Karnov Group AB

Welcome to the Karnov Group Q2 2026 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 second quarter of 2026. Please go to slide two. I am Pontus Boleson, 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 the second quarter, the core online legal growth was 7% and the adjusted EBITDA margin improved to 25%. Growth is driven mainly by AI uplifts across all geographies. The financial performance is strong in Denmark, Sweden and Spain, where Canov is the market leading provider of legal content. The financial performance in France, where Canov is number three, is below expectations due to weak non-core offline sales. The organic growth was 2% driven by online legal. Online legal grew 11% in Region North, consistent with previous quarters. The corresponding number in Region South was 2%, continuing the positive trend from Q1. Leverage was 2.0 times well below our financial target. The increased leverage compared to Q1 is due to our buyback program. During Q2, we have repurchased shares for 159 million SEK. Please go to slide four. During Q2, we have continued the accelerated growth trajectory in online legal. Customer satisfaction is on a high level. and the retention rates on the same high level as previous years. We continuously upgrade customers to our AI supported solutions and the number of users in all customer segments and the monthly usage is increasing quarter by quarter. In Q2, online legal grew 7% driven by our legal businesses in Region North which grew 11% and Region South which grew 2%. Our market leading Spanish business is accelerating growth thanks to a stronger product portfolio and deep expert authored local content. Our new AI products launched in March have become the most important sales contributors in Spain Q2. At the end of June, we launched our new AI driven workflow solution on all our markets. A very important milestone for Canov. which expands the company's position in the legal landscape. Our number one market position in three European countries stem from our proprietary legal content authored by 7,000 local legal experts. For more than 150 years, we have been the partner legal professionals rely on for legal knowledge and doctrine and we have sold AI-supported legal research for the past two years with great success. Now our trusted content will be seamlessly at hand through every step of their work. By adding an AI workflow layer on top of our trusted authoritative content, we become an even greater partner to our customers. Quite a few customers on all markets have already upgraded to the solution, and customer satisfaction is on a high level. Next slide, please. Over the past seven years, Carnov has evolved from a leading Scandinavian knowledge provider into a leading European provider of mission, critical knowledge and workflow solutions. We have expanded our user base from 60,000 to more than 400,000 users. Sorry, from 60,000 to more than 400,000 users. The number of legal experts has increased from 1,500 to more than 7,000 and net sales has increased by more than three times. We have created shareholder value through value accretive acquisitions and divestments and generated accelerated growth through development of AI solutions with strong customer testimonials. Today, more than 75% of our net sales come from market leading positions. Thanks to our ever evolving proprietary content base, we stand strong in a legal market landscape in transformation. Next slide, please. So, a quick reminder of our value proposition. To the left is our legal knowledge sources, both public sources and proprietary sources. Our authored content is written by our 7,000 local legal experts. The proprietary authored content is what makes Canva a unique supplier of legal information solutions, helping our customers to make better decisions faster. This content is crucial also for our trustworthy AI solutions. To the right is our customers. The largest customer segment is the public sector, courts, universities, authorities, and local municipalities, among others. The second largest customer segment is practitioners, mainly law firms. And the third largest customer segment is corporates, mainly legal counsels. Next slide, please. In the civil law markets where Carnov operates, legal precedents are based on four different types of legal sources. Legislation, preparatory works, case law and legal doctrine. Carnov's proprietary legal content is the doctrine shaping the legal interpretation. For example, in 2025, close to 50% of the decisions made by the Supreme Court in Sweden referred to Carnov's content. This is different from common law markets such as UK and the US, where case law is more important. 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 mode is the proprietary authored content itself, solely available via our solutions. AI serves as the interaction platform that delivers our content in increasingly valuable ways. We cross-sell our AI solutions into this 400,000 user base with great success. Late June, we launched our new content-driven workflow solution, which is powered by AI. By adding an AI workflow layer on top of our authoritative content, Kano turns the value proposition from a legal knowledge source into an execution layer seamlessly connected to our knowledge content across the entire cycle of legal work. As legal workflow and legal research converge, customers will put a premium on output anchored in authoritative sources. Canov is uniquely positioned to capture this because we embed our authoritative legal content directly into AI-enabled workflow services. Since the launch, several customers across our geographies have purchased the workflow solution. The customer satisfaction is at a high level and it looks promising for the coming sales cycle. During the autumn, we will enhance the solution with more features, creating even more value for legal professions. Next slide, please. Kano's rights to win in legal AI stems from our trusted proprietary content for more than 150 years. We've been the partner legal professions rely on for legal knowledge and doctrine. And we have sold AI supported legal research for the past two years with great success. Now our trusted content is seamlessly at hand through every step of their work. Customers are now assisted by Karnov from assignment to finished document. The legal validation follows every step of the workflow and switching between tools is not needed anymore as our trusted content is seamlessly integrated. Legal knowledge exists where the work happens. Next slide, please. Up until September 2024, Karloff only had one online legal product layer divided into different packages, the core legal databases. In September 2024, we launched the AI layer interacting with our content as a second product layer. Customers upgrading to the AI layer generate a net uplift of at least 30% for Karloff. Now, with our workflow solution launched, we have added the third product layer. Every customer uplifted to the workflow layer generates a net uplift of at least 50% compared to the AI layer and doubles the annual subscription value compared to the core legal database list price. Growth potential is driven by the pace of upselling to existing customers and pace of acquiring new customers. AI and AI-driven legal workflows are great growth enables for a company like Kaunov with unique proprietary content. Next slide, please. Over the past few years, Kaunov has transformed and grown into a trusted and leading European legal solutions provider through value accretive acquisitions and divestments. The company has introduced AI-enabled legal research and workflow tools that deliver clear customer value and at the same time achieved solid organic growth with a substantial margin improvement. Built on strong foundation of legal expertise, Kanovs deep proprietary content provides a distinct competitive advantage in legal AI. As the market leader in three countries, the company is uniquely positioned to leverage the seamless integration of differentiated content and workflow tools. Customer adoption of the new AI solutions is strong, and continues to accelerate the company's growth trajectory. Canov is aware of recent take private speculation concerning the company in financial media and has received related questions from shareholders and research analysts. The board of directors has and will continue to evaluate all options available to maximize shareholder value. Such options may include but are not limited to a sale of the company, divestitures, strategic partnerships or business combinations or other transactions, as well as continued execution and enhancement of the operating plan and capital allocation. The board of directors has appointed Goldman Sachs as financial advisor to the company. And we will not make any further comments to this evaluation at this stage. Next slide, please. And by this, I'll now hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial performance and the second quarter. Magnus, the floor is yours.

