Exsitec Holding AB (publ)

Welcome to this quarterly update for the third quarter of 2024 for Excitec. Presenting will be the CEO, Johan Kallblad. And without further ado, I will leave the word to Johan.

Thank you, Hampus. And thank you for joining. Talking now is me, Johan Kallblad. I've served as CEO of Excitec since 2010. I expect this presentation to be around 15 minutes and it is possible to ask questions via the chat or the hand raise function in Zoom. So I usually do. I will start off by making a short recap about the business. And after that, we'll cover Q3 financials and talk a little bit about our priorities going forward. So Excitec, we exist to help medium-sized businesses in the Nordics use digital tools to improve their operations. And we are a one-stop shop, so the customer can focus on their core business and leave IT to us. Digital tools is an important part of almost every business wanting to stay competitive in a mature market like the Nordics. Our offering can address areas like reducing financial administration through automation or use data for decision making. And it can also be creating integrations and information flow between business applications that are used in an organization. Like I said, I've been overseeing this operation as CEO since 2010. It took us a few years to set up this current business model and to reach scale. But since we did that in 2012 or 13, we've had 10 plus years of good solid growth and both top line and bottom line. So Market conditions have made growth challenging for the last 18 months or so, and we are working ourselves back into a growth mindset. We have increased headcount quite a lot this quarter and going after the quarter, we're around 625 employees in Sweden, Norway, Denmark and three colleagues in Finland. target market is medium-sized companies typically at least 50 million sec in revenue and there is no size limit upwards on where the model works but we don't actually actively target the enterprise segment in our sales and marketing and since we don't have the largest companies in our target market we have a quite a large customer base typically in a year no one single customer is more than one to two percent of revenue And we combine the software components that we work with in a modular way. And we created bundles of software to fit different industries. They're often made up of the same foundational components with some industry specific add-ons. And all in all, we sell and implement around 20 software packages that we combine in this way. And these are the primary software providers at this time. We have revenue share partnerships with the software providers where we market and sell their software to new accounts and we make customers successful in using the software over time. We also add our own in-house developed integrations to this. A dream customer can use up to perhaps five or six different components from us. The business model built on three revenue streams, sales and marketing is focused on selling software and integrations. This is sold on a subscription model where you pay as you use. And this revenue stream is around 20% of our net revenue. Two thirds of the revenue is from professional services where we implement the software and make the customer successful in using it over time. We can also build, do custom development and custom integrations where needed. The third part of the business model is that we offer the customers a single point of contact support on a recurring fixed price model. And in this engagement, we also can take care of infrastructure, internet access and IT security. And we try to give the customers a predictable cost structure with much of the running costs on a subscription model. So going into specifics for Q3, on a high level, this is what defined the quarter for us. As always, a reminder, Q3 is seasonally very weak given the vacation period for us and our customer. But this year was extra internally intense for us by design as we took on around 115 new colleagues. About 80 people went into our trainee program for consultants and 20 people went into a new sales talent program. And the rest of the people were already experienced in our offering, including a number of rehires of people that have worked with us previously. On the customer side, unfortunately, we had a really slow start of the quarter. We did see improving utilization and pretty good sales numbers towards the end of the quarter. Still a long lead time in closing deals, but as long as the market sentiment is not getting worse, we should be able to get back into organic growth over the coming quarters and Lastly, even when we struggle with overall revenue, we do see good growth in recurring revenue. And this is because our customers continue using the software and integrations and new implementations sold in prior quarters are going live, even if the general consulting market was weak. So looking at the numbers here, total revenue for the quarter was 161 million, an overall growth of 5%. However, with a negative organic growth of almost negative 5%. Most of the negative growth came from Norway, where it's been one step forward and one step back for the entire year. We do see really strong sales numbers in Norway towards the end of the quarter, actually up about 100% from last year. But we've continued struggling with some quality issues and an uneven resource utilization. The biggest segment, Sweden, organic growth was flat with a slow start and a stronger ending of the quarter. And we did have definitely the capacity to take on more work. But we've also been very occupied with training new employees here. So this is where most of the new people are. Adjusted EBITDA. It's where we really see the cost of the new employees, margins of around 4% compared with 8%, almost 8% last year. Obviously not great, even if it's not that big of an outlier compared to historic Q3s. Time will tell if we're making the investment in new staff too early. Given the market conditions, these things are hard to predict, but we do feel the combination of some easing in the macro environment