Carasent Asa

Good morning and welcome to Kärsant's presentation of the fourth quarter. My name is Don Rehman. I'm the CEO of Kärsant and with me is Sven-Martin Bjartlund, our CFO. And I will start by giving a company update before I hand over to Sven-Martin. Looking at the fourth quarter, I'm really proud how we managed to hit basically everything we set out to do during 2024. So we had our financial performance in line with targets. We did the relist into the Stockholm Stock Exchange. And more importantly, we did the acquisition of DataL, giving us a strong foundation in Germany. And talking about the acquisition of DataAl, we had gotten to know them quite well, or well actually during quite a long acquisition process where we really wanted to see all parts of the business and we wanted to get to know the management team before we actually pulled the trigger. So we've been able to move quite quickly after acquisition. So the WebDoc X team is now part of DataAl and we have a joint roadmap. including when to close down the different softwares from DataAl, and they will be fully replaced by WebDocX. I feel really happy about last year and proud of the organization and what we have accomplished. Looking a little bit more forward, We have good progress in our large development projects. I think most of you know about surgery. So that's WebDoc getting a surgery module, which is important for all or many large clinics in Sweden, which will use it. We have really good discussions with our larger customers on moving to WebDoc for clinics that today don't use WebDoc and moving on to the surgery module. So I feel really comfortable about where we are with surgery. It takes maybe a little bit longer than I expected because they want to have some further functionality in place before actually doing the switch. But we're in a good position in very close discussion with those potential customers. And we have a lot of interest from other customers also. So I think that will really help us during the autumn, especially. And then NLL is the new a medicine module for Sweden. It's a legal requirement that all medical record system needs to implement, but it's really good for WebDoc because after it's done, you will be able to see medication from all different systems in all systems. So if you use WebDoc, you will be able to see what's done in the public and so on. So that's a really good one. Volvat, which is so important for the methodology and the rollout there is going well. and during the autumn we'll start implementing Methodica and replacing all those present EHR systems in Volvat. And for you who are new, Volvat is a Capio Norway where we're replacing all their existing EHRs with Methodica during the autumn and it's to be finalized in January next year. We're building a couple of patient platforms for online visits and so on, which is going well. And WebDocX really has to pace up now working towards the German market. So from development perspective, we're doing better and better and getting more efficient every day, I would say. During the fourth quarter, we had a couple of bankruptcies and also a larger customer losing their contract with Stockholm. So that would put some pressure and would give us a bit of high churn. during the end of Q1 this year and the beginning of Q2 this year. In total, that's losses of around 2-3 million ARR that will take place in the end of Q1. And we feel that this is a one-off effect. The bankruptcies are the largest part of two tech companies, which have been quite large. One is a bankrupt and the other one is in reconstruction. So, but we have it's most likely they will not be able to continue. So I think it's the time now when many of those startups who have received quite a lot of funding but haven't been able to turn around their business, that the funding is drying up. We don't have any other of those kind of risks as we see it in the customer portfolio for WebDoc. We have many of the online doctors, but they are now mostly making profits and they have quite good valuations. So we're not too worried about those. But these are two smaller online doctors that will close down most likely. That means that the ARR for a group is likely to go from 2% to 3% during Q2, we believe. um but really feel like it's a one-time effect uh growth uh we have simon the error amounts to 17 million and this is uh mostly volvat it's uh medre for vgr and uh at cuties for friendly samin in norway uh those customers will mostly be implemented during the autumn so that's when we really will see those uh signed not even there are moving to real turnover In the quarter we had 15% organic recurring revenue growth and 17% contrary growth. It was really good as we're now at the breakeven level and that's just a step on the way. And we have strong improvements in our EBITDA as you will see on the next slide. And here you can see we're growing with 14 million in the quarter. In the 2023 numbers, we have 2 million of Conferere in those numbers, which we have sold. But in the 2024 numbers, it's important to note that we have 8 million of DataL revenue in those numbers. We're off 2 million or 25% of DataL's revenues are consulting revenue. So in total 14 million growth and what's really positive is that 13 million of that goes all the way down to our EBITDA minus capex level. So I feel really good about our control of costs and that we have the growth really really going down to the EBITDA C level. And looking at our targets for 2024 and our performance, we're basically in line of all those targets that we set. And it's, as you can see, quite a large improvement over 2023. And especially we're looking at the third row, if DA means capex, that's what we internally is the only profitability level we look at, or company-wide, so to speak. The reason being that EBITDA is, we feel, a measure that's not really reflecting reality as almost all development we do is to win new customers, also the ones we cannot capitalize. So we feel that EBITDA minus CapEx is a good level to look at. Looking ahead, the really key to delivering this growth this year is that we have surgery coming online in time and that we have Volvo coming online in time and so on. So it's really important that we deliver development on time or we have some extra time in the roadmap, but more or less on time will be a key for getting this growth to really reach there. the targets we have for 2025. But as I mentioned, we have big interest in what we're building. So we feel we're doing the right things and it's just important to get it out on time. The other really important part to achieve those goals is the efficient use of resources. and as i mentioned before it's about every day every week and every month becoming a couple of percentage points more efficient and we do that all the time some examples that we've been working with in the last couple of months is replacing roles so if you have roles that are not really creating the maximum amount of value, we will remove those roles and add other roles. So even if costs are more or less flat, we are doing quite a lot of changes in the organization in order to really maximize our output. So a couple of roles that's been removed last month and a couple of new roles have been created. Also, the use of AI is quite important for a software company to really be efficient in development. We see that we're getting more and more efficient using these tools. When it comes to WebDocX, as I wrote in the quarterly report, we did a little bit change in the roadmap now together with the DataL team. In DataL, We have two products, DataCure, which is a quite new product for therapists that's growing quite rapidly, and it's DataAd, which is their older product, which is for doctors and has a really lot of functionality. So what we decided is to first replace DataCure and then move on and replace also DataAl in a couple of years time. DataCure is the aim to replace this year. So that means that we can close down one of the two platforms in DataAl much sooner than we'd expected. But it also means that the certification we're aiming to do now, more or less now, will be moved to the autumn in order to first fully replace the DataCure functionality and then close down that software. So I think that's... really good change but it changes a bit in in our roadmap and the first german pilots are live and and they are happy but they are just using uh well the cakes on the sides it's not full pilots as we're not certified with those words i will hand over to sven martin thank you daniel starting um off on some of the financial highlights for the for the quarter

