Carasent AB

Good morning everyone and welcome to our second quarterly results. Looking at the agenda for today, I will start with some highlights from the second quarter. Then I will give a brief business and market update, talk about sales among other things. Then Sven Martin will give a financial review. Looking at the highlights, in the quarter we have a growth of 36% year over year. The non-organic part in this quarter is from the acquisitions of HBI and Conferera, which adds revenue, but so far no EBITDA contribution from them. With HBI, there will be a cost saving, and we'll come back to that. And with Conferera, the plan is to move over them to our own technology. But until we do so, we will buy the technology from the former owner, and that's because revenue goes hand in hand, so to speak. during that period of time. The organic growth was at 17% in the quarter. It's mainly consultancy driven and comes from the new structure organization where all parts guys have now knows this is my area of responsibility. This is my part of business and my job is to grow and develop that business. So we're now out meeting customers much more. And the first steps of that is that we start working a lot on the backlog. So with customers, And that gives a lot of consultancy revenues to start with. During quarter, we've also performed the cost savings program, and it's also completed. I will get back to that. We signed 41 new clinics for WebDoc in quarter, slightly better than last quarter. And we continue to have a very strong balance sheet, which gives us a lot of flexibility. Looking at the business market update, We will start by looking a bit on the revenues and the margins. And as you can see, we have had a solid good growth for quite some time. It's both organic and coming from good acquisitions of quality companies. What we also can see from this picture is that the margins have been trending down for quite some time. And it comes from the focus of rapid growth, which used to be the focus. We're now taking a number of steps to work with this. The first one is the cost savings program, which you can see has started to give effect on the EBITDA C level, which improves from the last quarter, and we'll continue to see this improve going forward. The EBITDA does not trend upward at the same pace yet, and that comes from much more focused on OPEX and CAPEX. And as I wrote in the report, I see very little difference between OPEX and CAPEX in this company because the development we do now on the backlog is focused on winning new customers. We don't need to do it to continue to have our present customers or to continue to have our present revenues. It is to win new customers and make all customers more happy with the experience of our systems. It doesn't really matter too much. It's EBTAC, which we focus on internally. The second step into improving this is to improve efficiency and continue to grow the organization while maintaining costs. And what we do to improve growth is a number of steps. The first one is that we're back. When I joined Caricent, I came from the customer side, as many of you know. All my colleagues on the customer side, on the caregiving side, they were asking, where is Calisant? Where is WebDoc today? We don't see them anymore. It seems that they are focused on other things. Now we're back. We're meeting customers a lot. We have these clear responsibilities that each head of each product is out meeting customers, making sure that they are happy. And that will give our customers the confidence that we're there for them, that they can trust us with their most important systems, which are our systems. We're now working a lot on the backlog, as you can see from the DA margins. And the backlog is full of questions from our customers. So working on that will improve what they think is the most important. It will really add to the experience of our systems. And from those systems we have, which are more consultancy-driven, such as in the tool, you see directly translating to higher consultancy revenues. We worked on deliveries quite a lot, setting new structure, new head of that group. And deliveries is when someone orders our system, and Webex is the largest one of our systems. The deliveries is when we implement it. And the implementation is extremely important for our customers and experience of the implementation, because they do this once maybe every 15-20 years. They want to have a smooth transition. There are high costs associated with transition for our customers as the business is not running fully during that period of time and you have a high fixed cost among our customers. So it's very important to have good deliveries with also good education to start using the systems in the right way directly. And I think we've done great strides to improve that. And the last 10 customers, they gave us an average score of 4.5 of a scale of 1 to 5. We're now testing outreach selling in a number of our solutions. I think it will take some time to find our way of doing it, but we're booking meetings, going out, discussing it, taking cold calls, and so on. So it will be very interesting to see how that plays out. I think there's a lot we can do because there's so many customers out there thinking about change systems. They're a bit afraid of it, and I think they need a push move into that direction into more modern systems we're developing our marketing function it's now a central marketing function where we pool resources from all our products and put them in one central marketing department so that we can have a better width of knowledge and experience and we can also make sure to target marketing for those products we want to push at the moment So now we're putting a lot of efforts into WebDoc. We had the development of new segments, which was part of our change of strategy, where we closed down WebDoc for Norway and started working on the surgery module and eRefers in Stockholm. Those segments will drive growth also going forward, but that will take some time before those hit the market. And then we have general improvements coming from the decentralized structure, pushing everything, for example, within support our support has always been something that our customers have really liked but we also trying to improve those parts all parts of all our products we're pushing forward quite a lot at the moment so the combined of all these things that we do we believe strongly will translate into a high growth going forward and when those different steps start to take hold it will vary a bit but the total package aim for a stronger growth going forward. When it comes to the cost-cutting program, it was initiated and completed in quarter. We will save approximately 40 million NOK on a yearly basis. It starts taking effect already in this quarter. The last savings will take effect in the end of September. It is within HVI where we have a development sprint that will end them, and then we will let go of some consultants. All in all, I think the savings program has played out very well. There's been a large understanding within the company and also a lot of appreciation around the new structure set with clear responsibilities and clear direction for each part of Kerasent, which really makes every employee situation much easier to know exactly what is my role in this and what are we aiming to do. So even if cost cutting is never really that popular the results of it and the new structures I think are highly appreciated in the organization. It has also gone very smoothly so everyone who's been let go has already left the organization. The cost cutting has been all over the group except who has good margins and developing very, very well. So it's been within all other parts, including the head office. And what I think is very important is that we're still staffed for a lot of growth. So looking at those margins we looked at earlier, I'm not worried about being able to meet a much higher revenue with roughly the same cost structure. We are really staffed for it. And we're putting a lot of effort into our present products. So this is not the low enough ambition. It's an increase of ambition, but a more efficient organization where we made sure they had the right staff in the right places, really chosen where to do the cost savings. So in order to maximize the organization afterwards. And I'm very happy with the results. And now the focus will be a lot on growth going forward and the development of the products. With those words, I will hand over to Sven Martin.

