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Axactor SE reported a robust first-quarter performance for 2025, marked by a 23% year-over-year increase in EBITDA and a 28% growth in its Third-Party Collection (3PC) segment. Following the earnings release, Axactor’s stock price surged by 5.77%, reflecting investor optimism. According to InvestingPro data, the company has demonstrated strong momentum with a 32.69% return over the past year. Despite a slight decline in total gross revenue due to portfolio sales, the company achieved an all-time high annualized return on equity of 12%.
Key Takeaways
- EBITDA increased by 23% year-over-year, reaching €32 million.
- The 3PC segment experienced a 28% revenue growth.
- Stock price rose by 5.77% following the earnings announcement.
- Axactor plans significant NPL investments in 2025, targeting €100-200 million.
- Collection performance remained strong at 101%.
Company Performance
Axactor demonstrated resilience in the first quarter of 2025, with EBITDA rising to €32 million, a 23% increase from the previous year. The company’s focus on high-quality collection services has paid off, especially in its 3PC segment, which saw a 28% increase in revenue. Despite a 2% decline in total gross revenue due to the sale of its Spanish portfolio, excluding this sale, the revenue actually grew by 7%.
Financial Highlights
- Total gross revenue: €77 million (down 2% YoY, up 7% excluding Spanish portfolio sale)
- EBITDA: €32 million (23% increase YoY)
- EBITDA margin: 50%
- Annualized return on equity: 12%
Market Reaction
Following the earnings announcement, Axactor’s stock price increased by 5.77% to €5.50, reflecting investor confidence in the company’s strategic direction and financial health. This price movement positions the stock closer to its 52-week high of €5.66, indicating strong market sentiment. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available through their comprehensive Pro Research Report, one of 1,400+ deep-dive analyses available to subscribers.
Outlook & Guidance
Looking ahead, Axactor expects its collection performance to remain robust at around 101%. The company plans to invest between €100 million and €200 million in Non-Performing Loans (NPL) throughout 2025. InvestingPro data reveals strong financial health indicators, including a current ratio of 71.31 and revenue growth of 6.92% in the last twelve months. Additionally, Axactor is focused on refinancing and cost control, with anticipated operational expenditure reductions following an IT migration expected to yield savings from the third quarter of 2025. InvestingPro subscribers have access to 12 additional key insights about Axactor’s financial outlook and market position.
Executive Commentary
CEO Johnny Turvis emphasized the company’s commitment to maintaining high collection performance and highlighted the increasing willingness of customers to pay for quality services. "We see a clear trend that the customers are more willing to pay for high quality collection services," Turvis stated.
Risks and Challenges
- Legislative uncertainty in Finland poses investment challenges.
- The Spanish NPL market is active but faces reduced competition.
- Economic conditions in Italy and Sweden may impact future growth.
- Potential fluctuations in equity markets could affect refinancing efforts.
- Continued focus on cost control is necessary to maintain margins.
Axactor’s first-quarter results for 2025 reflect its strategic focus on high-quality services and operational efficiency. With strong growth in its 3PC segment and plans for substantial NPL investments, the company is well-positioned for future success, notwithstanding certain market challenges.
Full transcript - Axactor SE (ACR) Q1 2025:
Operator: 2025 Results. My name is Becky, and I’ll be your operator today. I will now hand over to your host, Johnny Turvis, CEO, to begin. Please go ahead.
Johnny Turvis, CEO, Axaktor: Good morning, and welcome to Axaktor’s first 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 Q1 highlights, then Nina will present financials before I give an updated outlook. We will round off with a Q and A session.
Let’s move to Slide three and have a look at the highlights for the quarter. Collection performance was 101% for the quarter, which affirms the updated curve forecast after the revaluations done in Q4 last year. Total gross revenue ended at EUR77 million in a seasonally weak quarter. Here it is important to remember that we sold off approximately 6% of our total back book in the Spanish portfolio sale at the end of last year. Adjusting for this, the gross revenue was up 7% year over year.
We also delivered an impressive 28% growth in the three PC segment. On top, we managed to increase the margin. I will come back with more details. The EBITDA ended north of €32,000,000, which was an increase of 23% year over year. The solid EBITDA margin of 50% was driven by margin expansion and cost reductions.
Annualized return on equity to shareholders reached 12%, which is all time high and on par with 2026 financial targets. Akstockian has a very solid balance sheet with close to €350,000,000 in equity, which gives an equity ratio of 27%. Let’s move to Slide four for more comments on collection performance. I’m pleased to see that we are now back to the expected level on collection performance. This level is, of course, supported by the Q4 revaluations, but we can also observe positive signals in the underlying performance in certain markets.
