Carasent AB

Welcome to Kerasent Q3 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 five on their telephone keypad. Now I will hand the conference over to CEO Daniel Omen and CFO Sven Martin Bjornsted. Please go ahead.

Good morning and welcome to our presentation of the third quarter. We'll start with me giving a company update and so Martin will take over to give a financial update. Just a brief view of our history where you can see a strong record of growth with small churn. So going into the third quarter and the highlights of the third quarter, we continue to have strong sales. This quarter we're especially happy about bringing Falk Norway on board. Occupational health is an area which we believe strongly in and that we have a good position to grow. There are many large occupational health care providers which we aim to grow with. Also, I'm curious that you've done good work in Norway. And we continue to have good sales on our AI assistant, MedSapp. But I'll come back to that. Also, our recent acquisition, InfoSolution. is developing very well. If it's going according to plan, Infosolutions will next year be among our top companies when it comes to rule of 40. So that means growth and profit margin. So that acquisition is going very well. And I think the management is doing a great job in that part of our business. Germany is now entering a new phase. I'll come back to that, but we now are setting up to rapidly start selling our new product. But I'll come back to that. And looking at growth, we're at 29%. The organic area of growth is at 14%. And the 12% organic revenue growth is a bit lower. And it has a lot to do with Germany, which I will come back to. Well, an EBITDA of 21 million in the quarter and a margin of 20%. So if I start with MedSum, so that's our AI system that we build into our softwares. And what it does at the moment is that it listens in on the conversation between the caregivers or the doctor or physiotherapist or so, and the patient. And it automatically proposes clinical notes based on that conversation. So it saves really a lot of time for the caregiver, bringing up time to see more patients. And we are now close to 400 active users at the end of September. We have 300 paid users, so it's grown quite rapidly. And what's really fun to see is that the customers really like this functionality. I think all of us use different types of software where they kind of built in AI systems that doesn't really do anything useful. Doctors, nurses, physiotherapists, they have a lot of administrative tasks to do. around each and every patient they meet every day. So they're sitting a lot of time doing quite basic documentation, which we now can do for them. So it really saves them a lot of time and they really love this type of functionality. And we have very limited churn on the product. So that's also good. We will now soon launch more functionality and we'll also update the entire UX So to have the AI even more embedded into the experience and make sure that it's one experience, the UX and AI. So I'll show you some pictures of that within short. We're doing an MDR certification. So Läkemedelsverket, the governing body in Sweden for this type of products, have said that this type of solutions need to be certified according to MDR. So that's quite a big project because it's class 2A. which means that we're spending a couple of million in Q4 to get it done. And we're already spending a lot of time preparing all the documentation and doing tests and verifying different types of scenarios. So that's an important project going on this year. It does take some time, make it slower to get other functionalities out, but over time it will help us because there will be fewer ambient scribes on the market because of this type of regulation. And We are also allowed, after we've done this, to do much more than we do today. So that will really be good. In general, in the rollout of the AI assistant in our softwares, the aim now is to get as many early adopters in different clinics to start using it. So most customers, when we have a new customer, a customer for us is usually it's one organization. So one customer can be one clinic or it can be like Capio or it can be Aleris and so on. And what we're aiming for at the moment is to get many early adopters to start using it in different clinics. So one or two users in each clinic is what we're aiming for so that they then can spread the word to all the other ones working in those clinics. So this is really about getting people to start using it to see that it's really useful. Many are a bit skeptical and also healthcare is a really slow market. I've never seen technology spread very quickly in this market. And this is the quickest I've seen, I would say, in all my years in this sector. So we're really trying to get many users to start testing it in different clinics so they can talk to their colleagues. And we will then grow within each clinic, each customer, and also with new customers over time. So yes, looking a little bit what we're doing with this, what we're doing. This is from WebDoc. So it's our largest product. And sorry for the Swedish, but it's a Swedish product. So it says main content on the left. So that's where you will be looking at the medical records. You will be looking at calendar or whatever. And here on the right is the assistant as it works today. It doesn't look exactly like this. This is how it will look by around Christmas. But it works like this today. So you're recording the meeting with the patient. Or you can also do what the second one is there, dictate. So you can, after the patient has left, you can add some more