Divio Technologies AB (publ)

Hello and welcome to today's webcast where we have Divio with us who has a question about his year-end report. With us we have CEO Jon Levin and CFO Fredrik Wallmark who will present and answer their questions under the Q&A part. So if you have questions, just use the form on the right of the broadcast and with that I hand over the word to you.

Please. Thank you very much, and a warm welcome to all of you. I suspect that many of you have already been here before. My name is Jon Levine, and I have been the CEO of Vivu for about four years. I'm going to tell you a little bit about the progress we have made lately and how things are going. I also have Fredrik Wallmark with me.

Fredrik, hello. My name is Erik Barmark, CFO, and I've been here for 1,5 years. I'm responsible for reporting and so on.

Let's get started, Jon. Short, I think... Before we get into what's going on in the company, I thought I'd just tell you a short history, if any of you are new viewers. But I thought I'd be very quick. We started a long time ago as a web agency, but converted to a product company and released the product we sell today. We released the first version in 2016. and have slowly but surely built up a customer base on that and further developed the product. In 2019, we were listed in Sweden on Nasdaq, a Swiss company from the beginning. Now we are Swedish-Swedish, a good combo maybe. We have over 600 paying customers and it is growing slowly. What we focus on are the larger customers, enterprise customers. We have also opened up for smaller customers, something I will come back to very soon. We are in at least 10 different countries where we have customers. As a company, we are primarily focused on personnel in Sweden, Switzerland and Germany. A short background on why they exist and why they exist at all. Companies that are going up in the market need to know a lot. They come from having their own servers and going up in the market. And to be able to do that, no matter which developer you choose, there is a lot to keep an eye on. and create a lot of headache. And you have to dive into various technical landscapes to understand what to do and how to move your web applications to the cloud. And you can solve this in different ways. The challenges you face are often a lot. You become dependent on specific competencies and experts who like to build different solutions and can risk disappearing. And it's hard to find this type of competence. DevOps is a small circle that is consistent and they are quite mobile. And it is often a burden for those who are responsible, especially to make sure that it works 24 hours a day and that one's web application and website and so on is up and running. It is especially under some peaks and like Black Friday and all kinds of things, there is enormous stress on those who are responsible. Security and compliance is becoming more and more important. And it's also a jungle to take on. Then launching and building applications is about the same as it was before. But to then release them and deploy them is a pretty complex story even when you release them in a cloud environment. And then if you need help, which you normally need, it is very difficult to find the right help. It is both difficult to get the help you need, to get access to the help you need and to understand the help you get. It's a huge mess. You can solve it in different ways. Either you hire a an army of developers, DevOps, which is often expensive, or take in a lot of consultants, which is usually the case. Or you can find a platform that solves more partners there. And that's where we come into the picture. So we are a platform that takes care of the goal infrastructure, both the entertainment itself and the optimization of it, but also facilitates for those who are going to develop, they don't have to think about configurations and so on when they are going to launch new web applications. So with the help of this, you increase efficiency, you minimize risk, you are not so dependent on specific individuals, and the developers become much happier, because they can focus on development. Those who are responsible do not feel any stress, they can sleep on the networks, it is we who take care of the problems when they arise, or the platform in general. And then you can also actually lower the costs enormously, and therefore it becomes... We are experts, we have a team of experts and we are always there. You don't have to think about who to contact. It's always us you contact when you have problems. Man kan sänka kostnaderna upp till 80%. Det är både i form av resurser och rejäla kostnader. Resurserna man har utvecklas så att man kan fokusera på utveckling istället för operations, underhåll och annat. Single point of contact is just one person or one contact you need to be able to have control over your entire modeling infrastructure. It's us. Then we take care of everything underlying. We have contact with AWS, and various applications. We solve everything, quite simply. Man slipper fundera på det här med säkerhet och compliance på samma sätt som tidigare. Vi tar ansvar för huvuddelen av det också. Och så blir man inte inlåst i en specifik målmiljö. Man kan flytta till andra målmiljöer tack vare en plattform. Men jag tror det viktigaste som våra kunder upplever det är peace of mind. Man slipper fundera på det här. Vi släpper alla bekymmer och annat till Divio och vår plattform. Fredrik, you can jump in here and tell us a little bit about your business model.

