Earnings call transcript: Qliro AB sees strong stock response post Q1 2025 results

Qliro AB’s stock rose by 2.26% following its Q1 2025 earnings call, reflecting positive investor sentiment. The company, currently valued at $47.25 million in market capitalization, reported robust growth in operating income and total payment volume, despite a decline in gross profit and a continued operating loss. According to InvestingPro analysis, the stock appears overvalued at current levels. The market reacted favorably to the company’s strategic initiatives and expansion efforts in the Nordic e-commerce market.

Key Takeaways

• Qliro AB’s stock increased by 2.26% in response to the earnings call.
• Operating income grew by 2%, while total payment volume increased by 20% year-on-year.
• The company expanded its market presence to Norway and Finland.
• Merchant base growth surged by 220% year-on-year.

Company Performance

Qliro AB demonstrated resilience in Q1 2025, with a 2% increase in operating income and a significant 20% year-on-year rise in total payment volume. The company’s overall revenue growth stands at 3.3% for the last twelve months, according to InvestingPro data. However, the company faced challenges with a 4.3% decrease in gross profit to 64 million Swedish Crowns and an operating loss of 15.1 million SEK. The blended take rate also declined by 14% to 3.1%. Despite these hurdles, Qliro AB’s strategic focus on expanding its Nordic market presence and enhancing its product offerings has positioned it well against competitors, with a relatively stable market beta of 0.84.

Financial Highlights

• Operating Income: Increased by 2%
• Total Payment Volume: Up 20% year-on-year
• Gross Profit: Decreased by 4.3% to 64 million SEK
• Operating Loss: 15.1 million SEK
• Blended Take Rate: Declined by 14% to 3.1%

Market Reaction

The market responded positively to Qliro AB’s earnings call, with the stock price rising by 2.26%, reflecting investor confidence in the company’s strategic direction and growth potential. The stock’s movement is notable, considering its position between the 52-week high of 31.25 and low of 18.83.

Outlook & Guidance

Qliro AB reiterated its guidance for 15-30% income growth in the second half of 2024 and expects volume growth to exceed 39%. The company is focused on accelerating sales momentum and aims for a 5-10x lifetime value over customer acquisition cost.

Executive Commentary

Christopher Rutgersson, CEO of Qliro AB, emphasized the company’s ambition: "We are building a new European leader in composable payments." He also highlighted the expansion of the addressable market: "Our addressable market today is probably more than 10 times as large as it was three years ago."

Risks and Challenges

• Declining gross profit and operating losses could affect financial stability.
• Competitive pressures in the Nordic e-commerce market.
• Potential challenges in maintaining merchant growth and operational efficiency.
• Market share decline in the pay later segment from 48% to 41%.

Q&A

During the Q&A session, analysts inquired about the impact of the enterprise back-book on income and the revenue recognition model for payment volumes. The company also addressed credit loss variations and clarified market growth expectations, indicating a strategic focus on long-term growth.

Full transcript - Qliro AB (QLIRO) Q1 2025:

Call Coordinator/Moderator: Hey. Hey. I’m perfect.

Mhmm. Super.

Christopher Rutgersson, CEO, Clearro: So

Call Coordinator/Moderator: I will introduce David here.

Technical Support: Good morning, guys. Morning. How are you?

Karl Lofgren, CFO, Clearro: Good. Yourself?

Technical Support: I’m good as well.

Christopher Rutgersson, CEO, Clearro: Good morning.

Technical Support: Good morning.

Call Coordinator/Moderator: So, Christopher and Carl, we would always, as usual, count you down. And when it’s time, there will be a short introductions that welcome everyone and then hand over to Christopher and Carl. And when it says, please go ahead, then it’s your time to start talking.

Karl Lofgren, CFO, Clearro: To shine. Yeah.

Call Coordinator/Moderator: To shine. Yeah. Exactly. Yeah. And whenever you’re ready for questions, you just give us a call by saying we’re now opening up for questions, and then we will moderate in the ones who have lined up in the queue.

