Unlock the Editor’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Swedish software group Fortnox has revised its key market share figures after the Financial Times questioned the figures it presented to investors at a capital markets day in May.
Chief Financial Officer Roger Hartelius told the FT that his company’s use of figures that underestimated the dominance of the Swedish accounting software market this year, and at a similar event in 2021, was “a mistake”.
Fortnox, a publicly traded company founded twenty years ago, portrays itself as a start-up, while its market capitalization of $3.7 billion reflects the fact that it is seen as one of the fastest growing technology companies in the world, despite being listed in just one country is active.
In the original presentation published on May 23, Fortnox reported the growth in the number of accounting firms it counts as clients since 2021, accompanied by figures on its market share among small, medium and large companies.
It has now clarified that the market share figures related to a specific product, Digital Agency, which was only used by around half of accounting firms’ clients, and that in fact 80 percent of accounting firms with five or more employees already use Fortnox. The company’s shares fell 6 percent Thursday morning, wiping out $200 million in market capitalization.
Asked whether Fortnox had misled investors about its growth prospects, Hartelius denied the presentation was “made up of bad thoughts” and said it reflected how the company set its targets internally.
The proportion of small accounting firms, with zero to four employees, has been increased to 35 percent, up from the previously announced figure of 18 percent which now represents only Digital Agency clients.
As of Wednesday evening, Fortnox had not updated its January 2021 capital markets presentation on its website and Hartelius declined to reveal further historical market share figures to the FT.
“We really hope that there is not more information missing, as in this case,” he said, adding: “we are trying to be more. . . transparent.”
Fortnox’s clarifications were made after the FT asked it to reconcile its figures on the accounting market with those published by the Swedish statistics office.
Although the company’s updated market share figures are now in line with the agency’s figures, a discrepancy remains as Fortnox’s figures are based on their larger estimate of the total number of audit and accounting firms in Sweden: 28,000, versus the 25,000 counted by Statistics Sweden in 2023.
Hartelius said he could not provide additional data to clarify the picture before a Wednesday deadline because he was busy following the announcement that Fortnox’s chief operating officer had resigned.
After the FT published an article in March examining Fortnox’s metronomic growth and highlighting investor questions about its prospects and accounting practices, the company’s share price fell nearly 15 percent, losing hundreds of millions of dollars from the then $4.6 billion in market capitalization were wiped away.
Responding to questions about the FT analysis during an April earnings call, CEO Tommy Eklund said: “We’re going to get better and better at explaining the business, if it’s something that’s hard to understand, of course.”
Outgoing COO Johan Lundgren said in a company press release on Wednesday: “It has been an exciting and educational journey working at Fortnox,” adding: “I wish everyone the best of luck.”