CAG Group AB (publ)

Hello and welcome to CAG Group's second quarter report 2025. With us to present is our CEO Åsa Landén. If you have any questions for the company, you can send them in the form to the right. And then we will apologize for a late start due to technical concerns. But with that I will give you the word, Åsa.

Yes, exactly. Man slutar aldrig att bli förvånad över utvecklingar i it-miljön. Jag har ju de flesta av mina möten på Teams. Nu har vi Zoom. Och jag är jätteglad att er som hade tålamodet att stanna kvar. Och jag ska med glädje presentera CIGs andra kvartalsrapport för i år. Och går såklart rakt in på saken. since we started a little late. This time I want to start with some takeaways from this quarter. Given the economic climate, I am happy to be able to present a stable margin for Q2 and an increased margin for our first half year. This is due to the fact that we have a continuous positive price trend, just like in the first quarter. And as you may know, we also have a very strong position in the defense segment, which has a strong demand. I'll get to that later, but first a little, little short overview. You may already know that we are an IT consulting company, noted since 2018. We also have operations and administration, and we have nine independent subsidiaries. The fact that it is independent is important. It is also what is behind, among other things, this little pink medarbetarnöjdhetssiffran på 56 som är ett väldigt fint mått. Tidfinnande går jag inte in på hur man räknar ut det, men det har att göra med många som rekommenderar oss som arbetsplats, så det är en väldigt hög siffra, det är vi jätteglada för. Vad gör vi då? Kort så jobbar vi inom technology management, där är det mycket In the defense segment, for example, where we work with what is called life cycle analysis, it is requirement management, configuration management and to follow a material system, for example, from purchase and requirement to disposal sometime in the future, that you calculate What is best for the system. Also within banking and finance, there is a lot of compliance and anti-penning cleaning and so on. System development may speak for itself. This also includes a lot of AI, BI, analytics, e-commerce, product information management, but also Java, .NET and... that type of tasks. And cybersecurity is an important area for us, which also ties into IT service operations, which is our operations and administration. Där har vi ju inte så att säga bara workplace, nätverk, serverlagring, cloud och on-prem utan också då ett säkerhetscenter som jobbar med proaktiv övervakning. Det är ju väldigt aktuellt. Men inom cybersecurity jobbar vi också med pentester och informationssäkerhet och certifieringar och sånt. And last but not least, training where we run Summer School during the day, which is a very nice training in Systems Life Cycle Management that our subsidiary CGS Intel is running this week. That was a bit about what we do, and to that I would like to add, It is something that creates interest for us as a company, that we are so strong in the defense segment. I don't have to go through all these areas, but I want to say with this picture that we do not work with counting money and games, so to speak, to the defense forces and the FNV and other customers in the segment, but we really work with the material system and what it has to do with the defense of the country. leadership system, which is the first point here, for example. You have probably read in the newspapers in the near future about new radar systems and surveillance systems. We can be involved in that type of thing and also to put boats in the Baltic Sea to increase our surveillance. It's eastward then. And another fun area is military healthcare, for example, where we need to develop ourselves thoroughly. Of course, we also work a lot within social security and total defense, other authorities that are close to the defense segment, but this is the pure, so to speak. And cybersecurity also includes some of the tasks we have. So with that said, My usual picture shows that we are a growing company, we have had a good development and we are perhaps unusually stable to be in the IT consulting segment compared to our competitors right now. En annan bra sak med den här bilden är att våra återkommande intäkter ökar som procent av vår omsättning men än så länge så låter vi över 20% stå kvar här. Vi är dock något färre tyvärr eftersom vi har stängt ett dotterbolag och marknaden är lite tuff ändå får man säga. If you look at our segment, you can see that the defence segment is our largest segment. It accounts for 35% of our revenues distributed on the government side, and that is both Sweden, Norway, Finland and Denmark, but also the defence industry. And then we are very strong in banking and finance, where we have both a lot of consultations from major banks, the Riksbank and the Finansinspektionen, but also a lot of management and management solutions. And we have continued to have a good balance between the public and private sector, but one can note that the private sector is larger than usual, so to speak, since the public, the other public sector has had a hard time with budgets and has been a little careful with projects in recent years. That's how it looks. Jag är alltid lika stolt av att visa vår kundvefa här med fantastiskt fina kunder. Uppe i vänstra hörnet ser ni många av försvarskunderna. Nedanför dem är många e-handelskunder. Vi har flera apotek som kunder där bland annat. Så det är inte bara kläder och hundmat och annat utan mycket apoteksvarer. Till höger har ni storbankerna och vi har många... private equity companies and portfolio management companies as customers, and also a number of foundations, family foundations of different kinds. And a little more important in the public sector, for example, the Ministry of Health can be pointed out here, and Skolverket and Tullverket are also important for Totalförsvaret. It is also so, to my joy, even if the situation has been a bit more difficult in the last two years, we have as usual always had a flow of new customers, among other