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Introduction & Market Context
Zalaris ASA (OB:ZAL) presented its Q1 2025 financial results on April 30, 2025, showcasing continued strong performance and raising its long-term growth ambitions. The company’s stock has been performing well, trading at NOK 84 as of April 29, 2025, near its 52-week high of NOK 88, reflecting positive investor sentiment.
The Nordic payroll and HR solutions provider continues to capitalize on its position as a European provider delivering services hosted in Europe, emphasizing its business model anchored in long-term contracts that provide stability amid macroeconomic uncertainties.
Quarterly Performance Highlights
Zalaris reported impressive financial results for Q1 2025, with revenue increasing 16.2% year-over-year to NOK 370 million. The company also achieved a significant improvement in profitability, with adjusted EBIT reaching NOK 52.1 million, representing a 14.1% margin, up from NOK 34.8 million (10.9% margin) in the same period last year.
As shown in the following key highlights from the presentation:
The company’s Managed Services segment, which represents 75% of total revenue, was a key growth driver, increasing 19.4% year-over-year to NOK 278 million. This growth was broad-based across all regions, with particularly strong performance in the DACH region (+27%), followed by Northern Europe (+13%) and UK & Ireland (+6%).
The following chart illustrates the consistent growth trajectory in Managed Services revenue:
Zalaris Consulting (formerly Professional Services) also contributed to the company’s strong performance, with revenue growing 6.8% year-over-year to NOK 91.5 million. The company noted that significant consulting capacity is being utilized to support Managed Services in implementing new customers.
Detailed Financial Analysis
The overall revenue growth of 16.2% (13.1% in constant currency) demonstrates Zalaris’ continued momentum in the market. The company’s revenue has shown consistent growth over the past several quarters, as illustrated in the following chart:
Profitability showed significant improvement, with adjusted EBIT increasing by 50% year-over-year to NOK 52.1 million. The adjusted EBIT margin expanded by 3.2 percentage points to 14.1%. The Managed Services segment was particularly strong, with adjusted EBIT increasing 69% to NOK 54.7 million, driven by increased revenue and operational improvements.
The following chart shows the trend in adjusted EBIT and margin:
Zalaris also reported improved cash flow generation, with operating cash flow of NOK 21.6 million compared to NOK 7.2 million in the same period last year. The cash balance as of March 31, 2025, stood at NOK 227.6 million, an increase of NOK 5.8 million from Q4 2024. Net interest-bearing debt decreased by NOK 21.9 million to NOK 225.6 million.
The following waterfall chart breaks down the components of the company’s cash flow:
Strategic Initiatives & Growth Targets
Zalaris announced it is on track to exceed its previous revenue target of NOK 1.5 billion for 2026 and has now set a new ambitious goal of reaching NOK 2 billion in revenue by 2028, with an adjusted EBIT margin of 13-15%. This would represent adjusted EBIT of NOK 260-300 million.
The company outlined three key initiatives to achieve these targets:
1. Positioning as the preferred partner for multi-country payroll and transactional HR services
2. "Land and expand" strategy combining Consulting and Managed Services capabilities
3. Automation, AI, and X-shore initiatives to drive scale and improve EBIT margins
The following chart illustrates Zalaris’ revenue growth trajectory and targets:
Zalaris emphasized its strategic focus on leveraging artificial intelligence to drive transformation in its business. The company reported meaningful results in reducing system implementation costs and automating processes, with AI expected to be instrumental in reducing project timelines and improving operational efficiency going forward.
Forward-Looking Statements
Zalaris expressed strong confidence in its future revenue visibility, stating that the full annual effect of new BPO customers should result in a greater than 14% revenue increase compared to FY 2024. The company expects total annual revenue to increase by approximately NOK 192 million (+14%) versus FY 2024 by Q1 2026, based on already signed contracts.
The following chart shows the expected revenue development based on signed Managed Services contracts:
The Board of Directors has proposed a dividend of NOK 0.90 per share for 2024, reflecting confidence in the company’s financial position and future prospects.
In summary, Zalaris delivered a strong start to 2025 with robust revenue growth, significant margin expansion, and improved cash flow generation. The company’s raised long-term targets indicate confidence in its growth strategy and market position, supported by a healthy pipeline of new business opportunities and the increasing adoption of AI-driven solutions.
Full presentation:
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