Divio Technologies AB (publ)

Hej och välkomna till dagens webcast med D-View, där vd John Levin och CFO Fredrik Wallmark presenterar bolagets Q4-rapport för 2024. Efter presentationen kommer det hållas en Q&A, så om ni har några frågor till bolaget så kan ni skicka in dem i formuläret till höger. Och med det sagt så lämnar jag över ordet till er.

Tack så mycket och tack till alla som tittar. Jo Levin heter jag, jag är vd i Divius en tid tillbaka, ett antal år tillbaka. Med mig har jag Fredrik Wallmark, min stadie vapendragare och CFO. Vi tänkte som vanligt göra så att vi börjar med att berätta lite vad vi gör för någonting för de som inte vet det. Sen går vi in på lite vad som händer med bolaget och såklart tittar på siffrorna. So, a little short history. We started around 2005 as a classic web office in Switzerland. We started in parallel with the web office, building websites and other things, building our own products, especially for our own internal needs. And that's how our current product came about, because we had a lot of web projects at the time. for different customer calculations in different target solutions and to facilitate this, we built this solution that we then came up with is actually a solution that more people should need to use and that was the way it was. We decided somewhere around 2015-16 to become a product company and What happened was that we needed to take in capital, and first we tested in Sweden, and there you are not so risky or so wise when it comes to entering in the early stages. So there we got the recommendation to turn to Sweden, and that was the way it was. We took in money in Sweden and were noted in the same wave, and are therefore since 2019 a Swedish company noted on Today we have a little over 700 paying customers. The group we focus on is called Agencies. Many of them use our platform, both for their own part and for customer accounting. And they also work as an extension arm in sales. And then it's mainly enterprise customers where we grow steadily, slowly but steadily. And especially if you look at the income flows, we grow a lot there. Otherwise, the customer base is growing slowly all the time, but it is around 700. But there are many very small customers who pay a little and then there are some who grow in numbers, which stands for large revenues. And what do we do? We take care of complex target infrastructures for customer accounting. It's like going from your own data server to a cloud service. There are a lot of advantages to that, both in terms of cost-effectiveness, security and scalability. But it also involves a lot of homework, because you have to have a solid grasp of your cloud infrastructure to make sure that it works. and that it doesn't go down and that you have the right costs and so on. And this is usually a headache for many companies. And it's all from, for example, that the costs are difficult to foresee. The business model changes all the time and increases constantly. And then you often build yourself into some individuals in solutions and then some individuals on the company that create these solutions that you become very dependent on. Det är ofta DevOps-personer som är svåra att hitta. Det blir lite lättare nu efter hur konjunkturen ser ut. Men det är fortfarande svårt att hitta de som är duktiga och man vill som sagt slippa det här individberoendet. And to take care of a target infrastructure is often a big headache, not least for those who are responsible. If something goes wrong or happens, it can go down when it usually does when it shouldn't. So it's a big burden on the shoulders of those who are responsible. And then you have security and compliance, which increases the level of complexity and regulatory requirements. Plus, in combination with the fact that there will be more and more attacks in the form of dose attacks from one another, which makes it a big demand for security and compliance. This is where it starts to get tricky and also a big burden for many companies. And then a big problem is also when something happens to find the right support. To get hold of the right people is very complex. It is often difficult to find a response if you are not very initiated. And how do you solve this? Most companies employ a smaller army of different DevOps people who handle this manually and become these experts that you build yourself with. Eller så hittar du en lösning som våran som tar hand om och automatiserar allt det mesta och sköter hela det som är enormt kostnadsaffektivt. Det är därför vi finns till, för att ta bort de här huvudvärkena. The advantage is that we increase the efficiency and make sure that those who develop, who build various web solutions, are happy because they don't have to deal with infrastructure, which they normally don't find so fun, but they want to build and release new and test various applications very smoothly. They are happy, so they can do it now. They can do it themselves without having to worry. and have high knowledge and interest in our infrastructures. Then we also take away a lot of risk, because often when something happens that depends on the human factor, Since we automate the most and are experts in this, we take away a lot of the problems that arise. So the person in charge can actually sleep well and start to think about what's up 24-7 and monitor. That's the solution. Then, of course, you get the costs down, which is also very important. You can predict the costs and get them down strongly so that even those who are responsible for the economy are happy. Then there's a lot happening in the infrastructure world and also with web applications and security and so on. We take care of this and make sure that even the web applications are secure in the future. And then we are there, we are the experts, we are the support, you just need to contact us, we solve most of it and can also give a lot of advice when it comes to the development itself. But it's single point of contact that is very good and that's what our customers appreciate a lot. Men det viktigaste då är att man har lugn och ro. Man behöver inte fundera. Ingen oro. Det är peace of mind kopplat till mål- och infrastruktur, vilket normalt inte är fallet. Men använder man oss så blir det så. Fredrik, berätta lite om våran affärsmodell.

