Divio Technologies AB (publ)

Hello and welcome to today's presentation where we have Divio, where CEO John Levin, SIFO and Fredrik Wallmark present Q1 for 2025. If you have questions, please use the form to the right and we'll take it up after the broadcast. And I'll leave the floor to you.

Thank you so much Martin and thank you to everyone who is watching as well. My name is John Levin and I'm the CEO of the company and with me is Fredrik Wallmark. Hello. And as usual, we start with a short presentation of the company, what we do for those of you who don't know it. And then we go into a little more questions or especially tell you about the Q-rapport that was released yesterday morning. So I'll start with a short history of the company. We are a Swedish web agency company that started a long time ago, in 2005, and created a product that we use internally ourselves. First, to be able to handle all the projects we had for our customers, mainly in AWS's core service, i.e. Amazon's core service in AWS. And we realized quite quickly that this platform, the product, the service was very good and works very well for our part and therefore should also work for others. And we decided in 2014 that we would start converting and selling this service from consulting companies to product companies. And that's what we did, and we also needed to get capital for this. And to get capital, it was a bit tricky to get capital in Sweden. It was still much harder for startups and smaller companies compared to Sweden. And we were then advised to test everything and see how it could work in Sweden. And it went very well, we took in money in Sweden to make this conversion, and that we would also be noted. Which it became in the same wave as I came in. So in 2019 we became one of the most successful product companies and were listed on the stock exchange. And today we have somewhere between 700 and 800 paying customers. It is growing steadily. Above all, it is the enterprise customers that are growing and becoming more and more. But we also have many smaller customers who pay quite a bit, but who are also important to us because many of them have enormous growth potential. And they are good ambassadors for our platform as well. But you can say that the smaller number that we don't focus on as much is stable, while the large enterprise customers grow. And we are in about 10 countries where we have customers. It also grows steadily, there are a few more countries all the time. But we focus mainly on Sweden, the Nordic countries and the DAS region, which is mainly Sweden, where we also are, and Austria and Germany. And then we have customers in the USA, England and Holland as well. We have, among other things, Fidelity, which is a big customer, which is called American companies, but our business with them is mainly in Europe and a little bit in Asia. Yes, let's move on. What do we do then? Well, to handle, go from having your own servers, which people had before, or companies had before, to getting their web solutions, websites and others, in a cloud instead of having it yourself. It can be considered quite simple, and there are many advantages to it. It is much better, safer, and so on, more scalable. Men det är fortfarande hyfsat komplext och du måste veta vad du gör för någonting och skapa väldigt mycket huvudbry för de som sitter med det här. Och det är framförallt då det är svårt att få en överblick över kostnader. De kan öka lavidartat och man använder ofta, eller man köper ofta mer än man behöver. Eftersom det är hyfsat komplext att sätta upp så blir man ofta individberoende också med beroende på vissa individer som kan det här och blir experter och bygger in sig i lösningar. And it is individuals who Even if there is a decrease in demand for developers, it is still difficult to get hold of these developers. And to take care of a cloud infrastructure is very complex and often a big burden of work. It is often very unstable and often goes down in time and time, especially when it should go down. which creates a lot of stress internally, especially for those who are responsible and those who are dealing with it. Then we have security and compliance that have increased enormously in recent years and the demand for that and that you have a safe solution is also super important. We see an enormous development or increase of different forms of attacks against infrastructure solutions. from those who want to sabotage, and it increases all the time. And then it is often to release a web solution, a website, it is often quite a slow and complicated process as well. Then, above all, support. Finding support is really difficult, and you really have to know what you want to find the right support. Hur löser man det här? Många stora bolag väljer ofta att anlita, antingen anställa ett gäng människor eller anlita stora konsultbolag, en armé av konsulter som hjälper till att lösa det. Eller så hittar man en plattform som våran som löser det. Där vi tar över väldigt mycket av det som annars sker manuellt. It increases the efficiency and makes it much faster. So those who really build web solutions, they will be very happy because everything goes much faster and easier. And we minimize the risks. The risks with this are often built into the human factor. We minimize it as a platform that does most of the work and automates it a lot, so you can sleep better at night. And then the cost becomes significantly lower. Most often you only pay for what you need. And that's something that helps, of course. And so CFO became happy. There's a lot going on in the world, and there's a lot of change happening in the cloud services, and you have to keep up, and that's something we're working on, so it's a bit more future-proof. And then we're single point of contact, so it's just us you need to contact when there's something, if there's something. Most of the time, most problems occur before they arise, or they're solved before the customer discovers them, or there's actually been an effect. So we are the experts and we are super good at this. So let us be that and be a platform that solves most of the problems. The real effect is that you save a lot of money and resources, you can put the resources on the right things, you can focus on developing rather than having a zero infrastructure, which is mostly boring, and to solve problems that they don't want to have. And then the fact that we are single point in contact is super important. It is very simple for our customers and something they appreciate enormously. And then, can they be sure that it is stable? It does not go down, it is very rare to go down and if it were to go down, they would fix it before they blink. So stability means better. Another advantage that our customers appreciate is that you are not locked in a supplier, a multi-service, but you can quite easily, with our platform, or thanks to our platform, move from one supplier to another. Fredrik, some thoughts about our business model or explanation.

