Carasent AB

Welcome to Karasent Q1 report for 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Daniel Omen and CFO Svein-Martin Bjornstedt. Please go ahead.

Good morning and welcome to our presentation of the first quarter of 2026. We will start with me giving a company update and then I will hand over to Sven Martin for more of a financial update. First, a quick overview of who we are. So our business is to help our customers who are private hospitals and clinics to help as many patients as possible. We do this through our EHR systems and related products. We're growing rapidly this quarter with 16% ARR growth and with highly recurring revenues. In this quarter, it's actually above 95%. And we have a net revenue retention of 111%. So looking a little bit more of the highlights of the first quarter. So as I mentioned, we had good ARR growth of 16%. And we continue to scale our business in a good way. In this quarter, we had almost 80% of the growth translating into profitability. And this is the way we've been working the last couple of years. And this is how we aim to continue working. In a quarter, we have quite low consulting revenues. And consulting revenues, they vary between quarters, very much depending on exactly what happens, which type of projects we have in each quarter. And what I think is also, and we also have mentioned many times before, consulting revenues are not our focus. That's not what we want to build our business on. And we're trying and we're working to move consulting revenues into ARR instead. It also makes it easier to convince the customer of changing the HR system by not having a lot of upfront costs. So this is something we're working towards. But sometimes the projects are of types where you can have consulting revenues and sometimes the customer is of such type that they expect costs there and can accept costs there and it's difficult to move them into ARR. We have a major milestone as we speak. We're moving our first paying customers into our German system, Webcurl, which was formerly named WebDoc. Webcurl was the name that was preferred in the German market. It's a major milestone. We're very much looking forward to it and to start scaling the sales of our new system in Germany. Also, We have some promising traction for MedSum. We have signed up more than 100 new cast users this month or last month. And I will come back to this. As I mentioned, sign not implemented RR is now at 4 million. And what I think is worth mentioning around that is that all those 4 million are new. So all those are sales from this quarter. The 5 million we had last quarter has already been implemented. And in total, with the 16% organic error growth and the lower constant revenues, we have 7% report organic growth in the quarter and an EBITDA margin of 10% up from 6% a year ago. So, talking about what I think most people are talking about at the moment, AI. This quarter, I plan to talk a little bit can talk a little bit about how we act, what we do with AI. And there are three areas which I would like to mention. The first one is that we accelerate development. We believe strongly that as it gets faster and faster to develop software, customer demands will increase. So what our plan for that is to use all efficiency gains into producing more functionality for our customers and a better user experience for our customers. instead of saving money. So the aim is to really increase the pace, get more and more functionality out to our customers. And what that means is that we're widening the gap between our product and the legacy systems who do not really develop. And if you haven't really developed, ALT will not help you very much starting to develop. You don't have the culture, you don't have the structures, you don't have the staff. So I think that that will really help us. But I think it also will be an expectation for customers. And it also means that we keep in gap to customers. potential new threats and competitors the same or like the same, keep a big gap between us and them by continue to always develop and increasing the speed as we go. And we see quite big gains from AI in development and in many other functions also too. At the same time, it's very important that we continue to live up to all regulations, that we make sure the product is always stable. and that it's secure. So it's a bit of a balance act, but I think we're taking big steps forward and getting better every week and increasing the pace. We also do a lot with AI in the product and there's a lot of potential to do a lot with AI in the product. And that comes from healthcare has a lot of administrative demands and it takes a lot of time from our users. So, and it's AI is really good at administrative parts. So MedSum, which is our ambient scribe, that means that we listen in on the discussion between the doctor and the patient and automatically proposes a journal note already pre-filled into the system where the doctor can then make some small changes if he or she feels the need to do that. What's been very important there is to match the quality of the leading ambient scribes that started a bit before us. And we now feel that we are at that point point, and I know that many of our customers feel so. Most of the customers we gain from other ambient scribes because they already know the structures, they know they like to work with those types of tools, and they just feel it's much better that it's completely included within the HR system instead of a separate system. And the potential gains from this are really big. The studies out there say that you save between 15 and 33% of the documentation time. which eats a lot of time for our users. I will get back to next steps, what we'll do on the next slide, what we plan to really do. But what I think is what we're focusing on now is to really rebuild the UI of mostly WebDoc, our large system, to make sure that the AI experience fits the UI experience and it creates in total a really good experience for the user and a really efficient experience. So we are, this year we're building quite big parts of the front end of WebDoc to make sure that AI is a natural part of it. And what we want to do with the AI tools are this, and parts of it we already do. But when you have the discussion with your doctor, we listen in on the entire discussion. But from the discussion today, we have proposed clinical notes. The next step is to really catch everything that you agree with the patient to do. So prescriptions, referrals, follow-up bookings, sick leaves, and so on. So all of these are tasks that the doctor, physiotherapist or so needs to do either whilst talking with the patient and quite often do after talking with the patient. And it's a lot of their time. And there are stuff that they don't really like. So we catch it all. So you don't have to remember it. You can just see it popping up in the system as you speak, the tasks that you have to do. And then while you're done, you just go through the tasks that the AI has proposed for you. And it's as much as possible. There are some legal hurdles on some of these tasks, but most of them we can have completely pre-filled proposals, both from the talk, but also from previous medical notes and other information we have in the HR system to really make sure that we give such as good propose as possible. And this we aim to have in place by the end of the year, reason why it takes to the end of the year is that we redo in the entire ua we are interviewing with sitting with a lot of users testing different ways of building this testing how they really want it to work because as i mentioned before the most important is that we build technology that really fits how our users want to work and fits there every day we are in no stress uh we have the strong position we have uh And this will not, in Sweden and the Nordics and Germany, this will not grow exponentially. This will be a steady step that users want to start using this type of tools. So we're doing it really properly. We're doing it fully built in as a natural part of the system rather than just hiring it out. We want to be a fast follower in general. So it will be very interesting, I think, releasing all this functionality. Looking a bit more at the journey ahead, we aim to continue as we do. So with strong organic growth, especially focused on ARR, we aim to continue to have a good grasp of the cost, not to reduce cost. We believe that we need to release ever more functionality to our users. There is so much we can do for them. But we have a tight cost control and we aim not to increase our cost and that the absolute majority of all growth should translate into profit. And then this year, we also launched WebCur, formerly WebDocX in Germany, which is a major milestone for us. With those words, I will hand over to Sven Martin.

