Divio Technologies AB (publ)

Good afternoon. We welcome you to take part in a part-time presentation from Divio Technologies, where CEO John Levin and Finance Manager Fredrik Wallmark will present the company's Q2 report that was published this morning. After the presentation follows a Q&A. My name is Fredrik Hansson and I come from Finnvajr. Jono Fredrik, welcome.

Thank you very much, and thank you to everyone who is watching our report. My name is Jon Levine and I am the CEO of Divio. I am joined by Fred Wallmark, CEO. First, we will go through the background of the company. Then we will talk about the numbers and what is happening in the company and where we are. We'll get started. I'll try to go through the background quickly. Let's see if it works. We started as a web agency a long time ago and converted around 2014 to a product company. That's when we introduced the service we have today, which we first used for internal use to facilitate all web projects. We had different goal solutions for our customer account. It was so good that we decided to let others use it and convert it into a product company. And in connection with that, we also took in money because it is quite a difficult conversion. You have to sacrifice part of your consulting revenue to invest in internal development. So we took in money, and we were a Swiss company from the start, and it was tight in Switzerland, so we were recommended to do it in Sweden. We took in money in Sweden against a promise to be noted on the Stockholmsbörsen, or on First North. And we also did that in 2019, and today we are a clean product company, we have a little consulting service left, but it is more connected to our platform rather than web application consulting. Today, we have approximately 700 paying customers. Customers are spread out in different countries, regions and so on. The majority of customers are relatively small. They pay somewhere between 10 and 100 dollars a month. Then we have a number of enterprise customers, where we are at our largest crux, who pay from Några tusen dollar i månaden till 50-60 tusen dollar i månaden. Varierar rätt stort. Men vi har också vår stora tillväxtbas. Hoppar vidare. Och vad är det vi då håller på med? Det är lite krångligt att beskriva för de som inte är initierade. Men man kan väldigt kort säga att när du som bolag går från att ha en... Hosting, which consists of its own servers and is supposed to be a goal solution, there are a lot of questions you have to take into account. What I'm showing here is how such a goal infrastructure can look like. And there is a lot to keep an eye on, which creates a lot of concerns and thoughts among those who are responsible for this. And then you have to solve it in different ways. I jumped a little here in the pictures, but... Yes, we can jump right in. There are two ways to handle this. One is to hire an army of developers or, above all, DevOps. They are responsible for operations and monitoring infrastructures. Or you can use a platform like ours to facilitate- We actually take care of what most DevOps do. We take care of maintenance and ensure the safety of the cloud infrastructure. You can describe us a bit like these IT guys who sat in the server room and saw that everything worked, because that's what our platform is all about. We've taken over the cloud services. And that's why we exist. That's because we increase the efficiency of our customers and the developers who often want to develop, they don't have to deal with many infrastructures and they are happy. They can also quickly launch, release and test their web applications without any problem and without being dependent on others. Det är en lösebar plattform. Man minimerar också risken och man kan säga att de flesta anledningarna till att en webapplikation går ner eller det händer någonting, det är så att någon har varit där inne och kluddat. Någon som inte riktigt alltid vet vad de håller på med eller gjort ett misstag för att det har gått fort sådär. By automating most of this, you minimize the risk. If something were to happen, which it does, regardless of whether you use a platform like ours or how you solve it, then anything can happen. But what is good to know for our customers is that we take care of them. They usually never realize that something has happened before it is solved. So those who are responsible can sleep well at night. Then there are those who have been working with AWS and so on. Their business models are very complicated and if you don't know the situation, you often pay a lot more than you actually need and benefit. So with the help of our services, you also optimize the cost so that you only pay for what you need. So that the CFO in the company does not have to sit and think all the time about why these costs in the avalanche are increasing all the time. They are stable and predictable. Then there are a lot of changes. The technology is going very, very fast and you have to keep an eye on all the development and everything that happens. If you don't have that, you can easily go after it and have an obsolete solution. With the help of our platform, we ensure that we secure both the web applications and the obsolete infrastructure. Then we have the support, so that as soon as you need help, you don't have to talk to or take part in difficult to understand documentation from AWS or other suppliers, or try to get in touch with someone to talk to. We are always available and we are experts on this, so you don't have to keep or build up the expertise internally. Let us be the experts. Our slogan is peace of mind, which is rarely found if you don't use solutions like us. Peace of mind is important for our customers. Kort fördelar är egentligen att man kan minska resurser framför allt kopplat till målinfrastrukturer och resurser som är svåra att få tag på dessutom. Och sen kan man då sätta sina You can put your important developers on the development side instead of working with multiple structures and blocks. And then you don't have to have contact with a lot of different suppliers, it's just one contact, so you have control over everything. And then you don't have to worry about being locked up in a solution that you build in and never get out of. And it's also very important that you know that the security is high. You don't have to worry, because we are ISO certified. We have extremely high security on our platform. IWS and Molling are on their part. We have it on our platform, which means that your web applications are much safer. So, Fredrik, a little bit about the business model.