Excellent. And when there’s no more questions, they will will play a short text that says there’s no more questions. I hand over to speakers for any closing comments.

Christopher Rutgersson, CEO, Clearro: And

Call Coordinator/Moderator: when you thank everyone for today, and then we will end the call.

Technical Support: And

Call Coordinator/Moderator: after the call, please remain silence until we have shut it down, and we’ll talk to you again when it’s over.

Christopher Rutgersson, CEO, Clearro: Excellent.

Call Coordinator/Moderator: Perfect. Then I will hand over to David for the countdown. We have five minutes to go.

Christopher Rutgersson, CEO, Clearro: Thank you.

Technical Support: Thank you. So, guys, if you wanna grab a coffee or water, in the meantime, you can. And I will remind you when there’s, like, a couple minutes left. Great.

Christopher Rutgersson, CEO, Clearro: I’m back in a minute.

Karl Lofgren, CFO, Clearro: Yeah. Regional firm

Technical Support: Okay, guys. We had about one minute to go.

Christopher Rutgersson, CEO, Clearro: Excellent.

Technical Support: I will let you know when I say, now we will go live, and then there will be a little bit of pause, and then you will get the introduction. And then once so please go ahead. It’s all yours. Good. Good luck.

Thank you. We will now go live.

Conference Operator: And Now I will hand the conference over to CEO, Christopher Rutgersson and CFO, Karl Lofgren. Please go ahead.

Christopher Rutgersson, CEO, Clearro: Thank you, and hi, everyone, and welcome to our Q1 presentation for Clearro. I’m Christophe Ruttegasson, CEO of the company. And with me today, I’m very happy to also have our new CFO, Karl Logen, that’s joining us from from investor. And for today’s agenda, I will walk through a quick strategic update and then hand over to Carl for our kind of financial update, talk about the outlook, and then come back to kind of a q and a kind of at the end. So regarding the strategic update, we still see a large opportunity to build a new European leader in what we call composable payments and to deliver a word learning experience for merchants and their customer journey.

We see that that is now kind of making a mark in the Nordic market where we have accelerated momentum with more than 39% growth in new volume signed with merchants that are expected to go live on the platform during the year. We see a significant contribution from our SME segment in relation to our operating income, which is now representing more than 8%, up from 1% last year. And that is driven by a strong merchant based growth of more than 200%. And we expect that you know, our our expectations on our Nordic launch is is now higher than before. We are above expectations.

In Norway, we signed more than 500,000,000 in volume only in the last kind of eight months since launch, which is a great achievement and more, I think, than we signed in a whole year of 2023 in all of Telero. And that volume in itself will take Norway to profitability when it’s fully live, and we’ll come back to that. We also see that the scalable miss this model and the sales model is now working. On the expected profitability from new contracts that was signed in the first quarter, we see an expected lifetime value over CAC of a ratio of five to 10 x, which is a strong proof that the growth investments is working. And if you go back to the first topic of our vision to build a new European leader in compostable payments, we are starting in The Nordics, but we’re building it with global capabilities so we can support our merchants across the globe and through their volume, kind of get more volume into other European markets and then expand kind of step by step.

But we have now started on that expansion journey, going from historically only focusing on Swedish merchants to establishing a sales office in Norway in August, and we launched in Finland in April, this year. So quite new in Finland, and we will also come back to that in the presentation. Our mission is to deliver a word learning experience for merchants and their customer journey. And I’ve been in the payments industry for more than ten years. I think there’s no one that does this really well, and I think this makes Cluedo unique that we can handle the customers of the merchants in a good way and send them back to the merchant they came from to build kind of loyal consumer relationships for our merchants.

And that’s a strong driver for the growth of kind of merchants that is is kind of shifting to us from from other players in the market. And our short term ambition is to ensure we become a local market leader in The Nordics within the three to five years. And if you take the growth we’ve shown in new volume signed so far with around 40%, if you extract extrapolate that forward, we will be a market leader within three to five years in the Nordic market. So to reach that, why are leading merchants choosing ClearOak? So first of all, our mission makes us quite unique that we’re focusing both on the merchant experience and the consumer experience of our merchants.

