Enento Group Oyj

OMXH:ENENTO

Earnings Call Analysis

Company Weathers Swedish Market Turmoil

The company faced a slight revenue decline of 0.9% amid strong performance in the Business Information Services which increased by 4.8%. However, the Swedish consumer credit volumes plummeted, driving the total revenue down. Despite these challenges, the company managed to maintain a solid adjusted EBITDA margin of 38.9%. They undertook effective cost control measures to counteract the sales mix shift towards areas with higher fixed costs. Even with the economic headwinds, the free cash flow remained steady, and the financial position is robust with EUR 8.7 million cash in hand. The revenue outlook for the year has been revised to between 0 to -1.5% growth due to the accelerated negative trends in the Swedish market, while keeping the adjusted EBITDA margin guidance between 36% to 37%.

Introduction to Enento's Q3 Results

Enento Group, led by CEO Jeanette Jager and CFO Elina Strahlman, under the orchestration of Arto Paukku, presented a mixed Q3 report. Leadership changes marked the quarter with Paukku taking the role of Chief Marketing and Customer Officer and maintaining Investor Relations (IR).

Strong Performance in Business Insight, Weakness in Consumer Insight

A key highlight was the Business Insight area, posting growth in Finland, Norway, and Denmark across almost all segments. In sharp contrast, Consumer Insight faced challenges, especially in Sweden where consumer credit information demand weakened. The net sales for new services, a critical innovation metric, remained substantial at 10% of total net sales.

Revised Guidance and Commitment to Targets

Reflecting upon these developments, Enento revised its 2023 net sales guidance to an organic decline of 0 to 1.5%, retreating from the prior 0 to 5% growth forecast. Nonetheless, the group retains its 2024-2026 financial ambitions, targeting a yearly average net sales growth of 5% to 10% and striving to enhance the adjusted EBITDA margin close to 40% by 2026.

Financial Resilience Despite Revenue Decline

While the quarter witnessed a slight organic revenue decline of 0.9%, the adjusted EBITDA margin remained robust at 38.9%, a testament to the successful efficiency initiatives and cost management strategies. This performance, however, was tempered by a decline in Swedish consumer credit volumes.

Advances in Compliance and New Services

Enento launched several new compliance services, capitalizing on its growth area in the regulatory domain. Notable rollouts included Sanction List and KYC Monitoring services in Finland. The group's compliance services are set for expansion, with offerings harmonized across Nordic nations to ensure a consistent customer experience.

Challenges in Consumer Lending and Strategic Initiatives

Consumer lending in Sweden suffered from heightened caution among consumers, a sluggish real estate market, and an exodus of lenders. Despite not losing clients, these market conditions have led to declining volumes. In response, Enento is developing strategic initiatives including open banking data services (PSD2) and fraud prevention solutions, aiming to bolster its portfolio and market position in the upcoming years.

Technology Transformation with Decision Hub

Enento's introduction of the Nordic Decision Hub in Finland represents a strategic technological leap. Designed to consolidate decisioning services on a Nordic scale, this hub promises efficiencies and shared competencies across markets. Active in Finland, the Decision Hub’s expansion into Sweden is under progress, signaling an ambitious step towards a cohesive regional platform.

Earnings Call Transcript 2023-Q3

[Arto Paukku, executive]

Good afternoon, and welcome to an Enento's Q3 results briefing. My name is Arto Paukku. And with me today, I have CEO, Jeanette Jager; and CFO, Elina Strahlman.We will start with Jeanette and go through the highlights for the quarter. And after that, Elina will introduce the financial highlights and then we follow by a Q&A session and you can type in your questions in the chat function in the browser. And we also have live audience here. So we will take the questions after Elina's presentation.But now let's start the show. So Jeanette, please go ahead.