Thank you, Pontus. So please go to the next slide. In this quarter, we introduce a new term, online legal. In this term, we include our LIS, our legal information solution, our AI layer, and our newly launched workflow tools. In the second quarter, net sales amounted to 619 million SEK, a slight increase adjusted for the divestment completed in 2025. Online legal grew by 7% driven by continued AI uplifts, increased number of users and annual price increases. The organic growth was 2.4%, a slight decline compared to previous quarters. This is explained by weak non-core offline sales, mainly books and legal training in France. Next slide, please. Breaking down net sales on segment level, we see continued strong growth in Region North and modest growth in Region South in the quarter. Region North had organic growth of 5% thanks to strong growth in online legal, while Region South grew 0.2% thanks to online legal growth in both Spain and France. In Region North, excluding the acquired carved out Schultz business, online legal grew 11%. And in Region South, online legal grew by 2%. Next slide, please. The adjusted EBITDA amounted to 153 million SEK in the second quarter. This corresponds to an adjusted EBITDA margin of 25%, which is an improvement of 2 percentage points. The improvement is driven by operational leverage, product mix and lower cost base. During the quarter, we have launched our workflow solution and the cost base includes extra expenses relating to that launch. Synergies from our cost saving programs are coming through as expected, meaning personal expenses are decreasing. Items affecting comparability related mainly to restructuring and integration amounted to 31 million SEK during the second quarter. We are ahead of the plan in cost saving programs and in line with the expected cost to achieve. The programs will be completed by the end of 2026. Next slide, please. In Q2, net sales amounted to 310 million SEK in Region North. Online legal grew by 11% and the organic growth was 5%. The online legal growth is due to strengthened market position as we upsell and attract new customers, especially in the public sector in Sweden. During the quarter, we have upgraded several customers in Region North to our AI solutions. In Q2, we have a slightly larger decline in offline sales than usual. as we had one of sales of school curriculums in Sweden in Q2 of 2025. The effect on the organic growth is approximately one percentage point in Q2. We are expecting this trend to continue into Q3. The adjusted EBITDA was 155 million SEK. This is an increase of 25 million SEK compared to last year. The adjusted EBITDA margin amounted to 50%. The improvement is due to operational leverage from higher net sales and lowered cost base. We completed the Schultz integration at the end of 2025, and this lowers the cost base in Region North going forward. Next slide, please. In Region North, online sales accounted for 97% of net sales in the quarter. Please note the divestment of EHS. Subscription-based sales represent 98% of sales in the quarter. Next slide, please. In Q2, online legal grew by 11%. The growth is driven by AI sales, pricing, and additional seats. Our tax and accounting business, Dibkunskop, has improved its financial performance and grew by more than 6% in the quarter. The carved out Schultz business performs in line with the business case. Next slide, please. Which is the Region South segment? Net sales in Region South was 309 million SEK in the quarter. Online legal grew by 2% and the organic growth was 0.2%. Our Spanish business continues its positive momentum. In Q2, the organic growth was 5%. The French business had solid performance in subscription-based online sales, while legal training sales continued to be weak, leading to a negative organic growth of 4.5%. In Breeding South, the group's common AI platform was rolled out in Q1 of 2026. This means that we have a growth opportunity through upselling AI and now AI workflows into the legal customer base. The adjusted EBITDA margin was 11% in the second quarter. The Spanish business had meaningful margins improvement thanks to growth and synergies, while the French business had margins decline due to the weak legal training sales. Depreciations have increased by 5 million SEC, mainly due to completed development projects and catching up on lease agreements in office relocation in Spain. The latter is a one-time effect. Next slide, please. In Region South, the online sales increased by 2% compared to Q2 of last year and accounted for approximately 83% of net sales in the quarter. Online legal grew by 2% in Region South. Next slide, please. Breaking down the adjusted EBITDA margin in Region South on country level, we see strong margins improvement in Spain and a decline in France. The Spanish business had an adjusted EBITDA margin of 18%, well above our medium term target of 16%. while the French business declined to 2% in Q2 due to the negative organic growth. We expect this trend to continue in third quarter as the market demand for legal training courses has a temporary dip. Next slide, please. Which presents the segment group functions. Expenses in Q2 were 35 million SEK. As mentioned before, Q2 includes expenses primarily for consultancy in relation to the launch of AI workflow solutions. Next slide, please. In Q2, the adjusted free cash flow was minus 14 million SEK. The cash flow from operating activities increased by 11 million SEK, driven by higher operating profit, while capex increased compared to Q2 of last year. During the quarter, we have allocated 159 million SEK to repurchase of chairs. I'm now handing over to Pontus again, who will present

