Talenom - Automated processes for greater efficiency

[Karhu_Hylje]

@Karhu_Hylje

@Karhu_Hylje

Measured by cash flow, this remaining accounting firm business should perform quite well. Investments are about 4 million less than depreciation. Juha had estimated the level to be closer to €3 million. If we do a “back-of-the-envelope” calculation: EBITDA €20 million, from which we deduct investments of €6 million (excluding acquisitions), interest expenses of €3.7 million, lease expenses of just over €3 million, and some taxes. This leaves about €6.5-7.5 million for acquisitions, dividends, debt repayment, or other uses. Market cap is currently €67 million.

In the webcast, management believes they can get Sweden to a positive EBITDA level this year and that Spain will also improve its profitability. Personally, I also find it positive that the management has now changed, and if growth continues (target over 10% per year), I think this is quite an interesting valuation based on cash flow.

Juha made more detailed calculations and concluded the following in his report:

On the other hand, we estimate Talenom’s cash flow after investments and
interest expenses to be approximately EUR 5-6 million in 2026,
against which the EUR 65 million market capitalization is moderate.

In the “old” Talenom, cash flow was weak for a long time relative to market cap, and now in this new form, the money-making aspect looks considerably more comfortable.

Now, based on the first quarter, investments—cleared of acquisitions—were slightly higher (€1.8 million in 3 months) relative to these previous cash flow calculations, but certainly low compared to the depreciation level.

[Karhu_Hylje]

Juha already interviewed Juha regarding the recent updates:

Talenom Q1'26: Vahva tulos ja jakaantuminen takanapäin - Inderes

The interview reveals, among other things, that “other investments” included more one-off office renovation costs and computer purchases. Thanks to Juha for asking about this and for the interview in general!

[Gwertheney]

Report:

Talenom Q1'26: Hyvä aloitus uudelta Talenomilta - Inderes

No need for major changes. Moving forward with confidence, so to speak. Although there is a fair amount of debt, cash is flowing in. The market is waiting for a turnaround in Sweden and Spain, and if the draining of Finnish profits into those regions stops, the valuation should also correct itself. I’m pretty much on the same page as Kinnunen at the moment; last year I was more bearish than Juha. Waiting for H2…