Yes, this is a, as you have understood, a SaaS model, even a fast business model with infrastructure embedded with software. And it is a scalable model. We have developed the product that we continue to improve, but it is possible to sell to as many customers as possible. We have good efficiency in production, in the evaluation of new customers. We can grow with a number of customers and then we can grow with the customers that we already have by increasing our engagement, which is often the case that you start with a smaller project and over time they increase. What we measure is these classic SaaS KPIs. We look at monthly recurring revenue, some call it annual recurring revenues, but monthly is the same, divided by 12. That's what we look at and then we book up revenue as a whole. Det här är en väldigt förutsägbar modell så vi kan blicka framåt och se vad våra intryck var över en lång tid framöver. Vi mäter våra närmare i tusentals US-dollar per månad och det är för faktum i US-dollar. Sen gör vi vår årsredovisning och vår aktualiserapport väldigt sek. Men US-dollar berättar mer om hur själva verksamheten går och huruvida vi adderar kunder eller kör när det blir uppsatt och så vidare. So it's an operational method for us. We have a very low churn, which is good. It's a very valuable product when we choose it and it reduces costs for our customers incredibly rarely as it is someone who churns them. Then we also work with advance payments. Our default model is annual advance payment. Then it can vary a little bit, but the big customers have that. undantagsfaller kvartalsvis. Och det här är bra för vårt working capital för vi får pengar i förväg för levererande tjänster i framtiden. Då har vi pengar under tiden. Så det är lite av vår affärsmodell och våra nyckeltal. Och för kvartalssiffran då som kom igår vår MRR är upp nästan 40% till 212 000 USD. Förra tidpunkten då för ett år sedan så var den This is primarily a large customer that we have signed this fall in the pharma sector or health care sector. So net sales is up 66 percent, so this is a downgrade to beat this big deal. There is something else in it, but primarily it is revenue that goes up by 30 percent. And then it is our personal services, since there is a component in this agreement, the best release. to maintain a certain consult service for them. And this is something that we do not classify as MRR, even if it is a recurring call from the team. In the quarter, we have gone down in costs. It is mainly personnel costs that have gone down, but there are also external costs, which means that we end up with a positive EBITDA of 342,000. which has previously been negative with 4 million. So it's an important milestone for us. And then EBIT is still negative, and we continue to fight for it. The result for the tax is minus 4 million, and there will be financial deposits, and it's important to mention that these are not interest rates, but it is a debt from from our daughter company in Switzerland to the fashion company. We transfer capital to Sweden and then we lend it to our Swiss daughter company. And we revalue that debt every month. And then, with the help of the effects that have been in recent times, it turns up and down. You can look over time. Over time, it's actually zero. But some quarters it goes up and some quarters it goes down, depending on how slow And at the end of this quarter, we had almost 4.5 million SEK in the cash register.