[Jeanette Jager, executive]

Thank you very much, Arto. And actually, my first words will be about you. Now when it comes to Q2, we have had some changes now in our leadership team as Arto has now started as our Chief Marketing and Customer Officer, and also is keeping IR, which we are really happy for.Regarding Q3, our Business Insight business area continues to grow in Finland, Norway, Denmark and with strong performance in almost all areas in Q3, while Consumer Insight is developing weaker than expected due to the decline within consumer credit information in Sweden. Our innovating KPI new services continues on a high level with 10% of net sales. And our efficiency program is proceeding according to plan with a 65% benefits achieved on the run rate basis.In the beginning of October, due to a weaker than expected performance in our Consumer Insight business, we revised our 2023 net sales guidance to an organic decline of 0 to 1.5% from the earlier 0 to 5% growth guidance. Our adjusted EBITDA margin guidance remains unchanged and we are still committed to our long-term financial targets for '24 to '26. This includes an annual average net sales growth target of 5% to 10% and the name to expand the adjusted EBITDA margin to approximately 40% by 2026.Regarding our Q3 highlights, our organic net sales excluding Tambur declined by 0.9% at comparable exchange rates and was EUR 37.3 million. At the same time, margin remained on a high level of 38.9%. And that is thanks for -- thanks to, I would say, successful implementation of efficiency measures. Overall the development in Sweden was weaker compared to other markets and Finland, Norway and Denmark all had a strong quarter.Our underlying KPIs in regards of innovation, customer and employee satisfaction shows that we have the ability to capture good growth when macro environment improves as the share of new services continued to on the high level and was 10%. We did launch exciting new services during the quarter, but let's come back to those a bit later in the presentation. And our employee temperature is above benchmark on a high level, 7.7.The NPS from large and strategic business-to-business customers improved from Q2 and remains on a very high level at 47. So when it comes to our efficiency program, it is proceeding as planned, and around 65% of the efficiencies are already realized on the run rate basis equaling to roughly EUR 5.3 million. Main drivers behind the reduced -- is the reduced number of FTEs during Q1, the Sweden office move and the business process automate and activities.On the IT side, we have identified and acted upon optimization areas of licenses and server capacity usage. Moreover, and importantly, the application service transition has moved to handover phase which will be completed in phases now during Q1 and Q1 next year. And in addition to that, we are now starting up an analysis of our IT infrastructure consolidation with our external partner. And our target is to streamline our IT infrastructure so that we have one Nordic IT environment and one vendor.So in regards of business areas and highlights from Q3, as mentioned, Business Insight continued on a positive track. It's almost all business lines had growth during the quarter. Overall, the organic growth at comparable FX rates was 4.7% excluding Tambur. And the performance was particularly strong in Finland, Norway and Denmark.Premium Solutions and Compliance Services as well as Enterprise Solutions continued on a good level. And demand for both financial risk and reputational risk services remain strong and we anticipate this to continue as the uncertainty in all markets increases. Some of the highlights for the quarter include launching of Sanction List and KYC monitoring services in Finland. We will dive into the area of compliance after I've shared some information about our unique Apartment Information Reports launched in Finland.Six new reports are launched in the Apartment Information services, providing detailed information that our customers can use in core processes. The services are targeting real estate and banking verticals, where data is required in all transactions. There are attractive growth prospects as to data coverage is expanding and the service is already generating revenues.So this is to -- as a reminder, this is a position and growth-focused area visualization from our updated strategy, which was shared with you in our Q2 call. Compliance is one