That's right. We operate according to a SaaS model, a product company, so we rent out our software to our customers or even a platform that we rent out so that infrastructure can be included in this package. This makes it a very scalable model. The product is there, we can bring in new customers very quickly. This means that we can We can also increase the number of customers, but we can also increase the number of customers in addition to each customer. We can increase the number of customers with minimal effort from our own side. We look at our monthly recurring revenue, which we measure carefully. This is a classic SAS KPI that our company looks at. And this means that we get a very predictable income stream. We can see a few months ahead and when we look at a new customer, we know what to generate in revenue. Also, our platform has a very low churn, so there are few customers who stop when you have plugged in our application, so it is very good to stay with us since it is cost-saving for our customers. And what we have paid is And for 2024, In 2023 Q4, our revenue has gone up 15%. So for the quarter, they ended up at 5 million kronor, a little over, and last year it was 4.4. On the other hand, our a little more uncertain professional service revenues, consult hours and so on, one-offs, have gone down. So in total, on net sales, it's more flat. Total revenue, however, has risen by 25%. This means that we are also activating our development costs a little more. Then you can see that EBIT has dropped. We are experiencing a greater loss than we did in the last quarter last year. This is mainly due to our increased costs where we are investing in our platform, building new modules and making it more user-friendly. And that is also reflected in the capitalized development that has increased. But at the end of this quarter, the stock market was still at almost 13 million and our MRR is 153. And we count that in 1000 US dollars per month to avoid it from changing with the currency in which most of our customers pay US dollars. And what has happened during this quarter is that we have brought in our CPO, who we have announced about in the latest report, so he is on board and he has immediately started to take hold of a re-launch of an open cloud, a self-service offering, which makes it possible for our customers to start to sign up for the service without our own integration or hand-in-hand. Jom will talk a little more about that. And at the end of this Efter den här periodens utgång så har vi fått en förlängning av våra viktigaste kunder. Kontraktsvärdet är 12 miljoner och 5 miljoner ska de betala upfront. De här pengarna kommer nu att trilla in i huvudet. Balansräkningen kan vi ta nästa och titta på helåret också. On the whole year it looks about the same. We grow by 14% in subscription revenues, while EBIT goes down a bit. Last year we made a loss of 10 million kronor and this year we make a loss of 14 million kronor. This is a conscious effort from our side to strengthen our resources and invest more in the platform to create new offers and make the product easier to sell. In the whole year, you who have been with us for a while, at the end of last year, at this point, we received money from an emission of units, which consisted of both shares and bonds. So we have received about 15 million under the year. And then we have our biggest customer, we have extended both in the summer with a long agreement with Förskott, and then also their support contract, as I just mentioned.

