Kinnevik AB

Good morning, everyone, and welcome to the presentation of Kinevix results for the fourth quarter and full year of 2024. I'm Georgi Ganev, Kinevix CEO, and with me today is our CFO, Samuel Sjöström, and our Director of Corporate Communications, Torun Litzen. On today's call, we will walk you through the key events during the quarter. I will also give an update on our two most recent investments in Travelperk and Inveda. Samuel will then cover our financial position and the development of our net asset value. Finally, I will go through our priorities going into 2025, as outlined at our Capital Markets Day, and as usual, we will end with a Q&A. So, let's start on page four. Coming out of 2024, Sinevik now has a predominantly private portfolio invested in growth companies, coupled with a strong cash position. While we have around 20 larger investments, our priority in the past two years has been on focus our portfolio towards our most promising assets. And as a result, our five high performing core companies now make up more than half of our portfolio, showing attractive returns as a group. With our permanent capital backed approach, we expect several of these businesses to remain Chenevy companies for many years to come. In the fourth quarter, we continued executing on our strategic priorities, backing our company's long-term growth and investing our capital in a disciplined way. Our net added value amounted to 39.2 billion SEK, or 139 SEC per share at the end of the fourth quarter of 2024. The fair value of our private companies was up by 7% in the quarter, driven mainly by a large write-up in travel perks, significant multiple contraction in health care delivery, and positive currency effects. With 1.2 billion SEC net invested in the quarter, the private portfolio increased in value by 3 billion to 28.2 billion SEK. Our balance sheet remains strong, and we ended the quarter with a net cash position of 10.9 billion SEK. We see continued strong execution in our core companies, Citiblock, Muse, Plio, Spring Health, and Travelperk. And during 2024, this group of core companies has grown revenues by 55%, and improve their margins significantly. Our two largest investments, Spring Health and Travel Perk, were both profitable in the fourth quarter. These profitability improvements enable our core companies to increase investments into growth, a strategic decision we have influenced and gladly supported in several of them. In January, TravelPerk announced it had acquired expense management platform Yokoi and raised $200 million in a new funding round. The round values the company over 50% above our underlying Q3 mark, and we will take a closer look at our journey with TravelPerk later in the presentation. We also see promising developments in our group of selected ventures, with Invera and Agrina reaching key milestones this quarter. These are companies which are still early on their growth journeys, but where we expect to continue to invest meaningful capital in the coming years if they continue to track our expectations. We are convinced that some of them have the potential to generate outsized returns and emerge as our core companies of the future. We also know that not all of them will be as successful, but as a group, we have high conviction in their ability to create a number of exciting businesses. In the quarter, we invested an additional 438 million SEK in Enveda, and the company entered the clinic, which I will touch on shortly. Meanwhile, Agrina, the tech platform that supports farmers' transition to regenerative agriculture, received registration under VERA's world-leading voluntary carbon standard. This is an important milestone, not just for Agrina, but for the entire regenerative agriculture movement. It means that Agrina can now verify and sell their credits, unlocking the nascent soil carbon market. Finally, in December, Sinevik held an extraordinary general meeting authorizing new issues and share repurchases, and electing two new Genevieve Board and Audit and Sustainability Committee directors, Hans Plus van Amstel and Jan Berntson.

Moving to page five.

At the end of January, Travel Perked announced it had raised $200 million in new funding rounds and agreed to acquire the expense management platform Jokkois. We also welcome new partners, Atomico, EQT, and Sequoia to the cap table. And we look forward to working closely with them as TravelPerk continues its growth journey. TravelPerk is now achieving a combination of growth and profitability at scale with annualized booking volumes of over $2.5 billion, annualized revenue of well above $200 million, growth of over 50% per annum in the last two years and reaching EBITDA break even at the end of 2024. The new funding will be used to accelerate travel perks continued expansion into the US alongside further developments in product and AI. The acquisition of Yokoi, a leading spend management platform, allows Travel Perk to offer a deeper and more unified travel and expense offering to its clients, while expanding its addressable opportunities. Kinevik invested 485 million SEK in the round, including 78 million SEK in a secondary investment prior to the funding round, bringing our total investment in the company to 1.4 billion SEK. After the funding round and the acquisition of Yokoi, we remained the company's largest and most long-term shareholder with an ownership of 15%.

Moving to page six.

While the funding round is an important endorsement of Travelperk's vision and execution, Kinevix's conviction in Avi and the team go back to the early days of the company. And the investments served as a good case study on the strengths of our unique model. Genevieve first invested in Travelperk in October 2018. And since then, we have made an additional 10 investments in the company. In financial terms, we have multiplied our capital invested six times through follow-ons. So what was it that we saw in 2018 when we made the first investment? Some of the key attraction, having mapped all relevant European players in the sector at that time, included a number of factors. Travel Perked presented a technology-driven product to replace legacy-driven offerings. The company had a top-tier CEO with solid track record and a strong management team focused on both product and sales. Travel Perk had a clear view of the opportunities to enhance monetization and improve unit economics over time. And it was a strong fit with the Cinevic portfolio, where we could leverage learnings from other companies in our portfolio, such as Plio and Omeo. With hindsight, we backed the winner in the sector and the best team, and we did it early. And as a result of this, we're now the largest owner in a growth company of scale that has emerged as a standout homegrown European software leader.

