iZafe Group AB (publ)

Varmt välkomna allihopa till vår presentation av Q4-rapporten för 2024 för iSafe Group. Med oss har vi mig, Marius Amberg, CFO, Anders, CEO och idag har vi även äran att ha med oss Oliver som är vår analytiker från Aktiespararna. Han har tidigare tagit del av rapporten och har förberett en del frågor som kommer vara löpande under den här presentationen. So Anders, you can start.

Thank you. It's fun to have you with us, Oliver. Can you briefly tell us who you are and what you have taken with you to follow the company?

Thank you very much, Anders. Just like Mario said, my name is Oliver and I work as an analyst at Aktiespararna. I have had the honour of following iSafe for the past two years, so it has been very exciting.

Yes, and a little short now that we've been here for two years, do you feel that we're starting to get into a different kind of course as a company or what is your external feeling for the company?

Well, quite early on when I started following you, I communicated a number of orders and Under de senaste åren så har vi egentligen väntat på att leveransen av antalet doseller skulle komma igång. Det har vi börjat ta del av under de senaste kvartalen.

Det är roligt! Good. I myself think that we are in a very exciting stage where a lot is starting to happen now. I thought I would, for this interview, bring along some slides that I will also show. And as I said, we are in a different type of stage in the company. We have gone from having developed the product, tested it, and basically had no turnover, to now having gotten out 2,500 units, started to get a turnover, Vi har idag över 312 000 dispenseringar, vilket är egentligen det som vi brinner för, att hjälpa personer att ta rätt medicin i rätt tid. Vi ser att vi dessutom börjar komma in i en positiv trend där vi får igång fler maskiner varje månad mot månaden innan. Där vi ser att vi ökar med 25 % fler aktiva doseller här i januari från december. Vi finns i I have partners now in actually nine countries, but I would say that there are four countries that are more active, where we are right now in Holland and Sweden, which is the primary focus and we grow the most in Holland. But we also see that Spain will start launching here now in February, where they have developed this concept for two years, Savio Home, which will be launched and then that Norway will start here as well.

Extremely exciting, and it is of course noteworthy that the turnover is now approaching 8 million kronor. You write in your newsletter that you are counting on these 2,500 doses that you have sold to be activated within 3-6 months. And further that it is this degree of activation that drives the license income. Kan du förklara det här lite grann, och vad beror eftersläpningen på?

The interesting thing about our business model is that we are the owners of the product and then it is our partners who buy in the hardware, which makes the cost savings. The idea is to have a small margin. Last year, we had a slightly reduced price on the first 1,000 to the Netherlands, but otherwise we have a small margin and then, depending on the volume of products we sell to our partners, we make a pretty good margin or a very small margin. But they buy it as a stock to then be able to come out with the product over a period of about three to six months. And that is so that they do not have to stand idle and we will not build too much stock capital with us, but it is our partners who will do that part. So from there, it is our partner who buys in volume on a forecast of about three to six months, how they see that they will deliver the units. Was that a good enough answer to the question, Oliver?

Absolutely, and it's first when the units have been activated that you start to receive license fees.

Yes, exactly. So when they buy them and have them in stock, we do not factor in any recurring license income, but when they issue them, we simply factor in revenue. And that is what builds up our ARR, which is actually the most important factor. You should see more that we have sold these 2,500 dozelles to our partners, which makes it possible to build up our recurring license income, which is where we actually have all the margin, where we have almost 95% margin on average.

Right. And how high would you say that the activation rate is at the moment? Do you have any ballpark?

No, but as I mentioned, we are very close to our first milestone, which has been incredibly important as a product owner with a thousand units running. So that's where the ballpark is, if we say so, that we will soon be there.

Right. And can you say something about where the remaining 1,500 units are?

No, but I will come in a little later when we have talked about forecasts so we can see a little more what it looks like in the future and how it will look, both this year and in the coming years.

Excellent.

