Divio Technologies AB (publ)

Hi, and welcome to today's webcast with Divio Technologies, where CEO John Lewin and CFO Fredrik Wallmar will present the third quarter of 2023. After the presentation, there will be a Q&A, so if you have any questions, you can send them to the form on the right. And with that said, I'll hand over the floor to you, John.

Thank you very much, and thank you to everyone who is here and is watching. My name is John Lewin and I have been the CEO of Divio for almost four years. I'm going to present the Q3 report together with my CFO, Fredrik Wallmark, who has been with us for almost a year and a half.

Yes, almost a year and a half.

Great. I'm going to make a short presentation, try to be quick about what we do, who we are and then jump into the numbers and what's going on. Let's start with a short history. We have been running an old web agency for a long time. We became a product company and are now a product company and sell our platform. We are listed on Nasdaq since the end of 2019. Vi har runt 600 betalande kunder och fokuserar på allt från mindre kunder till större kunder och fokuserar i huvudsak på stora kunder. Men det är trevligt med inflödet av mindre betalande kunder också som anspelar till oss. Vissa växer med tiden och så vidare så det är en bra storm att stå på. Lite kort om vad vi gör för någonting. Vi är då ett bolag som håller på med, för det enkla kan man säga, hantering av olika molninfrastrukturer. Det är ett jobb som är ofta väldigt komplext att hantera en molninfrastruktur. Det krävs mycket kompetenser, mycket förståelse, och den här bildningen illustrerar hur AWS molninfrastruktur ser ut och vad man behöver koll på. Det skapar mycket huvudbry, och har man inte stenkoll kan det också medföra en del. Many challenges that companies have with cloud infrastructure is that it costs a lot of money and it is difficult to predict and business models are changing all the time. You are often dependent on specific individuals who have a solid understanding of this, who build in the system and who are the DevOps that are difficult to find and also not so super loyal. If something better comes up, they often hope for that. So that causes a whole lot of worry. Then it is just to handle the modeling infrastructure, it is complex. It was difficult when you had your on-premise solutions, but it is still, and it is smoother now, but it still requires a lot of understanding and understanding. It must of course be up and running 24-7 and it creates a lot of stress internally for those who are decision-makers and those who also have the responsibility to handle there. Then we have security compliance, which is a jungle, and there are a lot of rules and other things that you have to follow and keep an eye on to make sure that everything is safe and that you are also compatible with the laws and rules that apply. And then it often takes relatively long time, if there is a lot of handling and you are dependent on individuals, then it takes relatively long time to get, if you have built different web applications, to be able to deploy or launch them. And then support is also a jungle to find the right support. If you don't have a clear idea of what you're looking for and need, it's hard to find the right person. And this can be solved in different ways. You can hire an army of different DevOps that can manually solve it, or you can try to automate as much as possible. And that's where we come in and have a platform that handles more of the main problems That's why we exist. So what we do is we increase efficiency by minimizing the handling, and that makes the developers happy, who often only focus on developing and not managing the infrastructure. Even though most of it is automated, there is not so much handling that minimizes the risk. because it is often the errors that occur that make different web applications and other sites go down. It depends on whether you have done something manually wrong. So those in charge can sleep calmly at night, because if problems arise or something happens, we take care of it. And then the costs are significantly lower, but above all predictable when using a platform where you can use whatever you need. And we also have a look at the infrastructure, the price model and so on, and can optimize it. So Seafoam is normally very happy. It is also important to ensure that you have an infrastructure that works in the future and that your web applications follow along in the future. That is also what we ensure. It is we who are the experts. We try to trust these hard-hitting experts, that is who they are. Support-wise, we are always there. We are 24 hours a day with our customers. No matter what problems they have linked to that, we can respond to basically everything. It's just one contact, one point of contact, instead of having to contact a lot of different people in the middle of different documentation. So we exist there and solve most of it. So that's why we exist and that's why our customers are very happy with our platform. And then the advantages for customers is that they can use their developers to actually develop instead of keeping up with the main infrastructure. And that means that you can take away quite a lot of resources that are normally on and are forced to keep on with the infrastructure, make sure that it works and that it is possible to build and launch the web application. And then also reliability, we make sure that it works, we make sure that everything is compliant with rules and as safe as possible, beyond the fact that the infrastructure is secure, but also that the web application is secure. And then another big advantage is that you don't feel as a customer that you have locked in a specific IWS or Google or Azure or whatever you are using with a platform that makes it very easy to move a web application from one infrastructure to another. Väldigt kort vad vi gör och vart vi finns till affärsmodellmässigt. Vill du prata lite om det Fredrik?

