Carasent Asa

Good morning and welcome to our presentation on what's been quite a busy quarter with the takeover interest from EEG, the relisting process and the acquisition process in Germany. But I'm really pleased with how we managed to keep it all together and deliver a solid quarter. And today we will start with me giving some highlights and a company update. Then I will hand over to Martin to give a financial update. Looking at the highlights for the second quarter, we signed two new contracts. The contract with Vidyard Supply Medre was already known at the last quarterly conference, so we spoke about that contract back then. Now we've also signed the contract with Selsamien for Adcunis. And what's really important is that now for all products, except our smallest products, we have secured strong growth going forward. So, WebDoc and HBI already have really strong growth and we have secured contracts for all other products, except Adobe, as I mentioned, to also get really good, strong growth going forward, starting by next year. So, at the same time, we will keep a really strong cost control and a good cost control, and that means that we should really be able to drive margins during next year. For Adorpus, we're launching Adorpus Web, where we have the first five customers migrated through a new solution, which is a much better, modern, completely new solution for a user experience point of view, and also with much lower costs as it's a pure web solution, a native web solution. So it's really a solid foundation going forward with this contract. Other highlights is that the re-eating process continues and the first day of trading at Nasdaq Stockholm in Q4, probably in December. It looks like it will be a relatively easy process as we already are listed on the regulated market with similar requirements as Nasdaq Stockholm. So it seems to be relatively easy. In the quarter it was a quite high one-time cost related to potential bids from VG, the releasing and the acquisition projects in Germany. And there will be similar costs in the quarters going forward. But these are true one-time costs. Looking at growth, SiNot implemented ARR is now up to 17 million NOK. That's up from 2 million NOK a year ago. so that we really translate into strong growth in a year from now. We still grow with 15% when it comes to recurring revenue, and that's the same as last quarter. Profitability-wise, we're close to break-even on cash profitability, and that includes all the investment in WebDocX, which, as you know, is a new solution for a new market. We can manage to fund that ourselves from present business. And if we compare to a year ago, our just EBITDA is now up to 16% from 8% a year ago. And we actually cash flow positive, both in this quarter and last quarter. And as I mentioned, we keep going well, even though we're moving from consultancy income to recurring revenue. And what's important to note is that when moving from consultancy revenue to recurring revenue, it will not translate directly into better revenue. Because if we take away, say, one trona away from the consultancy income when implementing one of our systems with the customers, we cannot add that trona to the yearly AR. That means we can add like a third of it. So in a couple of years time, it will be much better than having this consultancy revenues as we have solid return. So it will really translate to stronger revenues over time. But short term, it helps us a little bit. But it's still growing. And what I was mentioning also is that you see that we sold Confrede. So that takes down revenues a bit for this quarter compared to last quarter and previous quarters. IPTA is up to 16%, as mentioned, and EBITDA, which is, together with growth, the most important KPI for us internally, is now at minus 2%, so we're getting really close to break even on some EBITDA level, and then we'll continue to improve from there. Digging a bit deeper into revenues, we can see that we grow with 3 million compared to the same quarter last year. If we take away Confrera, we grew with 5 million NOK compared to the same quarter last year. And then if you also add signed not implemented quarterly recurring revenue, we grew with 9 million. So from half a million a year ago to 4 million, a little more than 4 million this quarter. So in total, I would say that our growth rate is up to 9 million NOK. You can also see that the recurring revenue is a larger and larger part of our revenues. So it's 61 million in this quarter compared to 54 million same quarter last year. It's not that we don't have any consultancy revenues at all. We do some work which should give us consultancy revenues. And also different customers, especially with the ones that are signed large contracts, have different possibilities or requirements when it comes to what's easier for them to pay, recurring revenue or consultancy revenue. So some customers really, really, really prefer the one-time cost of the implementation. And in those circumstances, we really also charge those type of revenues. Looking at the EBITDA, we're improving from minus 11 to minus 1 million. Or if we take out WebDocX, We're moving from minus 4 million to 4 million in the quarter. Then you bring to the financial performance. We have, as we mentioned before, a well-functioning base. And that's all products except for HBI and Adopus. And those other products or operations, they are 87% of our revenues. and have a good organic recurring growth of 16%. And what's worth mentioning then is that Metodka is actually shrinking in the quarter. And the reason for Metodka shrinking by 15% in the quarter is that with the new level to Volvo, we are doing a lot of consultancy work for them during the coming 12 months. This work will price very low, but we have much stronger recurring revenues when it's been implemented. So it really hurts us here now, but a year from now, where we're implementing Mitulka at Volvo, we will have a recurring revenue, the new recurring revenue of 6 million from that. And then Volvo will also be at full price again. So a year from now, Mitulka will really help us drive growth and sustainability. But it has a short term. For operations, the EVTA margin is now up to 25% from 20% a year ago, and the attack margin is up to 17% from 12% a year ago. If you're looking at XBI and Adobis, the two products where we have some more challenges, we're doing large improvements also there. That group, which is only 12% of our revenues, had an organic growing growth of 7% in the quarter. And then we should mention that HBI actually grew with 25% in the quarter. So HBI is growing really well now. Adobis is still not growing, but we have Adobis Webcomic, which we really believe in. And now when we have the first customers coming online, they will help us spread the word. So I'm very positive about these two products also. Adjusted EBITDA for those two are now 2 million and EBITDA means capex is close to zero for those two products. In Web of Gates, we have lowered costs a bit more. We're now at minus 6 million from minus 7 million in EBITDA means capex. And we continue to move in that group from consultants to employees. And during June, we've removed the last consultants in that group. And starting after summer, we'll only have employees. So it will help us control costs even further in the next quarters and coming quarters. At the head office, we've gone from minus 8 million to minus 5 million. I think that's a reasonable level and roughly where we will be going forward. Finally, looking ahead, we will continue to develop our sales model. As I've mentioned before, we're really doing a lot with our marketing and sales, focusing on inbound marketing and outbound sales. We have re-run all our webpages, we're doing a lot of advertising on LinkedIn and other social media, and we're buying search words and so on. And we're still learning, I would say. It will take some time for us to really move into a different mode of selling, but I really believe in that. Many of our potential customers know they need to change systems, but it's quite a big change to do for a business or for a clinic or a hospital. And we need to help them to make the decision and to push them over that hurdle. And given how satisfied the customers who have migrated to our systems are, both with the systems and with the process, we can really market that. But it's something that will take us some time to learn and get better and better at. Another focus for us in order to deliver this product on growth is to deliver new development on time. So basically all of our products are dependent on us delivering our solutions on time for those customers. So that's an important area to focus on for us. Efficient use of resources is something that we work with every day, and we continue to work with every day. Every quarter gets three, four percent more efficient, and then we add that over time. It translates into big improvements, and that's basically the most important part of running a business, is to always improve, and improve much quicker than new problems arise. So that's really where Every one of us will focus our attention. When it comes to Weber GECKS, it now looks most likely we will certify in Q1 next year. And then we'll have a system which is ready to be used in Germany. There will still be a lot of small parts of different types of caregivers we need from systems, but then we will be able to start first customers. It's been a very intense quarter when it comes to our operations in Germany. We've had many discussions with possible pilots, acquisition targets and also collaboration partners. We spent a lot of time in Germany this quarter and every time we're there talking to customers, talking to growing out during next year. So with those words I will hand over to Søren Martin.

