Exsitec Holding AB (publ)

Hi everyone and welcome to this web presentation of the Excitec Q1 report. My name is Carl Öberg and I will be moderating this presentation. Presenting today will be Group CEO Niklas Ek and Group CFO Carl Arneson. If you have any questions during the presentation, either use the raise hand function or write directly in the chat here in Zoom. With that, I hand it over to you, Niklas and Carl.

Thank you. Hello, everyone. This is Niklas Eek speaking. I am the CEO at Excitec, and I will start off by making a short recap about our business as a reminder what we do. After that, we will cover Q2 financials and a short market update and also our priorities going forward. We are Excitec, making IT work together. 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. Excitec is a Nordic company started out from Linköping, Sweden. Today we are around 700 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. Best of breed is how we approach our customer solutions. Many of our deliveries are centered around the ERP and finance system, which act as the core. By selecting the right components and ensuring they work seamlessly together through our in-house integrations, we can take full responsibility for the entire solution. 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. This revenue stream has grown to 26% of our net revenue. And just under two thirds of our revenue is from professional services where we implement the software and make the customer successful in using the software over time. We also do custom development and custom integrations when needed. The third revenue stream in our business model is that we offer our customers a single point of contact support on our recurring fixed price model. Our customer base today is around 7,000 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 combined 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 over 20 software components. We combine these softwares with integrations that we develop in-house and we have a shared revenue partnerships with these software providers where we market and sell their software to new accounts and make customers successful in using the software over time. Excitec runs one of the largest trainee programs in the Nordics and has done so at scale since 2015. We are very proud of this and today almost 40% of our employees started their careers with us as trainees. The trainee program is our primary source for recruiting new talent and an important driver of our long-term growth. Looking ahead we plan to welcome a new group of trainees in August as usual and the size of 2026 program will be in line with 2025. So let's dive into specifics for Q2. I will start off with the highlights and then leave the word to Karl Arneson our CFO for the financial details. Overall, I'm pleased with the second quarter. We delivered a good balance between improved organic growth and continued high profitability. Organic growth reached 8% year-on-year, which is a clear improvement compared with previous quarters and an important step forward for us. One of the major events during the quarter was the acquisition of Amesto Solutions. I will come back to that in just a moment. Our recurring software revenue continues to develop well, reaching 246 million SEK on our last 12-month basis, up 19% year-on-year, providing a stable and predictable revenue base. And finally, despite a strong comparison quarter last year, order intake from new customers increased by 8%, which gives us confidence as we move into the second half of the year. Amesto Solutions is the largest acquisition Exitec has made to date. This acquisition is not primarily about size, it's about strengthening our position in the areas where we already have a proven business model and strong market positions. Like Exitec, Amesto Solutions is a long-term partner to Visma and Dubrofys, with a business model built on recurring software revenue and long-lasting customer relationships. That makes the strategic fit very strong. And the key strategic rationale behind the acquisition is Norway. Around two thirds of Amesto's business is based there, making us the clear market leading business partner in Norway. It's also giving us a stronger platform for future growth across the Nordic region. Beyond the stronger market position, we also see opportunities from combining the two businesses. Together, we have a broader offering, a larger customer base and increased local presence, creating opportunities for both stronger growth and improved profitability over time. The integration has started according to plan, and we expect to provide more details on the expected cost synergies during the third quarter. With that, I will hand over to you, Carl.