Our ARR base grew quite significantly in Q4, and that is partly driven by this acquisition of DataAl, which added about a bit more than 30 million SEK in ARR. And also our signed contract base takes us up to 304 million in contracted ARR, which grew 17% organically. and reported recurring revenue growth grew 15% and our other metrics as well developed as we had planned in the quarter. If we take a more detailed look into the P&L, there are three main points I would like to highlight here. Firstly, you see that in the quarter our gross profit increased by 26% and the gross margin increased from 81% to 84%. And this is because we have reduced hosting costs in Norway through negotiations with suppliers. we have also sold confrere. So this increase in margin is sustainable and you see the same trend for the full year. Secondly, we had big one-off costs in the quarter, 20 million of costs. And this was related to the relisting and the acquisition of Data Isle. And you also see that we had big costs for the full year of 30 million. And this has been a special year with this big process with EG, the relisting and Data Isle. But this cost has now been taken and we don't expect any more costs from these processes going forward. another key point to highlight is if we look at the personnel expense it increased from 32 to 39 million however if we also include the capitalized development cost we get the cash cost for our employee base and you see If we add these together, it's basically flat year over year. And that's very encouraging for us, given that we have added cost from data about 2 million. And also we have We have, of course, wage increases, etc. So this means that we have been very successful in reducing costs in other places and we continue to work on that through reducing roles and also through changing, for example, consultants to employees. And you see the effects of this on the margins. So we grew our revenues by SEK 15 million and the EBITDA basically increased by 14. So basically all our earnings trickles down to the, or all our revenues trickles down to the earnings. And with a 22% revenue growth, we get the margin improvement of 18%. So if we are able to continue being as strict on the cost side going forward, we can continue to see that this scalability has a very powerful effect. If we look at the development on EBITDA minus CapEx, excluding Germany, you see that the trend is positive. We have a good improvement year over year. It's trending a bit down in Q3, but the reason for that is that we have this holiday effect in Q3 that we mentioned on the personnel cost side. So that is typically the strongest quarter on the margins. If you look at the ARR growth, We continue to have a robust underlying organic growth, primarily driven by the net retention rates. The churn is low at 2%. As Daniel mentioned, it might increase to 3% given this churn in WebDoc, but still the recurring revenue base is very much stable. And the signed contracts takes us up to 17% growth. And then we have data as well that takes it up to 304 million. On the cash flow side, we also see good improvements. We have this high one-off cost as you see on the report to the EBITDA is negative, but we have strong working capital effects in Q4, partly driven by the customer receivables, but also some of the effect is related to invoices for the relisting that wasn't paid at the end. So that will have a negative effect again in Q1. But in general, you see on the full year figures that our working capital profile is very much supportive to our cash flow, given that we invoice customers upfront and then we pay afterwards. And you see that even though we have this big one-off cost of 30 million for the full year, we are still very close to being break-even on the free cash flow side. So that illustrates the power in our working capital profile. Finally, on the financial targets, we are now reporting INSEC after our relisting. We have thus provided this slide to convert the target we provided in NOC in October to SEK at the currency rate at the date of publication of the targets. So with that, we can open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Fredrik Nilsson from Redye. Please go ahead.

