Netcompany Group As Adr

Welcome to Net Company's interim report for the first nine months of 2025. Today's call is being recorded. If you have any objections to this, please disconnect your line. All participants will be in a listen mode throughout the presentation. Afterwards, there will be a question and answer session. To ask a question, please press five star on your telephone keypad. I would now like to introduce CEO Andrej Rogacevski and CFO Thomas Johansen. Andrej, please begin.

Good day and welcome to this presentation of NET Company's results for Q3 2025. My name is Andrej Rogacevski and I'm the CEO and co-founder of NET Company. And I'm joined today by our CFO, Thomas Johansen. Before we get going, there are some important disclosures that I need you to read through. So could we please have slide number two? I will pause for 30 seconds here and let you all have a read through of these important disclosures. And with that, can we please go to slide number three, please? The topic of today's presentation is our performance for Q3 2025. I start by walking you through the business highlights for the quarter and some of our recent launches. Once I'm done, Thomas will go through the financial performance, including our guidance for 2025 and long-term targets before we open the call for questions. And can we have the next slide, please? The future does not belong to traditional IT consultancy companies building solutions from scratch, but rather to European platform companies using components and products and AI to deliver in a fast, reliable and responsible way. In 2023, we launched a product and platform strategy embracing this development, and we are strongly positioned to take market share from more traditional players. We have clearly differentiated our offerings from our peers, which is also why we continue to grow. An example of a recent product launch is Vera, based on our Pulse technology. The launch is happening in a time where European governments, institutions and large enterprises continue to focus on European digital sovereignty through European solutions developed and hosted in Europe on European data. Vera is a critical solution for European defense and resilience, providing AI-enabled awareness, prediction, and response. This is a vertical we have invested heavily in within the last 12 months, and our ambition with Vera is to become a preferred European vendor and a trusted partner in a time of change. Another example of where we have differentiated our offerings is within real estate, where we have commercialized our offerings and launched Amplio Estate. Amplio Estate is a new solution for property management companies that aims to set completely new digital standards for property management across Europe, moving away from mere administration to real automation and new process support driven by AI. Our solution for the life and pension industry, Amplio Life and Pension, is a third example of launching vertical solutions on Amplio. Very fundamentally, all of our launches and products and platforms are AI-ready. But AI is also a fundamental part of our own delivery model, and it's mandatory for all employees at Net Company to use our digital assistant, Easily AI, to ensure that we continue to evolve and stay competitive. Easily AI knows about Net Company deliverables and methodology, and will assist our employees in designing, building, testing, and running our systems. at our capital market state tomorrow, we'll elaborate further on these topics. And can we go to the next slide, please? We closed the SDC transaction on the 1st of July with the merger of SDC into Net Company Banking Services. In Q3, we've commenced the integration of Net Company Banking Services into Net Company Group. The integration efforts are progressing faster than anticipated, and I'm thrilled about the opportunities NET Company banking services give us within the financial service industry. We can already see now that the combination of deep subject matter expertise within FormaSTC combined with NET Company best-in-class IT development capabilities will offer the customers solutions that are unmatched in the industry. We look forward to accelerate the partnership with our banking customers in the future. And we will already in this quarter be launching new AI initiatives benefiting our customers. Thomas will give you a detailed walkthrough of the NBS numbers in his part of the presentation. And can we have the next slide, please? And now I mentioned some of the contracts we've won during the third quarter. In the public sector in the Netherlands, we have been selected as a strategic innovation partner for the development, management and implementation of a new shared registration system for 3RO, the three collaborating probation service organizations in the Netherlands. The system is based on our Amplio platform. In the Danish private sector, we have entered an ambitious strategic collaboration with Heimstaden Bostad, PHM Group and Thulander. Together, we will introduce a new revolutionary European property management system built on top of NIC company Amplio and with AI deeply integrated into core processing with easily AI. This is the first contract for a newly launched Amplio state solution. The Scottish Government has selected Netcompany to build a digital communication infrastructure for Scotland and its citizens. The ambition is to enable broad digitalisation and interoperability of digital solutions and communication flows in Scotland, thus driving innovation and efficiency in the digital government, gradually replacing a large part of the analogue processes of today. The solution Scott account mailbox is built upon the company's AMI platform, which is extended and customized for the specific needs and the digital ecosystem of Scotland. And can I have slide number seven, please? Also in NIC company C and EU, we have signed several new contracts in the third quarter of the year, of which we have highlighted a few here. In the public sector in Greece, we have entered an agreement with the technical chamber of Greece. The project includes creation of an integrated system that will use new GIS and AI technologies and high resolution aerial photography to effectively identify cases of unauthorized construction. Also in the public sector in Greece, we have signed a contract with the Independent Authority for Public Revenue , where the scope of the contract is to design and develop a new integrated electronic human resources and payroll management system with the aim of digital transformation and upgrading the administrative capacity and operation of their services. In the private sector in Greece, we have been awarded a one-year contract extension with the leading gaming company in Greece, OPAP, to deliver end-to-end application delivery services, including design, implementation, and quality assurance across the core gaming platform. And also in the private sector in Greece, we have been awarded a one-year contract extension with Hellnik to provide support, maintenance, and development services. And with that, I'll now pass on the word to Thomas. We'll give you a walkthrough of the numbers. Please go ahead, Thomas.

