2010 was a year of strong growth and exciting changes in Visma. Revenue increased by 23%. The organic revenue growth was at 10,6%, the strongest in several years. A whole new division, Project & Consulting, was added. Visma got a new main owner, KKR, the world largest and most famous private equity fund. The growth and the changes reflect that the financial crisis is much less pronounced and that markets were Visma is operating are healthier compared to 2009. 2011 looks promising and Visma will continue to drive fast growth and innovation.
As the effects of the financial crises faded, Visma saw healthy demand for the products and services during 2010. The need to increase productivity meant that companies had to continue to invest in modern software solutions. We also saw that more companies considered outsourcing accounting and payroll functions to reduce costs and make their expenses more variable. In 2011 more companies are expected to increase the head-count which drives the need for more software licenses. While bankruptcies were slightly down on 2010, the number of newly established companies increased sharply. The growth in new companies is important for continued growth of Visma .
Visma’s revenues increased by 23% in 2010 and EBITDA improved by 19% compared to the previous year. The EBITDA margin of 19,6% was down compared to 2009 (20,2%). The explanation is acquisitions of some companies with lower margins, and increasing head-count to be able to handle the top-line growth.
This strong performance is partly explained by the well diversified business of Visma, with more than 340 000 companies/organisations as customers, including both small and larger enterprises, customers in both private, non-profit and government organisations, and customers in any vertical. Visma supplies “must-have” products at high quality and at relatively low cost. The long-term effort to ensure high quality and high customer satisfaction contributed to customer churn at an all-time low in 2010.
Visma has confined its operations to the Nordic and Dutch markets. This concentration has made it possible to achieve strong market positions, high brand-awareness, operational efficiencies and competitiveness, also when comparing us with global competitors. Rather than attempting to conquer the world, Visma tries to be the strongest and most profitable supplier in the few markets where we operate. There are still plenty of growth opportunities and the market size allows for a doubling of Visma in our current markets.
Investments in product development and innovation are key success factors for Visma. The willingness to invest in these areas will continue. Visma has maintained development at high levels through the financial crisis and into 2010, and we spent approximately 19,0 per cent of the Software division’s revenue on R&D last year. Visma launched several new product families in 2010, particularly within Software as a Service (SaaS). The new launched products included Visma’s first on-demand ERP system, Visma Avendo eAccounting. Visma had a very limited SaaS offering only three years ago but had grown its SaaS revenues to about NOK 236mill. in 2010. The SaaS solutions are particularly provided through the Software, BPO and Commerce Solution divisions of Visma, as an integrated and important part of the product and services offerings. To our customers, SaaS means a faster way to get access to advanced software without large investments. We see a clear market-trend that customers are moving away from capital expenditures over to operational expenses based on usage.
Cross selling between software and outsourcing services improved, and this was one of the reasons explaining Visma’s growth in 2010. Particularly large projects originated in the Visma Retail division included products and services from Visma Software, Visma BPO and Visma Project and Consulting. There is still a substantial potential for further cross selling between Visma’s divisions as more customers see the attractiveness of combining software and services, and of having Visma as a “one-stop-shop” for finance, accounting and payroll.
2010 has proven that Visma continues to grow at a significantly higher rate than its quoted and non quoted competitor peers both in good and bad economic periods. Visma has been able to combine around 10% organic revenue growth with high activity within merger and acquisitions. Visma has the financial and management capacity to acquire and integrate about 20 companies per year. With total growth in 2010 at over 30% Visma's overall revenue growth and its EBITDA growth was 3 to 4 times greater than its peers and than the overall market for each year in the period 2007 - 2010. We believe this superior growth is a result of consistent investment over the last decade in product development, R&D and innovation that is a core competency of Visma, a dedication to superior customer support and service and in investing in our people and systems over a similarly long timeframe. Because of these long term investments we believe that Visma will be able to sustain consistent growth in the future as well. Visma has as an ambition to double its revenue from 2010 to 2015.
Visma's mission is to help North European companies and government bodies maintain their competitive edge through the automation of administrative processes. Even with higher labour costs and a high tax level, Northern European companies have achieved world-class productivity through their investments in modern ERP and CRM solutions.
In 2010 Visma made around 15 acquisitions and the largest acquired business was Sirius, now the new Visma Project and Consulting division. With close to 500 software experts Visma P&C specializes in large software development projects for central governments in Denmark, Norway and Sweden, for pension funds and for large retail organisations.
2011 will be a year of challenges and opportunities for Visma. The economies where Visma operates are in relatively good health and Visma has to act upon growth opportunities while controlling cost at the same time. A special threat and opportunity is the gradual move form on premises software to SaaS solutions. Customer satisfaction and retention, and acquisition of new customers will be main themes for Visma in 2011. Customers are expected to increase their investment budget over 2010, and a somewhat tighter labour market will increase demand for outsourcing services.
Øystein Moan
CEO
Visma