Kinnevik AB

Welcome, everyone. Also from my side, thank you for joining. My name is Ruben. I'm interim CEO at Chinovic since about four weeks. This is my first earnings call, and so far I'm enjoying the work with the team. It has been very busy weeks, so there is a lot to talk about, and I would suggest we get started right away. I will be presenting today together with our CFO, Samuel, who you all will know quite well. Just to briefly go through the agenda, I will start with some reflections on our priorities and actions over the last weeks. And then Samuel will talk about the investee operational development, our NAV capital allocation, and then we'll have time for Q&A. So maybe to start out with a very simple question, which is why are we here? What's the purpose of Cinevic? And in my mind, there is a simple answer to that question, which is that our purpose is to be good stewards of our shareholders' capital and then generating attractive returns while taking appropriate levels of risk. There are probably also other more ambitious answers to that question, but I like this as a starting point for what we want to talk about today. And then, of course, I also want to mention that Chinovic obviously has a long history of living up to that promise and doing exactly this. But what do we need to be good stewards of our shareholders' capital also in the future? I think we need a culture that is focused on joint achievement and on performance. We obviously need that within our own team at Chinovic, but we also need that as an expectation towards our portfolio companies. In this context, I think it's important to strive for values like true ownership, so I want everybody on the team to act like an owner. Accountability, I want everybody to feel accountable for the outcomes that we generate. Focus and simplicity, which to me means to focus on the few things that really drive value and to not do anything else than that and to do those few things in the most simplest way possible. And then also clarity and candor, which to me comes back to honest and truth-seeking debate in the team. So this is really the type of values that I want to strengthen within Chinovic during my time as interim CEO. So in the spirit of clarity and candor, let's start by confronting some hard facts. In the first quarter of 2026, our portfolio is down 22%. That is a substantial number. It's driven by primarily three effects. The first one being derating of our listed peers due to macro and AI. Secondly, continued challenges that we see in the climate tech portfolio. And then thirdly, of course, also our own evolving views on our portfolio. Now, of course, we can debate if we all agree with the market's assessment that has been quite harsh, for example, on SaaS companies recently. And personally, I probably disagree with some of that. And I would find that many of the founders that we work with will actually find good ways to leverage AI to their advantage. But I think the bottom line is that we need to accept that the market price for many of our portfolio companies just has changed. And we are reflecting that really to the full extent in our NAV. Now, as a first consequence of the ongoing portfolio review, which is not concluded but has started, we have taken a first decision, which is to discontinue the sector of climate tech. I personally actually believe that climate tech has a great purpose, and so I don't really like this decision personally. But then again, if we just look at the hard facts and take an honest view, I think it's clear that we have not been able to live up to our expectations. And by the way, just to mention, I think we're not alone with that. It is a sector that has been challenged in many ways and has been difficult for many investors. So on that basis, we have taken the decision to not make new investments, in the sector and also not to report it separately going forward. However, of course, we will continue to be good and supportive shareholders to the assets that we do own. We have also done some work to simplify our reporting. I hope you have noticed we have reduced the length of our reporting from about 40 to about 20 pages. We have tried to make it more plain and we'll continue to work on this going forward. we have also decided to discontinue the idea of core companies. I understand that this concept has been helpful in many of the discussions around the portfolio in terms of focusing on some of the maybe larger holdings, but I also think it has introduced a kind of strategic rationale to the portfolio discussion by saying some companies are core and others are not. So I believe that this distinction might not be helpful to a company like Chinovic. So we will not report on that dimension going forward. Just to be clear, of course, all five of these companies are very important to us, but they are important because of their scale, because of their quality, because of their potential, because of their founders, and not because they are core or strategic in nature. Now, we have also worked intensely in the team to review our organization and our ways of working. And we have in the leadership team decided on some organizational changes that are far reaching. In my assessment, I saw many things that I liked. I see high engagement with the team. I see a sense of deep loyalty to Cinevic. I see a desire to collaborate and to do well and to improve and to learn and to grow. But I also think that when I look at the organization as it is today, I don't feel it's necessarily fit for purpose and fit for what we want to do in the future. And I think that relates to its size, but also in many ways to its complexity. And I would like really to make a shift from a mindset that feels a bit focused on different departments and different views, more towards a feeling of being one team, where just people have different roles and different accountabilities, but ultimately are one and the same team. So the goal is to be smaller and more focused in our organization to enable more direct communication, stronger collaboration, alignment, and then also faster decision-making. I hope that by doing these changes, every team member will have clearer accountability and also the ability to create more impact for the team and for our shareholders. We have also worked intensely