Fortnox : Annual and sustainability report 2023

ANNUAL AND SUSTAINABILITY REPORT 2023

Fortnox AB (publ), Corp. Reg. No. 556469-6291

Annual and Sustainability Report 2023

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FORTNOX HELPS

BUSINESSES START,

GROW AND DEVELOP

WHAT?

Fortnox offers products, packages and integrations to cover a business's financial and administrative needs by creating easy flows in accounting, invoicing, financing and for managing employees.

FOR WHOM?

Our primary customer groups are businesses of all sizes as well as accounting firms and their customers. Organizations such as sports and tenant-owners' associations can also enjoy Fortnox's offering. Regardless of what kind of organization, they all have administrative needs. That is why today, Fortnox's customers operate in essentially every industry and include businesses, firms and organizations of every size. The offering is intended for all users connected to a business: from the board, management and employees to customers, suppliers, accounting con- sultants, auditors and bank contacts.

CONTENTS

Fortnox in brief	3
The year in brief	4
Comments from the CEO	6
Comments from the Chairman	8
Vision, business idea, business

HOW?

Fortnox products are sold in two channels: directly to customers through the web- site or indirectly through accounting firms. Revenue is generated in three ways: through subscriptions, through transaction-­ based use and through lending. The combination of Fortnox products and apps from more than 400 development partners provides a scalable enterprise resource planning (ERP) platform where customers can customize their own business system.

WHERE?

Fortnox currently operates in the Swedish market, with more than 536,000 customers across the country. The company is headquartered in Växjö with offices in Malmö, Linköping and Stockholm.

model, strategy and goals	10
Our offering	14
Business areas	22
The share	28
Sustainability	31
Corporate governance
-Corporate governance report	43
-Executive Management Team	49
-Board of Directors	52
Directors' report	54
Financial reporting
-Financial statements	63
-Notes	72
-Auditor's report	123

HISTORY

Fortnox was established in 2001 in Växjö, with a focus on bookkeeping software that was available online - an idea so innovative that it took the market several years to catch up. Since then, the company has grown quickly and expanded its offering, both organically and through acquisitions. In 2007, it was listed on NGM Nordic SME, and in 2022, it took the step to Nasdaq Stockholm. At the end of 2023, Fortnox had 49,165 shareholders (consolidated holding).

Additional information

• Definitions and reason for use of alternative

performance measures

128

Fortnox AB (publ), Corp. Reg. No. 556469-6291

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THE YEAR

IN BRIEF

SEK 268	536,000
ARPC	Number of customers

29% + 41% = 70%

Growth

Operating margin

RoF**

	+/-%*	2023	2022	2021	2020	2019
Net sales (SEK million)	29%	1,642	1,276	932	694	532
Growth (%)	-	29	37	34	30	42
Organic growth (%)	-	28	30	21	30	42
Operating profit (SEK million)	45%	673	464	315	265	173
Operating margin (%)	-	41	36	34	38	32
Profit after tax (SEK million)	64%	570	347	241	205	135
Earnings per share (SEK) - after dilution	64%	0.93	0.57	0.40	0.34	0.22
RoF (%)**	-	70	73	68	69	75
Number of subscription customers	12%	536,000	480,000	425,000	367,000	313,000
ARPC (SEK)***	15%	268	233	194	169	154

*Percentage change in 2023 compared with 2022.

• RoF - "Rule of Fortnox," which alludes to "Rule of 40" - an indicator for software as a service (SaaS) companies that says that combined sales growth and operating margin should be above 40 percent to be long term sustainable.

***Average revenue per subscription customer and month, R12, rolling 12 months.

1,800						60	750
1,200						40	500
600						20	250
0	2019	2020	2021	2022	2023	0	0

					60
					40
					20
2019	2020	2021	2022	2023	0

Net sales, SEK million

Growth, %

Operating profit, SEK million

Operating margin, %

Fortnox AB (publ), Corp. Reg. No. 556469-6291 Annual and Sustainability Report 2023

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Q1

33%

Growth

38%

Operating margin

+15K

Subscription customers

242

ARPC

Q2

31%

Growth

39%

Operating margin

+15K

Subscription customers

253

ARPC

Q3

25%

Growth

45%

Operating margin

+10K

Subscription customers

260

ARPC

Q4

26%

Growth

41%

Operating margin

+16K

Subscription customers

268

ARPC

Fortnox AB (publ), Corp. Reg. No. 556469-6291

Annual and Sustainability Report 2023

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COMMENTS FROM THE CEO

MORE PRODUCTS, MORE CUSTOMER VALUE AND CONTINUED GROWTH

Fortnox remain steadfast and we follow our plan, which resulted in increased customer value and continued growth in the past year. Like everyone else, Fortnox needs to navigate this new, uncertain operating environment. Since much in our surroundings is beyond our control, the most important thing is what we can directly influence - the value we create for Sweden's businesses.

