Exsitec Holding AB (publ)

Hello everyone and welcome to this year end report for Excitec. Presenting today will be Group CEO Niklas Ek, CFO Carl Arneson and me Hampus Strangqvist. If you have any questions, you can either use the raise hand function or the chat function in Zoom. And with that, I will leave the word to Niklas.

Thank you, Hampus. Hello, everyone. This is Niklas Jek speaking. I am the CEO and has been that for almost a year now. I will start off by making a short recap about our business as a reminder what we do. After that, we will cover Q4 financials and a short market update and also our priorities going forward. We are Excitec, making IT work together and we exist to deliver digital solutions that improve our customers' businesses and we aim to be a one-stop shop to the customer. We do this by selecting different softwares and develop in-house integrations that can be reused. By implementing different software and provide long-term support, we aim to be a single point of contact for our customers. The digital tools that we use can address areas like reducing financial administration through automation or use data for better decision making. Our customer base today is around 5,500 organizations and our target market is medium to large-sized companies in the Nordics. No one customer typically is more than around 1% of our revenue, so very low risk in the individual accounts. We combine the software packages we work with to fit different industries and we have customers in many different industry sectors as you see in the slide. These are the primary software providers and partners that we work with at this time. We are resellers of softwares and the selection has grown to just over 20 software components. We combine these softwares with the integrations that we develop in-house. And we have a revenue share partnership with these software providers where we market and sell their software to new accounts and make customers successful in using the software over time. The business model is built on three revenue streams. The sales and marketing is focused on selling software together with integrations. This is sold on a subscription model where you pay as you use. And this revenue stream has grown to 25% of our net revenue. Just under two thirds of our revenue is from professional services where we implement the software and make the customers successful in using the software over time. We also do custom development and custom integrations when needed. The third revenue stream is our business model is that we offer a customer a single point of contact support on a recurring fixed price model. Excitec is a Nordic company started out from Linköping, Sweden. Today we are around 600 employees with Sweden being the biggest segment. We have been successful in the last 10 years with growth, both organic and from M&A. Our EBITDA has followed our growth nicely with an exception in 2024. Excitec runs one of the largest trainee programs in the Nordics and has been doing that with scale since 2015. We are very proud of this and almost 40% of the employees working at Excitec started as trainees. Our trainee program is the main source for recruiting new people and an important addition for future growth. So let's dive into specifics for Q4. I will start off with the highlights and then leave the word to Carl Arneson, our CFO, for the financial details. We delivered a strong finish to the year with an adjusted EBITDA of 43 million SEK and a margin of 18%. This is a clear step up compared to Q4 last year when adjusted EBITDA was 30 million SEK with a margin of 13%. The improvement is broad-based with positive contributions from all segments and Carl will come back to the segment performance in more detail shortly. I'm also pleased to see that we deliver organic growth of 2% during the quarter. Our recurring revenue from software continues to develop well and has reached 225 million SEC on an LTM basis corresponding to a 22% increase year-on-year. This remains an important driver of both growth and profitability, and Carl will cover this in more details shortly. The growth in recurring revenue is driven by a combination of new sales momentum and our continued focus on developing existing customer relationships over time. Lastly, I want to briefly cover an update that refers to focus on our core business before moving on to the financial details. So in December we signed an agreement to divest our subsidiary ZEDCOM to Infracom Group, a specialist within IT infrastructure. We acquired ZEDCOM in 2021 where part of the business was related to Visma Net, which remains within Excitec today. The other part of the acquisition consisted of infrastructure, hardware and connectivity services. Over time, this infrastructure-focused part of the business has become less aligned with Excitec's core focus on digitalization and business-critical applications. We have not been able to integrate this part of the business with our core offering in the way we originally intended. As a result, we decided to evaluate alternatives for Zedcom, where Infracom stood out as the best long-term owner. I leave the word to you, Carl.

Thank you, Niklas. Starting with our net sales, we report a 6% growth in Q4 versus Q4 2024, where the organic growth summarized to plus 2%. Following a stronger Swedish Krona, we actually delivered stronger numbers locally in both our segments, Norway and other Nordics. And I will come back to that shortly. During this quarter, we also saw stronger net sales performances in all our segments. And I will get back to that as well. Our growth comes from all our revenue streams, where professional services and software are the main ones, where the growth in recurring revenues from software stands out also in this quarter. But the overall market sentiment is still that customers tend to push decision for minor system updates and standard adjustments into the future, while new projects driven from our sales department are developing more positively. Also, looking at the trend the last 12 months, we see a 10% growth year on year, where the majority, 8%, is related from acquisitions. Moving over to our adjusted EBITDA, we report a 43 million SEK profit, which is a 42% uplift versus the fourth quarter last year. Main drivers behind the uplift is continuous growth in recurring revenues, as mentioned, slightly stronger professional services, but also by a solid cost control. However, and also previously mentioned, we still feel that we can deliver even stronger performances almost across all our segments. On a full year basis, the efficiency, especially Sweden and Norway, can be improved. And this is also something that we prioritize in our daily operations. Year to date, the adjusted EBITDA of 158 million SEK is a 31% growth versus last year. So let's continue with the net recurring revenues from software that for 2024 and also a few years back has been a highlight for us. For the last 12 months, we see a growth of 22% in this revenue stream that made up 25% of our total revenues last year. The growth is driven both through M&A, new sales and also to a certain degree also from price increases. Overall, the organic growth in recurring revenues as per Q4 summarized to approximately 50% of the LTM growth. This development is of course a very important contributor to our earnings and also a strength with our business model. But it's also a good indicator for us that we have a strong offering and that our customers continue to use and deploy the software that we deliver. So moving over to our different segments, starting with Sweden. Sweden delivers a 4% growth year-on-year in Q4, where the organic growth was flat. The adjusted EBITDA margin also developed positive in this quarter and ended up at 21% versus 17% last year. So we continue the margin uplift trend from that we saw in Q3. The higher margin year-on-year can mainly be explained by stronger recurring revenues, slight uplifting consulting revenues, but also, as mentioned, by a solid cost control. Norway reported a 5% growth in total net sales in Q4, however, highly affected by a weaker Norwegian krona. In local currency, the growth was approximately 11% year on year. It's also satisfying that we continue to increase our adjusted EBITDA and margin. In Q4, we go from 9% to 15% year on year, where an improvement in efficiency was the main driver behind this uplift. Here we also maintain the margin of 15% from Q3, which was also the highest level that we have had for Norway since the acquisition of the Norwegian business back in 2021. Even though we are happy with the improvement during Q4 and for the full year, we still feel that we have more opportunities going forward, as I mentioned previously. An improved margin in Norway is one of our key focuses. So a stable and strong margin over time is important for us to build a stronger business ready for future growth in Norway. Finally, our third segment of the Nordics, that covers our offerings in Denmark and Finland, reported a growth of 20%, where 12% of the growth was organic. In local currencies, the organic growth was 18% for the total segment. And by that, I hand over to you again, Niklas.