Earnings call transcript: Axactor Q2 2025 sees revenue growth, stock dips

Axactor SE reported its second-quarter 2025 earnings with a mixed financial performance, showing a positive revenue trend but a dip in stock prices. The company posted a total group revenue of €64 million, an increase from €59 million in Q2 2024. The stock experienced a slight decline of 0.47% in pre-market trading, though InvestingPro data shows a strong year-to-date return of 23%. According to InvestingPro’s Fair Value analysis, the stock appears significantly undervalued at current levels.

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Key Takeaways

• Axactor’s total group revenue increased to €64 million, up from €59 million in Q2 2024.
• Gross revenue decreased by 9% year-over-year to €81 million.
• The company completed significant refinancing activities, including a new €125 million bond.
• Axactor’s stock price fell by 0.47% in pre-market trading.
• The company anticipates continued growth in its Third-Party Collection (3PC) segment.

Company Performance

Axactor demonstrated resilience in Q2 2025 with a notable increase in total group revenue, rising to €64 million compared to €59 million in the same quarter last year. Despite a year-over-year decline in gross revenue by 9%, the company maintained strong performance in its 3PC segment, which grew by 14%. This growth is particularly significant in the Norwegian and Spanish markets, where Axactor has strengthened its foothold.

Financial Highlights

• Total group revenue: €64 million, up from €59 million in Q2 2024.
• Gross revenue: €81 million, down 9% year-over-year.
• Reported EBITDA: €33 million with a margin of 51%.
• Cash EBITDA: €50 million, a decrease from €61 million in 2024.
• Annualized return on equity: 10% (12% adjusted for non-recurring items).

Outlook & Guidance

Looking forward, Axactor is optimistic about its growth prospects, particularly in the 3PC segment, which is expected to double its revenues from 2025 to 2027. The company plans to increase its investments in Non-Performing Loans (NPLs) and aims to maintain a collection performance of around 100%. Additionally, Axactor anticipates no major debt maturities until Q3 2027, providing financial stability for future strategic initiatives. Analysts tracked by InvestingPro forecast 13% revenue growth for FY2025, supporting management’s optimistic outlook.

Executive Commentary

CEO Johnny Solis highlighted the company’s strategic shift towards NPL investments, stating, "We are well positioned to shift strategic focus to NPL investments and growth." Additionally, CFO Nina Mortensen noted the potential positive impact of reduced interest rates on collections, which could enhance the company’s financial performance.

Risks and Challenges

• Market volatility and economic uncertainties could impact Axactor’s financial performance.
• The decline in gross revenue indicates potential challenges in maintaining growth momentum.
• Interest rate fluctuations pose a risk to the company’s refinancing and debt management strategies.
• Competitive pressures in the NPL market could affect Axactor’s market share and profitability.
• Operational risks related to the ongoing IT infrastructure migration may affect cost efficiency.

Q&A

During the earnings call, analysts inquired about the Norwegian 3PC agreement, with expectations of front-loaded growth in 2026. Axactor expressed confidence in meeting leverage covenant requirements and indicated potential flexibility in managing its outstanding bond (ACR-03). The discussion also highlighted the potential benefits of reduced NOK interest rates on the company’s collections.

Full transcript - Axactor SE (ACR) Q2 2025:

Nadia, Call Coordinator, Axaktor: Hello, everyone, and welcome to the Exacta Q2 twenty twenty five Results. My name is Nadia, and I’ll be coordinating the call today. Session. I will now hand over to your host, Johnny Solis, CEO, to begin. Johnny, please go ahead.

Johnny Solis, CEO, Axaktor: Good morning, and welcome to Axaktor’s second quarter presentation. By my side, I have Nina Mortensen, our CFO. This presentation will be divided into four parts. First, I will take you through Q2 highlights. Then Neenah will present the financials before I give an updated outlook.

We will round off with a Q and A session. Let us move to Slide three and have a look at the highlights for the quarter. During Q2, we had a lot of focus on refinancing, and we did mainly two things: we prolonged RCF with two more years at attractive terms and secondly, we placed a new EUR125 million bond. Even though we still think the market required a too large spread, we were able to place the new bond, ACR five, with more than three percentage points lower total interest rate than the previous one, ACR four. I think we now can say that for all practical purposes, the refinancing is done and we are well positioned to shift strategic focus to NPL investments and growth.

Collection performance was 102% for the quarter, which affirms the updated collection forecast after the revaluations done in Q4 last year. This is the second quarter in a row that we are on the positive side of our collection forecast. Total gross revenue ended at EUR81 million. This is basically on par with last year after adjusting for the Spanish portfolio sales in 2024, despite low investment levels recent quarters. 3PC continues to show impressive growth with a 14 growth year over year.

