Major Finnish scaleups unfazed by economic headwinds

Helsingin Sanomat has analysed the latest financial statements from 15 leading Finnish scaleups, as defined by size or the amount of capital raised in recent years, finding that most of the companies continued to grow at an impressive clip despite the challenging economy last year. 

Hostaway, which provides solutions for managing bookings, pricing and marketing to businesses in the accommodation sector, exhibited the highest growth rate, its revenue surging by almost 180 per cent year-on-year to over 20 million euros in 2023.  

CEO Marcus Räder revealed to the daily that he expects the company to at least double its revenue this year to over 50 million euros, following the establishment of offices in France and the UK. The growth outlook for this autumn is especially bright as renting holiday properties is rapidly becoming more popular not only in the company’s main markets, the US, Canada and Mexico, but also in Europe. 

This year the company has also ventured into financial services, with the launch of flexible loans catered to the needs of holiday rental property managers in North America. 

“This initiative is a testament to our commitment to providing comprehensive solutions beyond property management software, helping our clients achieve sustainable growth. Our foundational belief is that our customers’ success is our priority,” Räder stated. 

Charging growth 

Almost doubling their revenue from the previous year were Virta, a technology provider for charge point operators based in Helsinki, and Oura, a developer of smart rings for health tracking based in Oulu. The latter reported 199 million euros in revenue despite its fiscal year excluding the all-important end-of-year holidays for consumer electronics. 

Jussi Palola, the CEO of Virta, said the company has set its sights on exceeding the 100-million-euro mark this year, a goal that requires a roughly 33 per cent increase from the 78 million euros posted last year. 

Last year Virta completed an 85-million-euro funding round that fundamentally guarantees its ability to make the necessary investments in growth in the coming couple of years. With electric vehicle sales slowing down in Europe, however, it is looking to expand the network of charge points primarily in Southeast Asia.  

“High interest rates have slowed the shift to electric vehicles. While we can’t change the global economy, in light of its realities we’re experiencing solid growth relative to the general market development,” outlined Palola. 

On average, the 15 scaleups reported a year-on-year revenue growth rate of 38 per cent. 

Bottom line takes precedence 

Relex and Swappie were the largest scaleups analysed by the newspaper, each with annual revenue exceeding 200 million euros. The latter, which refurbishes and retails used iPhones, was one of only four companies to register a drop in revenue – the drop coming only two years after it had been named the fastest-growing startup in Europe by the Financial Times. 

Swappie saw its revenue contract by 0.3 per cent as it moved from prioritising revenue growth to prioritising profitability, including by conducting two rounds of negotiations with staff representatives over cost cuts and transferring most of its refurbishing operation from Helsinki to Tallinn, Estonia. The effort appears to have paid off at least to a degree, as its earnings before interest, taxes, depreciation and amortisation improved from -35.4 to -15.3 million euros. 

Relex has built up its partner network in recent months, including in Iceland and Romania. 

Also, many of the other scaleups appear have transitioned from pursuing growth to profitability, with the operating results improving almost across the board – albeit while staying predominantly in the red.  

Last year was profitable for only four of the companies: Framery generated a profit of 18.8 million euros with its soundproof office pods, Supermetrics 3.1 million euros with its data acceleration solutions, Hostaway 2.2 million euros with its business-facing booking system and Yousician 200 000 euros with its interactive tool for learning to play the guitar and bass. 

Costly R&D bodes well 

Helsingin Sanomat reminded that the cost-intensive nature of product development in certain fields could explain a sizeable share of the losses racked up by IQM Quantum Computers and Varjo, a developer of virtual reality (VR) headsets. 

Varjo, for example, made its largest investments to date in product development in 2023, bringing to market a new generation of hardware that it expects will lead to substantial revenue growth and enable it to halve its operating loss to around 17 million euros. 

“This year we’ve returned to double-digit revenue growth. At the same time our product development [costs] have clearly fallen,” CEO Timo Toikkanen said to Helsingin Sanomat. 

Demand for Varjo’s hardware has surged especially in the defence sector. In August, the Helsinki-based company announced it intends to meet the demand arising from the proliferation of extended reality applications in defence training and simulation by opening a secure manufacturing facility in Greater Helsinki. 

The announcement came a few weeks after the company had revealed it has been chosen to supply the headsets for the first-ever pilot simulation training approved by the Federal Aviation Administration (FAA), a branch of the US Department of Transportation. 

Record-breaking quantum 

IQM, meanwhile, has continued to push the envelope in quantum computing. In July, it reported that it has achieved milestones in two metrics reflecting the quality of a quantum computer, including a new record gate fidelity rate for two-qubit operations. 

Gate fidelity is a measure of the accuracy of quantum operations. 

“This achievement cements our tech leadership in the industry,” proclaimed Juha Hassel, vice president of engineering at IQM. “Our quantum processor quality is world-class, and these results show that we have a good opportunity of going beyond that.”