At the smaller end, Odoo is raising its head. In medium-sized client accounts, the worst competitor is Monitor, but Roiman Lean is also involved there.
Precisely that consulting slump is the problem. It reflects the number of new projects and thus future continuous invoicing. Conversely: when there are no projects, there are no new customers, no invoicing base. However, it often seems that monthly invoicing only starts at the end of the project or during it. I don’t know.
It is true that Lemonsoft has many customers in industry and wholesale. And in that quantity, individual or even tens do not yet quantitatively make a difference. Generally, however, these industrial companies are large enough that one can easily make a big dent in the invoicing base. Compared to, for example, Finvoicer, where customers’ monthly charges are tens per month, whereas in industrial customers, invoicing can be thousands of euros per month.
And once the reputation is gone and customers start leaving, it’s hard to stop. One must remember that Finland is a small country and entrepreneurs talk a lot among themselves. Through that, when someone switches away and gets good experiences from another software, the stern really starts to leak like a lemming herd.
But as @Atte_Riikola noted, let’s wait and see. I hope I’m wrong for the sake of all investors in the company I myself sold my Lemonsoft shares after the IPO at levels above 15€/share, as I anticipated what was to come (And of course, at that level, the company’s valuation was completely overblown).
It is therefore expected that the company’s reorganized sales team will gradually start to improve its performance in the coming months. After this, new customer implementations will still take some time, so revenue growth could start to accelerate in H2 next year.
In Admicom’s case, the report states the following:
Also in Admicom’s case, changes have still been made in the organization this year, and this has slowed down development. In addition, the change in the billing model is one variable that could somewhat support growth next year. Furthermore, a slight recovery in the construction market would support growth, about which more was written, for example, in the CMD comment published today.
Well, your forecasts for Lemonsoft are quite conservative compared to the company’s targets, which is over 90% operating profit growth by 2028. However, for Admicom, you have growth of this magnitude forecasted.
Lemonsoft’s guidance: the new financial target is to achieve an average adjusted operating profit growth of 25% in 2025-2028. For clarity, the target concerns the following three years (2026-2028).
A potential hidden influence already crept into my mind. For example, ADMICOM is in your model portfolio, and partly the CEO’s speeches are also more assertive..
In the comment linked above, I explain how those targets relate to our forecasts. It’s good to remember that the targets also include acquisitions, so organically, such strong earnings growth is not expected at this point. But it is true that with good strategy execution and an improvement in market conditions, organic growth could be stronger than our current forecasts.
Atte has produced a new, excellent comprehensive report on Lemonsoft. As usual, this comprehensive report is accessible to everyone and is not behind a paywall.
We reiterate our Accumulate recommendation for Lemonsoft and a target price of EUR 7.1. Lemonsoft’s past year was characterized by major changes on both the organizational and technology platform sides. The transition phase is starting to be behind us, and going forward, the company will be able to focus on accelerating the pace of sales and product development. In our assessment, the growth outlook for 2026 is still cautious, but at the stock’s current valuation (2026e EV/EBIT 12x), expectations are also moderate. Thus, we see the risk-reward ratio as attractive.
We believe that the industry’s consolidation trend will continue in the future, as the Nordic ERP market interests several investment parties. Several private equity-led companies are forming in the market, in addition to which listed mid-sized players continue their expansion. In our view, Lemonsoft’s strong market position in Finland in the industrial and wholesale sectors also makes the company an attractive and potential acquisition target in the long term as the market consolidates.
Iikka and Atte talked about Lemonsoft in connection with the new extensive report.
Topics:
00:00 Introduction
00:09 Lemonsoft’s investment profile
02:07 Is the market saturated?
05:08 Core industries
06:59 Acquisitions are part of the toolbox
09:15 Forecasts
13:08 The company bought 2.2% of its share capital
16:33 Accumulate recommendation
18:34 Fear of AI
Here are Atte’s preview comments as Lemonsoft reports its Q4 results on Thursday, February 19.
We expect the company’s revenue to have decreased towards the end of the year, but due to implemented cost savings, the result remained stable relative to the comparison period. In the report, our focus will be particularly on the 2026 guidance and outlook. The short-term growth outlook is still unclear, but following the efficiency measures, organizational changes, and the technology platform transition, we believe the conditions for earnings growth are good. After the transformation phase, the company will likely also become active on the M&A front. The comprehensive report on Lemonsoft published in January can be read here.
Here are Atte’s comments as Lemonsoft has been out doing a bit of shopping.
Lemonsoft announced on Friday that it is acquiring a 76% majority stake in the share capital of Jakamo Osakeyhtiö, a software company specializing in industrial procurement processes. The relatively small acquisition strengthens Lemonsoft’s offering in its strategic core segment, manufacturing. The acquisition did not come as a major surprise, as we have been expecting Lemonsoft to become active on the M&A front following the company’s transformation phase. We will incorporate the acquisition into our forecasts in conjunction with Lemonsoft’s Q4 results, to be published on February 19.
Lemonsoft reported a Q4 result largely in line with our expectations. As a minor positive, SaaS revenue was slightly better than our forecasts at the end of the year. Operating cash flow (Q4’25: 3.1 MEUR) was strong at the end of the year, as was the figure for the full year (8.5 MEUR).