For example, we can observe more larger payments in the Norwegian market and even stronger collections in the Spanish market for secured assets, both likely to be explained by positive development in housing prices. The Q1 collection performance was affirming that our new forecast assumptions was correct for the period, and we expect collections in line with the forecast going forward. Moving to Slide five and more comments on the positive development we saw in the 3PC segment for the quarter. Although NPL counts for the largest part of Axaktor’s P and L, 3PC is still a significant and important part of our business. It is a capital light business model, offers lower risk, but still generates a strong cash flow at healthy margins.
It is also an important part in building the relationship with our banking customers. Q1 was a very strong quarter for our three d c business, showing an impressive 28% increase in revenue year over year. And at the same time, the contribution margin was increasing. What is equally positive is that we see a broad improvement for the segment with double digit growth in all of our four GPC markets. 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 gives a very positive foundation for further growth and margin expansion for 3PC.
Let’s move on to the next topic, refinancing on page six. Over the last couple of weeks, we have announced two important elements in addressing our loan maturities. Firstly, and maybe most importantly, we have agreed with our RCF banks to extend the RCF with two more years. And new maturity will be June 2028. The terms and conditions will not be changed.
This is a pure extension exercise. We consider the terms both to be fair and attractive, and this shows continued strong support for our two main banks. Secondly, we have repurchased a substantial amount of bonds at significant discounts during Q1. In the quarter, we acquired bonds for EUR 49,000,000 at 97.3 percent of par. We continue to buy a little bit more in the ACR03 bond in April, so the current outstanding amount on ACR03 is 180,000,000.
In total, we have acquired bonds for approximately €100,000,000 during the last two quarters. Let us move on to the next slide for more comments on how we plan to continue the bond refinancing. First, it is important to say that we are on track to refinance the ACR three bond. It is sixteen months left to maturity, and normally, we have done refi closer to the bond maturity. However, we recognize that the market has put a significant spread on our bonds and has therefore started the refinancing by acquiring bonds worth of €120,000,000 in the market at substantial discount.
Our aim is to refinance the remainder of ACR03 during 2025, and the main elements of this refi would be to place a new 100,000,000 to €150,000,000 bond in combination with cash flow generation in the period until we finance it. This continued reduction in bond debt is expected to further fuel reduced interest expenses. We have also several other options for cash generation such as portfolio sales. Regarding covenants, we have comfortable headwinds on all covenants, and many of them actually improved during Q1. The last point I will mention before I leave the word to Nina is the development in interest expenses.
Please move to Slide eight. The favorable development we saw at the end of last year has continued with even more strength into Q1. The reason for the positive development is the double positive effects from reduced IBOR rates in combination with the effects from bond buybacks since we are using cash in combination with RCF, which has a lower interest margin. In numbers, the reduction is 15% of interest expenses last two quarters. Also, we believe the positive trend will continue the next two quarters, although at a bit slower pace.
Still, a 7% reduction is expected until end of q three. Please note that the 7% reduction is assuming a constant level of interest bearing debt. With that, I leave the word to Nima for the financial update.
Nina Mortensen, CFO, Axaktor: Thank you, Johnny. So now I’ll take you through the q one financial performance, starting with overall figures and then a bit more context on what is behind the numbers. Gross revenue for the group ended at €77,000,000 in the quarter, down 2% compared to the first quarter of twenty twenty four. Excluding the portfolio sold in Spain in Q4 last year, the increase in gross revenue was a healthy 7%. The NPL segment reported a gross revenue of €62,000,000 The segment gross revenue, excluding the sole Spanish portfolios, increased 2% compared to Q1 twenty twenty four.
The triple C segment delivered revenues of EUR 15,000,000, up 28% from the first quarter last year. Let’s look a bit more into details on each of the business segments starting with Npel on the next slide. The NPL segment delivered an increase of 11% compared to the first quarter of twenty twenty four with total revenue of €50,000,000 The reported collection performance ended at 101% for the quarter, affirming the active forecast after a Q4 revaluation with adjusted ERC 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 17%, down from 26% in the first quarter of twenty twenty four.
The contribution margin ended at 77% for the quarter, up one percentage point from Q1 twenty twenty four. 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 triple C segment. The triple C revenues ended at EUR 15,000,000 for the quarter, equal to a growth of 28%. All markets delivered double digit growth this quarter with especially good results in Norway and Spain.
The contribution margin also increased this quarter to 33%, up from 32% in the first quarter twenty twenty four, driven by healthy volume growth. Further expansion in the CCC segment is expected throughout the year with strong pipelines for new business in several 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 EUR65 million, up from EUR57 million in the first quarter in twenty twenty four. The reported EBITDA ended at €32,000,000 with a strong EBITDA margin of 50%.
So we continue to see results from our cost reduction and revenue growth initiatives. Cash EBITDA ended at €47,000,000 for the first quarter compared to €49,000,000 in the corresponding quarter last year. The reduction is due to the large portfolio divestment in the fourth quarter twenty twenty four. Now on to the next slide for a look at the development in return on equity. The annualized return on equity for the first quarter climbed to 12%.