This quarter marks a milestone in Canop's history thanks to the launch of our new AI-driven workflow solution on all our markets. Canop's number one market position in three European countries stemmed from our proprietary legal content authored by 7,000 local legal experts. For more than 150 years, we have been the partner legal professionals rely on for legal knowledge and doctrine. And we've sold AI supported legal research for the past two years with great success. Now our trusted content will be seamlessly at hand through every step of their work. By adding an AI workflow layer on top of our trusted authoritative content, we become an even greater partner to our customers. Quite a few customers on all markets have already upgraded to the solution and customer satisfaction is on a high level. Canov continues to grow its core online legal business. In Q2, online legal grew 7% and the Group's adjusted EBITDA margin improved to 25%. The financial performance is strong in Denmark, Sweden and Spain, where Canov is the market-leading provider of legal content. Across all markets, customer retention levels are unchanged on a high level and we see strong customer satisfaction. AI is a great growth driver for a company like Kaonob with unique proprietary legal content. Due to this fact in an industry in transformation, we receive a lot of interest from third parties regarding potential strategic transactions. The board of directors has and will continue to evaluate all options available to maximize shareholder value. Goldman Sachs has been appointed financial advisor to the company. Next slide please. For those who would like to know even more about our business, I recommend our investor video. You can find it on our website or by clicking the link in the Q2 presentation available on our website. Next slide please. Yeah, and by this I'll end our presentation and we are now ready to take questions. So I'll hand over the conference again to our host.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Simon Johnson from Barenburg. Please go ahead.