Thank you, Niklas, and hi, everyone. Looking into our net sales, as Niklas mentioned, we report a 12% growth in Q2 versus last year. And if we exclude both the divested and acquired operations, the organic growth was plus 8%. As we've seen a relatively low organic growth in the recent quarters, it's very positive to see the uplift in Q2, and also that we see organic growth in all our segments. And I will come back to the development per segment shortly. Our growth comes mainly from recurring revenues from software that stands out also in this quarter. But in this quarter, we also saw an uplift in the professional services, especially in Sweden. Despite the uplift in organic growth and that we see positive signals, the general market sentiment is still that customers are a bit cautious and tend to push decisions of minor updates and adjustments into the future. Meanwhile, new projects driven from our sales department are developing more positively. Moving over to our adjusted EBITDA, we report a 50 million SEK profit, which is a 12% growth versus Q2 last year. Main drivers behind this uplift is the continuous growth in recurring revenues, also a growth in professional services, but also by a continuous cost control. Also worth mentioning is that we report one-offs of totally 13 million SEK covering both transactional costs for the MS2 Solutions acquisition, but also restructuring costs for our Norwegian Development Department. And I will come back to this shortly as well. Despite the growth in adjusted EBITDA, we still feel that we can deliver even stronger performances and profitability almost across all our segments. And even though we've seen organic growth in Q2, the efficiency can be improved. And this is something that we also prioritize in our daily operations. Year-to-date, the adjusted EBITDA of 99 million SEC equals a 10% growth versus the same period last year. Here we see a consolidated view over the net sales and adjusted EBITDA margin for the excited group. The adjusted EBITDA margin of 20% in Q2 was slightly higher than the same quarter last year. In addition, it's also satisfying that we continue to see a general increase in the net sales per employee across the board. Let's continue with the network recurring revenues from software. For the last 12 months, we see a growth of 19% compared to the LTM revenues last year in this revenue stream that made up 26% of our revenue year-to-date. The growth is driven both through new sales and price increases, but to a certain degree also from M&As. The organic growth in net recurring revenues summarized to approximately 70% of the total growth, so 30% acquired and 70% organic. This development is, of course, a very important contributor to our earnings and also 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 are delivering. Regarding our different segments, first of all, Sweden delivers a 2% growth year-on-year, although that the organic growth was 6% if we excluded divestment of the Sedcom business that we divested in Q1, and also the Amestio acquisition now in Q2. The adjusted EBITDA margin also developed positively and ended up at 24% slightly above last year. So we deliver a stronger growth and maintain the margin trend from last year, which is positive. Sweden continues to develop well with a gradually stronger demand in combination with an improved efficiency in the professional service operations. Norway reported a 40% growth in net sales year on year, but excluding acquired businesses, Amesto here, the organic growth in local currency was 7%. It's also satisfying that we continue to increase our adjusted EBITDA and the margin in Norway. In Q2, we reported 15% EBITDA margin compared to 11% last year. where the recurring revenues and good customer control were the main drivers behind the uplift. We maintain the margin level from recent quarters, which is a sign of stability that we've experienced in this segment. Even though we're happy with the improvement, we still feel that we have even more opportunities in Norway going forward. Therefore, we've also conducted a restructuring of our development department in Norway. This gives us the ability to strengthen the margin even further going forward. The one-off of approximately SEK 7 million related to the restructuring has been excluded in our adjusted EBITDA. Finally, our third segment of the Nordics that covers our offerings in Denmark and Finland reported a growth of 24%, where the organic growth in local currency was 11%. Our Danish operation had a very strong Q2 in 2025, but we are nevertheless not satisfied at all with the margin in this quarter. The order intake and the customer demand have not been at the level that we are aiming for during this quarter, so therefore we have adjusted the capacity in relation to the demand and our ambition is to come back to a higher margin level ASAP. In addition, it can be mentioned also that our Finnish operation delivered solid revenue development also during this quarter. And by that, I hand over to you again, Niklas.

Thank you, Carl. I will continue with a short update on the market conditions and our priorities for 2026. Overall, we see gradual improvements in the market compared with a year ago. Although the picture still differs across our markets, Sweden continues to develop the strongest. Norway is moving in the right direction, while Denmark remains more challenging. Sales momentum continues to improve. As mentioned earlier, we delivered another quarter with strong order intake. At the same time, we continue to see shorter sales cycles from lead to signed contract, which is an encouraging indicator for the coming quarters. We still believe there is a pent-up demand after several years of postponed IT investments. As market conditions continue to improve, we expect more of these investment decisions to move forward. Finally, AI continues to generate growing interest among our customers. While adoption is still at an early stage for most companies, we see our software providers rapidly introducing new AI capabilities into their platforms. At the same time, we help customers complement those capabilities with tailored AI solutions where they create real best business value. These remain our three strategic priorities for 2026, and I'm pleased with the progress we made so far this year. Starting with Business Next from Visma, we continue to see high activity both among existing and new customers. The acquisition of Amesto Solutions further strengthen our position through increased sales capacity and a larger customer base for future growth. Our Microsoft offering also continued to gain momentum. During the quarter, we saw positive development in both Business Central ERP and Power BI with several new projects. And finally, increasing our organic growth remains a key priority. We improved from 1% in the first quarter to 8% in Q2, which is a strong step forward. We are pleased with the progress while continuing to see good opportunities for further growth over time. This is a reminder about our financial goals. We have a goal to increase our net sales by at least 15% per year over time. And our performance target is to increase our EBITDA per share by at least 15% per year over time as well. Our stability measures is that our net debt must not exceed two times our EBITDA. And the last one is that our policy is to distribute 20 to 40% of the profit after tax. So this concludes the presentation. Are there any questions for us, Carl?

