Let’s open a thread for Heeros here, as there is a lot of interesting news flow surrounding the long-underperforming company.
The latest news today is about Heeros’ competitor ending the development of its popular accounting software: Heeroksen kilpailija päättää suositun kirjapito-ohjelmiston kehittämisen - Inderes
And in September, the search process for a new CEO was announced: Heeros vaihtaa toimitusjohtajaa - Inderes
I see Heeros’s future as quite grim. Many competitors are 2-3 years ahead of Heeros from a technology perspective (product quality and innovativeness). These include Procountor, Netvisor (and possibly other Visma financial management software), Talenom, and Fennoa. Heeros’s potential seems to rely heavily on its low valuation (quite rightly so), the general growth trend of SaaS companies, and international expansion. Of these, a low valuation doesn’t help if the company can’t compete. The SaaS company growth trend could help if, for example, Tikon customers switch to Heeros. In my opinion, this is unlikely because most customers don’t want to risk their software choice again, moving from old technology to uncertain technology (read Heeros). Finally, international expansion for a Finnish software company, especially in financial management, has been extremely challenging and requires much more market research and increased R&D investments. This also cannot support the company’s future too much due to the uncertainty.
Furthermore, typically, the market is dominated by 2-3 strongest players, with the rest withering away sooner or later. Heeros is not among these (strong players) at the moment. The biggest threat to these strong market dominators comes from small players shaking up the market, often with products developed with new technologies (automation, user-friendliness, new operating logic). Heeros doesn’t belong to this group either. I would see the only real positive driver for Heeros in this market as some players aggressively seeking to grow by acquiring competitors’ customer bases and integrating them into their own products. That is, the same thing Accountor Finago is now doing from Tikon to Procountor.
Still interesting, though, if Heeroksen’s revenue were to grow 10% per year for 20 years, ending up at the same level as Talenom’s now, and operating profit were also at the same level. The company value would have to grow 17.5% each year for the valuation to be at the same level.
Secondly, Heeros, as such a small SaaS company, is making a small loss, so in principle, profitability should grow immensely. The balance sheet is still in good shape, unlike Talenom’s. Of course, things could go badly and you could lose 100% of your investment, but you could also see a +2000% return.
I wonder if many accounting firms would switch to using Accountor Finago. It would be a charming mass suicide, as accounting firms would themselves finance Accountor sweeping them away in due time. With Heeros, this risk doesn’t exist.
Isn’t this a good opportunity for faster revenue growth if at least some accounting firms switch to Heeros? They have certainly tried hard to attract switchers during the autumn. They are offering migration services from Tikon to Heeros for half price (Offer valid until 30.11.). Even though it’s an ad, it’s worth checking out the user experience of someone who switched from Tikon.
I agree with user Ripelein. If Heeros could maintain even the current 10% growth rate, the stock looks cheap at 2.2 euros. A decent acquisition target. The shutdown of Tikon will certainly not make growing revenue more difficult. Heeros already has a respectable mass of accounting firms and a good position, especially in Southwest Finland.
An interesting place for Talenom to grow too! They’ve probably hinted at this, I understand now.
For example, Rantalainen uses the software that the customer wants. The accounting processes do not differ significantly between different software. Even if there were significant differences, software robotics (RPA) can also be used nowadays, automating manual steps.
Heeros’s financial position is not strong at the moment (equity ratio below 30%), and the company’s investment capacity is also quite limited in terms of profitability and cash reserves.
A couple of million from an offering would be good for the balance sheet, but offerings aren’t arranged for trivial reasons. It’s a shame that earnings reports only come out twice a year. You’d have to start with a small position to be able to stick with this.
According to Heeroksen’s ownership list, more shares have been sucked into the nominee register (OP custody, nominee register). The share is now 3.21%. It would be interesting to know which foreign(?) party has spotted a cheap Saas company and is increasing its stake month by month.
Mikko Pilkama Appointed as the New CEO of Heeros Oyj
Good that one uncertainty was removed and Pilkama starts practically immediately. Hopefully, under the new CEO’s leadership, Heeros will be more visible to investors than it has been so far. The stock’s liquidity is very low, financial reports are only published twice a year, press releases are “spared,” and the company has hardly been seen at investor events. Fortunately, Inderes still follows it! It’s difficult for small investors to get excited about a company that is largely unheard of, fairly bland and invisible. I’ve already made my Heeros top-ups. So now I’m waiting for the SaaS company to raise its profile and, of course, its share price 
. The share-based compensation/option arrangement for Pilkama is also a good thing. I support it!
Yesterday 400,000 units changed hands:
The seller must be either the soon-to-be ex-CEO Lattu or the largest owner Räisänen. The third largest owner, pension company ELO, only has 325,000 shares. Interesting times at Heeros.
Heeros has 4,349,963 shares. So, just over 9% of the shares changed ownership.
Went for quite cheap. Yesterday, the sell side probably had a few thousand shares on average, and the fifth sell level was probably €2.60.
Board member Marko Kauppi (Tenendum Oy) bought at least 90,000 pcs from the sold lot. A management transaction notice was issued. Not bad when the board buys 
Edit: Well, it seems there were still some coins left in the pocket. According to the new notice, he also made a small purchase today:
Date of transaction: 2019-12-10
Trading venue: FIRST NORTH FINLAND (FNFI)
Instrument type: SHARE
ISIN: FI4000127527
Nature of transaction: ACQUISITION
Detailed information of transactions
(1): Volume: 500 Unit price: 2.2 EUR
Kimmo Rasila, Chairman of the Board, also bought 1961 pcs yesterday.
If the CEO was the seller, shouldn’t there have been an announcement about that too?
Yes, the CEO should have reported if they had sold, as they are an insider. But Räisänen probably doesn’t need to, as an entity classified as merely a shareholder in First North is not obligated to disclose their holdings. The largest owner is not part of the board or the management team.
It will be interesting to see who the remaining 300,000 shares went to. I secretly hope it was a certain KK. Purely for selfish reasons, because then the flock would follow along and I would enjoy the ride.
It seems difficult to get shares under 2.50 anymore?