Good morning. Could I start with the groups up 11 million Q&Q and 50 million year-on-year? How much of this is due to the additional consultancy costs?

Well, in group functions, the cost increased close to 10 million SEK, and a majority of those are related to the launch of the workflow solutions.

So we should expect that number to be at least below 30 here in the next quarter, is that right?

Yeah, I'll avoid prognosis, but yes, in Q2 26, there's one-offs related to the launch.

All right, thank you. And then my second question would be on the... legal growth and online growth in SAF. It went from 3% in Q1 to down to 2% here in Q2. Could you provide some more color on what caused that, please?

Well, yeah, it's very limited changes in growth, we do see a great momentum in Spain in particular and that growth has been quite stable. So it's very limited movements and we still see, as I said, the momentum in Spain slightly slower in France.

Okay, very good. And then talking about France, another tough quarter and it seems like We should be prepared for Q3 to be quite similar. Could you maybe a little bit bigger picture, provide some more information on when we should expect that to turn?

It's a tough one. It's difficult to say exactly when we will see the turnaround. We are dependent on the market for training. So the training business in France in general, not only for our company, La Méliasson, is struggling and it is said to be changed in the quarters to come. However, we are careful, but we hope to see some changes in a couple of quarters and the training business, this offline training business is definitely important in the general turnaround for our French business. That's one part of it. a part that it's difficult to control. We can launch new training courses, but if the underlying demand is weak, it's difficult to turn that business around in just a quarter. So I guess that will take a couple of quarters. And when it comes to the other part that is doing quite well, It's the new AI solutions. We launched new AI solutions both for Spain and France late in Q1, late in March. And that is actually the best selling product we have both in Spain and France for the time being. And then late in Q2, we launched the workflow product, which also has had great interest among lawyers, French lawyers. in connection to the launch. So we see that that is the part that we actually can control. The underlying demand for training business is more difficult, but we see growth in the AI parts and hopefully also, as I said, in a couple of quarters in the training business.

Understood. And then finally, I'm trying to bridge the organic growth in Region North. Would it be possible to quantify how much Schultz declined in the quarter?

Schultz is quite stable and it follows the same logic as before. So we continue to follow the business case that we reported on in in connection to the acquisition. And that still holds quite true. And we talked about 80 million SEC in sales and about 50 million SEC in EBTA. And that still holds quite true.

Very good.

Thank you very much.

Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Predrag Savinovic from DNB Carnegie. Please go ahead.

Good morning, gentlemen. Thank you for taking my questions. So on the topic of divestments, if I put my question this way, what part of your products and services in your portfolio do you see as core and indispensable?

What we now call online legal, which could be considered core then, is the legal information solution, the AI layer on top of that, and then the newly launched workflows.

Okay, that's very clear. Do you still believe that the positive margin trajectory itself can continue to deliver further year-to-year margin expansion also in the coming quarters?

