Netcompany Group As Adr

Welcome to Netcompany's interim report for the first three months of 2026. Today's call is being recorded. If you have any objections, please disconnect at this time. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. I would like to introduce CEO André Rokaszewski and CFO Thomas Johansen. You may please begin.

Good day and welcome to this presentation of NetCompany's results for Q1, 2026. My name is Andrei Rogachevsky and I'm the CEO and co-founder of NetCompany. I'm joined today by CFO Thomas Johansen. And 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? The topic of today's presentation is our performance for Q1 2026. I start by walking you through the business highlights for the first quarter, and once I'm done, Thomas will go through the financial performance of the quarter before we can open the call for questions. Can we have the next slide, please? So the first quarter of 26 marks the beginning of a new and a very exciting era for NetCompany. Here, I'm not only referring to the recent announced AI partnership with INEOS Glanadius, which I promise I will give you some more comments on later in this presentation, but also to the potential we believe we can help customers unleash with our AI-embedded products and platforms. Since the introduction of our go-to-market strategy three years ago, our market-leading products and platforms combined with embedded AI capabilities have given us a truly unique position in the market. A position visible in our results for the first quarter of this year, where we delivered growth of more than 38%, of which 13% was organic. One of the highlights of the quarter is our performance in the UK, the largest market for IT services in Europe. Here, we saw very strong demand for our product and platform offerings, leading to more than 50% growth in top line. And in Q1, we also finally got to announce our partnership with Heathrow Airport. In the end of March, we listed our EBITDA margin guidance for 2026, a result of the promising output we see from our investments in embedding AI into our products and platforms with Phoenix AI. Can I have the next slide, please? Today, we launch a white paper on Phoenix AI, focusing on Phoenix built and the specific benefits it allows organizations to harvest when applied in combination with our products and platforms. Intensive AI is fundamentally changing the way software is delivered. In complex and regulated environments, AI only creates value when it's combined with control, security, and deep domain expertise. With Phoenix Build, we are providing this balance and making it possible as the first of its kind in Europe. With accelerated investments into Phoenix AI, we enable sovereign and secure agentic AI delivery across some of Europe's most demanding enterprise and government projects. reducing IT development time by up to 45% when using the company products and platforms. While the potential of implementing authentic AI is significant, unregulated use of AI introduces substantial risks, especially in large enterprises and public sector systems where control, stability, and quality is crucial. What we see in such scenarios with unregulated use of AI is that AI generates code in vacuum, but does not account for the many non-functional requirements essential in complex systems. And while this may work well for smaller applications, in mission-critical systems, it creates serious challenges without the proper governance as solutions risk to be poorly constructed and not optimized, and therefore very difficult to maintain. over time. For both private and public solutions, scalability, performance, stability, security, interoperability, and data protections are essential, and when using Identik AI, they do not emerge automatically. Implementation of Identik AI and AI in general therefore requires A structured approach where AI is guided through clear frameworks and governance to allow for the benefits to be fully realized. And as a part of the Phoenix AI framework, the Phoenix Build approach guardrails the AI. It enables organizations to capture efficiency gains without taking unacceptable risks. At NetCompany, we help organizations embrace AI in a way that is not only faster, but also safer, smarter, and better aligned with the realities of mission-critical delivery. And as you can hear, I'm excited about the opportunities ahead and Netcom's crucial role in building European sovereignty in the age of AI. Can we have the next slide, please? Another exciting news took place last week as we announced the AI partnership with Ineos Grenadiers. The establishment of a net company, Ineos Cycling Team, showcases our Pulse AI technology by enabling world-class athletes to perform at their best. A high-performance environment where precision, performance, and continuous improvements are essential for winning. Our POS platform is already implemented in airports around Europe under the name AirHard, where raw operational data is orchestrated in a real-time data platform, helping to predict and optimize decision-taking using AI. Through three dimensions of data, the platform will unify rider conditions, logistics around the team, and tactics into one AI platform, optimizing planning and prediction around the team. The partnership with the most successful cycling team ever, based in the UK with the ambition to continue to deliver extraordinary results, strengthens the awareness of their company, not only in the UK, but in all of Europe, and it reinforces our position as the best-in-class AI partner and supports our ambition to drive European digitalization and competitiveness. I look forward to follow the team to the Giro d'Italia starting Friday, where the team officially will ride under the name Meg Company Ineos. And with that, I will now pass on the word to Thomas. We'll go through the numbers. Please go ahead, Thomas.

