Karnov Group AB

Welcome to the Carnove Group Q4 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Pontus Bodelsson and CFO Magnus Hansen. Please go ahead.

Welcome everyone to Kano Group's earnings conference, where we will present the outcome of the fourth quarter and full year 2025. Please go to slide two. I'm Pontus Burusson, President and CEO of the company. With me I have our CFO, Magnus Hansson, and our Head of Investor Relations, Erik Berger. Magnus and I will present the outcome of the quarter using a few slides, and then we'll open up for questions. With that said, let's get started with the presentation. Please go to slide three. In Q4, the organic growth was 4%, driven by online sales growth, including AI uplifts. The legal businesses in Region Nord continues to have 10% organic online sales growth. The adjusted EBITDA margin improved to 26%, which is an improvement of two percentage points compared to Q4 previous year. Leverage was 1.3 times well below our financial target. In Q4, we achieved solid margins improvement with continued traction in AI sales. The number of AI users increased by five times in 2025, and the number grew every quarter. We are advancing our positions and we will in 2026 launch our AI-powered workflow tools with seamless integration of proprietary content. Please go to slide four. We ended 2025 on a high note with pleased customers and a successful renewal season in Region North. In Q4, our legal businesses in Region North had 10% organic online sales growth and 1,100 Danish prosecutors now use our AI assistance. Moreover, a majority of the judges in Sweden are now using our AI assistance. In Region South, we progressed with rationalization of unprofitable products and the synergy execution. In Q4, we reached an adjusted EBITDA margin of 17% in Region South. At the end of Q1, we will have a common AI platform across all local geographies, which will lower development expenses and generate more value for our customers. On December the 1st, we completed the divestment of EHS, the transaction generated proceeds of 1.1 billion SEK. Next slide, please. Let me take a minute to describe our value proposition. There is a fundamental difference between content-driven legal knowledge platforms with authored content and legal software providers without authored content. This is a slide which I believe is familiar to many, presenting our value to customers. To the left is our legal knowledge sources, both public sources and proprietary. Our authored content is written by our 7,000 local legal experts. The proprietary authored content is what makes Cannab a unique supplier of legal information solutions, helping our customers to make better decisions faster. This content is crucial also to develop and offer AI solutions. Next slide, please. Our core value proposition is local legal knowledge authored by our experts, trusted by more than 400,000 legal professionals across Europe. Our competitive moat is the proprietary authored content itself, solidly available via our solutions and mission critical for our customers. AI serves as the interaction platform that delivers our proprietary authored content in increasingly valuable ways. Customers are adopting our AI solutions at an accelerating pace. Usage is increasing every month and customers report significant productivity gains. In 2021, sorry, in 2025, the number of AI users increased by five times. Five times in 2025. Seamlessly integrating knowledge with workflow tools results in more precise and efficient work for legal professionals. Soon we will launch our content-driven workflow tools. Our ambition is to serve customers in all phases, from order intake to customer delivery, with our trusted content as the anchor in all phases. This broadens the scope of legal work we support and generates more value for our customers, while also creating new revenue streams on an expanding market. Next slide, please. In this slide, you can see our two cost efficiency initiatives running until the end of 2026, with the ambition of harvesting efficiencies of 20 million euro in total. At the end of Q4, we have achieved annual run rate synergies of approximately €20 million. We progress ahead of plan. Next slide, please. I will now present our segment performance, starting with Region North. Region North continues to perform exceptionally well, both in terms of organic growth and profitability. The organic growth of 6% is above our financial targets and driven by higher subscription-based online sales, including AI uplifts. The organic online sales growth in our legal businesses was 10% also in Q4. During the fourth quarter, the Danish Prosecutor Organization upgraded to our AI package. That means that 1,100 Danish prosecutors now have our AI assistance. At the end of September, we launched our AI solution for municipalities in both Denmark and Sweden. Since the launch, sales momentum has been strong and the customer feedback is positive. Margins are continuing to improve, primarily due to operational leverage from higher net sales. Next slide, please. We are pleased with the margin improvement in Region South in Q4 and we progress with rationalization of unprofitable products. In Q4, the adjusted EBITDA margin was 17%. The margin improvement in the quarter is thanks to synergy execution as well as positive impact from the divested trading business. The organic growth was 2% in the quarter, mainly thanks to solid online sales growth in France. the Spanish business was stable in Q4. I am confident in our medium term financial targets for Region South. From March, we will have Kanovs common AI platform across all local geographies. This will increase customer value, as well as improve scalability and shorten time to market for new features. Next slide, please. With that said, we have reached the point where I hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial results. Magnus, the floor is yours. Thank you, Pontus.