That's bordering on giving prognosis, Predrag, and it's quite difficult. We have some great thoughts on the launches. We have talked about positive momentum in Spain. And we still have the positive momentum overall in the online legal. And if we consider that, then operational leverage should, of course, look good.

OK. That's very good. And then on the margin level in North, I think it really reached some extraordinary margin levels. Are these sustainable for the long term? Reach even higher? I mean, I guess you can apply the same arguments to what you just said for South, but North enjoys even higher growth here. So how should we think of this really?

Yeah, I agree. It's reached really, really nice and impressive levels. To me, all businesses, not only Karnav, it's about finding plateaus. And now we've found one, but then we also need to invest in future growth. So we need to balance growth and margins going forward. And so it's a balancing act.

Finally, how do you view of publishing businesses? Is this important? Is it increasing the value of the digital offering? What is the relation here?

Well, it is important because when we talk about AI and proprietary content and doctrine, some of that, of course, stems from the offline side of things, from books and so on. So it is important. But the print side of things are a way of distributing that proprietary content. So yes, we do think that it seems still important with that publishing part to get a really good product in AI. The distribution, at least to me, is not that important.

Okay, super. Thank you very much for those answers.

Thank you.

The next question comes from Ina Jupson from SEB. Please go ahead.

Good morning and thanks for taking my question as well. So I wanted to ask now after you launched Flow Tools, where will kind of the incremental product development spend be focused and if you see any cost inflation from AI more generally?

It was a bit difficult to hear you, Ina, but I'll try to answer and please ask again if I don't reply. So I can start with the latter part of your question, and that's token cost if I got you right, cost inflation related to the launch of the AI services. And that's been, we follow this really carefully and we try to develop the products continuously to make sure that we don't spend more on token costs than necessary to provide good services to our customers. For now, it's more important to us that we get traction, that we get high usage than to control the last decimals on the token costs. So for now, it's not a big issue, but we do monitor this very carefully and do develop to make sure that we don't end up with too much inflation in that. Could you please repeat the first part of your question? I'm not sure I got it.

Yes, so now after you launched the workflow tools, where will you kind of start incrementally on product development, what kind of activities?

Ah, okay, so we still, you've heard us talk about six to eight percent capex of net sales. and we still believe that holds true. In Q1, we increased a little bit compared to previous quarters. I think we were just above the 7% mark, whereas we've been around the 6% for last year. So we do keep within that 6 to 8%.

Okay. And then on the workflow to Opportunity Steel, so if you could give some flavor on kind of what Tom do you see for with your North versus South or kind of what share of your customer could you see using it?

That's a really interesting question and extremely difficult to answer. This is a part of our market of the industry that is being created as we speak, more or less. I mean, what AI help our industry creating is a new way of working for the legal industry. I mean, we started out with AI on the knowledge part of our business, making sure that the doctrine is really itself helping customers to make better decisions. Now we are getting into more like efficiency of the work that our customers are doing. I mean, you could express it like, to put it... in an overview, five phases. The first phase of a lawyer looking at an intake of a project. Next, they will be planning it, how to deal with it, structuring it. The third phase would be the research part. That is where we always have been helping to make better decisions thanks to the knowledge we bring, to the doctrine we bring. The fourth phase is another one, a new one. Recently, we added the drafting opportunity, producing the documents, and the last phase will be the results when we help out with the output. So you could say that four out of these five phases are more or less new. We have been helping customers with drafting and research, obviously. That is where we are coming from. but the other three to four phases is actually new, not only to us, but also to the industry itself. So it's difficult to say what the total addressable market would be, but it seems like it's definitely growing much faster than our traditional knowledge, legal information solution market that we have been in. So we are opening a door extremely interesting new market for Canov and we can already see that we are helping out helping our customers with new things so yes we launched late in June already customers on all our four major markets and we are following how they're using it we have been co-developing this product together with several customers in each market but now we can actually see it it's happening so There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yes, so this is a question from the chat. So could you provide any details on the pricing of this new AI workflow solution? And can you also give me any details on the pricing? Is it usage based? And finally, the question is whether any comments from you on the initial response from customers on this new workflow solution?

