Gofore Oyj

OMXH:GOFORE

Earnings Call Analysis

Earnings Call Transcript 2022-Q4

[Mikael Nylund, executive]

Welcome, everyone. Good afternoon. This is Gofore's second half and full year results presentation for 2022, starting live now. My name is Mikael Nylund. I'm the CEO of Gofore Group. And as always, with me, I have Mr. Teppo Talvinko, our CFO here, together with me.

What we'll do today is that, first, we'll look at the highlights from last year. After that, Teppo will take over and guide you through the financials. Then we go back to me, and then I'll go through the outlook and our targets together with you. And last but not least, we will have a look at our Board's dividend proposal. For questions during the presentation, you can type them on the streaming platform. Emmi from our Investor Relations will then take them over from there, and we'll see them here on our iPad and we'll take your questions at the end of the presentation. So go ahead and ask your questions during the presentation, we'll be able then to take them at the end.

But okay, let's dive in. And as many of you probably have already seen, we released the numbers, it's been an excellent year for Gofore. Gofore is a growing and profitable digital transformation consultancy and the growing and profitable part with again and very successfully for year 2022 demonstrated. We took huge steps forward and ended the year with around 1,300 employees in 19 locations across Europe. And our growth and profitability improved both for the full year, and for the second half of the year. So yes, we are extremely happy about the year that has gone.

As said, we continued on our growth track, a very good track record we have from the last 10 years, and I'm so happy that we can again show you that -- everybody that we have the ability to be consistent in our performance, especially, of course, for the '22 year, we want to highlight the excellent organic growth at 32%, a very good improvement over the year '21.

Profitability improved towards our target level of 15%. And that's, of course, important in many ways for us, demonstrating our operational model scalability and so forth. We'll dig deeper into the specifics of the profitability very soon in the presentation. And yes, of course, we are looking to continue growth and for this year and after January, our last 12 months net sales is at EUR 160 million, which is again a good leap forward driven by the eMundo acquisition that we did at the start of November. And the continued organic growth that carries over from the good last year.

The highlights for last year, in addition to the growth and profitability, are that we were so successful in recruitment. We demonstrated, I think, very well that we are able to -- in this bigger size class also keep up the organic growth in terms of recruitment, in terms of strong employer brand, operational excellence in recruitment. Our profitability relies on customer prices and salaries being -- going hand-in-hand in development, and that was -- in those terms, the year was very good also for us. I'll guide you a little bit deeper into that next.

And for 2022, of course, 2 important events for us were the acquisitions of Devecto from the beginning of the year that has developed very good and as expected. And of course, the big step in the German market, in the DACH area market for us when we acquired eMundo in November as said. Next, I'll dig into this a little bit deeper and I said, then we'll go over to Teppo and look at the numbers in more detail.

For us, in the consultancy business, of course, the changing environment in terms of inflation, which is nothing new for us in salary inflation side, but other cost inflation is something new, is something that we needed to keep a good look on and customer price development is something that we have been paying a lot of attention to, and I think U.S. investors will do that, too.

We had a good year. Customer price change on an average was [ 3.5% ] over the year. So a little bit over what we had set our targets and expected, a very good year. And the average salary change was plus 2.9%, much lower than the year before. And here, we have to remember that average salary change can be divided into 2 parts basically. It's about salary raises for the people that already work at Gofore.

We want to be a good salary payer, and we want to be attractive as an employer, of course. And salary is a big part of that. Our salary raises to the people that we already have onboard. We're on a healthy level, I think, 6.2% during the year. But the other part of the equation of average salary change is the new employees. And that's where we did a good job. The hiring kept the average salary change at a good level compared to the customer price.

In terms of billing rate, we've had a pretty good year, a steady year, no big bumps along the road there. So that, of course, supports also very much the profitability and something that also supports the profitability that even though subcontracting share grew a little bit, we also managed to improve on the subcontracting margins, a couple of percentage points, which was a very good number for us also. So all these parameters behind the profitability developed in a good way and into a good direction. So that's why profitability was on a better level than the year before.