Mm, jag tar över. Vi har en skalbar modell där mjukvaran är i princip utvecklad och det gör att vi kan lägga till kunder på ett väldigt enkelt sätt. Vi kan lägga till antalet kunder men vi kan också öka vårt engagemang med respektive kunder. De flyttar över fler applikationer hos oss. So that means that we can increase our business without adding too much cost to the company. And what we are looking at is the revenue from the subscription. We measure MRR, which is the Monthly Recurring Revenue. The revenue we have from respective contracts means that we have a very predictable revenue stream in the company and that makes it easier for us to plan and forecast and we know in advance also when we bring in new customers what the profitability will be for the respective. Sen är det så att det är många kunder som väljer oss och väljer att stanna och väljer att stanna väldigt länge. Det vill säga vår churn som man använder sig av i det här lingot är låg. Vi har en värderande produkt och den är också som Jon var inne på tidigare kostnadsreducerande för många bolag och gör livet enklare. Det gör att många kunder stannar med oss över längre tid då. In terms of payment, there is advance payment with many subscription services. We always press for annual advance payment, so there are of course exceptions, and this is very good for our working capital. And now we have, as we will see, customers who pay several years in advance to get good prices, and we think that is of course very good. And as for the Q3 report that we released here this morning, the 15th, our revenues from subscriptions have increased by 12%. So right now we are in the quarter at 4.8 million kronor compared to last year which was 4.3. And the MRR, which we measure in US dollars, since our contracts are usually in US dollars, so we would like to look at it in that currency to avoid explaining every time why the currencies go up and down, is now at 151, so it has increased by 7% from 141, where it was last time we had this presentation for Q3. EBIT is... Sämre eller mer negativt än vad det var förra året. Den är på minus 3,6 miljoner, där det var på 2,3. Och vi var väl en ganska tun organisation då på den tiden. Så även om intäkten har ökat så har vi också tagit på oss mer kost, vilket är linje med den strategi vi följer att förstärka upp vissa områden. Det kommer vi gå in på lite mer senare. That, together with the fact that the cash register is at just under 21 million kronor, makes us feel very comfortable with our situation right now and how we are going to move forward for the future. The most important events are the advance payment of 21 million kronor, which we received here in the quarter. We have got a new CPO in place. Jon will talk a little more about Fredrik and what he does. Vi har fått en ny stor Enterprise Client kund i den finansiella sektorn, som vi också nämnde då i vd-ordet i rapporten. Och sen har betalningen från de här varanterna som var utestående, vi gjorde en issue of units i Q4 förra året, som blev aktier men också tillhörande varanter och de betalades in då i portalet. Så totalt sett så har vi fått in ungefär 15 miljoner kronor från de här emissionen av units som vi har genomfört sedan starten av Q4.