on a cost review. And this, I think, ties really back directly to the concept of stewardship, because when we look at how we invest, we invest really from our own balance sheet. which means literally every krona that we spend unnecessarily is a krona that we cannot invest and cannot make compound for our shareholders. I think this context we also have to consider that we do not have cash generating assets in the portfolio currently. So a first review of our cost base signaled a significant savings potential that we want to realize by the end of this year. and we aim for a target level of management cash cost of around 200 million per year starting by 2027. I'll actually come back to that point on the next page with a bit more detail. Now, also in the spirit of making every kroner count, I think we also need a very disciplined follow-on approach. Many companies in our portfolio are investing to grow fast, and so they should, and I think this is also exciting because the value of many of these companies lies in the future, so we should be investing. And I also believe that our role as investors is to support these companies on their journey, and sometimes also that means to be investors in follow-up rounds, which I see as a great opportunity to be presented with those opportunities to allocate more capital. At the same time, I think to be good stewards of our capital, of course, we need to be disciplined in these decisions. We need to look at a variety of factors, at the long-term potential of the company, but also at the execution track record, the financial performance, the competitive modes and how they are building and evolving, the question of whether or not we can build a substantial stake in the business and have the influence that we would want to have, and also at our own return expectation, which needs to be balanced with the risk that we are taking. So I look at ourselves as a supportive shareholder, but I think it's also important to say that we have the ability and maybe sometimes also the obligation to say no if we think that the investment is just not right for us. So in that context, our goal is to invest not more than $1.5 billion in follow-up rounds in the existing portfolio, and we should not think of this as a budget but more think of this as a cap. So some of the things that are outlined here will help us to preserve cash, and I think that is important also for my role as interim CEO because my objective is to provide optionality for a permanent CEO. By reducing management cash cost and by being disciplined on follow-on investments, I think we are doing exactly that. And my expectation is that this would leave Chinovic with around 5 billion in discretionary investment capacity. Of course, this number is not including any capital from potential exits in the coming years. In the context of preserving cash to create investment capacity, the Board is not pursuing share buybacks at this time. Also, the Board is proposing that the AGM provides authorization to the Board to be able to decide on buybacks in the future. So to briefly summarize, and I realize that this has been a lot, but I guess also a lot has been going on, so there's a lot to talk about. But just to recap, I think our purpose is to be good stewards of shareholders' capital, generating attractive returns with an appropriate level of risk. And we have a longstanding history of doing just that. But we are also on a journey where many things will change. And we are working on a number of levers, focusing on those things that we can influence to make sure that we also live up to that purpose in the future. So there's a lot of work to do, and I'm very confident that we'll make good progress in the coming weeks and that these steps will make the company stronger. Now, there are just two areas where I would like to provide a bit more background. The first one is the cost reduction and the cost review. So just to briefly walk you through our logic, we have started with the 2025 reported management cost, which was 341 million. We have then deducted all non-cash items, which are primarily depreciation, amortization, and LTIP. And then I've arrived at the management cash cost for 2025 of 313, which is kind of our baseline. And I really wanted to talk about cash cost because cash is king, so that's what we should be talking about. We have then made our considerations around the target org, how we think the team should be set up for the coming years, and the review of non-personnel cost. And on that basis, we have defined 200 million as our new target annual management cash cost. Now, you should think of this number as kind of a steady-state cost number, so it might deviate in some cases, such as inflation, FX changes, changes in cash-based incentives that depend on the outcome of those years and the related performance, but also significant deal-related or other one-off cost. So... To get to this target rate, we are targeting a reduction of about 35%, which I think is substantial. And we are aiming to take the restructuring costs that might be associated with this primarily this year. Of course, now the task will be to make those changes without taking away anything that is material to our performance and value creation. And I think there is a good path of doing that. We'll be working to implement these changes in this year and then aim to reach the new target cost level for the full year in 2027. The second area I wanted to dive a bit deeper into is the idea of cash preservation. You should think of this chart not as an exact plan but more as a way to think about it and an indication. Per the end of this quarter, of the Q1, so the last quarter, we have 7.5 billion on the balance sheet. And I think the goal is to spend as little of this as possible. And if we would look at what do we have to spend going forward, it's first of all the cost for our own team, which I just talked about. If we take a reserve for that for the coming five years, five times 200 gets us to 1 billion. And then I've talked about the follow-on where we want to stay below 1.5 billion for the current portfolio, which brings us then to 5 billion in cash that will be available to a next CEO. And my goal is to maximize that number. So with that, I hand over to Samuel to take us through the following sections.