On the customer side, a couple of noteworthy things on this slide. Our strategy of developing bigger customer relationships, deeper customer relationships, becoming a strategic partner for our customers in terms of numbers, again, took big steps forward. Our customer size grew significantly. We, again, had a good number in returning customer share of net sales, even with the very high growth numbers, 82%. We have managed to keep the customer satisfaction at a very high and above the target level. And our brand has gained awareness among our customers, which is, of course, also an important part of the equation.

Private sector customer net sales growth was 64%, whereas public sector customer net sales growth was at 33%. So the strong growth was in part driven by our strategic target of deepening our relationships with especially the private sector customers. '22 was also a year when business outside of Finland grew faster than business in Finland, which is something that we've been looking to achieve and we did it a bit ahead of our own schedule last year, 77% growth from outside of Finland, which was mostly organic growth because eMundo acquisition was so late in the year. In the report that we released this morning, we have a couple of good customer cases and references that I urge you to take a look at. We won't go through them in this presentation.

Organic growth was high. It's very strong and for us to be able to do that, we need to be very good on the people side of things. We need to be attractive as employers, both to people outside of Gofore so that we can have success in recruiting; but also to people, of course, that already are [ Goforeiers ] so that we can keep down attrition. And in both, we were again successful. We recruited 377 people during the year, which is a huge improvement over year '21. Our attrition rate decreased from 17% the year before to 12%, which is a little bit closer to our target of being below 10%, but not quite there yet. So we still have things to do. And both of these are, of course, affected by our employee experience, measured by employee Net Promoter Score and the employer brand that we had. We won awards for also during the year. So very good development here.

Next, I'll give over to Teppo who will take you through some more numbers from '22.

[Teppo Talvinko, executive]

Thanks, Mikael.

Okay. Growing and profitable, that's what we have been at least 20 years now, and it's good to have that way. So what are the key factors behind the excellent growth that we have been showing now in the recent years. So of course, on the demand side, we are on the right market. So digital transformation market is growing really fast and that's our home base.

So taking a look at, let's say, more internal things. So I would say that we have a right kind of offering. So end-to-end offering that we have been building to recruitment to acquisitions from, let's say, changed management in lead to quality assurance and verify. All these things are important, they give us -- they bring us opportunities kind of a cross-selling platform.

And of course, subcontracting, which is an ecosystem thing for us, giving us flexibility and in this kind of a market situation, scalability. When you have a good demand, you need to -- ability to respond -- response, and we were successful there. We were able to respond organically. As Mikael said, a strong employer brand helped us in being very successful in recruiting. And also, we had a really efficient onboarding process. So all these were supporting the organic growth.

If you take a look at the right-side table there, you can see that the private sector growth has been really, really rapid. And that's -- I would say that it's pretty much because of the latest M&As that we have carried out, CCEA; [indiscernible], today it's [ Verify ]; Devecto; and the latest, eMundo. All these are boosting the private sector sales and giving more opportunities in end-to-end offering and cross-selling.

Internal sales have been growing rapidly. And I would like to point out that the number of big customers have increased and that has also happened in our international customers. So it has boosted the international growth. And of course, latest acquisition in Germany, in Austria, DACH area that will bring us further on internal national business.

Some takeaways from sales distribution. So you can see that the private sector that has increased its share. So going back a couple of years, we had a share of 26%, now it's 40%. And still, we have been able to keep the strong position in public sector. So that's really delightful. Top 5 customers. I would say that it's a positive trend. So we have come down from 2020, 42%; down to 30%. But as Mikael said, the number of big customers have increased, and that's giving us a broader shoulders, more opportunities and supporting the top line growth.

Growth does not bring profitability always along. But in our case, it has. So we discussed about the top line we discussed about the big customers and success there. But if we look at under the hood, I would highlight some things there. I think the efficient onboarding in this situation, especially 2022. That has been a really a key factor here. So we had a really short lead time from, I would say, [indiscernible] to the customers. And that helped a lot. We have a lean operational model. We have a really good understanding about the customer needs that we have, especially the public sector is really strong. So that has helped a lot. We have been successful in M&As and really positive trend throughout the year in billing rate. All those things have supported the really good development on a profitability side.