The increase was driven by improvements in total revenue and lower financial expenses. The reported return on equity is all time high in Axosoft’s history and is on par with announced 2026 financial goal. With lower interest rates, improved NPL collection performance, strong 3% growth and a continued focus on cost, Axakto 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 Turvis, CEO, Axaktor: Thank you so much, Neha. As previously mentioned, we expect the collection performance to continue to be around 1.1% going forward, and we expect the 3PC growth to continue with healthy margins. Declining interest expenses from bond buybacks and falling IBOR rates will continue, and it is worth to mention that quarterly OpEx is expected to be reduced by approximately 700 ks post IT migration to new infrastructure platform. We expect full run rate on IT savings from q three. We will continue to see strong cash flow generation that will be used for both buying portfolios and to conclude the refinancing process.
As I mentioned earlier, we expect to refinance ACR three in 2025 well ahead of maturity, which is September 26. With that, we open up for questions.
Operator: Thank Our first question comes from Gustav Larsson from Arctic Securities. Your line is now open. Please go ahead.
Gustav Larsson, Analyst, Arctic Securities: Good morning, and thank you for taking my question. First question regarding servicing, double digit growth in all markets and C2C revenue up now 28% year over year. Is this a temporary boost from soft Q1 last year? Or can we expect this growth to continue throughout 2025?
Johnny Turvis, CEO, Axaktor: Well, first of all, I will not promise 28% growth going forward because that an enormous number. But we can we expect TPC to grow substantially also in the coming quarters. What we see here is that we are winning large market shares, especially in the Norwegian market. And also Spain is doing particularly well. So we expect growth to continue.
Gustav Larsson, Analyst, Arctic Securities: Thank you. What do can you say anything about the potential contribution margin that can be reached in 3PC given that you are signing more attractive contracts and I assume some operating leverage there as well?
Johnny Turvis, CEO, Axaktor: We’re not guiding specifically on the contribution margin, but it’s obvious that if we continue to grow double digit, we will be able to take out more scale effects. So we expect the margin also to continue to gradually improve.
Gustav Larsson, Analyst, Arctic Securities: Okay. Thank you. And on investing then in the NPL segment, CapEx is still low, but you’re guiding for an increase towards the end of the year. Where do you think that you in which geography are you expecting to buy most NPLs during this year?
Johnny Turvis, CEO, Axaktor: We believe that it like it was last year, we believe that Spain will be, the market that we invest most. And like you say, it will be, mostly towards the end of the year. It is correct. We have low investments in Q1, 5,000,000, but we also had only 11,000,000 last year. So it’s not a big big difference.
It’s q one is very slow. We expect a little uptick in in in q two, and then the mature majority of the investments will be later in the year, probably in q four. That’s when the majority comes on Spain, and then we also hope to be able to invest in the Norwegian market. And but we are open to invest in in all of our markets, of course, but Spain will definitely be the biggest one.
Gustav Larsson, Analyst, Arctic Securities: Okay. Thank you. And then regarding refinancing, can you elaborate a little bit, you’re saying you’re expected to issue bonds, SEK 100,000,000 to SEK 150,000,000. Will that be in NOK 100 Or are you trying to do it in euros?
Johnny Turvis, CEO, Axaktor: We haven’t taken any decision on that, but the hypothesis now is that it will be euros.
Gustav Larsson, Analyst, Arctic Securities: Okay. Thank you. That’s all for me now.
Johnny Turvis, CEO, Axaktor: Thank you, Gustaf.
Operator: Thank you. We have no further audio questions, so I’ll hand back to Johnny for any written questions.
Johnny Turvis, CEO, Axaktor: Yes. We have a couple of questions here. So the first one is, personnel expenses increased quarter over quarter with approximately 1,500,000.0. Could you please comment which factors that contributes, to this cost increase? And there are two main explanations for this.
It’s, first of all, it’s the number of FTEs has gone a little bit up since we are increasing so much on PPC. So that that is one of the main drivers. And then we have salary increases from q one that increases. So but if you compare this year over year, you will see that ’25 was actually lower on personnel cost compared to ’24. And then we have other operating cost.
Is there any cost items to mention that drives up total cost in the quarter? Yeah. So as you know, we are in the middle of this migration for a new IT platform. So there are some one off costs that is included in the in the numbers. And I think we also mentioned in the presentation the level that we expect and when the full IT cost savings will start kick in, and that is from from q three.
Unidentified Executive, Axaktor: Think also just to add then, Johnny, also on the total operating cost, that also the business mix between 2% then fell. Since the share of 2% is higher, it also has a higher share of costs, it’s also contributing to driving that total cost up in the the quarter, if you look at the nominal numbers. But if you then again also look at increase in total revenue of 15%, the increase in total operating expenses only 8%. So, yeah, are still having a quite good cost focus.