Even though Sweden entered a recession in 2023 and the number of new businesses has declined steadily since 2021, we increased by 56,000 customers to 536,000 by the end of the year. Average revenue per customer (ARPC) increased to SEK 268. Our operating margin for the full year was 41%, proof of Fortnox's scalability and our ability to manage growth.

Products for a successful business

During the year, Fortnox continued to help our customers develop successful businesses and released several important products.

Our automatic bookkeeping made a great deal of progress. Automatic bookkeeping, what we call bookkeeping via bank state- ments, was introduced for Swedbank's, Nordea's, Sparbanken Syd's and Ekoban- ken's customers. The product also allows users to automate transactions in their tax account through Fortnox's integration with the Swedish Tax Agency. SEB's, Handels- banken's, Danske Bank's and Länsförsäk- ringar Bank's customers already had access to automatic bookkeeping. We also updated the VAT workflow function in Bookkeeping. Immediately on the start page after login, the user can now see and manage any devi- ations, file VAT reports and record them to later be sent to the Swedish Tax Agency.

During the year, we developed a new process for recurring invoicing. With recurring invoicing, invoices are created and sent out automatically, and you can easily update several of your upcoming invoices at the same time. At the end of the year, we also launched a new easy way for customers to send invoices through web links and made it easier for consumers to pay invoices directly on the site with several payment options. We also bundled our financing offering with our invoicing products. Now Invoice Distribution can be used alongside Factoring for quick and easy financing.

Employees Approval was another new product that provides an easy-to-use, comprehensive tool for employee atten- dance, absence and payslips, including the possibility to set automatic reminders to managers as well as employees to complete their documentation. In addition, it is now possible for employees to register their attendance and absence digitally in Fortnox and see how much comp time, flex time and vacation time they have.

The Fortnox Business Mailbox was introduced in the app, which makes Fortnox products more readily accessible. Users can also grant others access to their mail, for example the head of accounting at the business who might need to handle incoming documents, or their accounting firm.

In 2023, we developed an improved version of Fortnox Insights for accounting consultants who use Digital Byrå. The focus has been on supporting consultants in their advisory services through automatic documentation. Consultants can now better analyze a company's sales and cost trends in real time. They also

have documentation to help their customers price their services. The function calculates a company's hourly rate compared with statistics from other companies in the same industry and presents how much revenue could increase if the company adjusted the price according to the industry's median value.

Another new item was the Fortnox Business Card. The card is integrated with Fortnox and automates several steps in the day-to-day work of customers and their employees, from purchasing to bookkeeping. Employees no longer need to pay out of their own pocket and wait until their next paycheck to be reim- bursed. The card will continue to be developed in 2024 and be rolled out to accounting firms during the year.

Fortnox Group was also released and became available to groups of all sizes by the end of the year. The product enables quick and easy consolidation in groups, with support for financial statements and digital reporting to the Swed- ish Companies Registration Office. Another advantage is the comprehensive analysis feature that can generate value insights for businesses.

In the spring, we also launched Fortnox Signature as an integrated product in our platform. This gives customers access to a signing tool that allows documents to be sent for digital signing directly from Fortnox. With a combination of document storage, Business Mailbox and signing, we are well on the way to offering our customers comprehensive document management.

Fortnox AB (publ), Corp. Reg. No. 556469-6291

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In May, we entered into a partnership with the Norwegian BankID service, Bank Axept AS, to offer know your customer (KYC) services. New laws mean more requirements for businesses, and Fortnox aims to offer

money laundering (AML) solution. As a part of the Digital and clear process will be created for accounting firms and following up with their clients. The new product will

Fortnox carried out 7,145 software releases during the meaning new code implementations so that the user can advantage of our programs. The mentioned product news this summary therefore represent only some of what we accomplished and introduced during the year. Whatever we do, we always focus on Sweden's businesses and how our platform can be of use for them.

Entrepreneurship builds prosperous societies

Successful businesses build prosperous societies and Fortnox's impact on the surrounding world is essentially positive. We are a hub that brings together people, businesses, organizations and authorities with the ability to have an impact far beyond our own operations. Fortnox enables partnerships that are essential for solving important societal challenges and we welcome the responsibility that comes with our position, whether in the form of stimulating new enterprise or preventing and fighting crime.