Thank you Danne. Some of the highlights here from a financial perspective this quarter was a clear step in the right direction. Firstly we show that our underlying revenue growth is robust. with 15% recurring revenue growth. And also that through signing new contracts, the growth for the next period also looks promising. Secondly, our margins are improving with the 16% IPTA margin and IPTA minus capex close to zero. Our signed ARR grew 20% organically year over year and this was driven by a major increase in our backlog of signed not implemented ARR because of the large contracts we have signed. We didn't have this sort of contract in the last few years. The last contract of this magnitude was for Alkyris in 2021. And now we have signed three such contracts within the last couple of quarters. So it's clearly setting a very solid foundation to see an accelerated growth in the coming years. And we now, without these contracts, we still grow very solid in the quarter, where we have net upsell of 13%. Churn continues to be very low, 2%. year over year and we also have this still have this inflow of new customers mainly for webdoc where we continuously find new customers it was four percent in the quarter and this is a very important part of our growth because these customers typically buy at the lower price and then they add more functionality pay more but also grow their business of the WebDoc customers we sign. Looking at the P&L for the group, there is some points worth highlighting as well. Firstly, we have good underlying growth for all product categories. If you look at the year-over-year figures, WebDoc was 17% or 18% adjusted for currency. which is strong and around 20% for the first half of this year. The other EHR category was 9% adjusted for currency and for this category we have signed Bolvat for Metodica and Fredrik Sarmén for Adcuris. In total around 10 million ARR So if you compare that to the figures we are now reporting, it's clear that we have secured a very strong growth only from these contracts alone for this category in the next few years. The platform products, as you can see, declined, but that was because of the investment of Comcee. Adjusted for this in currency grew nicely at 14%. This is HPI MedRib. coming next year. And also HBI's strong underlying growth makes this category also strongly positioned for the coming period. consulting the client, as mentioned by Daniel. And the gross profit margin increased from 82 to 85 percent. This is because we sold Comfrere, which had a dilutive impact, but also because we have renegotiated with our hosting supplier in Norway, reducing costs quite significantly. So you can see that even though revenues increased by 3 million, COGS actually decreased by 1.3 million. So this is a very nice improvement for us. And if you look at the profitability as well, you see major increases in EBITDA and we are close to break even on EBITDA minus CAPEX. And if we exclude the investments into Germany, we now have a EBITDA of 4.4 million in the quarter, or 7% margin, and it's improving rapidly. We constantly work on The cost base, in this quarter we have ended the R&D consultants with an impact of 6-7 million on an annual basis. Some of these will be replaced by employees, but the net impact is positive for us. We also are in the process of migrating to a new hosting solution in Sweden that will reduce costs and also when we move customers from Adopus to Adopus web, we can cost significantly for that product, which is still quite high. So these are some examples, but In general, our plan is to keep costs flat and grow revenues. And then to be able to do that, we need to do these cuts and become more efficient because we need to add costs in other places such as sales and compliance, etc. But we see great potential to continue to become more efficient as we grow. We have a high gross margin, so if you are able to keep costs flat, then we can scale our margins quite rapidly, as you see from this slide. Finally, we have the positive cash flow, also in Q2, driven by the improvement in profitability, a good working capital effect from annually investing for some of our products. dramatic reduction in capex. So in summary, from a financial perspective, we continue to grow well. Our underlying growth is robust. We have signed major contracts for future growth and our profitability is improving rapidly. So with that, we can open up for Q&A.