Yes, thank you. As John was mentioning, we have a transformation model, which is a typical SaaS company, but we provide a SaaS solution, a platform as a service, both infrastructure and software included. So we have a finished product, it is very scalable, it takes a lot of It takes time to get a new customer and add them to the platform since the pod is already developed. This means that our growth occurs by adding customers. But we can also increase the engagement with existing customers, which we do too. So over time, you can add more and more of your applications to the solution. What we regularly measure in our MRR is monthly recurring revenue, our recurring revenues. This is a regular SaaS copy, either ARR or recurring. This means that we get very predictable income flows. And as you can see in the last one, we get an advance payment, which is good for our working capital, and then we get income over 12 months or over the contracted period. Then we have, as Jonoxos is a very cost-effective product for our customers, which means that they can lower their costs and save money. And the customers who have entered our platform notice this and therefore tend not to leave us. We have a very low churn. It's not just cost savings, it's also complicated. Good. Maybe the next slide, Daniel. So, andra kvartalet 2024, vi växer våra renoverationsintäkter med 11%. Men däremot så går våra konsultintäkter ner lite grann. På det hela så är de totala intäkterna 9% på året. Men man kan säga att vi växlar till lite mer kvalitativa intäkter som är längre och förutsägbarare. Man ser även att kostnaden går upp till 9,5 miljoner från million we have taken on staff this is above all staff costs that go up a little more on other costs and this is where we invest in our staff and add more resources to the platform to develop sales later MRR is at 154 000 US dollars a month it is the currency we That's why it's a class to measure in, as you can see. There are changes that bother and you have to explain all the time. But the MRR has gone up 5 to 4, which is a growth of 6%. And in the cash register there are approximately 5 million in the half-year shift. And what has happened during the quarter is that we have received a large payment last quarter, which is an extension of a I think that was everything from the financial side.