What is happening in the company? We are working in February, which is our main focus. It is getting better and better. We feel that it will take a little longer due to global factors. att få avslut i de här dialogerna vi har. Det glider lite mer, men det är på grund av all osäkerhet som finns runt om i världen. Men vi är väldigt träffsäkra. Vi har ett jättebra cellteam nu. It took a long time to develop the right competencies. But now we're sitting on them and we're putting a lot of effort into it. We're very methodical in how we work. The significance was a little more in the form of Bilda Västern before. Now we're extremely methodical in how we work and strategic and also more meet-and-greet and have significantly better dialogues as well. And they move forward. Relatively fast, not fast enough in my opinion, but it goes still forward. We have quite aggressive target cells that we have set up and we follow them so far and will continue to be very offensive in the series. And we have also taken on some costs related to sales and marketing. Both when it comes to direct sellers, but also to bring in help, external partners that help in sales. And then we have taken on technical sales support and so on. Which is important to get the right output. And then we have also brought in Fredrik Hansson, who is a CBO, which means that he is product responsible. He works very well together with the rest of the team and he has set up a very clear product vision. We have not invested so much in our product in recent years. We have developed a part, but not as much as we should have done. Now we are focusing on continuing to be in the forefront and State of the art. And we have set up a very clear product vision where we want to take the road with our platform so that we are always ahead and are attractive. And in that, it is also to take in, develop together with all our customers and in dialogue with them, to listen to them and see what they need for functionality and other things. So it's really fun to work with Fredrik. I've worked with him before. He's extremely fast, talented and technically competent. So he's a really good addition to the development. Vi fortsätter också att utveckla samarbetet med AWS. Vi håller på med dialog även här i Norden nu, vilket vi har nämnt tidigare. Vi har fullt på gång med olika dialoger i framförallt Schweiz och Tyskland, vilket är jätteroligt. Vi ska bara se till att de råds i hamn, vilket jag jagar på. Vi fokuserar väldigt mycket på... Fintech, and now we've gone more into something we're digging further into, the vertical. We work a lot with what is called independent software developers, so software developers who have been around for a while and who need to go up in the clouds, distribute their products in the cloud services. And there we have a very good matching, so we have a lot of dialogue with that type of customer. And it's not the most, but medium-sized and medium-sized companies. Even those who are on the move to move up and distribute their services to those who have just done it. There we have a lot of focus to be more safe. We also work a lot with partners who help us, agencies and so on. Vi har fått in en del nya, då en största, Villanova Gradac, som är en stor kund som vi fick in, men vi har en del andra avslut som vi har fått här också, och det är väldigt mycket på gång, så det är väldigt roligt. Det är väldigt bra tempo i bolaget, väldigt roligt att jobba nu, och jag har kunnat lägga rätt mycket tid på det, men också jättekul. Vad har vi mer på gång? Ja, det är väl mer Fredrik, du kan berätta lite om

Yes, exactly. Continuing with the status. We have closed the technical option, the variances that we talked about before. 4 million kronor inflow before costs. And our, as you can see, is a large difference of 21 million from a customer who paid first. So once again, I emphasize that we are in a very stable financial situation. Then, of course, the situation has changed a little bit with this and we continue to invest in our sales and marketing as PRIO 1. The most important thing for us now is to push up our top line, increase our MRR over time, but there are also certain needs within tech-teamet eller produktteamet som vi behöver tillgodose. Och sen fortsätter vi investera i det partnerskap med IWS som vi annonserat om tidigare i våras. Men stark kassa och tillväxt. Vi är stolta men inte nöjda.

No, we are not yet. But we will be. But you should never be satisfied. But we are very happy for it. It's an incredibly good drive in the company. And we do the right things. We have said it before, but you learn all the time. What's fun now is that we see that everything is going in the right direction. And we have the right crew. Which is super important. Especially when it comes to sales. That you have the right setup there. Vi har en komplex produkt att sälja och då krävs det att man verkligen förstår och inte minst förstår kunderna. Vi har också fått igång ett riktigt bra marknadsföringsmotor, vilket också är jätteviktigt, som supporterar sälj. Vi har utvecklat en hel del i en our platform to make it a little more easily accessible in the form of being able to test it when customers come in and we have talked to customers, it will be important that they can easily test our product. We have previously had some shortcomings where you can quickly print out question marks and other things, but we have also minimized that and opened it up now. All we are doing now, Erik, is to eliminate all obstacles in order to reach a faster conclusion in all the dialogues we have. And that is very good progress right now, and we will keep that up. So it's fun. I wish that the environment was a little more stable so that you could make faster decisions. Vi kör på och vi påverkas ju inte som bolag så mycket av omvärlden och vår kunde påverkas inte heller, vår plattform har inte heller någon påverkan utan det är bara att besluten blir lite långsammare. Men vi kör på och kommer att fortsätta att bredda och öka och satsa allmänt på försäljning för att verkligen få igång ordentligt den här skyddet. Så här långt har vi lyckats väldigt väl, och jag är nöjd med resultatet. Eller jag är nöjd, det gör jag aldrig, men hyfsat nöjd. Så nöjd jag kan bli egentligen. Så vi tutar och kör på här och kavlar upp armarna och ska verkligen växla upp ännu mer det och i nästa division. Så det är super roligt. Ja, det var ett kort och gott det. Så jag hoppas att nästa for our report to be even better and that we continue this development. A big thank you to everyone. I assume that there are some questions as well, so please send in questions and we will answer them.