of the prioritized growth areas and we are already well-positioned to capture the rapid growth expected in this domain. We are continuing to invest in our compliance offering on Nordic basis.We are now harmonizing our offerings so that we can offer our customers across the Nordics a similar offering in each market. We have witnessed strong growth in Finland quarter-after-quarter. And during the summer, we launched the PEP and Sanction List Screening service in Sweden.The latest development is the KYC and Sanction List Monitoring Solution, which is now available in the Finnish market. And early next year, we will have our first offering launched also in Norway.Now a short deep-dive into our new monitoring solution of the Finnish companies. Automatic monitoring of the individuals behind the companies. Two services available, Sanction List Monitoring and the more comprehensive KYC Monitoring. We have a promising pipeline of customers. After easy setup, we automate the screening processes and flag in case any hits are found.So moving on to Consumer Insight. Consumer Insight had a challenging quarter, especially in Sweden as consumer lending volumes continue to slow down. There are a couple of reasons why the volumes are declining. The consumers are more cautious with their spending habits due to the high interest rates and overall inflation. The weak real estate market is impacting the mortgage volumes and then in addition to that in unsecured loans, we have seen lenders leaving the Swedish market and the volumes in the important broker channel has been declining.It is good to underline that we haven't lost any customers. The decline is connected to changed market condition in the Swedish lending markets.Development in Finland was more stable and direct to consumer services continue to grow. Overall, the decline net comparable FX rates was 7.2%. Some of the highlights include the launch of the new Nordic decision hub in Finland. We will talk about the hub more in a moment where also I would always like to share with you that we're also making progress with our strategic initiatives, PSD2 and Fraud, covering both Finland and Sweden.The PSD2 meaning, utilizing open banking data is proceeding according to our plans and we are expecting to launch new services during the first half of 2024. We are also doing a thorough pre-study of the future fraud offering and the plan is to have the first services out later in 2024. Now then as promised a little bit more of a deep-dive into the Decisioning Hub. Our transformation program is establishing Nordic shared capabilities as a part of our strategy to build on scale.The Decision Hub will be our Nordic solution for decisioning services. The design of the solution has been done with Nordic approach and this will also enable both growth, but also efficiencies, like decommissioning of local legacy and we can share also our competencies in all markets. Decision Hub is now live in Finland, and the development work is progressing in Sweden.Typically, the approach for the customer solutions in Finland has been a standardized service presented here on the bottom of the pyramid, where the advantage has been speed and time to market, whereas in Sweden, decisioning services are fully tailor-made and customized typically also with the long implementation project. With the new Decision Hub, there are alternatives for every single customer need from standard services to fully customized services.So now to conclude, we are advancing in the development of road maps and detailed operational plans. These plans are for executing our strategy across several growth themes and for digitalizing our sales and marketing activities. We are also making progress in uniting our ways of working as in September, we celebrated the milestone of having our development teams in all countries working in the same agile Nordic [indiscernible].Capacity and resource planning as well as driving cost efficiency especially in IT are very important for us. And so are the newly introduced services as they assist us and our customers in managing the risks and making better decisions. We do have macro headwinds, but we act upon what is within our control and that is to focus on our strategy execution, our transformation activities and to drive efficiency measures.And that was all from me. Thank you. I invite you, Elina, to please continue and put some more flavor of the financials and the numbers onto this.