Thank you for that, Andre. Like already mentioned, I'm the CFO of NET Company and I will go through our financial performance for Q3 2025. Also, please bear with us for the added complexity to this particular quarterly report following the inclusion of NET Company Banking Services into our numbers for the first time. So if we move past the breaking slide number eight and straight into slide number nine in one go, please. As of 1st of July 2025, Net Company Banking Services, formerly STC, was included in Net Company Group. This resulted in adaptation of new accounting standards for STC, moving from Danish GAAP to IFRS. The acquisition means that we in this quarter have made a full purchase price allocation of the 1 billion purchase price, just as we have made full provision for restructuring costs. Taking a look on the financial performance in the quarter, we grew organic revenue in constant currencies by 8.5% compared to Q3 2024. Currencies impacted revenue growth negatively by 0.3%, resulting in reporting organic revenue growth of 8.2%. Organic growth was driven by 6.7% growth in revenue from the public sector and 11.7% growth in revenue from the private sector. Revenue growth was supported by all segments, except from Norway. Reported revenue grew 34.3%, of which 26.1% were non-organic related to the inclusion of net company banking services. In net company Denmark, organic revenue increased 4.8% compared to Q3 2024, driven by revenue growth of 14.3% from the private sector, while revenue in the public sector was in line with the same period last year. Net Company CEU continued the strong growth for the first half of the year and grew revenue 12.5% compared to the same period last year. The growth was driven by both the public and the private sector that grew 12.2% and 13.5% respectively. Also, NIT Company UK continued its strong growth from the previous quarter and grew revenue 17.4% compared to Q3 2024. The growth was driven by the public sector, which grew revenue by 23.8% compared to the same quarter last year. The growth in the public sector was supported by increased engagement with both existing and new customers, including a continued ramp-up of resources on our engagement with HMRC through the DATAS framework and through other contracts. Revenue in Net Company Netherlands increased 10% compared to Q3 last year and was solely generated in the public sector. In net company Norway, revenue decreased slightly by 2%, driven by a soft market for IT consulting that generally has been declining over the last 12 months. In net company banking services, revenue grew 5.8% compared to pro forma revenue of SDC Q3 2024. This was a result of increased activity with existing customers. Can we move to the next slide, please? In a market where most of our peers have seen little or no growth, the net company grew organic revenue with 7.1% in the first nine months of 2025 compared to the same period last year. Organic growth was driven by the public sector, including the European Union, that grew revenue 8.3% and supported by revenue growth of 4.3% from the private sector. Growth in both segments was supported by our products and platforms and AI solutions. Reported revenue grew 15.7% in the first nine months of 2025, of which 8.7 percentage points were non-organic, related to net company banking services. Can we move to the next slide, please? In Q3 2025, organic adjusted EBDA before allocated H quarter cost increased 8.7% to 348.1 million, yielding an organic adjusted EBDA margin of 19.1%, in line with the same quarter last year. Reported adjusted EBDA increased 17.3% to 359.3 million in Q3 2025. Adjusted EBDA margin for the group was 17.3% compared to 19.8%. The explanation for the lower margin is the inclusion of Net Company Banking Services, which impacted adjusted EBDA margin negatively by 2.5 percentage points. In Net Company Denmark, adjusted EBDA margin was 29.2% in Q3 2025 compared to 28.6% in the same quarter last year, underpinning the margin acceleration that we've seen in Net Company Denmark. In net company CU, adjusted EBDA margin was 12.1% in Q3 2025, compared to 11.6% in the same quarter last year. In net company UK, adjusted EBDA margin was 14.3% in the quarter, compared to 10.3% in the same quarter last year, and at the same time significantly improved compared to Q2 2025. In net coming to Norway, adjusted EBITDA margin was 0.4% compared to 11% in the same quarter last year, and the decline was related to the soft market in Norway. Adjusted EBDA margin in Net Company Netherlands was 22.9% for the quarter, in line with Q3 last year. In Net Company Banking Services, the adjusted EBDA margin was 6.4%, in line with performer adjusted EBDA margin of 6.6% in SDC in the same quarter in 2024. Can we have the next slide, please? For the first nine months of 2025, organic adjusted EBITDA before allocated headquarter cost was 17.5% for the group in line with the same period last year. Reported adjusted EBITDA margin before allocated cost from headquarter was 16.6% compared to 17.8% in the same period last year. And again, reported margin was negatively impacted by the inclusion of net company banking services to the group numbers. Can we have the next slide, please? I will now give a detailed walkthrough of the acquisition of SDC and the financial impact of including SDC into Netcompany Group. As of 1st of