Good question. I have to say that the change negotiations (YT) in this whole category indicate that growth, at least, is not strongly on the horizon. The company currently has no open job positions available either.
The release did not specify exactly where the negotiations are targeted. They could be aimed at technology developers, sales, administration—anything.
AI has certainly changed a lot and automated many tasks, so reducing the number of coders is understandable, and AI has also boosted efficiency in administration and sales tasks. So, the personnel negotiations are justifiable.
Regardless, I would believe that the message mainly reflects the slowness of the market; growth is not expected, and they want to strengthen profitability. I believe that next year, profitability will be at a very high level as a result of these changes. To my ears, the news is fairly neutral; I wasn’t really expecting much tailwind for growth from the market anyway, but this is a clear signal that at least double-digit growth is not to be expected this year or next.
Well, there’s bound to be redundant staff at every level who don’t contribute anything to the company on a daily basis if around 16% can be laid off. You’d think that AI, in particular, would reduce the need for IT staff, unless you’re a developer who understands full stack. IT is apparently in India, so there probably isn’t anyone left on the basic database, hardware, etc. side? You’ll probably find those in HR, ESG, and finance departments.
Enento’s CEO Teppo Paavola was interviewed by Iikka immediately after the Q1 announcement
Topics:
00:00 Intro
00:09 Q1 summary
00:34 Which products are selling best?
01:56 Has the demand outlook improved?
02:42 Where can profitability be improved?
03:48 Organizational model
05:21 UC synergies
06:57 Profitability by country
07:35 Change negotiations
08:09 AI
09:11 Interest rates have risen
Here is a company report on Enento from Roni after Q1
Enento’s adjusted Q1 result slightly exceeded our forecasts, but considering non-recurring items, the reported result met our expectations. Although new risks have emerged over the nascently improving demand outlook from the beginning of the year due to the war in Iran, the prerequisites for clear earnings growth this year should nevertheless be in place. Overall, we still see the valuation and risk-reward ratio as attractive. We reiterate our target price of EUR 17.0 and our Accumulate recommendation.
