Divio Technologies AB (publ)

Hello and welcome to Divio's second quarter report 2025. With us to present is our CEO John Devin and CFO Fredrik Wallmark. At the end of the presentation, there will be a Q&A session where you can send your questions to the company's form to the right. With that, I give you the floor, John.

Thank you very much. My name is John Levin and I have been the CEO for a while now at Divio since 2019. and has a background as both entrepreneur and intrapreneur in both small and large companies and a lot of focus on sales and various IT solutions can be said to have become more and more. I have been here for a while and continued to innovate at Dibio and experimented to get sales and lift and so on, and it has been a very exciting journey and still exciting in the future. And with me I have Fredrik Wallmark. Can I say a few words about you? Fredrik is in any case with a right hand now, a couple of years ago, but I can tell you briefly.

So, it works better when you enjoy it. Fredrik Wahlmarketer and I have been with Divio for a few years now and have a background as a management consultant, but then also as a CFO in a number of different SaaS companies. So I support Jon in the financial and in this type of investment issues and so on. Great.

As usual, we start with a little introduction of what we do for something, for those who don't know. And today I have added some information to tell a little more about what path we are on. So a little new and then we go into numbers and what happens in the company. I will try to be quick here and see if I can change the picture. Just briefly, I'm jumping too fast here, a little lag, but it will be fine. Just briefly, who we are, what we do, what we do for something. In one sense, what we do for something is that we deliver a Enkel, sömlös, effektiv cloud lösning som ska ta bort all komplexitet kopplat till molnlösningar. Framförallt Digital Agencies som är vårt nya fokusområde ska kunna ha en enkel So our platform is built for agencies and backed by developers. That's the slogan we're running with. Short background, we started as an agency in 2005, a Swedish agency, built a solution that we use today completely for our own use to be able to handle all of our customer projects in different target solutions, which became a very complex handling after a while, so that's why we built this solution for completely our own use. We realized that it was actually good and that others should also have a need for it, so in 2006 we started this commitment from consulting to product companies. In 2019, we signed our first really big customer, Fidelity, and a customer that has increased quite a lot in spending over the years. It was a big customer from the beginning. In 2019, we also launched on First North. The short background to that is that when the conversion from a product company to a consulting company required that we took in capital. And we could do that mainly in Sweden, and not in Sweden. And at the same time, we were also noted. 2024 has been a very good year for us on all fronts. We made a lot of internal changes to increase costs and get lower costs, but we also took in a lot of customers, especially when Uroche, a Swedish pharmaceutical company, as a welcome asset to the revenue flow. 2024 and 2025 is also a good year. It continues to be good. We became positive, still on a year-to-date basis. With a small dip in the quarter, we'll get to that later. But we continue to develop towards striving to become cash flow positive and grow with existing customers and increase our customer base as well. And have a lot that lies ahead here in the next two quarters. present and future. So it looks very exciting. A little short of what we do. Managing cloud infrastructures is a main concern. It is much better to have a cloud than to have your own servers, of course. But there is still a lot of main concern and requires that you have the stonework you are doing. This creates a lot of challenges for many companies. Some of the costs tend to be random costs that are difficult to predict and to be able to control because these suppliers have changed their business model and they are quite complex. Then you also build up dependencies, connected to that you become dependent on developers who handle the cloud infrastructure and also build in solutions that are difficult to get out. Then we have the whole compliance, or 24-7, that it should be up and running is creating enormous stress for many. organizations and, above all, those who are responsible for this tendering. The web pages tend to go down when they need to most. Then we have security, which is a major concern. The number of attacks against various web applications is increasing enormously. There are more and more cheaters trying to take advantage of various wrong purposes. There is enormous stress on basically all web applications. Combined with compliance, to be able to defend and show that you have the best possible security, it also becomes a jungle and higher and higher requirements. As the attacks get higher, the requirements also get higher. It also creates enormous stress. Complexity increases all the time, also on the target infrastructure. It develops, of course, and becomes more and more complex, creating a burden. on those who are going to handle this. And then the support is often very difficult. You have to turn to several different actors and it is difficult to know what to turn to, and in most cases the support is quite understated if you do not pay a lot of money. And how do you solve this? Well, there are mostly larger companies, especially, but also smaller companies use, they employ DevOps to handle this. Expensive and not always stable people, or people who are stable, of course, but they don't always stay. Or you have consultants, this is the motto for consulting companies. because you can sell a lot of consulting help. Or you can use an automated platform like ours, which handles more of this. Just to briefly go into what we do with our platform, I will try to describe what it consists of. You can say that there are two teams, two parts. We have the infrastructure team where there are a lot of different goal suppliers and on it we have a platform that no matter what goal suppliers you have, or if you change several different goal suppliers, which many have, then it is the same boundary to work with, it is the same standardized way to work with building web applications based on this. We then even out these differences for the different goal suppliers. Above this storage, you have the application storage, which is where you build your web applications. Alternatively, you move over already existing web applications to this storage. If you build from scratch, there is a lot that is already configured. So you don't have to create from scratch and it's very easy to collaborate with various developers, teams can collaborate on this. Then you have the control panel along the way, that's the one you see and use. Here you have all the tools you need to be able to keep track of your modeling infrastructure and all KPIs. You share various user rights for those who are going to use this and You set up backups and everything is handled in a very simple way. And today we handle more than 12,000 live applications and it is constantly growing. We have 300 million monthly requests, which is a lot on our platform. And then we have over 3,000 users. It is also growing continuously. And then we note that in 2019 we have deployed over 800,000 applications on our platform. So it is used enormously fluently and we have a lot of customers and a lot of applications that are constantly running on our platform. So it does a lot of good, you could say. And the advantages for our customers are that there are many advantages, but we increase the efficiency so that you don't have a lot of developers who only spend time on the target infrastructure. If you look at the average, you can reduce by 80% of the time you spend on target infrastructure compared to what you had before. Sen kan man styra om sina utvecklar så att de fokuserar på utveckling istället för bara underhåll vilket de flesta tycker är relativt tråkigt. Then the risk is minimized enormously, both in the form of a lot of automation, so that there is not so much human factor that plays into it anymore, and then that we build in a lot of security in our platform and monitor our automation itself, so that there can be many incidents