Let's now move on to slide seven for an update on our investment in Invera. We led a new funding round in Invera in the quarter.

And as you may recall, Envera is unbundling light chemical code using AI and custom hardware to create breakthrough medicine. The process works on thousands of molecules at a time, speeding up the discovery of promising molecules for medicine. And Envera's founder Vishwa and his team has built a $1 billion pipeline of 10 medicines in just four years, at a quarter of the usual time and a tenth of the cost. The new funding will enable Invera to deliver more clinical milestones already in 2025 and in 2026 across multiple candidates with strong commercial potential. They will also continue advancing their pipeline of development candidates and invest further in their platform. I will now hand over to Samuel, our CFO, to talk you through our private portfolio evaluations starting on page nine.

Thank you, Jorgi, and good morning, everyone. So as usual, I'll start on our financial position and capital allocation, and then I'll move my way into this quarter's NAV and the valuations of our private businesses. So again, starting on page nine, our investment pace in Q3 carried into the fourth quarter with 1.2 billion SEC invested primarily into Travelperk and Nveda. As Jorgi mentioned, our 485 million SEK travel perk investment in the quarter consisted of our participation in their recently announced funding round, as well as a 78 million SEK secondary investment that we closed in the beginning of the quarter before and separate from the funding round. Looking back at the full year, we invested 3.6 billion SEK during 2024. More than 80% of follow-on investments were directed into our focus companies, and we continued to actively pursue secondary acquisitions throughout the year, adding up to 0.9 billion SEC in total during 24, after a record high 1.7 billion SEC in 2023. This disciplined and focused capital allocation, obviously in combination with our Tele2 exit, led us to end the year with a 10.9 billion SEC net cash position. And as we told you at the Capital Markets Day, our current balance sheet provides a long enough runway for us to start delivering exits again, improve the flywheel potential of our strategy and its capacity to finance itself. And these future proof points of being able to reallocate our capital will be coming on the back of us already having generated almost 10 billion second exits from modern day Chinovic growth companies during our now completed seven year transformation. So entering 2025, we feel great about our capital allocation capabilities. We have a record strong net cash position. The capital need in our portfolio is smaller than it's ever been. Our companies have good access to capital and are attracting new investors. And meanwhile, our pipeline of new investment opportunities is alive and vibrant across all our focus sectors. And our shareholders authorize the use of new capital allocation tools at our EGM two months ago. So in 2025, we will exercise these strengths and the freedom and flexibility we now enjoy with discipline and with surgical focus to work towards realizing the expectations we laid out at last year's Capital Markets Day and that you'll also find on page 10 of today's report. With that, let's move on to page 10 of this presentation and this quarter's NAV development. NAV was up 5% in Q4 to 39.2 billion or 139 SEC per share. Three main factors drove this development. Firstly, our core companies continued to perform and grew in value by 10% before adding this quarter's investment and while facing significant multiple contraction in healthcare delivery, impacting the valuation of Citiblock negatively despite its reassuring operational progress. Secondly, Our mature and profitable non-core companies continued their stable trajectory and added 0.5 billion SEC to NAD. And thirdly, we had strong currency tailwinds providing a 1.7 billion SEC positive impact. The private portfolio was up 7% in SEC terms to 28.1 billion, of which 15.4 billion now sits in our five core companies. And all these core companies have been prized by other investors during 2024. Most recently travel perk in this quarter at a 40% plus premium to our Q3 NAV assessment, which was already up around 15% year to date coming into Q4. Looking beyond travel perk and at the full private portfolio, we've seen price transactions in 71% of our private companies by value during 2024 at valuation levels that on average have been 10% above our preceding quarterly NAV. If we, as in previous quarters, Again, unpack that number into primary transactions, meaning funding rounds, and secondary transactions, meaning transactions in existing shares, then secondary transactions have on average occurred at a 20% discount to NAD, and primary transactions have on average been concluded at a 28% premium. And as I've said before, these price levels that other investors are transacting at in our companies resonate not only with what are normal secondary discount levels in healthy businesses in the current illiquid state of private markets, where you have to leave something on the table if you're getting liquidity ahead of everyone else. But more importantly, I think it validates two things. Firstly, that our valuations are both fair and balanced. And secondly, that not only are our valuations accurate here and now and in today's report, but they also serve as attractive entry points for new co-investors investing in funding rounds in our companies at almost 30% premiums relative to our NAV, with a conviction that they will make an attractive long-term return. On the next couple of pages, I'll try to give some color on the valuations in the private portfolio, and as usual, you can find much of what I'll be going through