Eleving Group has increased its adjusted EBITDA by 24% in the 3Q of 2022

November 7, 2022

Multi-brand fintech company Eleving Group has experienced a successful three-month run, enjoying the strongest financial position to date. The company has increased its nine-month adjusted EBITDA to EUR 53.5 mln and reached a record-high EUR 17.7 mln in adjusted net profit.

Operational and Strategic Highlights

The Group continues to demonstrate robust financial performance and delivers on its previously approved strategy as revenues have hit an all-time nine-month high, and the net portfolio has seen 4.6% QOQ growth, totaling EUR 288.6 mln.
Continued diversification of business operations and a balanced revenue stream from all three core business lines:
- Flexible lease and subscription-based products contributed EUR 37.5 mln to the 9M 2022 revenues—up by 109.5% compared to 9M 2021 and up by 7.7% QOQ. The key revenue driver was the solid performance in productive lending in the motorcycle-taxi segment in East Africa;
- Traditional lease and leaseback products contributed EUR 48.6 mln to the 9M 2022 revenues—up by 24.6% compared to 9M 2021 and up by 5.6% QOQ. Quarterly revenue growth was mainly driven by successful portfolio growth in Romania and Georgia, however, nearly all the other markets where the Group is represented also experienced positive incremental growth;
- Revenues from the consumer loan segment contributed EUR 43.8 mln to the 9M 2022 revenues—up by 2.8% compared to 9M 2021, but a 3.0% decrease QOQ. The negative trend in consumer loan revenues was mainly caused by the run-down of the Ukrainian portfolio.
Tightened underwriting policy has been introduced throughout the Group due to the economic uncertainty surrounding the operating jurisdictions. As a result, the conversion rate of the vehicle segment has decreased from 16.9% in Q2 to 14.4% in Q3, and the average ticket size has dropped from EUR 2.2k in Q2 to EUR 1.9k in Q3.
Customer payment discipline has remained stable across both segments, with a net NPL ratio of 6.3% in vehicle finance and 5.6% in consumer finance, representing 0.1pp. increase QOQ for each segment.
During Q3, Eleving Group has continued its course towards a more sustainable future and has achieved several milestones in line with its ESG strategic objectives:
- A new feature has been introduced on car portals operated by the Group—a CO2 intensity metric educating customers on the vehicle’s adverse effects on the environment. Vehicles that meet higher ecological standards are given a badge to become more eye-catching to promote environment-friendly decision-making;
- Eleving Group has signed the Mission Zero Charter to increase workplace safety standards and reduce work-related accident risk. Additionally, the Group has implemented a support program for employees with kids and a re-onboarding plan for employees returning from parental leave.

Financial Highlights and Progress

Solid profitability as evidenced by:
- Adjusted EBITDA of EUR 53.5 mln (9M 2021: EUR 43.2 mln);
- Adjusted Net Profit before FX of EUR 17.7 mln (9M 2021: EUR 12.1 mln);
- Adjusted Net Profit after FX of EUR 18.2 mln (9M 2021: EUR 12.6 mln).
Record-high net portfolio of EUR 288.6 mln, EUR 12.8 mln increase QOQ; Eleving Vehicle Finance and Eleving Consumer Finance accounted for EUR 224.8 mln and EUR 63.8 mln, respectively.
The Group has continued to diversify its capital structure by raising EUR 4 mln debt via private bond issuance in Kenya. The most of new funding is KES denominated, thus providing a natural hedge against local currency risk.
The Group has successfully continued to decrease its operational cost base, as evidenced by the 1.4 p.p. drop in the cost-to-income ratio in 9M 2022 compared to 9M 2021. Moreover, facing an inflationary environment, the Group will seek to become even more cost-efficient moving forward.
Thanks to outstanding financial performance in 2022, the Group enjoys the healthiest financial position to date, supported by a capitalization ratio of 27.4% (31 December 2021: 20.7%), ICR ratio of 2.7 (31 December 2021: 2.5), and net leverage of 3.3 (31 December 2021: 3.8), providing an adequate and stable headroom for Eurobond covenants.

Modestas Sudnius, CEO of Eleving Group, commented:

It has been another excellent quarter for Eleving Group since the business continues to grow steadily as evidenced by all the fundamental figures. We have experienced a successful three-month run, and given the outstanding financial performance in 2022, the Group enjoys the strongest financial position to date.

At this point, we do not see any significant signals of an economic slowdown at the Group level. However, we are ready to adopt the right measures if challenges arise in the future. From quarter to quarter, we have proven that we have the right business structure in place and are ready to exploit its full potential. This has been one of the key factors consistently producing stable profit, turnover, EBITDA results, and increasing the company’s portfolio figures.

Being aware of the new global and economic reality, we continue to take a more conservative approach to the company’s development. Our primary focus for this year is on streamlining the existing products in our mature markets which continue to perform at the usual level in the mobility and consumer finance segments. We have tightened our underwriting policies and reviewed the cost structure to be better prepared for upcoming turbulences. However, the demand for the company’s products remains strong, and we have achieved a q-o-q portfolio increase of almost 5%. It is lower than in the previous quarters this year, yet it has been our choice to maintain controlled and healthy growth during times of uncertainty. By holding the best financial position in the company’s history, having an efficient business structure in place, and running flexible operations, not only are we ready to embrace potential challenges but we are also ready to strengthen our market share in the existing markets.

Maris Kreics, CFO of Eleving Group, commented:

The last quarter contributed to our company’s strongest-ever nine-month performance, driven by satisfactory portfolio quality and smart cost control. It is confirmation that the adopted strategy consistently produces high-quality financial performance.

We may now conclude that the strategic decisions regarding the diversification of the funding have been justified and yield tangible results. We find ourselves in a fairly comfortable position since we have various funding sources, such as bonds, bank loans, and borrowings from third parties that were acquired or issued when the conditions for fundraising were more favorable. This quarter, we successfully raised an additional EUR 4 mln worth of funds in Kenya through a private bond placement aimed at local investors. The successful results of the previous quarters have contributed to the further growth of our business (portfolio), which was primarily financed by the company’s equity.

In the following months, we will be more actively streamlining the company’s administrative processes. We have prepared ourselves for the turbulent times ahead, and we believe these times can be striven through with a strong balance sheet and lean operations. That is where our focus lies.

Full unaudited consolidated report on 9M period ended on 30 September: https://eleving.com/investors/

Conference Call:

A conference call in English with the Group’s management team to discuss the results is scheduled for 9 November 2022 at 15:00 CET.

Link to register for a conference call: https://bit.ly/3FbdIv4

Eleving Group

Toms Vecvagars, Investor Relations Manager

Email: toms.vecvagars@eleving.com