Are we done? Yes. Okay, what happens then? You're wondering, of course. And you can say that we follow our plan. We still have a goal to grow by 30%. We're not so interested in consulting revenue, but it's primarily MRR that's the focus, the subscription revenue that's interesting for us. Vi har fortfarande planen att vi ska växa i genomsnittet 30% under de nästkommande fem åren. Vi följer den planen även om vi kan konstatera att vi inte har vuxit under 2023 i samma paritet. Utan vi har fortfarande en stabil tillväxt. Lite för stabil. Vi ska knäcka den här kurvan. Det är det vi kämpar för. Så att vi får en mer hockeyklubba utveckling. Och den planen är vi på. Vi har byggt upp ett säljmaskineri. Vi har haft lite historiskt problem med att hitta rätt säljare. Eftersom vi har en relativt komplex produkt att sälja. Många bra fördelar med den. Men den är ändå relativt svår att kommunicera. Det krävs att man har... Teknisk kompetens och är duktig säljare. Nu har vi ett team på ett antal säljare som är duktiga och tekniskt lagda. De har den första började som är duktiga och det är It started in March and the second is in August. Then they have a little run-up time. So what has been delivered now has not really hit them a little bit. But it's only now that we're starting to see that it's starting to come in. We have a lot of offerings out and so on. So we see now that we're starting to get the effect of these people. But we can't just rely on these cell individuals. We also have to have... Lead Generation Motor has helped to find the right companies and do the first jobs. So this is like a machinery. You have lead generation, then you have the sellers who take over the process and get help from technical competence, where we also have very good technical competence. We hired a technical account manager recently as well, who both runs their own sales with supported sales. On top of that, we have the marketing part, where we have made a lot of changes and are trying to make it easier for our customers to understand what we are doing, and we have an in-down-pipe. All of this in total means that we have a good sales machinery. What I am chasing now, above all, is to get to the end and chase those who are in the final phase. These are relatively long processes and environmental factors have made it take a little longer, Vi har bra pipe och vi har mycket offerter ute så det ser bra ut och det är kul att se att det fungerar. What we have also done to facilitate sales, we have two products that we offer. One is what we call Enterprise Cloud, which turns to medium-sized and large companies. Then we have what we call Open Cloud Self Service, which turns to smaller companies. Vi har egentligen inte lagt något krut på den produkten de senaste åren för att vi har inte behövt göra en del förändringar i i den produkten för att den skulle vara så pass bra. För huvudsyftet eller målet med den är att den är self-service, det vill säga att man behöver inte ha en handpåläggning. Folk hittar till våran sida, hittar oss, hittar till våran sida, gör en sign-up och så går de in och testar vår produkt och upptäcker hur fantastiskt den är utan några hinder och sen börjar man signa upp på det. Lite mindre subscriptions, så småningom utvecklar man det, det är liksom processen där. But the reason we're opening this up is that we've put in a lot of time to make it really good, and it's actually being released today. is that it also supports enterprise cloud sales. Because when we talk to decision makers and others, they are developers who want to test their customers. They rarely want to have contact with us before they have tested and discovered our product. So that's why this is important in the sales process, even for a little bigger customers, that we have it open. So that's the main purpose. But then the bonus side effect is that it will also lead to that we get less subscriptions than paying somewhere between 150 and up to 500-600 dollars a month. So it's still good customers and that that engine It happens by itself. We don't have to put so much effort into it. The sales apparatus happens by itself. Of course, we have to do a lot of marketing and create a lot of content on LinkedIn, webinars and so on to make it work. But we don't have to put as much resources on it. Then we have our AWS partnership, which has also developed. It has also taken a little longer, which unfortunately does everything, than I had expected. But we have quite a lot of dialogue going on even there. So we'll see if there will be any fun ending there in the short term. But it also works and it develops. And we have started, as I mentioned earlier, dialogues here in Sweden as well, nyttjade även i Norden. Så allt sammantaget så kopplat till Cell, för det är just nu det som är mest intressant i bolaget, så går det i rätt riktning. Vi har krigat rätt hårt under många år, känns det som. Men jag tycker att det här har varit en utveckling som har varit, jag ska inte säga nöden, man kunde säkert gjort det mycket snabbare, men jag tycker att det har varit tvunget och vi har hittat rätt nu och Vi kommer se resultat av det också. Jag har inte riktigt trillat in det, men det är extremt positivt. Eller inte bara jag, utan samtliga bolaget. Så det är väldigt roligt, men man får lite till tålamod så kommer det här lossna. Vi följer vår plan på det här med att växa 30% i snitt. Så vi har lite mer att växa i år än förmån år, för vi måste ta igen en 60%. growth during the year. So we have to be over 30% this year. But we will do that. In general, we have a decent budget and since we have these advance payments, then you have to be careful so that you don't eat them up. It's a balance. I would like to invest i sälj och marknadsföring och även utveckling av produkten. Vi har ju fått in nu då Fredrik Hansson som är vår CPO, vilket också är jätteviktigt för oss. Vi har inte jobbat så mycket med produkten historiskt, för vi har inte haft resurser. Och vi har haft en CTO som jobbat med det tekniska underliggande, men inte så mycket med produktstrategier och annat. Så nu har vi en tydlig produktvision vart vi vill och vi har ändrat om en del hur vi jobbar internt i utvecklargänget. Vi har gått lite från schweizisk manier där allting är 200% and all eventualities are covered before you release something to a little more minimal variable product, MWPs, where you release something that is half finished, but it's good, but it's far from finished. And then you test it out and build on it according to customer needs. So we have changed a lot in this strategy. From the Swedish manner to the Swedish manner, which is a bit more modern and agile. But we continue to invest in sales and marketing right now. We are doing a lot of work on it. Since we have a difficult product to communicate with, we have taken in a branding agency that helps us simplify our messages. It's easy to get stuck in i sina egna tankar och vi vill berätta också om allt bra vi kan göra istället för att fokusera på några få uspar som gör det betydligt enklare att kommunicera. Så det är mycket arbete nu kring kommunikationen som vi lägger ner för att ytterligare underlätta framförallt i sälj- och marknadsföringssammanhang. Men det är väl kort det som händer. Så det är fortsatt, jag har dessutom satt, man kan säga det också, tidigare har vi varit ett sälj, kommersiellt, men nu har jag satt ett säljmål på egentligen samtliga i bolaget även egentligen. utveckla gänget eftersom vi har gjort, använt den här, eller har öppnat upp den här Open Cloud Self Service produkten. Där har vi satt ett säljmål även på att utveckla gänget, för det är mycket de som kan påverka tillsammans med marknadsgänget, marknadsföringsgänget, kan påverka den produkten. Så det är väldigt sälj, mycket säljfokus. Innan har det varit lite två, lite uppdelat i bolaget, men nu är hela bolaget genomsyrat av sälj, vilket också skapar en annan I would say, another forward-looking energy, I would say. So it's very fun. Fun that so much is happening. It's still going a little too slow, I think. But we're on the right track and have done a lot. And it looks very good right now, actually. And it will continue to do so. Det är väl kort det. Är det någonting du vill lägga till Fredrik?