And then as Mikael pointed out the good balance between the customer prices and salary development, they have balanced nicely. It's [indiscernible] that has been also one of the key factors in terms of profitability. Also, I would like to highlight that the last quarter, Q4, that was operationally very strong. Adjusted EBITDA was 16.5%, a really, really, really good number.

Okay. A few words about the quarterly performance. So there is a certain seasonality in our business, and that's good to keep in mind when -- also when looking ahead and not all quarters are alike. We have a Christmas time, usually, the January is kind of a slow start there. We have a summer period and the August is kind of a month for restart. And all these things, it's good to keep in mind that they are affecting to the seasonalities that we have in our business. Anyway, you can see that there is a really positive, really good trend in organic growth, starting from 8% in the first quarter of 2021 going up to that 30% level. This year, January, that was -- I would put it in a way that it was okay start to the year. Then, of course, February winter holidays in Finland, March, a long month. So it's really exciting to see that what kind of figures we are having ahead of us.

About financing, you can see that the cash position was extremely strong. But that comes along with really strong cash flow. It's generating a quite nice strong balance sheet, a negative net debt interest-bearing debt, really strong equity raise. All that good profitability, strong cash flow that makes us a quite a good partner when it comes to the financial market when they want to finance us or we probably need a financing for further acquisitions. So basically, we have a really good situation in terms of financing.

Today, when the money has a healthy price, I would say, when the interest rates have increased from negative to positive figures, I would say that that's actually good for us. We have a hedging rate of 70% of our loan amount. And what does this mean? It means actually that we are well hedged towards any changes in the interest rate market. In the annual figures, we have booked EUR 0.7 million positive in [ overseas ]. So it's a valuable assets, but of course, we want to keep it because it's hedging the [ positioning ]. And then if you take a look at the financial expenses in profit and loss statement, you probably wonder why the financial expenses are EUR 0.8 million. So keep in mind that half of that, EUR 0.4 million, is related to noncash flow calculative interest arising from the earn-outs in our latest acquisitions. So what does this mean? It means that we are well hedged towards any changes in the financial market.

Thanks, Mikael.

[Mikael Nylund, executive]

Great. Good.

I want to remind you, if you have any questions, for example, on the financial, you can already type them on the platform, and we'll take it at the end.

Now I'm going to go through the targets and the outlook that we have on the market for this started year and beyond, of course, also. Before doing that, I want to take a little bit or step back and look at the targets that we set for ourselves at the end of 2020 when we came out with our growth strategy of then and the related targets. What we said then is that we want growth in Finland. We want international growth, and we want to continue what we already then called our disciplined M&A practice. And that's exactly what we've done. That's -- and the targets that we set back then, we have outperformed.

So we had an annual total growth target of 20%. Last year, as said, we did 43%. We had a target of around 10% organic growth, last year was 32% actually. We have an old figure on this slide. It was 32% actually. We were set out to build a good portfolio of customers in the private sector market, duplicating the success that we had already earlier managed to do with the public sector customer, becoming that strategic partner, becoming that long-term partner for them and the growth numbers for the private sector show that. We wanted to increase the amount of business that we do from outside of Finland. If we look at the pro forma figures for last year, it's already at 15% at the end of '22. So we have taken very big steps on that road also and of course, looking to continue that.

And partly because of this, partly because we outperformed our own targets. We had the confidence of now that we came out with our new targets to hike our targets a little bit, even though there's a lot of, of course, uncertainty also about the outlook now in the market. So what we did was hiked our growth target and our long-term financial targets are now set at 25% annual growth, 15% profitability measured in adjusted EBITA. And our dividend policy continues to be the same. We want to pay out 40% of -- at least 40% of our annual net profits in dividends.

And to do this, we have also devised a new or updated growth strategy. No need to come up with something totally new because as is evident, the strategy that we have is basically working. But what we want to improve on is that we want to have a stronger industry focus in our work. We want to build on the strong position that we have built in the customer segment that we call digital society, public sector and all those private sector players that also play a part in building that digital society for everybody -- every one of us for a more digital and better everyday life for people, for all of us and for businesses.