July 25, Netcompany completed the acquisition of SDC. The transaction was structured as a taxable merger, whereby former SDC was merged into a new company, Netcompany Banking Services, which was established by Netcompany and capitalized with 1 billion in cash and equity. The former STC reported under Danish GAAP, whereas Net Company Banking Services will report under IFRS. This results in significant differences in accounting treatment for certain assets and expenses, most notably accounting for leases and own developed software. Under Danish GAAP, leases are accounted for as an expense and hence included in administration costs. Under IFRS, leases are capitalized as right-to-use assets and amortized over the lease term. Reporting under Danish GAAP, SDC have historically capitalized and amortized owned developed software. Under IFRS, capitalization requires a clear relation between the capitalized development cost, future cash flow related hereto, and a clearly identified delivery obligation going forward. Due to the specific nature of the contract entered into with all the customers of Net Company Banking Services and the way the total solution in SDC has been structured, with more than 300 individual solutions developed, such an application does not exist under the IFRS interpretation, even though a significant amount of IP has been developed and established and still exists. Hence, the value of own developed software is substantially reduced in the purchase price allocation from around 750 million to 33 million. The value of the developed software is instead allocated to customer relationships and goodwill. This also means that net company banking services will discontinue the previous method of capitalizing and amortizing approximately 200 million annually. Future potential capitalization of development of own software solutions will be based on specific cases where a standard SaaS solution is developed, which will subsequently be licensed. A full purchase price allocation has been performed, and based on the assessment of assets and liabilities of STC, the purchase price allocation leads to the assets and liabilities in net company banking services, as illustrated in Note 8 in the company announcement. Furthermore, as a consequence of structuring the transaction as a taxable merger rather than traditional purchase of shares, the gain arising from the transaction is taxable for the sellers and the acquired net assets will be eligible for tax depreciation for the buyer net company. Under the Danish tax law, the full purchase price of 1 billion will be eligible for tax depreciation over a seven-year period, resulting in reduced taxes of 220 million. Also as a consequence of the merger, SDC was required to exit the ownership of Jordan Data as per the shareholders' agreement. Hence, Net Company Banking Services received 65 million for the shares in Jordan Data during Q3 2025. Under the regulations for operators providing quote-unquote solution for critical financial infrastructure, Jordan Data is obliged to continue to deliver unchanged services in quality and price for at least 24 months. If no alternative operating solution is established at that point in time, Jordan Data will remain obliged to deliver these services. A main reason for the shareholders of STC to enter the transaction with Netcompany was to accelerate innovation and reduce time to market for new solutions and at the same time reduce their own running cost. To deliver on that promise, Netcompany has initiated a comprehensive transformation project of Netcompany banking services, introducing Netcompany methodologies of working, sharing existing platforms to accelerate innovation for Netcompany banking services customers, and eliminate duplicate roles post-merger. In addition, NetCompany Banking Services will leave its current headquarter in Ballerup and work out of NetCompany corporate headquarter in Steingad in Copenhagen as of January 2026. The physical move will ensure fast and swift integration and sharing of knowledge and support the integration of NetCompany Banking Services into NetCompany Group even further. During the next three years, net company expect gradually to realize cost synergies that by 2028 are expected to be between 300 and 350 million annually compared to the SDC cost base in 2024. When we originally announced the transaction, we communicated that we expected the transaction to be double digit percentage accretive to earnings per share in 2028 compared to 2024 baseline. Assuming the midpoint of the 300 to 350 million cost synergy range, the transaction will add 6.84 kroner in accretive earnings per share combined to the 2024 baseline. This is equivalent to an increase in earnings per share of 71%. As a result of the integration, a restructuring provision of 205 million has been booked and expensed as special items in Q3, covering costs to be incurred towards 2028. This covers costs related to redundancies, lease terminations, termination of contract for services no longer required, as well as various other costs related to retention and integration efforts. Another 96.5 million related to impairment of right to use assets and other regulations have also been expensed in Q3 as special items, bringing total special items for net company banking services to 304 million in Q3, whereas total special items for the group year-to-date total 351.2 million, including 35 million related to advisory in connection with the transaction. Can we go to the next slide, please? So, in summary, the inclusion of SDC into net company banking services have led to significant changes to previous accounting principles, and a significant amount of costs have been booked as special items in Q3, supporting the realization of the expected annual cost synergies of between 300 and 350 million to be reached by 2028. These are summarized in the table shown here. Can we go to the next slide, please? In Q3 2025, we employed an average of 9,482 FTEs, equal to an increase of 1,394 FTEs or 17.2% compared to Q3 2024. 