Netcompany Group As Adr

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248 million related to a provision for redundancies expected to be realized during the coming 9 to 12 months. The provision relates to ongoing sizing of the organization, adjustments in employee mix, and realization of efficient growth in all entities throughout the group. The net effect hereof is expected to have a full impact from the second half of 2027 and onwards. Group adjusted EBDA before allocated headquarter cost increased 45.7% to 346.5 million Danish in Q2 2026 of which 30.9% were organic. In net company Denmark adjusted EBDA margin decreased 0.3 percentage point to 16.4 in Q2 2026 Which Mainly Reflected Increased Local Marketing Costs Related To The Partnership With Net Company Ines Cycling Team Excluding The Net Impact From The Net Company Ines Partnership Adjusted EBDA Margin In Denmark Would Have Been 21.1% For Q2 2026 In Net Company CU Adjusted EBDA Margin Was 16.2% In Q2 2026 Compared To 15.1% In The Same Quarter Last Year In The Net Company UK Adjusted EBDA Margin Increased to 13.6% from 1.6% in the same quarter last year as a consequence of strong operational performance and stable costs. In Net Company Norway, Adjusted EBDA Margin was 1% in Q2 and in Net Company Netherlands, Margin Increased to 25.6% in the quarter. For net company banking services, the adjusted EBITDA margin was 7.9% in Q2 compared to performer adjusted EBITDA margin of 3.4% in STC in the same quarter last year. The integration is, as Andre mentioned, progressing as anticipated, and we are starting to see the impact from synergies materializing. Can we have the next slide, please? Organic adjusted EBDA before allocated costs was 634 million Danish in the first half of 2026, yielding an organic adjusted EBDA margin before headquarter cost of 15.9% compared to 16.2% in the same period last year. The decrease in organic adjusted EBDA margin was driven by lower license revenue and increased investments in agentic AI, as well as increased marketing costs related to the partnership with NET Company India's cycling team. excluding the net impact of the NEC partnership, organic adjusted EBDA margin would have been 16.7% in the first half of 2026. Can we have the next slide, please? In Q2 2026, we employed an average of 9,895 full-time equivalents, which was an increase of 18.7% compared to Q2 2025. Around half of the increase was non-organic and related to the inclusion of net company bank services. To enhance and streamline our product and platform offering and further embed AI capabilities into these, all efforts around product and platform development as well as AI initiatives previously anchored with the business segments in Denmark and Southeast Europe was moved into one central unit, product development, as of 1st of January 2026. In Q2 2026, the number of FTEs in this unit increased by 124 FTEs compared to the same quarter last year, as investments in adopting agentic AI into our products and platforms accelerated. The number of organically client-facing FTEs for the Group increased by 9.3% to 8,137 in Q2 2026. The attrition rate for the last 12 months was 16.3%, which was on a decrease of 1.9 percentage point compared to 18.2% in Q2 2025. Can we go to the next slide, please? The group generated free cash flow of 41.2 million Danish in Q2 2026 compared to 25.6 million Danish in Q2 2025 and significantly improved free cash flow compared to Q1 this year, which was negative with 310 million Danish. The free cash flow in Q2 2026 was supported by the positive development compared to Q1 in net working capital. We have previously stated that the negative working capital that we saw in Q1 would be leveled out during the remainder of 2026, and the improvement in working capital in Q2 2026 illustrates that we are following that path. Days sales outstanding remained stable at 57 days in the quarter compared to 58 days in Q2 2025 and 57 days in Q1 2026. Cash conversion rate was 17.7% in Q2 compared to 32.6% in Q2 last year. However, adjusted for the taxes paid on account, cash conversion rate was 18.9% in this quarter compared to 14.6% in Q2 2025. Can we have the next slide, please? Revenue visibility end of Q2 2026 for the Group, excluding net company banking services, amounts to 6.8 billion Danish, an improvement of 10.4% compared to Q2 2025, with an improvement in visibility in the public segment of more than 11.5% compared to last year. Revenue visibility for net company banking services amounts to 1.7 billion and is solely related to the private sector. Can we have the next slide, please? Based on revenue growth of 14.9%, of which 15.1 percentage points were organic for the first six months of 2026, and taking into account the current backlog and weighted pipeline, we raise our revenue guidance for 2026. For the group, excluding net company banking services, revenue growth is now expected to be between 6.5% and 10.5%, which was previously between 5% and 10%. Guidance for adjusted EBITDA margin, excluding net company banking services, of between 17% and 20% is maintained. For the group, we raised revenue growth guidance for 2026 to be between 16% and 20.5%, which was previously between 15% and 20%. while maintaining adjusted EBITDA margin of between approximately 16% and approximately 19% all in constant currencies. With that, the presentation of the financial performance is concluded and we will open the call for the Q&A. So if we move to the Q&A slide, please.