Yes. Det här är för er nykomlingar då så har vi ett SaaS eller till och med ett SaaS-bolag. Det vill säga Software as a service, we rent out our software, or we have paid for it in terms of remuneration. PaaS means Platform as a Service, so it is an infrastructure included. This is that we have a product and it is extremely scalable, we can add customers as easily as we want, we just allow them to use the application. This means that we can grow the number of customers, but we can also We can grow with the customer and choose to migrate several applications. What we measure is MRR and other SaaS KPIs. We look at our monthly recurring revenue. This is what we earn per month. Since we are talking about revenue payments, it becomes very predictable. It will be developed in terms of revenue. Another important status quo is the churn, which we look at carefully. In our case, it is extremely low, basically zero in recent years. This means that we have a very sticky product. Customers tend to stay away from it and go into our environment and see the benefits of it. Then there are the cost payments. Customers pay first and then get to use the service, just like any other subscription. This means that we are in a very bad working capital situation and it has happened in recent times that people have chosen to pay for several years or several periods in the future. So that's how it works financially and the operational copies. Yes, you were right about that. Exactly. And Q4, did you go through this business that we have signed and invested in under Q3? So in Q4, it has a full effect. Our MRR, our generation revenues, went up to three percent last year. And that means that our subscription revenues have increased by 35 percent. EBIT has, in principle, the EBIT losses have halved. Last year we were at almost four million, and now we are at about minus one and a half million in EBIT. Kassan då efter genomförd nyemission, eller företrädelseemission, så är den på 9 miljoner. Det som är väldigt imponerande i det här då, det är net sales då som har ökat med 6%, vilket vi annonserade imorse. Den är på 9,5 miljon, 5 miljoner. Det beror på er den här nya affären som är en del i prenumeration och en del utav det är konsultarbete. Much of the consulting work is done by third parties, which means that we should see a very large increase in costs. And you can see if you go into the details in the results, that the COGS has increased a lot, almost the same amount that the Personal Service Revenue has increased. This is because this is actually processed and we maintain a certain margin. Then in total, the costs have actually been constant, as you can see here in the table, around 10 million. and that is because we are doing other measures now that are effective on personal and external costs. This means that EBITDA is largely at zero. And after deductions and the deductions and self-developed work, EBITDA is at minus 1.66 million. What has been important in the quarter financially is our We took in 17.5 million pre-costs. And then we have started to get paid from the new big funds we announced in September, which is good. What do you think? After the new year, nothing essential. We can look at the whole year as well.

I just want to comment on the MRR. It was up a little more before the change of year, but then we got quite a lot of revenue now in Swiss francs. That was mostly from US dollars. And we are reporting in US dollars. And the Swiss franc has unfortunately dropped in value compared to the US dollar. So therefore it has decreased somewhat. But at the same time we have the most of our costs in the Swiss franc, which cost-wise has no greater importance. Men på grund av valutaeffekten så har vår MR minskat lite. Så det påverkar inte det här målet mot att kommit och blivit kassaflöspositiv. Det har egentligen ingen betydelse alls, men det är väl intressant att se. Sen också när det gäller... We have, during the previous period, been able to get more sales going. We have received some new customers. It has been a bit slow in January, but we have received some new customers, which is very exciting. That was just an introduction.

Then we'll jump back to you, Fredrik. Good. For the whole year, it will be the same copy, where MRR is up 33%. And here you see the big income increase of the new business, but there you see the whole year's effect of it, where it has only been active in one of four quarters. So there the subscription revenue increase will not be as impressive, but still Ebitda a little worse than last year and EBIT is about the same. But we will see the effect of this business throughout next year. And we hope to be transparent when we announce the offer. The most important thing that happened during the year is that one of our absolute largest customers has extended a contract and paid for it for a longer period, more than a year in the future, but it's a big deal anyway. And our new Swiss enterprise customer that work within healthcare. Those were the big milestones, the ones we went through last time. Good. That was about the numbers. Jon, you can take over here and tell us a little bit about it.

