Nordnet AB (publ) (SAVE) Earnings Call Transcript

Good morning, everybody. Welcome to the presentation of Nordnet Second Quarter of 2026. My name is Marcus Lindberg, and I'm the Head of Investor Relations at Nordnet. Joining me today is our CEO, Rasmus Jarborg; and our CFO, Lennart Kran. Rasmus and Lennart will start by presenting the results, and then we'll have a Q&A session. [Operator Instructions] With that, I'll turn the call over to our CEO, Rasmus Jarborg.

Thanks, Marcus. Good morning, everybody, and thanks for joining us today. The second quarter of 2026 continued to present the dynamic operating environment for Nordnet and our customers. Globally, equity markets showed resilient performance with major indices pushing towards new highs. However, underlying market volatility remained elevated, driven by persistent deflationary questions monetary policy shifts and uncertain geopolitical developments with United tensions in the Middle East. Against this backdrop, retail wealth creation has proven to be a highly structural secular trend. Our customers are not just trading they are systematically deploying capital for the long term. This behavior, combined with our strong product execution, drove exceptional results this quarter. A standard moment for our platform was the historic IPO of SpaceX. Nordnet has acted as a Nordic distributor across Sweden, Denmark and Norway. This transaction highlights our unique ability to provide institutional grade deal flow directly to the retail investor community, reinforcing our brand equity and driving significant account acquisition. Turning to Slide 2. The headline for this quarter is that we achieved record quarterly revenue and profit driven by simultaneous growth across all of our primary revenue streams. Looking at some of the operational milestones, we officially crossed the $2.5 million customer threshold this quarter, achieving a 13% year-over-year growth rate in line with target. Trading activity remained robust, with record high cross-border trading supporting strong brokerage margins. For the first time in history recently, we saw a sequential growth in trading income from Q1 to Q2 and an otherwise seasonally weaker quarter with 3 fewer trading days. Net savings rose 78% year-over-year to SEK 26 billion, SEK 2 billion of that was from Danish pension, which had a record quarter supported, of course, by [indiscernible] This capped off the strongest first half in Nordea's history with SEK 55 billion in net savings year-to-date. Our Nordnet branded funds surpassed SEK 100 billion in AUM, aided by the launch of the first German index fund in the Nordics and this product is a great example of how powerful it is to have 1 platform and a uniform product set across multiple geographies. When we launch something for 1 market at Nordnet, it benefits our entire footprint. Our expansion into Germany is progressing on schedule. We commenced live production testing this quarter, signed a new country manager and are on track for our H2 commercial launch. During the quarter, we paid a dividend of SEK 8.60 per share, in line with our 70% payout policy, and we remain committed to continued shareholder remuneration, including further buybacks. Any program in 2026, though, will likely be fairly modest as we want the flexibility to manage the AT1 capital in the most optimal way once the next $600 million becomes callable in November. On Slide 3, our financial performance highlights the operating leverage inherent in our digital model. Adjusted revenues rose 26% year-over-year to SEK 1.6 billion. Over the same period, adjusted operating expenses grew by 11% to SEK 440 million or just 7.5% when excluding our investments in the German expansion. The result of this exceptional operating leverages and adjusted profit before tax of SEK 1.2 billion, up 33% year-over-year. Turning to Slide 4. You can see the scale and geographic diversification of our customer franchise. We saw great operating momentum and revenue across all markets. Denmark and Sweden both reported record levels of cross-border trades, Sweden achieved a 90% customer growth rate, marking its highest pace of new customer acquisitions since early 2022. In Norway, we saw record levels in all revenue streams. We added 74,000 new active customers this quarter, bringing our total customer base to 2.5 million, and this represents an absolute increase of 280,000 customers year-over-year. Savings capital reached almost SEK 1.4 trillion, up 29% or an absolute increase of SEK 310 billion compared to the same quarter last year, underlying what a machine we've built here at Nordnet. Turning to Slide 5. Our top line momentum is directly linked to our product velocity. We shipped 21 new versions of our award-winning app this quarter. We launched a conversational AI system in Sweden and Norway to automate routine high-volume customer queries. We also deployed AI-powered company insights across more than 700 instruments. This AI model extracts and processes complex financial data points directly from quarterly filings, effectively democratizing institutional-grade market data for our retail customers. We expanded our ad management footprint by launching the Nordics first German index fund, offering direct low-cost exposure to Europe's target economy at a competitive fee. I'm pleased to share that this fund has already attracted over $130 million in assets within its first few weeks, proving the strong client appetite for targeted cross-border exposure. And finally, we launched full premarket trading for U.S. equities starting from 10:00 a.m. European time instead of at 1 p.m. we offered earlier. This dramatically extends the trading window for our active traders, enabling them to navigate premarket news flow and reposition risk hours before the official Wall Street bell. Already, some 32% of preturning volume is in this early premarket window. Now Slide 6 illustrates how this product and customer momentum translate into financial results. Our revenue grew across all 3 primary income streams to reach SEK 1.6 billion in the quarter. Net transaction-related income was solid at near SEK 740 million. Fund-related income rose to almost SEK 200 million, driven both by asset depreciation but also high net buying. NII experienced a sequential recovery to SEK 675 million as higher rates began to fully flow through our liquidity portfolio and credit book and deposits remain high. Turning to Slide 7. We see the durability of our trading business. Average trades per day remained robust at SEK 298,000, up 15% year-over-year as our customer base grows and is increasingly active in the capital markets. As a result, brokerage income rose 37% year-over-year to SEK 740 million, and our revenue per trade expanded sequentially to SEK 42. This margin expansion was driven by a highly favorable country and product mix, including record high cross-border trading, which comprised 43% of traded value and 40% of trades in the quarter. Looking ahead, while we're carrying very good underlying momentum, we're now, of course, entering the seasonally slower summer period and it's worth keeping in mind that July and August of last year were fairly strong comparison baselines. Turning to our fund business on Slide 8. Total fund capital grew to almost SEK 360 billion. We saw our highest quarterly net buying of funds ever at 13.6 billion, with almost 40% of those flows directed to our own Nordnet branded funds. These funds now represent 30% of total fund assets. Providing a profitable and stable recurring revenue stream that acts as ballast against transaction-based volatility. Our fund margins contracted slightly this quarter due to lower efficacy fees from reduced trading in foreign funds the underlying fund margin remains largely stable. On Slide 9, we have sightline [ deposit] development. As you can see, deposits remained stable and in the quarter at SEK 95.2 billion. Looking at the capital flows, we saw SEK 2.5 billion in net cash inflows and SEK 10.5 million from dividends as dividend season wrap up in the quarter. This was offset by SEK 31.5 billion of net traded value, representing cash that our customers actively redeployed into the market. This cash sorting is natural and a healthy sign of an engaged customer base. Turning to Slide 10. NII has firmly target growth, reaching SEK 675 million in the quarter, a 12.3% year-over-year increase. Our NII yield improved sequentially to 280 basis points, reflecting the upward movement of the 3-month IBR curves across all the Nordic currencies. We continue to run a conservative liquidity portfolio of SEK 70 billion with 68% rated AAA and a balanced short-dated maturity structure. Our loan portfolio also expanded with SEK 31.4 billion, supported by healthy demand in both margin lending and mortgages. I will now hand the call over to our CFO, Lennart Kran, to walk through expenses, capital position and guidance.