and potential threats. before it happens, and if it does, then we have a way to handle it very quickly and remove everything from the farm before it causes any damage. And just as I said, a lot is automated, so it's not a clapper that goes in and destroys and opens up for safety shortcomings. The cost is optimized, you pay for what you use instead of being stuck in very complex models where you usually pay never too much in relation to what you need. And then it's us who are the experts. We are single-pointed, it doesn't matter what happens, you just need to contact us. If we haven't solved it before you hesitate to contact us, we'll solve it. And we are aware of everything that needs to be kept in check. You don't need to have contact with several different actors and try to understand different documentation that is incomprehensible if you don't know exactly what you are doing. And then we have the fact that you are not stuck in a solution. If you want to change the developers and the infrastructure, you can easily do that. You are not locked. But the most important thing is peace of mind. You can let go of everything that is connected to our infrastructure. It is we who take over and solve it. Vi har en massa olika kunder och olika varianter av kunder. Ideellt brukar vi prata om, det är en av våra största kunder. Det är en ganska hardcore kund som använder till molninfrastruktur bara egentligen. Vi växer sakta men säkert med dem, vi hjälper dem också med en del applikationssupport. Men det är också en väldigt trygg och bra kund och de säger att The best is when everything works and they don't hear anything from us. So now we deliver the report to them and confirm that they will see everything we do for them, so they don't have to think about whether we really need it. Roche, our last major customer, we take care of the online infrastructure, but we also help them with web application development, where we have a sub-consult that helps us with that. when we own the business and we are a very exciting customer where we grow slowly but surely. We have taken some time to get them on board. We have a big delivery now in September. Then it will be a little easier and a little less time to handle automation in the deliveries. Swiss Armed Forces is also an exciting company that also places very high demands on security and other things. Here we have gained a foothold, it is starting to grow, we are getting more and more applications from them, which is very exciting. A part of the applications, we can handle a lot, we can't handle everything, that's why we took part in creating a partnership again. consult bureau, som har kommit till senare, som vi redan börjat jobba med Swiss Armed Forces med. Water Digital får representera agencies som vi fokuserar väldigt hårt på just nu, som vi har jobbat med länge, och då hjälper vi dem både med alla deras egna projekt som de har för kunder, men de skickar också över direkt They resell our platform to customers. We have several customers who have received our platform, which is very exciting. And we cooperate a lot with them. So they have been a bit They have been our template for how we are going to work with agencies. Which has been very good. Let's move on. A bit much text on this picture, but... What we want to talk about here is, what are the alternatives to Divio and what does the competition look like on the market? And of course there are many actors on it. It is a large market, so there are many actors. And you can categorize it in three parts above all. We have the big hyper-scale target suppliers such as AWS, Google, Azure and so on. And they are mainly target suppliers. You don't need a pass solution like ours, you can go directly to them. But then you also need to have a solid understanding of what they are doing and you have large DevOps teams. For example, if you take a Swedish company like Klarna or Spotify, they may have built their own pass solution. But above all, they need to be direct to these goals. They don't need a middleman. But then they also have large teams that work with them and they are tech companies at the bottom. But it is far from all that it is. And then we should also note that these companies see us not as a competitor, but as a complement to their solution, which simplifies the handling of their solutions to large part of their customers who do not have such large tech teams. Then we also have European PAS infrastructure providers. There is an alternative number of them. They have much more limited solutions when it comes to cloud infrastructure compared to the big dragons and PAS solutions compared to our solution. But they are an interesting alternative as a complement often, and it gets more and more interesting now that there is a lot of tension between the USA and Europe, and more so that you have to have data in European companies. But it is often as a compliment. And then you have these niche companies, PaaS providers, where we act. There are a number of different companies that are reordered PaaS solutions. And here there are The focus is to make it as easy as possible to handle this goal solution and that you should not have experts. And then there are different directions among these niche companies. We have Heroku, which works a lot with small projects and volume at low costs. There are limitations there. You have Platform.se, which turned to these really big companies. and have quite complex solutions that still require a lot of competence and so on. So there are a lot of different niche variants that are used. And we have somewhere lay a little everywhere historically. We have big customers, we have small customers and so on. And the last direction is that we open up and that is to build a solution that turns to web agencies. And here is no one acting today. And if you look at us, we have now more and more chosen to turn to agencies and meet the the quite unexploited area or that part of the cake. And then it is important that you can both turn to smaller companies and large enterprise customers, so you can't just have one, you have to have a breadth in the platform, otherwise you can't meet the requirements of web agencies, because they often have a large variety of customers with these requirements. And you also have to have high security at the bottom. But apart from that, We have chosen a more communicative approach to this and why we do this is also because it is our DNA. We are an agency from the beginning. We built it from the beginning towards agencies. So many of the advantages of our platform to meet the needs of agencies. And that's digital agencies, web offices, and so on. And they appreciate these solutions. They will never build up large competencies connected to many infrastructures. They want to have as simple a solution as possible and focus on building web applications, campaigns and so on. And for us it is also important that we can focus our cell, instead of running on everything, we can focus on building relationships with agencies such as Centre for Digital that I have done and we have several other agencies, we have 80 agencies that we work with. and build a close relationship and get their projects in and also get customers in and use them as resellers so that they also turn to selling to their customers and get a kickback on that. So we get a much wider range in this. And you can also say that AI has made the production of agencies much more productive when it comes to development, but it does not help them when it comes to infrastructure, the problem where the challenges remain. We have also started to be recognized, especially in the Django community, but also in other communities when it comes to agencies. And now when we are out talking at fairs and everything, it is much easier for us to see who we are, what our identity is. So everything has become incredibly much easier for us. There are a lot of agencies, both big and small, out there. We have an enormous growth capacity here. We will continue to focus on DASH and Germany, Austria, southern Germany, Sweden and the Nordics. So this will continue to be our focus and this is what we see as our scale-up strategy. We will soon launch nine in just a few weeks, a new website that is completely updated and there is also a lot of focus on agencies. So it's incredibly exciting. And look, we can go over there and maybe come back to an agency a little later and answer questions there too. But Fredrik, you have to talk a little.

