CombinedX AB (publ)

Varmt välkomna till CombinedX kvartal 3 rapport. Jag heter Lasse Engström och hjälper till rent tekniskt att allt fungerar och presenterar även föredragsordnaren Jörgen Kvist. Enkla regler är att vi tar ett upphandlingshit efter presentationen med frågor. Please raise your hand if you have any questions. With that said, I would like to introduce the speaker of the day, Jörgen Krist. Welcome.

Thank you, Lasse. Welcome to our investment presentation for the third quarter of 2024. You who have followed us know that in the second quarter we talked about a weaker market and a weaker investment. Unfortunately, this has also affected the third quarter. We see this partly by the fact that our organic growth was low, minus 2.1%. Note, however, a very strong growth of 27.5% in total when we calculate our acquisitions. And we also have a movement margin that decreases from 6.3% in the same quarter last year to 3.1%. Here you will also know that in the third quarter we normally always have the worst quarter of the year with the summer holidays we have. We have what we think is an unsatisfactory profitability. And then you can wonder, what are we doing about this? We can divide the measures we do into two parts. We have operational measures in our companies and businesses to increase investment. First and foremost, it is about sales activities, but it is also about balancing our research. From time to time, we sometimes carry out certain strategic measures to focus our resources on the right electricity market with the right offer. Where do we want to be on the market and where do we want to invest, allocate our resources on? And which brands do we want to build up? Because Combined X is about building leading brands. And now, last week, in our world, we announced quite a big news, namely that we are putting together our company Aspire with Ninetech. And at the same time, Aspire's business is expanding for a long time. So this will go under the second category, strategic measures. And one can apparently believe that these companies were quite different, or are quite different, but It hasn't been like that. These companies have cooperated historically, many times, because they have the same basic system development competence, but have packaged and gone to the market with that competence in different ways. where Ninetech goes to the market with its basic competencies in system development and connects it to software platforms to optimize sales and marketing processes for its customers. And that differentiation has proved to be successful. We have built up a very nice business in 9tech, which we are now strengthening with Aspire's heavy system development competence. And in that way, we believe that we will get better development on this fine competence that we have in Aspire. At the same time, we highlight our Aspire's business called Borlänge. It is connected to a customer called Transportstyrelsen, which we have had for many years and where we have invested a relatively large amount of money. We have had an income of about 40 million SEK. per year for that customer, but the margins have not been as strong. And now when the Transport Board went out and made a new deal, we didn't really feel like we wanted to be part of the price pressure that was on this market. Instead, we found a solution where the new Ramantoss supplier, Tonsil, takes over the employees in Borlänge. And we think this was a very good win-win, both for Transportstyrelsen, who can continue to work with these good consultants, for the consultants who continue to work with this customer and where we ensure working conditions for them, for Consid, of course, and for us as well, who have found a good way to do this for us. A win-win for all parties. In the short term, we will lower our revenues a bit, but in terms of moving margins, we believe that this will have a positive effect over time. This means that we have a new company map, as we usually call it, when we look at how our companies are positioned, where they are and what they are. Now, before 2025, we will have six companies, six brands. Six leading brands. They are in three parts of the market. On the left, we have sales and customers, 9tech and Appsfront. We have a number of platforms that we work with, where we are very strong. Optimized Lean River and Microsoft Dynamics. And within ERP, the BI automation market, we have three companies, Elvenight, which now goes together with MTCS, Tu and Netgain, and a number of platforms that we work with. And then we have our infrastructure and security management, which we have gathered in the company NetHouse. You who have followed us know that we have a vision that we call 2028, and that we will be eight leading brands. And here we have six, a foundation for this vision, in these six companies. 9tech, Appsfront, Elmira, Toolnetting and NetHouse. And we think this feels like a very good base to go into 2025, forward to 2028 with. Okej, det var det strategiska. Sedan brukar vi på de här kvartalsrapporterna visa ett antal stapeldiagram för att man ska kunna följa vår finansiella utveckling över tid. Här ser vi resultatutveckling kopplat till vår rörelsemarginalmål som är 10 %. Det levererar vi som sagt inte. Vi ligger LTM nu på 8 %. Det tycker vi som sagt är för lågt. Vi ska tillbaka till de här 10 %. When we look at our costs, we usually divide them up. You can follow how our costs end in relation to our revenues. Then it is so that when our investment goes down, then all of these costs that are relatively fixed, they increase as a proportion of the revenues. So it's about staff and direct costs and time. Here we can see our income development. As I said, Q4 is always dipping, because we have the semester months. But we have a five-year figure of 18% and, as I said, a strong growth of 27.5% in Q3. Here we also see the rolling 12 months, and here we see the adjusted income margin, LTM, which has unfortunately fallen below 10% and will go back up again. Here we see the number of employees and revenues per FTE and the cost per FTE. We see that the staff costs have increased. It is also a consequence of lower revenues. And we exit Q3 with 593 employees. That's actually two less than the start of Q2, despite the fact that we have taken in 16 trainees. It's about balancing our costs. We have some trainees, or we have a sustainable replacement recruitment in the company, simply because of the market situation. The cash flow during the period has been somewhat negative, but on the marginals we have made quite large amortizations during the quarter and went into the quarter with a strong cash flow, went out of the quarter with a strong cash flow of 92 million. And we still have a very low net investment rate at 0.3 times EBITDA. En stark balansräkning. Avslutningsvis så visar jag en bild från vårt kvartalsträ, eller vår höstkickoff, som också var en kvartalsträ för det andra kvartalet, som vi hade i Karlstad nu för tredje årets rad. I år var det tema rockstjärna och väldigt många av våra medarbetare hade kört ut till Hårdrockare, vi hade väldigt trevligt och den känslan som vi fick där var ju egentligen bara bekräftade i att våra medarbetare trivs i sina bolag och trivs med varandra och har kul ihop. Vi har ett EMPS på 58, det säger egentligen att vi har väldigt många av våra medarbetare som ambassadörer och kan rekommendera oss som arbetsplats. And we are very happy about that. And at the same time this autumn, we are also doing a joint customer survey, which shows that we have 1 PS on 53. So it feels very reassuring to go into the coming period and feel that we have satisfied employees, satisfied customers. And now we are going to work together to also come back to a healthy salary. With that, I leave up for questions.