Thank you, Rasmus. Thank you, everyone, for being here. Turning to the costs. We can see that the adjusted operating expenses were SEK 440 million, particularly flat compared to the previous quarter. This demonstrates our rigorous focus on cost discipline even as we are aggressively scale our operations. Excluding our planned investments in Germany and our core Nordic growth cost growth was related to 7.5% as Rasmus showed earlier. This is below our 8% target in the medium term. our 26 item, however, remains stable and will be about 8%, and we continue to budget with SEK 80 million to SEK 90 million for the German expansion this year. Looking to the next slide. It actually displays the structural operating leverage of our platform. This relationship is driven by our high scale of the platform, which allows us to process record trading volumes and deposit inflows without the linear expansion of our headcount. As you can see in the 7%, 10% CAGR, 10% on cost and then it all ends up in the PBT. So very nice operating leverage on this one. We can go to the next one. With respect to capital situation, still very strong capital situation also the liquidity is very strong. But as a reminder here, usually, we do not -- as we have not done this year, either audit the Q2 results where that is not included in our reporting of the capital situation. However, here it is, so what you're seeing here is ended the quarter with a CET1 ratio of 22.2%, which is comfortable 710 basis points above the regulatory requirement and also the leverage ratio with 5.0% is well above our own target of 4.5. The capital position gives us an immense strategic flexibility. And that is very important to have. During the first quarter, actually, we bought back shares for SEK 25 million in the buyback program. We also gave the dividend, but still have a very strong capital situation. We have generated a lot of new capital for this one. And we have also submitted an application to the Swedish FSA to authorize a new buyback program for shares but we will remain a little bit cautious about this one as we also had the SEK 81 million of SEK 600 million callable in November. Given that deposit levels can swing as we experienced and our first priority is to ensure the flexibility for the AT1. We did not intend to initiate the next buyback out a little bit later. As we close that in Q2, we will have a much clearer view of both our deposit to get already and one market pricing, and we'll then probably inform you all of our excise on the caterers. So a strong capital situation and a very solid liquidity position. Finally, we can go to the medium-term targets on next slide. And yes, we remain confident in our target of 30% to 50% annual growth, customer growth. Our last 12 months revenue margin is above 49% which is above the guidance, but it's also interest rates are about the 2% approximate division that we have set out as an assumption for those. And also, as I touched upon in the previous slide, OpEx growth is in line with guidance, and we are on track to meet our targets for this year. By that, I hand over to you, Rasmus.