Yes, let's move on. And that's a bit of what's happening in the company, where we are. And as Fredrik mentioned, we have a lot of growth in MRR since the same period last year, and we continue to pace and increase sales-wise, and we are focusing mainly on subscriptions, MRR growth. But we also see, as Fredrik mentioned, a large increase in professional service, which is actually, one could say, consulting revenue. And it is mainly the Swedish healthcare. It is part of the business. It is divided into two parts. One part is on the service we deliver, and the other part is on pure web development. What we did a long time ago. But we have chosen to put that part of the business. to a subcontractor. We own the business, but it's a subcontractor that delivers, and we have a good margin for that. But that's why there's a big increase in revenue in professional services. So we'll see what we do with that in the future. But as it is now, we will continue to focus on our platform, and that's what our business is about. So we're putting in the work. But for us it's important that it's a whole supply to the customer.

If we look at the figures, we can say that Kogs has increased with almost the equivalent amount. This will be a direct cost for us. Not 100%, we get a small margin on this, but that's why it stands out. Exactly.

Sorry, continue. As I said, we will continue to pace sales-wise and will continue to have that goal and pace on that, that we will have a balanced growth of 30% per year during a five-year period. And so far, we deliver on that. So it feels good and looks good. Then we have, as I said, we have taken on board this new Swedish customer that we signed last year. But most of the work has been put towards the end of 2024 and the beginning of this year. And I think I mentioned earlier that when you take in a customer, we really want, if you can wish, that it will go a little slowly. But now we got a large part which requires a lot of work. It is super positive for us, not least financially, but we have to invest quite a lot of resources because it takes a lot of time. So we have put a lot of effort into it. And for us it is also super important that it becomes a first impression, that is what it consists of. So we have put a little extra time and the customer is very pleased, which is great. They are a fairly demanding customer, but they are super pleased and they also come from poor experience from previous suppliers, but now they are very happy. It has increased a bit, so we have more revenue now than when it started. But we will also need to increase the scope even more because we are over-delivering right now. We don't get paid for everything we deliver, but it is important initially. We should also be aware that the business we took on board is a small part of their business, but for us it is a big business. So there are, as I said, good growth opportunities here. Another interesting part is that we work with agencies and partners. First and foremost with partners is IWS. This collaboration has taken quite a long time. They are quite big and difficult to work with. But now we have put a lot of focus on them again, and we have started to bring in very interesting leads that we work with. They have been part of some previous leads as well. But what is really interesting is that we are starting to put a little more pressure on agencies. Since we are an old agency and have the history, and originally we built the platform for agencies, So we've just focused on that, and this has also given a lot of results, which is super fun. It has really delivered in the form that we have many new agencies and old agencies that have awakened. And every agency we talk to, there are a lot of our own projects to take on board and also customers that they want to recommend. So it has really delivered more than I expected. This is something, it's like an opportunity for growth that we really look at, that can grow enormously. So it's super fun and exciting that we put a little pressure on it, that it really delivers too. So this was a very good opportunity for growth. In general, we have a good pipeline. We are, as I said, much more crushed with our pipeline than we were historically before. So now what we have there is very good quality and we work hard with many leads. We still see that because of the whole shaky world economy, it takes everything. We saw that last year, but even now that it continues to be All CL processes take longer. We have several leads that have been in the pipeline for too long. We should have closed them already. But they are super good leads and we have progress in all these dialogues. But it takes a little too long. I get quite frustrated in between. But that's how it looks, and it's just to like the situation and fill up with even more good leads and open up even more dialogues. And not least with existing customers, where we have several customers who have bought bags with Girl Effect, we have Social Schools, we have Roche and Swiss Innovation Force now that we They also signed a framework agreement. It's not a messy customer, but a difficult customer. It's a part of the Swedish Defence Department. And of course, Switzerland itself is quite administrative, and this is a very administrative part within the Swiss authorities. Varje gång vi ska öka en affär, då var vi tvungna att göra mer eller mindre en ny upphandling och gå igenom alla frågor en gång till. På kundens initiativ så ville de teckna ett ramavtal. Så vi har gjort ett ramavtal för att det ska vara lättare att skala upp den här affären och lättare för dem att dra in fler projekt till oss. Så det har vi signat nu och nu ser vi också att det börjar ticka på här också. Så det är jättespännande för oss. Yes, no one really knows what that will take away, but the only thing we know is that it will be very good. Then it can be as good as possible. So it's really fun. And then this goal that is super important for us to get a positive cash flow, that we start to reach it now also comes very close, which is super important for us. It's so nice to see that all this work gives us result, that we are on the right track to reach it and will reach it as well. So it is super important for us and it is not only important for you who invest in the company, of course for you, but also important for us who work and get employees and so on to see this and know that we can actually stand on our own two feet, that we will eventually be able to do it, or in the short term will be able to do it. It is also super important energy internally, so there are two parts to this. So there is a lot of positive energy. I have been in Switzerland for two days now, and then I came here this morning and have been there and worked with both externally and internally, and it is There is a lot of good energy and positive dialogue and everyone is very happy with the work. The only thing is that we want a lot more than we can handle, so there are some frustrations, but it's just positive. So overall, it's a lot of fun. It's intense as hell, and a lot to do, and a lot to continue and close, if you think primarily sales-wise, but also on the other front, to deliver on. Which is super fun, but there's an enormous amount of energy right now, and we really need to take care of that. And then we're going to take this all the way to... to the stars. That's the goal. But first and foremost now to the surface and to be cash flow positive and continue then. I think it's really fun now to run businesses, but not least also this agency, to work close to different agencies is super fun too, because so much positive came out of it too. So overall, it's very exciting. Incredibly exciting actually. Men det var väl mer eller mindre allt vi hade att presentera. Någonting mer från dig Fredrik?

