Tecnotree Oyj

Good morning, everyone. Welcome to Technotree H1 results. It's been a record H1 2025 for Technotree with pivotal financial performance driving our growth. I'm excited to share the results with you. Well, as Technotree continues to expand its global footprint, today, Technotree is no longer a niche player, but a global leader in digital transformation. We have been creating impact through scale, serving 1.3 billion subscribers in 75 different countries for more than 90 customers. Our AI investments that started out in 2022 is helping us monetize and multiply the effect of our scalability of delivery and acquisition of new markets. We are poised for disproportionate growth and market dominance in the digital transformation era. What we have done operationally in terms of business transformation is brought efficiency by training our employees in telecom standards through TM forum certification, ensuring our product stack is highly standardized with 4,500 product features serving 40 lines of businesses, and standardize our interfaces to scale the delivery capability and expand our customers' digital footprint. In terms of our strategy, the product portfolio evolution is a story to be told. We have had incredible execution of mark to market. In terms of our ability to embed AI since 2023 into our digital stack has brought a lot of intelligent automation, creating a five year lead against our competitors in the telecom industry for AI. In 2021, we launched our ecosystem play with fintech and other adjacent market capability in terms of partner onboarding on our stack, making our stack standardized, open, standards based, reducing the TCO of the digital stack, and today creating native cloud enablement on the stack has driven the ability at low TCO, total cost of ownership, for our tier one telcos to do incremental modernization, reducing their risk while they are digitalizing their operations, and also helping us to be way ahead in terms of differentiation from our competitors who are still retrofitting legacy applications. Our prudent investments on the stack and CAPEX investments have helped us create the strategy and roll out the strategy, taking market share and growing our both cloud business as well as latest to add to our portfolio is the MVNO spread that we are getting regionally, especially in Europe. In terms of H1 results by themselves, I think it validates our business, scores our strategy for building a truly profitable business and transforming our business while doing so. The swing in free cash flow five consecutive years, the quarters of free cash flow, and the 6 million swing is telling. Despite the dollar devaluation in constant currency, we grew ahead of the market, which was at .2% and Technotree posted a H1 results of 2.7%. And in terms of EBIT performance, we are ahead of the general competitors in the market, particularly in the software product industry with a 28% growth in EBIT. And year on year, I think it is a .5% growth of plus 520 basis point growth year on year, which is quite significant. A lot of this growth has come from the operational efficiency that we have created within the business and transformed the business likewise. It is really a very proud moment, a historic moment in our growth strategy to see the auto backlog going to above 100 million. I think it's the first time in the history of the company and it's a validation of our AI embedded stack, dominance, sweeping market share, and creating a very strong moat between ourselves and our competitors. The CapEx investments, while they were high in the beginning, have now been reduced by 7% that marks the fact that we have productized and standardized our platform. And our customers are ready to take our platform out of the box and implement it very quickly, gaining scale and speed of execution. The ARR reduction is seasonal, and I'll talk more to it as we cover the revenue portfolio and backlog in detail, auto backlog in detail. And there is also seasonality in our collections. While our collections have improved in terms of real quantum of collection, there is a seasonality in terms of cash collection as well. Next slide, please. In terms of actual performance in H1, I'm really proud to say that we took great market share. We got new tier one telcos. But beyond that, we improved our cloud business and our MVNO ecosystem play to scale. And we also strategize that with the SI partnerships that we have carefully selected over the years to partner with, to grow our business into Europe and other regions. The recognitions that we have received from analysts and industry leaders is an external validation of our capability across multiple categories, and also demonstrates our AI capability in some of the areas. This builds us strong customer references and customer confidence. It also accelerates our pipeline growth, these recognitions. In addition, we are happy to announce that we had 10 Go lives in the first half, which really talks a telling story about our delivery at scale, which has been enabled by our internal AI productivity measures that we have implemented in our delivery. And that has also enabled us to deliver 600 plus features way ahead of market standards in terms of number of features per quarter on the stack. The business resilience, of course, is expanding. As customer confidence grows in our platform, we are able to increase the number of customers that use our ARR model to continue to evolve their capability on our digital stack as our ARR business is growing profitably. Moving to the next slide. Based on the order intake that we have had in H1, we have definitely raised our guidance from low to mid single digit to low to high single digit