Thank you. Good morning, Daniel and San Martin.

Morning.

I want the next question comes from with a question regarding go ahead.

Region Stockholm will decide on a new system for the public care in next week. How might that impact your addressable market in the region for the long term?

We're really positive today, as today most private providers in Stockholm use the public system, just because of historical reasons. When Stockholm privatized, the region offered them to use the public system, which is called Take Care, which is called Ombuds CDM Compute Group. Most just chose that system. There were no others to choose from. WebDoc wasn't there at that point in time. Today, most customers we are winning in Stockholm. What's really good is that all those private providers now have to change systems. Usually, the challenge for us is not to convince customers that WebDoc is better than what they use today. It is that it's also worth all the effort in changing systems. Now in Stockholm, everyone will have to change systems. We think that will really support us going forward. uh also really good or yeah it is that compute has almost stopped developing uh take care so because that system will die and that everyone knows so that also means that that system is lagging more and more compared to webdoc and so that would really help us too and what's also good is in the last Couple of months, region Stockholm has been more and more clear that you're not allowed to have large amounts of private pay or insurance pay agents in their system. So that will also help us. So in total, I'm really positive to this. And then finally, why I'm positive is that Take Care is a system which is not really good for hospital, but it's quite okay for primary care and specialist care. It was built for that from the start. and the rumor is that they would choose Cambio and that's what they wanted to choose. So we know the system well and it's good for a hospital, but it's really not what the small private clinic want to work with. And it's also much more expensive. So in total, I'm really optimistic about this change. It will take a couple of years. Okay, that's interesting.

Yeah, yeah. Yeah, can you hear me? Yeah, yeah. Please go ahead. Yeah, nice. Just to follow up on that, because I know in other regions using Cambio, the private clinics might be locked into that, but I assume you see no risk of that here then?

You can never say there's no risk, but at the moment, region Stockholm is pushing private players out of their system. So I think that's the way we're going. And in Stockholm, you have a lot of private pay insurance patient, and the region is actually not allowed to provide systems for that. And that's what they're now acting on. So I think that's quite good. And today, Stockholm is not pushing anyone into the system. other regions nobody has really challenged that so um we'll see what's happened there we have some good discussions with a couple of clinics that are in a can be region after the new i don't know i mean if you follow that but uh cambia has been pushed out in a couple of more regions um and private providers who used to be in the old public system there are now in Cambio. And they're really unhappy because it's really, really slow the system. So we have a process there together with hopefully together with region to move them to webdoc. We'll see if that happens. But if that's the case, it would open up a lot more markets. But we'll see that's other days, but we see no reason why we wouldn't be able to and also Cambio is built with a lot of APIs, so it's very possible to also connect systems, so you don't really have any downside of working in different systems. And also Cambio is always saying that they are for a very open environment. We'll see what happens over time, but at the moment that's the case at least. So no, I feel very positive about Stockholm and it's a large market and that's where we're now gaining a lot of customers.

Great, that's clear. And last question from me. I mean, looking into this year, I assume your recruitment plans are very modest considering your guidance. But what about beyond this year? What should we expect for the next few years in terms of recruitment?

So, I mean, we're keeping costs flat. And as I mentioned before, we feel that we have a really good development capacity and that that do not need to increase. What we do is prioritize between different projects. most likely the systems investing most in their systems. And we feel that it's a good idea to do that. What happens then is that as we always invest a little bit more in our systems than what others do, we get better and better compared to other systems, creating more and more incentives to change systems. So I feel happy that we are doing that, but we do not need to increase the level of investment in the system. We're also becoming more and more efficient in our development. I mentioned AI before. We're also doing a lot of new structures when it comes to our development departments. We're getting better and better, and I'm feeling hopeful that for development, which is our largest part of cost, we can keep it quite stable. We're also working with quite a lot of other issues. So even though we have much more customers, we do not have more support, business support, support questions coming to our support. And that's also a place where we can get more and more efficient and also use different tools to automate more answers. So we feel that we can control costs quite well and keep them quite stable, even as we continue to grow in the coming years.

