Translation: Original published in Finnish on 5/7/2026 at 8:00 am EEST.

We reiterate our Buy recommendation and EUR 1.8 target price for Talenom. Q1 results exceeded our expectations, especially due to stronger-than-anticipated growth in Finland, but there is still much to do in international operations. However, in our view, the company is on the right track, with management strongly focused on improving productivity and profitability. If international profitability turns around, Talenom's investment story would appear significantly more attractive than it currently is, which would also support the valuation.

Finland drove the earnings beat

Talenom's Q1 result clearly exceeded our estimates, driven by Finland's surprisingly strong performance. Revenue in Finland grew by an impressive 3.7% from a strong comparison period, considering market conditions, and this strong performance directly contributed to the Group's profitability. Comparable EBITDA of 5.5 MEUR and EBIT of 2.0 MEUR exceeded our expectations by a reasonable margin (EBITDA 5.1 MEUR, EBIT 1.6 MEUR). In Sweden, revenue continued to decline sharply (-9%), but adjustment measures also continued, and profitability improved slightly from the comparison period. There is still a lot to do to achieve a positive EBITDA, but we consider the signals (such as new sales versus churn and employee satisfaction) to be encouraging. In Spain, revenue growth (+32%) exceeded our expectations (+27%), but profitability was weak due to one-off costs. However, the company also has a clear program to improve profitability in Spain, which is likely to be management's next focus. Overall, the new Talenom's fresh start as a service company went operationally well, in our view, even though profitability challenges in Spain and declining revenue in Sweden still require solutions.

Things are progressing as expected

Talenom reiterated its guidance, according to which 2026 revenue will be 110–120 MEUR and EBITDA 18–22 MEUR. Q1 progressed in line with the company's plans, and the result appears to be heading roughly towards the midpoint of the guidance range. As a result, our forecast changes were minor. We slightly raised our forecasts for Finland despite the weak market outlook, but on the other hand, we slightly lowered our forecasts for international operations. In our view, Sweden's positive EBITDA in 2026 is achievable even with lower revenue, but our EBITDA forecast is at break-even. We slightly lowered Spain's profitability forecasts as rapid growth makes cost control more difficult, but growth is impressive, and in our forecasts, Spain's revenue will exceed Sweden's already this year. The turnaround in international operations is potentially the most critical driver of the investment case. In our view, Finland's competitiveness and outlook are stably positive, but there is not yet evidence of profitable international growth. We think Talenom is now on the right track, but the ongoing AI disruption across the industry creates significant uncertainty for the company's longer-term outlook.

Valuation rises with performance

Talenom's international business is currently weakly profitable in Spain and performing poorly in Sweden, but both operations still hold value. Therefore, we primarily use a sum-of-the-parts analysis in our valuation, which leads us to our target price of EUR 1.8. Roughly 72% of the value is based on Finland, about 20% on Spain, and about 8% on problematic Sweden. High financial leverage creates a huge valuation range between positive and negative scenarios, but if the new strategy and management succeed, Talenom, which is still out of favor, also has significant upside potential. Additionally, when looking at cash flow, we believe the valuation is already quite attractive even with 2026 forecasts, despite earnings-based valuation multiples remaining high.