Divio Technologies AB (publ)

Welcome to today's broadcast where we have Divio with us, who will present his Q1 report for 2024. The presenters are the CEO, John Levin, and CFO, Fredrik Wallmark. If you have any questions, you can use the form on the right, which we will take up during the Q&A after the presentation. With that said, I will pass the floor over to you.

Ja, tack så jättemycket och tack för alla som tittar. Jon Davin heter jag och är vd sen en tid i Divio och med mig har jag då Fredrik Wallmark, min CFO och vapendragare. Jag tänkte lägga upp så att vi gör som vanligt en kort presentation ifall det är någon som inte känner till oss. Ska försöka hålla den väldigt kort och krispig. Och sen går vi in på lite vad som hänt, både ta del av rapporten och lite vad som händer i bolaget. And then questions. So I'll start with a short introduction of Divio. As I said, we are an old web agency from Switzerland that sold to a product company in 2014, approximately. We released the first product then, and then a little later in 2016, we released the product that we sell today. and we create it according to our own needs and will soon go into what the service does for something. We were noted at Nasdaq 2019 and today in 2024 we have about a steady 600 customers. We don't focus so much on the small customers anymore, we try to shift them to bigger customers and large enterprise customers. And that category is growing steadily, while the smaller customers are struggling at about the same level. What we do, when you go in and handle, go over from a cloud service or from on-premise with your own data centers and others, so you had too much to cloud services, that is to say that you buy space at IWS, Google and so on, they stand for themselves and everything is in a kind of cloud solution, all your data, all your web applications and so on. Att göra det här och underhålla det är väldigt komplext. Det är betydligt mer komplext än vad man tror. Det är mycket man måste hålla koll på. Det skapar en del huvudbry hos bolag. Vanliga utmaningar man har är dels kostnader. Det är svårt att förutse kostnaderna. De brukar oftast öka lavinartat ut. The suppliers develop their price models and you need more and more. You are also dependent on different expert individuals who are able to do these multi-service solutions. They build their own variants and put together different buildings to be able to maintain and keep it going. And they are often expensive and hard to get hold of, and not especially, some are well, I will not say, I will never say I can, but many jump around to different companies and leave solutions for themselves that only they understand. And so this is often a burden for many companies. And then you also have to make sure that there is 24-7 availability, and that creates a lot of stress for many companies. Then you have the whole compliance, security, and so on, which also becomes a bigger and bigger issue that you have to keep an eye on. It also creates stress. And then for those who build and develop web applications and so on, who just build it and then just want to launch them quickly and effectively, it also tends to be a lot of stress, not stress, but a lot of concern that it will be able to go as fast as you want. Then also, if you have a problem finding the right support from different target suppliers and other suppliers of applications and so on, it is very tricky and difficult. Man kan lösa det här antingen genom att man anlitar en stor mängd konsulter och experter eller så hittar man en lösning som våran som automatiserar väldigt mycket av det här arbetet som görs annars manuellt. And that's why we exist. We increase the efficiency and make sure that all developers are happy. They can focus on developing web applications and launch them painlessly and easily. And then we stand for making sure that it works and is up and running and has a high uptime. That is, it turns on and the availability of these web applications is high. Vi minimerar också risken just när det gäller att det ska gå ner, att vi tar hand om det som sköter support och så vidare så att utvecklarna och även beslutsfattare och ansvariga kan sova gott på nätterna. Vi ser också till att optimera kostnaderna och sänker kostnaderna och ser till att det är framtidssäkert. Vi tycker också att CFO och CTO är glada. And then we are experts in that area. We are there and the customers should be able to have some peace of mind when they are connected to this part of their business. That was briefly what we do. I'll jump over to Fredrik. Can you talk a little bit about our business model?