And we want to especially strengthen and keep developing the offering that we have for the customer segment that we call intelligent industry and become a viable strategic partner for those customers, those big customers in that strategic customer segment for us. You can learn more about the strategy that we have and the other parts of it also by watching our Capital Markets Day stream from the beginning of this year, you'll find it on our website.

The third avenue to growth deserves to be mentioned. We will be continuing work with mergers and acquisitions, I think that we have learned quite a lot about and improved on. And for that, of course, it's very important that like Teppo. Teppo explained, we have a strong balance sheet. We have the means to do more on that side.

From the M&A track, still, just a quick look on the history, but especially on last year, Devecto and eMundo both developed in terms of growth, pretty much expectedly last year, Devecto grew 30%, eMundo had a chance to grow 17%, something that we -- we hope we can together improve on by finding synergies in customers and other parts of the operations for this year and especially beyond then.

Outlook-wise, the situation is a bit tricky. And this is something that we, of course, we have said for a number of years now for obvious reasons. A year ago, it was a situation where we had a war broken out in Europe, something that we -- of course, everybody suffer from still. The year before and the year before that was the pandemic. Now it's the macroeconomics that give us some concern, of course.

The good thing here is that outlook for digital transformation consultancy in the mid and long term, we think, remains extremely strong. And if anything, it has strengthened by these crisis that we have gone through. In the short term, on the other hand, we have the macroeconomic climate that does give us some uncertainty. And that is something that will affect, to some degree, demand. And that's the -- I think the overarching trend for that we look for during this year, and it will affect the other areas of our outlook, of course, accordingly. And I'll go through the public sector outlook, the private sector outlook and the talent market outlook separately here.

So to begin with the public sector. Sometimes people ask that isn't the digitalization already very far ahead in Finland. This is something that is almost done. That is not by any standard, I think, through we have just taken the first steps in digitalizing society here in Finland also. There will be a market -- there will be a growing market there, also looking forward.

Looking at it in the short term, we have a good momentum from last year. That carries on to '23. There are a lot of big projects and a lot of development that carries on. We do have the parliamentary elections in Finland in April '23, as we have mentioned earlier. And learning for experience, it's fair to say that it's very expected that there will be a slowdown -- we think that a slowdown period has already started in tendering activity during the election time that is something that is normal. It will not, however, have an effect on ongoing projects and development. It will have only an effect on new starting projects.

A slowdown in the whole digital transformation, our IT services' market will have some kind of effect also on the public sector market, especially short term in the higher risk of price competition when supply is moving from private sector side to public sector side if that happens.

Structural reform in especially social and health care services here in Finland continues, the regions that were formed for this reform have taken over the services from the beginning of this year. We have a strong position there, but that's still like a game that hasn't been played out to the end yet. We have a lot of customers that we need to build a long-term framework agreement situations with, so something that we put a lot of effort in.

We have also one bigger customer agreement that is coming to an end during this year and will be put out to tender during this year, something that we are, of course, extremely interested in and have -- are, of course, looking at the effects of that tender, whatever the results are, will be visible for us in any major way in next year, not this year. So most of the work for this year is already covered by the framework agreement as it is. So a little bit slower effect there.

There are concerns about public finances that are under pressure a little bit due to deficits and of course, the interest hikes. Our expectation is for that not to have a huge effect into investments into digital development. But we'll see, and that's, of course, up to politics to decide what kind of investments wants to be made.

On the private sector side, however, the situation is, of course, a little bit trickier in the sense that it's more cycle-dependent. We should remember that last year, the growth here for us was 64%, our customers, even with maybe a little bit darker clouds gathering towards the end of the year in that macroeconomic climate continued to invest into digital development. That is, I think, what we expect to happen during the year also and being like the big picture of it. But if situations become worse for our customers, we don't want to say that we would be in any way immune to that. This is something that will have an effect on also our order intake.

