BTS Group AB (publ)

Hello, good morning, dear BTS investors. Nice to be with you all. I'm Jessica Skan, CEO of BTS Group. Flew in from San Francisco on Monday of this week, just in time for your beautiful celebration of spring and the cherry blossoms and lovely to be here. So excited to report on our first quarter of 2024. First of all, it feels like we're starting off on a better foot than we were a year ago. BTS is back to growth. We are feeling great about our 23% improvement in EBITDA, which is a combination of both our 7% overall growth and the efficiency measures that we put in place throughout all of last year, which sets the company up for scale. And our EBITDA margin improving to 9.5% from 8.2%. So if we do kind of a double click into the largest unit for BTS, we have BTS North America. And BTS North America is off to a promising start with double digit growth. And double digit growth is coming primarily from growth in our fast moving consumer goods industries, pharma and biotech, and slowing down a bit in manufacturing. In terms of the overall sense of the market, the client conservatism that we felt mainly last year, I would say that the first quarter felt similar to the fourth quarter in North America, which was an improvement from 2023. But we still had some delays that even our clients across industries actually acted surprised on themselves in terms of they wanted to start in January. Some things got pushed into February, March, and April. However, I will also say that towards the end of March and kind of the beginning of the second quarter, that sentiment is easing kind of to the next level. And given that tech and software is a high percentage or concentration of BTS North America's revenue, I always tend to give updates on that as well. kind of speed of decision-making, the speed of initiatives was similar in the first quarter to the fourth quarter. There's been quite a slowdown in terms of the reorgs and all of that that was difficult for us last year. So that's still moving in the right direction. Now, also, there's been an innovation that we've been working on for the last four to five quarters in BTS North America, and it has to do with giving our clients different, basically, partnering models or engagement model choice. And we are calling it BTS Total Access. So I'll share a little bit of more information with you on that since we're talking about BTS North America. Essentially, it's a more modern partnering model for them. It's designed to allow our clients to deliver behavior change a more modern approach to change management at scale and ongoing throughout the year, which is something they've been asking for for quite a while. It's coming at a really interesting time. I've met with over 40 customers in the last four weeks, and a common thing I am hearing is kind of a shift from doing a high level of spend on external consultants for things like strategy or process work, and instead focusing not only on new tech and tech implementations, but also equipping their leaders to be able to drive a lot of the changes as opposed to relying on the external firms, which fits beautifully in BTS's sweet spot. And we're also hearing and seeing a lot of kind of rethinking happening right now in terms of what's the best way to do leadership development, to do change and training at scale. And this is designed to fit that need as well. And at the end of the day, BTS Total Access is a shift in our economic or partnering models with our clients that allows them to deliver bigger change at scale. And so it's a combination for our really large clients of a total spend agreement combined with subscription. And you know it's it's an innovation of the last year and the revenue is going in the right direction in terms of a positive trend and it's about 4 percent of the company's revenues at this moment. If we look across the other geographical areas, you can see BTS Europe is still struggling at negative 4% growth. And they did win some big deals in the first quarter. Their overall win rate is up. It's actually 43% compared to 39% a year ago. But the issue in Europe feels similarly, let's say, to what the market in BTS North America felt like in the third quarter-ish. of last year, right? There is still overall client conservatism. 18 out of their 40 projects were delayed in the first quarter. And so while our pipeline metrics are strong and the win rates are going up, this is obviously not big enough to outset the delays. BTS Other Markets is starting the year off with 8% growth, so overall continued good demand in several of the markets. In particular, consistent with the fourth quarter, we have faster growth in Southeast Asia and the Middle East. And the operational efficiencies that they put in place last year continuing into the first quarter and are supporting overall strong margin improvement from 5.8% to 7.5%. And this smaller unit is part of North America. APG is another kind of bellwether in terms of the sentiment for traditional training and leadership development and client activities picked up for them as well in terms of increasing demand. So overall, growth and profitability improved in the first quarter due both to the 7% sales and the efficiency measures that we put in place throughout all of last year. Here you can see kind of a historical look by quarter. So if you just look at the left-hand side of the screen, you have from 2020 to 2024. So now we're establishing a new bar in terms of the size of the first quarter of the year. And if you look at overall profit before tax by quarter, you see kind of a similar trend. The other thing that we'll continue to give you updates on are kind of BTS's own learnings in terms of how we are exploring and implementing AI throughout the firm. We're doing quite a lot here in three different areas. How do we further differentiate our services and add more value to our clients? How much revenue are our clients paying us specifically for AI-related change and training services? And then how we're using it to change our internal ways of working and making it easier for our teams. So just to give you some updates on what we've been doing and what we're learning. On the service differentiation, I'd say the most poignant aspect there is our practice bots, our coaching bots. We're embedding them both in our simulations as well as more on an on-demand basis. We are very focused and interested right now in how do you allow teams to prepare and practice all the time versus taking them out of the job to be able to do that. That's what we mean by turning everyday meetings into practice and the way to do that obviously is through AI and different tools there. In terms of clients asking for help, in terms of, you know, there's a lot out there, there's a lot of hype right now. Can you take the mystery and misery out of AI? We've generated, we're just kind of getting started there, but generated about $2.5 million to date. And then in terms of internal productivity gains, you probably remember we opened up and did a lot of training and opened up the tools, and our consultants have even been creating their own AI bots and tools since probably last May, so we're almost a year into that. Examples of the experiments where we are gaining productivity would be report writing, insights generation, content and video generation, translations, how quickly we can generate and drive bots, and then broader digital efficiency. It's still very early days, I will tell you that. The teams that are playing around with this and building new things, are estimating if we took it to full scale in 2025 versus where it's working now. It's about a half a percent savings across the entire company. But it's early days, so we still are figuring out where the biggest wins are, and then we will double down in there, and we'll also decide when we kind of up-level and get the enterprise-wide license on GPT-4. But we will do that when we're convinced of the lift. I think we're doing a lot of experimentation right now. So I think for the long-term investors, this is a reminder for you, for the new investors listening, we're very proud of BTS. We are a story of long-term profitable growth year after year. You can see our history. Our average growth is 12% per year, so double digits. Average EBITDA growth of 15% per year. You know, it's really fun, I would say, to be a BTSer. We get to take share from both the traditional consulting firms and your traditional training leadership development markets as well. We've always been on the people side of change as opposed to spending all of our attention on the strategy. We actually believe our clients are smart and can figure it out themselves. But through our methodologies and our tools, it's a more effective way to raise the bar on performance and to drive change. And you can see our stable and growing dividends since our IPO, excluding the pandemic year, obviously. Today is the AGM meetings, where we will be voting on the proposed dividend of 5.7 kroner per share, distributed in two separate installments of 2.85 each. And with that, our outlook remains consistent, so we expect our EBITDA to be better than 2023. Thank you very much, and we'll see if there's any questions.

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Hello. Good morning.