Yes, the business model is a classic transformation model. We usually talk about SaaS companies, we usually identify ourselves as a SaaS company. We have a platform as a service, both infrastructure and software. It is like a code that has been built and that makes it extremely scalable. A copy is not difficult to do, even for another customer on the platform. This means that we can grow with the number of customers in a very cost-effective way, but we can also grow within a customer with a large engagement of several clients. We always meet our MRR, which stands for our Monthly Recurring Revenue. We are on it all the time and hunt for it. It is the recurring income of each month that we see. So if an agreement is over 12 months, the contract value is divided by 12 as we look at it and we build on it all the time. This means that we have a very predictable income stream from now on. We know when customers will pay and when, and we also know the income for us and when. We also have a low churn. It is very rare that a customer who has come to us drops off. This also makes the production work easier, that we focus more on evaluating more customers and then maintaining our Good support, I would say, that no one is afraid of. And this is because the product is very sticky and customers appreciate that it is a cost-reducing and value-added product. And then financially, it works so that you pay in advance. This is normally yearly upfront. Now we have had a few times in recent times where some customers have I've chosen to pay several years in advance. This is very good for our cash flow and our working capital. Where we get the money in advance and then use it to maintain the service. But with very small costs that we maintain the service. We work on selling more and improving it.

I hope that...

Yes, and the figures in short, compared to the same quarter last year, we have grown by 10% if you look at planning revenues. We also have other revenues in the form of consulting revenue, and in total revenue, we have increased by 15%. That also has to do with the fact that we activate a whole lot of development costs. And then we will come to the fact that Vi investerar mer och mer i plattformen. Därmed har vi mer och mer refererbara projekt som vi kan aktivera och lägga som intellectual property på balansräkningen. Det här ger Total Revenue en extra liten skjuts. Det kommer sedan i slutändan leda till att våra avskrivningar kommer bli övergrepp som skriver av också vår immateriella anläggningstillgångar över tid. Som ni ser har kostnaden gått upp. Det här är i princip helt drivet av headcounts. Vi har lagt på flera resurser än vad vi var samma period föregående år, vilket gör att då vår intäktsökning inte riktigt har parerat det utan EBITDA har minskat från minus två miljoner i förra kvartal till minus fyra miljoner i det inrikt innevarande kvartalet. Sedan kommer då tidigare nämnda avskrivningar och så vidare, vilket gör att vi har ett ebit på nästan negativt sex miljoner förra året. Kassan, om man ska kommentera den, den är då på pappret 5,4 miljoner. Vi lägger in en rad vi inte brukar ha, men det är då våra trade receivables som är väldigt höga. Och det här är då en förlängning av en kund som har förskottsbetalat för en lång tid framöver. Vi segnerade ett kontrakt för att förlänga supportavtal över en lång tid. The order value is 12 million SEK and 8 million SEK will be first paid. So this is part of the trade receivables. And every day we have already received this money. So to get a better view of our cash positions on both of them. There is also, and Jon can elaborate on this a little later today, we have elaborated on a self-service. And it is something that allows customers to go to their website and sign up and test our product. And it's a very safe way to do that. If anyone is interested, curious about the product, then you want to test it at home without the support of a seller. And this gives a lot of qualitative leads in our sales department where you can follow up all the time on sign-ons. Some of these then convert to a As I said earlier, after the end of the period, we have received approximately 8 million SEK in April for the support contract that we have extended with one of our most important customers. Good job, Jon!