Great. That's all for me. Thank you very much.

Thanks, Erik.

The next question comes from Elvin Rolder from Carnegie Investment Bank. Please go ahead.

Good morning, Daniel, and good morning. I think several of my questions were actually answered by you during the presentation, so thank you for that. But I have just one additional question because my line was a bit bad for some time. And it's about data in Germany. You mentioned that you have decided to replace the other products as well to simplify and streamline. Can you just say that again for me? Because I think I missed that during the presentation, what that means and what you would replace it with and so forth.

Yes, so DataAl has two products. It's called DataAl, so it makes it a bit confusing. So the product called DataAl is for doctors. It's been built since the early 90s or the end of the 80s. I don't remember exactly at the moment. uh it's uh has a really a lot of functionality and that's probably we've said it will take a couple of years for webdoc to replace uh because you know the the doctors using the least amount of functionality we can take quite soon but the one using the full functionality of data will take a couple of years to replace and that's that's fine at the same time we'll start selling to other also other other customers that has the same use needs. But then DataLoss has a new product called DataCure, which is a web-based, cloud-based system, and it has just like 70 or 60 customers. It was launched one and a half years ago, but it's not built as robust and as scalable as WebDocX. So initially our plan was just to replace DataL and let DataCure live in the therapist part. But it's better to get rid of two platforms and just have one left. In the long run, that's much more efficient. So that's why we have chosen to replace DataCure first. There is almost no functionality that we need to develop that's not used by the doctors anyway. So it will set us in a much better position going forward and also lower our costs. So and then we can put all our efforts into work X, we don't have one product to to send customers one product to support and so on. So it's a bit of a change, but it's not a dramatic change.

Did that answer your question? Thank you. And yeah, of course. Thank you. That was very clear. And then just a follow-up on that, because I guess you can remove a bit of personnel from, and I've been working maybe on DataCure and covered that with WebDocX personnel. What would you expect the net effect to be on costs from this, when we say this is fully, when you've completed the actual move and focused on Webhook Exo to say what can one expect in like saving from this if there are any or do you need to fill it up with additional Webhook Exo workers or something like that?

So there will be a couple of roles possibly but we'll have to discuss that in public when we get to that point. I wouldn't count it as any major changes. For the overall group, we're all the time trying to become more efficient in different parts. Then we're also adding roles. We believe in always trying to be as efficient as we can. For example, we're adding roles within marketing, we're adding roles in compliance. which are two very important parts. Compliance is also important when it comes to sales. All of us want to feel really comfortable that their data is stored really securely, that no one else can take that data or access that data. We also want to feel confident that they themselves always can access that data because otherwise they can hardly work without our systems being up and running. almost stop down all of their own processes if we are down. So compliance is an important part. And for example, we're doing ISO 2701 now. So that will be finalized during Q2. So I wouldn't do any logical place on it, but of course it will help us be cost efficient going forward. So it's a long reply.

Yeah. Okay, great. And then just one follow-up on the bankruptcies and the churn that we will see here in H1. You mentioned 2 to 3 million in ARR churn. Is that going to get like a full effect in Q1 or will it be like the full implications on revenue will be from Q2 and onwards and then there will be some effect in Q1. How should one think about how that churn will transpire through the P&L?

So it will take effect at the end of Q1 is our best estimate now, so in March. So one month effect in Q1 and then full effect from Q2 onwards.

Okay, great. Thank you so much. That was all for me. I'll get back in line and see if there are any other questions.

Thank you, Albert.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

we don't have any more people dialing in so i think we can go to the chat where we have a few questions as well um first one is from emilia dmb what do you expect in revenue contribution from germany in 25 upside to the guidance if the migration process goes faster than you anticipate? And can you say something about when we should expect sales to come in from that region on WebDocX? So in terms of revenue contribution from Germany, we don't expect to have any material contribution from the WebDocX product. But when we updated the guidance in connection with the data acquisition, we increased the guidance 40 million. So somewhere where slightly above that likely be the the impact. And I think like on revenues from WebDocX, there's not much upside in 25 on the figures on the revenue side to the guidance given that even if we start to sign customers, we won't have much revenue impact during this year, basically. but we expect more material contribution to come in 26, 27 from the geeks, I would say. Next one, same from Emilia. How much of the churn was driven by bankruptcies in Q4? Should we expect to see some effects from this also going to 25? I think we addressed this already, but these additional bankruptcies that we mentioned for WebDoc did not take effect in Q4, so it will take effect, like I mentioned, in the end of Q1. Next one from Rasmus Persson. Good morning and congratulations on the year and the quarter. Thank you, Rasmus. First one, a large cash pile remains following the acquisition. It would be nice to get an update on the plans going forward. Are you expecting additional acquisitions?