in order to remain cautious about the currency fluctuations and the dollar devaluations that we have been noticing in the market. However, we have captured market share ahead of many of our competitors and the industry norm of .2% by showing a growth of .7% for this first half. What is really interesting to note is the rebalancing that we have done between the regional growth. While our Middle East business continues to grow in terms of actual quantum of revenue, we show a good distinct growth in our European and American sales as well as revenue and order backlog. When you look at the quality of the revenue, you see that this first half, the license growth has been significant. And naturally, the delivery and ARR growth are slightly lower. But again, that is the nature of our business. They will pick up in the upcoming quarters. And the shift from license to ARR will create a higher profitable ARR growth in the future quarters. In terms of EBIT, I would say we are best among the technology product companies in the world. A 28% EBIT return is best in class in the industry. Plus 520 basis points increase definitely shows you that we have brought efficiency through AI and built scale through introducing AI productivity into our engineering processes. That is also further demonstrated by the fact that we were able to lower our capex to sales from 18% to 14% in the first half. And we are well on mark to deliver the 12% capex to sales this year that we had promised in our guidance. Next slide. On free cash flow, I think the story that has to be told is the internal business transformation that we embarked on in Q2 of 2024. When we recognized the headwinds that were approaching us, we deliberately announced an operational reduction of 7 million. We have achieved those reductions already in the first half of 2025, incomplete. And therefore, the financial and business operational discipline has helped us for the last five quarters to deliver positive free cash flow in a market that is fairly volatile in terms of dollar fluctuations and other currency fluctuations that we have faced. It also demonstrates the agility and the resiliency in the business that we have achieved. Despite the dollar headwinds, we were able to achieve the free cash flow and stay EBIT positive, a strong EBIT growth as well. We have been self-funding this growth while staying profitable. Finally, I just want to show how the strategy is evolving. All the capex investments that we have done mark to market that I talked about earlier is bearing fruit. And here are the real defining results that show that we have taken greater market share from our competitors in terms of growth in revenue on the digital platform, .7% compared to 2.2%, which is the industry growth indicator from the analysts. Our cloud business has grown 44% this first half. This is a very telling story of all the investments that we made on the digital stack to be cloud native, open standards based stack, which is showing definite returns on investment in terms of the growth in the cloud business. The cloud market today is growing disproportionately. The expected growth is about 12% to 14% per year, year on year, up to 2030. And we are growing way ahead of the market trend. In terms of the MVNX business growth, we achieved 29% growth in this business in the first half. This is a growing reflection of digital transformation, where connectivity is the foundational capability, especially after the 5G explosion, to create sub-brands and to have ecosystem play in adjacent markets. So through connectivity, we capture enterprise market share to provide digital transformation capabilities to other types of brands in the areas of sports, health, e-commerce, fintech, et cetera. Technotree has achieved a good footprint in this area, and this market is exploding and having a growth of about 8% to 10%, and we are capturing good market share. We are also scaling our regional growth and balancing our regional growth while maintaining the core capabilities and the core customers that we already have in our portfolio by partnering with SIs, who are very strategic in nature for our business expansion into these newer markets and newer customers. The SI and other partnerships that we have with infrastructure and hyperscalers are strategic in nature, and they are not for margin growth at all. They are meant to help our business bundle offerings and reduce TCOs for our customers. Therefore, we have a very winning strategy with these partnerships to scale our operations. And finally, in terms of our guidance, as I stated earlier, we are...if you can move to the next slide. We are maintaining mostly all of our guidance. We have only changed the revenue guidance from low to high single-digit growth. That is in line with the -million-order backlog that we have that we will start retiring in the upcoming quarters, several quarters, not just H2 of 2025. Our margin growth of 200 basis points, we are well on road to achieve that despite the dollar devaluation because the profitability in the business, as I've said, the underlying business is fairly stable and sustainable for profitable growth, especially because of the AI and native capabilities and the use of AI to multiply the productivity and efficiency gains in our engineering capability. And finally, I think we will deliver not in constant currency but in real currency terms, greater than 4 million in free cash flow. The rest of the guidances remain the same. And I really believe that Technotree is well poised to deliver exceptional results to our investors. And we look forward to a very healthy H2. Thank you. So, on to Indraish, who will give us more details on the financial results. Thank you.