En kommentar där på när vi närmar oss målet med vad vi avser för någonting så har vi tagit fram något som vi kallar for adjusted EBITDA. Om man läser resultaträkningen så finns det en post där uppe på intäkterna som heter kapitaliserade utvecklingspostnader. Det är egentligen, man kan göra det här på ett But one thing is to add it as an income that you see the staff costs as they should be. Or you reduce your staff costs, take that part and put it on the balance sheet instead. Not as a cost, but as an investment. But if you clean up for this, and since our revenue is, how can I say, a little doped by us capitalizing, With some development costs, we want to refine the measurement of a adjusted EBITDA result, where we exclude, and that's what we want to be positive about.

That's it. Good. Significantly. Okay, that was all from us. I thought we'd move on to questions, which is always fun.

Ja, tack för den presentationen och vi har fått in en hel del frågor. Men den första frågan som lyder så här. Kan ni förklara lite mer ingående hur posten Net Financial Items och framförallt hur valutakursförändringarna kan påverka ekonomi så negativt? Gör ni då tillräckligt mycket för att minimera riskerna det för med sig?

Ja, det var lite vad jag var inne på. Det här är alltså Balansposter som justeras och uppdateras efter gällande FX-kurs. Det som står för den allra största delen av det här är en intern skuld mellan modebolag och dotterbolag som ligger i SEK. När det svenska dotterbolaget ska räkna ihop hur den här skulden ser ut så fluktuerar den med hur växelkursen har rört sig. Då måste vi föra det över resultatet. So this is really no money in or out, and we have no loans, so no interest rates. And over time, as long as the exchange rates don't go from each other a lot, then this is normalized. So I hope that answers the question.

So it's not cash flow affecting at all, but it's a pure bookkeeping setup, you could say.

I understand. Ni tog in 17,5 miljon nu i Q4 och med uttalande som att det skulle bli den då sista versionen på överlevnadsvillkor gjordes och efter Q1 så har ni cirka 4 miljoner kvar i kassan och nu har halva Q2 gått. Hur står sig bolaget rent ekonomiskt just nu skulle ni säga?