6 percentage points were organic and 11.3 percentage points of the increase was non-organic as a result of including net company banking services employees into the total number. The attrition rate for the last 12 months was 18% for the organic part of the group, which was a small increase of 0.5 percentage point compared to Q3 2024. On a sequential basis, the churn rate was in line with Q2 2025. Furthermore, the three months rolling churn rate was in line with Q3 2024. As net company banking services is in the initial phase of a significant and structural reorganization, it makes no sense to include data on churn within net company banking service into the group numbers at this point in time. Can we go to the next slide, please? Organic free cash flow decreased from 145.3 million in Q3 to negative 11.5 million in Q3 2025. The development in the organic free cash flow was mainly driven by development in working capital and to some extent also impacted by increased tax payments and increased acquisition of fixed assets. The negative working capital changes in Q3 2025 was mainly driven by increased contract work in progress in the organic part of the group. This was due to timing of milestone payments on projects mainly within public contracts throughout the group, while the level of trade receivables at the end of Q3 was slightly below the realized level at the end of Q3 2024. Consequently, Organic cash conversion rate was negative 7.1% compared to 89.5% in Q3 2024, while cash conversion rate adjusted for taxes paid on account decreased from 59% in Q3 2024 to negative 22% in Q3 2025. Also in Q3 2025, net company banking services accounted for negative 44 million of the group's free cash flow, which totaled a negative of 55.5 million. Cash flow is expected to normalize during Q4 and Q1, and the differences in working capital are of time and character only. Day sales outstanding decreased from 70 days in Q3 2024 to 53 days in 2025. Can we have the next slide, please? Organic revenue visibility end of Q3 2025 was 6.7 billion, which was an increase of 6.8% compared to 6.3 billion in Q3 2024. Based on pipeline end of Q3, revenue visibility in both public and private sectors for the remaining part of 2025 remains at a satisfactory level, supporting continued growth. Non-organic revenue visibility from net company banking services for the last three months of 2025 amounted to 390.5 million. Combined with the reported Q3 revenue in net company banking services, revenue visibility for net company banking services amounts to 811.4 million compared to expected revenue of between 840 to 870 million for net company banking services for 2025. Can we have the next slide, please? Considering organic revenue growth of 7.1% for the first nine months of 2025 and taking pipeline and revenue visibility into account for the remaining part of 2025, we lift the lower end of the expected revenue growth range from 5% to 6%. At the same time, we narrow the range and reduce the top end of the expected revenue growth range from 10% to 8%. Consequently, we now expect organic revenue growth for 2025 to be between 6% and 8%. At the same time, we narrow the range for our expectation to organic margin and now expect an adjusted organic EBDA margin of between 16% and 18% for 2025. We remain committed to the Share Buy Back program of 500 million launched in connection with Q2 2025 report running until the end of January 2026. Can we have the next slide, please? Yesterday evening we announced our long-term targets, and these are as follows. Long-term organic revenue growth for the group throughout any business cycle of between 5 and 10% annually, and an adjusted EBITDA margin above 20% for the group to be reached by 2029. The 20% adjusted EBITDA margin is including net company banking services using new accounting technologies, meaning that we do not continue the previous methodology of capitalizing around 200 million annually in net company banking services for development of own software. For the total group, including net company banking services, we expect total annual capitalization of cost related to development of own software to be in line with the historic levels for the group of around 100 to 130 million annually. For capital allocation, we will complete the 2 billion share buyback program by 2026, as originally introduced in 2023. We continue to be opportunistic when it comes to M&A, and we will dynamically redistribute cash using share buyback programs and dividends of all free cash flow while observing leverage, of which we have a target of below one. We will now open up the call for questions. So if you move to the Q&A slide, please, and open up for questions. Thank you.