Thanks, Ruben. And morning, everyone. So I'll cover investee performance. I'll work my way into NAV, and then I'll end on capital allocation. Then we'll open up for Q&A, after which Ruben will give some closing remarks. On performance, based on preliminary numbers, our larger companies have started the first months of 2026 broadly on plan. In Q1, our health investees grew revenues by 28% on average compared to last year, and improved EBITDA margins by 3 percentage points. And our software investees grew by 32%, while improving margins by 7 percentage points. In the quarter, we also saw Ambeda continue to deliver on important milestones. Their discovery platform's lead drug candidate completed very successful phase 1b studies, demonstrating both efficacy results well above the current standard of care and clear signals that the drug is well tolerated and safe. These are promising results which the company will now try to confirm in phase 2 studies. So operationally, our larger companies outside of climate tech have had a solid start to the year. But as reflected in the significant public market volatility, there are material and continued uncertainties out there, both in the short term and in the long term. And for us, I'd say that sits mainly in three areas. Firstly, rising oil prices clearly may impact air travel, and that would hold back growth at PERC and MUSE. Now, we're yet to see that come through in actual reported performance, and our forecasts do not incorporate this potential impact. But I should say that PERC shared some observations of the recent travel trends that they're seeing a few weeks ago, and we've put a link to that on this slide. Secondly, there's continued uncertainty around U.S. policies for federal funding of Medicaid and Medicare. Now, that's something we, probably you and Citiblock, clearly have grown accustomed to in the last quarters, and it's something that we're trying to factor into our projections. But thirdly, the key topic across our focus sectors is AI disruption and how this is feeding into the long-term growth expectations, terminal values, and thereby ultimately share price performance of public software companies. We published an article on our website that combines our perspectives with some insights from across the portfolio. And while these clearly do nothing to alleviate the compression in public market multiples, we feel they do provide important nuances when one reflects on our conviction in the longer term outlook for our companies. But moving to page seven, the way public markets digested AI disruption was the primary driver of valuations this quarter. We saw broad and significant multiple contraction across our public peer sets, particularly in software and software-like healthcare technology services. It is evident that capital is rotating into other sectors, with public software being the weakest performer year-to-date, with index declines of around 20-25%. As a result of this uncertainty and rebalancing, the sector is now trading at its lowest multiples in roughly 15 years. This drawdown was fairly indiscriminate across types of companies, but we do see a few patterns. two in particular stand out and they also resonate with our own hypotheses and that's firstly that fast-growing companies continue to command significant valuation premiums in public markets and secondly looking at share prices over a longer time period than just q1 more vertical software companies that provide specialized services have outperformed less critical horizontal application companies And these stronger performing companies are often not only the systems of record, but also form core workflow systems. And this, many argue, should enable AI and vertical software to become more of a feature than a threat. Again, please all make sure to read the article that I mentioned that we posted on our website. And please also note that we're providing some subcategories of peer groups in our standard spreadsheet published on our website this quarter. And as trading patterns in public market evolve, this subcategorization may grow in importance going forward. Having said all of that, again in Q1 the market drawdown was still fairly indiscriminate. So what we're doing on this page is that we're showing the quarters changes in multiples in our larger investees, and we compare them to the trading of their respective public peer groups. The black lines chart the multiple movement from the bottom to the top decile company in each peer group, and the red labeled dots represent our larger companies. As you can see, we have generally stayed within the trading ranges that we've seen in public markets when we reassess the multiples we value our businesses at. And we've also considered the recency of larger transactions in companies like Muse and Aviva that warrant a somewhat milder but still substantial multiple contraction. In other cases, like Cedar and Plio, we've been a bit harsher, considering the lower growth profile of these companies relative to other investees. Our evaluation models suggest that this is fairly proportionate to what we're seeing in public markets, where slower-growing public software companies have traded down some 10 percentage points more than their faster-growing equivalents. And lastly, at Citiblock, we've focused more on the trading of the more tech-enabled peers rather than the traditional care providers, to try and reflect this underlying market narrative. Moving to page 8, to put this multiple headwind in absolute terms, it brought an 8.3 billion SEC negative impact on private valuations this quarter. And that obviously makes it the driver of our private portfolio decreasing in value by 29% in the quarter. Adding net cash and public assets, NAV was down 22% in the quarter, and in Q1 at 27.9 billion SEC, or 101 SEC per share. Going by sector, health and bio was down 20%, and software, the sector most vulnerable to public market multiple contraction, was down 38%. Our climate tech companies, meanwhile, were down a meaningful 56% in aggregate. And this was a decline driven more by individual company circumstances. The main driver was the announcement of the funding round at Stegra, in which we have elected not to invest. And with the clarity gained here, we've taken a revised view of the fair value of our investment and have decided to write it down to 10 million euros. If the company hits the business plan that underpins this funding round, we expect to be able to recoup our full investment over the coming five to six years. And we've discounted this expectation at a conservative rate of return to reach the fair value that we report today. As Ruben mentioned, we've narrowed our sector focus, and that entails us not making any new investments in climate tech, and it also means changes to how we categorize our NAV. And as we make this change in today's report, we have made sure to provide a full breakdown of the fair values of each company in climate tech and the valuation reassessments that we're making this quarter. And on our website, you will also find a spreadsheet providing a historical pro forma NAD overview based on this new amended categorization. In our NAV statement in today's report, we now also show the value of our investments based on the last transaction that we've noted in each company. In the current market volatility, fair value ranges widen, and our valuation process places a very short expiry date on transaction-based valuations. But we hope you find this additional detail helpful nonetheless. More specifically, over the last 12 months, we've seen transactions in 46% of our private portfolio by value at a 9% weighted average premium to our preceding NAV assessment. So the transaction pace in our portfolio has come down a bit over the last quarters. And moving to page 9, you also see that reflected in our capital allocation in Q1. Because in the quarter, our only investment was effectively the completion of our 20 million euro participation in MUSE's funding round that we announced earlier this year in connection with our Q4 report. Net investments amounted to 116 million SEK after the sale of a real estate property as part of the right-sizing of our cost structure that Rubin went through. And after HQ costs and treasury income, our net cash balance was largely unchanged in the quarter, ending at 7.5 billion SEK. So our financial strength and flexibility remains strong and is reinforced by the cost savings and the 1.5 billion SEC follow-on expectation for the existing portfolio that Ruben went through. And looking ahead, we're continuing to execute on the capital allocation priorities that we laid out earlier this year, driving towards a more concentrated and more mature portfolio. And with that, we'd like to open up for Q&A before Ruben gives his closing remarks.