Thanks, Lennart. Okay. On Slide 15 now, we lay out the expansion time line for Germany. We've achieved several critical milestones along this journey and especially in the quarter. We successfully executed our first internal production testing live and our Frankfurt office became operational in mid-June. On July 1, we announced that the appointment of Arnaud Walter as our new country manager for Germany, Arnaud is a highly experienced executive in the digital brokerage space, and he will formally take over leadership on August 1. Looking ahead, we are on track to initiate our Prensa family launch followed by VIP launch later this fall. This is a phased approach that leads directly to the official launch of the new German pension accounts in January, which we expect to be a significant long-term catalyst for our German franchise. To wrap up on Slide 16 now. Our strategic priorities remain for the year, commercial launch in Germany. We will execute the phased H2 German rollout, as I just described. two, platform and training investments, we will continue investing heavily into our platform and creating features to expand our core most 3 AI adoption we will continue to lead the integration of generative AI into our customer-facing and engineering infrastructure to support nonlinear scale. Fourth, wealth management. We're now fully utilizing our new wealth management unit to further mature the private banking offering and capture high net worth client assets in a bid to have a higher share of wallet with this attractive customer base. And finally, as Lennart talked about, cost discipline, we will maintain our cost control which has delivered an industry-leading 27% efficiency ratio, which combined with our top line momentum provides us with the flexibility to fund long-term growth opportunities as they arise. In summary, Nordnet is operating from a position of undisputed strength. We're winning market share, our product philosophy is ever accelerating, and we are structurally positioned to deliver superior shareholder returns.

[Operator Instructions] The first question comes from Jacob Hesslevik at SEB.

A lot of conference call this morning so please let me know if you have already answered any of my questions but first in Denmark, it delivered record net savings of SEK 9.8 billion, and Finland grew savings capital 33% year-on-year. Both markets are showing operating margins of 74%, which is above your group average. What product would demographic dynamics are driving this outperformance? And do you see a path for these 2 markets to structurally close the savings capital to customer get with Sweden?

Jacob, thanks for that question. So there's a lot of different factors, of course, playing into the margins. As you know, our next question, both customer segment mix, the product mix, but also notably the sort of domestic versus cross-border trading mix now as we all know the domestic sack exchanges in both Copenhagen and Helsinki are smaller. And that has led to the situation where Danes in particular, are trading a lot more cross-border cross-border trading attracts a higher commission and also generates an FX spread in most instances. And that's what's behind the margin. The leading margins in these countries. Although the Helsinki exchange has done fairly well of late, it's not done particularly well over the last 10 years, which has also led to a lot of our finished customers being highly active in cross-border investing and so that also supports the cost that margin that you talk about. When it comes to closing the savings capture, that's a possibility, I think, more so in Denmark than lines giving sort of the demographics and how well this distributed in those countries. But for sure, we're very happy with the geographic diversification we have now that we have 4 very strong countries that are each contributing to both top line and bottom line.

Got it. And cross-border trading reached a record 43% of total trades in the quarter, which has been the key lever, lifting income per trade how much of this is structural versus cyclical in your view? And could you elaborate anything on how much is from the SpaceX IPO.