[Elina Stråhlman, executive]

Thank you, Jeanette. Let's now focus on the financial outcome of Q3 and go through the figures in more detail. Starting from the key figures and highlights. So as Jeanette already mentioned, our net sales was EUR 37.3 million. And despite the good performance in Business Information Services, our revenue turned into decline of 0.9% due to heavy pressure in the Swedish consumer credit volumes.And the 0.9%, that is with comparable FX rates and excluding the impact from the discontinuance of the Swedish housing transaction Tambur business. In addition, obviously, the reported figures with reported FX rate continue to be impacted by the weak Swedish krona, also Norwegian kroner, but smaller extent.The continuing good development, as said in the Finnish and Norwegian business information side as well as good development in new services that was not enough to offset the decline in the Swedish consumer credit markets that even accelerated in September.Adjusted EBITDA, that declined as well. But even with weakening sales mix, the margin held strong at 38.9%. And this was obviously thanks to the efficiency measures we have been taking. We managed to keep the cost development in control and offset all cost increases and inflation. But what we couldn't mitigate and offset fully was the significantly weaker volumes and sales mix. Adjusted EBIT development, that was in line with EBITDA. And then when it comes to financial position and cash flow, those remain strong.Then going into more details with the revenue side. So starting from them Business Information and Business Insight and business area, which grew by 4.8%. And what's good to remember is that now Business Information and Business Insight business area includes Business Information Services for enterprise and SME customers, premium services as well as then real estate and compliance services likewise.And as said, this business area continued to develop well and grew by 4.8%. And this is excluding, again, the impact from the Tambur discontinuance. Tambur included the growth was at 2.1%.Business Information Services in Finland, Norway, Denmark continued to grow, but also in Business Insight, we struggled in the Swedish markets. But going back to Finland. In Finland, we saw good growth in SME side, Premium segment as well as Compliance Services with very high growth and also the Enterprise Services continue to develop well, thanks to increasing demand for risk management-related services.In Norway, business was also going strong. Premium services grew nicely and were supported by new services and also Premium business performed well, thanks to successful sales efforts. However, in Sweden, we struggled also in Business Information Services and only Premium services were able to deliver modest growth in the Swedish markets on the Business Insight. But where we obviously see the largest macro impact from the Swedish situation is in Consumer Insight, that declined by 7.2%.The consumer credit volumes, those are soft in both markets, but especially in Sweden where we experienced even accelerated decline of volumes towards the end of the quarter. And this is obviously due to lower lending volumes, higher interest rates, increasing credit risk. That is then causing also indirect impact in that sense that usage of broker segment is decreasing and some consumer lending players are even leaving the Swedish markets at the moment. And this development then turned also our revenue development as a whole into decline and this is why we also had to revise our guidance, revenue guidance for the full year.And good development in new services, introduction of the -- and implementation of the daily credit register services in Sweden, that continued, but was not clearly enough to offset the very heavy decline in volumes. In Finland, consumer credit business developed much more steadily. We saw a modest decline, but it was close to -- the overall development was very close to flat in Finland. So quite different situation in the Finnish markets that we are seeing at the moment. And we are not seeing similar trend when it comes to broker segment or consumer lending players leaving the market, so all similar.Then on the Consumer Insight, the smaller business lines, there the development was much more steady and the Finnish style of the consumer business even continue to grow.Moving then on and continuing adjusted EBITDA development. So adjusted EBITDA, that was EUR 14.5 million. And despite the fact that we get costs under control, the decreasing consumer credit volumes and weaker sales mix. That then turned our adjusted EBITDA development into decline, with comparable FX rates and obviously then on top of that, the Swedish krona had significant impact on the profitability.However, thanks to the profitability improvement actions, as said, margin remained on good strong level at 38.9% and we managed to offset the cost inflation and cost increases with efficiency actions.Looking at the EBITDA development in more detail, the negative sales mix impact that can be firstly seen in the materials and services, which basically are our data acquisition costs. And despite the heavy revenue decline, those costs remained flat because the decline in sales took place in areas where we have high share of fixed data acquisition costs. Whereas then in areas where we carry variable data acquisition costs, the developments was either close to flat or even increasing.Then again, on the personnel cost side and those decreased by EUR 200,000 and this is following the savings actions and restructurings taken, but here, the positive impact was then partially offset by the salary inflation and also higher incentives compared to prior year.Successful saving actions and cost optimization measures. Those are also visible in other operating expenses that declined by EUR 100,000. And behind this decline, we can see a mix of permanent and temporary cost decreases, but also negative impacts coming from the weaker sales mix in the form of increasing sales commissions as well as then obviously cost inflation impacts.We also had some EUR 100,000 incident-related compensation paid during the quarter related to the Finnish incident and services being off for 1 day during the summertime. Then finally, production [indiscernible] decreased by EUR 400,000 and this is a result of portfolio optimization measures, but also especially is related to the focus on IT efficiency measures. We have currently ongoing IT transition of maintenance and development activities in Sweden. So that clearly impacts now our focus and efforts in this area.And then as said, what comes to the reported figures, very weak Swedish krona as well as Norwegian kroner impacted the reported figures negatively.Free cash flow. Free cash flow development was good. Free cash flow was EUR 7.1 million and declined somewhat compared to prior year, following the decline in profitability and timing of receivable payments, but on year-to-date level, we are basically flat with the free cash flow development. And when excluding the items affecting comparability related payments, adjusted free cash flow on a year-to-date level even has somewhat increased.And then finally, financial position. As said, that remains strong. We have some EUR 8.7 million of cash at our hands on top of unused credit lines. Net debt to adjusted EBITDA, that was 2.4, so at the same level as prior year and clearly below our maximum set level of 3. And then while cross investments already mentioned, somewhat lower than prior year, following especially the IT efficiency-related activities and focus on those at the moment.And then what comes to financial outlook. As Jeanette said, we have kept our adjusted EBITDA guidance. Margin guidance as is, we expect to be somewhere between 36% to 37% with adjusted EBITDA margin for the full year, but on the revenue side, as said, we had to revise the guidance following the situation in Swedish consumer credit business, where the negative development with macro and volumes even accelerated in September. And therefore, the revenue expectation for full year is between 0 to minus 1.5% compared to prior year.Thank you. This was all I had to say about the figures. And now Arto, I guess it's time for some questions.

[Arto Paukku, executive]

Yes, absolutely. So let's kick off with the questions from the audience. So Roni, please go ahead.

[Roni Peuranheimo, analyst]

I will start. Roni Peuranheimo from Inderes. I was wondering have you seen any effects on the interest rate cap yet in Finland in your demand at this point?

