Carasent AB

Good morning and welcome to our presentation of the first quarter of 2025. My name is Daniel Erman and I will start to present and then I will hand over to Martin Björstedt, our CFO, to take the rest of the presentation. So looking at the first quarter, we continue to improve rapidly. We have our EBITDA margin going from minus 8% to plus 6%. And that's our most important financial metrics internally. And performance is in line with our plan overall. We have slightly higher costs in the quarter than we had planned for. And it's not a lot we're talking about. We're talking about 1 to 2 million more costs than we would have liked to have. So it's not a big deviation. And this deviation is due to partly that we have chosen to invest more into AI. And then we're talking AI in our products, AI in our development. We've been working with it for a long time. We've been able to offset most of the costs of development in AI by getting rid of other costs, but some of it has increased our total costs. We also had to do some write-down of the receivables from the companies that went bankrupt as we spoke about in the last quarter. We also have had discussions in the board about capital allocation and I will get back to that later on in the presentation. feel that we have good progress in our large development projects that's surgery for sweden e-prescription there's a new regulation around e-prescription called nll in sweden which means that in all ehr systems you will be able to see all prescriptions from all other systems and you will also be able to change those prescriptions so that would be a really good thing for our customers that even if you're not in in one of the regional systems you will still be able to see all everything around medication and that way around also. Volvat is proceeding according to plan, the implementation of Metolka in Norway. We're also building our patient platforms for Norway. That's going well. And WebDocX continue to develop for the German market with a lot of new functionality. So in total, I think that we see really good progress in our development projects nowadays. The bankruptcy is for some of the customers. The one we spoke about in the last quarter, there are no major new ones. Put a bit high pressure on sales now. We are selling better and better. Every quarter we get a bit better at selling. So I feel that's really good and we can follow that. We're learning, we do new things in marketing. we see that we can do different things and that our reputation is getting stronger and stronger, which makes it easier to sell. So that's really positive. And we need that because of those bankruptcies. Sign of the error is now at 12 million. So that's slightly down. And that's because we have implemented Medirate for VDR. And we have not signed any new major contracts. And we have 14% organic recurring revenue growth and 26% contract area growth. So as we have started talking a bit about AI in our products, I just want to take the opportunity to talk a little bit about what we're doing and how we're thinking about it. So just briefly, there are basically two types of AI support in our products that we could do. One is clinical decision support. So that's when we help doctors, nurses, and physiotherapists to take decisions on what to do with the patients. So that could be automatic triage where AI decides on the severity of the patient's problem and automatically guides them to the right care level. This type of decision support, we never aim to build ourselves. That's because this type of of AI solutions or solutions in general, it doesn't have to be AI, puts in a very difficult legal framework called Medical Device Directory, MDR, and you basically become a research company and you have to prove in large studies that you always do the same thing and that your advice is the right ones and so on. So that will never be our aim to build those types of solutions, either with or without AI. It's also not a big topic for our customers. We sell mostly to the private sector. The private sector has a bit easier patients. That's what they're there for. So the clinical decisions is not what takes a lot of time for our customers. The other type of support is administrative support. And this is what our customers really hate and what eats a lot of their time. All the reporting to different places, for example. We already do a lot with it. So one being our systems are really user-friendly, easy to use, good workflows. We also have a lot of automatic reporting connections and so on. Between systems using our products, you have to do much less administration than in many other systems. But still, there are things we can do. And what we invest in at the moment is what's called ambient listening. So that means that the AI is listening into the patient meeting and then automatically proposes a medical record for you. We've been playing around for it for quite some time. I think like two years we've been playing with it. And now we feel, felt that actually last quarter, we felt that now it's time to start really putting it into our products. We don't really feel that we have to be the first mover or the opposite, actually. We want to see that first, that the use cases are there, that the customers really appreciate new technologies, new solutions, and having a strong EHR position where we are the dominant provider of a system to our customers and a difficult to change system. We don't have to be the first mover. It's easy to just replace whatever they're using or quite this at least. And our advantage in these types of scenarios is that we can build it directly into the system. So we get really tight integrations and we have access to all types of data around the patients and visits and whatever it is within the clinic. So that means that we can build support that uses all that knowledge. And that's why I think that sometimes it's the right that we do it. But not always. And that's what I want to show you on this next picture. So different situations and different customers have different needs, and we will not try to solve all by ourselves. And this is some examples when we talk about ambient listening, what we're selling now or start selling now. There are really big international companies like Nuance that's owned by Microsoft that have really large resources, large training data. But what they lack is knowledge about how an AHR or