Carasent Asa

Hi and good morning. Welcome to Q1 earnings call. My name is Daniel Löfman. I'm the CEO. With me I have Sven Martin Bjornstedt, our CFO. And we'll start with me giving some highlights and then a company update. And then Martin will give a financial update. Looking at the highlights for the first quarter. I hope that you all have seen that we have released new financial targets yesterday after working hours. And the background of that is that we've seen a good increase in new custom contracts. We have had more efficiency gains than we had planned for. We have sold Confrere and we have continued very low churn. gives us very good visibility on this year and the next year. And I will come back to that and give more details later in this presentation. Other highlight is that we have a new agreement with Västergötalands region in Sweden regarding MedRave. And MedRave is our system to follow up the quality of care in most in primary care and also to automate reporting to national quality registries. And Västra Götaland VGR is now changing EHR system for the region. And then they have procured the MedRe functionality for the new EHR system. And the ARR from this new contract is 11 million. The ARR from the old contract was around 5 million. So there's a 6 million increase. We also have 2 million of consultancy fees connected to this that we'll have this year. And in most respect, this is basically a price increase we're doing. It might sound like a lot, but the background is also that Medrev have had a lot of new functionality since Vidyar procured Medrev the last time. So we're actually increasing price to catch up on that. And in general, I think we have quite good pricing power as we need to use, especially in that product. So it's mostly a price increase when they update to a new system in Västra Götaland. We have also released our e-referral solution in Stockholm for WebDoc. So e-referrals is that if you use the region's EHR system in Stockholm, you can send referrals directly to our clinic using WebDoc. It used to be before this that if you had used WebDoc in Stockholm, you had to transfer the referrals by hand from the public system to your own system. And that's quite cumbersome and really makes it more difficult to sell a web doc where you have to transfer all those by hand. The first pilot says that he can add one more patient per day thanks to this solution. I think that's a bit optimistic. He's an optimistic guy. But I think it's an important point he's making. And that is that if you look at use of our systems, they typically, we cost around 2% of the turnover if they use a lot of our systems. solutions. So we take a rough 2% of turnover for our customer. But for the customer, we also set a lot of how it is to work within that clinic or hospital. So our systems are extremely important when it comes to driving your processes internally, driving profitability, all these parts. So if we're really good at that, in selling those kind of solutions and really developing them to fit our customers, if we charge 2% or 2.5% of their revenue, it doesn't matter that much. They have mostly fixed costs, so to make sure that our systems are always up and running, never down, that we keep improving, making sure that they can do as much as they can and help as many patients as possible each day, we sit in a really good position. When it comes to growth, Signed not implemented ARR is now up to 40 million NOC. It was 2 million NOC at the same time last year. And this will propel our growth next year, of course. And it gives us this visibility of where we're heading in a really good way. And if you look at signed ARR at this point in time compared to the same time last year, we have organic growth of 20%. And I think this is the most important number for us to look at. This is what says what will drive our growth going forward. And ARR is by far the most important type of revenue for us. We are more and more moving from consultancy fees to ARR. And in any agreement we do, we make sure to really focus on the ARR. So for example, the new agreement with Volvat, We have focused on getting well paid for our ARR. We have low churn. This contract will last for a long time. The implementation and the consultants were connected to that, but that's quite big in that contract. We sell it roughly half of what we usually charge. It's enough to pay for our costs, but it's not where we make our profit. It's not from the consultancy fee. It's the same in VR. We only charge 2 million to get Merev into the new HR system. But it's the ARR we're focusing on. And in the long term, that will really help us because it adds every year. Looking at profitability, we have done additional cost savings. And I think this is also an important point. Last spring, we did a big cost savings program. We changed the entire structure of the company. We put a lot of new people into new roles. And then, of course, if you do those kind of changes and so much changes, Not everything is perfect day one. A big part of running a business is every day become a little bit better. And over time, that creates a lot of improvement. And we continue to get every day a bit better. And what we've done since then is looking at different roles. Are they needed? Are they not needed? Did we get that right? And so on. So we can get more and more efficient and keep getting more efficient going forward, which I really look forward to. And every role when someone leaves, we take a hard look at it and think, can we find another way of not having to hire a new person? Can we move from consultants to employees? Can we lower our cogs and so on? And this has led to quite significant year over year improvements when it comes to EBITDA and EBITDA and excluding WebDocX. And I think WebDocX should always be excluded when looking at this measurement on how we're doing. Because WebDocX is using our position, our knowledge to create value in a completely new market for us. So it has nothing to do with the present business. But the EBITDA student WebDocX goes from minus 11 million to plus 1 million. So that's a big improvement. And we also actually cash flow positive in the first quarter. Looking at our financial development, in the quarter we only have organic growth. But the previous numbers actually include Conferera when you compare the revenue and all the other measurements, of course. And you can see here that the EBITDA is improving quite rapidly from back. And you can also see how we continue to invest a larger share than we used to in maintenance. And this is, I think, the most important part to win new customers is that that all of our solutions really help them every day, that there are no bugs, it's always up and running, and that maintenance is really important to give us pricing power and also to drive sales. This is a more important part to drive sales than new functionality. If the systems are stable, they work really well, there are no bugs, they're always up and running. Because all of our solutions are mission critical, you cannot run a health care clinic or hospital without the HR system up and running. So when there are bugs, when it's downtime, it really hurts the production of our customers. On this slide, you can really see how we are scaling into our cost base. So revenue has increased by 7 million NOK. And a combination of growth and cost savings lead to a large improvement in EBITDA of 30 million. What's also worth mentioning is that at the same time, we are investing in compliance and marketing and other functions. So we're not just saving money, we're trying to become a much better company to also spending more money on new things than we didn't spend on before. So it's a combination, but in total, of course, we're saving money. Going forward, growth in ARR drives very limited costs. so that's really what i like compared to my previous business of running clinics uh that here a new new revenue does not at all drive costs especially when it comes to error the consultancy is a bit different and as i hope you know within webdoc and most of products we do not have any development for a specific customer and the consultancy then is just implementation projects and helps helping customers with education and so on but some of our products have some development specific customers also and if we continue to focus and as we do continue to focus on efficiency we will see excellent effects on the bottom line from our growth and looking what we've done to drive sales i would say the first three points are the ones where we have The last two, we're not really there yet. The focus on customers is going from kind of an internal focus that we used to have to an external focus where we really discuss and meet our customers, look at what makes us more attractive in their eyes. That's the most important point. And that lead us to choose what to develop. how to improve our products, how to improve our delivery, and to always, of course, then become also more efficient in doing those things. We have invested