[Elina Stråhlman, executive]

No, not really. And we do not currently expect such actually either. There is a bit difference in the legislation that we had previously and the current one. So previous 20% cap was actually including the market rates. So the Euribor rate, whereas the 15% caps is excluding the Euribor rate. So when Euribor is at 4 plus something, it means that the actual rate currently is close to 20%. So in real terms, there is currently no difference, actually.

[Roni Peuranheimo, analyst]

All right. Got you. You mentioned in your report that you expect the level of interest rates to affect your demand in Consumer Insights. If interest rates development stabilizes, but they stay on this level, do you still expect to see the volumes of your consumer credit information services to bounce back where they were before? Or do the interest rates need to kind of come down?

[Jeanette Jager, executive]

I would -- I can start and then you can continue.

[Elina Stråhlman, executive]

Yes, please start.

[Jeanette Jager, executive]

Well, as we see it now, what we see in the development in the Swedish market is actually the consequence of a combination of different aspects. One is the consumer consent about the Swedish macro is weak. So what we see is that we have cautious consumers in Sweden and they are cautious about spending in general.Of course, that might stabilize if you see that we know how the interest rates will stabilize forward. We don't know that yet on the Swedish market. So that is one thing.The other thing is that we most probably will need to say that the interest rates not only stabilize, but also come down somewhat in order for this market to again, become attractive on the level it has been. Because what we have said here now and what we wanted to share with you is that we have not lost any customers.What we have lost is market volumes. We have lost -- some lenders have left the market. And of course, that means that in order to then come back to the volumes that we have seen, we will need to know -- see both consumer consent, which is stronger and also that we would see that the market would be more attractive again when it comes to margins for our customers.

[Roni Peuranheimo, analyst]

Yes. That makes sense. One technical financial question of the change in net working capital was strongly negative in Q3. What was behind this? Was it mainly due to timing effects or...

[Elina Stråhlman, executive]

Yes, it was mainly related to timing of payments. Part of the receivables where then the payments were postponed to the next month. So due to the fact that last day of the month happened to be in weekend, so.

[Kimmo Stenvall, analyst]

It's Kimmo Stenvall from OP Markets. A little bit broader question on the CapEx and on the EBITDA margin. You have an EBITDA margin target of 40% in '26. I was curious about how is CapEx developing in '24, '25 and maybe also '26? And what is your ability to generate cash from EBITDA? So we expect to keep the CapEx level so high that they are currently or it will come down in the coming years?

[Elina Stråhlman, executive]

Well, I can start. So what we have said in connection with the strategy is that our aim is to have CapEx level somewhere between 7% to 10% of revenue. So that is what we have told regarding that period. Obviously it is a combination of how the macro environment develops and how it impacts our revenue, how it impacts our cash flows. So obviously we also aim to keep a strong cash position and keep strong cash flows.So it is then a matter of how our business and how our macro also develops as a whole. But what's good to notice that what comes to CapEx levels, obviously, we do have a lot of growth initiatives that we see highly valuable to invest in, but we have, at the same time, taken efficiency measures to actually transition our Swedish maintenance and development operations to nearshore-offshore locations, which means that the unit cost for development activities will be lower in the future.

[Kimmo Stenvall, analyst]

Okay. So the CapEx level will stay at roughly at the same level that they are now?

[Jeanette Jager, executive]

Yes.

[Elina Stråhlman, executive]

Yes. That's what we have so far.

[Jeanette Jager, executive]

Yes.

[Elina Stråhlman, executive]

So far set.

[Arto Paukku, executive]

All right. Thank you, Kimmo. Then we have plenty of questions online. So let's kick off those. And some of you have already answered at least somewhat. But let's kick off with one concerning Business Insight and the momentum you mentioned in Finland.So the question is that, is the momentum similar in Finland and Sweden? Or is the growth driven by one country? And I guess it is.

[Jeanette Jager, executive]

Yes. It is. Yes, we have a high momentum in Finland. We don't have the same momentum in Sweden, to be clear. And it is both in Enterprise and Premium and in Compliance area, we have this momentum in Finland.

[Arto Paukku, executive]

But also in Norway and Denmark.

[Jeanette Jager, executive]

Also in Norway and Denmark, to the extent we have the same services.

[Arto Paukku, executive]

Yes. Exactly. Good. And then about the CI, credit information situation in Sweden. So a detailed question. So is it merely because of the consumer loans or the mortgages that drives the softness?