Thank you so much. Dear participants, as a reminder, if you would like to ask a question, you will need to press star 1 1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1 and 1 again. Please stand by, we'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question. And it comes from Linus Sigurdsson from DNB Carnegie. Your line is open. Please ask your question.

Okay, thank you very much. So starting, if you could help us break down these 1.5 billion SEC that you talk about. Is this primarily through continued participation in primaries and the larger companies? Is it tilted more towards the emerging companies? I guess especially, as you mentioned, it excludes some of the opportunities for follow-ons. Thank you.

Yeah, sure, happy to give some alcohol on that. So I think the 1.5 is derived by going through the portfolio and looking at where do we see follow-on demand coming up in the coming years and then just taking the sum of that. Of course, those things are difficult to foresee, so it might be more tilted towards younger companies, it might be tilted to companies that already have larger scale, but overall the idea is that this is the amount that we expect... the limit to what we might need to bring the portfolio to profitability in follow-on rounds. I think separate from that, I just think it's important to underline that to me, If there is one company in the portfolio that reaches scale and profitable growth and starts to go into the phase where you would talk of them as a compounder that continues to execute, but on the basis of a much more mature profile or as being listed, and then if Chinovic were to decide to double down on that asset and take a larger ownership stake... To me, that would be a different logic, and that would fall into the 5 billion discretionary investment that we might choose to make going forward. So this is, I think, a bit how our thinking of the 1.5 differs from the 5 billion that the firm has available long term.

Okay, thanks. That's clear. And then if you could talk a bit about how you've set up processes to make potential exits? I mean, should we think about this as a portfolio-wide effort? Are we targeting certain types of companies? And if this is what you mean when you say the portfolio review is not concluded.