If you do wish to ask a question, please press five star on your telephone keypad. To withdraw your question, you may do so by pressing five star again. We will have a brief pause while questions are being registered. The first question is from the line of Klaus Elmer from Nordea. Please go ahead. Your line is now unmuted.

Thank you. First of all, congratulations with a strong Q3. I have two questions. I will take them one by one. The first is to the banking service division. When do you expect to be ready to launch some new products that will have a meaningful commercial success outside the existing customer base? That will be the first one.

Thank you, Klaus, for that question. So we have already commenced some new services to be launched within the next three to six months in our customer group.

And that's for Denmark, or is that also in a broader European perspective?

That's primarily for Denmark and then Scandinavia.

Okay. Then the second question goes to Denmark. It's a two-fold question. So you increase your FTE by around 6%. Does that mean you are running at a full utilization in Denmark?

Yeah, it means that the utilization is beginning to be where we want it to be. And just maybe one more comment on the increase in FTEs compared to relative increase in revenue. We are also changing the split in FTEs and thereby utilizing more FTEs outside of Denmark to generate revenue in Denmark. That, of course, has a positive impact on margin, and that's why we can see increasing margin despite the fact that FTE count is increasing more than revenue.

Okay, and then just more to Denmark, the private segment which grew quite nicely here in the quarter. Can you share some details on the pipeline and what type of projects do you see in the pipeline?

I can do that. I mean, the private sector is a focus area and has been a focus area for us the last one to two years, even more than before. And all the engagements we are currently working on, the pipeline is strong and the engagements we are working on are based on our platforms that we use across all regulated industries. And furthermore, we also engage with looking into how larger enterprises in Denmark can substantially reduce their IT expenditure and at the same time become more agile. So it's a very interesting pipeline and engagements.

Okay, thank you so much. That was all for me.

The next question is from the line of E-Way Joe from SGB. Please go ahead. Your line will now be unmuted.

Hi, thank you for taking my questions. I have three and do one at a time. And firstly, Andrew, could you maybe talk about your expectation for a company banking service, the future growth potential, and what is embedded in your long-term target portfolio? Also, in this context, I realize that you have lost this local bank alliance in Norway earlier this year. What is the timeline for phasing out its 10-member banks?

Well, I cannot go into the specifics about the Norwegian market and what we're doing there, but I can tell you what the strategy is and it's indeed quite simple. We have already modernized the kernel of the banking system and we're now adding our platforms and our services on top of that. and we will gradually be introducing more and more automation and AI into our services. Now, looking at the acquisition and looking at the numbers as well, I think it's clearly that there's synergies to be had. But at the same time, we'll also be making sure that our time to market will go down and you will see much more optimization coming out of our service lines. And that's what we're going to do to our existing customers. but we'll also do it in a modernized way so new customers do not have to invest into the entire banking platform in order to benefit from our service lines. And that's as far as I can go with our expectations on that.

Okay, fair enough. And in this context, a question on your cost synergy. If I calculate correctly, the $300 to $350 million cost of energy, it will lift your EBIT margin for MBS quite significantly, probably to more than 20%. And I understand a lot of that will be driven by your productivity and efficiency in the software development. And would you consider to pass some of those gains to your customers? Or do you see the need for it?

When we've made the agreement with the banks, the agreement was that we would deliver a couple of things to the banks and that's why they were willing to let us take over SDC. First of all, we would deliver better products faster. We would deliver new innovation and we would deliver capabilities within artificial intelligence. Now, we will also develop and deliver that at running costs that are lower than what they have historically been paying to STC. So the synergies that we are mentioning here is net of that. And you can view the synergies as impact on net profit or profit before tax. But since the transaction is is also opening up for depreciation on the assets, then there's 220 million in safe taxes to be offset. So you can view the 300 to 350 million way as additional profit for the net company bank services group.

Okay. And can you please talk about the revenue stream from the banking customers here to MBS. And I understand from one peer that a part of the revenue is coming from the platform and also part of that coming from the commercial projects. And I was wondering if you can also talk about if the price for those commercial projects are already fixed under your current contracts or long-term contracts with the banks.

We cannot disclose any of the details in the agreement we've made with the banks. And I think you can appreciate that. First of all, we've agreed with the banks not to do so. And second of all, we think that's for our privilege to have. Now, we will go more in details with Net Company Banking Services on our capital markets tomorrow. including what kind of services we are going to deliver, how fast we will deliver them, and what the change will be to the customers of net company banking services having paired up with a professional IT provider rather than an internal IT department of a bank.

Okay, now looking forward to the section tomorrow. Last question here. In relation to the bank merger earlier this week, how do you view its impact on the Danish banking IT market? Do you expect this ASU bank and its chosen IT vendor will change the competitive landscape?

Well, we certainly welcome that the landscape of delivering banking services in Denmark is going into more dynamical character. Every time we see that type of developments, if you look at the business case calculations for For merging banks or acquiring banking services, the IT part of that calculation is always very significant. And in that sense, I think sticking to our strategy that I mentioned before, being able to deliver faster, more modern and in a cheaper way will position us perfectly in that market.

Okay, and would you see any opportunities or even risk to your business in the long term?