But we are optimistic. Our customers seem to be quite optimistic, and there are drivers in the market that are also positive also for the short run, and we hope these things will carry our customers over the more difficult times. But I think it's fair to say that customer demand wise, the year 2023 probably will not be as strong as last year was. It doesn't mean that it will be negative. However, it just isn't as strong as last year which was, of course, a record strong year as you can see from our performance.

All this is also affecting the talent market. Short term, I think as I just said about the customer demand for this year, I think we can see a situation where the bottleneck of our business and our growth is expected to shift from talent availability to customer demand. But I want to stress that this is a short-term situation. This will not change the big picture in the talent market that will be extremely competitive. There will be a shortage of talent for the coming year or so. So it doesn't mean that we don't have to do the things that we would do anyway in developing Gofore as an attractive employer; as a very operatively strong recruiter, onboarder as Teppo said and being also able to retain our people. So these are all as important -- even more important than they have been for us -- for our success in the long run.

And while I'm talking about the [ shift ] of bottlenecks from talent available -- availability to customer demand as like an average phenomenon, there are areas where customer demand will continue to be strong and talent availability will be the bigger bottleneck. You could take, for example, cybersecurity as an example of those capabilities that still will be in this situation.

We've updated the risk assessment that we've shared with you investors for some time now. And maybe at this point, it's only worth noting that the same thing that I said from the market outlook perspective, the macroeconomic situation is the big like unexpected here where things can happen, and that will reflect on the customer demand than especially on the private sector side. So those risks are the bigger ones.

We've also highlighted the M&A risk there. Of course, we've taken a big step last year in acquiring a bigger company from the German market with eMundo, and that's something that is the first one for us, basically. So we might have some things that we don't see yet in that area. At this point, we are extremely happy with the acquisition, and we have -- we're so glad to get to know our new colleagues from eMundo and get to work with them that it's really been a great success up until now at least.

So these are the things about the outlook for last year. And again, if you had any questions for this type them on the streaming platform, we'll come back to them in a few minutes.

Shareholder value compared to peers, Gofore has been strong for the past 2 years, and this is a good introduction to our dividend proposition that the Board will propose to the Annual General Meeting. We are so happy to be able, again, to improve on the dividends from the previous year. And there will be EUR 0.34 dividend per share that will be proposed to the Annual General Meeting, and we hope to continue this trend of annually rising dividends even if that's not something that we've written out in the targets. That's something that we look closely on and take pride in that we have been able to do.

So that's basically all that we have for today.

[Mikael Nylund, executive]

We'll go over to the questions and start with the first question that we have here from Joni Grönqvist from Inderes and Joni asked that, "Your recruitment in '22 and January '23 give already good base to achieve long-term organic growth target. Can you tell what kind of net organic recruitments are you aiming for in '23?"

Let's start by saying that for our operations internally, we don't put, like, annual fixed targets that we want to achieve. That would be against the idea of how we operate. We constantly look on the situational awareness that we have of the customer demand, what kind of numbers we have there, what -- which way the trends are pointing and so forth and we adjust accordingly on the recruitment side basically. So really, it would be wrong to answer Joni's question directly. That depends on how the customer demand develops during the year.

We then have a question from a Jaakko Tyrvainen from SEB. "Average wages were up 2.9%, but average salary hike was 6.2%. Did you recruit more junior staff? And what was the impact of acquisitions? And follow-up, do you expect similar wage hikes in '23? And are you able to offset that with recruitments?"

For the year '22, the difference between average wage development and average salary raises during the year is attributed completely to recruitment. So yes, we -- as Jaakko puts it, we recruited more junior staff at a lower salary rate than the average Goforean is making during the year, so that is what happened. In other words, how we put it. We managed the way -- structure, the way -- the pyramid that our business is about in a very efficient and successful way. So yes, that is exactly what the difference there is about.

His follow-up question was about, "Do you expect similar wage hikes in '23? And are you able to offset that with recruitment?"

I think for the talent market as a whole, '23 looks like that the whole economic situation will reflect on the talent market, in a way, that there will be not as much over demand for talent. And that might have also an effect on wage inflation and wage development. On the other hand, of course, we have still the inflation in the economy, so it would be a little bit early to suggest that average salary hikes would, like, be lower than year '22. We don't expect that.