No, I'm sorry. By saying that the portfolio review is not concluded, I'm just sort of indicating that in the four weeks that I've been here, I have not been able to dive deep into every one of those assets. So we have started with that, and you see that already some decisions have come out of that process. But I think for practical purpose, we are still in the middle of it. I mean, Chinovic has more than 30 portfolio companies, and I think it takes time to go through that, and it will take us more time going forward. In terms of exits, so I think for Chinevik in the midterm, it would be wise to move towards a more concentrated portfolio. At the same time, I think it's very difficult to time these things. And I also think it's not in the best interest of our shareholders to rush into exits. So there I think we just have to be balanced in how we approach it.

Okay, I appreciate that. And then my final question was, I mean, I can understand this waiting to pursue buybacks ahead of a permanent CEO being in place and your comments around optionality and the 5 billion SEC, but what types of actions do you envision a permanent CEO could take?

I'm not sure I fully understand the question, but I think a new CEO could take all sorts of actions, primarily also defining what will be new focus areas for investments going forward and how do we want to complement the existing portfolio that we do have that, as we know, consists primarily of younger companies, fast-growing companies. How do we want to complement that with investments potentially in other sectors or with a different maturity profile? Those will be decisions to be taken by a new CEO, also in line with the new strategy going forward. Okay, thank you. Okay, great. Thank you.

Thank you so much. Now we're going to take our next question. And the question comes line of Derek Laliberte from ABG Sundal Collier. Your line is open. Please ask your question.

Yeah thank you and I appreciate the clarity. I wanted to follow up on the potential exits here going forward. I mean how do you view the possibilities for that and how high on the agenda is it right now as it could sort of change your outlook for what you provided for the balance sheet going forward? I mean looking at some of these especially the prior core assets, it seems quite clear that they are quite attractive in the private marketplace. So how do you think around that?

Yeah, as indicated, I think directionally, over the next years, I would like to see a more concentrated portfolio. So I think that is something that we definitely will look at and consider. um but then at the same time you know we live in a very volatile world i think it's very difficult um to you know give more color or like a specific forecast on on how exactly that will play out so i think we just you know we'll be investing a lot of time to go through the portfolio to review the different options that we have and i can promise to you we'll be very active in thinking about where to take the portfolio and what actions would be in the best interest of our shareholders. I just find it very hard to make specific forecasts on that topic. So I would not want to promise something that is then hard to influence because it also depends on many other factors. And I think it would be wise for us... If I think of this as my portfolio, I think I would try to really carefully strike that balance to become more concentrated going forward, but then also to try to find the right time and the right moment and the right price if I wanted to make any exits.

Great, that's very understandable. And on the write-downs here, I mean, apart from the peer declines outside of climate tech, what do you mean about what has changed in your underlying view of the assets outside there? Because we see PERC being down 43% and TEO down by 40%, which does seem pretty extreme in the light of how peers have moved and also the latest transaction values in the market.

Hey, Derek, it's Samuel. I'll try to answer that one. So, you know, naturally, our views on our companies are evolving continuously. But as we state in today's report and in the prepared remarks, there hasn't been any meaningful changes to the outlooks for our larger companies in this quarter. So what we're trying to do here and what our process is trying to sort of apply onto our private portfolio is this very substantial drawdown in public markets. And There, we believe, and the models tell us, that it should be affecting our investees in varying degrees. So, as you rightfully state, Oviva and Muse have recently raised funding rounds. That typically leads to slightly milder but still meaningful write-downs because, as I mentioned, the expiry date on transaction valuations in this type of volatile market is very, very short. And then we have companies that are growing slower, such as Acidra and Aplio. And the data tells us that those should be impacted slightly harder than a company growing a bit faster or less equal. And you mentioned PERC. Clearly there we have a comparable in Navan. That company is trading at around the same levels it was doing at the turn of the year. So our process makes us feel obliged to move closer to where Navan is trading, even though our view on PERC's long-term value creation potential has not changed one bit. So I'd say the write-downs you're seeing and the variations in write-downs you're seeing in this quarter is less driven by a change in view on our individual companies or their performance. It's about how to apply this very significant derating in public markets across a set of investees that share some characteristics and have some differences in between them.

I appreciate the clarity. Looking at the 10 largest assets you list here, can you say something about which of these you are the most comfortable with in light of the potential of AI disruption here and where do you see the biggest risks in the portfolio?