That's so interesting. As a business model, we have a very scalable SaaS or even a PaaS solution, Platform as a Service, where both infrastructure and software are included. And it follows the normal SaaS industry in our metrics. We look at our ARR, or even more, MRR. It is our monthly or yearly recurring revenue that we can generate over time, which means that we get a very predictable revenue stream forward since the customers pay in advance, so we generate revenue over time. It is, like all new products, very scalable. The product is more or less ready-to-use even if it is further developed. And that means that we have a fairly small cost to add more customers. We can also grow with a customer who starts with some initial deals. So we can grow with a customer and we can grow to several customers. And over time, we have added our some key speakers, that our ARR is about 2.5 million US dollars and that our growth in the last year has been 34 percent. We have a very low churn, that is, everything that Jon has just mentioned is very attractive to those customers who have chosen to go with us. They choose to stay, and of course we are very happy about that, and this is very important in the SaaS industry, that you don't lose more customers than what you buy. And then the last one is that we have upfront payments. The customer pays in advance and we deliver the service. There are so many subscription services that we feel work. And this is very good for our own working capital. Then there will be some other cash flow effects with it, that you get the money in advance and then you get income over time, but it will not be paid for when the subscription is renewed. Det är någonting som vi har försökt berätta om då att några kunder har valt att förskottsbetala i flera år framöver för att låsa in priser och för att få vara säker på att tjänsten tillhandahålls till dem då under den tiden. Bra, vi kan byta till nästa då kanske.

