Carasent AB

Good morning and welcome to our presentation on what's been quite a busy quarter with the takeover interest from EEG, the relisting process and the acquisition process in Germany. But I'm really pleased with how we managed to keep it all together and deliver a solid quarter. And today we will start with me giving some highlights and a company update. Then I will hand over to Martin to give a financial update. Looking at the highlights for the second quarter, we signed two new contracts. The contract with Vidyard Supply Medre was already known at the last quarterly conference, so we spoke about that contract back then. Now we've also signed the contract with Selsamien for Adcunis. And what's really important is that now for all products, except our smallest products, we have secured strong growth going forward. So, WebDoc and HBI already have really strong growth and we have secured contracts for all other products, except Adobe, as I mentioned, to also get really good, strong growth going forward, starting by next year. So, at the same time, we will keep a really strong cost control and a good cost control, and that means that we should really be able to drive margins during next year. For Adorpus, we're launching Adorpus Web, where we have the first five customers migrated through a new solution, which is a much better, modern, completely new solution for a user experience point of view, and also with much lower costs as it's a pure web solution, a native web solution. So it's really a solid foundation going forward with this contract. Other highlights is that the re-eating process continues and the first day of trading at Nasdaq Stockholm in Q4, probably in December. It looks like it will be a relatively easy process as we already are listed on the regulated market with similar requirements as Nasdaq Stockholm. So it seems to be relatively easy. In the quarter it was a quite high one-time cost related to potential bids from VG, the releasing and the acquisition projects in Germany. And there will be similar costs in the quarters going forward. But these are true one-time costs. Looking at growth, SiNot implemented ARR is now up to 17 million NOK. That's up from 2 million NOK a year ago. so that we really translate into strong growth in a year from now. We still grow with 15% when it comes to recurring revenue, and that's the same as last quarter. Profitability-wise, we're close to break-even on cash profitability, and that includes all the investment in WebDocX, which, as you know, is a new solution for a new market. We can manage to fund that ourselves from present business. And if we compare to a year ago, our just EBITDA is now up to 16% from 8% a year ago. And we actually cash flow positive, both in this quarter and last quarter. And as I mentioned, we keep going well, even though we're moving from consultancy income to recurring revenue. And what's important to note is that when moving from consultancy revenue to recurring revenue, it will not translate directly into better revenue. Because if we take away, say, one trona away from the consultancy income when implementing one of our systems with the customers, we cannot add that trona to the yearly AR. That means we can add like a third of it. So in a couple of years time, it will be much better than having this consultancy revenues as we have solid return. So it will really translate to stronger revenues over time. But short term, it helps us a little bit. But it's still growing. And what I was mentioning also is that you see that we sold Confrede. So that takes down revenues a bit for this quarter compared to last quarter and previous quarters. IPTA is up to 16%, as mentioned, and EBITDA, which is, together with growth, the most important KPI for us internally, is now at minus 2%, so we're getting really close to break even on some EBITDA level, and then we'll continue to improve from there. Digging a bit deeper into revenues, we can see that we grow with 3 million compared to the same quarter last year. If we take away Confrera, we grew with 5 million NOK compared to the same quarter last year. And then if you also add signed not implemented quarterly recurring revenue, we grew with 9 million. So from half a million a year ago to 4 million, a little more than 4 million this quarter. So in total, I would say that our growth rate is up to 9 million NOK. You can also see that the recurring revenue is a larger and larger part of our revenues. So it's 61 million in this quarter compared to 54 million same quarter last year. It's not that we don't have any consultancy revenues at all. We do some work which should give us consultancy revenues. And also different customers, especially with the ones that are signed large contracts, have different possibilities or requirements when it comes to what's easier for them to pay, recurring revenue or consultancy revenue. So some customers really, really, really prefer the one-time cost of the implementation. And in those circumstances, we really also charge those type of revenues. Looking at the EBITDA, we're improving from minus 11 to minus 1 million. Or if we take out WebDocX, We're moving from minus 4 million to 4 million in the quarter. Then you bring to the financial performance. We have, as we mentioned before, a well-functioning base. And that's all products except for HBI and Adopus. And those other products or operations, they are 87% of our revenues. and have a good organic recurring growth of 16%. And what's worth mentioning then is that Metodka is actually shrinking in the quarter. And the reason for Metodka shrinking by 15% in the quarter is that with the new level to Volvo, we are doing a lot of consultancy work for them during the coming 12 months. This work will price very low, but we have much stronger recurring revenues when it's been implemented. So it really hurts us here now, but a year from now, where we're implementing Mitulka at Volvo, we will have a recurring revenue, the new recurring revenue of 6 million from that. And then Volvo will also be at full price again. So a year from now, Mitulka will really help us drive growth and sustainability. But it has a short term. For operations, the EVTA margin is now up to 25% from 20% a year ago, and the attack margin is up to 17% from 12% a year ago. If you're looking at XBI and Adobis, the two products where we have some more challenges, we're doing large improvements also there. That group, which is only 12% of our revenues, had an organic growing growth of 7% in the quarter. And then we should mention that HBI actually grew with 25% in the quarter. So HBI is growing really well now. Adobis is still not growing, but we have Adobis Webcomic, which we really believe in. And now when we have the first customers coming online, they will help us spread the word. So I'm very positive about these two products also. Adjusted EBITDA for those two are now 2 million and EBITDA means capex is close to zero for those two products. In Web of Gates, we have lowered costs a bit more. We're now at minus 6 million from minus 7 million in EBITDA means capex. And we continue to move in that group from consultants to employees. And during June, we've removed the last consultants in that group. And starting after summer, we'll only have employees. So it will help us control costs even further in the next quarters and coming quarters. At the head office, we've gone from minus 8 million to minus 5 million. I think that's a reasonable level and roughly where we will be going forward. Finally, looking ahead, we will continue to develop our sales model. As I've mentioned before, we're really doing a lot with our marketing and sales, focusing on inbound marketing and outbound sales. We have re-run all our webpages, we're doing a lot of advertising on LinkedIn and other social media, and we're buying search words and so on. And we're still learning, I would say. It will take some time for us to really move into a different mode of selling, but I really believe in that. Many of our potential customers know they need to change systems, but it's quite a big change to do for a business or for a clinic or a hospital. And we need to help them to make the decision and to push them over that hurdle. And given how satisfied the customers who have migrated to our systems are, both with the systems and with the process, we can really market that. But it's something that will take us some time to learn and get better and better at. Another focus for us in order to deliver this product on growth is to deliver new development on time. So basically all of our products are dependent on us delivering our solutions on time for those customers. So that's an important area to focus on for us. Efficient use of resources is something that we work with every day, and we continue to work with every day. Every quarter gets three, four percent more efficient, and then we add that over time. It translates into big improvements, and that's basically the most important part of running a business, is to always improve, and improve much quicker than new problems arise. So that's really where Every one of us will focus our attention. When it comes to Weber GECKS, it now looks most likely we will certify in Q1 next year. And then we'll have a system which is ready to be used in Germany. There will still be a lot of small parts of different types of caregivers we need from systems, but then we will be able to start first customers. It's been a very intense quarter when it comes to our operations in Germany. We've had many discussions with possible pilots, acquisition targets and also collaboration partners. We spent a lot of time in Germany this quarter and every time we're there talking to customers, talking to growing out during next year. So with those words I will hand over to Søren Martin.

