I would rather receive the dividends into an equity savings account (OST) so I don’t have to pay trading fees and the spread.
I believe I can see a bit of budding positivity here now.
Previously, they have been very cautious with investments, recruitment, and share buybacks, but now I seem to detect a slight change in tone. Where sales recruitment was previously avoided, they are now hiring a senior expert for international software sales and see good potential in the market. There is a promise to increase investments at the expense of profitability development. Share buybacks have been asked about in almost every webcast over the years, and the responses have been reserved (even if the matter doesn’t belong on the CEO’s desk). Now, the board is clearly confident in the future, as they finally dare to move forward with this after years of inquiries.
And why not, as the market shows signs of recovery, IPOs are expected to increase, there is growing interest in the product portfolio, and the valuation is historically low. Finland serves as a stable cash cow.
It’s great that investment targets have finally started to be found. It’s been quite the recessionary few years, and I’ve found myself wondering several times if there really are no growth opportunities in the market where Inderes could get a sensible return on its money. The only thing raising an eyebrow here is the H2-weighted guidance. In these “it’ll take off at the end of the year” guidances, the Helsinki investor has been disappointed time and time again in recent years:
Full-year results and growth are estimated to be weighted toward the second half of the year.
At a quick glance, EV/EBITA is somewhere above 12, adjusted P/E 17, and P/S 1.5. If in the coming years (2027–2028) they could get back on the growth track (+10%), the revenue distribution would be “higher quality” thanks to the growth of the software business, and profitability would rise toward previous historical levels due to various factors (the role of software, revenue growth, profitability optimization), then a very good expected return can indeed be built from this. I see clear twin-engine potential.
On the back of a cigarette pack, one could slightly optimistically sketch revenue growth of, say, 5–10% per year while profitability gradually rises to 16% for 2028. If one were to then accept multiples for the realized figures such as EV/EBITA 18, P/E 22, or P/S 2 (yes, high figures compared to the current situation), then as an average of those, the share price could well be double what it is now. And it’s hard to see any kind of massive business collapse in the coming years. The risk-reward ratio is quite decent.
35 Likes
These share buybacks are a bit like the company depositing cash into its current account. That’s why calling it a profit distribution feels a bit off to me. The likely intended use is to pay for various expenses and investments, such as employee rewards, acquisitions, etc. After all, we don’t use the term profit distribution when depositing cash into a company’s current account, do we? Of course, one might ask whether it makes sense to buy back shares while simultaneously issuing new ones as employee rewards, but at least that would be transparent. Pioneers like Sampo, Nordea, etc., have taught us that shares bought as part of a profit distribution are canceled, and thus the shareholders’ ownership stake understandably increases in the same proportion. I don’t see how that happens here.
”Shares are acquired to be used as consideration in potential acquisitions or other arrangements related to the company’s business, to finance investments, as part of the company’s incentive scheme, or to be held by the company, otherwise transferred, or canceled.”
EDIT: exactly: this way, the funds would be locked into something clearly defined as a profit distribution, whereas now the funds act as an extension of the cash account and will be used in the future for a purpose chosen by management (expenses, investments, or profit distribution). In my opinion, this makes the profit distribution a notch less transparent.
10 Likes
Mikael has, if I recall correctly, commented on that choice of wording before. Main point: If you declare the purpose of a share buyback program to be the cancellation of shares, you are legally locked into canceling them. However, if shares are “acquired to be used as consideration…”, then the shares held have optionality.
In practice, the shares can then be canceled at some point in the future, but you never know what kind of opportunities might arise where you can use treasury shares.
Personally, I am happy with this distribution of profit. Proof that the company’s “talk to bullshit” ratio is low, as they are ready to sacrifice dividends in line with their vision. It is no longer just a sentence on strategy slides 
30 Likes
SEBin kommentit:
Q4: Slightly ahead; Capital returns split to dividend and buy-backs
- Inderes’s Q4 profitability was slightly ahead of our estimate, owing to slightly better than expected sales. At first glance our 2026E sales growth is aligned with the fresh guidance, but are at the top end of the EBITA margin range and the company flags the internationalisation investments impacting profitability. Dividend was axed and came in well below our estimate. Yet, the overall capital distribution is up y/y as the company returns EUR 0.9m via buy-backs.*
9 Likes
This is bothering me as well. In my opinion, the overall package would have been perfectly fine if, instead of increasing the dividend, more focus had been put on share buybacks, or if the announced “distribution of profits” had been genuinely tied to the cancellation of the purchased shares.
Now that the intended use has been left open, the dividend was effectively cut so that the company can, if necessary, use the shares for rewards, acquisitions, etc. IMO, this is not a growing distribution of profits, but rather a message that the company cannot pay dividends as before while simultaneously making the investments and other measures required by the business.
10 Likes
@Eicca makes this essential point well. When the purpose of share buybacks is left open, it in itself signals that they aren’t being bought primarily with profit distribution in mind. If the shares are not specifically bought to be cancelled, it is not definitively about profit distribution, but rather an option.