We invest a lot in this experience if you compare to the niche banks. We’re quite different from some of the other pay later providers that are moving more into building their own consumer experience with the marketplaces, price comparisons. We can have their own shopping experience, more competing with the merchants. While we’re not competing with the merchants, the merchants are our customers, and we we kind of we we develop their consumer journey to kind of guide the consumers back to them. And we do this through our product strategy, composable payments.

And that is leading to that the new product offering we launched last year with the clear checkout zero point zero that was launched during last summer. We now see a leading conversion in Nordics for our checkout. When new merchants changed us, they typically AB test our solution what they had before, and we see improvements everything from 4% to more than 30% in conversion increase for the merchants, which means more sales for the merchants. Secondly, we have upsell features that we help the merchants sell more. Our solution is modular, and then we’ve now built integrations to more and more platforms in The Nordics, which means that more merchants can comply with us quicker and easier than before, and that’s expanding our addressable markets.

We’re doing that also with a very partner driven and performance driven approach. As we spend a lot on kind of analytics and kind of product improvements to to maximize the performance of our solution, not only on conversion, but also uptime, upsell, as well as kind of driving kind of a good consumer experience that guide the the consumers back. And and the fifth kind of on that consumer experience, our kind of premium consumer experience, we see that that is building more loyalty with consumers and which is also driving kind of the customer lifetime value for our merchants and reduce their cost of acquisition. And sixth, if you combine all of these factors, when new merchants moving out with us, they typically say positive business case of kind of 10 to 20 x kind of return on investment on kind of the cost of changing supplier. And that is what leading to that we now see a big step up in volume.

Volumes kind of 2023 and 2024 was fairly flat. But since the new product launches we did last year, we now have contracted new merchants with an expected growth of around 40% when all of that volume is coming live on the platform if we compare it to last year. And what’s very good now is we also see that volume now materializing for real. So in q four, we had a 16% growth. Q one, we had 20% growth.

But if you look at March and April, we’re trending more than 30% growth, also including the kind of Easter period. So we we are seeing that contracted volume now kinda materializing into real processed volume on the platform. And SME is a a big driver of kind of the new volumes and and also expected income and kind of profit in the future. In q one, we saw the income from SME going from 1% last year to 8% of our income in q one. And that’s driven by kind of the the large growth in the merchant base, and we expect that growth to continue with the growth in the merchant base on the SME side.

And the reason Clidero is now very well positioned to win the Nordic SME market is, first of all, our kind of great checkout performance and that we packaged all payment methods into unified payments. This is something we have been working on for three years. We continue to develop the offering. But that that means that all new merchants can very easily go live with Clidor with all payment methods without working with multiple providers. We handle all the currencies, all the conversions, all the payouts, all all support.

So it it’s very simple to to work with Clero, which leads to that it’s a great experience for SMEs working with Clero instead of other providers. We are now quicker on onboarding, and quick onboarding is important both for us to generate revenue earlier, but especially for the merchant to have a simple experience. And with plug and play integrations to more and more SME platforms, we see that kind of not only the onboarding getting easier, but they’re also getting easier for merchants to to choose to upgrade to Clido. And we do that through partners. We’re partnering both with ecommerce platforms, but also different kind of agencies and and and kind of partners within the ecommerce ecosystem that is helping the merchants to to kind of develop their their kind of their web or their platform or their their peers also.

We have plug and play integrations not only to the ecommerce platforms, but also to CRM systems, BI systems, and their peer systems. That means that kind of clearly fits well into kind of the modern technology stack for kind of SMB merchants. So that is leading to the growth in merchant base, where we see a big step up from kind of during last year where we started to see accelerated growth with the new product launches. So we we’re still trending more than kind of 200% growth in in merchant base. And that’s still mostly driven by our solutions and kind of teams in Sweden.