along with strong underlying finances for Excitec and a pretty good order intake should make this a long-term good choice for us. We have 10 years of track record in running trainee programs and we expect to recoup the costs, the investment sometime in Q2 of 2024. Year-to-date earnings up 22% from the year before. Looking at the segments, Sweden has been performing on exceptional margins for a long period. In Q3, of course, adding a lot of staff is costing us a lot of money. We have been running at profitability levels that are over our long-term goals in Sweden. So we do feel creating conditions for long-term growth is more important than optimizing for short-term profitability here. Norway again had good overall growth due to the acquisition of Integrationspartner, but organic growth has been very weak in the quarter, which is a disappointment. I realize I've been saying that the performance in terms of growth should be better and more predictable for a couple of quarters now, and still we are not there. We do see really strong sales numbers in the quarter, and I must believe that this will turn into better growth numbers. Denmark, again, is underwhelming in a slow market. And again, the key thing for us is reaching scale in new offerings where there's been one step forward and one step back also here. For practical reasons, we package Denmark and Finland here. Finland is small with only three employees at the time. So after these numbers, I need some financial strong points. And I do want to remind the audience that we do see good growth in our recurring revenue from software. This is the in-house developed integrations, along with recurring margins from resold software. We see a growth of 32% here year over year. And the growth comes partly from M&A, where we have a larger customer base and a broader offering. And to some extent, it still comes from price increases. These have been slowing the last year, but were strong primarily during 2023, leading into 2024. And it is growth from customers deploying new software. This is an important contributor to our earnings. And it's also a good proxy to see that we have a strong offering and customers continue using and deploying software from our offering. So... I want to finish up with a short update on the market conditions and our priorities. Some comments on the people here. There was a massive undertaking for us in hiring more than 110 people in the quarter. So average full-time equivalents was... FT East was 33 people added from Q2 to Q3 compared to 14 last year. But since most hires started in the second half of the quarter, outgoing numbers is actually a lot more. It's around 80 people more on staff after this quarter compared to what we had going out of Q2. Direct additional costs compared with last year in the quarter was, if we look at the sizing of the trainee program, was around 4.5 million in direct salary costs and of course a lot of overhead in terms of training and mentorship also. The 4.5 million was the additional cost compared to last year, so probably 14-15 million for running the trainee program in the quarter. With 10 years of track record here, we expect a positive contribution from Q2 of 2025 going forward from this initiative. The market, not a single answer. Overall, we see sales growth of 5% in the quarter. We started slow, but in September we saw a really strong end to the Q3 sales. We also see that sales cycles are still longer than historical mean. No real improvement, but not really getting worse either. On a really positive note, existing customers are starting to scale up. We see a big increase in existing customers ordering extra licenses and services, especially towards the end of the quarter. October has also started on a good note. So we do actually feel pretty good about this. Looking at M&A activities, we see an increased level of M&A activity, especially driven by ourselves, I suppose. Valuations are feeling that they are on historically average levels, about the levels that we paid before. We're not looking for massive acquisitions at this time. We want to use the existing debt structure. So we do expect free cash flow and debt to be primary sources of financing going forward. We did close two deals early in Q3. These were very small in terms of the revenue implications. But we have a strong M&A funnel and reasonable competition, meaning that we can take the time we need to make a solid due diligence. So we do have a pretty positive outlook on opportunities for M&A going forward. So as for business priorities going forward, three priorities. The first one is the operational excellence, where we are typically running at around twice the margin of our peer group of publicly traded IT services companies due to a higher level of reuse and a higher level of recurring revenues and obsession of taking good care of customers over time. This is always something that should be expected of Excitec. The second priority is talent development. We're doing a huge investment this fall in training both new consultants and sale people. And we want to be a great place to start a career or develop leadership skills or sales skills. So obviously now a huge priority for us. Lastly, we are investing for growth in terms of capacity, which means we need to acquire more customers through organic sales and through M&A. We think that we are early compared to competitors in scaling on for growth, and time will tell if we are too early, but we are switching more to a growth mindset after a year and a half of consolidation. So Last slide here. What's up with me? So after this is a news report that came out about two weeks ago after 14 years as a CEO, it's I feel it's time for change. So I've asked the board to start looking at replacements for me. The timeline is open, no rush really, but then there's no reason to have it take more time than it has to. And I'm really looking forward to continuing working with Excitec from a board level. So I'm not leaving the company per se. So this concludes my presentation. And if there are any questions, please feel free to ask.