a lot in marketing. We have new web pages for almost all products now. I think there's one or two lacking still, but almost all of them have new stories around them, new web pages, new marketing material. We are also running a lot of ads. in different forums. And most importantly, we're trying to generate a lot of leads with different types of efforts and built the marketing department based on really generating leads for our sales team to work with. We have started with outbound sales efforts. We're not really there yet. It's supported by the change in how our sales people are paid. They now have a much larger share of the payment being dependent on how much them as individuals sell. It used to be mostly fixed salary. So I think that will also help. But it's an ongoing effort to move in that and also to learn how do we best approach a customer which is semi-warm. I would say that most of our potential customers, they're using an EHR system which they're not very happy with. I think that most of them feel that they would be better off in using WebDoc, but you have to convince them to really take the lead, take all the work in a changing system. And as all of our customers mostly have fixed costs, it's really expensive to have some downtime also when changing HR system. So you're a bit reluctant to do that. And it also creates a lot of turmoil within the clinic or hospital typically to change HR system. And that's why our delivery team is so important and they do a great job. And what we're trying to market at the moment more and more is that it's quite easy to change to WebDoc. You can import all your old medical records. The customers that we do move, they are really happy with the change. When we ask them a month after the change to WebDoc, are you happy? We get really good responses and I think To do more marketing around that will really help us because I think that's a major obstacle to change systems. And we're also doing new development to open up new markets and there I especially look forward to surgery. This has given effect. If you look now, as I mentioned previously, we have 40 million of signed not implemented ARR. It's up from 2 million before. And if we would add that, it equals 6% growth on top of the growth we already have. And the major new contracts in Norway, it's Medical and Volvat. In Sweden for WebDoc, it's Capio and Joint Academy. And for Medrevis, Västra Götland's region. So we're winning customers from many of our competitors at the moment. I think we also have quite a strong potential pipeline of new contracts. Largely ones, it's connected both to Sudry, which I think will really help drive web doc growth even further. But also in Norway, we need new contracts for Atcuris and Adopus. That's extremely important. We are not close to where we need to be at the moment within those products. So it's really needed, but it's also ongoing. And I have strong beliefs in us getting further contracts. Looking at new functional to drive growth. I've already mentioned serial e-referrals. I really look forward to our work on the patient journey within WebDoc. Today in healthcare, you still send a lot of snail mail. You have a lot of phone calls. It's really cumbersome to be a patient and it's also cumbersome to be the caregiver because you have to send all these posts and then people don't like what they see in the post and they call you and so on. And this takes really a lot of time and effort from the clinic and makes it difficult to plan your days. And within WebDoc, we have a lot of functions that really can help the caregiver be much more efficient and just get rid of all this snail mail the phone calls and so on. But we need to make sure that it's a really good experience all through. And we need to sell it as an experience and a process, not sell it as different functions. And me as a customer, I would have loved what we can do within WebDoc in a way that almost no other system I've seen can do. So it's really something we can work with. HBI, we've been talking about the new functionality before and that it not growing as fast as we wanted. Here you see the number of tests in that new functionality from August 22 to March 24. And you have this really exponential growth. And this is how it typically looks with software, especially in healthcare. You need to have some first users, then they took some other users, and then more and more users get to know about the product. It's difficult to sell a product that you don't, to get someone to buy a product that they have no references on. Because you're quite careful within healthcare. You really don't want to take risks as a healthcare provider. And it's also in the mentality of a healthcare provider. So here you can really see the growth. We hope it continues this way. You never know, of course. But it's a good sign. And in total, we have new customer growth of 5%. The net retention rate of 110%. And so Martin will talk more about it. And all this leads us to our new targets. And with the backlog and cost control, we have this high visibility of our results going forward. And if you look here at 2023 compared to 2024, 2023 of course includes Conferrere. But the difference between 2023 and 2024 is a combination of the savings we already have done and growth and continued cost control. So we feel it's quite a lot in our hands to make sure this happened and that this is very doable. Looking at 2024, 2025, more of the improvements come from high growth and continued cost control, of course, but growth is a larger part of the improved results. But the growth in here is the increased growth from 2024 to 2025 is roughly 15 million NOC. And that's what we have in the backlog for next year. So we basically know that we have that extra revenue. Then, of course, we have to continue to sell well in all of our products and have the underlying growth that we already have that needs to continue. We need to improve it a little bit. But most of the difference between these two years, we already have in the backlog. So we feel quite good about this. Looking at the financial performance in the first quarter. We have shown you this structure before to give you a good view on how the different parts of Casent are doing. We have the major part which we call operations which are the ones the part of Casent that is quite healthy. It's 86% of our revenues almost all of it. There we have 16% growth. EBITDA continues to improve and especially EBITDA improves from zero to eight million in the quarter. So quite good improvement there. When it comes to the parts where we have a little bit more challenges, we have HBI and Adopus. We used to have Conferero also, but it's been sold. It's just 30% of our revenue. There we have a lower growth, so it's important to keep going and the signs are very positive when it comes to HPI as you saw in the previous graph. At Opus we still have some work to do when it comes to growth but costs are under control within these two products now which feels really good as you can see from the EBITDA going from minus four to minus one million and we expect to continue to improve that during the year. In WebLockX we have improved somewhat and we keep going from consultants to employees in that project So that will also help us save money. And HQ has improved a bit. So looking ahead, we aim to continue with strong organic growth. A lot of it is already in the backlog. I look forward to having new functionality that will drive sales. even better. Efficient use of resources is of course extremely important when it comes to driving profitability and in this quarter we did have additional cost savings and those are the only one ops that we have adjusted the EBITDA with is the cost of the related layoffs of 1.7 million. And it's a bit all over the organization. Where we've seen that here we can become a bit more efficient. But it also comes from, yeah, every time someone leaves, we look at do we need to replace this role or not? And can we replace it with someone internal and always become more efficient? And finally, which is an extremely important part in the little bit more long term, is the launch of World of Gates. The development there is focusing on certifying the system for Germany. So that someone working for a public system in Germany can start using WebLockX. We hope to do that within the coming six months. And we're also working with acquisitions, as you know from before. I think it's an important part of rolling out WebLockX in Germany is that it cannot be a complete greenfield. Then it will take too long and be too expensive. So we are looking for an acquisition there to support them, to have a custom base to work with. But we have to make sure that we buy the right target and that the system of that target is ready to be replaced. And it doesn't have too much functionality because then it will be too difficult. So I think we have good dialogues and look forward to continue that work. But nothing I can go into more details now. Having said that, I will hand over to Martin.