Thank you. Thank you for the question. Well, starting out with the response, as I just said, I mean, we received, well, we are really happy to see that it's well received from the customer side. We had a lot of positive things. We didn't, of course, develop this just out of the blue. As I said, we have been working with hundreds, actually, altogether, more than 100 customers in the four major markets we are in. making sure that we are delivering true customer value already from the beginning. So yeah, we had high hopes, and we can see also from the beginning that we fulfill quite a bit of those. Concerning pricing, yes, from the beginning two years ago, when we added AI solution to the knowledge product, we talked about a general price uplift on every market or about 30%, at least 30% on every market. Now, going from that AI that we launched two years ago, we are now adding another 50% on top of that. So that is sort of the triangle we can see. In the base, we have the legal information solution product. The next level would be LIS plus AI, that it means plus 30%. And then the workflow solution, supported by AI, and that's another 50%. So that is how we see this product triangle, so to say.

And for now, it's subscription-based pricing. We follow the talk, of course, in the industry with usage-based pricing. But for now, we do believe that the best way for us to launch this will be through the subscription-based pricing.

Thank you. Another question from the audience. Could you touch upon the differentiations or similarities between the workflow layer now launched by Carnov and the one offered by other players in the industry?

Yeah, thank you for the question. It's of course interesting to not be the first one out. We could be inspired by what we already have seen since a couple of months by other players in the market. And we can discuss this with customers and potential customers and see what actually works and where we can tap in in a unique way. Because we have a unique opportunity to add on in a very specific way. How? Well, I would say the easiest way to describe it is that we add doctrine. I mean, advanced expert written content seamlessly into the workflow tool. So to put it easy, you could say that our customers, there's no need to copy and paste between different systems. They can all work in our system where we provide both the workflow tool and the content in one seamless system. So that, I would say, is one of the differences.

Thank you. And the follow-up to that is, why are you not going even harder internationally with a new workflow product like the VC-backed companies do? Is this an option for Karna for the future?

Yeah, we've started out analyzing where we can immediately add a lot of value, and that is giving... after the customers, we see an immediate value creation in adding workflow tools. And that is by identifying the customers already using our content, already using our doctrine, and now adding workflow tools. Potentially, we could also do this in countries where we not have content. So yes, the question is not too far-fetched, but for the time being, we are definitely starting out on the markets where we have doctrine, advanced content, but we see a future where we can expand, of course. It's not in the plans right now, but it's definitely a possibility.

Thank you. A question for the CFO. Will you report the numbers specifically for the workflow part of the business going forward?

No, for now we have decided not to report that specifically. We now talk about the online legal and that would be the underlying LIS product, AI layer and then the workflow.

Thank you. And the final question for the CFO. What portion of group functions, such as the beta, was non-recurring? Could you give any favors to that?

Yeah, it's a majority of the increase between Q1 and Q3. So let's say the increase was about 10 million sec, and the majority of that would be non-recurring.

Thank you. Final question from the audience. Are you considering any divestments in Region South to enhance the group's performance?

Well, we are constantly looking into what we have and how we could improve in any way. One way is acquisitions. One way would be divestments, et cetera, et cetera. So we are constantly looking into that. Nothing more to be told today about this. We are working hard with both France and Spain. We can see that we have definitely in Spain been able to turn that around into now really healthy margin levels and a good growth in Spain. Still some changes to be seen in the French perspective. They're working hard. And as I said, hopefully the market for the knowledge training business will turn around in a couple of quarters and also inspiring news about the adoption of our new AI products in France. But no specific plans concerning divestments at the moment. Thank you. No more questions from the audience? Okay. Thank you then. Thank you everyone for listening and for all your questions. We will disclose our Q3 report on the 12th of November. So we hope to hear from you then, if not earlier. Thank you very much.

Thank you.