Norway is taking off, but we expect Norway and Finland to be able to contribute as much as as Sweden when they’re fully up and running. If you look at it from a kind of a product perspective, we also made a few product launches and and partnerships in the quarter. So we announced that we launched two as a payment method in our checkout, which is a bit to bill pay later method. So historically, Clidro have been very strong on pay later for consumers, but we haven’t spent that much effort on on bit to bill, which typically is a bit more complex, a bit more risk, and and then quite different from from kind of consumer, kinda credit. So we’re now making a kind of international partnership with two, which is one of the leading players in this area with a global solution that support us in all our current markets.

So that is strengthening our offering and and basically kind of expanding our addressable markets to segments of merchants where we haven’t been a perfect fit before, but now we can address those merchants as well. And that’s also been a clear requirement for some of the kind of enterprise merchants that that joined Cluedo recently. Then we also, launched an integration in our onboarding with Bits Technology, basically a solution to streamline, optimize kind of our KYC processes. We also made a lot of product investments in improving our onboarding and configuration of new merchants in general. So we see improvement of onboarding times by by more than kind of or lead time for more than 50% since we launched this.

So we see a big step up in in kind of improvements on getting merchants live quicker with a better experience. And if we move on to to the topic of our Nordic expansion, our sales team in Norway started in April oh, sorry, August. Finland was in April. But Norwegian team that started in in August and now have had eight months. Typically, the sales processes are are longer, especially for enterprise, but we have already made merchant contracts with expected volume of more than 500,000,000 Swedish krona.

And if you take our kind of average profit on volume, which is more than 2%, then only with this volume, when that’s live and mature, we will be at the kind of breakeven in Norway, which is very positive. And a a strong sign that the investments to expand in Norway is is kind of a very positive investment. And we see also now that we’ve been live in in Norway for for a time that our hypothesis that the technology stack we built for Sweden is scalable also for for kind of Norway and then Finland and other markets. So even if we we kind of expanding into Norway, Finland, we’re building for Europe, and many of the partnerships we do is scalable in multiple markets. For Finland, the team started up fully in April, so it’s quite new.

But our accounting manager have been preparing for a few months. So we already signed an on border, our kind of first local Norwegian or, you know, Finnish merchants, and we we see kind of the product and experience is working. So so now we’re scaling up the kind of the sales effort to for people in in Finland. And for kind of on on the European ambitions, we see kinda when this model is is kind of fully working in the Nordics, we could also take it to new markets. But our approach is to to grow with our Nordic merchants and their European volumes to to get more experience in more markets and then kind of taking the steps into new markets after that.

But we have opportunities with larger European merchants that sell a lot into The Nordics where we have our own pay later offering. So also kind of in in some interesting discussions on those opportunities. If you take all of these combined, we within q one, we signed more volume in new contracts than 1,500,000,000.0 or 1,500, you know, million Swedish krona in the first row here. And we spent around 15,000,000 on sales, marketing, and expansion, if you include every every sales and marketing cost, which means that if you make the calculations on this, we have an average gross profit too over volume, which is more than 2%. But we have also announced previously when look at the business model that we have a ramp up of of kind of gross profit or income generation from the volume of around 50 to sixty percent first year, 85 to 90% last year or second year, and then a hundred percent third year.

And that is driven by the kind of the buildup of the loan growth because most of the revenue is driven by by part payments, and part payments are are split over time. So we don’t get all the loan book and all the value kind of day one. So you can see kind of the the example of the loan book kind of build up here, going up to full run rate in in kind of year three. And if you look at also, yeah, the other angle of it, kind of gross profit of a loan book, we we’re trending at around 14% the last year, which means that only the first year this volume is processed. We expect more than 50,000,000 in gross profit.

So the first year of the volume is live. The sales effort will have paid off itself. Then there is some onboarding time and so on, which means we we expect a payback of less than one and a half year. And but if you look at the full lifetime, we expect more than kind of five to 10 x if if kind of is if kind of you take the lifetime value over CAC, which is very positive. So more than five to 10 x return on investment in the sales effort that we now do.