Yes, there is. First of all, we have Thomas Nilsson at Nordea who has asked three different questions. But to start with the first one, organic growth accelerated to 8% in Q2. How much of the improvement reflects a stronger underlying market versus internal execution? And how sustainable do you believe this growth rate to be in H2 and beginning of 2027?

Yeah. So the organic growth here, it's really a combination of the market and internal execution. Especially in Sweden, we see a better market. So It comes from several different areas in our business. For instance, we continue to see strong growth in recurring revenue from software. We have a better utilization, especially in Sweden, compared to last year. And we have more activity among existing customers. So it's a combination of those. And then the question was about 2027 or the future, right? About organic growth. How sustainable do you believe the growth rate to be? And we do not give out any forecast about that, but I think that we are in a good place for the second half of the year since our order intake is still strong and a little bit better market, especially in Sweden. So I think we are well prepared for the second half of the year.

Perfect, thank you. And the second question was, you described increasing customer interest in AI and growing internal productivity benefits. Do you see AI becoming a meaningful revenue driver over the next two to three years or primarily a margin opportunity?

Both. I think that we will see new opportunities with AI and areas where we do not help our customers today. But also when it comes to efficiency using the AI tools, especially in development and integrations, I think that we can deliver more value with the same effort as before, and that over time should increase our margins. So it's a both on that question.

And the third question was Denmark continues to lag due to weak demand and lower consulting efficiency. What actions are you taking to improve performance there?

Yeah, we have already been taking actions during the spring. So we have made our reduction in headcount and we have reallocated consultants into other areas with higher demand. And another priority for us is to to keep on building the pipeline for Business Next, since Business Next is an important part for us in Denmark, and even more so now with MS2 coming in with a customer base using Bisma Business, the on-prem version. So that's really important for us to keep on talking to the customers so they are ready to migrate to the cloud.

We just got a question from Henrik Karlman regarding Denmark and he is asking why do you think demand differs so much in Denmark compared to Sweden?

Well, I think that if we look back to the fall when we acquired ECIT, the customer base in Denmark, we saw pent up demand for those customers. And at the same time, we had this new law that really demanded for almost all customers to upgrade their systems, their on-prem systems. So we had a really good year in 2025 where we could capitalize on those opportunities. And after that, we saw that the customers were a bit passive since they invested quite a lot in that in 2025. So that's a difference in Denmark if you compare it to Sweden or Norway.

Perfect, thank you. Okay, let's move on to Carl Svensson who has asked three questions as well. The first one being, how much were the restructuring costs in Denmark and Sweden during the quarter in addition to Norway?

I can take that one. We have no material restructuring costing in Denmark or Sweden during the quarter. Nothing like the restructuring that we carried out in Norway. As a consultancy company, of course, we reorganize more or less all the time. It's part of the ordinary course over business, but this one-off in Norway was a bit special, both in terms of the amount and also in its one-off, really one-off nature. So that's the difference here. So no material amounts in Denmark or Sweden.

And the second question was, is the restructuring in Norway related to excess capacity following the Amesto acquisition or what is driving it?

No, it has nothing to do with the domestic acquisition. This is our development department. And as you probably remember, we acquired Integrationspartner in Norway, and we have merged the development team from Excitec and Integrationspartner. And after doing that, we saw that we have We have more capacity than the customer demands, so it's completely related to that.

Thank you. The margin last Q3 in 2025 of 14% was well above your historical Q3 numbers. Was this a one-time effect or do you see a structural better Q3 margin now? Maybe he means Q2, but yeah.