and more in note four in today's report. And as we start reporting the 2025 financial year with our Q1 report in April, we're looking to continue to take steps towards more clarity and more transparency in our reporting on our private portfolios performance and valuations to help our public market investors see and recognize the value of our portfolio that is so consistently confirmed by investors in private markets. But for now, Let's start off with a very quick snapshot of what everyone can agree on, and those are the known external drivers, currencies and multiples on page 11. The US dollar, appreciated by 9% in Q4, leading our private portfolio's value-weighted currency basket to be up by 6%, or 5% when including our net cash position that we hold entirely in SEC. Trading in key peer sets of our private portfolio was a bit scattered, as outlined on the left-hand side of this page. And we saw quite drastic multiple compression in health care providers and value-based care-related benchmarks, and positive or stable trading in software and health care technology. This combined to value-weighted average peer multiples being up 3% in Q4 for an overall stable quarter. That was very quick, as promised, so let's now jump to the next two pages and to our five core companies. That means we're on page 12, where we show a chart that has become a bit of a staple chart over this last year. For those of you who are new to us, what this chart does is it plots our five core companies' weighted average year-over-year growth rate on the y-axis and their weighted average EBITDA margin on the x-axis. And as this chart shows, our core companies have made significant progress in maturing their financial profile over these last years, while balancing the trade-off between growth and margins in an efficient way. The first red marker in the top left is the average financial profile of these companies in Q421, when they were growing by more than 150%, with 70% EBITDA loss margins. And then each red dot represents a subsequent quarter with growth being traded in for margin improvement. In 2024, our core companies grew by more than 55% on average and improved their margins by more than 20 percentage points. Notably, and as you heard from Jorgi, Spring Health and Travel Perk are two largest assets, making up 35% of our portfolio and 65% of our core companies were both profitable in Q4-24. Looking ahead, we now expect our group of core companies to grow revenues by 40% to 45% in 2025 with EBITDA loss margins in mid single digit percentages on average. Now, as some of you will notice, this is an unchanged forward looking growth margin profile from Q3 rather than the slightly slower growth and slightly stronger margins that we previously expected to see when looking into 2025. And why is that? It's driven mainly by two factors. First and foremost, the very large write-up of Travel Perk this quarter and our 485 million SEK investment significantly increases Travel Perk's weight in these average numbers. And more weight in Travel Perk moves the group's financial profile towards higher growth, but also towards negative margins. Because with their $200 million funding round and acquisition of Jokkoj, TravelPerk is increasing OPEX investment in 25 and intentionally going back to controllable negative EBITDA margin territory after being profitable throughout Q4. Secondly, other core companies like Muse and like Plio are doing exactly what TravelPerk is doing, namely increasing 25 investments into sales, product and market expansion led growth. And they're doing this with our full support they're doing it on the back of significant margin improvements and strong unit economics and they're financing it with their large cash balances and strong access to capital to use a popularized expression some may have preferred us to quote unquote soft land these businesses and quickly glide them into a mature slow growing profitable state along this black diagonal line on this chart but As we said at our capital markets day, that is not what we nor our core companies are about. Their addressable markets, their potential, and their cash positions are too big to not go for a larger opportunity. We are both comfortable with and, should I say, excited about many of our core companies investing in accelerating their growth. And we look forward to report to you how these decisions generate results in 25 and in 26 and see this red curve on the chart bending upwards. And judging by Travelperk's recent funding round, other private market investors who take a fresh five-year perspective on our businesses, they agree with how our companies are calibrating their financial profile. With that, I'd like to move on to the quarterly valuation changes, starting with these five core companies on page 13. On average, Underlying constant currency valuations of our core companies were up 3% in the quarter, or by 10% when excluding Citiblock where public market benchmarks pushed our assessed valuation downwards in a meaningful way. Going through each of them, that downwards push is where I would like to start, by spending a minute or two on some reflections on Citiblock. Because our mark-to-market approach, where movements in public peers affect our valuations, can sometimes be misconstrued to imply that write-downs are always a consequence of companies not performing. That is not the case here. CityBlock is a leading value-based care company, growing by 30-40% by adding high-quality revenue from partnerships with a diversified group of healthcare insurers, including several of the large nationwide players. Their care model's gross margin ramp-up is proven across several years of cohort data across markets, And the city block team has proven their OPEX efficiency in navigating a difficult couple of