Yes, Fredrik Nilsson has the floor.

Thank you very much for that. Can you hear me well?

Yes, hi Fredrik.

Hi, I was going to start with these projects that started a little late after the summer. Are they in full swing now?

It's not a project of great character that has been completely put on ice, but it has been slow to get started and it affected the second quarter, or the third quarter, especially in September, which we felt became a little weaker than we had hoped.

Okej. Sen noterar jag här att medeltalet för anställda i kvartalet är klart, eller en bit under i alla fall, både ingående och utgående siffra. Är det här en konsekvens av att ni har minskat då inom Aspire och tagit in trainees exempelvis, så att det blir lite av en sådan utveckling då, eller är det någonting annat där?

Just hur det nyckeltalet beräknas har jag inte Anna, are you with us? Is it so that we have FD that we calculate the time of the semester or how is it? Anna, do you hear us CFO?

Is it Anna Hedström? Anna Hedström, yes.

Then I have a microphone for her. So then. We actually calculate the key number depending on each month's incoming and outgoing value. Eftersom det kan skilja ganska mycket i samband med att vi gör förvärven. Så konsekvensen av det under det här kvartalet har helt enkelt blivit det som du beskriver.

Okej, så jag vet inte riktigt Fredrik om det var svar på frågan.

Jo men det tror jag. Vi kan ta det mer i detalj sen också men det låter bra tycker jag. Then you mention that Aspire makes red numbers in the quarter, but what does it look like for your six major specialist companies in general? Relatively in fuel, is it reasonable to count on a certain decrease in revenues and profitability even there, or what does it look like?

In the long run, we have a lower investment, we see that in almost all of our companies, if we compare Q3 2023 with Q3 2024. And with lower inflation, everything else is the same, we also have lower profitability. So Aspire, absolutely, and there we have red numbers, but we also see, and that's why I can say that we have a weaker market. It's not like a single phenomenon, but we see it happening, with some assumption that we have lower inflation in Q3.

Okej, bra. Sen tycker jag då att trots den här konferensen som ni har varje år så övriga externa kostnader ökar knappt relativt Q3 i fjol trots då flera lite större förvärv. Så att det verkar som att ni har hållt ganska bra i kostnaderna men är det något särskilt där som sticker ut i kvartalet?

Jag får nästan passa till dig också Anna om du har något svar på det. Jag har inte det spontant.

Nej, hörs jag igen? Mm. Mm. Mm. Mm. Mm. Mm. Okay.

And if I understand you correctly in the report, Jörgen, then in your best guess that the market will be at about the same level during the rest of the year here in 2024. Is that true? And what are your thoughts on next year when it comes to demand in general?

When we got into this year, there was an expectation that the market would be stronger the second half of 2024. I don't think that has really come true from our perspective. When we talk to our colleagues in the industry, we get the feeling that it may have fallen out and that there is a certain trend-based reinforcement. But I can't say that I see it yet. That's why I don't dare to say it. I think it's a bit difficult to do that. It's a bit of a waste of time. This is how the market is going to develop. We don't see any concrete improvement for us now, but we hope, like many others, that the market has and will turn upwards by 2025.

Okay, good. One last question here. Is there anything in particular you are looking for when it comes to companies 7 and 8 that are completing what you have today?

The simple answer is that we have now gathered ourselves in three parts of the market. We have the one we are talking about, Nine Tech Aspire. which is about sales and marketing processes. And we think it's exciting to be there. We also think it's very exciting to be on the infrastructure and security side. And we think it's exciting to be on the ERP and BI side. So we feel comfortable with those three markets to continue to grow within. So that's the main track for us. Vi håller också öppet för att vi skulle kunna öppna en fjärde delmarknad. Huvudspåret är att vi ska växa inom någon av dessa tre delmarknader.

Okej, jag förstår. Det var allt från mig. Tack så mycket.

Tack, Fredrik.

Ingen har räckt upp handen än, men får gärna göra det. Det är bara att räcka upp den elektroniska handen, så släpper vi fram er. Nej, Jörgen. Det förefaller som att inga fler frågor finns.

Då tackar jag er som har lyssnat. Jag önskar en fortsatt trevlig fredag och en trevlig hälsosmåndag. Tack!