And that is kind of one of the big kind of things you need to understand from a logical perspective to say kind of why is clearly expanding so quickly. We think we can establish ourselves as a market leader in The Nordics. We see good economics in it, and that’s why we’re going all in on expansion. If you look at the summary of this, we we have reiterating our guidance of kind of 15 to 30% income growth in the second half of this year when kind of more of the volume is live, and we see that building up the loan book. We see a significant volume growth momentum with this kind of more than kind of 39% volume from signed deals, that that’s a step up also from from previous.

So we see the momentum from a commercial perspective is increasing kind of month over month. We also see kind of a strong merchant base growth, more than three weeks compared to last year. So I think it was around 220% growth in in the merchant base. Of course, mostly driven by the SME, but you can also see kind of how the SME is kind of both taking a larger share of number of merchants volume and kind of leading to to income. And the Nordic expansion is above expectations, and we have a potential to accelerate further.

We’re still very new in Norway, and we’re just starting up in Finland. So overall, I think with Norway and Finland, we have around double kind of addressable market than Sweden alone with a a bit kind of less competition in the local markets given that the ecommerce ecosystem in Finland and Norway is not as international as it is in Sweden. And we’ve seen improved operational efficiency and digitalization, enabling our scalability primarily in the kind of the the onboarding areas. We’re now onboarding much more merchants and quicker than before. And we are capitalizing on our enhanced product offering.

We will now say that we have kind of market leading capabilities on kind of the topic of checkout performance and the consumer experience, and that is kind of primarily what is driving a lot of merchants to to upgrade to our solution. And with that said, I will hand over to to Carl, our new CFO, to walk us through our the financial update, and I will then come back for for the q and a.

Karl Lofgren, CFO, Clearro: Perfect. Thank you, Christopher. Well, thanks of all. First of all, it’s a pleasure to have joined Christopher and the Cleo team. I’m very excited to share some of the details, of my first quarter, the q one.

So starting off with the, overview of the quarter. As Christopher mentioned, the underlying business momentum is very strong, with a TPE growth of 20% in the quarter. Operating income grew by 2% driven, as Christopher mentioned, by SME sales, while the back book enterprise contracts, were a headwind, and I’ll get get back to with some more details on that, that we’re disclosing to give you a little bit more color on operating income growth. Moving to, credit losses. These were 11% higher than last year.

We see that underlying credit metrics are improving in our business, but this effect is offset by a number of reserve adjustments both in this quarter and comparison quarter last year. And as we mentioned in the q four report, we expect that these improvements, that we have made to the credit policies will also lead to lower reported credit loss ratios over time. Moving on to variable costs. These grew by 29%, driven primarily by TPV growth, but also impacted, by payment mix. As a result of that, the g p two decreased by 4.3%, versus last year to 64,000,000 Swedish crowns.

Fixed costs increased by 18% or SEK 12,600,000.0 versus last year, a change that’s driven by our investments in expansions, which I’ll get back to in some later slides. So in summary, in the quarter, we made an operating loss of 15,100,000.0 SEK, which is lower than q one last year, but roughly flat sequentially versus the q four on an adjusted basis. So moving on to our operational KPIs. So starting with merchants, as Christopher mentioned, number of merchants our our strong sales momentum is evident in the merchant growth of more than 200% year on year or 23% versus q four, which is evidence of the traction that our offering is having with merchants. As I mentioned, TPV growth was 20%, year on year, in the quarter, but as a result of more merchants choosing to also upgrade to Cleo as a provider for pay now solutions or pay now volumes, as well as the increased availability of Swish, Beeps, and MobilePay in our in our checkout, our pay later share declined, to 41% versus 48% last year.