years for the company and for their industry. They have more than $250 million in cash. They are debt-free and we expect them to need less than half of that to reach cashflow profitability without compromising on the growth opportunity. So it's a company that has great long-term potential and that are attacking a huge TAM. We're co-shareholders with leading healthcare investors like General Catalyst and Town Hall Ventures, who, by the way, carry the business at much higher valuations. And the business also has meaningful strategic value to the large national insurers. In our books in Q4, we are valuing Citiblock using an established and quantitative approach at a 15% to 20% discount to what their growth and EBITDA margin warrants when performing regressions against the company's publicly listed benchmarks. Therein lies both the answer to this quarter's write-down and what we will be looking to refine in 25. Because we are comparing CitiBlock with, on the one hand, large, slow-growing healthcare companies, and on the other hand, a group of healthcare companies with value-based care elements to them that remained on public markets during 22 and 23, when high-quality assets like One Medical, Oak Street Health, and Signify We're all taking private at multiples three times higher or more than where we are valuing city block today. Now, our model is robust and we're not planning on changing it. And this model is what provides this quarter's valuation corresponding to 1.2 times forward revenue. But we will be looking to refine our approach in 25. to make sure that we're not projecting public investor concerns around companies that may face a variety of idiosyncratic troubles that may be less relevant for the valuation of a premium business like Citiblock. With that little exposition completed, I'd like to move on to cover off our other core companies on this page a lot more briefly. And next in line on this page is Muse, which was up 7% in the quarter in SEC fair value terms. with multiple expansion offsetting us pushing some 25 revenues into 2026 in our projections. CEO was down 10%, as the aforementioned OPEX investments into 2026 revenue growth weighs on the margin improvement trajectory in 25, without adding much to the next 12 months revenue. And this in turn points to a lower multiple in our regression models, which do not look beyond 2025 financials. Spring health was up 18%, driven by continued strong operational performance and dollar tailwinds, while we moved our multiple down by 5% to 10% relative to public software and health care tech benchmarks to calibrate towards the multiple we expect the future IPO to price in relation to these two peer sets. And lastly, Travel Perk was up 48% before adding our in-quarter investment, and we're valuing that business in line with the valuation of the recent funding round. which means a gross profit multiple 40% higher than our Q3 valuation and a revenue multiple 45% higher than in Q3. And to put that in relation to our other core companies, the funding round values travel perk at a gross profit multiple some 15 to 20% higher than our valuation multiples at Muse and at Clio and 35 to 40% higher than our valuation multiple at Citiblock. Moving on to my last page, then, page 14. And there's not a lot of news here, but having covered off our core companies, I just wanted to quickly point out a group of companies that we talk less about, that we try to give you a sense of at last year's Capital Markets Day. That is our so-called mature non-core companies. More specifically, it's Betterment, Cedar, Hungry Panda, InstaBee, and Omeo. During the last three months of 2024, these companies grew by 18% on average and generated a 2% average EBITDA margin. Now these are great businesses, but they're not large enough to our NAV or growing fast enough to qualify as core companies. And in Q4, they grew fair value by 12% and provided some stability to their meaningful 17% share of our private portfolio. On the Opposite side of the maturity spectrum we have embedded where we saw a larger increase in fair value in the quarter as we increased our valuation to the level of the company's q4 funding round that your geek covered earlier So to summarize my little fillet of today's presentation I want to make sure to leave you with the following three messages Firstly we are in a great position from a capital allocation perspective very limited funding needs outside our focus companies 10.9 billion sec in net cash and an exciting pipeline of investment opportunities in new and existing companies we have never entered a year with this level of financial strength and flexibility and we will make sure to exercise this with focus and with discipline secondly our core companies have demonstrated significant profitability improvements in 2024. with our two largest businesses, Spring Health and Travel Perk, both being profitable in Q4. In 2025, many of our core companies are intentionally and incrementally refocusing on growth, and these are decisions we're both happy and comfortable with. And thirdly, any debates around the accuracy and fairness of the valuations of our largest and most important companies should soon be concluded if they aren't already. It's been a tough couple of years, and an otherwise strong year of NAV development was in 2024 undermined by Walgreens actions at VillageMD and difficulties at Matam. We are entering 2025 without these types of at-scale risks. We've taken down valuations of our smaller tail companies significantly in Q4, and the valuations of each of our core companies have been corroborated by other investors during the year. Having hopefully made clear that the CFO's 2025 outlook is positive, I would like to hand it back to Jorgi for his concluding remarks. Thank you very much, Samuel.