Hey, Derek. So naturally, as you can imagine, we and our companies are spending a lot of time assessing how our companies best can adapt to a changing environment, and that's something that clearly we're used to. I don't want to reduce the write-up that we've put up on our website to a 30-second answer, but to give you some examples, like we see very strong moats in aspects like MUSE's ownership of quite complex workflows at hotels. We see moats in Enveda's ownership of proprietary data, and we see defensibility at Oviva in terms of the trust from customers and regulators that they've built up over several years of real-world operations. I'd refer you to that write-up on our website, and I think in terms of how the risk of AI disruption is reflected in our valuations, this quarter is mainly through this relatively indiscriminate D rating that we're seeing in public peers. And we're not sort of trying to be smart when applying that in terms of thinking about the longer-term view on AI that we have in the piece on our website, but the valuation process is much more quantitatively driven.

Got it. Okay, and then just on this organizational simplification you're carrying out, I mean, looking forward, what will be sort of Kinevik's edge as an investor going forward as you see it?

I think Genevix's focus really over the last years has been to invest into fast-growing challenger-type companies that take on big problems and try to solve them differently through technology. And I think that is really the type of business that we have been focused on in the past. And, of course, we'll also continue to work in that field and continue to evolve our view and continue to try to find great opportunities. But then I think in terms of how to build capabilities there, it's also to a large extent driven by what future strategies and future focus a permanent CEO would set. And I think that can only be answered once that person is on board. When we think or when I think about the target org, we try to provide that flexibility and in the way that we structure the work in our investment team, to do it in a way that we can continue to cover those sectors that we are focused on right now in a really good way. And in my mind, that's not always a function of the number of people. It's also a function of many other things. And then how to have the flexibility to add new ideas and investment themes that will define the future of Genevieve once it is clear what those are.

Perfect. And finally, given that you're striving for more efficient operations, does having two offices and teams align with that vision?

So in my mind, I think that going forward, Stockholm should be culturally and also from where the team comes together much more the center of gravity. We'll continue to have colleagues that live in different places across Europe, and London will be one of them and will provide good opportunities for them to work there and meet companies. But I don't think we should think of that as a second hub, not only in terms of the cost that presents, but also, and maybe more importantly, in terms of what that presents in terms of having different cultures. I mean, Cinevik is, you know, before the change and after the change, ultimately a small team. And I think there is a big benefit to have, you know, one physical place where the cultural center of gravity is. And I think for Cinevik, that should be in Stockholm. Okay, great. Thank you.

Thank you so much. Now we're going to take our next question. And the question comes line of Bjorn Olsson from SEB. Your line is open. Please ask a question.

Good morning, guys. Two questions on the organizational changes. First, could you give any more flavor in terms of where you expect to find the cost efficiencies? Is it from the investment teams back office or just sort of across And second, I mean, culture is something that's in the walls. So when you now strive to increase the performance culture in your company, do you have any sort of tangible actions planned in terms of either changed incentive schemes or any sort of change of key staff or similar?

Thank you for that question. So I think in terms of where we see savings potential, I think it's really, you know, we look at it across the board and across all those different topics that you have mentioned. It comes down to a leaner target org, but also then a non-employee-related cost. There are opportunities that we see, such as office costs, IT costs, and many others. So it gets very granular very quickly, but I think we just... really also over to everybody that we do that tedious work and essentially we're looking at at every single contract and we are reviewing if we need it and what is the value it creates and is there a simpler and more efficient and better and also cheaper way to do it. So that's clearly a focus. I think in terms of performance culture and achievement culture, you are 100% right that this is not something that can be impacted just within a few weeks. I think that is obviously those processes take more time and I think a lot of that will also be than hopefully brought forward by a new CEO. But to me, it is really a lot about leading by example. How do you take decision? What quality of argument do you accept? What do you not accept? So I think it's in many of the details of our daily collaboration that I think culture comes through. And just to be clear, that's also not just about me changing that. That's also about kind of the team bringing out the good things that we see and encouraging the team also to lead itself and each other in that regard. So I think that is something I'm quite passionate about and where I think we can make a lot of progress. You mentioned incentives. I mean, incentives, of course, also. play an important role, but to be fully frank, I haven't looked at that in the first four weeks, but I agree it's an important theme, and it will be important for the long-term success of the company that we get incentives right. That is, by the way, not saying that they are not right, but they need to be right, and I haven't reviewed them yet.

Good point. So then just a minor follow up. So in terms of redundancy costs, then when you're sort of right sizing, that should probably be lower than if the FTE reduction is a smaller part of the 100 million in cost savings.

I think personnel is a part, just like many other pieces, and there will be also redundancy costs related to personnel, but also related maybe to other contracts that we might want to get out of, and the idea would be to incur the majority of that still this year.

