Carasent AB

Good morning and welcome to Kärsant's presentation of the fourth quarter. My name is Don Rehman. I'm the CEO of Kärsant and with me is Sven-Martin Bjartlund, our CFO. And I will start by giving a company update before I hand over to Sven-Martin. Looking at the fourth quarter, I'm really proud how we managed to hit basically everything we set out to do during 2024. So we had our financial performance in line with targets. We did the relist into the Stockholm Stock Exchange. And more importantly, we did the acquisition of DataL, giving us a strong foundation in Germany. And talking about the acquisition of DataAl, we had gotten to know them quite well, or well actually during quite a long acquisition process where we really wanted to see all parts of the business and we wanted to get to know the management team before we actually pulled the trigger. So we've been able to move quite quickly after acquisition. So the WebDoc X team is now part of DataAl and we have a joint roadmap. including when to close down the different softwares from DataAl, and they will be fully replaced by WebDocX. I feel really happy about last year and proud of the organization and what we have accomplished. Looking a little bit more forward, We have good progress in our large development projects. I think most of you know about surgery. So that's WebDoc getting a surgery module, which is important for all or many large clinics in Sweden, which will use it. We have really good discussions with our larger customers on moving to WebDoc for clinics that today don't use WebDoc and moving on to the surgery module. So I feel really comfortable about where we are with surgery. It takes maybe a little bit longer than I expected because they want to have some further functionality in place before actually doing the switch. But we're in a good position in very close discussion with those potential customers. And we have a lot of interest from other customers also. So I think that will really help us during the autumn, especially. And then NLL is the new a medicine module for Sweden. It's a legal requirement that all medical record system needs to implement, but it's really good for WebDoc because after it's done, you will be able to see medication from all different systems in all systems. So if you use WebDoc, you will be able to see what's done in the public and so on. So that's a really good one. Volvat, which is so important for the methodology and the rollout there is going well. and during the autumn we'll start implementing Methodica and replacing all those present EHR systems in Volvat. And for you who are new, Volvat is a Capio Norway where we're replacing all their existing EHRs with Methodica during the autumn and it's to be finalized in January next year. We're building a couple of patient platforms for online visits and so on, which is going well. And WebDocX really has to pace up now working towards the German market. So from development perspective, we're doing better and better and getting more efficient every day, I would say. During the fourth quarter, we had a couple of bankruptcies and also a larger customer losing their contract with Stockholm. So that would put some pressure and would give us a bit of high churn. during the end of Q1 this year and the beginning of Q2 this year. In total, that's losses of around 2-3 million ARR that will take place in the end of Q1. And we feel that this is a one-off effect. The bankruptcies are the largest part of two tech companies, which have been quite large. One is a bankrupt and the other one is in reconstruction. So, but we have it's most likely they will not be able to continue. So I think it's the time now when many of those startups who have received quite a lot of funding but haven't been able to turn around their business, that the funding is drying up. We don't have any other of those kind of risks as we see it in the customer portfolio for WebDoc. We have many of the online doctors, but they are now mostly making profits and they have quite good valuations. So we're not too worried about those. But these are two smaller online doctors that will close down most likely. That means that the ARR for a group is likely to go from 2% to 3% during Q2, we believe. um but really feel like it's a one-time effect uh growth uh we have simon the error amounts to 17 million and this is uh mostly volvat it's uh medre for vgr and uh at cuties for friendly samin in norway uh those customers will mostly be implemented during the autumn so that's when we really will see those uh signed not even there are moving to real turnover In the quarter we had 15% organic recurring revenue growth and 17% contrary growth. It was really good as we're now at the breakeven level and that's just a step on the way. And we have strong improvements in our EBITDA as you will see on the next slide. And here you can see we're growing with 14 million in the quarter. In the 2023 numbers, we have 2 million of Conferere in those numbers, which we have sold. But in the 2024 numbers, it's important to note that we have 8 million of DataL revenue in those numbers. We're off 2 million or 25% of DataL's revenues are consulting revenue. So in total 14 million growth and what's really positive is that 13 million of that goes all the way down to our EBITDA minus capex level. So I feel really good about our control of costs and that we have the growth really really going down to the EBITDA C level. And looking at our targets for 2024 and our performance, we're basically in line of all those targets that we set. And it's, as you can see, quite a large improvement over 2023. And especially we're looking at the third row, if DA means capex, that's what we internally is the only profitability level we look at, or company-wide, so to speak. The reason being that EBITDA is, we feel, a measure that's not really reflecting reality as almost all development we do is to win new customers, also the ones we cannot capitalize. So we feel that EBITDA minus CapEx is a good level to look at. Looking ahead, the really key to delivering this growth this year is that we have surgery coming online in time and that we have Volvo coming online in time and so on. So it's really important that we deliver development on time or we have some extra time in the roadmap, but more or less on time will be a key for getting this growth to really reach there. the targets we have for 2025. But