Thank you, Padma. Yeah. Can we move into the summary what we have? What I have presented here is not just the last years or the last half years, but comparatively from 2022, which will give us a broader view of our financial situation. Our financial numbers and also tell us where we are heading and what we have done in the current year. As you can see, the revenue numbers are at about 34 million, right for the last three years. And this year in constant currency, we were able to achieve a higher growth, even though in real currency, we were down by 2%. We already spoke about the headwind, what we had from the dollars. We are also impacted by that. The earnings before interest and taxes, which is one of the major measurements of our performance, has been at a very high level, at 9.6 compared to 8 million, what we achieved in last year, H1, and almost in line with what we did in 2023 and substantially higher than what we did in 2021. And financial items, where I want to draw the attention of the audience here, it is at 5.2 million, is the cost I need to take in this first half of the year. As you can see, the financial items mainly comprised of the last, what we had to take about 4 million compared to 2.5 million in this first half of the year, which is basically the dollar weakening against euro, what we discussed earlier by about 13%. That has hit when I report the numbers in the euro numbers. And the income taxes, based on what the collections we make, was slightly higher. The net income, because I had to take a very high cost of the foreign exchange losses, it is lower at 2.6 compared to 3.7 in the last year. The cash collection, which is one of the high parameters what we have internally for our performance, we were able to collect about 30.8 million. Again, I want to draw the attention. This is not in a constant currency, but this is in the real currency. After we took the hit on the conversion, is at 30.8 compared to 26.1 what we did last year. As Padma already spoke, the highlight of this half year or this quarter has been the orders what we got, which is phenomenally high, probably the highest in any quarter at 74 million in this half year what we got, and compared to about 23 million what we had in the previous year, half year. The order backlog, which is a result of the orders what we got and what we consumed for our revenue, is at an all-time high of 105 million compared to 72 million what we had. The earning per share was because my net income was lower, is at 0.15 compared to 0.22. And just for us to remember, for 23 and 22, it is not strictly comparable because they were before the spread of the shares what we did in 2024. One other positive thing I wanted to highlight here is the free cash flow what we had is at 2.1 compared to negative of 3.9 the previous year, H1. Just want to call out in the last four quarters, since second quarter of 2024, we have got more than 4.2 million in the positive free cash flow in the last four quarters. But as Padma mentioned earlier, for the last five quarters, we have been consistently achieving a positive free cash flow. Can we move to the next slide, please? I'm coming now mainly to the quarterly numbers. As you can see, the quarterly revenue was at 7.3 million, slightly lower than the last year. But in a constant currency, we were at 18.8 million for this quarter compared to 18.7 almost comparable in the last year's Q2. The EBIT, again, as we saw for the H1, for the Q2 was also at a reasonably high level at 5.1 compared to 3.5 in the previous year. Retreating again, the huge loss we had to undertake because of the weakening of certain currencies, mainly the USD at 3 million is the exchange loss I had to take in this quarter. Taxes were at 1 million. The collection was reasonably at the same level as last year at 16.4 million. Then order backlog, as we said, is at a very high level of 105 million. The earning per share is because we had a higher, higher financial items is at 0.06. Some of the highlights in this quarter has been the operating margin at .2% compared to 18.8 in the previous year. The net sales in constant currency increased slightly to 18.8. Exchange losses were very high at 2.7 and free cash flow again at 1.1, whereas in the last year Q2, we had 800,000 as a positive cash flow. Can we move into the next slide? I think one of the other parameters we discussed is on the days or days, the collections continues to be challenging. While overall the receivables has come down, we still have a substantial amount to be