11 Likes
Hi,
On behalf of the analysis business, I can confirm that the above still holds true from a revenue perspective. Strategically, the Premium user base is, of course, valuable to us.
t: Antti
15 Likes
I personally am not very well-versed in ‘buyback math,’ but can anyone explain why ‘cancelling shares’ would be better than the current wording?
So, if a company has, for example, incentive obligations for 50 shares and is also about to make an acquisition paid with 50 shares, why is it better for the 100 repurchased shares to be cancelled and then have the necessary 100 shares issued for the incentive program and the acquisition, rather than just allocating those 100 repurchased shares to these?
It seems that for many, the former option falls under ‘this is proper profit distribution via buybacks’ and the latter under ‘the company can’t afford profit distribution and the money is going to management etc. etc.’
While the shares are held by the company, they seem to show up in per-share figures much as if they were cancelled. And if I recall correctly, for tax, accounting, or other reasons, it is ultimately better to cancel shares held by the company than to use them for acquisitions etc.
7 Likes
Share buybacks make an illiquid stock even more illiquid. And that would be fine if there were the growth and profitability that have been set as long-term financial targets.
But sensing the guidance, 2026 is becoming the 4th year out of five where long-term financial targets are missed (even 2023 was only exceeded through acquisitions: “growth adjusted for the impact of acquisitions was 5%”), so it feels like share buybacks provide about as much warmth at this point as peeing your pants in freezing weather.
At least with dividends, you can buy some growth company 
Is Inderes’ long term presumably somewhere in the 2080s?
In general, I find this annually increasing absolute distribution policy puzzling. We are now in a situation where the distribution exceeds free cash flow. And at the same time, it is stated: “we are preparing to significantly increase investments in the software business due to the opportunities we see in the market.” Positive, yes, but if growth remains at an anaemic level this year too, increasing the distribution is not on a healthy foundation.
Why try to be everything to everyone?
I suggest a flexible annual distribution (based on free cash flow) instead.
P.S.
I remember when in some older Inderes videos or podcasts, they were laughing tongue-in-cheek at Finnish companies that explained away weak performances year after year with weather conditions etc., and instead of growth investments, they mostly just grew the distribution. Now, listening to these explanations about the weak IPO market and cultural differences in Sweden and such, while the distribution grows, one can only chuckle to oneself.
13 Likes
That would certainly make sense. In my opinion, however, shares reserved for incentive schemes and acquisitions are not “distributed” profit for investors; instead, they should be viewed as mandatory expenses for business continuity. If it’s been determined that for the future of the business, the company needs more shares on its balance sheet for reward systems or investments, I think we should speak more in terms of increased costs or investment needs. In such a case, I find it a bit questionable to speak of “profit distribution.”
6 Likes
Hybrid profit distribution makes a lot of sense, especially if the share price is estimated to be below the company’s fair value. Specifically, for many companies, it could be sensible to keep the dividend at a reasonable baseline, increase it moderately each year, and distribute surplus capital not needed for investments by buying back their own shares. EPS grows, and achieving dividend aristocrat status becomes easy.
The biggest problem for Inderes is that this level of earnings is not at all what many had hoped for and expected. A dividend laggard producing a steady (adjusted) result wasn’t exactly what was expected when Inderes went public, even if the reasons are understandable.
6 Likes
You can’t really praise the performance here for much else besides VideoSync, but there’s no need to start throwing stones either.
The ball has been tossed to the board regarding share buybacks for who knows how long (I can’t be bothered to check), and it’s great that the ball has finally been caught and funds are being directed that way. Personally, I would have launched an even more aggressive buyback using debt as well, but I understand why the company acts a bit more conservatively than the average retail investor. 
As for the criticism regarding the wording of the buyback authorization, it’s more than sensible for the company to keep its options open; if something happens where these could be used for something other than cancellation, they won’t have to wonder about it then—though one could always just print more shares at that point anyway. If the shares end up in the shredder as expected, the distribution of profit doesn’t happen at the shredder at that moment, but at the moment the shares are bought back from the exchange.
“It’ll turn around next year” and “kicking the can” seem to be the trend in almost every analysis, but maybe Inderes will set an example for its clients this year and get the top line growing.
On the Swedish side, it would be desirable to finally achieve something concrete, as they’ve been operating there for several years now and you can’t hide behind a “different corporate culture” forever. One has to hope that the EU Listing Act regulation will provide some tailwind for this.
9 Likes
But the point is exactly that: if they are used for something else, then it’s no longer a distribution of profit, but rather an investment or, say, Verneri’s bonuses. It’s not capital that has been distributed to you.
And since the dividend has now been cut by half, this discussion is specifically about profit distribution.
I’m no math expert either, and I think the end result is the same except that those funds have already been distributed to you. Compare it to a dividend; the capital is concretely transferred to you.
It’s worth noting the difference that if these funds are distributed as dividends and new shares are issued for an acquisition, EPS will decrease, whereas after a share buyback, EPS remains the same.
We could continue this discussion in the Share Buyback thread to get experts like @Paapaa involved.
4 Likes
Are so-called “lemonsofts” possible? If not, why not? One would think it would create shareholder value, given there are large sellers in the background?
2 Likes