Thank you. To ask a question, please press five star on your telephone keypad. If you wish to withdraw your questions, Press 5 star again. There will be a brief pause while questions are being registered. Our first question comes from the line of George Watt from Morgan Stanley. Please go ahead. Your line will now be unmuted.

Yeah, a few questions from my side to kick off with. Starting off on the revenue growth side of things, Q2 was clearly very strong, organically at roughly 17%. I guess I found it a little curious that the full year revenue visibility X NBS didn't materially change between Q1 and Q2. I think it was about 10 in Q1, 10.5 in Q2. Why doesn't the revenue visibility tick up more strongly? And when we think about even the upper end of the four-year guidance organically of 10.5%, how should we be thinking about the implied slowdown in H2 given that strong first half run rate? Secondly, on the margins into the second half, clearly you need a meaningful improvement on those to reach even the lower end of the range. I guess what gives you the confidence that that's an achievable outcome at this stage. And then lastly is the technical one. On the restructuring provision you booked in Q2, how much of that close to 150 million are you expecting to be cashed out in 2026 versus in 2027? Thank you.

Thanks George for the questions and good morning to you also. When it comes to revenue growth and revenue visibility for 2026, it's absolutely correct as you say that we continue to see strong visibility, 10.4%, which is slightly above what we saw in Q1. We are looking into a second half where comps are a little bit tougher. We continue to see strong demand for our services. We continue to see strong demand for our products and platforms. So we're confident that the revenue visibility gives us a good segue into delivering on our upgraded guidance. And I'll leave it at that. In terms of margins and in terms of the implied pickup in the second half, you are right that there is a pickup implied in the second half. The same was actually the case last year where margin from H1 and then full year by 1.6 to 1.7 percentage point. So we are seeing some impacts in the second half of the year. If you look at the relative part of revenue decomposition this year compared to last year, you also note that the amount of licenses realized so far in 2026 is lower than it was in 2025. and clearly that will also have an impact in the second half realizing increased licenses of which we know that some are already booked. So a few bits and bobs up in there but we feel comfortable that we will get into our guidance. When it comes to provision we cannot really comment too much on the cash out on a quarterly basis. All we can say is that we will realize that As Adr

In terms of the agentic benefits and the coding tools that we talked about that kind of fueled the initial guidance raise of the year, I guess this restructuring provision is the way to unlock some of those savings. You're talking about those savings fully run rating more kind of second half of 2027. Has your opinion on the amount of savings you expect to come through from that change changed at all with regards to the potential impact in 2026 as it moved out to 2027? Or I'm trying to work out how you kind of think about those two things in kind of combination. Yeah.

Yeah, well, I'll start and then Andre will fill in. It's a complex question and a relevant question, George. And there's a lot of moving parts when we talk about efficiencies. We see a great opportunity to embed and to work with agentic AI. And that means that we can continue to grow and we will continue to grow. It also means that we will continue to to recruit young talent, but it also means that we will shift a little bit around in terms of the overall distribution within the pyramid structure, so to speak. Whether the impact is going to be bigger or smaller than what we anticipated, I think we're all learning right now as to what is going on with the agenda. We're also learning some of the things that You As A Company Like Ours Need To Be Very Adherent To In Order To Unlock All Of Those Potential And Not Just Shift Them Over To Somebody Else In Terms Of Increased Cost For Compute And The Like And That Was What Andre Mentioned In The Beginning Of His Intro but I think it's probably worth a little more detail on that there, André.