medical note is supposed to be written in Sweden, how we set diagnosis and so on. So they are good at certain things, but less good at other things. We sell their products today and they're really good at, for example, speech to text where the doctor or physiotherapist just talk and it writes exactly what the doctor or nurse or physiotherapist say. Their ambient listening is not as well suited for such circumstances at this point in time. There are also specialized products. Another example is Tandem, which we also, many of our customers appreciate that solution. It's built for our type of customers. They're niched so they can really focus on this and they can really invest in it in another way than we do and take higher risks than we would do with this type of solutions. And they would be the right for certain types of customers. For example, they've built an app so that you can take the listening with you when you leave your outpatient office. So if you're a first therapist and you go out to the training floor, you can take that with you and record the entire meeting. It might not make sense for us to build such an app, for example, because it's maybe 10% of our use cases for our customers. And then we can have our own integrated. And the advantage we have is that we can build really seamless workflows as we do with other things. So it's always right patient. You start it all within the same system. You don't have to switch windows. You don't have to go into other things. You don't have to copy things. We also build for our type of customers and we have access to all the data that could be needed to write a really good medical record. i think all three of them probably have their place and it's also difficult to foresee exactly where where technology will take us and what will happen so we do not put everything on one course or whatever to call it so we we're doing all these three things but we think that for many customers our solutions are probably the best choice and we aim to make sure that this So it's a little bit how we're thinking about AI in our products. And over time we see that we'll add more and more administrative support in our systems. That's why it's important to start releasing those type of features in our systems. Also worth mentioning is that the thing we're releasing now is for all our systems. So it's already included in WebDoc SC in pilots and also in WebDoc for Germany. It will soon be in our Norwegian systems and it's all using the same backend. but it's been trained on different languages. Slightly different backend, but in the same organization that builds it. Moving on, we talked about how we use our capital and looking at how we grow. New sales is of course very important. What's worth noting is that most new sales are to startups, so clinics that start new. And then we grow with them. So new sales are extremely important. More important looks like in the numbers because it's with those new startups that we then grow the coming years. So new sales is very important, even if they often are small. With surgery, we aim to also move over larger clinics and to increase that part of new sales. We grow with existing customers, as mentioned, that's both since they are growing, but also since we add more and more value into our systems and different add-ons we can sell. And then we have acquisitions. And what's really worth and important to note here is that we do not aim to start making acquisitions and looking at different types of structured process that come out from advice and so on. We have a few companies that we know would add a lot of value to our organization that we would over time like to acquire. So what this means is that we would go and knock on the door and say, hi, we think that we could add value to create more value together and then have a discussion. So that's very different from the acquisitions of old in this company, but it's the same story we had in Germany where we looked at all different providers and we knocked on a few doors and said, hey, we think that together we would be a good fit. And that's how I did done acquisitions before also. I think that's where you really can create a lot of value that you have chosen this and this and this company slash product fits really, really well with our company. So we're not aiming at becoming a serial acquirer. So, but we see that there are some opportunities to create real value and good value, strength and positions. So that's what we're talking about. It will not, be many acquisitions and not in a rapid pace. And what that means for our capital allocation, that is that we see that we want to do some acquisitions, but they are very targeted and we know exactly who those are and we have no hurry to do those. But that means that we want to keep some cash on hand for that. And we also have we have on hand already 253 million SEK and we have a rapidly increasing cash flow. So that means that we will do recurring share buybacks. The exact size of those will depend on the discussions we have with those emanators I spoke about earlier. So the board will decide on how much to buy back when they think it's the right time to do it. So I hope that we, quite soon after ADM, we'll be able to come back to you all on that and what size it is at this year. But I cannot give you that answer today. But we see that share by a box is a good way of distributing cash to our shareholders. And then we'll be looking at a few very selective M&A opportunities. And looking ahead, continue to have a big focus on growth, of course. We have pilots in three very high potential projects ongoing at the moment. So we have Surgery, we have Volvat where the first pilots are live now, and also Medsum, that's our ambient listening solution, where we also have pilots live. So three very high potential projects that will be really fun to follow. We continue to focus on efficient use of resources every day, every month, every quarter, becoming more and more efficient in all parts of what we do. And I think that's extremely important. That's how we'll be able to scale in a really good way. And cost control is vital. And finally, launching WebDocX in Germany. And we also have our largest high potential project, so the fourth one, with first German pilots live, as you know, and we aim to replace DataCure, their older product in DataAl during 2025. So with those words, we hand over to Sven-Martin.