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We don't have any questions from the call in line, but we have Several questions posted in the chat, so we can start with those. First one from Emilia, any updates on your targets of organic growth and profitability? Are you confident you will reach the target of 15% organic growth? Do you also expect to break even on EBITDA for a full year?

Yeah, thank you very much Emilie. Yeah, we feel that our targets are solid and we did everything on those. So we're pleased where we are and are moving forward in a good fashion. This type of business is quite easy compared to other businesses at least to foresee. As we have a small churn, we know the rate of our growth and we can keep a good cost control.

Yeah. Next question from . First one, could you comment on the quarter growth rate in WebDoc? Was there some term currently or just lower activity among clinics?

Yeah. So, I mean, we'll always have some movements up and down when it comes to growth, if you signed a large clinic or not, or a couple of large clinics or not. So we grow roughly around 20% in the first half year. What we did have in the quarter, which impacted this quarter a bit, was that we had a couple of customers that came online where they had told us that they were much larger than they were. So what it means is that in WebDoc we charge per visit. So in the regular pricing increases we do, we look at the number of visits that customers have had in the last period and then we increase by the growth that they have. When there's a new customer coming in, we charge them based on the number of visits they say they will have or have. And especially if one large customer was not even close to, I think there was some and not really what they had. So we had to repay some of that in the second quarter. But in general, we're doing well and we keep growing at roughly 20%.

Yeah, there was some currency effects also compared to last quarter, but the growth rate of around 20% for each one is representative of where we are currently trading, I would say, for WebDocs. Next one, how does NewSafe Clinic sign up for WebDoc look like?

So, yeah, we actually had the first couple of so-called cold calls to mention it, where we actually, it's us reaching out to customers and not them reaching out to us. We managed to close contracts, so I'm really happy about it. It's still, as we spoke about, and as it has been for quite some time, a challenging market to sell in, especially in WDR, where there's a lot of unknowns. And taking these type of big decisions, which it is, to change systems, you don't do that when you have a lot of unknowns around you. So it's a bit of a challenging market. It's been that for quite some time. and it will be so for quite a time going forward. But still, we may still glow at around 20%, so I'm quite happy about it.

Great, next one. Can you update us on the impact of what is happening in Stockholm related to private clinics politically?

Yes, so in Stockholm we have the new leaders in region Stockholm have been really trying to move care from private providers to public providers. I'm very doubtful that that will actually happen. So it will probably result in less care in total and more queues in Stockholm, and then there will be more private care again. So long term, the trend has been for a very, very long time. that the private care as part of the total care is increasing. That's because the private care providers are obviously much more efficient. And I think that's what will happen later on again. But shorter, we actually have this movement away from private care providers to public providers. But for us, It's not really a major problem, because what's happening in Stockholm is that many of these private clinics are moving from public care to private care. And private is both insurance and private pay, because the need for care is there. And if the public is going to provide less care to the population, more large parts of the population will pay for the care themselves, either for insurance or private pay. is really good when you have a mix of different buyers of care. So it actually supports the mending of our customers in Stockholm. They use WebDoc for private and insurance patients, and they use Take Care for the public patients. So they use two systems in one clinic. That's what we want to move away from with the new e-referral solution and so on, and are moving away from, but that's still the case. And also our part of the Stockholm market is quite small, so even if the market is not