Yes, so we have a question. Jacob, Benon, you can activate your microphone. Yes, thank you.

Hello, can you hear me? Yes, please go ahead. Perfect. So I just wanted to start with some questions on the acquisition of Mflow. Can you start by just telling us your reasoning behind this acquisition?

Yeah, so this is a bit of an unusual acquisition for us. It's actually the master reseller of Medius software in Finland. So we have Medius as a software for automating accounts payables and to some extent purchasing. that we've been very successful with in Sweden. And it's actually really large. It's actually probably our largest recurring revenue contributor in Sweden today, even bigger than Visma software. We've been very successful in Sweden and we want to see if we can do the same thing for other markets. So Enflo is the master reseller of Medius in Finland, meaning that they have the complete market. So any Medius deployments that's done in Finland is sold through Enflo. It's a really small company, but it provides a good opportunity because what they have done actually is it's only three employees, but they've been selling into large accounts in Finland, and they've handled all the deliveries through subcontractors. And we're moving, the thinking is moving forward. We continue to selling the software, using our agreements with Medius, and then we do the services ourselves rather than having subcontractors. So the company should, in 12 months from now in terms of revenue, be a lot larger than than what it is. Then on a high level, the company looks expensive, but what we're buying is 100% recurring recurring revenue with a very high margin. So, you know, again, you know, we will have to prove over time that we can continue growing this, but it's a really interesting thing to do something that we've done really successfully in Sweden that has a good traction in Finland as well and to become the go-to-market partner of Medius in that market. So, yeah.

Okay.

That's maybe, Jakob, that's maybe a longer reasoning than you expected. Not so much going into financials, but also talking about the logic. The other logic, I would say, obviously, we are interested in building a consulting operation in Finland as well and expanding our entire offering into the Finnish market. We feel that it's a lot of growth opportunities. In the other countries where we are already present. So we don't feel that it has to happen now. But looking long term, we do expect Finland to be in our scope for other services also, not only media software.

Okay, I see. Because looking at the acquisition from the outside, it raises at least some eyebrows on my end that you paid 57 million SEK excluding earnouts for this rather small company with three employees and a year-to-date sales of like 5 million Swedish. I did some calculations and if your levels of salaries would be applicable to Finland as well, you would be able to hire like 15 something salespeople in Finland and run the business trying to sell media software for five years for that same amount of money that you spent on the acquisition. So can you tell us a bit more about your reasoning with acquiring a foothold here in Finland versus establishing yourself there organically?

Yeah, these are reasonable questions. But what we have here is it's something that you cannot see in the numbers is that we have customer commitments and deals. Actually, we have a master reseller agreement with Medius. Showing that we are the sole seller now and with also support from Medius. So it's an agreement with Medius, a go-to-market agreement that we could not create. Well, maybe we could over time, but there is an existing agreement. agreement with Medius on being their go-to-market partner on the local market. And we have customer engagements on a lot higher levels than the historical revenue. So over the last two years, they've been really successful in selling into new engagements, including some of the largest customers in Finland, like Kona, for instance, is a big one. So the run rate of revenue, we do expect them to have an EBITDA of around, looking from the date when we closed the acquisition and one year forward, we do expect it to be an EBITDA of around 5 to 6 million SEC. Still not that cheap, I do agree, but we have recurring revenues on customer commitments, on yearly revenues of somewhere around somewhere around, I think, 11, 12 million SEC with 100% margin and only the cost of three salaries to run it. So the calculation... The forward-looking calculation is actually relatively reasonable here, even though I feel the same thing that you do. It's a lot of money for a very small operation, but I can see the customer commitments with around 40 plus customers and recurring revenue commitments under those contracts for using the software of 11, 12 million SEC per year. And that's the contribution. So it should be financially sound over time, but it's a steep price considering the number of employees. Then also the revenues from consulting services, this is something that's not seen, that has not been funneled through the company. So the revenues for consulting services have been invoiced directly from the subcontractor to the customer. So there is no, the revenue that we see in this company is only the margin from software commitments. And we do expect to add our own consulting services to this. And you cannot see that in the historical numbers. But still a really good question.

Yeah, okay. Makes a lot more sense now.

Makes a little bit more sense. But yeah, I mean, you should continue asking this over maybe not a quarter from now, but probably a year from now. Yeah. Because we do have some... We do have some... follow up to do to make sure that this was... It's an unusual special situation here. So I do agree.