Kommer den upp?

Not yet with me. But I can tell you about the Q2 figures at least. While we wait for the slide to come up. I can't see it, but the others might see it. The Q2 figures show that our revenue has increased by 31% to 6.3 million from the previous 4.9 million. Above all, our professional service revenues have gone up to 1.9 million. We have talked about this for a few quarters. We have a component at Roche where we and then invoices for some of the work that is then carried out by subcontractors and we cut in between a certain margin. So this professional service revenue is not really of recurring character as we want to define it. It is of recurring character, but it is not a promotion service for our platform, but it is further invoiced and that is also what makes our COGS go up, because we get almost the same cost immediately. Men som sagt, prenumerationsintäkterna är upp 31% och net sales står ju upp 62% i kvartalet. Och vår MRR i juni, vår monthly recurring revenue, slutar på 207 000 US-dollar. För ett år sedan idag så var den 154 000 US-dollar i månaden. This means that this quarter EBITDA is slightly negative, around minus 200 000 SEK. Previously, we had an EBITDA result of minus 2.6 million SEK. When EBITDA is negative because we do deductions, Men sista raden då, resultatet, earnings or profit before tax, i det här kvartalet är positivt. Så det har att göra med lite sådana här finansiella kostnader som är upp- och nedorderade och inte company-skulder. När växelkurserna svänger väldigt mycket som de har gjort det här senaste halvåret med alla utspel från Vita Huset och så vidare, så omvärderas våra skulder till dotterbolagen och det här gör viss resultateffekt på oss, men det är inga cash-effekter. So we are very close to being cash flow positive right now. When this report was written, we had 1.7 million in the bank and then we have taken up a small loan of 2 million waiting for payment of the fundraiser that we announced at the end of June. So that's a bigger intake of money and they are on the bank now. They are not in the books per this quarter, but we have mostly just written about them in the comments. But it is almost 10 million kronor that we have taken in. And I don't know, Jon, maybe you should tell a little more about it and the purpose and so on. But this was really the financial highlights for this quarter, that the cash will be on very stable and comfortable levels. när vi presenterar nästa rapport och att vi är väldigt nära ett kassaflödes positivt resultat. Do you want to add anything to the fundraiser? We have emitted shares.