Nej, mer än att vi liksom, även om det inte syns så mycket på topline och sådana ämnen så är vi i ett helt annat läge än vi var för ett år sedan. Vi har mycket bättre visibilitet framåt om vad som kommer att hända och pipelines är ju liksom helt använda sätt. Vilket är kul.

Yes, it's really fun. And if I seem a bit low compared to how I usually am, I'll just tell you that I'm in the middle of a wonderful influenza period, so I'm struggling here now to bring some joy and energy, but I should actually be in bed. But you don't have time for that when you're running a company, especially not when you're communicating with your dear shareholders. But even if I seem a bit... Modestly, I'm very impressed. As I said last time, it was a struggle. You shouldn't put it under the table. We have still been developing all the time and we are growing slowly but surely. We are going to break this hockey club now. It is more fun now than ever because we have the right team and we have the right people in the right place. It has been difficult to find, but now we have achieved it. It is incredibly fun and it is energy in the company that we have not had before. A bit of frustration, but it's useful. But that's because it's going a bit too far, we all think. We think we deserve a little more speed, because we work so very hard and more on all levels. So this will be good. But with that said, let's jump over to questions. If there are any questions.

That sounds good to hear. I have to thank Fredrik and Jon for this presentation and now we jump over to the Q&A part. And our first question is that you mention that you have built up a steady pipe of both small and large leads. How long are the sales cycles? That is, is there any calculation of how long it will take to convert a lead to a colorful business?

Yes, it does. We know from history that, depending on the big customers, but really big customers can be up to four years. That's why we don't focus so much on them anymore. But those that are within our target, our target, I would say the sales sign is at about eight months. Six to eight months they should be. Now it has been a little longer due to... The environmental factors, companies are a little slower in most cases, especially when it comes to taking on new costs. So somewhere between six and eight months, but it can be a little longer right now. And that's what makes it take a little time, especially if you take in new sales, so they have partly an onboarding period before testing them to see if they work. And then when they work and understand what the product is, it's a certain time before they just get a pipe and the pipe itself. So it's a long process. And then every time you drop a seller, it starts a little bit more. Or drop or throw out, as we have done most historically. So it's long deadlines. It's unfortunately so. And it's something that's in the way. At the same time, when we get them in, it's very exciting. We got in a customer who initially was not a giant business, but we have a Swedish softwares company that has previously distributed their softwares through physical installations with customers. With the help of our product now, they have managed to solve it. They can actually deploy automatically. You don't have to be outside with customers. It becomes more like a modern SaaS company. You download a deep content that is clear and updated. under time, all the time during the morning. And it's a kind of course that is really exciting and growing, where we really make a guitar that is quite traditional, or very traditional, almost a bit of a prehistoric, old solution to become very modern, very exciting. Now I'm wandering away with no answer, but it's quite long, unfortunately.

But it also depends, as we have been talking about, when you meet the customer on their journey, how willing the customer is to take the product. If you have a firm commitment to do this, or if you are more of a researcher, then you need to have more or less dialogues with holding hands and guiding and so on. You have to take the right direction and so on. You also have to have a time organization on the train. It also depends, but a good seller can easily identify a stable company.

Yes, and that's where we help now. And we offer a bit of those services. It may also be seen in reduced consulting revenues. But it is also to help and guide our customers in their process when they choose the solution, when they understand what we provide, we have to help them. både att utveckla och modernisera sina webapplikationer, containerisera och så vidare. Det är mycket konsultande också och får dem att känna sig tryggare i det här. De kommer ju trots allt med sina kritiska webapplikationer och släpper dem i knät på Divio. Det är det vi ber dem göra. Det är en intern process. Man måste förstå och känna sig trygg. Och det tar lite tid.

Super. Next question then. In the VD-word you also mention that after testing different sales capacities, but that now you have found the right method and sales team. Will we see increased sales in the coming quarter?