I think it makes a lot more sense now. I choked a little bit on my coffee this morning when I saw the consideration.

Jakob, my board did the same when we came up with the idea to start with. So you're not alone. But it does look... It does look... Actually, they've had a good start too, even though it's a slow period there. But we closed one or two additional deals in this quarter. No revenue at all. The revenue doesn't start until it's deployed and the customer is successful using the software. But we do see the contractual commitments. And this should be a good growth, one of several good growth opportunities for us going forward.

Yeah, I understand. And can we talk a little bit about the customer list that Enflow has? I'm interested in... Because when you look at Excitec now, and if we take your recurring revenue from software and divide it by your, let's say, 4,000 roughly customers, I get that each customer brings in a total of some 40,000 Swedish kronor per year in revenue from software. And Mflow had about 30 customers in the press release, and you said something like 40 now. So, meaning that if each customer were to generate the same revenue per customer that Excitec does, mFlu would only generate like slightly above 1 million SEAC in sales, which is obviously not the case. So, can you tell us a bit more about that? that customer base and what kind of revenue potential you see there for customers.

First, there's a historical thing that you have to be aware of. Excite existed before we all did the cloud software transition in this space. So some vendors were early and did it 10 years ago. Some have done the transition earlier. a couple of years ago. So just there's a historical, in our customer numbers, there's a legacy base of customers that are not actually SaaS software customers that are on-prem and that are legacy customers. So the average customer, whereas Mflow, which has existed only for a couple of years, and they've only been successful maybe for the last year, And they've sold entirely a subscription based transaction priced software. They're at a lot higher software revenues. But if I take out my media software, which is the same in Sweden as in Finland, if I take out that offering from my entire numbers, it's not that big of a difference between my media customers in Sweden and the media customers that we have in Finland. So this offering is the most recurring revenue driving and also transaction-based pricing. It's the most modern pricing that we have of any softwares in our assortment of softwares that we sell. So we can actually compare these 40 customers to 150 customers or so that we have in Sweden on the same offering. But still... Even while doing this, I would say that the average price, they're around maybe twice the size that we have. So there are larger customers. And the reason for that is in Sweden, moving a little bit up in segment and realizing that our offering actually fits a little bit higher in segment is something that's fairly new to us in Sweden. Historically, we've been only focusing mid-market, but Even looking in Sweden on this offering, the Medius offering, we do have customers like a Polestar, which is obviously a larger company than our average company. We do have an Alcell that we're working with. We do have multiple large scale companies that we are working with with this offering. So this is one of the offerings in our assortment that fits a larger customer. Then I would also add that Enflo acts as the sole reseller of medias in Finland, whereas medias in Sweden historically have direct sales in the enterprise segment. So the average customer here is larger in terms of license usage than our average customer in Sweden. But when you look into detail, it's not that big of a difference, actually, because this, this portion of the of the businesses doesn't look exactly as our historical legacy software base, if that makes sense.

That makes sense. And with the acquisition of Mflow, does their percentage kickback level from Medius change anything with you acquiring the company?

That's a good question. We've seen that in some areas where we have acquired a smaller vendor moving into our systems and then we've been able to increase the margins. But unfortunately, in this case, they were already on the highest level. So no, there is no opportunity like bundling volume because we were both at the highest level in terms of of margin. We do, you know, possibly become a more important partner of Mediasys, but it's not actually, we don't expect any margin improvements due to that, actually.

Okay, thank you. And I think you've covered all the question marks I had regarding the acquisition. So another question from my end is, you mentioned that you have some quality issues in Norway related to a few projects. Just wondering if these are the same kind of issues that you talked about in the Q2 report as well, or if there's anything new.

One of them is the same issues and it's a new product offering that we do feel really good about and that we're selling a lot of. actually from Visma but it has taken us time and we've underestimated how much time it would take us to learn the software and also maybe we've been overselling to some customers or not maybe we have been overselling how easy the conversion should be and we've been having to work a lot of hours for free in order to cover for this. And that's the same quality issue. We also have another one that's getting a little bit better over time. We have another one because we audited a lot of our project engagements and we realized that we had software components that was only local for us in the Norwegian market that we don't intend to continue working on. So we're removing one one product from our offering. And we only had three customers on that, but we need to scale back on that offering. And some of the customers were able to, I guess, two of the three were able to find other solutions. And one of them we will not be able to support. So it's been a cost, a one-off cost of rolling back a delivery that we are not able to complete so so it's one one portion is the same and one portion is is new but that should be a one-off that only should be this quarter okay great and um you you talked a little bit about organic growth in software subscriptions uh but i'm just wondering if you could uh

explain a bit more how investors should view this. For example, this quarter you state that your software subscriptions are growing roughly 15% organically LTM, but your organic growth for the entire group year to date is growing 0% organically. And so what is driving the organic growth in software subscription to almost 15% while your consulting organization is experiencing negative growth? Is this to be seen as some sort of backlog that you are now filling and that we should expect more modest organic growth in software going forward?