Yeah, but we see, I mean, the reason why we're actually growing is because we're coming in with very complex solutions to regulated industries based on platforms and products where customers really believe that it's a reliable way to go forward and we will deliver at time and budget. More functionality is put into our products and platforms. We have a product and platform division now that is just It's actually a decent size and it can produce a lot of platform features and product features. And on top of that, we're using AI. So I think when you look at the composition of our large engagements, many of them are fixed price. Customers really care about having delivered these things at time and at budget. And we can do that by having more functionality dealt with In A Product And Platform Division And Using AI At A Cost That Is Also Controlled We Are Definitely At The Moment Probably One Of The Most Leading Companies When It Comes To Have Local LLMs With Fixed Token Price On Our Own Infrastructure Now The Demand Is Created Two Fold One Is Of Course The Token Price The technical discussion right now token prices will definitely go up but if you have your own infrastructure and you have your own LLMs and you're using them for the purposes that you will be using them for you can actually decide how much it's going to cost and you can even fix that price for a longer period of time so when it comes to using Phoenix for all our employees we know how much that's going to cost and we know it's not going to go up Because We Are In Charge Of That Secondly I Think Right Now Customers Really Don't Care About What LLM It Is They Care About The Effect Of It And How It's Embedded Into Their Systems And Again Using Open Source Open Weight LLMs On Own Infrastructure You Can Accommodate Those Demands In A Very Particular Way And The most important thing for customers is to get there, not necessarily which LLM they use. And they want to stay independent, especially European customers. They don't want to use global LLMs where they don't know how much it's going to cost in one or two years' time. So that's the market we're in, and customers are really experiencing a great interest in that.

That's helpful. Thank you. Thank you.

Our next question comes from the line of Klaus Almer from Nordea. Please go ahead. Your line will now be unmuted.

Thank you. Yeah, also a few questions on my side. If we are looking more into these one-off costs you put in Q2, how should we try to translate that to savings in that part of 27-28? And what is the phasing? That would be the first question.

and a thanks for the for that question closer and a probably not there surprising we're not going to really be able to give you any specific insight on a quarter-by-quarter basis other than say that they we will see the benefits throughout the the stipulated period which is the next in nine to twelve months or it was worth I don't know what will be absolutely it to and in another way all year this

I hope it's not me who's doing the echo. Well, I guess this would be a number of FTE to leave the company. At the same time, you're still planning to grow your revenue. So how should we think about FTE moving forward? Will it be a growing number? Will it be declining? Yeah, that would be a follow-up question.

I mean, if you look at it historically, we've been doing this... Definitely To A Smaller Degree The Last Two Years But Every Month We're Doing It More And More If You Look At The Revenue It's Going Up The Number Of Employees Is Not Going Up In The Same Pace So We Would Definitely Be Able To Deliver More Per Employee At The Same Time We Don't See Customers You Know Depressing Or Putting Pressure On The Prices Because What We Deliver Are Really Complex Solutions In Regulated Industries Where Competition Is I mean, we beat competition both on quality and we are also very competitive in price. So, I mean, what we're seeing at the moment is a slower growth in employees compared to a higher growth in revenue. And I think that's a very, very positive development. Now, customers are also asking for additional services that we normally don't help them that much with. Could Be You Know More Industrial Knowledge And How To Go About It So We Also Hiring People In New Areas Where The Margin Is Quite Good Actually And Where Customers Are Asking Us For More Services So It's Very Difficult To Say Exactly What's Going To Happen But When You Look At The Core Of Development Of Testing For Instance One Thing Is Absolutely Certain If You Have A Token Cost And The Tools That Are Competitive And You Know Exactly What The Cost Is For That it will replace some of the the cost associated with doing that manually and at the same time if you can deliver even more complex solutions that were impossible to deliver in one or two years time took four or five or six years time just two three years ago you are in a very very competitive situation and that's why we are winning new customers so what I can tell you is We're definitely delivering more with fewer people, but we're growing at the same time. And the mix of our employees is also changing accordingly. I know it's a long answer, but it's a very positive development. And I think the industry is going to be divided probably into, as it always has happened over time historically, some companies will do this and other companies will... will not, and they will probably stagnate more than, and not create that goal. And I think the growth in itself just shows that we're on the right path here.