We are convinced that the solution to many of today's societal challenges can be found in enter- prise. If we can provide more than half a million businesses with better conditions to conduct their operations, in everything from corporate governance to reducing their climate impact, then we can take important steps towards our vision.

Regulatory compliance is an area we will invest more in going forward. Fortnox will do its best to make it easy to do things correctly. We also aim to take a greater responsibility and counteract various kinds of financial crime, which is why we will make additional investments in products that combat, for example, money laundering.

Driving forces for successful businesses

We released many new products in 2023, a year that I look back on with pride. None of this would have been possible without our Fortnoxers, who work tirelessly every day to develop solutions for Sweden's businesses. We are constantly growing and I am pleased to work with all 761 employees at Fortnox.

Although the state of the world may seem may seem uncertain, we will continue working to realize our vision of a prosperous society built by successful businesses. I look forward to 2024 with anticipation and keen interest.

Tommy Eklund,

CEO Fortnox

Fortnox AB (publ), Corp. Reg. No. 556469-6291

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COMMENTS FROM THE CHAIRMAN

ENTERPRISING FORTNOX IN AN

UNCERTAIN TIME

War and crises during the year gave rise to new patterns in the geopolitical game, making the world more unsettled than before. The economy is weak and finances are strained for many businesses as well as individuals. Fortnox only operates in Sweden, but international events impact the Swedish economy. Despite this, I remain optimistic, both for society and for Fortnox.

Fortnox continued to grow in 2023. Despite fewer transactions during the recession, Fortnox delivered stable earnings and we reached our goals. I am also proud that we are contributing to more entrepreneurship in a time when there are fewer new businesses starting.

Inflation started to decline in the end of 2023, though the future is uncertain. The raised interest rates were a necessary shift away the monetary norm of low or negative interest rates that we hade for a long time. The economic slowdown was also unavoidable. This has naturally led to a downturn, but no downturn is permanent and I am convinced that the conditions that Fortnox is creating for Swedish business can contribute to positive societal development.

Entrepreneurship that improves society

Sustainability is becoming more important and encompasses more areas. In addition to our work to develop our corporate governance and reduce our impact on the climate, we have opportunities to guide society in the right direction through our customers. More businesses create a better world, and if we can provide more

than half a million Swedish businesses with better conditions to work based on an ESG perspective, that is a real contribution to a prosperous society.

Technology that builds the businesses of tomorrow

The Fortnox Business Card was launched during the year. Together with other prod- ucts, such as our new Business Mailbox, it brings Fortnox closer to our customers' transactions. Our ecosystem of products is gradually becoming a part of their financial infrastructure. Traceability, transparency and security in our digital bookkeeping products is a cornerstone for so much more, for example the ability to offer financing.

My ambition is for us to grow further in fintech, especially within our offering of short-term credit for growing businesses with cash flow challenges. This ties into Fortnox's scalable business model, which focuses on many small transactions rather than a few large ones. My conviction that Fortnox will invest in this area remains undiminished.

Fortnox is to be a hub for starting, running and developing businesses. My long-term ambition is for us to make an impression on the market and become a major contributing factor in Swedish enterprise. Many of the solutions to the challenges the world faces will originate from growing businesses.

More colleagues who believe in Fortnox

At the end of 2023, we had 761 employees at Fortnox. We need to make room for growth, including the number of employees, which is why we continued to develop

the headquarters in Växjö during the year. Besides Växjö, Fortnox now has operations in Stockholm, Malmö, and Linköping, and we are also continuing to develop offices in those locations as we grow.

Many foreign companies are choosing to invest in Fortnox and we are honored by this international spread of owners. During the year, the Board took initiatives to renew the employee share savings plan that we launched in 2022, since the participation rate was so high. Many signed up in 2023 as well. I'm happy to see that our employees believe in Fortnox and that many are choosing to be a part of the company through joint ownership.

For my part, I am going into 2024 with a sense of hope and a firm belief that Fortnox has yet much to accomplish.

Olof Hallrup,

Chairman of the Board, Fortnox

Fortnox AB (publ), Corp. Reg. No. 556469-6291

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"FORTNOX IS TO BE A HUB FOR STARTING, RUNNING AND DEVELOPING BUSINESSES."

Fortnox AB (publ), Corp. Reg. No. 556469-6291

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VISION

FORTNOX'S VISION

IS TO CREATE A

PROSPEROUS SOCIETY SHAPED BY THRIVING BUSINESSES