, driven by the acquisition of Sarastia, but the quarter’s profitability remained weak. This is partly due to non-recurring items from the Sarastia arrangement, but in our assessment, weak organic development in other business areas also weighed on profitability. Thanks to the efficiency measures implemented, the profitability of Sarastia and other business areas should start to improve clearly in H2, which the improving outlook for the Finnish economy may also provide some slight tailwind. However, after a soft start to the year, achieving the earnings guidance will require strong performance in the second half of the year.
Atte interviewed Administer’s CEO Kimmo Herranen about their fast-paced Q2
Topics:
(00:19) A fast-paced second quarter
(01:10) Revenue development in different segments
(02:32) Staff leasing
(03:07) Profitability
(04:22) Sarastia acquisition finalized in April
(05:31) Sarastia’s efficiency measures
(06:06) Impact of the new Public Procurement Act on Sarastia
(06:58) Will acquisitions continue?
(07:41) Guidance
(08:17) Impact of Finnish economic growth on business
(09:14) Focus areas for the rest of the year
Atte has published a new company report on Administer following their Q2 results
We reiterate our “reduce” recommendation for Administer and adjust our target price to 2.3 euros (previously 2.4 EUR). The company’s Q2 result fell short of our expectations, although this was largely due to non-recurring items related to the Sarastia arrangement. The company’s outlook for the remainder of the year anticipates a strong improvement in earnings, for which the efficiency measures already taken provide a good foundation. Should this earnings improvement continue next year, the stock’s valuation will also fall to a moderate level. After a soft start to the year, the company still has much to prove in this regard, and we remain in a wait-and-see position regarding the stock.