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Swedish software group Fortnox revised key market share figures after the Financial Times questioned figures it presented to investors at a capital markets day in May.
CFO Roger Hartelius told the FT that his company’s use of figures that underestimated its dominance of the Swedish accounting software market this year, and for a similar event in 2021, was a “mistake”.
Founded two decades ago, Fortnox, a listed company, presents itself as a start-up, with its $3.7 billion market capitalization reflecting the fact that it is considered one of the fastest-growing technology companies in the world, despite operating in just one country.
In the original presentation published on May 23, Fortnox reported growth in the number of accounting firms it considers customers from 2021, along with data on its market share among small, medium and large firms.
It has now clarified that the market share figures were for a specific product, Digital Agency, which is used by only about half of accountancy firms’ customers, and that in fact 80 per cent of accountancy firms with five or more employees already use Fortnox. The company’s shares fell 6 percent Thursday morning, wiping $200 million off its market capitalization.
Asked whether Fortnox had misled investors about its growth prospects, Hartelius denied the presentation was “built from bad ideas” and said it reflected how the company had set its goals internally.
Its share of small accounting firms, which have zero to four employees, has been updated to 35 percent, up from a previously disclosed 18 percent, which now only represents Digital Agency customers.
By Wednesday evening, Fortnox had not updated its January 2021 capital markets presentation on its website, and Hartelius declined to provide the FT with further historical market share figures.
“We really hope we’re not missing any more information like this,” he said, adding, “We’re trying to be more . . . transparent.”
Fortnox’s clarification was made after the FT asked it to compare its accounting market figures with those published by Statistics Sweden.
While the company’s updated market share figures now match the agency’s numbers, the discrepancy remains because 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 was unable to provide additional data to clarify the picture by Wednesday’s 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 methods, the company’s share price fell almost 15 percent, wiping hundreds of millions of dollars off its then $4.6 billion market capitalization.
Responding to questions about the FT’s analysis on an April earnings call, CEO Tommy Eklund said: “We’re going to get better and better at explaining the business, if of course it’s something that’s hard to understand”.
Outgoing COO Johan Lundgren said in a company press release Wednesday that “working at Fortnox has been an exciting and educational journey,” adding, “I wish everyone the best of luck.”