[Jeanette Jager, executive]

Yes. Let's put a -- mortgage, yes, and that one was consumer loans. So yes. And both of them. I mean, we all know that we already have, let's say, we have a real estate market, which is very much on -- it's not moving actually. So in that sense, volumes are not coming from the real estate market. Volumes are not coming either from any kind of consumer credit loans on top of that. So yes, it is connected to both patterns of consumers, but it's also connected to that the market as such has lost also a couple of lenders on the market, who has actually closed during this period in this year.So we also see then in addition to that, lower volumes in the brokers, et cetera, et cetera. And so I can continue. There is lower everywhere.

[Arto Paukku, executive]

And do you see that the situation will stabilized now during Q4 or will it last longer?

[Jeanette Jager, executive]

I think that we can expect that this will continue. Yes.

[Arto Paukku, executive]

Yes. Anything, Elina, you want to add or...

[Elina Stråhlman, executive]

Yes, I can just comment that what we saw in September declines was that roughly half or even a bit more than half of the decline that we saw came from the less usage of the broker segment due to higher credit risk. So it's not financially reasonable anymore for players to use broker segment because the credit risk has increased.And then on top of that, a couple of players leaving the Swedish market fully on consumer lending side. So that was the driver behind -- biggest driver the development.

[Arto Paukku, executive]

And there's one question still connected to this area. So has some of these lending providers or lenders, have they been our customers?

[Jeanette Jager, executive]

Some of these lending providers?

[Arto Paukku, executive]

Who have left the market in Sweden?

[Jeanette Jager, executive]

Yes, they have been our customers. Yes. Absolutely. So yes, again. I want to underline that we haven't lost any customers to competition. What we have lost are lenders, customers of ours who have left the market.

[Arto Paukku, executive]

Right. Very good. Then let's move on a bit to the visibility towards '24. So what kind of inflation are we seeing and should we expect some tailwinds from the efficiency program still going forward? And is it possible to keep the costs broadly flat versus the level we have seen this year?

[Jeanette Jager, executive]

Yes.

[Elina Stråhlman, executive]

Do you want to start [indiscernible]?

[Jeanette Jager, executive]

Yes. Well, I can start. I mean, to start with, we are very much focusing on how we can move forward and execute on our efficiency program, which, of course, is very important during these circumstances. And in addition to that, we continue to also find new operational activities on a continuous matter. We are, as we have mentioned also earlier, focusing a lot on how we can get price increases into place. We haven't had contracts. And as we know, we have a fair amount of revenue connected to our strategic and large customers.And those contracts, we are now putting the index into. It will take us a couple of more years before we have them at place. Still, and I will actually hand over to Elina right now to get the conclusion of this. What we see is that we are actually doing well with the efficiency program, as you heard today. We are doing well with our operational efficiency and we are also slowly progressing with the price increases also getting into place.Now you can put that into numbers also as conclusions.

[Elina Stråhlman, executive]

Yes. So of course not guiding to '24 yet, but our overall aim is to, as far as possible, mitigate cost inflation and increases with both efficiency program and pricing actions. Of course, what then remains a big question mark is the macro environment and volume and sales mix development. And obviously, if we continue to see significantly weaker sales mix compared to, for example, early last year and weakening volumes, then, of course, those impacts are difficult to offset.

[Jeanette Jager, executive]

Yes.

[Elina Stråhlman, executive]

Then what comes to efficiency programs, still as you discuss -- asked on that. So the next bigger item that we'll start realizing next year at some point, Q1, is the application maintenance and development transition that is currently ongoing. Transitioning that work from Sweden to offshore-nearshore locations. So yes, we continue to have efficiency activities ongoing that will also positively impact next year's cost levels.

[Arto Paukku, executive]

Good. Thank you. Then about -- still about sort of the country differences. So why do you see that the Business Insight situation in Sweden is not as strong as in Finland or Norway? Is there something that you can...

[Jeanette Jager, executive]

Well, actually, I wouldn't say that it is not totally clear, actually, and we will see how this also develops. We do have some changes ongoing which might impact this. Of course, we also know that when it comes to Premium, I would say that in general, we have a media landscape, which is actually also I would say, is also being less strong under these circumstances if you also compare to the media industry. And we also know that we have probably the highest rate of consumers, which are actually looking into any kind of change in all digital services that they are buying.So it means that it's also something which our consumer area is having the consequence of. So I would say this definitely -- it has definitely been a macro that has been hurting all over the place. In addition to that, we're also doing some changes in our activities within the Premium side.