Thank you for that, Andre. I will now go through our financial performance for Q1 2026 and our guidance for 2026 too. So we move past the breaking slide number seven and straight into slide number eight in one go, please. As already mentioned by Andre, we've had a strong start to the year with organic revenue growth of 13.1% in constant currencies compared to Q1 2025. Currencies impacted revenue growth negatively by 0.3 percentage point in the quarter, resulting in reported organic revenue growth of 12.8%. Organic growth was driven by 10.1% growth in the public sector and 19.5% growth in the private sector. Revenue growth was driven by a combination of new wins related to our products and platforms, and from existing customers buying additional services with all segments contributing to the growth, most significantly in Net Company UK and in Net Company CU. Group revenue grew by 38.7%, of which 25.6% were non-organic related to the inclusion of Net Company banking services. And head company Denmark increased revenue 1.6% compared to Q1 2025, driven by 16% growth in the private sector with contribution from multiple different verticals. Net company CU grew revenue 18.6% compared to the same period last year, which was actually a tough comparable as Q1 2025 included close to 42 million Danish in license revenue, And the growth was driven by both the public sector, including the EU, and the private sector, which grew 15% and 32.6% respectively. Net Company UK continued its strong growth path from last year and grew revenue by a staggering 51.4% compared to Q1 2025. The growth was driven by both the public and the private sector as a result of increased engagements with both existing and new customers adopting our products and platforms. In particular, the TSS win from December 2025 and continued increase in the utilization of the Dallas framework supported this strong growth. In net company banking services, revenue increased 10.1% compared to performer revenue in FTC in Q1 2025. In net company Norway, revenue increased by 2.1%, and in net company Netherlands, revenue increased by 21.5% compared to the same period last year. Can we move to the next slide, please? In Q1 2026, organic adjusted APDA before allocated headquarter cost was 16.4%, a decrease of 2.1 percentage point to the same quarter last year, all in constant currencies. The decrease was a result of lower license revenue, which had a dilutive impact on margin of 1.7 percentage points, and investments into our product development unit to accelerate the adoption of agentic AI in all of our offerings, which had a dilutive impact on margin of 2.1%, split between increased cost, impacted margin 0.7%, and foregone revenue impacted organic margin 1.4%. Hence, in a quote-unquote like-for-like scenario, margin in Q1 2026 increased from 18.5% last year to 20.2% in Q1 2026. Group adjusted EBDA before allocated headquarter cost increased 12.1% to 362 million in Q1 2026. In net company Denmark, adjusted EBDA margin decreased 4.7% to 17.4% in Q1 2026. The decrease was a result of the transfer of 150 client-facing FTEs into product development that led to higher costs related here too. and foregone revenue which in total had a dilutive impact on margin in q1 2026 of three and a half percentage point and hence on a quote-unquote like-for-like basis margin in denmark was 20.9 compared to 20 22.1 percent in q1 2025. a net company see you adjust the dbda margin was 16.3 percent in q126 compared to 17 and a half percent same quarter last year The decrease in margin was a result of lower license revenue income recognized this quarter compared to the same period last year. On a like-for-like basis, adjusting for the lower license revenue in Q1 2026, margins would have been 4.5 percentage points higher and yielding a 20.8% margin in CEU for Q1 2026. In net company UK, adjusted EBITDA margin increased by 5.5 percentage points to 16.5% in the quarter. An improvement reflected by improved utilization, larger projects delivered on NET Company fixed fee basis, and better project execution. In NET Company Norway, adjusted EBITDA margin was 4.1%. In Q126, NET Company Netherlands margin increased 2% to 23.3%. In NET Company Banking Services, the adjusted EBITDA margin was 8.8% in the quarter. compared to a performer-adjusted EBITDA margin of 3.2% in STC in the same quarter last year. The integration of net company banking services is progressing as anticipated, and we are starting to see the impact from synergies materializing. Can we have the next slide, please? In Q1 2026 we employed an average of 9845 FTEs equal to an increase of 1695 FTEs or 20.8% compared to Q1 2025 of which around half was non-organic related to the inclusion of net company bank services in the numbers. To enhance and streamline our product and platform offerings and to further embed AI capabilities into these all efforts around product and platform development, as well as all AI initiatives previously anchored with business segments in Denmark and Southeast Europe, was moved into one central unit, product development, as of January 1st, 2026. During the first quarter, an additional 52 FTEs were transferred to product development to accelerate the adoption of agentic AI. At the end of Q1, the total amount of resources working within product development totaled 459 FTEs, compared to 302 FTEs in the first quarter last year, an increase of 51.8%, underpinning our commitment to invest in this area. Most of the increase in FTEs are reallocated resources from the Danish business segment. Non-client-facing employees amounted to 545 for the entire group in Q1 2026, an increase of 13 compared to the same period last year. This means that the proportion of admin and support staff declined from 6.5% of all employees last year to 5.5% in Q1 2026, a relative reduction of 15%. The attrition rate for the last 12 months was 16.4% for the group compared to 18% in the same period last year. Can we go to the next slide, please? Free cash flow was negative 305 million in Q126 compared to 67.9 million in Q125. The negative free cash flow in Q126 were driven by two main factors in our working capital, development in trade receivables and working progress. The increased trade receivables were impacted by the timing of more than 200 million in payments, which were expected to be paid on 31st of March, but was not received until the beginning of April. Further, work in progress increased as a number of the large ongoing projects under the so-called recovery and resilience facility will not reach payment milestones until Q2 and Q3 in connection with their ongoing completion. Such lumpiness in the process from work in progress to accounts receivables to cash received occur from time to time, and it is indeed a pattern we have experienced before with the large and complex multi-year fixed B contracts. The funding for the projects are guaranteed by the EU under the special RRF program, and there are no counterparty risk associated with the build-up of the work-in-progress experience in Q1 2026 that is expected to normalize throughout the year. Can we have the next slide, please? Revenue visibility at the end of Q1 2026 for the group, excluding net company banking services, amounts to 6.190 Danish billion. An improvement of 10% compared to Q1 2025, with an improvement in visibility in the public segment of more than 13% compared to last year. Revenue and visibility for need company bank services amounts to $1.24 billion and are solely related to the private sector. Can we move to the next slide, please? On March 26, we updated our financial margin guidance for the full year, and we now expect an adjusted EBITDA margin, excluding mid-company banking services, between 17% and 20%, previously 16% to 19%. The announced AI partnership with Aeneas Grenadiers, creating mid-company Aeneas cycling team, will not lead to diluted margin expectations in 2026 or in subsequent years, for that matter. We maintain our full year guidance for revenue growth, of between 15% and 20%, including net community banking services, and revenue growth of between 5% and 10%, excluding net community banking services, based on realized revenue in the first quarter, current backlog, and the revenue visibility. With that, the presentation of the detailed financial performance is concluded, and we'll open up the call for Q&A. So if you move to the Q&A slide, please, and open up the call. Thank you.