Yes, I will continue. Status, what happens in the company? It happens a lot all the time. We have chosen to only report larger businesses and we can start with that. Vi har ju väldigt mycket som många dialoger igång, många färder ute. Jag tror inte vi haft så många och så mycket bra kvaliteter och färder ute tidigare. Men vi märker av att det är väldigt trögt. Det är extremt långt. Även om man kommer till det här offertstadiet där man börjar förhandla så är det väldigt långa processer. Så långt har det inte varit tidigare. Jag var på ett event i Malmö, ett SAS-event, för en tid sedan och pratade med många. business colleagues who are in various SaaS companies and they feel the same thing. I don't know if it's environmental factors and so on that makes it unusually slow to get to this last stage of signage, which means that it has been a little quiet from us for too long, but I think a lot about this with the catch-up effect and we see it in front of us Men det är lite tråkigt att det inte kunnat leverera mer säljresultat och fina kontrakt under det här första kvartalet. Men det kommer. Vi fortsätter att ha vår målsättning på 30% genomsnittlig. Det är ingenting som vi avviker ifrån. Om vi bara kan få till de här avsluten så kommer det att lösa sig. Fredrik mentioned that we have a continuous collaboration with Fidelity. They use our platform and we also have a support agreement that we renewed at the beginning of the year. Vi har ytterligare en mindre affär som vi fick in som är intressant för att den öppnade upp ett nytt spår för oss också. Det är egentligen traditionella mjukvarubolag som historiskt har distribuerat sina applikationer via sin mjukvara. classic updates in the form of, yes, you send deliveries, they are a little bumpy deliveries and they have not been cloud-based solutions. By using our platform and a part of our platform, we can easily convert these traditional softwares companies to SaaS companies, so they can distribute their platforms via cloud services and continuously update their softwares to customers. And you can quickly distribute to a lot of customers in a very simple way. So we have helped them with this and it opens up a new business opportunity for new customers that we also employ. Vi har också tagit in, som vi nämnt tidigare, en ny CPO, Fredrik, som jag jobbat med tidigare. Han har också satt upp en tydlig... I och med att vi också har anställt en del utvecklare så har vi kunnat lägga mer tid på att utveckla plattformen, se till att den är up-to-date och få till lite funktionalitet och annat som kunder har önskat oss. Så har vi också satt upp en tydlig vision för vart vi vill ta vägen med den. With our platform, which is important, not least when we communicate with customers, but also for our developing group and where we are going with the product. We have also changed our price model. We have worked on it for a long time, especially last year, to update our price model, but launched it at the beginning of the year. And the advantage is a lot that has changed, partly that we have changed so that it is easier to compare with other solutions or alternative solutions, but also that we have built more packages so that you can go into something, I will not say at a lower level, but it is easier and more saleable to existing customers. So it's a big change. We have also worked a lot with our branding strategy. We have launched a piece of mind that penetrates everything. We have, as everyone knows, a relatively small product to sell and communicate. But with the help of this new attack or attack, we will have easier to communicate. Both in marketing, but also in sales context. So it's very important for us. And also so that we can position ourselves clearly. And it's peace of mind that will go through everything we do to make sure that our customers can release everything that has to do with target infrastructure and entertainment. We have also, as Fredrik mentioned, released an open cloud. We had this solution, open cloud self-service variant of our product. Den hade vi redan sedan tidigare och den används av våra mindre kunder och syftet med den är ju grundläggande att It's from customers who don't want to have contact with us, who just need a solution that they can easily use and everything is self-explanatory with the help of our very good documentation, so you can solve most of it yourself. And it's not really for enterprise customers, but the main purpose of releasing this is that when we process enterprise customers, then their developers want to explore our platform without having contact with us. Of course, we don't want that, but that's the reality. They don't want to talk to us, they want to explore themselves. So that's why we've worked hard to simplify it and make it so good. And it's a work that will quickly move forward. So we have relaunched an update of the Open Cloud version. and the documentation. The main purpose is that it is an important part of the sales to enterprise customers so that they can explore our platform on their own while we have communication with decision makers and afterwards also with developers who use our platform. So this is a very important piece of the puzzle that we will continue to work with. We have also continued to build on the IWS partnership, which I have promised results from for a long time now. And it will come, but it has taken so much more time than you think. I may be a little naive, or rather optimistic. It takes a long time, but Häskliv has a lot of dialogue going on there as well. So we will continue to work on that, and it will also deliver results. It may not be so fascinating, but we have worked a lot on the internal structure of the company. Because we are more or less a 100% remote company. Expanded people, very talented people. But we may not have had a perfect structure, both learning and efficiency structure in place. So we have worked hard with that and we are going after what is called OKR. A method that many companies use to achieve their goals. Then you break it down to different department levels and so on. We have been Company OKRs. And then we have key results that we break down into departments and so on. And then we work hard towards this and have a very clear structure and a learning and implemented a lot of data driven and a lot of KPIs so that we can really see that we are making progress. And this is a super important foundation for the whole company and will also mean a better output. But overall, the focus is on sales. It continues to be so, and I say it again, that we have a lot of dialogues, but it goes extremely slow. I'm not going to say extremely slow, but it goes slower than usual. Although we have many that are just at the end, it's incredibly frustrating for me, because that's what I do, I chase the end. So that's where we put the whole grain. And in parallel with that, we of course want to be a healthy company. So even if we have employed some people during the last year, which was conscious and necessary, So, and with that we drew on costs, now everything is focused on becoming cashless positive. So we have locked, we are not hiring and we lock and look over costs, we make it more efficient. But it is above all to increase the income that will lead to us becoming cashless positive and stay there when we reach it. So that is our absolute goal right now and it will be a good time in the future. And that's where we put the corn, and I hope that it becomes this ketchup effect, because it's something I think we deserve. We have so much going on, so we should... So that's what happens in the company. I know that we get a lot of criticism that we don't update the market enough, but what you want to communicate is above all conclusion, and that's the most interesting thing in the end. But we will try to get hold of it again and see how we can get a little better at it and keep all of our loyal shareholders Inform them about what is happening in the company, what is happening and what steps we have to take forward. It is super important to understand that. So that it does not become a black box when you take into account. So it is full focus. I try to free myself a little mentally from course development and focus on the operational part. Because if I get it in place together with the other employees, then the other will also give themselves. And it will come into place. That's what I wanted to share. Do you have anything to add, Fredrik? No, I think you brought it up well. Then it's time for questions.

