2014 was a prosperous year for Visma, with good and profitable growth. Revenues increased by 10.3% and EBITDA grew by 11.4%, and the EBITDA-margin improved from 20.5 % to 20.7 %. We saw strong growth in new business areas like SaaS ERP and electronic invoicing. SaaS revenue grew 37%. At the same time we continued to strengthen our position through acquisitions. The Nordic market growth was moderate, but steady. All in all we have good reasons to be optimistic about 2015.
2014 saw substantial political turmoil and changes. The Russian aggression towards Ukraine had some indirect effects on the markets where Visma operates. The EU restrictions towards Russia lead to counter-action with trade embargoes effecting especially Norway and Finland. However, after initial worries, it seemed like products found new routes into Russia, or new markets absorbed the surplus. For the Norwegian economy the dramatic fall in crude-oil prices created worries and the NOK depreciated substantially. However, natural gas is a larger export than oil, and all kind of oil related services and engineering is an even larger export. The weaker NOK lead to better competitiveness and thus it seems that the Norwegian trade-surplus is holding up pretty well. The Greece crisis concerned EU and the Euro-zone, but the real impact from the Greek economy is probably too small to be significant.
While there are uncertainties at the beginning of 2015, in general there is a more optimistic mood than mid-year 2014. It seems GDP in Finland will grow for the first time in several years. The Norwegian economy seems quite resilient as other industries are taking up the slack from less oil related activities, Denmark seems to have good growth, the parliamentary situation in Sweden is more clear, and the Dutch economy is benefiting from better growth in the EU at large. The Baltic region, including Latvia where Visma is the leading ERP software company, is among the fastest growing regions in Europe. The combination of a well educated work-force, relatively low cost level and vicinity to the high-cost Northern European region will drive high growth in the coming years as well.
Visma’s SaaS business matured considerably during 2014. SaaS revenues grew 37 percent to NOK 828 million and accounted for 11.6 percent of total revenues in 2014 vs 9.4% in 2013. This was driven by the macro-trend for companies to utilise cloud computing and mobility for almost any applications, including ERP, HR and Payroll.
The Visma eAccounting entry-level ERP system passed 25,000 customers by the end of 2014 and the number is expected to double during 2015. During 2014 Visma introduced a whole range of new cloud and mobile solutions, like International Payroll and HR, a new generation of Travel Expense, Visma.net Financial ERP for larger customers. Through Netvisor and Severa Visma has a strong position in Finland on SaaS ERP-systems, and this was further strengthened through the acquisition of the Finvalli cloud ERP solution and Logium travel expense solution.
Visma BPO is in a major transition as most customers will use Internet to access their accounting reports. Also, they may approve invoices, issue their own invoices, submit travel expense forms and view their pay-slips online. Continuing into 2015, Visma BPO will strengthen its position as a cloud-enabled provider for outsourcing services within accounting and payroll. This cloud strategy builds a foundation for more attractive and competitive services.
Visma Retail experienced that the whole retail industry is under hard pressure from e-commerce, and successful retailers will have to embrace an omni-channel strategy, combining physical stores with e-commerce. Through the acquisition of Wallmob, and in-house product development, Visma has the solutions enabling retailers at combining traditional stores with mobile and cloud-based e-commerce. For the traditional stores self-checkout, iPAD point of sales solutions and mobile payment reduces expenses and improve the shopping experience for their customers.
In all our markets governments are moving fast towards digital solutions and away from legacy solutions. There is extensive investments in e-government solutions, and during 2014 Visma achieved a strong position in Finland as well in the Scandinavian markets. Around 20% of the total revenue in Visma is towards governments, central or local, and Visma see it as one of our missions to help make the public services and government more modern and efficient.
Visma has concentrated its operations to the Nordic, Baltic and the Dutch markets. This priority has made it possible to achieve strong market positions, high brand awareness, operational efficiencies and competitiveness. Visma´s ambition is to be the national and regional leader in its product categories, an advantage versus global competitors. Rather than overextending resources, Visma intends to be the strongest and most profitable supplier in the markets where we operate. There are still multiple growth opportunities. When Visma will expand to new geographies, most likely this will be through acquisition of market leading local companies, and we remain loyal to the strategy about being a strong and sizeable player in each market, rather than spreading thin globally.
Investments in product development and innovation are key success factors for Visma. Investments in these areas will continue. Visma has maintained development at high levels throughout 2014, and R&D expenses amounted to approximately 12% of revenues. More than half of R&D investments are related to SaaS projects. Visma will continue developing Intellectual Properties based on both Java/Open source and Microsoft.Net.
Visma is competing with larger global and regional companies and we are dependent on our off-shoring capacity. The Nordic cost level combined with insufficient access to competent human resources have been the drivers behind the build-up of our off-shoring activities, which today comprise operations in Romania, Lithuania, Latvia, Poland, Ireland and Spain. At the end of 2014 we had 681 full time employees (FTE) in these locations, and the plan is to increase this to around 1000 FTE by the end of 2015. Most resources are within software development and accounting/payroll outsourcing. The offshoring operations are necessary to facilitate development of new SaaS solutions, to win larger consulting contracts and to be able to be competitive on outsourcing business.
There are plenty of reasons to be enthusiastic about 2015. This will probably be a very active year for Visma. The growth in SaaS is expected to continue and Visma will further launch innovative products. We also see several larger acquisition opportunities.
The economies in which Visma operates are in relatively good shape, and we will act on growth opportunities while simultaneously controlling costs. Customer satisfaction and retention, Cloud computing and building an even more competent and enthusiastic organisation are key priorities.
CEO of Visma