It makes a lot of sense. Maybe a different topic, maybe on the same topic, so to speak. You know, 17% revenue growth was quite impressive, and, you know, full year guidance growth is also rather impressive versus the peers. When we talk about AI-driven projects, both on the pipeline but also in the growth you have delivered so far, is it possible to quantify in any way how important has an AI project already become?

Yes, it's important in two ways. One is, of course, to construct the actual solution as fast as possible. And the most reliable, that's Phoenix AI. But it's also important that the solution you construct, and this is where it gets really interesting, as hooks into AI engines that can process faster. So if you receive bookings in your transportation company, or if you have cases that you need to administer faster, you need hooks into an AI algorithm that can help you in a responsible way. These are built-in In Our Solutions So You Don't Have To Do That Later It's There And It's Part Of Our Solutions And Without That You Will Be Very We Were Having Big Difficulties In Competing In The Future And A Lot Of We Have That Built Into Our Architecture It's Built Into Our Platforms It Comes Out Of What We Do It's Born With It And I Think That's A Real Differentiator And It's Extremely Important

Sure, so I was more trying to figure out if you look at your let's just say the private sector in the pipeline, what is the magnitude of these large platform IT infrastructure projects you are currently in discussion with the customers to move forward with?

Okay, but I don't think we have many customers now where we don't have AI embedded into their solutions. It's the is more the rule than the opposite. I can't come, I mean, even if I look back the last six months, I can't remember we've had any talks with customers with AI, embedded AI is not part of it.

Okay, thanks.

Our next question comes from the line of Matt Crisco from BNP Econogy. Please go ahead. Your line will now be unmuted.

Yeah, thank you. Also, a couple of questions from my side. I will take them one by one. So first, coming back to the implied margin guidance for H2. So I understand there will be license fees, positive restructuring fees, and also the normal seasonality. But what about the use of R&D capitalization in H2 and also on the synergies in NBS? So are you still targeting the 35% execution of synergies in NBS? And how much have you realized so far this year?

Yeah, so if we start with, thanks for that, Mads, if we start with the synergies in MBS, that is progressing, as we've said, to target. Now, whether we're bringing, you know, agreed, reaching Q1, Q2, Q3, Q4 is not so important for us as long as we reach it throughout the year and we don't really go too much detail on the quarters. But that is tracking according to plans. At the same time, it's also important for us to state that while we are realizing efficiency gains in MBS, we're also investing into that unit. We've hired a capable and very senior new CEO to the business because we expect to be able to do more business. It's not a pure cost out, but the cost out that we have committed to, we stand committed to also for 26 and 27 and onwards. So that is progressing according to plan. In terms of the impact on the implied guidance, correct, as I stated earlier, there will be more licenses to come. There will also be other benefits in the second half. In terms of the capitalization, we've seen that capitalization in Q2 increased compared to Q1. And the reason for that is related mainly to a fairly large project that we do within Net Community Banking Service where we are developing a critical solution for the customers that instead of being sold as a normal project where we would get revenue on an ongoing basis, is a project that we have agreed to develop a piece of software for that we will then charge a license revenue in a 10-year period subsequently. So that is the main pickup. There's also a little here and there, as Andre was alluding to, with the product division units that are doing new features and new solutions. So that's the run rate in Q2 is going to be more or less run rate for the rest of the year.

Perfect, thank you for that. Then maybe a question to you, Andre. I think we've recently seen Europe is considering to include a bi-European criteria for public procurement. Is this the kind of initiative you think is needed to really get the Europe agenda moving and potentially also open up more opportunities for net company and not least the EU?

