Addnode Group AB (publ)

Thank you all for listening to our Q1 presentation for 2021-2024. I'm the CEO, Johan Andersson, and with me I have our CFO, Kristina Elström-McIntosh. We will guide you through the interim report today and also a short introduction to Adena Group before we start. So with that, and we will of course end with a Q&A. And for those of you who are new to our group, if we did not mention it, reporting currency is Swedish crowns. So looking at Adler Group, what do we do? We are all about digitalization for a better society. This is why we exist and what we want to achieve in everything we do. We believe digitalization is the only way to provide decision basis for our future. We are confident in the capacity of humanity to do good and make sustainable decisions if the tools are right. Our digital solutions transform the private and the public sector to design, build and operate more sustainable products, buildings and societies. Our key markets enjoy a strong and continuous growth driven by global trends in urbanization, digitalization, automation, AI and sustainability. To clarify what we mean by digitalization for a better society, we have updated our brand identity, which is reflected in our new visual identity, logo, website, and the interim that we have published today, interim report. We are a decentralized group organized in three divisions, division design management with companies specialized in design, BIM, and facility management software, The offerings in the division is both own developed software, and we are one of the largest Autodesk partners in the world. Division product lifecycle management are experts in software and digital solutions for simulation, design, and virtual twins, led by the company Technia, a global partner to Dassault Systèmes. Division process management is a portfolio of companies specializing in case management and geographical information solutions for the public sector. Adder Group, we are an add-on growth accelerator for digital companies, providing for a sustainable future. We invest in companies within software, digital twin solutions, and lifecycle management solutions, all with the intention to increase efficiency, predictability, and increase knowledge to build a more sustainable society. While operations take place in our companies, we act as a catalyst to amplify their performance. We do that by providing resources, knowledge and support, and we speed up growth and expansion. At the core of our sustainability agenda lies the management of the operation of companies to deliver digital solutions to clients that will enable them to deliver sustainable products and service to their customers. Looking at, we will also take the opportunity to present a few sustainability cases, what we're doing for our customers. You will find more of them in the appendixes, and you will also find more on our website. So please take the opportunity to update yourself on what we're doing. We will not spend so much time on that in this presentation here, but I want to make sure that you know where you can find information. So looking at AdNord Group in numbers, We are a large cap company, 2,700 employees. This morning we had a market cap of 15 billion. We have a net sales trailing around 7.8 billion SEK. We are in the result about 0.7 billion SEK. We're active in 19 countries and you as a shareholder have received a return of investment by 247% for the last five year period ending this quarter up until today. So with that, as an introduction to Adnord Group, let's step into Q1. Q1 2024. We started 2024 with strong growth, earnings improvements, and a strong cash flow. Stronger market in the US, the acquisition of Team D3, and cost efficiency measures contributed to a 15% increase in earnings per share. Net sales increased by 22%. to say 2.4 billion, and the EBITDA margin improved to 10.5% compared to 10.2%. All divisions contributed to the increased EBITDA, with the big effect year on year coming from the acquisition of Team D3 and cost efficiency in both division design management and product lifecycle management. The first quarter is a strong quarter due to a high volume of Autodesk agreements up for renewal in Q1. We have a seasonal pattern with a strong Q1 and a stronger finish in Q4, but with a slower Q2 due to this seasonal pattern. And this has also been enforced with acquisition of TMD3. Cash flow from operating activities increased to 381 million. The first quarter is traditionally strongest in terms of cash flow, as a large share of our support and maintenance contracts are invoiced in advance. And with that, an introduction to Q1, I would like to hand over to our CFO, Christina McIntosh.

Thank you very much. And I'm going to go through this slide. We have three graphs that I'm going to take you through. And if we're starting from the left, you can see our trend in net sales over the past five years. And the last year is the rolling for the last 12 months in 2024. And you can also see that the ad node has had a substantial growth mainly in the last three years in net sales. And we ended the last 12 months about 7.9 billion SEK. You can also see that the EBITDA has increased from last year. We saw a slight drop between 2022 and 2023. Now the peak is going upwards. Moving then to the pie chart in the middle, we have a graph over the different categories of sales. And you can also see that the recurring revenue amounts now to 76% of net sales. and the recurring revenue consists of both third-party sales and also revenue from our own solutions services about 20 percent had an increase of 11 percent in the quarter and that also consists of services both related to our own software offerings and also customer specific solutions and the total growth for the Quarterly, mainly relating to acquisitions, as Johan just presented. And then going to the graph, pie graph, all the way to the right side, we can see a split on sales in geography. And you can also see that the US market now is 34% of total sales. And that is now the third quarter in a row where the United States market has been the largest one. Previously, Sweden was the largest market, and it's number two now of 25%. And by that, I would like to hand over to you. I'm going into more details about the divisions, individual divisions for the quarter.