as I mentioned, we have big interest in what we're building. So we feel we're doing the right things and it's just important to get it out on time. The other really important part to achieve those goals is the efficient use of resources. and as i mentioned before it's about every day every week and every month becoming a couple of percentage points more efficient and we do that all the time some examples that we've been working with in the last couple of months is replacing roles so if you have roles that are not really creating the maximum amount of value, we will remove those roles and add other roles. So even if costs are more or less flat, we are doing quite a lot of changes in the organization in order to really maximize our output. So a couple of roles that's been removed last month and a couple of new roles have been created. Also, the use of AI is quite important for a software company to really be efficient in development. We see that we're getting more and more efficient using these tools. When it comes to WebDocX, as I wrote in the quarterly report, we did a little bit change in the roadmap now together with the DataL team. In DataL, We have two products, DataCure, which is a quite new product for therapists that's growing quite rapidly, and it's DataAd, which is their older product, which is for doctors and has a really lot of functionality. So what we decided is to first replace DataCure and then move on and replace also DataAl in a couple of years time. DataCure is the aim to replace this year. So that means that we can close down one of the two platforms in DataAl much sooner than we'd expected. But it also means that the certification we're aiming to do now, more or less now, will be moved to the autumn in order to first fully replace the DataCure functionality and then close down that software. So I think that's... really good change but it changes a bit in in our roadmap and the first german pilots are live and and they are happy but they are just using uh well the cakes on the sides it's not full pilots as we're not certified with those words i will hand over to sven martin thank you daniel starting um off on some of the financial highlights for the for the quarter

Our ARR base grew quite significantly in Q4, and that is partly driven by this acquisition of DataAl, which added about a bit more than 30 million SEK in ARR. And also our signed contract base takes us up to 304 million in contracted ARR, which grew 17% organically. and reported recurring revenue growth grew 15% and our other metrics as well developed as we had planned in the quarter. If we take a more detailed look into the P&L, there are three main points I would like to highlight here. Firstly, you see that in the quarter our gross profit increased by 26% and the gross margin increased from 81% to 84%. And this is because we have reduced hosting costs in Norway through negotiations with suppliers. we have also sold confrere. So this increase in margin is sustainable and you see the same trend for the full year. Secondly, we had big one-off costs in the quarter, 20 million of costs. And this was related to the relisting and the acquisition of Data Isle. And you also see that we had big costs for the full year of 30 million. And this has been a special year with this big process with EG, the relisting and Data Isle. But this cost has now been taken and we don't expect any more costs from these processes going forward. another key point to highlight is if we look at the personnel expense it increased from 32 to 39 million however if we also include the capitalized development cost we get the cash cost for our employee base and you see If we add these together, it's basically flat year over year. And that's very encouraging for us, given that we have added cost from data about 2 million. And also we have We have, of course, wage increases, etc. So this means that we have been very successful in reducing costs in other places and we continue to work on that through reducing roles and also through changing, for example, consultants to employees. And you see the effects of this on the margins. So we grew our revenues by SEK 15 million and the EBITDA basically increased by 14. So basically all our earnings trickles down to the, or all our revenues trickles down to the earnings. And with a 22% revenue growth, we get the margin improvement of 18%. So if we are able to continue being as strict on the cost side going forward, we can continue to see that this scalability has a very powerful effect. If we look at the development on EBITDA minus CapEx, excluding Germany, you see that the trend is positive. We have a good improvement year over year. It's trending a bit down in Q3, but the reason for that is that we have this holiday effect in Q3 that we mentioned on the personnel cost side. So that is typically the strongest quarter on the margins. If you look at the ARR growth, We continue to have a robust underlying organic growth, primarily driven by the net retention rates. The churn is low at 2%. As Daniel mentioned, it might increase to 3% given this churn in WebDoc, but still the recurring revenue base is very much stable. And the signed contracts takes us up to 17% growth. And then we have data as well that takes it up to 304 million. On the cash flow side, we also see good improvements. We have this high one-off cost as you see on the report to the EBITDA is negative, but we have strong working capital effects in Q4, partly driven by the customer receivables, but also some of the effect is related to invoices for the relisting that wasn't paid at the end. So that will have a negative effect again in Q1. But in general, you see on the full year figures that our working capital profile is very much supportive to our cash flow, given that we invoice customers upfront and then we pay afterwards. And you see that even though we have this big one-off cost of 30 million for the full year, we are still very close to being break-even on the free cash flow side. So that illustrates the power in our working capital profile. Finally, on the financial targets, we are now reporting INSEC after our relisting. We have thus provided this slide to convert the target we provided in NOC in October to SEK at the currency rate at the date of publication of the targets. So with that, we can open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Fredrik Nilsson from Redye. Please go ahead.