In what way to our business? Opportunities? Any opportunities, yeah.

Well, obviously, when the market becomes less static and when everything is more about how to deliver the right services at the right cost, our modular approach and having the most modern technology with less cost is absolutely attractive. So, yes, we see a lot of opportunities in a less static, statical market.

Okay, thank you. I'll jump back to the Q&A.

Before we take the next question, let me just remind you, please press five star if you wish to get into the queue. And next up, we have Paul Yesen from Danske Bank. Please go ahead. Your line will now be unmuted.

Yes, thank you. A few questions about you, right? In the report, you said that the integration is a header plan. Can you give a little more color in what way it's a header plan? Because you haven't

seen and you don't guide any synergy impacts for this year no i mean shortly that means that we've had some months quarters to uh you know learn each other learn the organization and figure out how to organize ourselves and that is in place plans are in place we are executing upon the plans And when we look into that, we can see we are ahead of our schedules. And by the 1st of January, we'll have STC moving into our headquarters. And we've already established teams and development efforts and everything has been set into a new setting. And that's happened before we actually scheduled it. So that's good to see.

Some Danish media has been writing or having focus about unions and the potential synergies. How is that evolving?

Well, we have a very constructive dialogue with all the unions in Denmark, and we will continue to do so, and I expect that we will find a solution in some way.

And then finally, looking ahead on your long-term ambitions, you've launched VERA and this week the estate solution. When you give the long-term marketing guidance, how should we look, or maybe that's more for tomorrow, how should we look at licensing from being part of the guidance here?

Well, the more vertical products we launch, and good examples of that is Vera, but also Estate. Obviously, when we launch the more verticalized versions of our platforms, we will also be incurring a license towards the customers selecting those solutions. But going into more further details of our expectations, I don't think we can do that. No.

What we can say, though, Paul, is that the long-term targets that we have set is based on the net company that you know. And then we are in a transition, as André is mentioning, to launch more verticals. And that means at one point in time, we will also see significant uplift in our ability to charge licenses for the products and platforms that we offer. The target of 20% in EBITDA margin by 2029 does not assume that there is a significant uplift in licenses. That will come on top.

Okay. And when you look at, when we talk about Vera and this state, and then compare it with the speed that we have seen on Earhart on the ramp up there, have you taken a more cautious view on getting into these new verticals than what initially was communicated about the airport?

Well, I think we've all learned from the developments in Erhard. It's the same type of technology platform. It is a strategic decision to select our platform and product in this sense. However, we also see that it can be utilized in smaller settings than a complete airport. So we'll be offering it to both selected institutions, but also entire countries or geographies, if so to speak. So we've been cautious in the way we've been approaching it, but at the same time, we think we have a solution that is very adequate for supporting European countries and institutions and vital enterprises having a clear view of their assets and how to protect them.

Okay, thank you.

And next up, we have a question from Anders Wallesen from Jyske Bank. Please go ahead. Your line will now be unmuted.

Hi, good afternoon. I have three questions. I'd also like to take them one at a time, if that's okay. For the first one, I just noticed there's no material license revenue in Q3. I was just wondering if you could give any guidance on how we should think about that going into Q4, if there's anything pent up or waiting there?

Well, thanks for that question, Anas, and you know the answer to that, and that is that we cannot give you any specific guidance into Q4. So we've narrowed the range, and we expect a top line of 6 to 8, and we expect a margin of 16 to 18, and we're comfortable that we will end in that range.

Fair enough. Second question, and third actually goes to NBS. Can you tell us anything about how we should think about the facing of the cost energies that you've put out today in NBS? Is it like linear or is it like a big ramp up in 2026? Just, yeah, I guess a housekeeping question.

It will be a gradual realization of those synergies, and we'll go more in detail with that tomorrow. But you can assume there's going to be a gradual realization of cost synergies over the next three years, 26, 27, 28. Okay, great.

And then the final question. When I look at the Avalanche Lens Bank transaction, obviously there will be a winner and a loser on the bank platform side. Would you have an appetite in merging or acquiring the losing side, sort of quote-unquote, and would you see yourself as a better fit than a potential bank data VC merchant?

Well, we will always be a relevant player in any type of competition, and we actually believe that we have relevant services. Of course, we will be ready if that should occur.

Great. Thanks so much.

And we now have a follow-up question from E-Way Joe from ACB. Please go ahead. Your line will now be unmuted.

I have two more questions here. Firstly, on this tax impact from the SDC acquisition, and you mentioned this 220 million tax assets can be used for tax deduction. Thomas, if you can elaborate a bit, how should we expect to face over the seven year period? it would be upfront loaded or it would be smooth spread out. And also, if you can also talk about its cash impact.

