4C Group AB

Good morning, everyone, and welcome to this third earnings call for 2025 4C strategies. I'm Jonas Johnson. I'm the CEO and I'm joined here today by Veronica Wallin, our CFO.

Good morning, everyone.

And we're going to guide you through to today's presentation. And I'd also like to say that the Q&A section is now open. So please, if you have any questions, write them in the chat as we move through the presentation and we'll come back to those at the back end of of today's call. We're going to take you through a little bit of a key update from the start and then into the high level numbers overview. I'm then going to guide you through our segments around the world with a bit of an update of what's been going on during the third quarter. And then Veronica is going to do a bit more of a deep dive into the numbers. And after that, I will be coming back in a bit more detail as well to the strategic update that we've announced this morning as well. So if we start by looking back at what was a slightly slower third quarter than we were perhaps expecting, especially on the North American side. We did have solid progress, I would say, across the world. We did make a couple of core deliverables, especially within the NATO realm. You can see that small picture there on the left-hand side is from a delivery of a project called Talos, which is really important for us, and I'll come back to it a little bit more in the EMEA update. But we've made good progress in core markets. We've also made good progress in our expert services here in Sweden. And we maintained, I would say, a strong momentum in the defense and training segment. We have seen a continued slow uptake on the resilience side. And based on that, as I mentioned, for those of you who have had time to read the report this morning, we have made a strategic decision to realign our position going forward. in terms of being able to more focused drive profitability and scalability for forces strategies as we continue to progress in the current macro environment so I'll come back to more details on that as well a little bit later on the call because I want to give I want to give you as much detail and understanding about where we are where we're going and how we came to this conclusion as well so I'll come back to that but if we look at the numbers in brief We can see that Q3 2025, we delivered 72.7 million SEC top line with a negative result of 16%. Now that is significant to less than the comparative quarter last year, which was in a way also a little bit impacted by a few large deals that were signed in that quarter. But as I mentioned, it was a softer quarter than we were expecting, mainly impacted then by not being able to achieve as much deals as we were expecting during the third quarter in the North American segment. We know that when it comes to expert services and EMEA, the third quarter is always a bit slower due to the seasonality and the holiday period. But we were expecting to get more out of North America than we actually were able to achieve. On the positive side, we can see that if you look at the last 12 months of sales, we're still above 350 million and we have increased our ARR up to 270 million due to a number of new COTS deals that came in in the quarter. So I would say all in all a bit of a mixed bag when it comes to the third quarter, not what we were expecting, not what we were pushing for, but at the same time, A lot of positive activities has been taking place which position as well towards the future and there is a lot more to come as we move forward towards the end of the year and into next year. Looking a little bit more in depth than at the different segments. So we're going to take you through EMEA, APAC, North America, and then end with expert services. So here in Europe and our EMEA segment, which also covers our NATO customers and our global customers of that aspect, We have had, as I mentioned, the lower activity due to the seasonality. So here in the Nordic region, but also in Europe, July and August are significantly slower when it comes to making new deals with government officials and customers. But we did maintain good activity. Despite that, I would say we have delivered a couple of core projects within NATO where the first one first delivery of the Talos project has put our external product in a position that NATO themselves described as the new standard for delivering testing and evaluation and trials and experimentation within NATO. And we are then obviously expecting that to spill out into the NATO countries and allies as well. But in addition to that, we also, as part of that, secured a continuation and expansion of that specific contract for approximately 15 million SEC, which will be delivered by the end of 2025 and into 26. And we've also delivered additional trials and tests together with three additional European NATO countries, which we are then working hard now in terms of progressing those into the next phase towards the end of the year. So really promising progress there and I think it's important to mention as well that we are seeing, especially now in Europe, the fact that this change, which there's been a lot of money pumped into the system, but a lot of that money has gone to purchasing of new material and new weapon systems and so on. We are seeing now that that is starting to convert into also producing capabilities. So that comes with training, that comes with readiness assessment, and that comes with the continued question of what are we getting from all those investments? The increase in the services and the software that we deliver is continuously high and it's growing all the time, I would say. But it is also processes that take a long time and therefore continues to impact the quarterly volatility a little bit. If you look at APAC, comparatively to last year, slightly lower quarter, but still strong. We achieved the key contract that we were targeting. for the third quarter uh where we renewed and expanded with one of our key strategic defense customers in the region we've also broadened our work within the where we sell our defense product within the uh within the public sector so we've delivered our initial projects together with the uh with the counter-terrorism centers in both in australia new zealand And we've also expanded our work with other government customers such as the Australian Maritime Safety Authority, which is going into a very exciting exercise next year that we will be part of delivering. So I would say a good quarter as expected in APAC slightly lower than last year. But it is an exciting and interesting market that is that is growing at the rate that we were hoping for. And they are both cash and revenue positive and being on the other side of the world. That's obviously an area that we're quite keen on to continue that expansion. If we shift focus then into North America, as I mentioned, a slower quarter than we were expecting. There's quite a lot of turmoil in the US at the moment with everybody knows that the currently as of Today, the government is still in shutdown with no new budget approved. I think this impacted a little bit also back in Q3 that there were concerns about how things were going. We have delivered new contracts. We are continuing to expand our COT space with key defence customers selling directly to our end users. And I think that that strategy still holds. We are expecting a more normal way of working once the government comes out of this shutdown and either a continuing resolution or a budget is approved. And the comments that we're hearing from the customers as well is that once we get through this, then the defense budget will be in a much better position and the defense and those who are who are able to spend that defence budget will be in a better position to be able to commit to things as well. We can clearly see that our offering is very much aligned with the new direction that comes from the newly established Department of War and and the government administration, which is to buy ready now and COTS software to be able to deliver effect quickly. So I'm looking forward to a more stable situation in the US. And I think that our position that we've strategically gone into is the right one. And I think we're making progress towards that. So I think we'll be stronger out of Q4 and into next year as well. Finally, on the expert services side of the house, very important part of 4C strategies and one that is growing well as well. It was a little bit hampered during Q3 due to the fact that we are a bit challenged when it comes to growing our team, our pool of resources, our delivery consultants. This is in part impacted by a stronger interest in the market, which is which is a bit of a catch 22. So our customers are recruiting the same competencies that we are recruiting, but at the same time, they're trying to buy additional competence. So from we see a very strong position going forward, our order book is strong, and we've signed A number of new projects during Q3 as well of quite significant nature going into next year where we are helping sector-wide exercises and sector-wide government agencies to deliver more of a total defense capability across Sweden, really. This is followed by an uptake in the UK as well, but in general for expert services, the Swedish market and the Nordic market is our core market and it's something that's going to continue to grow as well. So I'll stop there with the sort of segment overview, and I'm going to hand over to Veronica to take you through a little bit more of the numbers.