Thank you, Daniel. Although we don't see all the effects of the recent operational advancements in the figures yet, we are starting to see that our financial metrics is also improving rapidly. Revenues in Q1 was 67 million, up 12% from last year. And we now have a signed ARR base of 260 million, which grew organically by 20%. Our net retention rate was 110% in Q1, which shows our very solid basis for growth. And if we hadn't succeeded at all on the new sales side, we would still have grown 10% the last year. It's so improving. We had the 12% adjusted EBITDA margin in Q1 and the minus 7% EBITDA minus capex. And that's including all the investments in WebDocX. So quite some details on this slide, but in summary, we are seeing major improvements on several levels. As you see on the top here, WebDoc grew 25% year over year, and adjusting for currency, 21%, which is still a major uptick compared to the level we saw last year, which was around 15%. And that shows that WebDoc is gaining momentum on both the new sales and also upsell to existing customers. Our other EHRs is growing at a steady pace. Here you see that the platform products, which is HBI and MedRev, Declined, but that was due to the divestment of Confrer and adjusting for this, we had a 10% organic growth in this category as well. And our consulting revenues are down, and this is because we prioritize recurring revenues in basically all levels of the organization, as Daniel mentioned. Our gross profit increased quite significantly from 80% last year to 84% this year. And this is driven by two main factors. Firstly, we have done procurement process in Norway for a new hosting supplier, and that cut our cost by close to 50% on a run rate basis, around 2 to 3 million per year. And also, the divestment of confrere had a positive effect on the margins, given that it was very dilutive on gross margins, same period as last year. Personnel expenses increased 5 million. However, this was driven by a decrease in capitalized development of more than 10 million. So this is what we have talked about, that we prioritize our core products in our core markets, and then we capitalize less costs. Also, we had the one-off on the personnel expenses of 1.7 million related to that. the layoffs in the quarter that will drive cost savings going forward. So in total, EBITDA increased from 2.3 to 6.3 million. And adjusting for the layoffs, we had the adjusted EBITDA of 8 million in Q1 and the EBITDA minus capex of 4.9. And we had a positive EBITDA minus capex, excluding the German expansion project. Our recurring revenues grew organically by 15% in the quarter, which is also a step up compared to the level we have seen last few years. And it was driven by a strong net upsell of 12%, where approximately a bit less than half is related to price increases. And the other half is that we continue to sell more services to our customers and that they continue to grow. Churn is very low at 2%. And the new customer growth in the quarter was 5%, which is quite in line with what it has been the last few years. However, we now see that all the initiatives on the sales side is starting to pay off. And we see that the ARR, including the signed not implemented ARR, is increasing quite rapidly, mainly as a result of the large new contracts we have won. Looking at the signed ARR last year, it was 211 million. And with constant currency, we had the organic growth of 20%. And you can see that it is driven by the strong growth in the revenue backlog that increases from 2 to 14 million. Combined with the strong underlying basis we have, with a net retention of around 110% and the bread and butter new sales of around five. In addition churn is very low, 1.7% for the group and that's even lower if we exclude Adopus which has seen some churn. It's closer to 1% and that clearly shows that Our system is really critical to our customers and in addition as Daniel mentioned we are a quite small fraction of their cost so that combination is very powerful in terms of our churn and also our pricing power in the long term I would say. Another highlight in Q1 is that we have the positive cash flow. Our operating cash flow was around 13 million and the increase was partly driven by the improvement in profitability. But also in Q1 we have quite strong working capital effects as some of our products does annual invoicing for their customers. This of course varies, will vary a lot from quarter to quarter. But in general, our working capital profile is very attractive and supportive to our cash flow, given that we invoice our customers in advance. That could be like three months in advance or 12 months or one month. And then we pay our invoices in arrears. So it's a positive effect that we will have in the long term as well. Investment or capex is significantly down from 25 million to 13. And in total, we are cash flow positive slightly, but it is a milestone for us. And our profitability is also improving rapidly. On the left hand side, you see that our cash profitability excluding WebDocX in Q1 is positive. Improvement of 12 million euro a year. And in Q2, it will be close to break even, even including WebDocX. And the main uncertainty in our business and profitability development is basically how fast we can grow our revenues, given that the cost side is very much in our own control. And combining the large contracts we have won with the underlying net retention and the bread and butter sales that we have delivered the last few years means that we now have much of the growth for 2024 and 2025 already secured. And this gives us very strong visibility that the margins will improve rapidly as well. This was faster than we anticipated, and also at a lower cost, given that we expected that the new ARR we would generate would require more resources than the one contracts we have signed. So in general, all our businesses are highly scalable, and if we manage to continue to grow our revenues, our margins will expand rapidly also in the long term. So with that, we can open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.

