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A new decade—Times of change

After almost 23 years as the Visma CEO, these will be my last comments to the annual report. On March 31, 2020, Merete Hverven will take over as the new CEO. I will continue as Executive Chairman of the Board and hope to be involved in the business for the next 5 years.

Overview

It has been a pleasure working in Visma these years, and to see the company develop into one of the leading software companies in Europe. In 2019 the revenue was NOK 15 028m and this was a growth of 32 % over 2018.

In the late nineties the largest part of Visma was a global software business serving the international shipping industry. In 2000 this business, comprising close to 80 % of Visma, was divested. Remaining was a small Nordic ERP software business with a little over 100 employees and around EUR 10m in revenues. The present-day Visma has been developed from this, both through organic growth and not least through about 200 acquisitions. The strategy has been to expand within software that is mandatory, necessary and regulated by local/national laws and regulation. Visma wants to be the #1 software company in the markets we engage in, and we have gradually expanded in Northern and Eastern Europe. Now at the start of the new decade, Visma has more than 11 000 employees, we are about to exceed 1 million customers and we serve well over 10 million users.

The last decade has been both challenging and rewarding as a software company. The major challenge has been to convert our business and technology from Windows-based, on-premise client server technology to true cloud computing with Software as a Service rather than license-based. The transition has been painful, but now as 75 % of Visma’s revenue is pure cloud, we see the benefit as accelerating organic growth and expanding margins. Within the next 5 years Visma will achieve 100 % cloud computing revenue. The transformation to cloud computing has been achieved partly through organic development and partly through acquisition of innovative and leading cloud companies. Without the acquisitions of new companies with new competence, the transition to cloud would have been far slower and less successful.

In 2019 Visma continued the fast growth in the Dutch market that was kicked off from the summer of 2018. The Team Jumbo-Visma sponsorship was very successful at making Visma one of the best known software brands in the Netherlands. We are continuing the growth and towards the end of 2020 the Dutch market will most likely be the largest for Visma.

Overall, the economies in Visma’s core markets are performing well despite a turbulent global political climate. As this text is being written, the Corona virus makes the future more uncertain, but the business of Visma seems to be fairly well insulated against negative effects. Overall, the Nordic economies are stable with above average growth rates compared to the rest of Europe and we remain positive about the macro-economic situation, although 2020 seems more uncertain than recent years.

Strong growth across all segments

Visma experienced good revenue growth across all segments. The strongest growth was in the Custom Solutions segment, which grew 57,8 % year on year. Revenues in Visma’s largest segment, SMB, grew by 17,4 %. Enterprise grew by 39,5 % and Commerce Solutions grew by 20,7 %. Visma is combining its organic revenue growth with an active acquisition program. During 2019 Visma acquired 17 companies, with an additional 3 companies signed making it a total of 20 companies signed and closed, most of them fast growing cloud computing companies.

Cloud computing continues to be a key driver for growth

With more businesses seeing the benefits of SaaS software, demand for cloud computing and mobile solutions keeps growing. Visma has invested heavily in its SaaS products since 2010, and we are now reaping the rewards from our demanding transition to becoming a cloud company. Revenues from Cloud Computing grew to NOK 10 854m and were 72 % of total revenue.

The cloud champions of Visma Tripletex, Poweroffice, Visma eAccounting, Visma Netvisor, Visma e-conomic and Dinero all had between 20 and 40 % growth. They continue to take considerable market share and we expect the growth to continue in 2020 at the same pace.

We continue to invest in the future

Investments in product development and innovation are key success factors for Visma. In 2019, R&D expenses amounted to approximately 15 % of revenues.

Visma operates in high-cost markets with a strong drive for increasing efficiency. Through utilizing advanced algorithms, big data and artificial intelligence, Visma is exploring more ways to automate business processes for customers to increase efficiency and competitiveness. Visma is particularly investing in optimisation algorithms and solutions embedding this technology as we promote the Zero Waste Society. With optimization and automation in our software, we try to eliminate waste of physical resources, energy and people’s time.

Finding the right talent

Finding and keeping the right talent is a key to Visma’s future success, and the competition is tough for the best and brightest minds. Across our core geographies, Visma has worked consistently to build brand awareness among students in top universities over time with application numbers for our trainee programs increasing. Also among experienced professionals, Visma is increasingly perceived as an attractive employer.

Visma is competing with larger global and regional companies and we are dependent on our nearshoring capacity. The Nordic and Dutch cost level combined with insufficient access to competent human resources have been the drivers behind the build-up of our nearshoring activities, which today comprise operations in Lithuania, Latvia, Slovakia, Poland, Romania, Spain, Ireland, Bulgaria, and Argentina. By the end of 2019, Visma had over 1 600 employees at our nearshoring locations. Most resources are within software development and the level of employee engagement in these locations is among the highest in the group.

Cyber security and privacy

As a provider of mission critical systems, Visma takes its responsibility seriously when it comes to cyber security and privacy. Visma is consistently working on improving its data protection procedures. To meet the increasing global cyber security threat levels, Visma also continues to invest in its IT security program. Visma IT&C, responsible for Visma’s internal IT operations, is ISO 9001, ISO 20000, ISEA 3402 and ISO 27001 certified.

Continued growth ahead

Visma will continue to promote competitiveness by providing our customers with software that makes their business and admin processes more efficient than those of their competition. Our core markets are among the most tech-savvy in Europe, and Visma expects to see our modern SaaS solutions being the growth driver in the coming years. We expect that most Windows-based solutions will either be migrated or converted to cloud computing before 2025 and, as such, Windows-based, on-premise solutions will cease to be in use in the second half of this decade.

In a changing world with tough competition it is hard to plan for all eventualities. However, an agile, competent and engaged organisation is able to adapt to disruption in technology and markets. 11 000 engaged and competent employees are the best guarantee for future success.

Øystein Moan
Executive Chairman of the Board and Former CEO of Visma

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