And this can also be seen in the BNPL volumes, to the right, which declined by 9% year on year. Our blended take rate is also impacted by the shift in the in the payment mix, where we see a 14% decline year on year to 3.1% take rate. And the payment loan balance as a result of all of this was, roughly flat year on year. Now, we wanna share some more details on the operating income growth to clarify some of the key drivers. So this slide is is new and it’s and we’re disclosing a little bit more.

And it shows a bridge for operating income in q one versus the same period last year. And what you can see from this slide is that the first gray box shows the impact of our enterprise back book, I. Contracts we’ve had for a long time, where the reduced share pay later volumes from, one major enterprise merchant as well as a negative price impact from certain enterprise agreements were a headwind to growth with a year on year headwind on operating income of around SEK 5,000,000. But as we mentioned in the report, this impact will dissipate after the summer as it’s fully phased in in comparative quarters last year. More importantly, what’s clear in or evident in this view are the green boxes, where the strong impact of our new sales and new merchants signed since the beginning of last year contribute 7,000,000 SEK to operating income growth year on year, one from enterprise and 6,000,000 SEK from SME as Christopher mentioned.

We believe that this view can provide a little bit more clarity on why we’re confident in reiterating our guidance for operating income growth for the second half of the year as the headwind from the enterprise back book will subside, and we’ll see the full impact of the strong sales traction. Moving on to some details on SMEs. So this graph shows the contribution of our SME sales to operating income overall. And as Christopher mentioned, we’re now seeing the impact of the sales effort towards the segment with 8% of operating income in the quarter coming from SME merchants versus just 1% last year. And most of these new SME merchants are signed over the past six to twelve months, and we know that we only get 50 to 60% of the g p, two contribution in the first year.

So going forward, we expect to see the contribution from these recently onboarded merchants to grow further. Driving into costs. Our cost base has increased by 14,800,000.0 SEK, and the main driver, are the continued sales and expansion investments we’re making. Sales and marketing increased by more than 6,000,000 to 15,000,000 crowns in the quarter, as Christopher mentioned. D and A also increased by 5,000,000 to around 20,000,000 in the quarter, driven by increasing amortization of CapEx investments primarily in IT platforms.

Other operating expenses increased by 3,400,000.0, driven primarily by variable cost increases of 2,400,000.0, but also partially by investments we’re making into risk compliance and credit functions. And last but certainly not least, moving on to our capital position. As you know, we successfully issued a new tier two bond, of 70,000,000 second March, on terms that we’re very happy with. This can be seen in the graph to the left as a 3.2 percentage point increase to our available capital base, which now stands at 22.3% on a total capital own funds level. Sorry.

This gives a headroom to our total capital requirement of around 8.2 percentage point or a hundred and 82,000,000 SEK. When including the pillar two guidance from the Swedish FSA, the available buffer is in excess of five percentage point to around or more than a hundred million crowns. And looking at our funding base to the right, it remains strong and diversified. We’re drawing on deposits in both Sweden and and Germany as you’re aware of, and our liquidity position is also well above the, the requirements, within liquidity coverage ratio or the LCR of 316 and a net stable funding ratio of a 26%. With that, I’ll hand back to Christopher for some closing remarks.

Christopher Rutgersson, CEO, Clearro: Thank you, Karl. So if you look ahead, we will continue to focus on our growth acceleration. We are reiterating the forecast of 15 to 30% income growth in the second half of this year. And the reason for the range is that it it depends a lot on, like, kind of exactly when the merchants are going live. What is very positive is now that that many of the larger merchants in the pipeline are coming live quicker and quicker.

We also went live with some of the largest merchants we signed, like, Scrivat that went live actually this week, and also, two of the three brands within the Pet Power Grow group that we signed in in January is now also live on the platform. And we are expecting more than 39% volume growth compared to 2024 with all the contracts that we have signed so far, and we are increasing kind of a sales momentum month to month. So we expect this to to grow also going forward. We are accelerating both in SME and enterprise and building this into kind of a repeatable sales engine that we can take into more markets. So we are now setting up Norway and Finland based on the the learnings and the successful model we set up in Sweden.

