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Zalaris (OSE: ZAL)

Last close As at 23/11/2024

NOK67.00

▲ −1.40 (−2.05%)

Market capitalisation

NOK1,484m

Zalaris is a leading provider of comprehensive human capital management and payroll solutions. The company operates across 17 countries and supports the payroll and HR needs of more than 1.5 million employees every month.

Equity proposition

There are five key reasons why Zalaris represents an exciting investment case.

  1. It operates in the fast-growing human capital management and payroll market, forecast for 8–10% annual growth as businesses increasingly look to streamline back-office functions.
  2. Zalaris is highly competitive in large, complex multi-country projects – an attractive sub-segment of the wider market. Its single platform approach across countries gives it a distinct advantage over less scalable peers when bidding for substantial contracts.
  3. With the potential to serve 150 countries, Zalaris has fostered deep geographic reach and strong client relationships across a diverse range of industries. Its solutions are utilised by organisations of all types and sizes, from large multinational corporations to municipal governments. This broad industry coverage provides resilience and significant cross-sell potential.
  4. With around 80% recurring revenue, a low churn rate of c 3% and an average contract duration of five years, Zalaris has predictable cash flows and clear earnings visibility due to its long-lasting customer relationships.
  5. There is substantial room for margin expansion and earnings growth, with management targeting 10% annual growth and a 500bp improvement in EBIT margins by 2026 through operating leverage and efficiency gains.

Zalaris is a market leader exposed to structurally growing demand for payroll and HR solutions globally. With resilience, strong client retention and visible earnings growth, it shapes up as an exciting investment case.

Latest Insights

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TMT | Update

Zalaris — Another quarter of records

TMT | Update

Zalaris — Tenth consecutive quarter of revenue growth

TMT | Update

Zalaris — Continuing contract momentum in FY24

TMT | Flash note

Zalaris — Commencement of strategic review
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Sector

TMT

Equity Analyst

Katherine Thompson

Key Management

  • Gunnar Manum

    CFO

  • Hans-Petter Mellerud

    CEO

Balance Sheet

Forecast net debt (NOKm)

N/A

Forecast gearing ratio (%)

N/A

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (0.9) (6.8) 75.4
Relative (2.1) (7.8) 63.4
52 week high/low NOK79.2/NOK37.4

Financials

Zalaris delivered its 11th consecutive quarter of revenue growth in Q324, alongside record quarterly revenue and profitability. Contract momentum continues with both existing clients and new contracts, resulting in a net retention rate in Managed Services of 108%. Zalaris has made good progress towards its mid-term adjusted EBIT margin target of 12–15%, with a 17.9% margin in the Managed Services business boosting group margins to 10.9% (Q323: 8.5%). The enhanced profitability has been driven by the strategic improvements to operations in Germany and increased use of near-shore and offshore service locations to drive efficiencies.

Y/E Dec Revenue (NOKm) EBITDA (NOKm) PBT (NOKm) EPS (fd) (öre) P/E (x) P/CF (x)
2022A 892.7 106.2 6.1 6.69 1001.5 N/A
2023A 1131.2 162.6 21.5 129.27 51.8 N/A
2024E 1306.5 222.1 111.5 410.81 16.3 N/A
2025E 1435.3 258.3 141.5 526.78 12.7 N/A

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AUS – Edison talks tech

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Deutsche Börse Eigenkapitalforum 2014 Research Guide

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Mobile ecosystems

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ASX Spotlight Conference – London, 6 March 2014

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