So [indiscernible] right away. I mean, SpaceX was huge for us in a lot of ways in customer acquisition and net savings and an initial trading on the day. But on a quarterly basis, SpaceX didn't really move the needle in terms of a cross-border. It's difficult to answer the question directly, but I would give you an unhelpful -- it's a bit of both. I do believe that it is a structural trend. We see that it's driven by 2 major trends. I think, one, is just the mix of our countries where those countries with smaller domestic exchanges have become a larger part of Nordnet. And so that means that we're shifting structurally into more cross-border. That's one. Two, I think that the globe entire world is just getting smaller and smaller, and it's becoming more of a global investment community. If you want to participate in the AI super cycle, for example, you're having to invest in the U.S. markets, and so that's driving cross-border and we're also seeing a lot of foundries and other chip manufacturers that are not available in domestic markets, of course. And so that's driving cross-border assets European defense so I think that, that is structural. And once customers realize that it's no harder to buy a U.S. document to buy reader stock, that behavior tends to stay. But then, of course, it's also cyclical. So we talked about the AI super cycle that's been there. There's been a lot of sort of play around defense energy now given the attention in the Middle East. And so that's had an impact also. So -- but it's both. But over time, I do see the share of cross border ever climbing whether it will be as toppy as it's been this quarter, that's a different one.

And another point on the cross-border where we see that the holdings. Equity holdings of our customers are still very skewed toward domestic holdings. So in Sweden, it's around 70% Swedish stock in Finland and Norway, it's 60-70, Denmark is the most diversified, but it's still a little over 50%. So there's definitely room to diversify over time.

Okay. The next question comes from Patrik Brattelius at ABG.

Great. My first 2 question is regarding Germany. So if we start off by the fact that it seems to be the #1 focus now, but we also saw that your country manager is leading. So has this changed the launch time line in any play or execution risk in your view?

Sure, as you know. Of course, the timing was unfortunate, but we were very lucky to have been working closely with Arnaud as a senior adviser to the initiative even before we hired the previous company managers, Arnaud has been advising us since the is be very close to the project close to our staff, and so he was able to step in immediately taking over formally on the first of August. So there's no change to our time line. We're still committed to a late H2 launch. And I wouldn't say there's any additional operating risk, either Nordic is always bigger than 1 single person. And under Arnaud's leadership, I feel very secure that we're going to have a good launch and do this well and on time.

Okay. And regarding Germany, can you give us your latest take on the competitive landscape there? Have you seen any ships or changes from competitors in terms of increased marketing or additional new products ahead of this reform that we are going to see in passenger or so?

I mean it's a very -- it's a highly competitive market, to be sure. I mean, it already was before we announced that we're going in. And since we've announced we're going to Germany, a lot of other international platforms that have done the same. There have been some homegrown start-ups as well. But it really is a very exciting market in terms of being Europe's largest savings market being at an inflection point now where we see sort of an acceleration of the number of Germans that are investing in equities and equity-based funds. And so it really is a very good time to go into the market. Then when the pension reform hits in January, that's another sort of accelerant for the market. Of course, there are strong competitors locally. We've seen Trade Republic announced a new trading features and products over the last 2 weeks, which is a very good expansion of their product set. I have to give that to them. And of course, there are marketing machines. So that's a strong competitor latexes there. They're a very competent competitor. But actually, I was on a panel with the CFO of latex just the other month and he was saying in the Germany is a market that's big enough for both of us and for many more. sort of tie this all ship type situation here with the influx of savers into the equity rights in Germany and with this government being very supportive of retail investment participation and not least through this new pension account, which is subsidized and actually highly attractive.

Then my last question is regarding the onboarding issue that you highlighted in your CEO wording. Can you elaborate a little bit more what the issue was and how it has been solved? It would be helpful to hear a little bit about the process improvement when they were finalized, they have been rolled out across all geographies. And will this enable you to hit your 13% to 15% customer growth target in the second half of the year, given these changes.

Yes. So there are a couple of things in there that I highlighted already in my CEO letter last quarter. And I think the issue we identified which is not really something new, but that came back strongly my listening tour is that we make it difficult for especially high network customers to onboard because of all the AML and KYC requirements, and that process can definitely be smoother. Separate from that. But of course, it's the same flow is that there are a lot of tweaks that canon should be done continuously to the onboarding flow in order to have a higher conversion to active customers. So we measure, obviously, we met every single step, but we measure from the marketing file into the customer becoming a customer and opening account and then from opening that account to funding it and making their first investment And so there is a new team in our customer journeys area with the sole responsibility of improving that conversion to activation and they're running multiple A/B tests and features. So it's not the fact that they've done something it's going to be done and then we're happy and we move on. But this is a team that has a permanent mandates for me to improve that onboarding experience for customers to improve that conversion. And yes, you're right, that is going to help us with the customer growth target, but I wouldn't say that it's going to have a meaningful impact already in Q3, Q4, but it's something we're going to be working with all the time over time in order to keep improving that conversion to active customers.

Next question comes from Martin Ekstedt at Handelsbanken.