collected, which are about one year at 22%. Again, all of us know that the customers we cater are very large telecom operators. And also in certain countries, we still have the challenges in collection at 22%. And days or days, if you look at them as a parameter, there's a lot of seasonality in this also. You see from 225 days, it comes down to about 144 days. And again, it goes up, comes down. By end of the day, I hope or we expect our DSO days will be between 100 to 140. That is the guidance we are given. Can we move to the next slide? Yeah, we spoke about the currency risks, what we have. 2025, 4 million forex loss in H1 due to the headwind with 13% weakening of USD against Euro. Exposure to foreign debt, how are we trying to mitigate it? While we know that dollar devaluation is something unexpected or nobody had thought. Last year, probably at the same time we were thinking we had a huge risk in the Naira. Nobody had thought that dollar will behaving the way it did in the first half of the current year. We were always targeting to reduce our exposure to the frontier currencies. So which we did in the first half of the year. And now it stands at about 10% of our total revenue. Growth in mature markets expected to reduce the impact of currency risks over time. And as we know that any weakening of any currency is normally spread over four quarters. It takes four quarters to rebound and as you can see in the next slide, what we have put or rather in this slide, what I have put as a diagram, the weakening of the dollar right from 2008. You can see that between the dollar and Euro in 2020 and 2021, the dollar was highly strong against Euro. But that trend is weakening, but we never saw such a drastic weakening of about 13% in a few months time. One thing, if you look at that, we didn't change the guidance for the free cashflow. We still keeping at the real currency about 4 million. One of the reasons for that is we expect the dollar to be slightly stabilized versus Euro, which we have been seeing in the last one month. And with that, our guidance on the free cashflow remains same. And again, we have explained last year in the volatile currency on the frontier market, what we call our revenue is to be at 27% and that has come down drastically to 10%. So where we were able to manage the other volatile currencies, but dollar headwind really hit us. Can we move to the next slide? This on the balance sheet, I want to call out certain numbers for the audience here. I wish to compare most of the numbers in the last six months, how it has moved. The trade receivables has come down from 34.5 to 32.8. The other receivables, which mainly comprises largely of the unbilled and other long-term receivables has come down from 42 to 37. The cash balances have gone up from 16.8 to 19.1 at the end of the current half year. The shareholders equity as a combination of the increase in the profitability has gone up to 93.1 million at the end of June, 2025. Convertible debentures, there are no changes. We still remain at 23.1. And the other significant is the short-term trade payables, which was at 15 million. We brought it down to about 10.4 million. Minor growth in the intangible compared to the last year at 2024. Trade and other receivable reduced by 9%. Growth in cash and cash equivalents driven by free cash flow generated from operations and significant reduction in the current liabilities. This is how I want to present the balance sheet to the audience here. And I move on to the next slide. What are the takeaway from the finance perspective in this half year? Order book at a record high, five quarters of continuous free cash flow. We are on track to meet the guidance of greater than 4 million in the whole year. Cost cutting measures, which we initiated last year has been paying off reasonably with substantial margin improvement in H1. Dollar-based contracts hurt by dollar weakness in H1. Healthy underlying performance and all the guidances on target. And we have increased the guidance on their revenue. We expanded up to the high end of the single digit growth. Can I move on to the next slide? This is what I had to the audience. Thomas, back to you. If there are any questions, we are happy to answer them.

Thank you for the presentation Indraish and Padma. Yes, we had three present questions this morning from some users and there are some questions in the chat. So if you guys are ready, then let's start with the first question. The recent contract wins you announced. How quickly will they translate into profits?