Let's start with what is happening. We may be a bit bad at communicating as usual. Our goal is to increase 30% on average per year during the five-year period. This is something that we maintain and we are very sure that we will take it this year. Vi har fått igång säljet. Det är oerhört frustrerande för mig att se att det tar lite längre tid hela tiden. business in the loop on the way in, contracts, negotiations and so on, which unfortunately takes a very, very long time. Some big companies that are very slow in their processes, which is frustrating. I would have hoped to have a little more fun to tell you about this now. I'm probably saying too much, but it's a little frustrating. It's getting a little empty tones. But I am confident that we will reach this goal. So it's just a matter of keeping the excitement going. We have started the sale. What we are doing now is that we have put quite a lot of money into this direct sale to our enterprise customers. Customers who also have what is called Open Cloud with a support contract. I'm not going to go into details, but we have started that. We are also building a machine automation here too. When you work with sales, there was a lot of cold calls and the type of sales that you do. And before that you knocked on the door. Now everyone who is out and has mail and LinkedIn and so on knows that you are completely downsized by sales messages and propos and one thing or the other. So you are completely dead against all types of sales more or less. So what you have to do to be able to overcome this is actually two things if you are going to be hard on it. One is that you have to Make sure that customers have the right matching for your offer. And also find the right timing. And then there are a number of things you can do. Because then you are a little more receptive to sales if it is the right offer. The other thing is that you can't just throw yourself in the trap and ring. In a nice way, you can wake up a customer. It can be anything from liking a post on LinkedIn, leaving a comment, becoming a friend, building a contact, and then you keep going until the end. And then it is also assumed that someone is interested in what you want. And then you finally contact the person with the offer that will match. And this requires a lot of finery and a lot of methodology. We still believe in personal contacts and not a lot of automation and it's strange that we've been sold out. But then it is required. So we are also building this up so that we become even sharper in our prospecting. This is in combination with our sales machinery and the people we use in sales, which now works after a lot of testing over many years. But we still haven't seen the result yet. Not you, at least. It's probably more me that I see on your side. But this is incredibly important. But on the side of that, we have also hired a person who will be responsible, who comes from a bureau that has used our service, an agency that has used our service for many years. Han har vi anställt och han kommer också hantera alla de partners och agencies som vi har och börjar aktivera dem så att de börjar använda vår plattform mer och de som inte gör det, de kommer sätta igång och använda det. And he is completely agreeable when it comes from the agency world and can speak their language in their own way and is incredibly more convincing than anyone else. So it is an incredibly interesting improvement that we have made. Our developers are incredibly important to us. They are in the whole sales process. Tidigare har vi haft en webbsida som kanske inte riktigt tilltalar utvecklanden och kan inte riktigt få en ordentlig uppfattning om vad vi gör för någonting och hur vi kan underlätta deras vardag. Så vi kommer i dagarna att släppa en ny version av en hemsida som är då Vändelse. Vi kommer fortfarande att ha en gamla som jobbar att förbättra hela tiden. but also be able to release a part that only communicates directly with developers. Then you have to work with a whole lot of very sophisticated market partners to get them to come in on our sales side. But they are also super important in the sales process. In this, we also have open cloud self-service, which I have already talked about earlier. It's actually a version where you can go in and start testing and it's also super important for developers to be able to go in and work and test without us contacting them, who can experience our platform in a good way without our assistance. Then we continue to build on AWS. It has also been a collaboration that has generated a lot of interest. And we are about to go into an advanced program with them, as well as what we call ISVS Accelerator. It is also connected to retail and partnership. And then we are also exploiting an area together with them. They have an AI platform called Bedrock. And now I'm not talking about AI to house our rating or anything, but it's mostly that it's very interesting now that AI has started to set itself up and there are good tools to use. It also opens up opportunities for us, and we get inquiries from customers about how we can, for example, in a simple way, facilitate our support, our documentation, find easier support and pathways and so on, with the help of putting in various AI tools, making everything much easier and better to use. For example, in this case, it was AWS Bedrock, which is their AI investment. So it's fun when you get to the stage where it starts to work. We won't develop AI ourselves, we will use the tools that exist to improve. I think it's exciting when the AI hype starts to set itself up, where a lot of good will come out of it. Sen är vi också hårt fokuserade på att bli kassaflöspositiva. Nu såg vi i kostnaderna att de har ökat och det är framförallt kopplat till personalkostnader. Och det är också att vi gör en växling i lite dyrare, vi har ju rätt mycket personal till exempel i Schweiz som är framförallt mycket dyrare än till exempel i Sverige. Så vi håller på att göra en växling i personal och då har vi nu suttit med en del dubbel bemanning för att vi måste liksom and make a nice surplus. So we are in the process of phase out, phase in, and in that way, in the next quarter, we will see that the staff costs will decrease. And then we have also looked at a lot of our applications, we can optimize, we put a lot of effort into it, also to reduce our internal costs when it comes to different applications that we use in our operations, to reduce gap between income and expenses. So we are on the right track. We have to get a couple of contracts in and then we don't have that long until we can reach this, which is our absolute goal. So it will be a healthy company. I think that was all. Is there anything I've forgotten, Fredrik? I think that's all. Så det händer mycket mer såklart som vanligt än vad vi visar och vad som syns på sista raden. Och det är som sagt i min värld lite frustrerande. Men jag är otroligt fortsatt väldigt positiv till allt som sker och att det här kommer vända inom kort. Så det är bara att hålla tålamodet uppe och is i magen. Jag vet att jag har bett om det otroligt länge. We are on our way, so just hang on a little longer. Then it will be so good. We are in that phase. Good, I think that was all I had to say. Thank you so much.