I wanted to ask first on your income savings ratio. I think it was on Slide 14 in the presentation. It's down to 49 basis points from 59 in 2023. But your medium-term target, as you said on the page is around 45 basis points. But is that 4 to 5 meant as a floor? Or is it more as a kind of through the cycle midpoint, if you see what I mean.

Yes. No, it's definitely -- these are medium-term targets, and they are through the cycle, as you mentioned. So -- and of course, the income to savings capital or the income margin is highly dependent on where we are in the rate cycle as well as that's a blended margin of commission income, fund income, FX and of course, NII. So we're actually printing 49 basis points now, LTM, which is above the target and in '23, of course, that's when we raise for hard and so I would read more into it than that. And again, these are sort of 5 years through-the-cycle targets.

And then on to my next question then. You had a very good customer inflow this quarter, I think 75,000, right? Some of these came into the SpaceX distribution, I guess. Are you tracking this cohort for activity levels compared to normal customers auto growth they stand out in any way? Or are they just behaving like normal customers generally?

No. We are tracking that the SpaceX cohort separately. We have a number of cuts of cohorts, of course, the one that we report on is the yearly cohort. But no, they're trading normally, and they've sort of monetize activate themselves and not just by SpaceX. So after allocation in the IPO, they've also continued to invest in setting a monthly savings plan and buy stocks and funds and ETFs like any other customer.

Great. And then finally, if I may, just quickly, sorry if I missed it. Have you stated what size buyback program you have applied for?

No, we have not no, we have not -- we will look into that when it comes to what we saw in Q1, we had a client inflows of deposits, and that changed over the time. So we watch this 1 and we can back later on with those statements. So the leverage ratio is a little bit of a constraint as well that you have in mind the leverage ratio is the constraint, yes. And now we have the SEK 81 million or; SEK 600 million that will be callable in November. So that's also some aspects that we have to take care of in this aspect.

Next question comes from Ermin Keric D&B Carnegie.

Starting on AI, you mentioned how you've increased adoption and you look to increase it even further. Do you see that having any impact on your cost outlook? And then I'm also just thinking about your user growth. So you're now at 13%, and I suppose it's been quite a strong market. We target is 13% to 15% so what would be needed to get you towards the upper end of that range?

Thanks, Ermin. Let's orbit AI. And so at the moment, AI is probably just costing us more rather than saving as cost. We're on purpose not touching the brake on token spend because it's important to us to be in the forefront of experimentation and to not only learn but use technology for the benefit of our customers. So actually, towards the tail end of June, 60% of newly written code was agentivly co-authored with Quadcode. We are, of course, working that cost base. So we've been able to get a discount on topic by listing to a certain number of tokens and so that we have to work these things smart is you don't want to tie yourself up too long because, of course, another technology may be the one that's prevailing in 6 or 12 months' time. When I talk to my leaders within product and tech, who had headcount mandates, they said they would rather spend that money on tokens and the new hires, which I think is telling. We also put into the company presentation, I don't know if you've seen yet about a metric, which is the cost of engineering salaries plus the cost of tokens divided by so-called pull requests so deployment of new code can be 1, 2, 3 or more pole quest. And so we're actually seeing a 14% decline from December to June on the cost and per polar cost. So that is an efficiency gain. But at the moment, we're using that efficiency gain in order to ship product faster and at the more automated rate rather than taking the savings and with a gross margin of over 70% of the that is the right call. In terms of the customer growth target, of course, it's the law of large numbers. It becomes increasingly difficult as we move beyond 2.5 million customers now to maintain the 13% to 15%. Nevertheless, that continues to be our target. I'm really happy to see that we had the 13% in the quarter. Like you say, it's been a confluence of good events this quarter with the IPO market with volatility with indices rising. At the same time, our marketing spend is still doing its job, and we also put a new slide on that in the company presentation on how brand awareness, brand preference, brand recall, ad recall, all these things are ticking up as they should now that we're sort of a year and a bit into our marketing push. So that's going to help support this. Germany will, over time, is not going to move the new deal initially. And then thirdly, like we already talked about it upping that conversion to account open and upping the conversion from account open to active customers, that's also going to aid that growth rate.

And additional customer growth, if you look at our market share outside of Sweden, it's in compared to Sweden where wasn't allowed to have a quarter of the population or so in Sweden and -- the other markets where we are the market leader, we have around 10% market share and those markets are maturing and catching up to Sweden. So over time, it's not unreasonable to think that we could double the market share outside of Sweden which would give us that customer growth for over the medium term?

Yes, I would agree on that. It was more the case of getting those uses, I suppose. But thank you for the call are very helpful and wish you all a great summer.

Next question comes from Andy Lowe at Citi.