Perhaps I think it is related to Q3 here since especially our Q3 in 2024 was pretty weak in terms of margin. So we saw an uplift in the Q3 margin that is correct. Was this a one-time effect or do we see as a structural better Q3 margin? I think that As Niklas mentioned, we are well prepared for the second half of this year in terms of both efficiency and also the order intake that we've seen during the first half of this year. So we have good hopes for both the Q3 and the Q4 performance during this year.

Thank you. Then we have a question from Max Adolfsson. I know that you guys touched on this in the presentation, but maybe just a short reminder on that. How has the recurring revenue developed organically during the quarter?

Yes, normally we measure the recurring revenues on an LTM basis because there are some differences in looking just at an isolated quarter. So the best way of comparing year on year is to look at an LTM basis. As per Q2, we had a growth of 19% versus last year. And of that, the organic growth was 70% out of those 19. So basically, what is that? 13, 14% or something.

And the rest was acquired.

Yeah.

Yeah. Then we have three questions from an anonymous person here. Amesto contributed to approximately 2 million in EBIT in June and 30 million SEK in H1 2026, implying a margin of around 12%. What are the main drivers you see that lift the 17% margin you have communicated?

Yeah, I can take that one as well. Well, the Amesto figures are only consolidated for the June month, basically. So the pro forma of 13 million is perhaps not the pull relevant figure here. But yes, I think the June margin was slightly higher than those 12%. And of course, we see that we will have synergies coming up, both from a commercial point of view, but also from a cost basis. going forward. There are a number of drivers behind that we see that the margin can be increased on this business going forward. It's not that we will not operate this business as a separate company. We will merge this Amesto operation into our existing Excitec. So there will be significant synergies going forward.

The second question was regarding the cost synergies. You said that you would provide an update on are these already included in your communicated target of 40 million SEK in EBITDA for Amesto, or are they additional synergies you are working on to achieve beyond that?

Of course, in the communicated target for the upcoming 12 months, there are a certain level of synergies included in that number. But of course, we hope that We will be able to provide even more on a long-term basis, but initially we see that there are synergies to expect so that we can improve the profitability going forward. to the level that we've communicated so far. But also, as Niklas mentioned, we will come back on the synergies in the next quarter. As of now, the main focus of the integration has been to get to know each other and get to know the organization. So we will come back to any Any cost synergies and so forth in Q3 report.

And then the third question, a question about AI and the consulting revenue. Roughly what share of your consulting revenue sits in the areas where you see the greatest AI impacts and which areas are those where you see the largest effects?

Right. I think that all of our areas will have an impact of AI and already are. And as I mentioned before here, we see that all the software providers we are working with, they are implementing AI functionality into the software that the customers are using. So in that sense, it's already out there and we see it in all of our areas. But what we see more right now is of course around the building integrations and system development. We see that we can do more with AI with the same effort as before. So that's a big impact. And also when it comes to our area with the data and insight business intelligence, we see a great AI impact.

Thank you. And then we have one more question from Philip Helmroth. I noticed that you have launched off-the-shelf AI agents on your website. How has the customer demand been so far for this and how does your pricing model for these solutions work?

Yeah, so far it's been, it's still pretty early. So we have some customers that we have implemented AI solutions like agents or helping them to be AI ready and so forth. But so far it's pretty early, so it's not that big demand yet. And we are still exploring a bit about the pricing models for some customers. We are doing the same as we did before. It's billing hours and sometimes it's a fixed price and sometimes it's something else. So we're still exploring a bit about and around that.

Thank you. That was actually the last question we have. Do we have any more questions from anyone? Yeah, we just got one more. How big part of your recurring revenue is from integrations versus kickbacks today? Do you see these having pricing pressure?

How big part from integrations? Good question. I don't have that in my head, but the big part is kickback provision from the software providers. So that's the biggest part for sure. And what was the last question? Do you see these having pricing pressure? No, not really. We do not see anything about that, that customers are not willing to pay for integrations now. There's still a demand out there and customers still need help from us to solve their business issues.

Thank you. That was the last question we have right now. Do we have any more questions from anyone? Doesn't seem like that. Okay, thank you so much. That concludes the presentation for today. So thank you so much for listening and asking your questions. Me, Niklas and Carl wish you, of course, a good day and a really nice summer ahead. Thank you so much.

Thank you, everyone. Thank you. Bye-bye.