notes, just with speaking them out. Or you can only do dictation if you want to, and just talk to the, to a doc and it will propose a medical note, like you used to do with the medical secretary. What's coming next is this functionality. So while you're talking to the patient, we will look at everything that all administrative tasks you will have to do after the patient has left. So here I'm talking with the patient that has pain in the foot. So the first one there, and sorry for Swedish again, it's a note to försäkringskassan. So that's this patient is going to go on sick leave. Then the doctor has to fill out a really long form. There's a lot of text there. And if you don't do it properly, the försäkringskassan will send it back to you and you have to do it again and so on. So you really want to do that well. but it's really not a fun task and it takes a lot of time. So here we have caught from the conversation that they're going to do that, that the doctor has told the patient that I will put you on cichlid. And then he has said to the patient, I will book a revisit in four weeks. And I will also send a referral to orthopedic surgeon. And I will write some medicine for your naproxen. And all of these things popped up here. And that's the easy part. But what we also will do is that we will pre-fill all these things. So after a visit or university, if you want to, this pops up as you talk, you can click on these things and it will take you to the right place in the system. And with basically everything you need already filled in, except for medication, because we're not allowed to do that here. We can do certain things, but not everything. So this will really save a lot of time for that. Make sure that you just go to the right place at the right time, everything is pre-filled. Our aim is also that you shouldn't even have to wait for the LLM model to work, because we can do this in the background while you say goodbye to the patient. So this, I think, will really add a lot of value. We've been discussing it a lot with our customers, and this is the functionality they want to see and the type of work they want to offload. So this is coming around Christmas and then it will help grow sales even more. We will not increase the price. The price will stay with this at roughly 750 kronor per user and month. So looking at Germany, it has been going a bit slower than we expected to bring WebCore, our new system, to the market. Even with AI, it still takes a lot of time to really make a software which fits the user's needs. But we're getting there. Pilots are happy. The customers we show it to are happy. So we're now preparing to push it really into the market. There's been one big project that's been holding it back somewhat, and that's been the reporting of public patients. But that's almost done now also. So now we're really setting up to push it. But in the meantime, until this, you can see that we have churn in Germany, quite big. That's mostly with the old, it's only with the old product and it's usually doctors retiring and the one taking over the clinic wants to see a new system than the old system of data. So that's why we have quite a big churn that will take, it's a large part of the churn for the entire group. So the churn in the Nordics is really low. And as you can see also the organic revenue growth in the group, if you take them out of this 15% and the impact margin of the group is 25% without Germany. Why we really believe in Germany? It's a really large market. Most customers are on really old on-prem solutions, nothing close to what we have. And what required 8L was to really get an organization in place, which we can build upon. It's really hard making greenfield with a startup in a new country. I think that's really unwise to do. So it's important to have something to build upon. That's why we required 8L. And now to really have this push into the market, we have a new CEO in place since September. He has a strong background in sales and marketing within this sector. We have also replaced parts of the sales team and also added new salespeople and also changed the product management team to really increase the speed and get to the market quickly. So we will really start pushing this now in Q4. It will mean in the short term that our costs go up somewhat, but we believe strongly in both the product and the market. And the last point on this slide is a bit interesting. So I mentioned this, the chairman of the data and the old product. As you all know, our plan was to close that product down eventually and to try to move as many of them as possible to our new product once the new product has all the functionality that the old one has. But with the help of, now that we have such high speed in development, and especially since DataL is a product we already have, it's quite easy to work with AI on it to modernize it. So we're doing also push to modernize that product to decrease churn and possibly to keep that product alive. We'll see. It's a bit early days if we go on pilot thing now. But when you have the tire in the code, we basically have all the answers to what the customers want and which has been tested together with their customers over many years. So it's a good foundation for actually modernizing a product with the help of AI. Looking forward, we will continue to grow strongly, especially Nordic Water to do, and we'll pick up the pace in Germany. We continue to have strong cost control, make sure that a large part of the growth falls down to the bottom line, and we're pushing WebQ into the market. So we look forward to Q4 and next year. With those words, I will hand over to Martin.