Okay, so we have gotten quite a few questions here. First one is from Rasmus Persson. Can you talk about the tender for the region Stockholm and Gotland and any risk you see if they move to a closed system?

So I would say that today Stockholm is basically a closed system, which we just opened up. Because in Stockholm, in fear, you can choose any system you want. But if you choose another than the original system, then you have to transfer all the first by hand or The ones sending referrals have to send you a letter in the post. And no one referring a patient will send a letter in the post. That's just a lot of work that they want to do. So everyone has to transfer patients by hand or as we now can do with the help of a RPA solution, a robot solution, we can transfer patients between the systems. And I see us doing similar things with all other systems in the regions, so that our customers are free to choose systems, even if the region wants it or not. That's our aim. I think they basically closed the day. What they say is that the private providers will be allowed to use the public system. That's what they say so far, but it's not a demand. And Stockholm has generally been there. I think that they will continue to be there. So I feel very positive about Stockholm. That's a couple of years in the future. So now we talk about the system that will be deployed in 2029, 2030 somewhere. And so it's quite a lot far in the future. But at that point in time, I think it will be very positive for us because the major obstacle for us is that everyone needs to get the change system. They know that they will be more happy with WebDoc than with what they have. But it's a lot of work to change systems. And as you have seen in the press problems from time to time, typically within healthcare, people are not very happy about changing systems. So if you own a private practice or a hospital group or something like this, you're very reluctant to do those changes unless you feel really, really confident it's good. So that's our main obstacle. And really, Stockholm will fix that for us because everyone will have to change systems. Also, I think everything points to Cambio winning that process. And those are the ones we're winning customers from in Sweden at the moment. So I think you saw that I had a copy on a picture showing that we won from them. So we had, we signed, I think it was eight clinics that moved from Cambio to WebDoc now. So I think that's a very positive thing for us. I think that in a closed system, I think it will be less closed going forward. And also all What the government is initiating in this area is to increase interoperability between systems. There is also new EU regulation on the same thing. So I think in the longer term, we're moving to a more open environment and not a closed environment. But it's something we have to always look at. We have to be there. We have to push for it. And we have to discuss with different parties. Yeah.