Great, thank you for that presentation and opening up for questions. The first one is from here. Tell us more about the collaboration with NIO and what opportunities it opens up for both you and them.

Yes, that was a bit of what I was talking about, that they have been a traditional softwares company that has distributed once in a while via CD-ROM discs, classic implementations. Then they have more delivered monolith updates, but not as a classic new, or as a SaaS company, where you have the product in a morning service and everyone has access to it and it is updated. If you constantly work on updating, but it doesn't affect the customers that much. You don't have to work with implementations. So by using our platform, we can push out... You use our platform and then we can push out the solution to customers in a very SaaS-like way. So it becomes more of a class. A SaaS service from being a... It's more of a classic soft service that you implement on customer computers. We used this solution for another customer before. We have a customer called Social School, which uses it to update all their hundreds of customers or school customers, various variants of their software. But now we have applied it to NU instead so that they can use it. So you can say that they are not fully out in a classic SaaS company solution, but it is a bit of a hybrid solution. Men vi hjälper i alla fall att ta det steget åt det hållet. Vi har hittat många bolag som är i samma situation så det öppnar upp för en ny potentiell målgrupp som vi har börjat bearbeta i korta drap.

And how does your collaboration with AWS progress? And which important milestones have you reached so far? And how do you expect this collaboration to contribute to your growth in the near future?

Yes, many questions. And it has come close because we have a close collaboration. We have set a goal together with AWS and milestones that we have to tick in. And so far we have done that. And that will mean that we, together, and we are already doing that, we are cooperating with customers together with them. What is always tricky with this type of collaboration is that the more we can draw in to them, the more they will draw in to us. And that is what we are working hard on now, to draw in customers to those who may not always benefit us in the short term, but in the long term will absolutely benefit us as well. So that we are on their map and then we have different things we have to tap into and different moments and that's what we do and work with now and we have started to get a lot more traction. It has taken a lot of time, but now we have started to get traction and there is also a lot of focus that we put, especially one of our, or two, one and a half, I should say, of our employees who put a lot of focus on the relationship with AWS. In the future, we have a lot of business opportunities that we are working with. Businesses will emerge during the year, but I don't dare to say that. I know that you have already run Peter and Vargen a little too many times when it comes to AWS. But we have a lot of business opportunities. konkreta affärer igång som kommer att landa. Det bara har lite mer tålamod, måste jag ha i alla fall. Jag får inte sätta några löften, det ska inte jag heller, eller får jag inte göra helt säkert.