Yeah, so that's a persuasion discussion we have with the board. So as we see it, we will start having a strong cash flow from the business going forward so that it can be used in different manners. Of course, we do not plan to sit with a lot of cash on the balance sheet, but also we see a lot of interesting opportunities. So that's a prioritization discussion we'll have with the board and then we'll come back to the market with how we view it. We feel strongly that it's important not to stress any acquisitions. That you always have to do with good control and really think through things. And it's, yeah, it's first now we are in that position that we really see this positive cash flow coming in. And that will grow over time. So that's something we know we need to address also to the market now. And we'll come back to that in the coming months, I would say.

Next one, regarding Stockholm, our customers hesitant and waiting for the new tender for main system.

No, I wouldn't say so. The change in systems will take place if they manage to keep timelines for the first time ever by the end of this decade. So it's quite some time to go before they actually have to change systems. I don't think the way to pretend this is that WebDoc is still quite unknown in Stockholm. We're working on that. We've had a lot of events in Stockholm during the autumn. We're doing a lot of marketing towards private clinics in Stockholm in different ways. So I think it's about that and also about, you know, most of our sales today are people using our system and talking to others uh private clinics and they say okay that's a good system so then i will look at it so most of this is word by mouth word of mouth is probably the way to say it and that's of course weaker in stockholm than in gothenburg as we have much fewer installations in stockholm or there are no installations at all but users in stockholm uh so that's also an important part but we're trying to really speed it up with marketing and a lot of events. And the large private providers who are really very much better connected into the different systems and know what the different systems are. That's where we have most of the discussions at the moment because yeah, they have large IT departments. They know different systems. They know they want to use WebDoc. So that's easier for us to move with them and then have the smaller ones moving to WebDoc later on. So I don't think it has to tend. It's not a big part. What would really drive web doc growth in Stockholm is just more people getting to know the system.

Next one is on the bankruptcies. I think we addressed that already. And then one from Richard here on the ARR growth was a bit slower in Q4. Could you elaborate? Seems stable, but net upsell is down. It's true that it's slightly a couple of percent down from Q3, but I would say in general around 15% is where we have been. trending this year and that is basically our run rate as well going into next year and then we need this large contracts that we have signed that is not yet being reported in revenues that we need to implement those to drive up the percentage points basically.

And we could also mention that those large contracts is taking quite a lot of effort from the organization. It's a lot of close work together with customers. So it also to a little bit hampers our possibilities to take on other new contracts at the moment. When you assign these small contracts is no problem at all. We can assign them as we go and implement them as we go. All processes are there. It's really easy to do and most of our growth is small contracts. But lawyer contracts take a lot of effort from the organization to really discuss all the requirements that the customer have, go through it, show how we actually fulfill them. It's long, quite tedious processes and our capacity to run those processes at the moment is a bit tampered because we have these larger ones but as we mentioned before also it's important to run them anyway on the side so that once we've implemented these we have the next large contracts to implement and and i think we'll get there but it's at the moment it's quite a lot of work with the existing large contracts

Next one is from Niklas. Two questions. First on the cash position. I think you addressed that already. Second one is related to the historical tax losses. What happens to the historical tax loss after relisting? Will you be able to use this onwards to avoid having to pay full taxes? So this is related to the 295 million NOC tax loss we have in Norway and that was of course an important part of the relisting process, how we should manage that and the structure we made in the end for the relisting made that available for the future as well so in Norway we have a very high degree of tax loss for a long time and we also have some in Sweden we could also mention there is that what we when possible we're trying to

create values in Norway in order to be able to use these losses going forward. For example, development of our new AI tools for customers is taking place in Norway so that we can use those losses. When possible, we do development in Norway in order to be able to use these losses going forward. I think that's all the questions we had. So thank you all for your attention this morning. And just let us know if you have any questions. We're available. And have a good day. Thank you.