[Arto Paukku, executive]

Good. And then let's continue with Sweden. And our latest view on the governmental proposal of having a central credit register and the impact that it might have on our business.

[Jeanette Jager, executive]

Yes. And the question is?

[Arto Paukku, executive]

The question is that can you elaborate on the latest?

[Jeanette Jager, executive]

Yes, on the latest.

[Arto Paukku, executive]

Yes. So is there any news compared to, say, Q2?

[Jeanette Jager, executive]

I wouldn't say there aren't actually because we are still in the period right now where there is -- where they're gathering information and conclusions and their dialogues in the market. So it hasn't really changed anything. We are still looking forward for the next step would then be, what are the conclusions in regards of the proposition of a license model? So...

[Arto Paukku, executive]

Right. So the question here was about a central credit register, but that is not on the table I assume?

[Jeanette Jager, executive]

Yes. That is actually not on the table. What is on the table is a license-based as of now. Then if you see a central, that has been also the choice in some countries. So why it might come on the table here is because there might be thoughts whether a license-based or central will be the final version or no one version will be -- too early to say. This is still very much somewhere in the horizon.

[Arto Paukku, executive]

Good. Yes. And then let's talk about the financials a bit and the CapEx level. So this year, the CapEx level has been notably lower versus '22. And should that be something that we expect or for '24 or Q4 and the acceleration in '24? So are we expecting any kind of catch-up? But I guess that you already answered that pretty much to Kimmo's question as well.

[Elina Stråhlman, executive]

Yes. So currently, we are not looking any major pickup on that. And as said, we are also getting into lower unit cost base. So that's the current outlook.

[Jeanette Jager, executive]

And may I add to that one. When we're looking at Q4 now on the CapEx, we're having a lower CapEx spend also due to this transition going on, which is very much in Q4. So in that sense, we should not elaborate Q4 for further because we will actually pick up again when the transition is done.

[Arto Paukku, executive]

Right. Very good. Then a question regarding Finland. And the question is that based on the recent news flow, consumer lending volumes in Finland have been accelerating in Q4 despite the new interest rate cap. Have you seen this providing tailwinds to your business? And I guess you already answered that question as well.

[Elina Stråhlman, executive]

Yes. Well, so far, as said, the interest rate cap is not actually impacting the real interest rates currently. So therefore, it's not either bringing any negative impacts with the markets. What comes to the current trading, we have seen similar development as we have seen in latest months. So basically, no change so far.

[Arto Paukku, executive]

Yes. Very good. Then a question regarding the real estate-driven business for '24. So especially in light of the recent decision to scrap the first-time homebuyer transfer tax obligation in Finland, so what's our expectation for our real estate-driven business for '24?

[Jeanette Jager, executive]

I'm not actually sure I am able to answer that one with a good answer. Do you have the background enough to feel confident about that one?

[Elina Stråhlman, executive]

No, not that one in specific. But overall, I mean, like our real estate business is, well, clearly, less than 5% of the group revenues. Of course, the real estate business development has been very low in general in recent quarters due to the situation in the housing transaction market. So in that sense, we do expect somewhat more positive development in that side. And also you mentioned the new --

[Jeanette Jager, executive]

Services.

[Elina Stråhlman, executive]

-- new services. So -- but nothing specific on this one.

[Arto Paukku, executive]

Yes. Very good. Then about the Q4 outlook. So this year's net sales guidance implies that our Q4 organic growth will be weaker than in Q3. And why is that?

[Jeanette Jager, executive]

Well, I would say that it is due to that we see that the pattern that we now got in Sweden in September is continuing. And we expect it to continue due to the reasons we have mentioned that this is to see for some extent of period forward.

[Arto Paukku, executive]

Yes. Very good. I don't think we have more questions online. One more round here. Gentlemen, do you have any thing to add? No? All good. So that I guess concludes the call. So thank you, everyone, here and online and we wish you a really nice weekend.

[Jeanette Jager, executive]

Thank you.

[Elina Stråhlman, executive]

Thank you.

[Arto Paukku, executive]

Bye-bye.

[Jeanette Jager, executive]

Bye.

[Elina Stråhlman, executive]

Bye.