So let's now move to page 16. In 2025, we look forward to the strength of our strategy and our portfolio becoming more apparent and better reflected in our value creation trajectory. We're entering the year, as we heard Samuel say, with a strong cash position, and with a portfolio of leading growth companies with limited capital needs. This provides us with a high degree of flexibility in how we invest, and we will utilize this flexibility and our new capital allocation tools with discipline. With a more concentrated, stable, and performing portfolio, we expect continued stability in operational performance. translating to a positive NAV development in 2025. Of course, provided equity markets remain somewhat stable. And finally, with a portfolio recognized by leading private growth investors, but still undervalued by public investors, we continue to deliver proof points and work towards a better, more direct, and more transparent and clear disclosure. Lastly, I would like to thank our shareholders for your support in 2024, a demanding and challenging year, and I look forward to reporting on our progress throughout 2025. We're now ready to answer your questions, so operator, please open up for Q&A.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. to answer your question, please press star one and one again. We will now take the first question. From the line of Linus Sigurdsson from D&B Markets, please go ahead.

Thank you, and good morning. So starting with a question on spring and travel perk, as you said, both on positive EBITDA and Q4, back to prioritizing growth, Could you just help us understand what that trajectory looks like or how long should we expect them to deviate from profitability? Thank you.

Hey Linus, it's Samuel. Starting with Spring, as you heard from Adam at the Capital Markets Day last year, they are the company in our portfolio closest to IPO. That clearly makes them slightly less aggressive, whereas Travel Perk has a longer period ahead of themselves in private markets where you can be a bit more aggressive. Having said that, on Spring, the time of the core business is still very large and very much untapped, and there's plenty of expansion opportunities, but Spring is being, call it a bit more careful than Travel Perk. So Spring will be profitable throughout 2025. Travel Perk, I think the company and Avi made it very clear in the announcement in and around the funding round that they are expanding quite aggressively into the US, both by the acquisition of Amtrak earlier last year and organically, and the gross margin improvements and the productivity gains and also the NPS improvements they've seen from their investments in automation and AI. they're going to continue to be a leading company in that space as well. So in Travel Perk, we're seeing them in, call it, high single-digit EBITDA loss margins to low double-digit EBITDA loss margins on a full-year basis next year. When will they come back to growth? Sorry, to profitability? Let's see. Most likely in 26, when sort of the scale of the business generate sufficient cash flow to maintain that investment momentum without necessarily having a negative margin on the bottom line.

Maybe to add on that, Linus, we should also remember that Travel Perk operates now at a gross margin level close to 80% as Avid disclosed, right? So I think this is very much in their own control and they will not, you know, move away from kind of plus minus EBITDA profitability territory. So we feel that they have good control of the business.

Okay, that's super helpful. And then just secondly and lastly, if you could give some color on the split of your near-term capital allocation or the pipeline of investments. Given the high tilt towards follow-ons in Q4, Would it be fair to expect a higher focus on new investments in Q1, or how should we think about that? Thank you.

I mean, as mentioned, Linus, the pipeline has been growing throughout 2024. We have now great opportunities in our sectors. That said, if we look at companies like Invera, for instance, that are hitting their milestones in Agrina, we're, of course, ready to deploy more capital, meaningful capital in these business as well. We don't want to set out a target, but just knowing that our portfolio is well-funded and many of the businesses in this quarter, we name actually seven, have reached EBITDA profitability already last year, there will be naturally more room for new investments.

Okay, thank you.

Thank you. We will now take the next question from the line of Derek Laliberté from ABG Sandal Collier. Please go ahead.

Thank you. I wanted to start out on travel perk here, given the acquisition of Yokoi. How do you view this sort of idea of integrating travel and expense management? And what does it mean for how you view PLEO going forward? Thank you.

Hi, Derek. Thank you for the question. So this Yokoi transaction is a way for Travelperk to address especially the mid market. So it's slightly larger clients. They will continue with a deep partnership with PLEO for the rest of the market and potentially with other ones as well. So that's part of the strategy to both use partners and an in-house solution. We see Yokoi being And a very attractive acquisition for Travelperk because it's broadened, it's TAM. And we also are allowing the company to broaden its cap table with investors such as Sequoia. So this is a pure equity-driven deal. So that's why we also think it's a very good testament to Travelperk. This is not where the journey ends. It's actually the start of the next phase, if you will, for the new investors. and indirectly for Sequoia.

Okay, interesting. And on Clio, could you also there give some more details of what's driving the 10% valuation decline? I thought this seemed pretty drastic, given that I presume peers were up.

Sure, Derek. It's Samuel. It's fairly quantitative, but maybe I can just start off covering Clio's performance, so we're clear. They grew by around 45 to 50% in 2024. I think they improved EBITDA margins by almost 40 percentage points. So this is the leading spend management platform in Europe. And all the local competitors are smaller and they're growing slower, if at all. So the goal now is to solidify this position. And that's why the company is increasing OPEX investments, I think in the range of 20 to 30 million euros in 2025, and that's going into customer acquisition growth through marketing partnerships, tech-led productivity boosts. It's also going into the product and into the tech, mainly to improve the offering to the customers. And when we do our valuation, we just look 12 months out. So we're just seeing that OPEX investment in our numbers, and we're not necessarily seeing the gains on revenue, which will primarily materialize in 2026. And then we take that financial profile, we put it through our regression models where we look at all the software peers and in particular the high growth ones. And that's what leads us to the multiple that we put on PLEO in this quarter. And that's what leads to the write down here. So it's a bit of a one step back, hopefully two or three steps forward over the coming quarters. But we like the approach. Software in particular is an area where we have this abundance of peers where you can really trust these quantitative models and we sort of we stick to that and we try to have separate brain halves where I love what we are doing right now and this year but that doesn't mean that they get a write-up by default just because I like it the model says otherwise okay great I appreciate the clarification and I know Samuel you talk quite a bit about the city block here but just trying to understand the background here

whether it was mainly driven by peer multiples, because I would have thought FX should have provided some cushion here, or is there anything else behind the valuation adjustment, or is it mainly how you decided to calibrate the valuation model as you talked about?