Yes, I can say that we have taken in money. We have burned a little more money than we had planned. It's a bit of these advance payments that are still chasing us in the tail. But we have taken it in, so now we should be stable. And we have a whole lot of advance payments, sometimes from Fidelity, that will come in at the beginning of next year. Or around the change of year. And that in combination with the fact that we continue now to go towards becoming cash flow positive. We are not really there yet. I had hoped for a few more businesses before summer so that we could be there. But it's nothing that has disappeared, it's just to continue to chase and be committed so that these businesses come in. And we have a lot of tension that is there in the pipe. So we get there and then It also means that we are in a completely different situation when we start next year, because then we will not have to burn the funding in the same way as we did before. So it looks very good and stable, and in combination with the growth rate. Can I jump down to the last page here with a little status on what is happening? I hope you can see the page. We have had a steady growth in sales. A small dip, mostly due to these extremely fluctuating currency effects, but we have growth even this year. in MRR and also in net sales. We continue to pursue the goal of having an average growth of 30% over a five-year period. We maintain it and will continue to deliver it this year as well. I mentioned earlier that we have had a lot of energy that has been put into taking over Roche, which is a very large customer for us and with a lot of potential for growth. We have been a little sparing with job on growth. We have a lot of growth in it, but we try to be very careful just this year because we have had to spend a lot of time on taking on board even more projects here and now. But those dialogues are in full swing, a lot on the initiative of the customer. So it looks very exciting. Then we have the agency strategy, which is a bit like going back to the roots, which should have been done long ago. man blir klok av erfarenhet, inte av att gissa sig fram. Utan baserat på vad vi gjort och fram till nu så har vi sett att det här, vi började testa det här egentligen i början av året. Och vi har sett att det har börjat komma in väldigt mycket Especially to start with smaller projects via agencies, but also a lot of larger projects that are starting to come in now via this strategy. And then we have also written about, as mentioned earlier, that the sales team is focused and focused on not chasing direct customers as much as before. We have those discussions too, of course. And there will be a lot of such things. But above all, it is to maintain a close relationship with agencies and other partners. So we get a much wider range and it's much clearer for us when we communicate and so on. So it's great. I think we've found the right thing here. And plus, as I mentioned earlier, this is also an unskilled research. No one has enjoyed this area, so it has become much easier for us communication-wise. Historically, we have probably been way too broad. We have tested a few different approaches, but most of all, we have been very thorough, and it rarely works well if you have limited muscles. And we have the Swiss Armed Forces, Swiss Innovation Forces, which we work with and get in several projects, and we have also gotten in It has been a good entry in this last point here, connected to Zylke. Zylke is a large global Swiss consulting company that works a lot with applications, but also with cloud infrastructure and others. They have a big hole in their business and it is connected to the whole domain, the domain that we represent, much connected to Wagtail, Python, and so on, but also other areas that we limit, they don't have a good solution. So we fill a very good gap in their business, which makes their business much stronger, their offer to customers becomes more And for us it is interesting, for example with the Swiss Armed Forces. They start sending all kinds of projects to us that are not at all limited to what we are doing. And there you get into a situation when you are building up a relationship, then you don't want to say no, you want to say yes to everything. There we partner up with SYLKE who have already started to get projects and they have started to send projects to us. It is a very good basis for a good collaboration that you start at the start and send projects to others so that it is not just a project that takes 100 years before it actually delivers. We have a very good relationship with them and they have a lot of super interesting ideas about how they should actually leverage on our platform and Divio. So it's an extremely interesting partnership. And we are also very close to each other culturally and on many other levels as well. So it's very interesting. And as Fredrik mentioned, we are very close to getting cash EBITDA positive. We have already been there and we are on the basis of half a year. So we will continue to push this and get there. And we don't need that much more to achieve that. gap in increased revenues and we hold tight to the costs, continue to reflect on different levels so that the costs do not fade away. And it will also be a challenge in the future to make sure to keep to the costs, so that even when we reach the water level, that we actually do not draw on costs and go back to having a negative result. But we will continue to build up and grow organically. Så det ser väldigt spännande ut och det är väldigt kul med det här SYLKE-projektet som kommer in här nu också. More to come, säger jag bara. Det kommer vara mer saker som ska levereras här nu under året. Som nämnde innan, jag hade hoppats på lite mer leverans innan sommaren, men det var det. Det är ingenting som har försvunnit. together with the whole team to continue to hunt in with these agreements that are in place. So it looks super exciting in the future as well. It's nice to have secured funding now until we have the next installment or start a little bit with Fidelity. and other customers in the beginning of next year. So that we have a healthy journey forward. So it looks very exciting and incredibly excited after having struggled and fought for a very long time, we have now arrived right. And I just want to come over, I really long to come over this water surface to be able to feel that now we are also going with a win. We have an existential narrative. Så det ser superspännande ut. Det här är ett bra år för oss. Precis som förra året. Det var väldigt kort det som händer här nu. Är det någonting du vill lägga till Fredrik?