So the tax depreciation of the full purchase price, the 1 billion, is what gives the 220 million. So that's safe tax, and that will be realized over a seven-year period. That's the depreciation method used for taxable depreciation on intangibles. So it will be realized gradually, and that means that for all practical purposes, one-seventh per year, which will have a positive cash impact in that year. In terms of reduced taxes? Yeah, reduced taxes.

Okay. And the cash flow should be one-to-one, the cash flow impact?

Yes. Great.

Thanks. And then next question is regarding the GM data. Now you have the ownership and I was wondering over longer term if the banks or if you have more bank customers. I mean, the data hosting is a large part of the business. Would you consider to add more or operate a data center? Would you be required by the customer to do that?

I think in any aspect, Yodendata is hosting all the applications right now on behalf of Net Company Banking Services, and we are happy with that, and our customers are happy with that. Of course, going forward, in terms of what the future will look like, we will have to discuss that, first of all, with our customers of Net Company Banking Services and with Yodendata in the commercial negotiations that we have in terms of how the future will look.

Okay, so we cannot rule out one day you have to invest in the data hosting business. I guess it's very, very small exposure you have today.

Yeah, I don't think that you should think of net company building data centers, if that's your question. That's not the same to say that we don't have investments in servers, but the physical data center is something different. Okay, okay, thanks.

I'll jump into the queue.

And next up, we have Aditya Budavarapu from Bank of America. Please go ahead. Your line will now be unmuted.

Hi, André Thomas. Thanks for taking my questions. So firstly, at the Q2 results, you had spoken about seeing an impact in Denmark because people are spending time on product development and the SDC integration, and that is expected to reverse in H2. So could you just give an update on how that has progressed during Q3, how much of maybe a benefit that was to growth? Yeah. Second, Norway's growth is weak due to weaker market. Could you talk about what's happening there and maybe how some of the contractors you had there could help to drive growth in that segment in Q4 into next year?

If I take the first question, then André can add on to Norway. So in connection with Q2, we said that in Denmark we had, for the first half of 2025, utilized roughly speaking 100 people in three different buckets, equally distributed on work related to the integration of SDC. increased business development, i.e. sales activities, specifically within large public and private engagements, and then the last third used for product development in terms of making sure that different features and capabilities were put into, most notably, the solutions Hermes and Solon. And then we also said that we expect this over usage of resources from Denmark to normalize through second half and that it would be an even normalization throughout Q3 and Q4. And that is what we have seen so far. So we are seeing that normalization and expecting that to come to full fruition during Q4.

When it comes to your question about Norway, the market in Norway is specifically soft. There's also some timing issues in that, also looking at the government spending. However, we have some solid customers there and we continue our business and then we are ready to embrace the next pickup in the market space.

Maybe just one follow-up on the UK. You saw a very strong growth in that market. Can you just talk about the pipeline there and also what could help drive growth again into Q4 next year?

Yeah, the UK results are, and you can see that they're actually coming from two sources. One is our existing customers who are buying more under existing framework contracts. And the second phenomenon is that we're actually penetrating the UK with more and more platforms, platform-based projects, and the awareness of net companies growing also in the public sector. And the win in Scotland with the EMI platform is also one of a strategic kind because we're using one of our platforms for creating digital posts and what relates to that. So it's the result of a long, say, a long... long tedious and patient uh um build-up of pipeline and uh yeah we are happy to see that it's actually materializing alicia thank you and next up we have a question from mess kiskar from bnp carnegie please go ahead your line will now be unmuted

Yeah, thank you for taking my questions. I will take them one by one. So first, some bookkeeping questions. If you want to find a performer 2024 adjusted EBITDA number for STC, would it be fair to take the Q3 number of 26 million and then multiply it by four? Or is there any seasonality in STC? That would be my first question.

And there is, unfortunately, a little bit of seasonality, so it's difficult to just take one and multiply by four. So I wouldn't recommend that. There are certain things happening both in 24, but also in the first two quarters in 25. So it becomes blurry if you do that.

Okay, but I guess giving, you know, There's an IT company, Q4 tends to be stronger, so it would be a fair assumption to also here assume that Q4 is stronger in STC compared to Q3?

That's a fair assumption.

All right, then I have a question on the revenue, because I've seen the report that you write that most of the revenues in STC is based on the time and material basis. But I recall from the 2024 annual report in STC that you have a strong backlog and it is recurring by nature. So can you maybe talk into revenue, even though it is a CMT basis, is this recurring by nature?

Recurring by nature, and it's also not uncapped, so it's also by nature what you would call fixed fee. But the contract is structured as T&M in terms of how we are remunerated for the effort. But it is recurring by nature, and there's also in the contract agreements in terms of what's going to happen over the next coming years.