We’re also kind of prioritizing growth, obviously, to to capitalize on these opportunities, and we see a very strong economics in that as as we showed. So we see more than kind of five to 10 x in lifetime value expected from the merchants we sign compared to all the cost we we spend on kind of sales and marketing investments. And we are also continuing to investing into our platform and our payment capabilities with great success from a commercial perspective from the product launches we did last year. And also some of the new enterprise merchants come with new requirements, so we continue to invest in kind of improving the platform. Like, we also showed here in the quarter with adding, for example, two as a payment method to kind of expand our kind of addressable market a little further.

And if you take our addressable market in in total, if you look at Clero two, three years ago, we were only focusing on enterprise merchants in Sweden. We’ve gone from from that focus to also expanding to SME, also expanding into Norway and Finland, adding new partners. And if you take on all of these factors combined, I think our addressable market today is probably more than 10 times as large as it was three years ago, which is also a reason we see kind of the accelerated kind of growth momentum where we reach a a better product market fit with more merchants in more segments in more markets. So our ambition is to continue to deliver a kind of a market leading experience for kind of our merchants and and their customer journey, and we think that will lead to our kind of lead us to kind of establishing a market leading position in The Nordics within the next two to five years. Thank you very much, and we open up for for the q and a.

Conference Operator: The next question comes from Airman Carrick from Carnegie. Please go ahead.

Karl Lofgren, CFO, Clearro: We can’t hear you, Herman.

Christopher Rutgersson, CEO, Clearro: Hello.

Armen Carrick, Analyst, Carnegie: The the first question I had was just on the kind of guidance for the income range, 15% to 30%. Because it sounds like some of these larger merchants are actually maybe being onboarded a bit ahead of expectation. Should we expect it to come more kind of the upper end of the range? And for ’26, I believe you said something about acceleration of the income growth. So so would that be to the upper end?

Or or how should we think about ’26 income growth?

Christopher Rutgersson, CEO, Clearro: If if we start with the of course, everything builds kind of around the business model. So when we process new volumes, that volume is kind of in turn kind of building up the the loan book. So if you take more than 90% of our income or kind of gross profit comes from pay later. So if you take our longest part payment, which is thirty six months, then, if you process that transaction today, we get the first revenue next month, and then we get revenue over thirty six months from from that loan book. So the more volume we process, that that volumes build up a loan book over time, and we get a full run rate after three years.

We get around 50 to 60% value in the first year of that kind of maximized run rate, and then we get up to 85, 90 percent the second year and a % kind of the third year, which means that we expect our volume growth to turn into income growth over time. And that’s why we say it will accelerate during the autumn, and it will accelerate also into 2026. And that full full kind of volume we are expecting onto the platform will turn into kind of income over time. So so that’s why we think we kind of we will come to kind of accelerate income in the second half of the year, and that will continue to accelerate into the 2026.

Armen Carrick, Analyst, Carnegie: Thank you. And just thinking generally about the ecom market, if we just focus on Sweden, it’s been quite sluggish if we look on market data year over year. How much do you see that impacting your merchant base? Or do you feel that you have any mix that kind of the overall market isn’t really indicative?

Christopher Rutgersson, CEO, Clearro: We have certain segments in the portfolio that’s growing very well, but we have also certain merchants that is not growing as well. And also, as Carl showed before, we have in the quarter roughly 5,000,000 impact on operating income from the back book enterprise portfolio, partly driven by pricing of certain merchants, but also partly driven by volume, especially in a few larger merchants or one large merchant. So so that is is definitely hitting us in in some segments. But we also see that kind of that kind of more growth in the existing portfolio than we see in in kind of the market in general. So not that worried about the the kind of the market momentum.

We also expect kind of the consumer demand to to kind of stabilize and increase when we see kind of the the economy kind of also kind of stabilizing a bit more than than before.

Armen Carrick, Analyst, Carnegie: That’s very helpful. And on that enterprise pressure from the back book you saw, could you give us any more color on that? What’s what’s driving that decline in volumes? Is it just that the merchant has less sales, or is it anything with regards to the contract with with Clero? And and also on the one where you’re you’re commenting about the pricing, have you changed pricing generally when you’re trying to win new contracts?