And as I said during the presentation, it's also important for us to demonstrate to Goforeans, to demonstrate to our people that we are and can be a good salary payer, so that's part of the attraction of Gofore as an employer, and that reflects on the attrition rate, of course.

So we are not at least counting on a big change there, therefore, this year. We are most certainly targeting the same kind of effect with recruitment that we did during '23 -- '22 that we can offset and balance out the big salary raises the people by recruiting, basically, more or cheaper, cheaper workforce.

Okay. Daniel Lepistö from Danske Bank asked that, "Your share of operating expenses of sales increased some 1 percentage point year-on-year to around 11.6%." And this is probably, Teppo, for you. And the question is, "Was 21% unnaturally low for these costs? And what do you see as a manageable level at this point going forward? Do you see any items in this category having material cost inflation?"

[Teppo Talvinko, executive]

If you take a look at the OpEx development. So one thing what was actually quite heavily impacting on the OpEx in 2022 was our cost related to acquisitions. If we clean up that away from the figures, that actually means that we were pretty much on a same level, actually 1 digit below the 2021 figures. So to answer your question, so cleaning up those transaction costs, the OpEx was, I would say, in a decent level.

[Mikael Nylund, executive]

So we have scalability in terms of operational expenses. That's what we are targeting. And then is -- second part of the question was about inflation. Inflation is affecting pretty much all costs.

[Teppo Talvinko, executive]

Yes, it's affecting to all cost. And what are the biggest cost in our case, I would say that it's the office space that we have. And of course, it's affecting there. And then that's -- maybe, you can see the highest inflation there. Otherwise, we have still a negotiation power in the market, so that's one thing which is which is keeping the OpEx inflation, I hope, at least in decent levels.

[Mikael Nylund, executive]

Okay. Matti is asking that, "Are you looking for global funds in M&A financing and/or market development?"

As Teppo went through in his part of the presentation, I think our balance sheet pretty much tells its own story. At the moment, we are set for the 2 or 3 next years in terms of financing and have the -- the roadmap for us is also covered, I think, like balance sheet and financing-wise and market development. What we have said in our strategies is we we'd look to develop that, the market in that area and establish ourselves there. So that's what we are working on.

[ Aero ] asks, do you have -- "You have grown very fast in private sector, especially last year. Do you have a network in which you are engaging large customers or large network of competent people engaging SME private sector customers?"

Our strategy is quite heavily leaning towards the bigger customers. So those customers that have a significant potential to invest in digital transformation, in digital product development and so forth. So that's where we are quite heavily leaning.

And then from [ Tanya ], "Are you evaluating your position as consultancy in global consultancy house leaders? What will be your focus and competitive edge?"

In terms of comparing ourselves to, like, global established, let's say, consultancies and players, I think our strength is very much in what we are, an agile consultancy that still can provide the same end-to-end service that these global players can do with a very different, like, mindset in terms of that we are agile. We focus very much on results, not so much on the process and give us our people, very much, power of how they carry things out with the customer. And that's been a strength of ours, and that's what we want to build on also going into the future.

One more question from Jaakko Tyrvainen, commentary on eMundo's first months as part of the group. "What has been the reaction from customers and employees?"

Very important and good question from Jaakko there. And so far, at least so far, we have really positive, positive reactions. Both employees who, of course, see their possibilities in a bigger company in terms of development and what they can achieve and look at Gofore's Nordic mindset, Nordic working culture as a positive thing and something that they -- that is not a threat to what eMundo's company culture has been a very similar one. They call it the new work in, like, the German context, so very positive.

Customers, on the other hand, pretty much the same. The bigger -- the broader offering, the bigger shoulders that we, as Gofore, being -- have been regarded as a positive thing in the customers. And eMundo's customer portfolio is kind of similar to what Gofore's is in a different size level, of course, but they have been focusing on the big customers of their portfolio. And that's something that suits us. We have told earlier also that there are important potential customers there like Deutsche Bank and BMW as examples.