Next one, you had a workshop with Cambio a few years ago, where you talked about sharing information between your EHRs. Any update on the progress here?

Yeah, I don't know that specific workshop, but as I mentioned just now, there is a push from both the government and EU on increasing interoperability between systems. There is even a government investigation into new legislation, where they're looking at interoperability between the systems. You have a lot of new things coming out, for example, NLL, which means that any user of an NIHR system should be able to see all medication given by any other uh healthcare provider in sweden so that will really help and and lessen the demand for interoperability between the systems themselves uh we also have mpr that is part of eloquent where you can really also look at the medical records from other institutions if even if they use the same hr or not so i don't think the solution is really to have a one-on-one integration with with cambio it is moving in direction that society is moving with more and more interoperability between systems

Great. There's talk about Nationella taxon. How large part of revenue within Webdoc is from doctors and physician within Nationella taxon?

So I think Nationella taxon here, I think, is talking about etablering, what you usually call them in Sweden. So that is that the doctor or physiotherapist or psychologist They have an agreement where they can, on their self, just take on patients without the region having any say in it, in general. It's a bit mixed. And there is always discussion on should that continue or not. I think that it was introduced in the 90s with the right wing government at that time said that we need to increase competition and then you were allowed to leave the hospital and then you you didn't have to win a tender you could just you got this agreement that with the government that you can charge the region for any care you provide within a within a certain limits then it was about to be closed down uh back in in was around 2000 a little bit later uh social democrats didn't like this at all Then when we got the Reinfeldt government, they started allowing those contracts to be sold. So there were no new contracts awarded, but then they started selling them between themselves. So doctor to doctor, nurse to nurse, physiotherapist to physiotherapist and so on. And ever since then, it's been really difficult for the regions to close this down because individual doctors and physiotherapists have paid a lot to get those contracts. That's been discussed since the 90s. If that will happen or not, I don't know. The reason why the regions want to close this down is that they don't really have control of these doctors and physiotherapists, and they want to have control. They want to tender those agreements instead. I don't think we're very dependent on those agreements, but I also don't think they will disappear. It's been an ongoing discussion for quite some time. I would say that it's not a major problem for the regions. So it's not really a big push, but we'll see.

Next question. Can you please provide a split on net retention? How much is price increase? I mentioned it briefly in the presentation, but if you look at our net retention, it's composed of 12% net upsell and 2% churn, basically. on the net upsell side price is close to half of it so five six percent and uh the remaining is that we have seen um quite a strong momentum for several our add-ons for example boardroom recently so um so that's one part the upsell and then the other part is that the volume growth so that's the remaining uh six seven percent in addition to the price Next question from Philip. Can you elaborate on the momentum in the sales from smaller contracts?

Yeah. So talking then, it's mostly web doctors winning a lot of small contracts all the time. And we have good pace in small contracts. What really drives growth to get extra growth, we need also larger contracts. In Q1, we had Joint Academy, which was quite a bit larger. We had a couple of Capio clinics going over from Cambio. So we need those larger clinics also. And that's why I look forward to surgery when we have that module up and running. Because typically, if you have surgery, then you have a much larger clinic. So there we have large customers. waiting and we have great discussions with them and big interest from potential customers who have many potential customers in that project working with us setting all those structures so but small customers they continue to add they're important because they drive net retention going forward I mean most start small and then they grow so we need to continue with them but to drive growth in more shorter we also need large clinics and private hospitals moving to our systems.

And I would say also that the 21% growth for WebDoc currency adjusted is a good signal on this point that the momentum is very strong in WebDoc compared to what we have seen the last few years. Next question from Niklas. While your primary focus for acquisition is to make one in Germany, what opportunities do you see across your ecosystem in Sweden and Norway for add-ons?