So let's start with an overview, switching to slide 11. In Q4, we achieved net sales of 665 million SEK. The organic growth was 3.8%, offset by currency effects of 3.8%, and acquired growth was negative 3.7% due to the divestment of EHS and the Spanish training business. We have separated EHS from all numbers, and the slides present the financial result for the current Carnot Group. Net sales excluding EHS was 648 million SEK. The organic growth in Q4 is driven by increased online sales, including selling more licenses to existing customers, higher tier packages, AI updates, and attracting new customers. The online sales growth was 5% in local currencies. Next slide, please. Breaking down net sales on segment level, we see continued strong organic growth in region north and modest growth in region south in the quarter. Region North had organic growth of 6% thanks to strong online sales performance, while Region South grew by 2% thanks to good sales performance in France. The legal businesses in Region North, excluding the acquired Carvoud Schultz business, had an organic online sales growth of 10%. Revenues from AI sales are increasing quarter by quarter as the subscription revenues are recognized over the contract period. Next slide, please. On slide 13, you see the net sales development within online and offline, split into segments. In Region North, the online sales increased by 4% compared to Q4 of last year and accounted for 94% of the net sales in the quarter. Please note the divestment of EHS and the fairly large FX effect. In Region South, the online sales declined by 3% compared to Q4 of last year due to currency effects and accounted for approximately 79% of net sales in the quarter. Organic online sales grew by 1% in Region South. Next slide, please. Subscription-based sales increased during Q4 and represent 88% of sales in the quarter. The negative development in subscription-based sales in region south is related to negative currency effects. The online subscription sales in local currency grew by 1% in region south. Next slide, please. The adjusted EBITDA amounted to 172 million SEC in the fourth quarter. This corresponds to an adjusted EBITDA margin of 26%, which is an improvement of 2 percentage points. Excluding EHS, the adjusted EBITDA amounted to 167 million SEK. The full year adjusted EBITDA increased by 119 million SEK and reached 25% excluding EHS. Synergies are coming through as expected, meaning personal expenses are decreasing. Items affecting comparability related to restructuring and integration amounted to 25 million SEK during Q4. At the end of Q4, we have achieved synergies within the group of 19.6 million euros on an annual run rate basis. The effect in the quarter compared to the baseline amounted to 4.5 million euros. We are ahead of plan to achieve synergies of 20 million euros with full effect on an annual run rate basis by the end of 2026. Next slide, please. In Q4, net sales amounted to 318 million SEK in region north, excluding EHS. Organic growth was 6.2%. The growth is driven by online sales. We continue to strengthen our market position and attract new customers, especially in the public sector in Sweden. Adjusted EBITDA was 135 million SEK, excluding EHS. This is an increase of 11 million SEK compared to last year. The adjusted EBITDA margin amounted to 43%. The improvement is due to operational leverage from higher net sales. We completed the Schultz integration six months early and have terminated the transitional service agreement at the end of 2025. This will have a positive impact on margins from Q1 of 2026. Next slide, please. During 2025, Carnoveb achieved accelerating organic growth in region north. This has been driven by the legal business uplifting customers to our AI package. In Q4, the organic online sales growth was 10%. Our tax and accounting business, Dibkurskap, has a stable performance along with the Schultz business. Dib has now launched their AI assistant with positive feedback. The Schultz business included customers not in Carno's core area, and the portfolio value is 9 million, sec lower going into 2026. The business case presented in connection with the acquisition still holds true. Next slide, please. Which is the Region South segment? Net sales in Region South declined by 28 million SEC compared to Q4 of last year. Currency effects had a negative impact of 17 million SEC in the quarter, and the divested Spanish training business another 17 million SEC. Our French businesses had solid growth in subscription-based online sales, while the Spanish business had a stable performance in the quarter. The adjusted beta margin was 17% in the fourth quarter. The margin expansion is thanks to synergies coming according to plan and positive impact from the divested training business. Compared to the baseline, the cost base has decreased by 25 million SEC in Q4. Next slide, please. Which presents the segment group functions. Expenses in Q4 were 26 million SEC. Next slide, please. Q4 is typically a cash generative quarter for Carnot, reflecting the timing of the group's online contract renewals and invoicing cycle. The renewal season has been in line with our expectations and the adjusted free cash flow was 239 million SEK. The leverage was 1.3 times EVTA last 12 months at the end of the year, well below our financial target. The proceeds from the divested EHS division has strengthened our balance sheet. The board has resolved to allocate SEK 500 million to buyback shares. The board will propose a mandate to buyback up to 10% of the shares on May 7, 2026. To increase flexibility for the ongoing buyback program, the board intends to summon an EGM in March to increase the current buyback program from 5% to 10%. I'm now handing over to Pontus again, who will present our last slides.