Translation: Original published in Finnish on 07/02/2026 at 07:45 am EEST

Lemonsoft issued a profit warning on Wednesday, where the company lowered its revenue growth guidance for the current year, but the profitability guidance remained unchanged. The decline in the outlook is partly due to a technical issue (Lixan's financing arrangement and Lemonsoft's holding falling to below 50%), but at the same time, customer churn has remained high since the beginning of the year and has not started to decline as previously expected. Our current estimates (growth 6% and adj. EBIT 27%) are within the updated guidance range, but the decline in the outlook still puts slight pressure on our estimates. We will review our forecasts in connection with the Q2 result at the latest. On a positive note, in Lemonsoft's core sectors (industrial manufacturing and wholesale & retail), the market has shown signs of recovery, and the sales outlook has improved. This supports the revenue growth prospects for the coming years, against which the share valuation is, in our view, very moderate.

Several factors weigh on the growth outlook

According to the new guidance, Lemonsoft expects its revenue to grow by 1–7% in the 2026 financial year (previously 5-13%). The company still expects an adjusted EBIT of 23--29%. Our estimate before the profit warning anticipated 6.4% growth for the current year, so we were already at the lower end of the previous guidance range, but now we are at the upper end of the new range. In terms of profitability, our current estimate is 27%.

There are three key factors behind the decline in the outlook. First, the company announced a financing arrangement for Lixani Oy, as a result of which the company will no longer be consolidated into Lemonsoft's figures. Lixan's revenue in 2025 was around 0.4 MEUR, so the impact on 2026 revenue is estimated to be around 0.2 MEUR (~0.6 pp). The Lixani ERP solution for the construction industry has no longer been at the core of Lemonsoft's current strategy, which focuses on industrial manufacturing and wholesale & retail, so the arrangement is not a complete surprise.

Secondly, the development of Finvoicer, acquired in 2023, has been weaker than expected due to increased customer churn, which is reflected in transaction and accounting firm revenue. In our view, Finvoicer's decreased revenue has not been particularly profitable, so the impact on earnings will be minor for this reason. Last year, Lemonsoft faced challenges with Finvoicer's invoice financing business when a single large key customer became insolvent. Since then, the management of the business has been changed, and several other changes have been made. Overall, the Finvoicer acquisition appears to have been unsuccessful in hindsight, even though we believe the HelpostiLasku product that came with it has been very successful under Lemonsoft.

Thirdly, Lemonsoft's customer churn for SaaS and consulting revenue has remained at the previous year's level in H1 due to customers' financial difficulties, bankruptcies, and M&A, and has not decreased as we expected. According to the company, churn has been elevated, particularly outside Lemonsoft's core business areas.

The recovery of core industries supports the growth outlook for the coming years

As positive news, the company highlighted that the market in its core industries (industrial manufacturing and wholesale & retail) has shown signs of recovery. According to the company, new sales activity has increased significantly during late spring, and the sales pipeline has grown substantially. This supports our view that Lemonsoft's competitiveness in its strategic focus areas remains sound. According to the company, the market outlook is partly boosted by the fact that certain legacy software solutions are being replaced at a faster pace than before. The reason for this is that certain software providers have announced that their products have reached the end of their life cycle, forcing customers to switch software in the coming years. Another factor is that AI features cannot be built on top of old legacy software. As a result, remaining with older systems will likely be a significant competitive disadvantage in the next few years, as most of the industry transitions to modern software with various AI-powered features built on top to enhance operations. However, due to the length of sales cycles, the increased activity will not materialize in this year's revenue to an extent that would compensate for the negative effects of customer churn and Lixan's divestment.

Overall, the decrease in the outlook is a slight disappointment, particularly regarding the elevated customer churn. However, Lemonsoft's profitability appears to be holding up well, and we still believe the growth outlook is strengthening in the coming years. This is also supported by the company's comments regarding its core businesses. In the big picture, the decline in the outlook does not materially change the company's investment case, even though there is slight downward pressure on short-term estimates.