The 2026 guidance was also largely in line with our expectations. Our forecast (+1% growth) did not yet include the recent Jakamo acquisition, which supports growth by roughly 6 percentage points this year. Jakamo’s EBITDA (9.6%) somewhat dilutes Lemonsoft’s relative profitability. Our forecast for this year’s adjusted operating profit was at the upper end of the guidance range at 29%, so even including Jakamo, it remains within the range.
The company’s webcast is today at 1:00 PM, followed by another interview with Alpo. I will need to ask specifically about the company’s views on AI and whether investors’ concerns are justified.
That was a lackluster revenue guidance. Organic growth could even turn negative; Inderes predicted +1% growth, guidance is 5-13%, BUT Inderes doesn’t have last week’s major acquisition in their forecasts.
And here is the interview with CEO Alpo Luostarinen regarding Q4, with Atte as the interviewer, of course.
Topics:
00:00 Introduction
00:13 An eventful year comes to a close
01:13 Development of customer churn
02:11 Cost savings implemented and the recruitment situation
03:24 Improved cash flow
04:20 Jakamo acquisition
07:21 Outlook on the M&A front
08:10 Impact of AI development
11:07 R&D and utilizing AI
11:54 Outlook for 2026
13:20 Drivers for profitability improvement
SaaS revenue grew 1.9%. Likely, the SaaS base has decreased when adjusted for price increases. Churn is 6.8%, which in my opinion is a lot. I’d be most worried about the consulting revenue falling by over 11%.
I’d like to know how badly that core contract base has eroded. At least the CEO didn’t dare to admit it. It’s a pity the guy didn’t answer the questions properly in the earnings live stream either…
For the first time in our coverage history, I have now moved to the buy side with Lemonsoft. Overall, the valuations of Nordic ERP providers (Admicom, Lemonsoft, Smartcraft) have been pushed to historical lows in the recent SaaS sell-off, and at least I am now taking the view that AI fears have become overblown here. At least for the moment, I don’t see AI posing a significant threat to ERP providers, but I am also ready to change my mind if developments start to look that way at some point.
I’ve reached the same conclusion in my own work - though from a slightly different perspective. In my opinion, it’s not so much about new entrants entering the market but rather about the decrease in the cost of self-development.
I recently received an assignment to consider the buy vs. build setup in the AI era from a company slightly larger than Lemonsoft’s scope that is considering an ERP renewal.
It’s clear that AI has shifted the buy vs. build balance in favor of in-house construction. With a slightly larger development investment, you could theoretically get a solution where you don’t have to pay licensing costs, which are by far the largest component in any long-term TCO calculation.
However, the modeling fairly quickly concluded that:
The AMS for an AI-developed solution is practically infinite, whereas the opex costs of a more traditional SaaS solution are predictable and manageable. Many CFOs prefer the latter.
A SaaS company’s R&D still scales across the entire customer base, and one can’t afford to spend more than a fraction of a percent on in-house development compared to an ERP provider’s development budget. In practice, AI-assisted development quickly creates a significant legacy mess, while a SaaS solution stays “evergreen” without any effort.
An ERP provides the necessary GAAP etc. processing out-of-the-box. Building these yourself offers no competitive advantage when talking about traditional finance and supply chain ERPs.
Build could become sensible if we’re talking about, for example, more complex business (e.g., configurable products and an associated service component) that a typical ERP might not handle very well without add-ons or other customizations. In such cases, a competitive advantage could be created by tailoring the ERP to the processes and not the other way around - which is how the current paradigm works. As I understand it, Lemonsoft is used specifically for these basic functions that are shielded from competitive advantage considerations.
Lemonsoft is also protected by the size of its customers - even in the AI era, the capabilities of the SME (PK) sector won’t rise in the big picture to a level where maintaining a custom solution would be reasonably trivial.
But, the lowering costs of application development do limit the kind of premium SaaS companies can charge in the future. When you combine this with the fact that AI solutions on top of software are no longer things that can be duplicated with zero marginal cost, I’m not at all surprised that valuations have come down due to pressure on both the top and bottom lines, alongside increased uncertainty.
High trading volume for Lemonsoft today, €3.4M following large block trades. It will be interesting to see if there will be any flagging notifications, as 2.5% of the shares changed hands.
"In stock exchange trades, the highest price paid for the shares was EUR 4.67 per share.
Rite Ventures is obligated to launch a mandatory public tender offer for all shares in Lemonsoft.
In the offer, Rite Ventures offers a cash consideration of EUR 4.67 per share."
" Kari Joki-Hollanti , who owns approximately 26.17 percent of Lemonsoft’s shares and voting rights, has irrevocably committed not to accept the offer for the shares in his possession."
I wonder if in this case, at some point, more devalued shares will be acquired from the market, followed by a bid to take the company private with some consortium? Right now, SaaS companies are being priced at bargain-bin levels on the stock exchange…
Edit: For example Rite Ventures, Kari Joki-Hollanti and someone else?
I myself sold my Lemonsoft shares after the IPO at levels above 15€/share, as I anticipated what was to come (And of course, at that level, the company’s valuation was completely overblown).