Sure, no, FX does provide some cushion. I think our underlying change in valuation of the business in dollar terms is at around 30%. And the second practice is 25, 26% somewhere. Again, the company is performing the way we expected it to. The challenge here is that in the peers that we're using, and you can find it on our website, as you know, we have two or three constituents trading at almost like 0.1, 0.2 times revenue. Is that because of their financial profile when you sort of pull that out in a comp stable? No, it's because of very idiosyncratic issues where CEOs get fired, they miss guidance consecutively quarter after quarter and make the market disappointed. They lose analyst coverage and so on and so forth. And I think that's the challenge I was trying to sort of make clear in my prepared remarks that it's a peer set that consists of a few companies that sort of pull down that regression line against growth and profits for reasons other than their growth and profits, if you see my point. And that's where I think me and the team needs to do more work in really understanding each of those constituents and why they're trading where they are, and make sure that we're not projecting those types of very company-specific issues onto our business, which is performing in line with plan. So that's the nuance I tried to bring. In terms of how the company is doing, again, It's growing by 30 to 40%. The contract portfolio is so much more diversified now than was the case three or four years ago. So we're not seeing that churn that has sort of pained us in 22 and 23 and has pulled the valuation of this business downward on a 24-month basis. We're not seeing that any longer. So we're feeling very comfortable. But again, we're going to do more work on the comps, and I'll let you know where we end up in Q1.

Okay, got it now. And on Muse, if you could comment on how the onboarding of Best Western is going and whether the company has signed any additional new hotel chains.

So, hi, Derek, again. The Best Western onboarding is going very well. It's a different structure than, for instance, Strawberry, that it's more of a top-down approach where it's a kind of corporate decision to roll on this platform, whereas Best Western, you have the frame agreement or call it hunting license, and then you onboard individual hotels. What's interesting to note is that in this case with Best Western was actually the smaller hotels connected to Best Western who push the change to Muse because they knew that this system was superior to what they were using and what they actually understood from the, from the border market. So it's, uh, well above a hundred, um, uh, smaller hotels on boarded, I think even more. And, uh, we saw really promising figures in the fourth quarter of the year when it comes to, um, onboarding customers and also realizing and acknowledging revenue.

Great. I appreciate it, Keller.

And briefly, if you could comment on, I think the other investment bucket was down quite a bit in the quarter. Just wondering what drove that.

Sure, Derek. The explanation is, I'm afraid, very simple and maybe a bit crude, but we have in Q4 discounted smaller loss-making companies a lot more heavily than we've done in the past. And that brings, call it 450, 500 million hit on NAV and those more call it top-down adjustments that aren't necessarily driven by individual company performance. So part of that CFO Q4 attitude of trying to make sure that 25 becomes a good year.

Got it. Okay. And just finally, if you could share a comment there on looking at your five core companies, where do you see the largest risk to your operational targets over the coming year or two?

We're not seeing a specific company risk. I think they all have ambitious plans, but given how they have performed, both in profitability improvements and top line growth, 55% on average, we're very comfortable that they will deliver. But each of the company have very clear milestones to hit. If it's kind of profitability improvements or kind of onboarding efficiency and so forth, That's something we don't want to disclose because these are private assets, but there is no specific company.

Okay, that's fair. Thank you.

Thank you. We will now take the next question from the line of Andreas Joelsson from Carnegie. Please go ahead.

Thanks a lot. I only have one question. Georgi, you mentioned in your CEO letter that Investments will be more disciplined going forward. Can you explain a little bit how that differs from how you have done investments before, if any difference?

That's a very relevant question, obviously, because one should say that we're always disciplined. What we're trying to say is that I think we've been coming out from a difficult period for Sinevik and for other venture and growth investors. So at the end of 2021, we all knew that there were a lot of capital flowing into these businesses. Since then, we have written down on average our portfolio with more than 60% on average and kind of changed a lot of our capital allocation focus. What we say here is that now the companies are either profitable or funded well to profitability. That will not change. that discipline that we've had over the years. So we don't foresee the market to become exacerbated in the way it was in 2021. So that's basically what we mean.

Perfect. Thank you.

Thank you. We will now take the next question from the line of Oskar Lindström from Danske Bank. Please go ahead.

Good morning. Well, two questions from my side. The first one is, I mean, you mentioned that some of your core growth companies are accelerating growth and sort of refocusing on growth and sometimes at the expense of short-term margins. And you made the examples of spring and travel there. Is this partly this increasing focus on growth or refocus on growth? a consequence or a reflection of pushing out the timing when you expect these companies to be listed? Is that one of the reasons why you can afford to focus on growth for 2025, where perhaps previously That had not been the expectation.

Hey, Oscar.