Let's move on to the next question here. Can you elaborate a little on the latest changes in your provision system and also the price model for partners and how do you expect these changes to affect your income potential and the relationship with your partners?

We have changed that as well. I would have mentioned that we have changed the setup with our partners and it is partly the price model that affects them, but then it is also what they get back. One is that they can use our platform, and that's what we've relied on earlier, that it will facilitate for our partners to use our platform. Then the monetary side has been quite flexible. Now we have changed that, so the practical use of the platform is still the same and large, but also the monetary side, the upside of our partners is much larger and more interesting, so it will be an interesting business for them as well. to really recommend and use our platform. So that certainly makes it easier to have better relationships and it becomes more interesting for our partners to put... Because the challenge when they are going to make a platform is to put... To invest time in learning our platform and then convert or transfer customers to their customers on the platform. And there we have noticed that it will be, even if you see the benefit, it is only time that should be spent. So what you are doing right now, it works completely okay. So that's why we need a little bit better morot and that's why we have opened up for significantly better morot. advance on becoming a partner with us. When you get customers on board, it will be much better, more money in, and that is enough for it to be interesting for customers or for partners to actually slow down the time needed. Then we have also chosen to become, we have had a little too many partners and if you want to have partners, you have to have a very close relationship. There are some partners who have extremely good relationships and we see that there will be a lot of projects through them. But we are limited in the number of people and individuals who can spend time on this. Therefore, we have reduced the number of partners and build a very close contact with fewer partners than we really believe in. And in this way, we will also get better output on more partners than what we get today.

Regarding the introduction of the new price model, what feedback have you received from your customers and how do you expect it to simplify your sales process and drive more sales?

Ja, vi har fått mycket feedback både från partners, mest skulle jag säga från partners än så länge. De kunder vi har fått på that we have in dialogue with, because they don't have much to compare with. They may have looked a bit, but the positive feedback is that there are not as many questions from the customers we talked to as there were before. There were a lot more questions about the prices. It was a little harder for them to understand and be able to predict costs in the future. But we have received a lot of feedback from our partners. In the beginning it was both positive and negative, constructive feedback was absolutely, but there were also some who had question marks. But it was mainly existing customers who used our platform, the price model for existing customers. Ändrades och kunde i vissa fall vara en nackdel och en utmaning för de här partnerna att gå med en prishöjning till sina kunst. Men det har vi liksom använt som nyttig lärdom och i dialog med dem har vi kommit över dem och kommit framåt och också kommit fram till hur vi ska kommunicera med dem. How they should communicate with their customers. And on the whole, we have seen that it has become much easier to explain what price models are, the basis, and then the various packages, depending on what the customers have for needs. And what that adds to costs. And there is not so much before, there was a lot before. There are some contradictions in our pricing model that we have figured out, so it's much clearer. It can probably be even clearer. But it's significantly clearer than it was before, and it's significantly easier to start at a certain level, still a high level, and then you can add everything according to different packages, and we see that both on i nya dialoger att vi kommer att kunna ha den utvecklingspotentialen och det är kunder som vi pratar med eller potentiella kunder som vi and then we have an optional, as they say, yes, this is interesting, but we don't need it right now, we can take it later. So all this, but then they are aware that this will come, and it can come before, it can come early, it can take a little time, but it will come, so they have it mentally with them when they go in and start using our platform. Och sen ser vi också på, vi håller på med den kullerbytten att med befintliga kunder också kunna konvertera över till den här prismodellen. Ibland sitter, men det är lite stökigare, men det är någonting vi också håller på med för att vi ska kunna också framförallt på de lite mindre kunderna som fortfarande är stora att kunna göra en merförsäljning också på sikt med dem också. Så det underlättar betydligt verkligen både i befintliga dialoger och i de dialoger vi har.