Thank you, Kristina. So looking first at the design management. Net sales increased to SEK 1.6 billion. It's a growth of 34%, which was acquisition related. Organic growth and currency adjusted organic growth was minus 1%. EBITDA increased to SEK 168 million and the EBITDA margin was 10.3%. The acquisition of Team D3 completed in July, 2023 contributed positively to net sales and earnings for the quarter. And cost reductions implemented in the U.S. operations in 2023 contributed also to the division's improved earnings. The first quarter is a strong quarter, as I mentioned before, for Symmetry, due to a high volume of Autodesk agreements up for renewals. We can also see that we were able to increase the sales of three-year deals that also contributed to the net sales in this quarter. Looking at demand, demand for symmetries offered to the engineering industry remains stable in both Europe and USA. While we can see that demand from architects and technical consultants is on the rise in the US from a low volume, but we are seeing a slowdown in Europe from a high demand. Looking at ServiceWorks Global, which provides digital solutions for facility management, and Trivia, which provides collaborative solutions for the construction infrastructure sector, we can see continuous stable growth. So all in all, a good quarter for design, showing that we are able to grow and with acquisitions, hold the organic growth stable. Of course, minus 1%, but it's quite okay in this market. And we can see the positive effect of the cost reductions. I would like to take the opportunity to remind you that we are entering a phase with a new transaction model for the Autodesk business. This will mean if you look at the, this is a display of what we will see, an illustrative way of what is happening. It's not related to an actual number, but it shows you how the business model will change. In the column current, VAR model, you will see that what happened is that today when we sell on Autodesk, We get a cost of sales from Autodesk that gives us a gross profit. Going forward, we will get a commission on the sales of the Autodesk software that will also have the impact that we will have no cost of sales. This will also mean that our gross profit margin will go up on the business. We are expected to have a similar gross profit and similar earnings out of it. But our gross profit and our EBITDA margin will go up. This will happen in the U.S. market starting June, has been communicated both to customers and other markets. In Europe, it's expected to happen later. The exact date has not been communicated for that yet, so we'll have to come back. But what has been communicated is that this will happen latest 2025. So with that, let's move on to our PLM division. For PLM, net sales increased to CEC 454 million. It's a growth of 5 percent. Organic growth was 3 percent, and adjusted for currency, the organic growth was 2 percent. EBITDA increased by 58 percent to CEC 41 million, and the EBITDA margin increased to 9 percent. While market conditions remain stable, customers' decision-making processes related to larger PLM system projects are still slow. However, the division's positive and well-established customer relationships frequently present opportunities for upselling of design and simulation software and expanding current assignments. Customers are continuing to demand time-finished leasing licenses instead of licensed purchases with perpetual right of use. We're going more to a rental model in practice. The restructuring measures implemented in 2023 have had a planned impact. The cost level has been reduced and the delivery organization's utilization rate has improved. So all in all, we can see that we're able to increase profit as we expected due to the measures that we made in 2023. And the market is what we call stable, meaning that nothing has really changed in the market. still taking a little bit slower for bigger projects, but we're able to expand current offering. So looking at what we did at Adnord Group, we are a growth platform for entrepreneurs. We acquire and support entrepreneurial companies in the effort to become even better. We support our companies in the growth journey by providing not only capital for product development acquisition, but also valuable knowledge and an extensive international network of experienced leaders. 2024, we have completed three acquisitions, and we see good opportunities to carry out further acquisitions during the rest of the year. Our latest acquisition is Optimec that you can see on this slide. It's a good example of an add-on acquisition supporting Technia's growth strategy to be the best assortment partner in the world. Optimec adds simulation competence and customers within research and development and manufacturing in the automotive, aerospace, industrial equipment, and consumer packaged goods industries. Optimec are 20 employees and has a net sales of 640 million. So looking at process management, net sales increased to 342 million. It's a growth of 2%. and adjusted for currency, it's still 2%. Demand for case management and geographic information systems in the public sector remains stable, with some restraints continuing among municipalities and public authorities with respect to new investments in large projects. But the division's good and well-established relationships with the large public sector customer base frequently present opportunities for recurring sales and expansion of current assignments. Here we can see that Easter came early, so it means that we had a slightly few working days in this division compared to last year. But the EBITDA increased to $665 million, and the EBITDA margin was stable at 19 percent. So with that and the introduction to our divisions, I would like to hand over to our CFO again.