Yes. I mean, the short answer is, of course, I mean... Whatever you think about it politically, this is happening. So the big discussion in Europe right now is to, especially when it comes to public procurement and hence also the spillover effect to private businesses and regulated industries. Data, location, ownership. These things are definitely under discussion. I think we'll see European regulation coming in on those areas, especially when it comes to society-critical systems, but also systems in regulated industries like financial industries. So that is coming, and it's here, and it will definitely be very positive, you can say, thing for us since we are so European-focused. And what we're also seeing is An Increasing Interest And Is Actually A Spiking Interest From European Companies And European Governments To Invest Into Own Hardware And Put In LLMs Open Source Open Weighted LLMs Into Own Infrastructure That Is In Order To Control Token Costs And To Build Solutions That Are Under Own Control Now We Are Leading When It Comes To That Part That's for sure. And that's in many industries because it's a common infrastructure we have under all our solutions. So, no doubt that, I mean, we can still help the customer if the customer comes and says, listen, we want to use Entropic for something. It's not like we're saying, well, we don't want to talk to you at all. But, because of course we will and everyone has different opinions about what to do. But we have an infrastructure and an offering

That Will Accommodate These European Demands And We Are Definitely Leading In That Part Of The Business Perfect Then Just My Final Question Is Have You Seen Any Updates On The European Facility Which Is Set To Replace The RAF Not Any Formal Updates As Of Yet But There Are Some

Significant And Continued Discussions As We Hear In Terms Of Putting In A Quote On Quote RRF Version 2 And The Numbers We Hear Is Between 10 And 20 Billion Euro And The Allocation To IT And Digitalization Between 10 And 20 Percent So Another 1 To 3 Billion Ish We Will See What About The Timing And The Likes But The Talks Around It Are

Our next question comes from the line of E-Way Joe from LCB. Please go ahead. Your line will now be unmuted.

Hi. Thank you for taking my question. Also a couple of questions and I'll do one at a time. Firstly, I just want to follow up the licensing in the second half. So if we and I know you have some License income expected to receive from the cycling team and besides the Correctly 30 million in the second half from them. What are the products? Do you expect to also receive license income from and there will be materializing and

Yeah and thanks for that question Wei and I'm not going to be able to disclose what type of solutions we are selling to what clients and hence I cannot give you an idea of what type of product platforms we are expecting to sell in the second half. What I can say is that it's Firm, materialized, and very, very late stage in pipeline. So we feel comfortable that that will materialize also over and above the Pulse license that we are selling to the NET company in-year cycling team.

Okay, fair enough. And then a second question, also follow up on the MBS question. I mean, we see the EBDA has been declined over quarter over quarter over the last two quarters. Could you elaborate a bit on the trend? I mean, you have talked about the synergy materialized as planned, but why we haven't seen the EBDA start to increase?

What we've committed and what we stand for is the full, when we're in the two, three year into the ownership where we've said that we would see a improvement in margin due to reduce of cost. We stand committed to that. Now, we also want to make sure that we do things the right way and that we create a net company banking service That Is Here For The Long Run And That Will Be Able To Compete And Take Market Share And That Is Not Done By Following A Very Structured Have To Take Cost Out At X Per Quarter Because Otherwise We Are One Or Two Million Behind So There Sometimes You Know Things Slip One Quarter And The Other It Might Also Be That We Are Spending More Resources On Various Projects For Preparation In One Quarter Which Will Then Benefit Another Quarter So Don't Look Too Much On The Quarterly Development Is My Advice On NPS But More On Are We Meeting Our Annual Targets And Are We Meeting What We Have Said Committed Throughout The Three Year Period Okay Thank You Last Question I Want To Understand The Phoenix AI What Is Your Pricing Strategy For For This

And are you also looking to charge token and also if it will only be a fixed license income going forward?

So Phoenix is being used by ourselves at the moment and we know what the cost structure is. We are now launching it more commercially to be used with our customers and the developers and people at our customer site. We will be launching it in a differentiated price mix. And of course, we are in control of what the tokens are and we can add to the tokens if we need to. And we will. So that's a part of the pricing model. But I can go into more details about exactly how it's going to be structured. That can also vary from industry to industry. And it can also vary in terms of how big an engagement we have with the customers. Unfortunately, I can't tell you more right now, but we will come back with more when it really reaches the market, for sure.