Yes, that is the plan. And that's the way it is. Yes, you're naive when you... It's hard to find good sellers in general. People can be, as I talked to someone, they can be good at selling in and being charming and nice, but they have a hard time running the sales process. And in our case, it also adds that you have to understand. You have to have a fairly good technical competence. And we have one good seller now. We had an old developer ourselves from the beginning. So he fully understands the work of the developers. And finding a person who can drive his own process is very difficult. But they exist, so we have managed to get a few now. And that makes a huge difference to everything from the inbound, or rather the pipe, not the inbound, but the outbound pipe. And all the offers that are out there and the dialogues that are going on, all the meetings and so on. So yes, it is of course. Then it has taken a while to get these things to work and get started. But yes, the answer to the question, we will see.

Absolutely. And the next question then. How big is the demand for your Open Cloud service?

Yes, that's a good question. Quite a difficult question. You could say that På en open cloud tjänst så har den varit, alltså efterfrågan eftersom den inte har funnits kommunicerad på marknaden under nästan två års tid så har den ju varit i princip. is very low. We have a lot of customers. But we haven't communicated that we exist. So it's just a lot of rumors. Or that we have just that open cloud, the self-service product. So that demand has been zero, but the real demand is If you look at what it should be, if we want to know, it is very high. There are many alternatives out there that are much more complex and difficult to handle. Heroku and other companies have similar solutions that are a little more difficult to work with. and difficult to handle. But it's almost like, you have to, in principle, you don't have to, but most people use such a product. Some form of solution, PAS solution, most people use. Then which one, that's a question. So there is an enormous demand for it. And we see several companies have gone in the opposite direction. They have ended, when you look at Roku, they have ended De har nästan stängt ner sig en self-service applikation. För de hade för mycket av den varan. Därför ser vi att vi skulle absolut tämligen enkelt kunna driva över en hel del trafik och potentiella kunder till vår plattform. Så efterfrågan finns. Men vi har inte sett det efter just vår produkt eftersom det inte var tillgängligt. Men på den typen av lösningar så finns det en stor efterfrågan.

Yes, next question is, what is your financing situation like at the moment?

Fredrik will answer. Yes, it feels good. As I said, at the end of the year we have a lot of money in the cash register and we have more than SEK 8 million on the way in. This will help us to get through until the next customer pays in according to the SaaS model. So we feel safe in that situation and that if we carry out the plan we are on and our sales goals, then it will go well. I don't know if that answers the question.

Yes, I think so. Last question then. Which milestones should investors keep an eye on in the coming quarter?

Can I answer that? I think what you should keep an eye on is the increase in sales in MRR growth. That's what I'm focusing on. Sen är det intressant att följa just vad som händer med den här self-service lösningen som vi släpper idag. Det kommer inte hända så mycket med den initialt, men när den väl är på plats och vi börjar kommunicera lite mer, vilket vi börjar med nu i slutet av veckan, And then it will continue. So it will be interesting to see. But I think the most important thing is... There are two things we do. One is sales growth. The other is that we, like all other companies in our world, want to be cash flow positive as well. That's also something to keep an eye on. But in general, it's hard... I don't know how many times I can tell you about Milstolpa. There's a lot I'd like to tell you, but I don't think I can.

No, it can be like that. Is there anything you want to add? Or how do you feel?

No, it's probably more to add a little, not so long-term, but short-term patience. I think you need to continue, but it will be really good there. Very positive for this year. We have never been so well had such good machinery. I think you start over a little often most years, but this year we have a flying start actually. We have a lot, not least connected to sales and sales machinery. So I think it's very fun. That's what makes it fun, I would say too, that we have it, that it's not all the time to start over. Now we have to throw out sellers that work and find new ones and then you keep on and struggle. and find new ways to sell, new communication plans. Now we have a good communication plan, but we are working on making it even better. That's why we have this branding agency, which forces us to become much more easy to understand. So that everything is combined, and then we have Fredrik on board, who runs the development team in a completely different way, where we can release new functionalities much faster. come out with Open Cloud and so on in some way. In the old world, it would have taken a long time to release a product like that. But now we're doing it fast and agile. So, no, I think it's actually very fun. That's what I said last time, that it's very fun. And it is. You can continue to fight. You can never stop doing it in a company like this. But I think we have another load and energy ahead of us. It's just to keep a little patience in the short term, and I'll be super good.

Do you have anything to add, Fredrik? It's an exciting year ahead of us. It will be exciting to follow internally, so you can sign up and press release from us.

Then I have to thank both Fredrik and Jon for this presentation. I also want to thank everyone who has watched and listened and all the questions. With that I say thank you for today.

Thank you everyone.