These are hard questions, Jakob. Good questions. Sorry. But you are correct in that we have negative. So first, let me first reconfirm your analysis that we do have negative organic growth in the consulting operation. That is correct. Okay. So why is software subscriptions growing? Well, actually, one of the strange things... One of the strange things is that new sales has actually been pretty good, even for the last 18 months. Not every month, not every quarter, but overall, we have not seen a large slowdown in organics in new sales, which is a little bit surprising. But what we've seen really weakening, a really weak structure is that existing customer base, the revenues that you get from just customers doing the customer that you already sold to many years ago, doing some small changes that they just do. We've seen a lot of like the average customer has been cutting down on spend. So even though, because a new implementation is often driven by change. So something changes, you can't use your old systems or you've grown too much or the old systems became outdated, you need to do a change. And that's what drives the new implementations and the old customer base can perhaps choose to not consume as much IT services for a year or two years if their finances are stressed, right? So we've seen less growth. And this is a bit unfortunate because the existing customer base used to just... I mean, we have a lot of money coming in there that we don't actually have to work that hard for because it starts usually with the customer calling support and asking for help. And then we realized this is not actually support. You're asking us to change something. And so... So with the slow growth in the organic, like the consumption that happens by itself without salespeople being involved, that has been really negative growth. And that's hitting our consulting services the most because there were And this is where like it's just many small streams. It's an hour here and an hour there. And when you sum it all together, it affects our consulting service operation, whereas new sales has worked reasonably successfully. So the reason for the organic growth is that we do deploy gradually. When we do sell new commitments and we deploy gradually, we do get an increasing software revenue as long as the existing customers aren't doing so bad that they actually cancel the usage of the software. Because that could be like an existing customer that does really bad. He may cancel. He says, I don't need this software anymore. We haven't seen that happen to a large extent. So it seems that the customers that are trying to cut down on spending, they cut down on professional services. They keep using the software. And new customers that come in, they add software. Plus that we see on the newer, like a little bit what we talked about with Enflow, newer softwares typically have a higher cost a higher software subscription component than older software. We have a legacy customer base where the customer perhaps bought the software on a perpetual license. So you paid 500,000 and you got a perpetual right to use the software. And now everything is on subscription. So that means churning out old customers and adding new customers may be a net zero in consulting services, but it will be really positive on software subscription growth. So to get to the core of your question, I don't really expect software subscription to slow down. There is one effect that will be entirely removed, and it's that we've seen maybe last year more than 10% price increases on the average software component. It's not like that. Prices aren't increasing that much this year, but there is still some lag. So some of the old price increases are hitting our numbers now and the last quarter and so on. So the software the money driven by price increases, of course, will dry up. And they're probably already to a relatively large extent drying up. But I don't expect a lower growth in terms of actual deployments. So we do feel pretty good about this one, yeah.

Thank you. And sorry for asking the hard questions.

No, these are good questions. These are the types of questions that we are asking ourselves internally. I mean, again, so coming back, so I don't mean to sound... First, I don't want to dismiss. We were not happy with the start of this quarter. And I don't want to dismiss that. I do have some excuses and I do have some... And I do... around that. But there is also some logic as to why we are choosing this time to add a lot of staff. And it's because in general, we are feeling pretty good about things going forward. But these are the types of questions that we're asking ourselves, of course.