Du kan kör på.

Vi är medvetna om att kassan är under SEK 5 million. The development of that depends on how the sales develops and then the pattern of the payments we make to customers is to pay with a little different space and a little different time periods over the year and then there is also a customer who has previously paid for a longer period in the future. Vi är fullt medvetna om situationen. Vi kollar på att under en övergångsperiod, vilket eller vilket av de alternativ som vi har framför oss, välja för att säkerställa likviditet närtid.

Så vi har koll på det. Det är väl inte så mycket att kommentera egentligen. Visst, vi tog in 17,5. Det är väl inte det vi får in netto efter en sån transaktion såklart. Men vi har koll på det här verkligen.

Tack för det svaret. I er presentation efter årsrapporten så nämnde ni att ni hade två styckna medelstora kunder på ingång där ni låg i slutfas om avtal. Vad är status kring de här idag?

It's one of the things I refer to when I say that I'm a little frustrated that it takes a little too long. And I might also be a bit of a time optimist on the other hand. But there's really a little left and we're getting closer. We're discussing, we're making some changes in the approach and so on. But they continue and I... But it has taken a little too long. I think it's a little slow in between, that it will take so long. But I just like the situation, I think. When I talk to others, it's other companies, business colleagues and so on, who experience exactly the same thing, that it takes a little longer. I don't know what it's all about. It's probably due to a certain insecurity in the world economy and so on. Everyone is a little more about themselves and around themselves, unfortunately. Over time, we have got other leads and closed some businesses. Things happen all the time. For example, the Swedish authorities closed very quickly. I thought it would take a long time, but it happened very quickly compared to what I expected. So it goes a little forward, while there are other companies that have felt that this should go really fast, but no, it takes a very long time instead. So it's nothing that has disappeared or changed. Of course, we sometimes lose leads, but none of those that we have had communicated or talked about before, but they continue and there will be a lot of exciting new things. So I am very confident that this will be, it will be much more.

Thank you for that answer. Could you explain a little more about the latest framework agreement with the Swedish army and what that means for Divio?

That's what I mentioned just now. It will be easier for us to grow. The first business was a contract linked to one business. Then we started discussing new businesses. Then we have to start over from the beginning. Instead of having a customer proposal, we have to have a framework agreement that we can fill. We have set different levels on them that we cannot communicate. which we will then fill with business, which we now have a lot of dialogues with them. Then I hope that this will spread to other parts of the Ministry of Defence, but also within the authorities. So it's a very good reference case for us as well. So it's very positive, surprisingly, very positive. And especially that it all comes a lot now from the initiative of the customer. So we have a very good relationship with them.

And is the goal with the cash register to be enough until you are cash register positive? And is there any underlying factor to the fact that the burn rate has been so high in the previous period?

Den frågan är väl ställd och besvarad med tillägget att jag tror att burn-raten det beror på lite som det här med påskottsbetalningar och så vidare annars är ju kostnaderna väsentligt lägre än Q1 förra året så i mitt perspektiv så har vi en bättre burn-rate tidigare men det är också när inbetalningarna kommer som varierar lite.

Precisely, and it also affects how we plan and the cash flow forward. It's when these different in-payments, advance payments, some of which are very large. Some are the ones we already have, which are planned, scheduled, and some are based on new business. So, as I said, we know about this with the cash flow. Ni får skicka in en tilläggsfråga om det är några otydligheter.

Jag tyckte det var tydligt och bra besvarat där. Då får jag tacka er, John och Fredrik, för er presentation här idag och även svaren på alla våra frågor. Det riktar stort till att ni har följt dagens sändning. Tack så mycket, hörrni!

Tack och vi tackar alla som har lyssnat och alla aktieägare. Alla som lyssnar som också är aktieägare tackar vi särskilt såklart. Vilket förmåning allihopa. Så stort tack och är det några frågor så får ni höra av er så ska vi försöka svara på efter bästa förmåga.