Joni Grönqvist asks, "First time you mentioned uncertainty. What has changed since January? And is it more in the area where you see the uncertainty?"

I'm not sure. I think I've -- in many situations, I think I overuse the word uncertainty at times. So I don't think this has been there the first time we mentioned that, I hope, at least. But maybe we should clarify that up until now, we have seen no major postponements, cancellations or anything that would have a direct effect on the projects that we work with customers.

There have been some. Some can be attributed to the uncertainty, some can be attributed to, like, normal situations. Customers do that. That's normal. They should do that when they reevaluate their development portfolio. But I think some of them can be attributed to the uncertainty. But it's just a very small part so far. So what we see is still, in our day-to-day operations, order intake and so forth, no changes in that sense.

And Daniel Lepistö asks that, "Your growth slightly accelerated in January. What sort of momentum and customer activity you are seeing currently?"

Well, as I just said, there are no big changes there. January, as such, is always January for us, and we did comment on that shortly in the release also. January does have some, like, seasonal attributes that seem to be always there, which are related to the projects ending at the year-end and new projects started and some, like, slowness there. So that's kind of a headwind that we always face in January. But looking at the numbers, of course, we did make a good net sales, even though that's the situation in January.

And Joni Grönqvist asks, "Can you tell about the salary inflation and price increase outlook in 2023?"

Yes. I think we are expecting a similar situation to 2022. Depending on what kind of agreements we have with customers, the price increases can come in, in, like, early or some are delayed to this year. We don't expect price indices to develop heavily differently from 2022, so no strong changes there.

Salary-wise, maybe something that hasn't been mentioned today is that we have a company-wide and company-specific salary solution in place for Gofore and that means that salary raises that are -- that everybody are enjoying are dependent on company performance in terms of growth and performance, so we share the success basically also in salaries. When we do good, we have a little bit bigger salary increases. When we do not so good, we have a little bit smaller. So if we are successful, you will also see that in higher salary development, which is good and which is what we are looking to do of course, again, to be sharing the success to be the attractive employer that is so important for Gofore.

And a few more, Daniel Lepistö asks that, "What's your ideal public-to-private sales split you would be aiming for medium term? Is it 50-50 or something else?"

Well, this is something that we get asked a lot. I think there is no optimum balance there. We do see that in terms of the market, we have so much stronger position in the public sector that the growth cannot reach the numbers that we have now reached on the private sector, we are more -- where we have more of, like, a challenger position, so that's one thing there.

But we are not aiming for 50-50, 60-40, 40-60 or anything like that. We are aiming to grow as much in both segments that -- as much as is possible.

And [ Pekka ] asks, "Has the macroeconomic turbulence caused longer bench times and lower utilization rate during the last 6 months?"

As the numbers suggest, not significantly at least. And that's something that when we recruit and taking people, and I think it's the best for new people coming in and for the company, is that we try to balance them out with the customer demand always, so that, that wouldn't happen. We can't be successful in that every time, but we try to be diligent in that. We are not trying to use the market situation to, like, recruit people to the bench and invest in that way. That's not the definition of success for us. We don't try to do that.

One more from Jaakko Tyrvainen, "Pricing impact of 3.5% in 2022. Do you expect to see a larger number in 2022 report? That is, what is the magnitude in current contract negotiations?"

Well, first of all, maybe if we look at price change as a whole, it's 2 part. It's about price changes for existing customers inside existing agreements. And it's about the normal, like, new sales and new projects starting with existing customers or especially with new customers that affect the average price ratio, so both are, of course, at play here.

And there are a little bit different dynamics in this. But to sum it up, I think 3.5% was a very good number. And if we can reach that again, I think we should be very, very happy about that. So it's strong for the IT industry, and you cannot expect to exceed it at least, not by far.

[ Mika Koski ] asks, "When is it time to split the share? By splitting the share, the share gets more sale by transaction and that's a more reliable price."

Not something that we have considered for the time being, good advice though. And that's all we have for today. Thank you so much for the many questions and a good discussion. Let's keep in touch. Thank you. Bye-bye.

[Teppo Talvinko, executive]

Thank you.