Thank you. From the financial side, the Q3 came in strongly. Growth was maintained at a good level and margins continue to improve on EBITDA side. So we basically continue to deliver on our plan of profitable growth. As you see here, Contracted ARR was 424 million at the end of the quarter, where 8 million was signed, not implemented contracts. It grew 14% organically. And then InfoSolutions also added a bit more than 40 million of ARR. InfoSolutions has developed very strongly, as Daniel mentioned. both good underlying organic growth and now after the cost savings good profitability and then we do the price increases by by new year so in the plans for next year it will be one of the top performers top performing products in the group from a real afford perspective which is very very positive EBITDA margin 25%, EBITDA 20%. We keep converting most of the extra revenue into profits. And then we also had a net retention of 110%, which is in line with what we normally see. Looking at the P&L, our revenues grew from 82 to 108 billion, 12% organic growth. You see here that on the revenue categories, consulting more than doubled, and that's mainly because InfoSolution has a bit of a different revenue mix than the other parts of the group. Gross margins was slightly diluted from 85% to 84%. And then the cost base increased a bit on the personnel and OPEC side. This is mainly driven by the addition of InfoSolution and also by a lower degree of capitalization than we had the previous year. But on the EBITDA side, which is the metric we focus on, on the profitability, it improved from 15% margin to 20%, which was a growth of 75%. And there was no one-offs this quarter either. Then the last 0.5 there on the slide. I want to spend a couple of minutes on. So Q3 is seasonally our strongest quarter on the margin side because personnel cost is lower because of the holidays. Revenues are also a bit lower, but in total the effect is positive on the margins, which of course does not carry into Q4, where the cost and revenues normalize. And then we also will have some extra costs in Q4 related to the MDR certification of MedSum, and that we are stepping up the sales and marketing in Germany. Also, It's important to bear in mind when we compared to Q4 last year, it was a very special quarter. So to repeat what I said on that conference call in Q4, we had very high consulting revenues, including a big one-off revenue in Germany. and the positive one-off effect on the cost side related to the Skattefund grant that reduced cost. So I said already on that call last year that it's not something that comes regularly and these effects won't come back in Q4 this year. So the improvements that we see here in Q3 will be smaller in Q4. And Q4 will have a lot of noise in the comparison. But it's important to note that most of this is temporary and the underlying trend here is the one that we see in this quarter and that does not change. And from Q1 next year again, the comparison is more clean and the temporary cost has been taken. So we will get back to the big improvements that we have seen over the last few years. The ARR bridge is where we see the growth here is more or less in line with what we're used to. The net EPSL is strong, 13%, 42 million. This is driven by the same factors as normally. We add more clinics and at existing customers, our customers have volume growth and we also sell new modules. It's worth mentioning that Volvat or Capio Norway is an important contributor to this bucket, given that it was on board during Q4 last year. And it was also a major part of the backlog that you saw there in Q3 last year. MedSum is also starting to show up here with now 3 million in ARR and will be an important driver going forward. Next bucket there, churn, 9 million, 3%, or 2.8%. The Nordics is still below 2%, so the German business is... contributing a lot to that churn, unfortunately. And then we have new customer sales of 13 million, taking the organic growth to 14% for the group and 15% in the Nordics isolated. You see that the backlog is now 8 billion. That was six in Q2, so it has grown quite a bit. And we did have a very large backlog compared to normal for WebDoc in Q2. And part of that backlog we have kept because there is fewer implementations during the summer. But then we have also added these big contracts that Daniel mentioned for Falk and Fred Sarman. So Q3, as it was in Q2, Q3 was also a very strong quarter actually on the sales side for the group. So the scalability slide shows our focus and how the business works. So you see that over time revenues has grown from 245 to 390. It's partly due to acquisitions, but also a very strong organic growth. And then the costs you see below there on the organic side has been basically flat over this period. So in the same period, we have had an EBITDA improvement of around 100 million and this is because we have been able to keep that dark blue part flat and Yeah, we have taken on costs many places, such as AI costs and different roles, but taken out costs on other places. So this is a very important part of that we have been able to increase our profits so rapidly. Finally, on the cash flow, we do have the third quarter is seasonally weak on the working capital side. You see here that the change in working capital was minus 22 million. This year, minus 21. Last year, it's because we pay out holiday salaries and we don't have any big annual invoicing in this quarter. So operational cash flow was 5 million but in the year to date figures you see a better picture of the working capital model that we have so there is the operational cash flow 74 million and free cash flow after CapEx is 48 so it's also quite a bit higher than the EBITDA, because the working capital is supportive as we charge upfront in the majority of the cases and pay invoices after the period. So a very strong cash flow so far this year. We did not have, on the capital allocation, we did not have share buybacks this quarter, but we have repurchased 40 million in the beginning of the year. And the cash position remains at 47 million SEK. So that was all from me and let's open up for questions.