Thank you. Starting off by looking at high-level metrics, we improved a lot also in Q1. Our ARR grew 26% to 321 million, including the backlog. And our organic recurring growth was more or less in line with previous quarters. Net retention rate as well at 110%. and then margins also improved. We did expect the margins to improve a couple of percentage points more, but we had this additional cost that was mentioned. But overall quarter in line with our plan. If we take a closer look at the P&L, you see strong improvements year over year. Revenue growth was 29%. And we have highlighted some points there where WebDoc grew at 15. So there you see that it's slightly lower than what we posted last year. And this is because this bankruptcy or churn took full effect from the end of Q1. So going into Q2 as well, the pace will be affected by this churn. On the other hand, we did have a very strong quarter on the sale side in WebDoc in Q1. So we expect them to be back on track quite fast. Overall growth, as mentioned, 29% driven by the acquisition of data and strong organic growth. And you see also consulting revenues was very high. This was due to these big implementation projects being at full speed and also sort of weak comparables last year. It was quite slow on consulting. Third point, 10 million EBITDA improvement or 14 percentage point increase in margins. Worth noting as well is that in the first quarter, we were close to being neutral on EBITDA for our German operations. And this was because of a very strong quarter on profitability side for data. which had good consulting revenues, which helps, of course, and also that we have gone through the cost base after acquisition and removed, particularly on the OPEX and COG side, removed unnecessary costs and also negotiated with suppliers. So the underlying profitability now is better than before the acquisition. If you look into the growth, ARR growth, it was, as mentioned, more or less in line with previous quarters in the reported figures. But there are some effects that pull in opposite directions. So, as Daniel mentioned, we implemented the VGR contract for MedRave. and also implemented some clinics for Frelsharmen in Norway, which also contributed to the growth. That would have increased the growth a couple of percentage points, but then the WebDoc churn for the bankruptcies took full effect in these figures, so that pulled in the other direction. So overall it was quite stable. if we look at the profitability it's improving rapidly and we have gone from minus 30 margin two years ago to plus six now we are of course still far away from our potential and the key given that we have a strong backlog of revenue to implement and a good good underlying growth momentum the key will be to convert as much as possible of those revenues into profits. And if you look at this slide, it shows how we are doing with this over the last year. So the left-hand bar, it shows the revenue growth, the revenue increase, excluding Confrer, which was sold, and Data Isle, which was acquired over the last year, so the organic business. and then we had the COGS increase naturally, OPEX was quite flat and then the personnel expense increased 2.6 million but we did have last year we had some one-offs related to layoffs of 1.7 so if we remove those from the comparing comparison figures it increased 4.3 and then COPEX decreased by a similar amount so in total we were able to convert 90 percent of the revenue increase into EBITDA and if we adjust for the the non-recurring last year it was 73 percent So we have set an internal target to convert around 80%. And we did have this extra cost this quarter. Next quarter, we will have around a million in extra cost for the new incentive program. So it will be key that we succeed on these cost initiatives that we are taking. And over the last year, removed roles that were not necessary and also replaced consultants for employees, which typically generates a good saving. So that is why we are able to keep these costs quite flat, even though the, of course we have wage increases, et cetera, and add roles in other areas. Finally, The cash flow, we had as mentioned good improvements in profitability and lower investments, but we had the working capital headwinds. So I mentioned this in the last report that we had a lot of outstanding invoices for the relisting at the year end and these were paid in Q1. This was an effect of around 12-13 million. So if you look at the figures, it would have been quite strong if we hadn't had this effect on the cash flow. So overall, financially, we developed, despite some smaller items on the cost side, we developed according to plan and in line with our financial targets for the year, which we maintain. The key to reach those will be to roll out the implementation projects in time and also, of course, keep the cost control. So with that, we can open up for Q&A.

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