Yes, exactly. But a lot of other things are happening that may not have the same bombastic significance as these two businesses. But a lot of other things are happening in the company. We continue to have this goal that we will grow by 30%. i gennemsnittet av fem års. Nu har vi nått med det förra året och det blir högre och högre volym men vi är övertygade om att vi kommer fortsätta kunna köra på det här målet och det ser bra ut. Jag nämnde det här om MR-siffran 203, det har lite valuteffekt på det men det är fortfarande 3% ökning förra året vilket är bra. And we see that we get more and more customers on, as I mentioned, small test projects, but good customers where we can grow a very large growth potential. And that's happening a lot right now, which is fun. Even this big healthcare customer that we got in last year, we have already grown a lot with them, which has been announced. And it looks like a lot will happen in that direction as well. So it looks very good and is very fun. And we also had, as Fredrik mentioned, a good fundraiser before Christmas, which was good for us to be able to cover the cash flow. And so that we, until we are cash flow positive, and it is still one of the most important goals is to achieve it so that we can stand on our own feet and be a healthy company. And we see that the figures point in that direction as well. We have taken quite big steps, even if they are not visible on the annual figures, they are visible on the quarterly figures. So it's very fun that we can deliver on that and continue to deliver on that and we are convinced that we will get there. In terms of sales, as I mentioned in the beginning, we are working more and more with web or agency partners that help us in sales. We get a lot of customers on the road and track. And we put even more effort, as I mentioned earlier, that we have taken in a... Person, vi kommer nog trycka in lite mer resurser där också för att just jobba nära de här agents, för det är lite där vi ser bäst cell-effekt, eller i alla fall snabbast, man ska säga det är lägst cell-effekt. lead times, so to speak. Then we continue to work with enterprise sellers, but we also do a lot of work together with strategic partners like AWS and so on, which are important to us. And we have some other, that type of partnership going, which means that we will be able to continue to work effectively towards enterprise customers. And we have a lot in the pipeline when it comes to enterprise customers that we have worked with ourselves. But to boost this a little more, we will work more with agencies and strategic partners that are even closer. So So, the entire partner network, we have cleaned up and improved it and put a lot of pressure on it. But as I mentioned, the big focus is on cost optimization, but above all, we have increased sales, so based on that, make sure that we get cash flow positive during the year and we get better. And we are on the right track to achieve that goal, so it feels very exciting and very fun, and it will have a great meaning for us. Otherwise, we push on. As I mentioned, January has always been quite a busy month. When you have to drive sales, which we work hard with, it doesn't happen that much because people are busy when they start their year. But now, in the beginning of February, February, things are starting to happen a little bit more. So now it has started to loosen again, which is very fun. And hopefully we'll be able to announce some things in the short term. So it feels very good and we have a very good year ahead of us. We've made a lot of changes as well. You can do that as a startup, or not a startup, but a scale-up at least. You always have to work with and optimize and change. We have also made a lot of internal changes and changed a lot of staff, but also structured so that we become more and more effective. It's easy when you've been around for a while as a company to get a little stilted and hierarchical, especially when you have a Swiss and quite a lot of German legacy. But we have changed quite a lot. We can really rely on the fact that we are quite small and agile so that it can happen a lot. We will also do a lot to invest in our platform so that it is constantly on the forefront. We have made a lot of changes. But we feel that we have a very good structure. We are very effective and we have a lot in the pipeline. We manage to keep up with the costs and also optimize them. So everything points in a really good direction. There is an incredible amount of drive in the company. As I said, everything takes a long time. I've talked about this many times. But you can see that it's starting to show in the last few rows, which is really fun. All this hard work. We will continue to work hard and fight to make this a really good and interesting company. Men det var väl kort det vi hade att presentera och vi är redo för att ta emot frågor.

Ja, tack så mycket för presentationen här. Ni har ju lyckats minska förlusten på ebitda nivå till i princip noll. Kan du konkretisera vilka kostnadsåtgärder som har haft störst effekt och vad som återstår för att nå positivt kassaflöde?