Okay. Thank you.

Thank you so much. And the question comes from Johan Sjöberg from Nordea. Your line is open. Please ask your question.

Thank you. I have a couple of questions actually. Starting off, Ruben, I understand you're four weeks into your temporary job and you have a lot on your plate right now. But on the other hand, you have tons of experience. board with a similar amount of experience. You have Samuel also who's well on track how things have been progressing with the 30 portfolio companies. So my question for you is sort of how long time do you think it would take you to sort of get your head around all the companies which wants to sort of focus upon who will be sort of your concentrated portfolio over the coming, you know, in the foreseeable future?

Yeah, sure. I mean, I personally would think of it as a kind of ongoing process and ongoing discussions and considerations that we have in the team. And I think we also have many, many ideas in that regard already. And as you mentioned, also, we're not... doing everything from scratch, there is existing views and existing knowledge obviously in the team, right? So sometimes it's also just about following up on that and servicing those pieces. So I think we're incredibly focused on it. But I don't think it would be wise to now put ourselves in the corner by sharing specifically what our thoughts are on individual companies. I think that's not advisable. But as in any good investment company, I think those discussions should be ongoing as ordinary cause of business also to just always be up to date on your portfolio, on the different companies, and what our position on them should be going forward.

I understand. So just to sort of push in a bit here on the 30 portfolio companies, when you talk about more concentrated portfolio, what sort of range are we talking about here? Are we talking about below 20 or are we sort of, you know, once again, I understand it's early and you don't want to sort of promise anything, but just for us to get some sort of feeling here.

Yes, right. I mean, to be frank, I think a lot of that also comes down to strategic decisions by a new CEO, but then I also don't want to shy away from an answer. In my view, it's not necessarily about a magic number, so I don't think there is kind of the perfect portfolio that is 10 or 15 or 25. but it's really about in each of the companies to have a position that allows us to be a meaningful owner and to only have such a number of positions that you can cover with a kind of small, lean, but very experienced and high seniority team, that you have only positions where you can have a meaningful value add to those companies, where you truly can be a great owner of that business and provide the right level of leadership to those companies. So those would be some of the considerations I would be focused on. And I don't have the number for you. I don't think of it in those terms. But I do think that the current number is too large. I think that is also given. I mean, we all know there is a large bucket of what we call other companies that has to do with previous strategies. And I think a lot of these things just have maybe a bit accumulated over time. And then we need to think through how to take that into a good direction going forward.

Perfect. And we also talk a lot about the new CEO. Could you give an update on how that process is ongoing here? It's been since November that the first decision was out. And we had a lot of time. I understand a lot of, you know, it's been a full headwind in Q1 in terms of how the market is viewing this sort of conflict, but also what it's done right now.

Sure. I mean, that search process is led by the board and then more specifically a subcommittee of the board. And I'm sure they will give an update as soon as they have an update. But there's not really a whole lot more I can say on the issue, on the subject. I'm right now incredibly focused on the inner workings of Chinovic and all the work that we outlined in the presentation.

Okay. Final question, Samuel, maybe you can help with this one. I mean, just looking at the NAV or the write-down of NAV in the quarter, I think it's great that you're taking down the NAV because obviously the market has not believed in sort of the underlying figures here and that, sure, I mean, we've seen multiple contractions during the first quarter, but then on top of that also you add some reverse, you also change your view of growth for some of the new companies. And I guess, first of all, this is a number which I guess, Ruben, you feel much more comfortable with also, although just four weeks into the job. But just to get a feeling for you, I mean, Samuel, maybe just looking at sort of the multiple impact on the breakdown, how much would that be? And sort of what have you, what is the impact from your sort of changed view on the interview? So thank you.

Thanks, Johan. So, I mean, the easiest way to answer your question is to refer back to the page where we showed that multiple contraction had a negative impact on NAV in excess of 8 billion SEC. And again, in terms of how we've applied the multiple compression we're seeing in public markets onto our portfolio, that is sort of flowing through our process, which is unchanged and is sort of intrinsically rigged to be conservative, to be objective, and to be as numbers-driven as possible. Clearly, valuation levels in our portfolio has come down over the last quarters and last years, and I think that's two reasons. that our portfolio has matured and that public comps have derated significantly. So in this quarter specifically, we're taking that significant hit from the public peers. We've learned a lot over the last couple of years, and those learnings are clearly sort of ingested into our quantitative models. And then, as always, there are individual considerations, but then again, those individual considerations are mainly of a technical and quantitative character in our different regression analysis And so on. So again, in terms of outlooks on our companies, looking at the larger investees as a group, those are largely unchanged. And in Q1, the larger companies have delivered on expectations. But yes, there is a lot to decipher in the public market moves in Q1.

