Talenom Q3'25: Many good qualities, but Sweden just won't take off

Translation: Original published in Finnish on 10/20/2025 at 8:00 am EEST.

We lower our recommendation for Talenom to Reduce (was Accumulate) and our target price to EUR 3.8 (was EUR 4.2). While the Q3 report contained many positive aspects, such as a clear improvement in cash flow and strong development in Spain, it revealed that the problems in Sweden are long-term. This was reflected negatively in the earnings estimates for the coming years, the sum of the parts, and the target price. In the short term, risks are elevated as a negative profit warning remains possible, and the goodwill related to Sweden could be called into question. Talenom still has a lot of potential, particularly in Spain, and its valuation is not high in relation to this. Furthermore, the upcoming separation of Easor is a potential value driver. Nevertheless, we believe the share's risk/reward ratio is currently insufficient for a positive stance. 

Finland good, Spain progressing but Sweden lagging

Talenom's revenue increased by 2.4% to 29.8 MEUR in Q3. In Finland, Talenom is gaining market share with modest absolute growth (Q3: +3.5%) and doing so very profitably. However, the story is different in Sweden, where revenue fell by 13%. Sweden's customers are now leaving in droves for the second time, prompting the company to freeze its software rollouts and replace its country manager. We estimate that the measures and significant cost savings will be able to halt the decline, but as the process of changing operating practices slows, hopes for significant productivity and profitability improvements in the coming years will fade. In Spain, revenue grew by 17% in Q3, a significant portion of which was organic, demonstrating that the business model is effective. Talenom's Q2 EBIT was 2.4 MEUR, which was slightly disappointing (forecast 2.8 MEUR). Profitability in Finland was largely as expected, but development remained weak in Sweden, and Spain was also partly weighed down by one-off items. Overall, we believe that developments in Finland and Spain are well on track, but there are no signs of a rapid turnaround in Sweden. Thanks to strong cash flow in Q3, debt temporarily decreased, but the net debt ratio still remained high at 160%.  

We significantly decreased our estimates for Sweden

Talenom reiterated its guidance, in which it estimates 2025 revenue to be around 130-140 MEUR and EBITDA to be around 36-42 MEUR. Our estimates are at the lower end of both ranges, and although Talenom appears to be reaching the lower end of its guidance, there is still a risk of a profit warning. We decreased our earnings estimates for the next few years by around 15%, particularly as the outlook for Sweden darkened. Customer losses will put pressure on revenue over the next 12 months, and at the same time, the expected benefits from new processes and software will be postponed far into the future. Consequently, our estimates for Sweden declined significantly in both the short and long term. We also lowered our growth forecasts slightly for Finland, as the economic outlook remains weak. In Spain, meanwhile, the Verifactu transition is gathering pace, and although the investments are highly justified in the long term, the costs will be the first to increase. Next year, there will be progress in both results and cash flow, but in many ways, the foundation for Easor's growth is still being laid.

There are drivers all around

The separation of Easor is a positive driver for the share, but the risk of a profit warning and the goodwill of the Swedish business offset this. In the sum-of-the-parts analysis, we valued Sweden at 20 MEUR, but only 26.9 MEUR appears as goodwill on the balance sheet. Our sum-of-the-parts indicates a value of approximately EUR 4.0 (previously EUR 4.5) for the share, by both country and software/services division. While the valuation multiples are reasonable in themselves (2026e EV/EBIT 16x), they are not particularly cheap, considering the negative forecast trend and market uncertainty. The company has tremendous long-term potential, particularly in Spain, but in the short term we believe it is reasonable to wait for the situation to become clearer. In principle, we believe that Talenom will emerge from this situation unscathed, but the risks are clearly elevated now.