Great. And then on the CapEx, I understand your point on decapitalization, but how should we sort of view it going forward, Thomas? Is it fair to assume it to be, let's say, 20 million per year, or is it one rate closer to 50 million? I think you capitalize one as 120 million on a full-year basis in that company group and in Intersoft. So how to think about it?

I think to think of two things. So capitalization, think of that on a run rate of somewhere between 100 and 130 for the group all up. And in terms of CapEx, so traditional investment in servers and other traditional CapEx investments. that is typically somewhere between 50 and 80 on historical basis. And that will come in different waves. From time to time, we need to invest in server capacity. And from time to time, we need to invest in other capacity, which makes it not even. But if you look at the investments so far historically, then you'll come to a run rate of somewhere between 50 and 80, I would say.

Okay, thank you. Final question, coming back to the consolidation. So just to understand the industry, so the ongoing consolidation we also expect in the future, is that a risk opportunity or is this a more end-user game? Hence, less important if banks continue to consolidate. That'll be my final question.

I think the consolidation is definitely an opportunity. Any change in the static environment of the banking market is welcomed by us. And as I said before, the IT costs and the agility and time to market are really, really important parameters when rearranging the ownerships. And I think it's fairly underestimated how much the modularization of services will infect the market. There's going to be a lot of modules that you can use across the data centrals. And furthermore, I think AI will really penetrate this market over the next two years. So it's definitely an opportunity for us because it opens up the horizon of what is possible and it leaves the static nature of always utilizing the same vendors over and again and again.

It was just more to understand, you know, that we're above 200 banks in the 90s. We are around 50 banks today in Denmark. And there seems to be ongoing consultation. And just to understand, you know, financial IT service providers have still, in the meantime, been able to lift their revenues substantially. So it seems to me as this is more like an end-user game that, you know, it is a consultation that is driving the top line in the financial IT service providers. But that's more the question.

I think that if you look at the total spend on IT for those banks that have been reduced substantially, IT spend has exploded. And that's because it has been run by internal IT departments that have not had as their core business to do IT projects, digitalizations and the likes. And we are biased here, but we believe that we are better to do that. And therefore, we're quite certain, as André is alluding to, that it will be an opportunity to net company, net company bank services, for sure.

All right. Thank you so much for answering my questions. Thanks, Mads.

And next up, we have an extra question from Paul Jessen from Danske Bank. Please go ahead. Your line will now be unmuted.

I don't know if you heard it because it just said unmuted now.

We didn't hear it, Paul. So I'm quite sure it was a great question. Can you please repeat it?

No, it's fine, Dren. When you launched the Vera solution, then you let a person quote you for saying that pulse and similar solutions could account for 20 to 30% of revenue somewhere in the future. Based on estimates now, that would then be 2 to 3 billion. I was just wondering, could you put a little more color on what you actually meant and what is the starting point? Is it already close to 2 billion coming from those, or is it all platforms aggregated? If you could put a little more question on that. Yeah. Comment on it.

Yeah, what I meant there is that real-time orchestration and digital twin solutions will be a big part of what IT industry is going to be delivering in Europe over the next years to come. And that is happening because of several reasons. One is that the amount of sensors, the amount of areas where you've digitized something that can be connected to a real-time engine has just been rising over the last three or four or five years. And then of course also the geopolitical situation we're in. So you will see a lot of companies being able to monitor their assets in real time. And that is great from an optimization point of view to drive your business more efficiently. This was not possible before, where it was much more about administration, orders, invoicing, economy, financial control. Now we will see a lot of things happening in the operational part, in the real-time orchestration of businesses. And that will happen both from an optimization point of view, but it will also happen in regards to the geopolitical situation we're in at the moment. So, yes, I do believe that 20 to 30 percent of solutions being made in the near future are going to be much more related to that than just financial automation or classical administrative IT systems.

So in your context, then we're talking about pulse.

Yes, that's the platform you're using for that. Yes.

And where are you today? Just to have an indication, is it a doubling or is it plus 30% or is it a tripling that you're talking about when you say 20 to 30%?

We don't have that information disclosed, Paul, so we cannot give you where we are today. We're not at zero and we are not at 20-30% as of now. But what we are seeing that any new project that we are embarking on in NetCompany is based on one of the products or platforms that we have. And that means that when we grow, we grow on products and platforms and then we have some ongoing solutions that we also manage here that will gradually move to those products and platforms also so it's a it's a phasing thing which will happen over the next as Andre say a couple of two or three years and then they will expand from there on okay thank you as there are no further questions I'll hand back to the speakers for any closing remarks

Well, thank you everyone and have a wonderful day.