Thank you very much for the presentation. I think we will jump into the questions at once. Permanent income increases by about 12%. What would you say is the most contributing cause to this?

Yes, it is more about the customers. The customer base is 100% the factor that makes the revenue increase. We sell a little more consulting hours, we build it into some of the businesses to facilitate minimize obstacles to take on board customers and make it as easy for customers as possible to migrate to the target. But all focus is on den återkommande intäkterna och det är ju en ökad kundbas som bygger det och den ska vi öka än mer. Idag är vi ju på, det är ju roligt att vi är på all time high MRR-mässigt och vi hade ju en dip tidigare men den har vi hämtat tillbaka och nu ska vi liksom fortsätta öka den aggressivt. But it's only new customers and to some extent existing customers that increase their spending. But above all, it's new customers.

And we've seen that through a number of press releases that have gone out in recent months. When we sign a slightly larger contract of substantial value, we try to go out to the market and tell about it.

Yes, you are right about that. But will we see that there are more windmills, that the increase will continue in the coming quarter?

I can't say for sure, but yes, we have spent the wave quite a bit and we are right about it. It's a qualified guess, or guess, I don't know how I can, I don't think I can answer it, but it's probably a correct assessment of the person who asked the question.

Men så här då, det blir väl, ställjorganisationen blir ju smartare och smartare hela tiden. Ni blir mer pricksäkra i det arbetet som genomförs dagligen. Absolut. In addition to the environment, it is a better selling core today than it was before.

Both the core and the demand, but equally important is also that you sell against how we sell and to whom and in what way. Everything is incredibly much sharper today. So it's a combination of many factors. Om man tittar tillbaka historiskt så trodde vi att vi var rätt på det då också. Men det kan man i facit se att nej, det var vi inte riktigt. Vi var lite nöjda. Men nu ser vi ett framdrift. Vi kan bara titta på framdriften i den pipe vi har, vad som hände där. And the dialogues. We have a lot more dialogues, so you can be honest with that too. We lose some dialogues that are paused or for various reasons are moved to the future. But at the same time, we have a lot more qualitative dialogues that also move forward to supply. There is a lot more supply out there and so on. And all this indicates that we do a lot more right things. So we... Without saying too much, it is a good assessment that there will be more wind in the sails.

You have hired a new CPO. What should he do for DIVIO that has been missing earlier?