Let's take a final question here. How has the implementation of goals and keywords improved the team's efficiency and performance measurement? And what would you say are the most important keywords you focus on to drive growth?

Well, you could say that earlier we had, the company was a little divided into two groups. We have the developed group, which is quite classic for a soft product company. You have the developed group, like Short-Sit-Race, and then you have sales, finance, market and so on, support in the other part. Man har lite olika visioner, bilder. Man har samma vision, men man drar lite åt olika håll. Man tittar inte så mycket, speciellt eftersom vi jobbar väldigt mycket remote. Alla är inte så involverade i varandras delar, inte som man bör. Det är mycket därför vi satt den här strukturen också, för att få ihop de här delarna så att det blir effektivare framåt. Alla är engagerade. Vi kommersiella är väldigt engagerade i product vision, product development, and so on, and what happens there, and customer feedback that comes from the developers who have direct dialogue with customers in support, and so on. Vice versa, to develop the team, so to speak, is very engaged and also understands the whole commercial and also the financial and market part, and is very engaged. Så hela den här strukturen har gjort att det blivit mycket mer samsyn och man supporterar varandra på ett helt annat sätt och är delaktig i varandras delar på ett helt annat sätt. Och rent kommersiellt så är det ju också mycket enklare att få It's not that you take more developers in sales work, but they are more proactive because they have a completely different insight into what is happening and are part of it and can also follow the development in a different way. Because we share, we have company OKRs, then we have shared OKRs and then we have key results under that. Sen har vi OKRs för respektive avdelning. Allt det här och Q-results på det. Allt det kan alla följa i realtid. Vi använder det som notion. Där kan alla följa och se hela tiden framdriften och vara delaktiga. Sen har vi ner på aktivitetsnivåer. All aktivitet vi fokuserar på kopplar till något i slutändan av OKRs. hela tiden och gör den inte det så ska vi inte hålla på med det. Så det är väldigt tydligt och rent kommenterat så har vi ju då även här satt då brytet ner intäktsmålen också och säljmålen och det brytet ner det i både och det är allt från att vi har de faktiska MR-utvecklings eller målsättningarna på hur mycket vi ska stänga till att vi har andra som supporterar sälj in the form of, for example, that we have to become more data-driven, more followers weekly, not just MRR and end customers and so on, but also response and learning from all the dialogues we have going on and meetings we have and so on, so that we all the time have reconnection and learn significantly more and become much more effective and smarter, I would say. So there are many different KPIs that we follow in the different departments. But sales is of course super important and has an impact on the most, I would say.

It has created a very good consensus and understanding in the entire organization about how everything fits together and what our top goals are. It makes it easier for the respective employees to prioritize what they are doing. As for management, it has also been an exercise in what we are not supposed to do. What is secondary, or what we are not supposed to do right now at least.

Den kanske är väldigt extremt viktig. Är man begränsad, man vill göra det kanske likadant i andra bolag. Men det är så mycket man vill göra. Men det blir lätt att man gör för mycket och då blir det inget fokus. Som Fredrik säger, det har varit lättare för oss att tratta ner och verkligen fokusera på det som är viktigt. Just nu.

Sen uppdaterar vi OKRs kvartalsvis och behåller de som fortfarande är viktiga. Och så introducerar vi nya And then we close them when we're done and so on. So I think it's another type of professionalism in management in the company.

Good. Then I thank you, John and Fredrik, for the presentation and also for answering all of our questions and also all the viewers who have followed today's broadcast with Divio. We wish you a nice day and see you soon. Thank you for today.

Thank you all. Big thanks.