I can go on to some other factors that are important to know about related to what stage we are in. Partly why healthcare is automatically so important now is because Vården står i ett skede där man behöver digitalisera den. Idag sker 23 % av all felmedicinering kopplat till att personalen är underbemannad eller stressad. Om åtta år kommer det vara dubbelt så många fler att ta hand om. Alla förstår att det här inte är hållbart och vi måste göra en förändring. Digitaliseringen är på väg. And as the digitalization is on its way, as well as the fact that more people will need this type of help, we are really in a phase of growth now. And what drives these parts, which can be worth knowing, is that Dozell is based on getting medicine in dosage bags. And if we just look at the four markets that we are talking about here now, the market itself already exists, where people get their medicine in a dosage bag. We are just going to add this extra step, that is to say that you put the dosage roll in the dosage bag, which makes the medicine inaccessible. First it is time to actually take the medicine and then you can just take the medicine you are supposed to take. And here is the market we primarily look at that we want to take shares of.

Jag tänker på en sak. Det är tydligt att det finns en del marknadstrender som spelar er rätt i händerna. Finns det några initiativ från statliga håll att driva på den här utvecklingen av digitala hjälpmedel till vården?

If we look at Sweden as an example, they point out that pharmaceutical automations are one of the three most important parts to introduce. Both SKR and now also ADDA are looking at how they can introduce pharmaceutical automations so that it becomes easier for the whole of Sweden to advocate for this. Under 2025, there will probably be a deal with Läkemedelsautomater from Adda. Parts of this are being done to simplify and speed up the introduction of Läkemedelsautomater.

In the stack diagram, The use of dosage packages looks quite low in a country like Spain. What does this have to do with it and which alternatives do you use instead?

In Sweden, 300,000 people get medicine on a dosage package. The population is about twice that in the Netherlands, and there it is about double, 600,000. If we look at Spain, the number 200,000 is the number that we know gets medicine packaged in dosage bags from our partner, TMD. So it's not the entire market in Spain. Unfortunately, I do not have figures on the entire market, but what I know is the market that we now control, which is then 200,000. And that is where our partner TMEDY will focus on the fact that the pharmacy, in connection with the fact that they deliver these 200,000, will also add so that there is a doselle. So the hope is that it will absolutely not be all 200,000 that need a doselle, but the hope is to get a large proportion to have a doselle. In Spain, the fact of having medicine on a dose bag has not existed for as long as it has existed in Sweden and the Netherlands. So it is very common to pack it in blister carts. It looks like an animal calendar where you print out the dose of the day from a little bag. But we see that the dose bag market is growing quite well there. And it grows, just for T-media, it grows about 10% per year.

The use of dosage bags is one thing, but how big is the use of digital aids in healthcare in these other countries? You can imagine that Sweden is quite far ahead compared to other European countries.

I would say that Sweden and Norway are good at it. The Netherlands are absolutely very good. I would say that they have almost come longer than what we have done in Sweden. Spain is not at all common, so it's a new way. So it will be exciting to see how it goes there. We have expectations, but we also have an understanding that it can take a little time to get the market to see these parts. But we will have a big launch and we hope that it will be received well, quite simply. Then, the more that comes out there, the more that will be used. We only see that on the few, really. We do not market here in Sweden on our consumer version, but there we see that the few we get are those who have talked to others who have one of these and have been recommended.

And how do you say on the competition picture on på marknaden. Ni är ju inte helt ensamma, men jag noterar samtidigt att Dosell till exempel vinner mark i Nederländerna och det här är på bekostnad av andra läkemedelsrobotar dessutom. Vilka andra aktörer ser ni och varför väljer vissa att byta till Dosell?

I would say that it is good that there are more of us who are driving this development. The competition is just positive. And I would say that in the Netherlands there is a pharmaceutical company called Medido. And here in Sweden, our biggest is Vondos. And there are different parts. Both are good at different factors. Särskildjurs med att fokusera på är att den ska vara så användarvänlig som möjligt. Det ska ta kort tid att kunna ladda den och förstå den. Dessutom ska det vara lätt. Den väger bara två kilo. Den är enkel att placera i hemmet. Vi integrerar den till andra lösningar vilket gör att The staff doesn't need to have other systems or apps than they already use. Plus, we have priced ourselves in in a way that makes it a more attractive price, simply put, for what you get. Both focus on the same thing, delivering the right medicine at the right time. Then we have focused on just that, while the others may have a little different feelings around as well.

Yes.