I think it's a good observation. We feel that there's no rush to IPO these businesses in this market if they have the ability to double in size in a couple of years by growing both, I would say, in the market but also in the product dimension to have a better product or even you know increase the addressable market that's that's you could say a little bit more long-term approach but nothing has really changed from last quarter to now i think there was not really on these businesses agenda to ipo let's say mid 2025 i knew that there were expectations from from some of our shareholders and the market that should happen, but that has never been the plan for these businesses. What they have said, however, is that they want to be IPO ready. We see companies like Spring Health, for instance, go through this process of feeling that they could IPO, and then they will basically adjust their financial metrics to what the public market is looking for at that moment in time. My best guess right now is that they will be close to profitability. They will keep on improving their gross margins. So it's entirely within their control whether they should hit EBITDA growth, positive growth again or not. So since these businesses have a very clear business model, we also feel that it's not even a risky thing to do. It's basically the accurate thing.

Right. Thank you. But Spring is the only company that's really aiming to be IPO ready later in 2025. Is that how we should see it?

That's what they have communicated. I would say that next candidate is probably TravelPurse. So what Avi, the founder, said when the round was announced last week is that it's more likely that Travel Perk becomes a public company than not because they reach such a size that either they are acquired by a US company or they would like to have an independent strategy and to continue to grow. And that's where he sees the journey for Travel Perk.

So I would say...

Most probably, they are the next in line.

All right.

Just a final question from me. Thank you. My final question from you would be, maybe you addressed this and I didn't quite catch it. The multiple compression that we saw in the healthcare providers and value-based care peer groups, did you say that that was for sort of company-specific reasons in those peer groups?

Not necessarily, Oscar. Hey, it's Samuel. What I said was more that the trading levels as such relate to a number of company-specific issues that we will need to unpack and properly understand, again, to make sure that we're not projecting that onto city block. In terms of the quarter-on-quarter movement in this quarter, that has been fairly homogeneous And that's what we're reflecting in our valuation in this quarter. So it's more of a look forward thing where I just want to make sure that we're comparing apples to apples and not golden apples to rotten apples. All right.

So, I mean, you have used those lower multiples for this quarter, but you're saying maybe you need to look at it a little bit deeper to make sure that there wasn't something

Exactly, because our co-investors are asking me what I'm doing when I'm valuing the business at less than half of what they're carrying it at. That's what we need to sort of call it improved in the level of sophistication with which we value. In this order, if you take all the comps that you have in the spreadsheet on the website and you draw a regression line

revenue multiples and growth and if it's all margins you'll see that we're carrying city broke at a 20% discount to what that regression tells us yeah yeah all right thank you I understand better now thank you we will now take the last question from the line of Stefan Ward from Pareto securities please go ahead

If you say that you are carrying the book value, half of that of other investors in the same company, and after 20% discount, your own regression methodology, doesn't that sound overly conservative?

That's what I'm going to find out in Q1, Stefan, if I'm being overly conservative or not. I like being conservative, but we shouldn't be overly conservative. I didn't quite hear your lead into that question, because you sort of faded in. But was that the question?

I think that was what I said, at least.

Then regarding, what sort of... I'm afraid you're breaking up, Stefan. Is this better?

Yeah.

Sorry. Okay. So I had a problem. And just to give it to me, it seems like city block is becoming, I don't expect any more sort of healthcare provider investments from your, your side or value-based care type of investments. So it looks a little bit of part of the old strategy, if you see what I mean. Can you describe on how we should think about the possibilities for Citiblock, your investment in Citiblock going forward? Will you remain an owner until IPO or is there any other alternatives for you regarding Citiblock?

I think I can take that, Stefan. I mean, we know this industry and this subsector very well. We've been investors in both VillageMD with some positive results and some negative results, as you know. What they have built is a platform that have demonstrated to be the most efficient one to increase engagements among patients in this population. So it's primarily Medicaid and these duals that are entitled to both Medicaid and Medicare. with special conditions. So what we see now is that the agreements with the larger national providers is basically the key for profitable growth. And looking at the cohorts of Citiblock, we see very promising gross margin levels compared to other value-based care providers. So if they continue to execute now according to plan, there will be value both for insurers, but also there will be healthcare investors that will acknowledge that efficiency that Citiblock has. So if the plan is to IPO the business in a couple of years, or if it's going to be acquired, I think it's far too early to say today. But the important thing is that it doesn't really matter what type of exit opportunity or future we see for the company. What they're focusing now on is actually what they need to deliver on anyways. which means to continue now to growth with having these cohorts moving into more profitable levels, so higher gross margin levels. So we don't have to make that decision today. But looking at their performance, it looks promising. And we can say already today that they are best in the class.

OK. Thank you. That's very helpful. Then one question relating to the slide on number 12 with the rule of 40 sort of line and with the arrow pointing to Q425. Is that to be interpreted like, to me it says EBITDA profitability for the group or breakeven for the group at 2025? Can you add some clarity there? And then, I mean, for all the core companies, I got the message that Spring Health will be EBITDA-profitable for the full year. But then it's a little bit unclear for the rest. Travel Park was negative, Clio negative. So what would the total be, would you say?