things, the Swedish Defence Force and the Finnish National Guard, where we, for example, have worked with land-based management systems on new tasks within BAE, SAAB, Telekrig och Marina Ledningssystem och även Kongsberg Maritim i Värmland är en ny kund. Riksbanken, Swedbank, Finansinspektionen, ni ser det kommer till. Och även inom lite mer övriga bolag så kommer det till uppdrag som Aker, BP, Scania är ju en gammal kund till också. Men Mälaren Energi, Bonava, ny kund inom fastighetssektorn och så vidare. Så det är vi väldigt glada över och även nya uppdrag på vissa myndigheter. Som till exempel Naturvårdsverket som är en viktig myndighet. So that was it, new customers and tasks. And if I then take myself into the second quarter, then the market is a little tough. And of course, you never like to see a downturn. We have not made any acquisitions this quarter either. It is definitely our ambition in the future. But this decline is explained in its entirety by the fact that there is one less working day even in this quarter, just like in Q1. And we have, as I said, made an reorganization and closed down our company in technical testing. Hade vi räknat bort tappet i underkonsulter så går vår egen affär också ner med 2,5%. Så det är lite mindre då. Man kan konstatera att vi tjänar lika mycket pengar och har lika mycket omsättning per år. per employee, but on the other hand, we are fewer. But it is compensated by the fact that we have a continued trend as in Q1. I was talking about that we have better investment and a little better prices, roughly at the level of inflation. So it feels very reassuring. And that means, together with the fact that we are cost-effective, that we defend our margins. We have the same high margin as last year. And if you look around what has happened in our sector, then this is quite nice and good, you could even say. And we are also very well financed with good, stable financial position and low loans. And that means that De pengar vi tjänar högre upp i resultaträkningen trillar ner till resultat efter skatt och vinst per aktie som till och med har ökat lite grann. Så det får man väl ändå vara glad över. Sen kan man också påminna sig om att i maj betalade vi utdelning. Fortsatt en progress uppåt i våra utdelningar och 4 av 10 betalade vi ut per aktie den här gången. That's how it looked in the quarter. And soon we will have a convenience-staffette again. Our picture here to the left shows some of our happy employees running it. It's fun. In the first half of the year, we actually have a small margin improvement. There were two less working days in the first half of the year and we had this shutdown of technical tests. which actually explains a little more than the decline in revenue, where it is relatively flat. And if you take away under-consult revenue, we only lost 1.2%. But of course, we were not satisfied with that. But the same thing in the second half of the year, that we compensate that we are less with that we have better investment. That is, we use our capacity a little more than last year. And we have a little higher prices. And that shows that we have attractive consultants. Otherwise, we would not be able to follow up on the price development. So we have a margin of 9.2% against 8.8%. I should also say that sometimes I get the question, we have a adjusted EBITDA. I can say that in Q2 we have no adjustments, so it's basically the same thing as our EBITDA. Here we had a discount for our reorganization of 3 million, but it is still stable and good. So that was our finances this time when it comes to income. When it comes to balance accounting, it is worth pointing out, because as I mentioned, we have of course continued the ambition to do an acquisition. On the other hand, we are a bit picky about whether it should fit in and complete what we have and it should be financially sustainable, that is, we should not pay too much for things and things. Det är viktigt i den här sektorn. Och där har vi ju en jättebra balansräkning, så jag ville visa det den här gången. Vi har ju en nettokassa, vilket mått man än väljer, och det är ju väldigt trevligt. Väldigt låga lån, och det betyder ju att vi har ett bra förvärvsutrymme också. Vi har en hyggligt stor lånekapacitet, bra egen intjäning, och även ett mandat med oss från stämman, precis som tidigare. And finally, after this quick transition of our Q2, I have a little outlook. And I can say that in the defense segment, as I have said for a long time now, we see that the demand continues to be unbroken in both the industry and the authorities. However, I have put a small question mark on the market during the rest of the year. I think that just like many others, we saw a lightening at the end of last year. I thought Q1 started to speed up. Then a few things happened on the other side of the Atlantic and so on. Det kom av sig lite granna och det är ändå ganska tufft där ute. Men det som är fint i alla fall är att nu resten av året så har vi samma antal arbetsdagar som året innan. Och kanske ändå vi kan se en liten ljusning framöver här. Men det kommer nog inte att visa sig vara ett år som har lika positiv konjunktur som vi kanske trodde vid jultid så att säga. When it comes to AI, we work with it in all our areas, from system development to money laundering and in e-commerce and project information management and so on. It's still happening a lot, but it's... normalized. Yes, of course, it also applies to the large language models and agentic AI and so on. But we see that, as usual in this sector, you want to build solutions with the best available technology, whatever it may be. So it gets a little more normalized and it also applies, we think, to price and wage development here. Moreover, it is a little more normal. And we continue to see more activity on the trade front than we have done before. We get more proposals and so on, even if we have not yet been able to stop anything. That's what we see. That was it. And here I have a tiny AI entry before we conclude. A new AI-generated image of myself. I couldn't let it be. With that said, Ludvig, I think we can perhaps take the question.