Great, thank you for the good questions. Let's move on to the most exciting part. Right now, we have entered a stage where we have produced these units, we have started to deliver them and we have started to see actual key figures every month. It has been difficult for us previously to go out with forecasts, but now we see forecasts where we can see that our markets are delivering steady figures every month. We are, however, still in an early stage. This is now based on about five, six months back. For each quarter, we will have more data and will be able to update the continuation. But we see that we made a good increase from 2023 to 2024 at 326%. And we now see that we will, during this year, go from starting at almost 2 million in ARR to closing the year at around 10 million in ARR. And from then on, we will grow relatively steadily with new assets every month, which means that the percentage increase is decreasing from year to year. But we predict, based on the partners we have now, that we will be able to close 2029 by having 85 million in recurring license revenues. Then we know that there will be more markets, more partners, but then we will update it when we have seen that they have started, because it is difficult for us to know exactly how quickly we will find a new partner until it is started. And then, when we know that, we will update these forecasts. But we are starting to see that we are entering a completely different type of stage as a company, so this is really exciting to finally be able to show that now we are growing every month and as we grow steadily, Over time, a very good recurrence of license detectors that we have a good margin on.

How does the production capacity look like to be able to deliver these volumes?

We now have a very good production partner, so as long as we set to them which volumes we will forecast in the next three months all the time in advance, so that you can buy home components, production volume is not a challenge. We can produce 200-300 per day if needed, as long as the components are stored.

And what are your purchasing routines?

We collect forecasts from our partners. That's what drives it. And then we need to know how much they need in the next six months. And then we make an estimate for the next six months. And then we have quarterly meetings with our production partners and say how it looks. And then we make sure that we have components for the upcoming productions in half a year.

As I mentioned in the beginning, there are a couple of interesting orders that I have started to deliver on now, the last year. But have I calculated correctly that the orders that you have communicated this far do not really reach here? And the idea is that you should grow rather to expand the existing cooperation or is it about adding more?

We have now entered a stage where we cannot communicate every small business. As we wrote in the monthly letter, in January we had two new municipalities in Sweden that started. We have seven more that will start before the end of Q1. This is something we do not communicate because it is now our everyday business. The same goes for our partners. So what is really the most important thing now forward and start to follow is how we pace on each market and how we grow every month. On the other hand, we will communicate if we come out with larger businesses and if we also have a new partner that guarantees some larger volumes. But otherwise it will be more recurring business on each partner every month and that is what we then want that's why we started this morning's letter, because it happens so much every month, so we want to update it in the morning's letter and then update and follow it here on the quarterly reports.

And the turnover in the quarter was negative, with a handful of millions approximately. Now, as the turnover is about to start, hur ser ni på kostnadsutvecklingen? Hur sitter kostnadskostymen så att säga?

Vi ser ju att vi dels har sänkt våra kostnader för vår vardagliga burn rate, om man säger så, så mycket vi bara kan och sedan i takt med att vi nu får upp licensintäkterna och att de ökar varje månad så blir vi någon gång under året kassaflöjes positiva och sen från det så blir det ju bra på resultatet då.

Just det. För att ni vid utgången av kvartalet eller här för några veckor sedan så aviserade ju ni en nyemission på drygt 9 miljoner. Och Hur ska pengarna användas och hur långt räcker de och hur ser ni på likviditetsbehovet?

De är till för att säkerställa produktionen dels och sen de säljaktiviteter vi har ihop med våra partners. De ska se till att de hjälper oss i den fas vi går nu till att bli kassaflöringspositiva.

Jag tror att jag bara har en avslutande fråga. The turnover in 2024 was over 8 million, but the commercial goods went up to over 9.5 million. That's negative brutto margin. How did this happen?

We have written down a part of the storage on the old Dozell, where we have had a part of the components. We have written down over 1 million there. And then, as I mentioned, the first delivery of 1,000 units, they were given a discounted price to start the market there. So it was part of the launch campaign to get started on the market. Then forward, we will have a better margin. Plus, now that we're starting to produce in larger volumes, we're starting to look at how we can scale down production costs. We need to find better ways to buy in components in larger volumes to reduce costs. We may need to change some of our suppliers to reduce production costs. So we're entering a phase now where we can focus on those parts. It has not been relevant in the past because we have to get the product out and get the licenses started and get the first big proof of concept, which we now have. So now we can start working a little more on those parts.

Right, right. I understand. It's going to be a lot of fun.

Yes, thank you. Fun. Fun that you could be with us and ask questions. And I hope that you, just like me, look forward to the coming quarterly reports and where we take off during the year.

Absolutely, absolutely. It was fun to be with you.

Good. Thank you very much.

Thanks a lot.