Okay, understood. Thank you. I'll jump back to the Q.

Thank you. Our next question comes from the line of Paul Yist from Ventsk Bank. Please go ahead. The line will now be unmuted.

Yes, I have a few questions. Just coming back to the special items of the 149, just curious about in the past you haven't made provisions for taking out capacity or people. It's been done ordinary through your reporting. What's different here? Are you closing down specific lines so that you can do a provision or... what's the reason by doing it now and not just by doing your normal pyramid management?

I can start and André will fill in. We actually also did it last year in connection with the restructuring of 352 million that we did on NBS. So in that aspect it's not new. Clearly the magnitude is of a size But Also What Is Important Here Is That We Are Entering Into A New Era As Andre Was Talking About In Terms Of How We Work And Therefore We Are Taking The Actions To Be Able To Remedy For That Going Forward So This Is Not Something That We Expect To Be Normal But As Of Now We find it prudent to do, and this will also allow us to continue to attract the talent that we need to continue to thrive and grow our business.

Yes, and you should see it as a tool as well, because we need to force ourselves, and it's actually happening in a very good way, to be less doing the traditional work when it comes to manual work, and being maybe more doing the new types of services work where we know more about the verticals and the business and the solutions are definitely growing in complexity and in scale and a number of integrations. So we will see, we will still hire a lot of talented young people. We still need a lot of technologists. We need the good ones, the best ones, but we will also hire people who know about the business verticals. I think the mix will change over time. And of course, that could also imply that we are doing organizational shift around. So this is a good tool. We're just being prudent and making sure that we are ready to do that. As I said before, we are growing more than the market is growing. We're taking market share. We're not growing as fast as number of employees as we're doing in the market. And that's what we see now. And we will also be Both Courageous And Doing The Right Thing When It Comes To Having The Right Mix On Our Products In Order To Deliver In This Changing Time But I Don't See The Lack Of Great People I Mean I Still See A Lack Of Great People Everywhere And What Is Happening Right Now Is More The Manual Parts The More Tiresome Not Really Interesting IoT Work Being Replaced By

By Price Competitive Algorithms It's Important You Know What You're Doing Here So And I Truly Believe We Do And The Savings That You Are Heading For Should We See These As Savings That Will Support Market In The Future Or Could We See That You Would Reinvest Them Into Operations For The Net Impact Of This

No, I think they will materialize in better margins at our projects. And we have delivered, we have built many of these things over the last two years. Phoenix was introduced first time as a probe one and a half year ago already. So I think most of this is in place and we are ready to yield the benefits. And I said before, customers are not paying less for their solutions. They just want them delivered faster. and in a more reliable way, in a modern way. But they're not paying less. On the contrary, they want more. So I think we're in a very good position to get the best benefits out of this.

Then on the top line, on NBS, you've grown 10% and 12% in Q1 and Q2. Is it new clients coming on board, or is it existing clients who are purchasing new services, or is it just because it was a soft contract you had last year?

It's existing clients, and then there's a lot of potential new projects going on with that client base, and then of course we also at one point in time want to extend that

To New Clients But The Growth As It Is Now Is With The Existing Client Base And Then The Final One We Had A New Government And Elections In The Spring We Had A Summer Have You Seen The Execution On The Government Pipeline Starting To Turn Into Contracts Or Has There Not Been Any Negative Impact Here At All We Are Definitely Having A

We had an election and then we had a long period of time not having a government. But the government has definitely set up a course with much more utilization and we are seeing a pickup in the public sector of that. So yes, it's been a slow first half year, but we expect it to pick up over the second half year.

But Is That Already In Q3 Or Is It A Q4 Event That We Should Expect All The Signatures On The Contract During Second Half Without Being Specific So During Second Half It's Always Difficult With Government Okay Thank You Thank You As No One Else Has Lined Up For Questions In This Call

I will hand it back to CEO Andrei Rogozhevsky for concluding remarks. Andrei, you begin.

Thank you all for joining in and have a wonderful day.