Yeah, understandable. My final question is about you stepping down as a CEO. Can you firstly comment a bit more on your decision? And secondly, I'm wondering what you think would be the main challenge for the company going forward without you and what you're doing to mitigate this?

continue in asking the difficult questions well I felt you know on a personal level I've been the CEO here for 14 years it's you know More than twice as long as the second longest job I had in my life. And the second longest job I moved between four cities during the seven or eight years I was there. And now I've been doing the same thing for a long time because it was a good fit in my life. And it's a wonderful company to work for and to grow with. But after 14 years, I also must say that oftentimes I ask the same people the same questions about the same things. And to some extent, I'm nervous about not thinking the new thoughts that I should think about. So I raised this question. And also, it's a matter of inspiration. And I'm more of a growth person than I am a consolidation person. To be honest, we've had a year and a half of consolidation, perhaps, and maybe my own personal... inspiration comes more from growth than from consolidation. So I've had this discussion with the chairman, Peter, and we talked about, you know, there will be some point where maybe he won't be chairman and I won't be CEO. And then we figured maybe we should, maybe we could do a shift here. Maybe there's a way for me to be a chairman of the company and maybe there's a way for somebody else to take over. So that's really the logic. And then we felt this became very much like one of those more insider trading things. So we felt that if we have this plan, we need to go out and talk about it and inform about it immediately, even if we don't know who takes over. And so on. But that's some some level of I really love this company. So I do intend to be to be involved in it going forward as well. So that's the other part of your question was how do we mitigate risk? Well. I think we're divided right now into six business units and the business units are performing on various levels. Some is underperforming, some are performing really, really well. But I mean, it's around when someone, if someone else comes in, you know, lifting the business unit managers. I actually brought to the ones that have physical meetings with me, I brought two business unit managers today. They've been very quiet here, but they're They're with me here, so I want to have some other people to get acquaintance with some of the things that I do that nobody else does. But the organization is actually built for not needing a CEO to be a part of day-to-day operations. The organization that we created over the last three years, four years, is built around that. relatively independent business units with their own that work a lot together in terms of recruiting and in terms of talent management and so on but they have their own separate sales forces and and work relatively independently so so it's not a company where the ceo needs to be involved in all the day-to-day operations it's more about how do we measure how do we How do we determine what is good and what is bad and what's the general direction and those things? That's important. So I hope that we have six business units managers. I hope that we have six prospective new CEOs in the company from that level. So I'm trying to work on that.

Great. Thanks for answering my questions. And if we don't speak to each other next quarter, I wish you the very best and good luck on your next adventure.

Oh, I'm quite sure you'll be speaking to me in the next quarter. Okay. Thanks. Thanks.

Yeah. So we have a question from Tom.

Hello, Tom. Yes.

First of all, the run rate on consultancy services in Sweden, you've been relatively flat. Q1, Q2 is down 3 million in Q3. Should we expect it to remain on a flat level year on year in Q4 and Q1 and then accelerate in Q2 again?

Is that your question? Well, you know, we don't give forecasts, but we don't see, like, we think that we're first from a capacity level. We definitely have the capacity to increase our consulting services. And that's not actually driven by the trainee program because that takes longer time. That's in Q2 of 2025. But we also see a much lower employee churn. So we actually have the capacity to deliver more So we should have good opportunities for growth in that sense. So it's all about our ability to engage with our clients and make sure that we have the right demand. The projection that you said would make me a little bit disappointed without doing any forecasts. But I would be disappointed if we don't have growth also in consulting services over the next six months. That would disappoint me. how we manage to engage with our clients. I mean, it's not a great market out there, but there are deals to be had. And when we are engaging with clients, we do get work. And there's a lot of companies that really should invest in digital automation. So we do feel actually long-term pretty good about our prospects for growth. All right, thanks.

And just on the run rate on the kickbacks you received last year in Q4, do you have a status update for us on 2024?

On, you know, is it the software revenue?

Yeah, the extra software kickback where you reached the diamond level of... Oh, yeah, yeah, yeah.

Yeah, we had a one-off. We had a one-off in... I think it looks pretty good.

Yep. Perfect. That's all from me.

And then we have a question from Raymond.

Hi, can you hear me?

Yep.

Perfect.

So, yeah, go ahead. No, we don't hear you anymore.

Hello, hello.

Oh, yeah. Hi. Yeah, we hear you now. Yeah.

Okay, so in terms of CEO replacement for yourself, could you maybe provide some color on whether you think there are suitable candidates internally or is there any reason to look externally?