Yes, thank you very much for that presentation. We jump directly to the first question here. How does the decrease in the number of employees affect the future growth potential of the company?

I think we look stable here on all our figures and it is important that we stick to our business. Självklart är det vår ambition på våra kvarvarande enheter att rekrytera. Vi gör allt vi kan för att rekrytera inom försvarssegmentet och vi har kapacitet att rekrytera fler konsulter till vår overhead-kostym utan att öka våra overhead-kostnader. Så jag ser ingen fara i det som läget är inom överskådlig framtid. Men det är såklart alltid tråkigt att bli färre, det är ju inte ens ambition.

Tack. Vilken roll spelar återkommande intäkter i bolagets långsiktiga strategi?

Ja, men det är ju viktigt, inte minst inom drift och förvaltning såklart. Där har vi många tjänster som normalt sett alltid levereras ofta på treårsavtal eftersom det gäller långsiktiga IT-lösningar för kunderna. Det kan ju vara alltifrån Datorer, arbetsstationer, utrustning i mötesrum och så vidare. Men också såklart serverlagring i molnet och on-prem och säkerhetslösningar, reform av brandvägar och sånt där. Det är mycket installation och mycket skötsel som ska till där. Därför levererar man det på treårsantal. Det är bra. Det ger en långsiktig trygghet i intäkterna. Vi har också projekt där vi har långsiktiga åtaganden, där råvaran är mer konsulter, men där det är projektåtaganden på flera års sikt. Men jag vill ju brukar säga det när jag pratar om det här att även våra konsultintäkter, även om de kan juridiskt sett sägas upp på en månads varsel ofta, så är ju det ett kännetecknande för CGs uppdrag att de ofta är väldigt långa. Det är ofta fleråriga uppdrag. So it does play a role to give visibility, but I would say that the whole CG is a bit out of place in itself.

Thank you very much. How does the increased focus on the defense sector contribute to the company's resistance in the low-income sector?

Well, you can see here that it is very good. Det är en stark efterfrågan, det är jätteintressanta uppdrag. Vi är ju upptagna på CAG enligt vårt varumärkeslöfte att reverera samhällsnytta och det känns också väldigt bra att bidra till att stärka Sveriges totalförsvar och försvarsförmåga inom vår militära beredskap. Så det bidrar absolut till att hålla oss uppe när andra segment har lite lägre efterfrågan

Thank you. Let's move on to the last question. What is the company's strategy to achieve the goal of 10% EBITDA margin and more than 10% revenue growth?

Exactly. If I start with revenue growth, it will have to happen through both organic growth and acquisition. It is definitely our ambition to get back to organic growth. When we are done with the comparison numbers for our developed companies, we will absolutely grow organically. We will recruit more competent consultants and expand our operations with new services and so on. But we will also need to do acquisitions and therefore the ambition to grow over 10%. If you remember this first overview of our development since 2017, we have grown by 12% per year. i snitt så att definitivt vill vi ha 10 som ett mål att gärna överträffa. När det gäller resultatet så ligger vi ju under rätt så många kvartal rätt så nära det där men vi behöver We will continue to develop our services in high-value areas such as defense, banking, finance and cyber security, where we can take good pay. have services that customers are ready to pay for. So that's our strategy. More consultants per overhead krona, continue to deliver good services. AI is an area that is interesting in all segments. Continue to grow in that way and become more profitable through scale, quite simply.

Åsa, tack så jättemycket för den här presentationen. Jag ger de avslutande orden över till dig igen, Åsa.

Tack så mycket för att ni har lyssnat idag. Jag hoppas att vi ses igen i Q3 och att vi ska ha bra siffror och fina affärer att rapportera även då. Ha en jättebra och varm och skön dag.