There are many pieces. We have been very technical in recent years. We have a development team that is a developer, a CTO and a development team. Det är lätt att man, och så har vi det kommersiella, det är lätt att vi blir egentligen två öar i bolagen. Vi har det kommersiella som fokuserar på sälj och så har du det tekniska som fokuserar mer inifrån uttänk när det gäller produkten. And in order to be successful, you need a person who really builds this together, both in the media and the commercial, and has a lot of dialogue with customers to bring the information to the technical, so that we get much better, more customer-adapted development than just coming from trends and what is at the heart of the developers. Vi har inte haft den rollen på ett tag och det gör också att man tappar lite. Det är fortfarande en väldigt bra plattform men man tappar lite den här produktvisionen och det finns en risk om man inte gör någonting åt det, att man hamnar på efterkälke och inte ligger i framkant, vilket man måste göra. Fredriks jobb blir att se till, och det har han redan kollat upp armarna åt, han har en dialog med våra kunder och han har a more commercial thinking about the product, which also contributes to better sales dialogues and so on. So it's a very important role that we, a little naively, have not had before. We may not really have had advice and our CTO, he is extremely good with customers and so on, but he is a technician. And then it gets a little more... So he has a very, very important role also because Fredrik is the conversion of a very skilled technician, developer, but also he is extremely commercial in his thinking and loves customer dialogue, which is also super important for us in this machine industry. So he has an enormously important role ahead of him. And we also go, and I'm talking too much now, but we also go to the previous one. We come from Sweden, so it has DNA in us as a company and everything is perfect. It's 120% of everything we do. And then it gets a little slower. Now we take a little more... Maybe take it down to 90% instead, so that we test and get a little faster in things we get out to customers. We don't build big things, we test more towards customers. So it will be a slightly different type of thinking. which is very important for us to be a little more fast-paced and above all more commercial in our thinking. That was a long answer to that question.

That's just great. You now have a strong cash flow of about 21 million kronor. What will the money be used for?

It is above all. We have been forced to strengthen, among other things, as Fredrik takes in a CPO that we need to get a little better, a very important role. We have also put on technical sales support. Then it is sales and marketing. We still don't let go of this ambition to be cash flow positive, but we have dared to be a little more fussy and invest a little more. resurser medans vi har möjligheten. Tidigare när vi tagit in pengar och haft pengar i kassan så har vi varit extremt försiktiga. Nu är vi fortfarande försiktiga för vi är i naturen men vi gör lite mer investeringar. Framförallt kopplat till sälj men också för att få produkten lite bättre. Så att vi ligger några steg före vad som behövs. Det är superviktigt. Så det är väl framförallt en del vi investerar i. It's a lot of sales, but also a part of the product. And then we have the collaboration with AWS. But it's also a role that our technical account managers will also handle a lot. So it's to build and get even closer to AWS so that we really get full money for that collaboration. Because it's a really good motivator for us.

Finally, the last question. Has this more unstable environment, but also a tougher economy, affected Divio in any way?

Yes, it does. You can just look at the stock exchange rate, but that's not the most important thing. Of course, it's super important, but what we notice is that Kunddialoger blir lite mer om sig och kring sig. De vågar inte hoppa in i någonting lika snabbt. Det tar lite längre tid. Fler som är involverade i kunddialoger. Vi märker också vissa dialoger vi har där vi tror att den här stänger vi snart. Men då pausar de lite. De måste tänka om och tänka lite till sen får de... It appears again, but it's a bit slow, I would say, and I think that's generally the case for all companies right now that navigate all SaaS and PaaS companies, that it takes a little longer. We are a service that is not, to a certain extent, it's not nice to have, but it's nice to have and it solves a lot of The companies are a bit more about themselves and what they invest in. There must be a clear savings, but also solve problems that are important to them. One thing that is important is that you don't want to be so dependent on people. Och det problemet löser man. Man blir inte individberoende på samma sätt som man var förr. Och man är mer kostnadsmedveten. Och det ligger för oss. Men besluten tar lite längre tid, har jag verkligen märkt nu. Och vissa dialoger blir inte nej, men de kanske pausas på grund av omvärlden till längre fram. Men då får man bara ligga på och vara där och jobba lite hårdare. Och det gör vi. So that's mainly what I notice. But now we have so many dialogues that I hope it will compensate and very qualitatively good, right dialogues as well. So I'm not concerned, I'm just a little frustrated, you could say.

Maybe just because inflation and so on in the long term will drive wage costs and we know that our product If we can save hours, we have to get the message out and make the companies think a little more long-term.

Thank you very much for presenting this today and answering all the questions. Good luck in the future.

Stort tack själva för alla som lyssnade.

Så syns vi Q4 här. Det gör vi absolutt. Ha det bra. Tack så hemskt mycket.

Hej.