But even more importantly, we are well positioned for further growth in the next twelve months with large new contracts agreed in Q2, which has not been started yet. Annualized return on equity to shareholders was 8%, but adjusted for nonrecurring items related to legal proceedings, IT infrastructure migration costs and refinancing activities, it was 12%. Reported year to date return on equity to shareholders was 10%, 12% adjusted for the nonrecurring items. Let’s move to Slide four for more comments on collection performance. Akzo Akzoktur continues to deliver on the expected level on collection performance.

Actually, it was the second quarter in a row we were slightly above the forecast. The first half collection performance was affirming that our new forecast assumptions was correct for the period, and we expect collection performance in line with the forecast going forward. Moving on to Slide five and more comments on the continued positive development we have seen lately in the 3PC segment. Like I said last quarter, although NPL counts for the largest part of Axsacor’s P and L, 3PC is a significant and important part of our business. It is a capital light business model, offers low risk, but still generates a strong cash flow at healthy margins.

It is also an important part in the relationship building with our banking clients. Q2 continued the very strong trend we saw in Q1 with growth in all markets and a 14% increase in revenues year over year. Even though we see strong development in all markets, I would like to highlight that Norway and Spain are the two markets we see the strongest growth. We have had a clear breakthrough in the Norwegian three market for Bank and Finance over the last couple of years, and we expect to more than double the three PC revenues from 2025 to 2027 as a result of both the landmark agreement we announced in Q2 and other large agreements as well. We see a clear trend that the customers are more willing to pay for high quality collection services, and the growing pipeline with solid prospects give a very positive foundation for further growth and margin expansions in 3QC, not only for Norway, but for the group as a total.

Let’s move on to the next topic, refinancing on Page six. Let me start with the conclusion. For all practical purposes, Axaktor is now done with all major refinancing activities. We don’t have any substantial maturities before towards the end of Q3 twenty twenty seven. The RCF is extended and matures mid-twenty twenty eight.

Given normal circumstances and the long lasting relationships we have with our RCF banks, renewal processes are doable at fair terms. The last bond, ACR-five, was placed at more than three percentage points better total interest rate than the previous bond. We are continuing to work on our maturity profile, and the target is still to have more frequent and smaller bond placements than we have had historically. With that, I leave the word to Nina for the financial update.

Nina Mortensen, CFO, Axaktor: Thank you, Jannik. So now I’ll take you through the Q2 financial performance, starting with the overall figures and then a bit more context on what is behind the numbers. Gross revenue for the group ended at EUR 81,000,000 for the quarter, down 9% compared to the 2024. The decline is a result of the sale of portfolios in Spain last year and low investment level recent quarters. Excluding the portfolio sold, the decrease in gross revenue was down 1% compared to Q2 last year.

LENPENS segment reported a gross revenue of EUR 65,000,000. Excluding the sale of our Spanish portfolios last year, the gross revenue decreased 4% compared to Q2 twenty twenty four. The triple C segment delivered revenues of €15,000,000 up 14% from the second quarter in twenty twenty four. Let’s look a bit more into details on each of the business segments, starting with NPL on the next slide. The NPL segment delivered an increase of 6% compared to the 2024, with total revenue of EUR 48,000,000.

The reported collection performance continued above 100%, ending at 102% for the quarter. This affirms the collection forecast we provided after the Q4 revaluation adjusted E and C curves. The improvement in total revenues was also supported by lower net negative revaluations and lower effective NPL amortization rate. Amortization rate was reduced to 23%, down from 34% in the 2024. The contribution margin ended at 77% for the quarter, same level as last quarter.

The margin is supported by both rising total revenues and lower operating costs. Please turn to the next slide for comments on the development in the 3% segment. The three to three revenues ended at EUR 15,000,000 for the quarter, equal to growth of 14%. All markets continued to deliver growth this quarter with especially good results in Norway and Spain. The contribution margin of 31%, down from 36% in the second quarter twenty twenty four.

The decline in margin year over year is related to implementation and buildup phase of new contracts. A landmark 3% agreement was reached with a leading financial institution in Norway during the quarter and is expected to contribute to significant growth for Norwegian 3% revenue when fully operational. Further expansion in the 3% segment is expected throughout the year with strong pipelines for new business in most of our markets. Let us move on to the next slide where I’ll present more details on the reported financials. Total revenue at group level ended at EUR 64,000,000, up from EUR 59,000,000 in the second quarter twenty twenty four.

The reported EBITDA ended at EUR 33,000,000 with a strong EBITDA margin of 51%. So we continue to see results from our cost reduction and revenue growth initiatives. Cash EBITDA ended at EUR50 million for the second quarter compared to EUR 61,000,000 in the corresponding quarter in 2024. The reduction is mainly due to the sale of the Spanish portfolios last year. Now on to the next slide for a look at the development in return on equity.