Thank you, guys. Thank you. Let's go back to... And listen to what you have to say about the questions we have in front of us. In March you had a monthly income of 153,000 dollars, you wrote in your statement. And now June has been closed with 154,000 dollars. It's an increase of 1,000 dollars. Last year MRR increased during the same quarter with 7,000 dollars. Is the market tougher this year?

Yes, I think I've mentioned it earlier. What we've seen, and I think it's a bit of the economy, the world economy in general, I wouldn't say it's tougher, because we have an incredibly good discussion, when we're in the final negotiations and so on, with We have probably never had such a good supply situation before, if you compare historically. But what we have noticed is that it takes a much longer time with everything. And it is buried in details. Ligel, especially when you get into larger companies and so on, is much more precise and everything takes a lot longer, which is Extremely frustrating, because when you get to a point where you feel that now it's going well, then I just drag it on and it's slow. So I would say that it's not harder, it's not tougher, it's just that everything takes an awful lot longer, which is extremely slow.

Yes, I understand. The currency has previously made itself known in your report.

Is a strong dollar today a benefit or a disadvantage for the company?

Do you want to answer that, Erik? When we pay the US dollar, if it goes up, the crown goes down and we get more income in USEK. It's a bit simplified, and it helps us to pay our Swedish wages, which is constant. But we don't have as much as we might have more in relation to Swiss francs and dollars, where we have more personnel in Switzerland. But that's the way it is. But currencies are not something we can really take much into account or speculate in. They are what they are. But surely it has effects when the crown is weak. Then we have a lot of sales in the country.

And now we see that when the Swiss franc is stable and the dollar has gone down, then of course it also affects. But it's not so big that it becomes a challenge for us.

No, the customers who buy in dollars get quite a lot, or foreign customers who buy in dollars get quite a lot for their dollars and on the other hand. So it can be, hopefully, maybe make business easier.

Yes, absolutely.

You write about more optimization of cost management here. What does that mean more specifically? You mentioned that you moved costs, personnel from Sweden to Sweden, among other things. Is there anything else?

We are a big customer of AWS, both ourselves and via our customers, so it's a big cost for us. And there we do a lot of development work, where we take over and do the work that AWS does ourselves. So we can take away some of the costs we have against AWS. automatisera och leverera den tjänsten till våra kunder själva. Då kan vi ta bort den kostnaden. Det är så mycket den typen av arbete.

Fokusläget arbetare inte instämmer.

Sorry, hör ni mig? Jag vet inte varför. Nu, jag försvann. Hallå?

Ja, såhär. I can add to that as well. Then we look at the costs around the company, with those that are not directly included in the product material, if you say so. All around services and what we really need, what we don't need, and those that we really need to make sure that we are at the right level with the right suppliers and at the best possible price. So this is a two-way process that you have to work through all the different types of consultations.

I think it was Sirik who came up with it. I think I said some code word. Sirik came up with it and started talking about it. But no, that was probably what Fredrik said. But we do a lot. We develop applications, collect different services we have and structure them in a better way. So there's a lot we can do. And we have a lot of different... solutions. We have not built everything ourselves, we have third-party solutions that we have brought into our platform. And not just AWS, but there are a lot of different solutions where we can do different things, where we can build out and deliver the services ourselves instead of using applications. In this way, we can save a lot of costs, as well as when it comes to staff. That we can actually find just as good and sometimes even much better staff in Sweden, Germany and so on, instead of just having it in Switzerland, where there is actually a completely different cost.

Tackar jag för de frågorna. Du nämnde såklart att ni vill bli kassaflödespositiva och du hoppades och hoppades. Har du någon bra gissning Jonen, vilket kvartal du blir kassaflödespositiv?

Jag har ju sagt det ganska länge och gissat hit och dit. Så det är väl lite tomt att svara på den frågan. Men jag kommer se till att vi blir kassaflöspustiga under 2025. Det finns inga alternativ för mig i det läget. Så 2025 kommer det bli.

Det låter definitivt.

Ja, och det är definitivt.

Då ska jag be att få tacka för dagens presentation, mina herrar. Fortsätt ha en bra sommar så hörs vi igen om tre månader.

Stort tack allihopa och ha en fortsatt och så glad sommar. Så ska vi se till att nästa rapport blir betydligt mer spännande. Tack.