Is that something we should factor in on new volumes to an extent?

Christopher Rutgersson, CEO, Clearro: No. We haven’t changed pricing or pricing model in general. And we are kind of onboarding new merchant with expected profitability in line with or above kind of the back book portfolio in general. And, however, we had a couple of large merchants that been with us for a very long time that had kind of quite favorable pricing in in the kind of going back, which was renegotiated last year, which have an impact in the portfolio. Secondly, one of our larger merchants in the portfolio have have been a kind of bit declining in in volume in general, which is also kind of impacting us.

But we see both of these factors will impact the kind of the comparability until the summer, and then we get into kind of a more more stable phase going forward in the back book, which is kind of hiding a bit of the kind of the growth in from from new volume.

Armen Carrick, Analyst, Carnegie: Got it. Thanks. And then moving over to Ask Quality. If we look on the kind of breakdown you gave us, it looks like you have fairly high write offs in Q1 for charge offs. What’s driving that?

And how should we think about that going forward?

Christopher Rutgersson, CEO, Clearro: So what happened in Q1 is that we which actually happened started before, we have we’re always kind of optimizing our kind of debt collection and and solution rate agreements, and we changed the provider last year, which gave us the kind of more favorable pricing overall than we had before. But some of the debt sales that that we’re doing when so what’s happening is when when a consumer go to debt collection, we own the contract for three to four months. And and if the consumer haven’t paid by then, we sell it off to kind of a a predefined price. So we already know when and consumers go into debt collection, what we expected in losses from from that portfolio every month. But given that we changed provider last year, we had some of the debt sales that were supposed to happen in q four for practical, or operational reason got delayed over New Year’s and instead happened in early January.

So if you look at the kind of the debt sale kind of quarter over quarter, that was very low in q four, and and that ended up in more or less a double portfolio that was sold in in q one.

Karl Lofgren, CFO, Clearro: Yeah. And and this is also, I mean, partially driven by the the kind of challenging secretary debt market, last year with the turmoil in that market, which, you know, where we we limited our debt sales, for a while, and that resulted in kind of written off losses being norm lower than normal for for the for the kind of second half of or for the rest of, 2024, should we say, you know, in following this the turmoil in the spring.

Armen Carrick, Analyst, Carnegie: Okay. That’s that’s very helpful. And then just on your on the capitalization, the Ria is outpacing lending growth. Is there anything specific that’s driving that?

Christopher Rutgersson, CEO, Clearro: Sorry. Could you say the question again?

Armen Carrick, Analyst, Carnegie: Yeah. The risk exposure amount

Christopher Rutgersson, CEO, Clearro: Mhmm.

Armen Carrick, Analyst, Carnegie: That you have is outpacing the the lending growth. I can’t really break down the risk exposure amount that much, but if I would just put it in relation to kind of the lending book, there, the relation now you have much higher REA than what the lending book growth would suggest, Just all else equal if I would model it that way.

Karl Lofgren, CFO, Clearro: Yeah. There is not to my knowledge We

Armen Carrick, Analyst, Carnegie: can take it offline. Otherwise,

Christopher Rutgersson, CEO, Clearro: it’s Yeah. Yeah. We can take that.

Karl Lofgren, CFO, Clearro: Let let me let me get back to you on that one. I think it’s a good question. There’s no fundamental change in in, you know, risk weights or anything like that. So, let me let me get back to you on that one, Armen.

Armen Carrick, Analyst, Carnegie: Excellent. Thank you very much.

Christopher Rutgersson, CEO, Clearro: Thank you, Armen.

Conference Operator: More questions at this time. So I hand the conference back to the speakers for any closing comments.

Christopher Rutgersson, CEO, Clearro: Great. Thank you for today, and we look forward to accelerate our growth going forward. And we’ll be back for this topic next quarter.

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