Thank you. So looking at the highlights for the quarter on the financials, we saw that the metrics improved slightly. all over compared to Q1, but not a big difference in total. But we had revenue growth of 36 percent, of which 17 percent was organic. Organic recurring revenues grew 14 percent, where net retention of 108 percent in Q2, and the rest is new sales of 6 percent. Margins continued to be under pressure in the quarter as a result of the high cost base. That high cost base was the background for the cost saving program that Daniel talked about. I will go through a bit more into detail on what the effects of that program was in Q2. ARR was 221 million NOK at the end of the quarter. If you look at how our revenues have developed, we see that we continue to grow. We have a very stable revenue base in terms of that around 90% of the revenues are recurring in nature with very low churn. So organic growth was 17%, as mentioned. It's slightly higher than what it has been last year. And that was due to high consulting revenues in the quarter as a result of high activity across the group, but also primarily driven by Adcuris and Metodica, which has a consultancy driven business model as well. Customers continue to invest heavily into the Methodica system, and we see that for the enterprise customers and private hospitals, we see potential to continue to grow, particularly in Norway and Denmark. Organic recurring revenue growth was quite stable as it has been the last quarters, and we do these initiatives to increase new sales now in the core market, which we have ambitions to result in recurring revenues. If we break down the 14 percent, as I mentioned, we have a net retention of 108, which is basically due to that our customers continue to grow. We sell add-ons and we have low churn. So that is quite stable. And then new customers accounted for 6% in Q2. And here we believe that there is remaining potential. We have strong market positions for all of our products, but there is still potential to take market share for all of our products as well. And in particular, web doc in Sweden, we see a good potential as we have 8% market share on this still. And we have initiated all these measures to increase new sales that Daniel mentioned. So if we look at the cost base in Q2 on a cash cost level, including capitalized R&D, the cost base decreased by 4 million compared to Q1. And if we exclude currency effects, the decrease was 6 million. And there is two main effects that drove this, and that's the cost savings program and some seasonality effects. So the cost savings program had the estimated savings of 40 million per year, around 10 million per quarter. And the program was initiated in Q2, so the savings did not have full effect in Q2. We said that most of the savings was completed by the end of Q2, but the majority of the savings did not have effect in the quarter. most of the savings will have effect in Q3 and all of the savings will have effect in Q4. And the seasonality also has an effect on personnel cost of two to three million reduction compared to Q1. And in terms of margins and cash flow, We saw signs of improvement in Q2. EBTA margins was relatively flat, while capitalized development decreased by 6 million compared to Q1, and by 5 million compared to Q2 last year. So cash EBTA improved by 7 million in the quarter compared to Q1. and was down slightly compared to last year. And we will continue to see effects of the cost savings program in the coming quarters, as mentioned. So that was all I had, and we can open up for questions.

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