Yeah, so there are a lot of interesting opportunities out there. I think there are a couple of different points here. The first one is that we cannot try to do too much at once. So even if we have a list of acquisitions that we would like in this region, we're not actively pursuing it. I think also in the private market in general, especially in the Nordics I feel, is that if you are profitable and you have a good cash flow and you don't need to sell your business, then prices haven't gone down. They were all offered really good sums a couple of years ago and they're not prepared to sell for less typically. So the price has not really changed to reflect the valuation that you see in, for example, a public company. When it comes to the ones not making a profit, and there are quite a lot of that after that boom we had those couple of years, they have come down a lot in price. But those are not the ones we want to buy. Typically, they have business models which are not really working. And I think what many have made as mistakes is that they They come from the outside and try to change how healthcare is provided too much. Healthcare is a slow-moving business when it comes to change. You cannot come in and try to disrupt it, especially not from the outside. That will not work. So I think that makes it also it's not the right time maybe to chase opportunities when it comes to acquisitions in the Nordics. great uh we have a few questions from ricard um have you seen any effects with customers from product improvements nrmps etc potential going forward yeah i think i mean that that webdoc now is going at more than 20 percent this is uh it's what you you really see there and and the net retention rate where we can increase prices uh a little bit more than a year ago, so I think it was in January last year. I mean, I was a customer before, and all of us customers, we felt that WebDoc was a great product, but they kind of, it felt like they didn't really care about us anymore as customers. They were focused on other things. That was a general feeling, actually, and we spoke about it between the competitors. And so one of the first things I did was to invite the chief digital officer of our largest customer, Capio, here. And he said, I don't need a lot of new functionality. I just need the system to really work and work well. And they were quite upset at that point in time that it did not work better, that we didn't fix things that needed to be fixed. Software, if you don't do anything, there would be more and more problems. You have to have maintenance just to make sure it works as well as it did yesterday, basically. And now, a year later, they're really happy with the product. So we have completely different discussions with them and other customers. So that's why I feel we're in a really strong position.

Next question. What is your view of the long-term sustainable level of consulting revenue and its effect on EBITDA? In Q1 now, we had consulting revenues of around 8% of the total, where recurring revenues was 92%. Given how we focus now, we expect recurring revenues to grow faster than consulting revenues, but we will always have some consulting revenues related to implementation. There could be a specific project for Metodica, et cetera. But the most important focus is on the recurring revenues without being too specific. Next question, what is your view on the efficiency of resources deployed into WebDocX with only one live customer?

Yeah. We're not trying to get more live customers in general into WebDocX at the moment. What we're really trying to do is to make sure that it's allowed and certified for the German market. And then we want to have live customers in that market. I think it's extremely important that we develop the system for a specific customer base. and not try to build a too wide system, then you typically have issues with the customers not really liking the product you have developed. And that's what you see quite often, I would say, and part of the reason why we win customers from other systems at the moment. But you can always discuss efficiency. We're trying to become more and more efficient. The team is now smaller than it was a year ago, and I think it's also working better. entire structure around the team we have a new management in place and i feel that the team really knows what needs to be done we now have a good um how to put it um when it comes to software development it's very important to make sure that you know you have a good pace in demand and that the developers can can meet that demand so you don't have any lags and that you have no one sitting idle uh at any point in time and it's uh that's kind of the factory going on here and uh now within web.x we started to get that hum really going well i think uh we had a lot of changes in in the personnel there uh to make sure to get there uh that team was employed in maybe a bit too short time with the focus on just employing the entire team in a very short period of time which created Maybe we were not at that point in time as careful enough as we should with employment, as you always need to be. So that's what we had to fix quite a lot there. But I feel now it's a much better team with good internal pace and with more harmony than before.

Next one, what effects can be expected on the communicated targets for EBITDA with the potential German market entry in 2024 and 2025?

Yeah, so that includes, you know, investment in those targets include investment in Germany and WebDocX with 20 million. uh per year roughly um and we feel that it's we do not include the acquisition in that so that's why it's just negative that part of the case uh aiming for acquisition we don't have it yet so we cannot put it into the numbers but we're aiming to buy a profitable company which will help us scale up faster but so um that should be a positive for those targets when we have that and if we have that acquisition um so um but this is the base case where we do not have it and and it's being rolled out uh quite slowly yeah and the targets now uh i would say um on the revenue side is very limited effects from webdocx but we have the 20 million cost but we of course aim to do

an acquisition that will make it potentially look quite different. Now we have quite a few questions from Mark at Red Eye. First one, could you comment on what you see in region Stockholm, given the political landscape? Your churn is low, but has this impacted your customers yet? And has it impacted new sales in the region?

Yeah, so region Stockholm now, So private healthcare in Sweden is always quite political. It's always been. I've been active here since 2006 in this landscape. Typically there has been a lot of talk but very little action. So the private part has always grown because the private providers are cheaper than the public ones. It's easier for the region to deal with and just gives more care for the taxpayers. Now in region Stockholm, I would say for the first time you see the Social Democrats actually trying to turn the tide. I've never seen that before. And they are actually trying to take some of the care into the public hospitals again from the private providers. It will be much more expensive than the care they get at the moment. But it's the first time I actually see that the number of private providers actually will decrease and are maybe decreasing in Stockholm. But at the moment, we have quite a few customers in Stockholm. So it makes it a bit more difficult to sell. It's been like that for maybe a year now. So it's a bit more challenging environment to sell in. If we wouldn't have that situation, we would be able to sell more. and most of the providers today at least that are going towards the public are now aiming to get insurance patients and then webdoc is an even better system for them and they are also hoping I think to win tenders because the public hospital will not be able to manage this the public hospitals every year they get a little bit less efficient so and the care need increases all the time so We might have some short-term headwinds there, or we have, but in the longer term, I think it's a non-issue, and they will move back to the usual pace. But at the moment, it is a bit more difficult to sell, and it's been like that for like a year, I would say.