Nej, jag tror att det är bra. Det kommer väl lite frågor här. Vi fick lite förhandsinfo om någon fråga som hade kommit in. Men vi tar det nu då. Vi hoppas att det är frågor.

Thank you very much for that presentation. Let's move on to the Q&A session. The first question that came in was about how much the MRR revenues need to increase in order for you to be able to show a positive cash flow.

Yes, we had a picture of that, but we removed it, Jon. There is a small gap left and I would say that we have about 10-15% that we would need to increase. Jon, you might not be able to calculate it more precisely, but if it is the same, then it is somewhere that it will go up to 240 or something like that. So that we are going to lay on the cash flow positivity. And then we calculate the business that we have now with Roche as ongoing and that it continues in the same pace. So there is not much left.

We have both, if you look at the increase in existing customers, new sales and a lot of other revenues. så ska inte det, alltså det, ja, vi ska lösa det utan, alltså det ska inte vara ett problem. Det ska inte vara ett problem att lösa det och nå dit och även över under innevarande år.

Tack. Nästa fråga här. Hur stor del av tillväxten i omsättning kommer från återkommande abonnementsintäkter jämfört med engångsprojekt?

You could say that almost 100% is recurring income. No, it's 100%. It's wrong of me, by the way, because now we have increased the consulting income quite radically, but even there it is recurring income. It's a contract that bygge på återkommande intäkter där det ska leverera X antal förbestämda sprinter under nästkommande tre år. Storbulken av det kopplat till Roche är också återkommande intäkter. I övrigt, om man tar bort den delen och bara tittar på de normala consulting revenue, which is a one-time revenue, I think it means that a few percent, maybe 5% of our total revenue is taken away by consulting revenue. And it can be looked at on time. So it's a very small part. The majority of the bulk is then recurring revenue that is based on our platform.

You can look at the figures we had there that subscription revenues are now at 6.3 million and professional service revenue at 1.9 million. So then professional services is about 20-25% of the total.

But it includes the Roche business.

It includes the big Roche business. If you look at a year ago, the figures looked completely different. Then it was almost 5 million in subscription and 200,000 in...

i professional services då var det under 5% av intäkterna så Jons gissning var rätt Tack så jättemycket för det svaret helt enkelt det var den sista frågan jag tänker lämna över till er om ni har några avslutande ord

Nej, jag har inte mer att vi tackar för att alla lyssnar. Vi har kämpat på länge här. Man ska aldrig sluta innovera, ändra och utvecklas. Det har vi inte gjort heller. Nu har vi hittat rätt. Vi har hittat rätt. Det ser otroligt spännande ut. Man märker ju också det man tittar internt på organisationer. Det finns en enorm otålighet i hela organisationen. get out there and move on and take the next step and get across the surface and be able to put more energy into developing the platform even more. There are thousands of ideas on how to develop it further. We are also looking at how we can, which we already do in many respects, how we use AI in our platform. There is as much as possible. som vi har börjat med och som vi tagit tag i och kan göra framgent. Så det ser superspännande ut på alla fronter just nu. Det är väldigt kul faktiskt. Det är roligare att driva bolaget nu än vad det var för två, tre år sedan. Så det är superspännande. Men stort tack till alla som lyssnar. If you have more questions, I will try to answer them.

Perfect, thank you very much.