Raymond, as you know, it's not the role of a CEO to name his successor. Obviously, for me, if I didn't think that there were people of the right integrity and quality internally, then I wouldn't have done my job. So obviously, I think that there are candidates internally. But it's not really up to me. It's really up to the board. And I guess it's... But for sure, there are also very, very talented people outside of Excitec. We decided with the board that we're taking this week, we're taking this quarterly report, and then we'll start looking at that probably next week with the board. But from my end, obviously, if I didn't think there were people of the right qualities internally, then I wouldn't have done my job. But it's really, again, up to the board. There's no one else who's been the CEO of a billion sec company internally. And there are people like that externally. So is there a reason to look externally? Of course. The reason would be that you want someone who's already run a company with a billion sec in revenue. And there's no one like that internally, including myself. So that would be the reason to look externally. But we have... you know, we have some of the best people in the business is already working as leaders in our organization. So, I mean, there should definitely be the talent. The question is, do they have the experience to make the board comfortable?

Got it. And you've said before that Denmark needs to reach a critical mass. What progress are you seeing there and what should we think about in terms of the timeline of any margin improvement?

Sorry, maybe you had something. I was going to shed some light there. I said one step forward, one step back. Last year, we finally got some traction on the VismaNet, which is the cloud offering from Visma that we've been very late on releasing. Visma has been late on releasing in Denmark. We finally got some traction. I think we closed 11 deals on that software, which is actually not bad. We only do maybe 30, 40 deals even in Sweden in a year. So that was actually pretty good. But just as we got that started, Visma decided to instead focus on the business next, the cloud version of their old on-premise software. And they made that a priority. So just when we were getting started with one set of new software projects, the focus from our main software provider lacked a little bit. So we're not actually at this moment sure on how much growth to expect from VismaNet. We've seen negative growth this year from that new offering, which was unexpected for me. I really thought that it finally took off. So we're instead moving into following Visma. We're moving into more of a focus of Business Next already in Denmark. It released formally right around summertime. We closed our first two deals there. on that software. And, and to be honest, I felt that we were a bit unlucky and the team was a little bit unlucky because they, they, it's a lot of effort in reaching, getting somewhere on a new software. And just as we started hitting traction, we got some, some changes in the product offering. And that was not by our design or by our choice, but sometimes you have to roll with the punches and, and you know, just see things for what they are and change your plans.

um so yeah yeah what type of progress am i seeing not enough obviously got it another question so in the report you write that customers have been slow to start a project after the summer um is that a sign that customers are sort of more hesitant to make purchases or But he's already won projects that are seeing delays in their implementation.

Yeah, we saw that. I talked to actually one of my business units managers who's sitting in here with me. He just said that he was very disappointed because we know that Q3 is slow. So we felt he had a detailed plan on what everybody was going to work on once we came back from vacations. And then after vacations... around five projects were stalled. But it was actually mostly because of customers not having the staff available to run the projects. Because we're not resource consultants, I would probably expect without me knowing that the more the The more the resource providers, like the people where you buy a full-time consultant, that they will maybe do better this quarter than I did. Because we're delivering the entire solutions. And it's not enough to have... We need to work in a team with the customer. And when the customer is not ready to... to initiate work with us, then we can't deliver even if we have a contractual agreement that says that we were supposed to. So we don't know why it was very slow. We don't feel... If it was the overall market conditions, it doesn't make sense why it got started in September. Then we would have seen the trend continue slowing in September, right? If it was the overall market. But it did. These projects, these five projects that we knew that were held up, that we thought we were going to start on in August, they actually started in September. Maybe all of them. So so so it's a delay. Not necessarily a stop. So, yeah, I think I think I do not know, but I do think that there's been more talks in September around maybe now the interest rate is going down. Maybe now it's time to consider investments. And there are some people that, like myself, are seeing that maybe we should not be the last ones to grow into a better economy. you know, maybe we should try and be a little bit early here. Maybe this is a time for us to add to our, it's not like it's the general consensus in the market, but that there are more people than me that are thinking that maybe now is a good time to prepare for a better market in 2025. So, yeah, that's my take.

Great, then compare it.

Yeah. If you then compare organic growth, Q3 might not be so telling as maybe comparing September's growth year on year. Could you give us any flavor on September growth?

Yeah, September was better. Still, all the issues around getting new people in there, but especially for me, the last weeks of September looked better so september even when august is slow start of september is typically slow as well so so but it's been improving and that's really all i i can look for right now it's improvement week over week in terms of you and that's very simple it's resource utilization actually it's not so much sales numbers it's resource utilization at this time of year and and uh and we're seeing improvements week over week um and and but not from a starting point that we loved

Okay. All for me. Thank you so much.

Thank you.

And that will conclude all the questions we've got.

Thank you so much for listening in and we'll talk to you in a quarter.