How has the response to the e-referral been so far?

Yeah, so the pilots are up and running now. As I mentioned earlier, they're very positive, maybe a bit too positive. It really saves a lot of time for them and decreases the risk for patient risk. When you process this by hand, you might miss patients. I know there was a patient, for example, where they missed giving a response in a cancer case because this was missed by hand work. though it went okay for a patient but it's not acceptable those things happen so now we're automated it's it decreases risk so that's quite good uh and it will help us sell in stockholm uh it's a key part of it it's not the standalone thing that makes you buy the system but it's part of uh the whole thing that will help us and help subscribe sense

Have the new Kapio clinics signed due to the expected surgical module or is it tied to other underlying things such as improved downtime, e-referrals, et cetera?

Yeah, so it has nothing to do with the surgical module. I think it has more to do with the product improving and that they feel that we want to have customers in Sweden, that they feel that we're going after that and that we are improving the system all the time. So those clinics, they will not use the surgical module. We had to do some other development to automate reporting into cataract registry for the customers eye clinics. We didn't have that before. We can sell it to also some of the existing clinics that module. So that's a good thing. But we had to do some small, small development that we can then sell to all other customers also.

Next one, WebDoc is selling strongly. Could you talk more specifically about the upsell? What do you see here?

So what I really look forward to is this patient journey I spoke about earlier. We have a product which we call Vordermattis, which is for the interaction with patients between the clinic and patients. And there you can have a chat with the patient. You can have video calls with the patient. You can have the patient rebooking their appointment. You can send out forms. You can do a lot of things. And what's really key between Vordermatt and other similar solutions out there is that it's completely connected to the HR system, WebDoc that is. So anything you do there connects directly to WebDoc. So when you change the appointment, it changes within WebDoc. If you chat with the patients, you can press a button and it goes into the medical records. Otherwise, you have to transfer it by hand in different ways. And many systems, good insurance systems, doesn't allow you to use control C, control V for safety reasons. So it's really a very efficient system. But we've been selling it as singular functions. And caregivers are not the most inventive. So if you try to sell, you should sell a chat. It doesn't really help them very much. But if we sell a complete customer experience and how that can drive efficiency in their world and really show that and we set it up for them, then I really believe in that product and that we can relaunch it. And there's some smaller things we have to do to make sure that that is a seamless experience. So that's the aim now. And I think that could really drive up sales. So will the Circle module was adding new partners in the network that will help us drive up sales.

And I think another part that has driven it is that upsell has been quite strong for a period. But we also last year had quite big drawdowns in volume after the pandemic. So that volume growth is now more stable than it was last year as well. Next one, do you see a chance of a larger contract for Medrev in Skåne as well, given that the region has also procured the same public EHR system as Västergötaland?

No, Skåne has a different type of contract, so it will not be a completely new contract with them to give Medrev to Millennium in Skåne. So no, it will not be the case. They will have Medrev also in Skåne. And they will continue to MedRave. We are setting it up for them at the moment. But in general and including Skorna, I think we need to look over the pricing of MedRave everywhere. We have improved the system a lot and we know we haven't really charged our customers for it fully, I think. And it's creating a lot of value for our customers. So we will not have a new large contract with Skorna. I see the opportunity in general to increase prices within MedRave. But we're analyzing it at the moment. We also have many different types of contracts in that product. I mean, more than 90% of all primary carriers really use MedRave. So it will be stepwise and will be at different types of different contracts and so on. But in general, I see a good opportunity to increase prices within MedRave.

Next one. Any update on the process of finding an acquisition in Germany?

Yeah, we have, I think, good discussions. I think every time we're there, we feel more and more strongly about this opportunity. We're very positive about that it's the right time to enter Germany. And we have good discussions. But this is the challenge with M&A. It's black and white, so you never partially do it. You do it or don't do it. And it's always important that we are ready to back off if we find something or see something that we don't like or if the negotiation doesn't go well enough. So it would be very difficult to give a proper update until it's done or not done.

Do you see good acquisition targets in the Nordic region too? I think I responded to that earlier. Could you comment more on Adcuris and Adopus and their sales progress?