In short, it's a combination of increased revenue and increased costs. We have optimized costs. We have used old legacy costs from the time we left and changed services that are part of our platform. But when you look at our costs, the biggest cost is the staff. Eftersom vi är ett sveitsiskt bolag från början så har vi haft många sveitsiska anställda som är väldigt dyra och nu har vi växlat många av de kompetenserna. Det är inte bara för att få ner kostnaderna utan även när man har jobbat med vissa individer som är rätt färgstarka och under a longer period of time, they tend to get stuck in certain wheel tracks. Now we've got new blood, new thoughts, new strength, and challenged our old truths with our platform and so on. So it's also to get new strength. So that combination has been very good for us, that we have been able to grow these costs on the staff side. Fredrik, do you have anything to add?

No, you're absolutely right. It's both that we look at our... We go through all our agreements and see if it's a service we need and benefit from. In that case, we try to get better prices, while also saying, as Joma said, that the personal strength is our biggest... ...reward. So that's the one that gets the effect of the blockade.

Exactly. And in the future, what we're doing now is that we of course keep the costs. We're not going to be stupid at all, because we can't do violence on our platform and delivery capacity. But we keep the costs and are smart with everything we invest in, while we press on in sales and are going to see further increase in revenue in order to really reach this goal that the cash flow is positive. And it looks very good.

You can add that we still have, we measure our MRR with monthly recurring revenues. Now you clean away from eventual consulting businesses and what it costs and so on. Then we compare it all the time with our, as we said, our monthly recurring costs. So we see what the gap is all the time between, and our ambition is to fill it with the help of increasing revenues rather than saving more right now. But it's not far off.

Thank you very much. Sales increased by 86% during the quarter and MRR rose by 33%. What do you think of the long-term sustainability of this growth rate and what factors are most important for maintaining it in the future?

I think that what we have discussed or discussed a lot internally, we have been Vi har varit ganska spretiga i vår försäljning och hur vi når vissa kundgrupper. Vi har under de senaste åren försökt tajta till det men inte tillräckligt. Det är ett enormt brus där ute och tränga igenom det här bruset krävs väldigt mycket. direkt och har väldigt precis i din försäljning. Här har vi gjort ännu mer jobb med att verkligen trappa ner så att vi kommer fokusera och nischa oss lite mer för att kunna verkligen, det innebär inte att vår plattform is limited, but in communication with customers and the market, and even our website, which is actually sub-targeted, we are building on to also become much, much more hit-safe and top-notch. And what we will focus a lot on to position ourselves in this, to be able to get through, is much linked to just to be a platform, made up of agencies for agencies, and that's where we get a lot of our customers from, even enterprise customers, that way. That's one part, to focus in so that we can get through. And again, that doesn't mean that we're going to choose away and not just continue to focus on enterprise customers, because that's still a big focus. But to be able to get through and be meet-and-greet, we have to niche ourselves more, since there's a lot of noise out there. The other thing is that we will tighten up the work with agencies and also continue to work with AWS. But we also have a few other partners on the way in that we think will be able to help us a lot. With our limited resources, we will be much smarter and work with the opportunities we have together with our partners and niche us a little more in communication. So in that way, and then continue to build on this, what should I say, this motor that we built up, the prospecting motor and the cell motor that we built up over the past few years, continue to use it to get through. So all of this together means that we will continue and we see that we have a very high quality and good progress in the cell pipe and from now on it goes much faster compared to how it was before. All in all, we will be able to continue to deliver on sales.

Thank you very much, and you mentioned that you try to run as much as possible with limited resources, and you did, as you mentioned, a successful capital allocation here before Christmas. How do you see the future of capital needs? Will the cash flow be enough until you reach cash flow positivity, or can it be up to date with further capital allocation, or how are your thoughts?

No, the goal is that we will reach cash flow, that we will become cash flow positive and not need any more capital to reach it. Sen kan det ju framöver finnas mer projekt att man behöver investera i specifika satsningar och så vidare. Men då gör vi ju det inte bara för att täcka kassabehovet, utan det gör vi för att vi vill göra allt specifikt för att bygga affären. Men inte för att överleva. Det ska vi inte behöva till och med pengar. Det är absoluta målsättningarna. Utan nu har vi en... Vi är på god väg och det är inte mycket kvar. Vi är övertygade om att vi ska... Thank you.

