4C Group AB

Good morning and welcome to 4C Strategies financial result announcement call for the first quarter. I'm Jonathan Juruso, the director of group sales and marketing here at 4C and I will facilitate today's session. Our aim for the presentation is to cover both our recent financial performance and give you some future outlooks and strategic priorities. But at the outset, let me first introduce today's speaker. First up, we have our recently appointed CEO with us, Jonas Johnson. Also with us is Anders Nogen, our CFO, who will join the Q&A session. And I will now open the possibilities to write questions in the closed chat. We will address these during the Q&A session. So let's get to it. Jonas, before starting off with an executive summary, looking at the quarter from the market and an operational perspective, could you please do a brief introduction of yourself?

Of course I can. Thank you, Jonathan. And good morning, everyone. It's great to be here. My name is Jonas Jonsson. And as mentioned, I am the recently appointed CEO of 4C Strategies. Really excited about that. So who am I? Well, I've been with 4C for a little over 10 years now. I've worked in a number of different positions, starting off in delivery, working my way through different sales roles. I've built our in-house legal team. And more recently, I've held a position as managing director of 4C International, leading our global expansion. In addition to that, I'm a reserve officer in the Royal Swedish Navy. I have an education in law from Lund University here in Sweden, and I live in London together with my wife and our daughter. I think when I look at my journey through 4C, I can see that all the different roles I've had have always been very closely linked to our software and to our customers. And that, in combination with my military background, in addition to the fact that I've been living and working most of my professional life abroad, I think gives me a very good tool set and puts me in a good position to be able to lead 4C strategies on the journey that we are on and in the next phase of that journey. So I'm really excited about that and I'm really excited about what's to come. So that's who I am. Now let's focus on Q1. And again, good morning and thank you everyone for joining. So in terms of an executive summary, so for the first quarter of 2024, 4C Strategies as a group had a net sales of 75.7 million SEK. We had a negative result of 21%. This is obviously not a result that we are super proud of or even very happy with, but it is a result that we were to a degree expecting and that we had seen coming. So we were prepared for it. It is a result that is heavily skewed due to delayed sales processes in the North American segment. On the other hand, if we look at our other two segments, we see that we have had a positive growth in the Nordics and a very positive growth in the international segment. And I will come back to these in more detail. When we look at this in terms of a historical context and where we sit, we can see that the quarterly volatility that we've been speaking of remains very much a live factor. We can see that. So we had a very strong Q4 last year. We now had a little bit of a drop in Q1. And we can see that with these big defense contracts, we are expecting the quarterly volatility to remain. But on the other hand, we are also expecting it to lessen in impact as the business grows. And especially as our corporate segment continues to grow into the future. So we are expecting continued quarterly volatility in the short and medium term. But as I said, we are expecting it to lessen as the business grows. So going into a little bit more detail then, we start here in the Nordics in our home market. We had a strong start to the year, a solid growth of 8%. We have delivered on a number of key deals and key contracts that we've had in the public and in the defense segment close of last year who are now coming to fruition. We've also signed no less than 50 new customers in the public and in the corporate sectors, which is really a promising start to what normally is quite a slow quarter here in the Nordics because it's also the start of the financial year. So a positive outlook in the Nordics, an okay start to the year. Shifting focus then to North America. As mentioned in the report, and as you can see in the numbers, we are heavily affected by the fact that for the majority of Q1, there was no US defense budget in place. That was the same situation as we had in Q4 and in parts of Q3. This delays the sales processes. And it is very difficult to sign new contracts and get new business in this segment, in this sector, when there is no defence budget. So what have we been doing during Q1? Well, we've been working very hard with our newly established, re-established North American leadership team, with our new external US board of directors. Both of these efforts and these teams are putting us in a good position to now look forward with the North American business and to be able to push ahead with these delayed sales process. In addition to that, we start to see a good traction when it comes to our corporate space in North America. We announced last year that we've opened an additional company. We've sent people across from our Nordics team to our North American team to help with that initial go to market strategy in North America and to break into this very, very significant market, which is the corporate market in the US and in Canada. We can see that we've had an okay start to that. It is a long journey. It is an area that is challenging to break into, but given the level of interest we've seen in our market outreach during Q1, the events and the trade shows that we've attended, we can see that there is a significant interest and we're also expecting further continued growth in the short and medium term in this segment. When we're looking at international, international has come to a very strong start of the year. We've seen significant growth in the defence space in all our geographies. We've sold new contracts and we've renewed contracts in both the United Kingdom and Europe together with NATO. We've developed our position in Australia even further. And we can see also increased activity and development in the corporate space, something that is very, very promising for the future, at least in the short and medium terms. So we can see that international, as I mentioned, has gone off to a good start to the year, significant growth compared to previous quarters in Q1 23. And we see now that the global upswing in military training initiatives is increasing the activities when it comes to exercising and when it comes to building readiness and when it comes to tracking the activities that you're doing across your armed forces, not only buying ammunition and body armor and helmets, but actually investing in how to use these things and operationalizing your strategies in the growth in the defense spending. So a good start to the year in international. a positive outlook towards the future and we're optimistic towards what's coming for the remainder of the year.

Thank you, Jonas, for that overview. And if I look at the financial results with a revenue decline and a negative EBIT margin, that's not in line with our targets. Could you share your thoughts on these results? Is there anything you would like to add aside of what you just presented in your executive summary?