Yep, so those products need more customers. and I think we have good discussions and a good likelihood of at least one a bit larger contracts for one of those products within the coming months and that then we would have ability also one of those products under control which would feel really good and we need it Otherwise we need to do other things. At Opus we've lowered costs quite a lot and rolling out at Opus web. We have some parts which are not really developed enough to give that customer experience that we need to give. especially when it comes to logging in and logging out of the system. It's not stable enough, but we should be there in short. We have had a customer survey, and the AdWords Web users are quite happy. That they don't like, but in other circumstances, they're really happy with the system. So I'm optimistic still, but we're a bit behind schedule on that office.

Next one from Philip. What gives you confidence in the 15% growth during 2024? As I understand it, most larger contracts will contribute with start in 2025. So for 2024, we of course have quite good visibility at the moment and the growth we target is quite close to the run rate we are at. at 67 million in Q1, and we expect some growth during the year as well. But it's correct that the larger contracts for VGR and Volvo will have the main impact in 2025, although the Madrid contract will start generating revenues in Q4 already. You are saying from Emilia Dimby. You are saying that most of the growth included in your updated targets are already secured, but can you say something about how much of the growth with new contracts will contribute in 2024 and 2025? The new contract is basically why we target the higher growth in 2025 of 20%. It's around In 2024, we expect to grow around 35 million nominally from if we just for last year. And then if we take the same growth, which is basically how we have been growing the last few years and add the new contracts, then we come to the 2025 figure. So we have to continue to succeed in the same pace that we have done historically and then add the new large contracts on top of that, basically. Next one, what is your best guess on the timing on new system in Stockholm and when do you expect to see effects from this process on your sales?

Yeah, so I mentioned briefly before, but it's being tested at the moment. It's to be implemented around 2029 somewhere. That's the plan. The projects are typically delayed by two or three years. I think Stockholm is a bit more difficult than it should be at the moment because you have some care that the region is trying to move from the private to the public side. And also, you have that the caregivers don't know really what will happen with the new system. They don't know what their options will be. So I mean, they will be comparing WebDoc with something they don't know what it is yet. So I think that as we get closer to that point in time, it will be easier to sell. I mean, we're selling quite okay anyway, but it is actually quite difficult environment to sell in at the moment. But that will take some time because 2029 is some way off. And this is the third time I think they tried to tend to this system. So I think that clarity and that things get clear are always good when our customers don't really know what the options are and what's happening. they tend to wait with big decisions like this, a big changing system that is. So I think it is affecting us negatively. I think we just need to realize that that's how the market is and just make sure that our system is even better so that you, in a way, choose to change systems. And we are taking customers in Stockholm. We'll continue to take customers in Stockholm. And I think we can increase when it comes to surgery. A lot of that is in Stockholm. And because surgery are the big care, that's what you typically don't pay out of pocket for. So if you look like a smaller region that doesn't put as much care on the private providers, then you will typically have a lot of outpatient and less surgery. In Stockholm, you have a lot of surgery within the private setting. So the ceremony will be important in Stockholm especially.

Next one, another on the potential German acquisition. How many targets would you say are ticking all the boxes of the requirements you mentioned? And would you expect that several of the legacy systems are complex, given that you typically see that systems grow in complexity over the years?

Yeah, that's partly true. So the German market for HR system is extremely fragmented. You have CGM owning 30% of the market, but that's not one system. That's so many different systems that they acquired and not really invested in. And not kind of pushing them together, what we can see in a major example. So they own a lot of systems. And then there are a lot of small systems out there, so the potential target list is really long. And as you mentioned in the question, you're completely right there. It's important to make sure that what we buy do not have too much complexity, and that's something we really have to look carefully at when buying systems.

So I think we have talked a little bit about, but on your ecosystem of third-party add-ons and developments here, new interesting applications. or any existing applications that are gaining traction?

Yes, I think WaterMath is gaining traction. I think we can do much more to make it gain traction more. We have a new partner we're working with, which is using some AI in the speech recognition, which is maybe a bit more popular than the ones we used to sell, so that's improving. The check-in shows we're selling are actually, we're losing some customers out and we're moving them to wardrobe to try and move them to instead. So I think that's a positive. It gives us a bit less revenue, but more profitability. So cause wardrobe you don't have a physical and you don't need to have that anymore. So it hurts revenue a bit, but it's good for profitability that move. and yeah we are the new partners all the time uh but i think those are the most important changes um another final question from peder you are not making any changes to your long-term guidance correct uh no that's not correct so we used to have a goal three years in the future kind of with the average for each year now with increased visibility we can give a much more precise guidance but we're giving it for this year next year so this means that we do not have a goal for the year after that yet we see this be a very positive and optimistic as you can hear but we don't have the same visibility on three years in the future as we have in two years in the future so we're replacing the old toys fully and and now have much more granular for the coming two years.

Okay that was the final question you want to wrap up?

No thank you all for listening if you have any questions or comments just reach out so I look forward to hearing from you so have a good day thank you.

Thank you.