You mentioned in the presentation that the decline in francs at the UST has affected the reported MMR. How much of the income is exposed to currency exchange changes?

Previously, it was not so far, it was the euro and a little Swiss franc that we had, but now it is Again, we are reporting US dollars, but we have quite small costs, to be honest, in US dollars. It's mostly because we had the most income, especially from Fidelity in US dollars, which made it possible to report and avoid these fluctuations in the currency. Now we have received... quite a lot more Swiss francs. I can't say exactly how much it makes, Fredrik, you might know, 30% or something like that, in that direction, roughly, I think I would say, that 40% of our income comes from Swiss francs. And then there's the problem again, that the currency comes... The Swiss franc is a very strong currency, so it doesn't feel like a bigger problem. And we also have the highest costs in the Swiss franc. So I would probably want to see that we get... It's not wrong if we have even more income in the Swiss franc as long as we have it that way. Men jag känner inte att det är mer rapportering just när det gäller det här på MRR som det kan bli en viss effekt. Men egentligen rent ekonomiskt, finansiellt, resultatmässigt så har det inte någon större påverkan som det ser ut nu. Tack. Jag tänkte på Fredrik om du har någonting att lägga till där.

Nej, det var en tredjedel som är i. Egentligen. But the reason why we wanted to report our MRR in CEK, because our bookkeeping is also in CEK, and our quarterly reports and so on are in CEK, so it's easier to follow. But the reason why we have chosen US dollars is that we want to show that it is quite constant in that our contract is in US dollars. And then we had every quarterly report instead to explain how much of this in FX positive and negative aspects, and how much is new sales, respectively churn or upsells, and so on. So now we have historically cleaned up the FX part, so we can only talk about which are new customers, which have expanded with us, is there someone who has left, and so on. Then it becomes very focused on operations, how it goes for the company, and not the FX effects that we can control and we do complicated effects, plus and minus.

Yes, and it's a good thing that we don't have MRR in SEG, because that's also a good thing.

So now it's... It has other effects in our results and balance calculation on the valuation of subsidiary companies and so on. It's not entirely easy to follow, but the reason we have it is that we want to be able to talk about it as a measure and show what we do on the sales side.

I understand. Thank you very much. And then we go into the last question here. You have brought in a new large Swedish customer and see potential in several smaller customers, you mention. How does the strategy look to scale up these smaller customers and businesses and how quickly can they contribute to increased income?

Yes, the smaller customers. And actually, the customers themselves are not smaller. They are quite large, as we said. But what I mean by smaller is that you start with a smaller business to get in on the customer. And then they often test our product with a slightly smaller project, because there is not so much risk. And then when they see that we can actually live up to their expectations and also deliver on it, they start adding projects. It can go very slowly when there are certain companies. It can go incredibly slow, but to just grow the business. In other cases, it goes much faster. And we have some examples like Girl Effect and Nova Grey Deck and others where we start small and then quickly it rumbles to. And we have some others now that we have worked with for a while that... I mentioned the Swedish army, there we also have very good dialogues, and there are different functions of the Swedish army, where we also see that we can switch up quite quickly. It can go differently quickly, but I would say that in most cases it can go fairly quickly. We really can. There's a lot of internal politics to be handled. But I think it will be a contributing factor. And when it comes to the big customers that we've brought in now, it's also a fantastic financial perspective to bring in these big customers. But you should also know that it requires a lot of us as a smaller company when you come in with so many and so big projects. direkt, för då måste vi liksom lägga allt fokus på att få det här att fungera och svälja den här jättestora and get it on our platform and support it. It is crucial, especially at the start, that we deliver, which we have done. They are very happy with us. But of course, we cannot include three such customers at the same time, because then we would probably... But when they are on board, it's no problem. But it's the first phase of getting them on board that is a challenge. We really want to be on board and deliver, so we just spray them. Then they will be happy and happy and hang on. So right now it's pretty good with a balance, that we take in one giant customer and a few smaller projects that we can then switch up a little more slowly, which is easier for us, significantly easier for us. But then we'll see, it can only get better with more big customers, of course. And that's an obvious problem.

Det var alla frågor vi hade. Tack så mycket, Jono Fredrik, för att du presenterade här idag. Tack till alla som har tittat. Ni får fortsätta hela veckan.

Tack allihopa. Det är bara att hänga med. Det här året ska bli bra. Stort tack, alla.