Thank you Danne. Some of the highlights here from a financial perspective this quarter was a clear step in the right direction. Firstly we show that our underlying revenue growth is robust. with 15% recurring revenue growth. And also that through signing new contracts, the growth for the next period also looks promising. Secondly, our margins are improving with the 16% IPTA margin and IPTA minus capex close to zero. Our signed ARR grew 20% organically year over year and this was driven by a major increase in our backlog of signed not implemented ARR because of the large contracts we have signed. We didn't have this sort of contract in the last few years. The last contract of this magnitude was for Alkyris in 2021. And now we have signed three such contracts within the last couple of quarters. So it's clearly setting a very solid foundation to see an accelerated growth in the coming years. And we now, without these contracts, we still grow very solid in the quarter, where we have net upsell of 13%. Churn continues to be very low, 2%. year over year and we also have this still have this inflow of new customers mainly for webdoc where we continuously find new customers it was four percent in the quarter and this is a very important part of our growth because these customers typically buy at the lower price and then they add more functionality pay more but also grow their business of the WebDoc customers we sign. Looking at the P&L for the group, there is some points worth highlighting as well. Firstly, we have good underlying growth for all product categories. If you look at the year-over-year figures, WebDoc was 17% or 18% adjusted for currency. which is strong and around 20% for the first half of this year. The other EHR category was 9% adjusted for currency and for this category we have signed Bolvat for Metodica and Fredrik Sarmén for Adcuris. In total around 10 million ARR So if you compare that to the figures we are now reporting, it's clear that we have secured a very strong growth only from these contracts alone for this category in the next few years. The platform products, as you can see, declined, but that was because of the investment of Comcee. Adjusted for this in currency grew nicely at 14%. This is HPI MedRib. coming next year. And also HBI's strong underlying growth makes this category also strongly positioned for the coming period. consulting the client, as mentioned by Daniel. And the gross profit margin increased from 82 to 85 percent. This is because we sold Comfrere, which had a dilutive impact, but also because we have renegotiated with our hosting supplier in Norway, reducing costs quite significantly. So you can see that even though revenues increased by 3 million, COGS actually decreased by 1.3 million. So this is a very nice improvement for us. And if you look at the profitability as well, you see major increases in EBITDA and we are close to break even on EBITDA minus CAPEX. And if we exclude the investments into Germany, we now have a EBITDA of 4.4 million in the quarter, or 7% margin, and it's improving rapidly. We constantly work on The cost base, in this quarter we have ended the R&D consultants with an impact of 6-7 million on an annual basis. Some of these will be replaced by employees, but the net impact is positive for us. We also are in the process of migrating to a new hosting solution in Sweden that will reduce costs and also when we move customers from Adopus to Adopus web, we can cost significantly for that product, which is still quite high. So these are some examples, but In general, our plan is to keep costs flat and grow revenues. And then to be able to do that, we need to do these cuts and become more efficient because we need to add costs in other places such as sales and compliance, etc. But we see great potential to continue to become more efficient as we grow. We have a high gross margin, so if you are able to keep costs flat, then we can scale our margins quite rapidly, as you see from this slide. Finally, we have the positive cash flow, also in Q2, driven by the improvement in profitability, a good working capital effect from annually investing for some of our products. dramatic reduction in capex. So in summary, from a financial perspective, we continue to grow well. Our underlying growth is robust. We have signed major contracts for future growth and our profitability is improving rapidly. So with that, we can open up for Q&A.

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