Thank you, Daniel. So starting off by looking at the financial highlights of the quarter. So the headline growth figure, as Daniel mentioned, looks a bit lower than we're used to. And I will get back to that in more detail on the next slide. But the underlying metrics that we follow, that we believe drive value in the long term, the ARR growth, The scalability and the cash flow generation continued to develop in the right direction and improved a lot compared to last year. We ended the quarter with 360 million ARR, contracted ARR. It grew 16% year over year, and we had a strong net retention of 111%. Profitability also improved a lot. And EBITDA margin was 20% and EBITDA margin was 10%. Starting with the P&L, you see that the revenues came in at 90.4 million compared to 85.2 last year. And this, as you see illustrated here, is a growth of 6%, 7% adjusted for currency. And you see that there was a drop in the consulting revenues from 8 to 4 million. so a 50% decline. And that is the reason why the growth is, uh, lower than the ARR growth. Um, this is a few different reasons, but, uh, consulting revenues typically vary more from quarter to quarter and is more lumpy in nature. Uh, we also had, uh, uh, in, uh, Metodica, we had to focus, um, uh, a lot on post implementation work for wall, but that didn't generate the revenues. Um, And in general, we prioritize away consulting in new sales processes compared to the recurring revenues. Looking at the cost base, which I think is one of the key highlights of this quarter, the cost base is essentially flat year over year. You see personnel expense increased a million, other OPEX decreased around a million, and the capitalized development increased half a million. around half a million increase in total. And this is even though we add quite a lot of cost for AI related features, such as made somewhere we have a big hosting costs before we get a lot of revenues. And also, in our own development, we had tools, we haven't been able to absorb these costs and become more efficient in other areas, basically. So this results in EBITDA of 8.6 compared to 4.8 million last year. So you see that the revenues grew approximately 5 million and EBITDA grew close to 4 million. So we were able to convert close to 80% of the revenues into profits, even though we have very low consulting, which typically has 100% drop through rate. So this is a very important metric for us. Also worth noting that there is no adjustment in the figure and there was no adjustment last year either. Looking at the ARR Bridge. It clearly shows what the growth is coming from. You see on the left side, we had 320 million contractors last year. And then at Epsil, this year was very strong, 45 million or 15%. This is also stronger in historical figures. And this is because... Some of the large new units we have added is included here, such as Medtanken and Volvat, adding 10 million alone. This is included in NetUpsell because we had some units from these customers before we signed the big contract, so it's an existing customer. Upsell in general also was very strong. In the quarter, and you see churn here, 10 million, 3%. A third of this is coming from the German legacy product. So in the Nordics, we can see now that the churn has normalized again, as we had communicated in H2 that we saw that churn was down to lower levels. And if you remember, March last year, we took effect again. A lot of the churn we had in WebDoc there took effect in March. So now this is not included in the figures anymore. On the new customer side, we had 50 million in ARR added, 5% growth, and it improved quite a lot compared to last year as well, when it was 11 million. So in total, ARR grew 16%. And worth noting is that the Nordics is now growing at very strong So excluding Germany, the growth, AR growth was 19% in the quarter, which is higher than we have seen actually for the last few years. So this is a very good sign that the momentum in the business is continuing. This slide we have shown many times now, and it's a good illustration of how we think about developing the business. To explain it to those who haven't seen it, the orange line there is the revenues, and then the bars is the cost base that we have. And the dark blue part of the bar is the OPEX, CAPEX and personnel expense for the organic business, if we exclude the acquisition we made. And you see that it's been extremely flat over the last 10 quarters. And this means that we have also been able to take out costs, given that we have wages increase on inflation, etc., And this is, of course, very powerful. So if you look at how the margin has developed because of this, we had the EBITDA of minus 30% three years ago. It's now plus 10%. And we still have capacity to continue to scale. And that's the plan going forward to add very little cost. We will add some roles this year in Germany to take WebCure forward. rollout WebCure commercially, but in the Nordics, we will continue to be very disciplined. Finally, on the cash flow, you see that in the quarter, we had very strong free cash flow, 47% operating cash flow and 36% margin on the free cash flow. This is, of course, because of a very strong working capital effects during the quarter. And it's driven by three main effects. Firstly, as I talked about in Q4, we had a big customer that had a delayed payment in Q4. This came in in January and it was 10 million added. So this would normally have been in Q4. Then we had very high consulting revenues in Q4. This was paid in Q1 as well. So this, of course, boosted the working capital compared to normalized levels. But then in Q1 is typically also quite strong because we have annual invoicing of certain customers. It's worth noting also that our working capital profile is very supportive to our cash flow in the long term because we charge upfront and we generally pay our invoices after the period and salaries. So all in all, final point there, share buyback, we did 40 million in the quarter and it took around 40 million in cash. But all in all, a quarter that in the underlying metrics, the ARR growth, the conversion of revenues into profits, I was... a step in the right direction and we continued to deliver on the plan on these important metrics. So with that, I can open up for Q&A.