The annualized return on equity for the first half year reached double digits, coming in at 10%. This result was mainly achieved through improvements in total revenue and lower financial expenses. With lower interest rates, improved NPL collection performance, strong 3PC growth and our continued focus on cost, Axsopter expects to deliver a return on equity at a healthy level throughout 2025. With that, I’ll now hand it back to Jonny for some comments on the outlook.

Johnny Solis, CEO, Axaktor: Thank you so much, Nima. As I have already mentioned regarding refinancing, Akerstaktur is well positioned with no major maturities the next two years. We expect the collection performance to continue to be around 100% going forward, and we will now shift focus from refinancing to investments, and we expect a pickup in accretive NPL investments going forward. We continue to see strong momentum in the three PC segment with several large new three PC agreements secured during the quarter that will ensure continued significant growth for the next twelve months. Regarding costs, quarterly OpEx is expected to be reduced by approximately 800,000 post IT migration to new infrastructure platform.

With that, we open up for questions.

Nadia, Call Coordinator, Axaktor: Thank questions. It appears we have no audio questions. I’ll hand to Johnny for any written questions.

Johnny Solis, CEO, Axaktor: Thank you so much. So we have a couple of questions here. The first one is regarding the 3PC agreement in Norway. Do you expect this to double by 2027? Will most of the increased collection be front end loaded?

And that I can confirm, yes, it will be quite heavily front end loaded and most of the growth will come into 2026, but there will be a tail into 2027. Second question is, can you talk a bit about NPL markets? Are there a lot of portfolios for sale? And what money multiples are you observing on your portfolio? So what I can say is that Q3 is normally relatively slow.

It will also be the same for this year because of the vacation period, and we see a normal buildup for the Q4 pipeline. So expect normalized volumes in the market. Regarding money multiples, I think that it’s fair to say that IRRs are slightly lower now than if you compare to, for example, six to twelve months. But it’s still attractive IRRs if you put it in a more historical perspective. And those are the questions we have received so far.

So I don’t know if the moderator have any more.

Nadia, Call Coordinator, Axaktor: We currently have no questions.

Johnny Solis, CEO, Axaktor: Yes. And we have also received one more question here online. And that is how do you view the competition situation in the NPL market? And what I can say is that there are in definitely most of the processes, there are competition. But we see also fewer participants than what we did a few years back.

So it’s like I said, in a historical perspective, it’s IRRs are good, attractive market. But we see normally three, four competitors in each bid, sometimes more, very few times less.

Nadia, Call Coordinator, Axaktor: We have no audio questions. So I’ll hand back to you, Johnny, for any written questions or any closing comments.

Johnny Solis, CEO, Axaktor: Yes. Now it comes in actually a couple of more questions here. So what are the dividend prospects? So it’s there’s no new take on the dividends. It’s clear what we have in the financial targets.

And we are midyear, so there’s no new view on this. Next question is how will potentially reduce interest rates in NOK in the future affect you? I don’t know if you’re looking for a number. That I don’t have. But Nina, would you like to comment shortly on that?

Nina Mortensen, CFO, Axaktor: Of course, we have one of our bonds are in NOK with NOK 2,300,000,000.0. So of course, reduced interest rates will impact us in a positive note when it comes to financial expenses. But I think also, you know, if the interest rates goes down in Norway, that could also potentially have a positive effect on collections as well, as a lot of our debtors also could then have potentially higher disposable income as they pay less interest on their housing mortgage, for example. So I think it could benefit us in several possible ways.

Johnny Solis, CEO, Axaktor: Agreed. So then I think there’s no more questions here. So yes, okay, there we have another one. How comfortable are you regarding meeting the leverage covenants requirements by the 2025 and early twenty twenty six? We are quite comfortable the way that is now.

First of all, we have a lot there’s a lot of mitigating actions. So when we do portfolio acquisitions, which we expect to do primarily in Q4, that will improve the covenant position. And they’re also considering to sell off smaller portfolios that could also be helping out on the covenant position. And then we have another one. Do you plan on repurchasing the outstanding part of ACR-three bond this year?

That could happen, but and they are working on different ways to look at it, but we have flexibility. So it’s also true that the interest rate on ACR03 is quite attractive. I think we pay SEK5.35 plus Eurobar. So this is not something that we will stress doing. But we are looking into different options how to solve that little stub that is left on ACR03.

Since there are no more questions, I think it’s I think we’re ready to close the meeting. And thank you so much for calling in and for the questions. Have a nice day everyone.

Nadia, Call Coordinator, Axaktor: Thank you. This now concludes today’s call. Thank you all for joining. You may now disconnect your lines.

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