Johnny Turvis, CEO, Axaktor: I did not. That’s correct. Next question. Can you elaborate a bit more about your decision to focus more on secured NPL investments? What risk do you see?
Is it more OpEx heavy? So first of all, we have not a decision that says that we will focus lot more on secured. We or I think it’s around between 510% for our total book, closer to five. That is secured assets. We only do secured assets in Spain.
We are also having a really quick recovery on the secured assets. So I would say that the book is more or less constant in size on secured, and we need to invest quite substantially this year just to just to keep the secured book constant. So I don’t expect that the secured book will increase a lot relatively to the unsecured. And but regardless of that, the the the risks are more or less there are no particular risks other than in the unsecured. It’s you could claim it’s less risk because you actually have security behind the the claim.
And the price difference is, of course, different, but we believe that the risk reward is even better in many of the secured portfolios that we are buying. But it’s, of course, a bit more OpEx heavy because you need to go legal on some of the claims, and the legal process could be cumbersome and, like, inexpensive. But this is, of course, reflected in the acquisition price. And then next question, can you comment on timeline for introducing dividends or repurchase of stocks? So there will be the earliest possible timeline, I assume, will be approximately one year from now if the board decides to to give dividends based on, the 2025 numbers.
And, yes, those were the questions that we have received. So unless there are any new ones on the line, I think yeah. Are there
Operator: No. We have no further audio.
Johnny Turvis, CEO, Axaktor: No. We got we got another one here. How can you describe a com the competitive situation on NPLs in different geographies? So I would say that if you start with the with Spain, which is the most important for us, it’s it’s quite an active market. But in general, we see less bidders in the auctions, so that goes for all the markets.
But Spain is competitive, but still the IRRs are better than a few years back. Italy, we haven’t been very active. So and I also feel that there are less deals in the market. I but we haven’t done any large acquisitions. Later, we did one in q four, but we have not bought anything there in q o.
In in The Nordics, I would say that there are, like I said, fewer participants. See maybe the the market that we see the largest change is Sweden, where it used to be very, very active and a lot of bidders in the processes. Now we see far less. So it’s I think it will be easier to to achieve reasonable IRRs in the Swedish market going forward. Finland, I would say due to legislation reasons, we are not active in the Finnish market.
It’s it’s in many ways uninvestable until we are getting more clarity on how the Finnish government will handle payment free months going forward and and so on. So we also see less activity in the Finnish market. And then in the Norwegian market, we have two to four bidders normally and and have the competition, but but still we see that the price level is is fair, and it’s possible to achieve okay IRR, I would say. Let’s see. Can we have another one?
It was a long question. AXA has reported strong revenue growth of 15% and improved EBITDA margin of an improved EBITDA margin of 50%. That’s that is not correct. The the day margin is 50%, not improved too, but but that is the level that we are have normally seen when we have not done renunciations. How sustainable do you believe these assumptions are?
And do you see any opportunities for continued probability in the coming quarters? Yeah. We believe that that the level we see now is more or less the level that we will continue to be at. Of course, this depends on on connections going forward. But as long as we are able to deliver around one month percent on collection performance, which we believe we can do, then then there are not I don’t see any large risks in the profitability.
We know that interest expenses will come down the next couple of quarters, and we believe three p c revenues to continue to grow, and we have really good cost control. So I would say that we are very confident when it comes to the to the margin as long as we are able to reach the correction curves. And there it says, software acquired NPL portfolio sort of 5,200,000.0. Do you expect the NPL investments to increase throughout? Yes.
So we stay at our current guiding. So it we believe it will be at least €100,000,000 euros. So we have said that in our annual guiding, it’s not specifically for for 2025, but it’s in our financial targets. Over time, we would like to invest between 1 and €200,000,000. Like I said earlier, yes, it was a low amount in q one, but the same was the case for last year.
And last year, ended up at 128,000,000. So q one is not decisive for where we end up in in investment levels, so to speak. Yes. And I think I’ve touched upon this on the last part of the question. In our view, how would the market for such investment move forward?
We believe that there will be ample opportunities. There are several deals in the market. We see the normal annual processes in more or less all markets are going as as they usually do. So I would say there’s not a boom in the volumes, but we also see that there has been we know that there are some large secondary portfolios in the market. So it should not be a challenge to invest €100,000,000 at attractive IRRs.
But again, we also have said that we will make sure to prioritize the the bond maturity. So that’s why we are holding a little bit extra back here in the first half until we have been able to refinance the ASR free bond. Okay. That was the last question, we have received. So thank you so much for calling in, and I wish all of you a good day.
Bye bye.
Operator: This concludes today’s call. Thank you for joining us. You may now disconnect your lines.
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