growing at the moment we can still grow so i don't think and we don't see any major impact on us and it can be both a bit positive and negative all right next one how much further can you strengthen your gross margin roughly um i would say the most near-term improvement we we have there is the one i mentioned where we move um alope's customers to web Although the COGS we have there is around 1%, a bit more than 1% of our revenues today. So that could be an improvement, but it will take some time to materialize. The WebDoc hosting cost is reported in OPEX as it's not directly linked to the sales. So there will also have potential, but that won't improve the gross margin. In the more long-term, we have also quite high cost in our other product in Norway, but that's more long-term potential. Next one, you say that you delivered development, new development on time. Can you talk a bit more about the development and launch of Hadoop's web, the surgical functionality in web.com web.exe?

Yeah, I think what I said was that it's important to deliver new development on time. And anyone who's worked with software knows that that's part of the challenge of working with software. So it's very important to have a really efficient development team with clear goals, clear processes, and talented employees who like their work. And that's what we work a lot with. So Adopus Web was developed far before I joined. I don't know what time I was back then. But it seems to be a really good product. From what I can see, it's a really good product. But it's always the customer who decides, who will see when it meets customers. But the first customers are really happy about it. And now we will remove our largest customer from the old Adopus, Adopus Web. So it will be really interesting to see how that plays out. And then it's word of mouth, which is really important. We're also working with marketing to strengthen the message. But all these industries are quite small. So you typically talk to someone else and say, how is that working? But we believe that Adopus Web will really change the view of Adopus among customers. Margot also asked about the Circular Function of the WebDoc. So the Circular Function of the WebDoc will roll out for the first pilot after summer, a month or two after the vacation ends, and be ready to be sold in October, November, and rolled out in a general fashion around January next year. So then that's when everyone can use it. It's taken a little bit more than 12 months we planned for. So the development time is maybe 40, 50 months from 12 months, which we had planned for. But we're getting better and we need to keep getting better at the pace of development. And that also goes for BlockX, where we have done a lot of improvements in how we develop the team composition. The management, especially all management of Webhook X have been replaced in the last 12 months. And I feel that we have a really good page there now and tell the employees to like what they do and really be energy of building a new system. So I think confident about Webhook X being a really good system. Then it takes time to really meet Now what's important is to work closely with the customer to make sure that we build things that the customer really appreciates and needs, and that we do not overcomplicate things, and building things for the sake of the school building things. We need to build what the customer actually needs. Finally, from Mark, do you see a risk of having a competitor like EG make a deal with you? Not really. We knew that they were competitors, so the DGD was sending information that we did not want to give a competitor, we could have given DGD. And that's always how we have to treat situations like this. If you have someone who wants to put the bid on you, then obviously you give them access to as much as possible for them to be able to give their bid. But then you have to restrict your access to things that a competitor might take advantage of, and I think we found a good balance.

Next one is from Kristoffer Kastberg. What are the overall expectations both for the company and existing shareholders with the move to Nasdaq Stockholm Exchange? Any capital markets they planned related to the move?

So we see that, I mean, most of our employees are in Sweden, most of our customers are in Sweden. The interest for companies like ours is largely in Sweden and in Norway. So we believe that Nasdaq Stockholm is the right exchange for us. We're looking to make it as easy for all shareholders to transfer their shares and to keep holding their shares in Calcent. We are planning for, we haven't planned for Captain Marcus to get the test, but we're planning for activities to make Carinthians more well known to the public in Sweden. So that we look forward to doing during the autumn. Yeah.

Okay, final question from Alexander. It's in Swedish, but I will try to translate. During the quarter we had a strike within the healthcare sector in Sweden. The parts agreed, but the union leaders flagged that it could come more of these going forward. How does this impact Capsaicin?

So our customers were not directly affected in a major way. So it's nothing that we see in our revenues and are unlikely to see. What it means is that the queues, which are already really low, will keep getting longer. So ever since the pandemic, the public system has lost even more of their efficiency. Queues grew during the pandemic. And now it's trying to grow even more. So it will obviously put a lot of pressure on the ecosystem and that's really where we can support them. Our products help our customers get more efficient and they just support, take care of much more patients per hour. So we believe that it's not something that hurts us, most likely to have a positive effect on us, especially in the long term, as when we choose growth, either the public would have to buy more cash from private providers, or more patients would buy their care themselves, either through insurance or private pay. And that's where Webto comes in, but also many of our other products. so we don't see that to have any negative effect on us possibly a positive effect okay that was the final question okay and i would like to thank you all for your interest today and wish you all a really good summer thank you for now thank you