No, exactly, Stefan. That little arrow is supposed to point towards a low single-digit EBITDA margin on an MTM basis at the end of this year, meaning 2016. financials. I think more importantly, and it may be not that clear on the short, we should have made it larger. The arrow is actually moving upwards, meaning that we're seeing growth accelerating in 2026. In terms of what the companies are on an EBITDA margin basis, Spring is the most profitable right now. Citiblock is closely behind on a full year basis. And then you have TravelPurpleo and then Muse is by far the what are the least mature assets of the bunch where they are investing the most heavily, I should say, in their product and in their platform. Perfect. Thanks a lot.

Regarding spring, when we were at the CMD, the number of lives sort of covered or that they handle or are responsible of was 11 million. Has that figure changed in any material way or how should we think about it? Because the ramp up was so dramatic in the prior couple of years and then it looks like it sort of slowed down during 2024. Can you comment anything on that?

I don't want to give you numbers that Adam and April will scold me for providing, but growth is where we expect it to be. I think this business is a bit special in the sense that most contracts start on 1st of Jan every year. So you have a high level of visibility, but then we sort of knew where they were going to end up already in last quarter and the quarter before. And then you're sort of selling and then you're going to launch the new contracts 1st of Jan in 26. So It's a bit chunky in that way. The sort of LTM, NTM approach that is very sort of simple and useful when you look at more linear growth companies isn't necessarily applicable at Spring. the company is performing in line with where we thought they would be and revenue is in that 40% plus growth territory whilst making a positive margin in 2025. And that should correlate quite decently with the number of lives they cover.

Adam also hinted on gross margin expansion from or at least this is my impression that it currently is around 50 and that the potential maybe was more like 55. Is that a longer term or is that something that helping EBITDA profitability already in 25?

We're not quite there yet in 25. We're above 50, but we're not at that 55 level. I think getting to 55 will require both more scale, but also there are sort of different expansion opportunities that could help bring that gross margin up. For instance, you could could sell the tech to independent therapists and basically as a SaaS product where you would make call it 75, 80% gross margins, not on a massive piece of revenue, but that would also be the gross margin accretive. But we're in that, in 25, we're in somewhere in between 50 and 55. And let's see if Adam can do what he says he can do.

Yeah, perfect. Thanks a lot. Just one could be a repeat here on Travel Perk. You said that gross margins are currently at 80%. You grew revenues by more than 50 last year. And then we again turned to prioritize growth over profitability. So EBITDA margin will go negative. What does that imply in terms of will growth dramatically increase from the plus 50% or how should we think about the growth for next year?

We think they'll stay in that 50% territory in 2025. Clearly, you don't want to sound sort of brash, but you don't raise $200 million and just put it in the bank account.

No, of course. I just thought if you're sort of driving down the margin again, if you're accelerating the growth so that 50 plus 50% level moves materially higher,

but it's also Stefan it's fair to say that the investments are more kind of sustainable investment to increase your product attractiveness to actually have you know fundamental improvements of your go to market model it's not kind of marketing dollars only that would of course result in higher growth levels short term but would actually decrease as soon as you kind of which that increased marketing budget off, right? So it's more kind of project to enhance product and also enhance their capabilities to grow with partners and grow in a new market.

Got it. Thanks for that. Then just one final question. It's been helpful to have this sort of core organization and improved level of detail for the core assets. How should we think about that going forward? Will you keep the core as a reporting segment? And then when new ventures or selected ventures become more core, will they move up into that bucket? And if something that you feel is not as core anymore? Will you remove that? How will you treat that dynamic going forward?

I'll take that Stefan. Yes, we will definitely use the terminology of core companies and we'll continue to report on their progress as a group and hopefully we can report on that progress again as I said in a more clear and transparent way. But exactly as you point out and as I think we pointed out at the Capital Markets Day, you should expect companies to traverse these different categories of businesses that we now have. For instance, Jorgi mentioned on the newer ventures, the goal for each and every one of them should be that they become core companies in the future. And currently we have five core companies. I think what we said at the CMD is that by 2030, we want to have 10 of them and we want them to make up a larger share of the portfolio. But being dubbed a core company comes with a couple of requirements, and those companies need to pass that hurdle before they qualify. Similarly, of course, there's a chance that you'll see core companies being moved out of that group, either because we sell them or because we do not feel that they no longer qualify to remain in that group. I think for the five we have here now, The second reason feels very unlikely looking at 25. But hopefully by end of this year, we'll sit here and explain why company X is now a core company. Perfect.

That sounds good. That's all for me. Thanks a lot. Thank you.

Thank you. I would now like to turn the conference back to Georgi Ganev for closing remarks.

Thank you very much for listening and for your questions. And as a reminder, we will report our results for the first quarter on the 24th of April 2025. Have a nice day.