No, I'm just referring to sort of looking at the software down 38%. I mean, just looking at the presentation which you gave, these are clearly below. And once again, I don't have a problem with it at all, but it seems like you have written it down more than sort of what was the multiple contractions. That's sort of my – maybe I'm wrong here.

I think to summarize, I think we are, you know, confident with the variations that we have put out in Q1. I think that's the bottom line of it.

Perfect. And that's what I wanted to hear. Thank you so much for this. Sorry.

Thank you. Now we're going to take our next question. Just give us a moment. And the question comes from Oscar Lindstrom from Danske Bank. Your line is open. Please ask your question.

Great. I hope you can hear me this time. I have two sets of questions. The first one is on this ongoing portfolio review. Could you see adding back a cash flow generating asset as opposed to more of the growth-oriented assets that you have today? as part of the portfolio again, sort of have that balance between cash flow generating assets and growth assets? That's my first question.

Yes, I think it's a very relevant question, and I think it also falls into that category of future strategy where, again, I just want to be careful with my own view, given that I'm also only here temporarily, But I think there is – my personal view is there is merit to what you are saying, and I think there needs to be the effort to make the portfolio more balanced. And my understanding is also – I don't oversee kind of the full 90-year history of Chinovic, but my understanding is that also even though – The company has a history of backing challengers and taking technology investments at early stages and kind of betting on the future in a way. In my understanding, that was at many times also balanced with more mature, more cash-generating assets in the portfolio. maybe also some of them being listed. And to me, that seems like an advisable idea because right now, of course, and that also became apparent when we went through the evaluation exercise, one challenge that we clearly have, and I think it's also something that the team here in Tony really tries to live up to very hard, is that we have a portfolio of private, fast-growing assets that are just really not easy to value. I think we can all agree on that. And then every quarter, of course, we have the expectation of public shareholders that want clarity and transparency, also for very understandable reasons. And every quarter, again, we have to kind of bridge that gap. And that's not an easy task to do. And that's also not easy on the team here internally. And I've also experienced that now firsthand when going through the valuations. So I think also in that regard, it might be a path to just make our lives a bit easier and also to generate a more balanced outcome for shareholders. So I think there's merits to that idea. But then again, I think it's also subject to the general strategic discussion going forward.

Thank you. My second question is on the $1.5 roughly billion of follow-up investments that you've talked about. How soon could that $1.5 need to be spent, do you estimate? Is it like front-loaded or sort of evenly over the years, or how soon?

Yes, I really understand the question, and I would also love to know. I think that's the honest answer. I mean, we have some view and some visibility on what demand might be coming in the coming months, but then it's also really difficult to forecast. And just maybe also to reiterate, I think it's really important to think of this not as a budget that we intend to spend, but it's more kind of an estimate or like a cap that we want to limit ourselves to. Because I also think, in my perception in the market, there has been the perception that maybe the majority of the cash that we have might need to be deployed into the current portfolio. And I think our message is just that we really don't think that that is the case necessarily. So that is the context why we have talked about this number, the 1.5 billion, but then really it will be a bottom-up exercise. I think every follow-on opportunity has to be assessed in its own right. I try to speak to what are some of the characteristics and some of the analysis and some of the considerations we will make when we evaluate whether or not to participate in those rounds. And I think that is really what will be happening. So it's very much bottom up. I wouldn't want to forecast it too detailed on a timeline. And I think, you know, I think of the 1.5 as an estimate and the maximum number.

So just a thank you, just a follow up there. The 1.5, is that within the next five years or just to clarify that once more?

Yeah, probably. I mean, that's probably like a reasonable assumption. Like we talk about the existing portfolio, right? So like theoretically, it's a number into kind of eternity because we have the existing portfolio. It continues to drive towards profitability. And at some point, more and more of these companies just will not need further follow on investments, right? So then they fall into a different category where we can, of course, always think about if we want to accrue to a larger stake because we think it's a company really want to be holding long term with a larger allocation, but that's then a different consideration. So as the portfolio grows towards profitability, that number will be deployed and it's difficult to put a number on it, but probably five years is a valid assumption.

Great answer. That explains it to me. Thank you. Those were the questions that I had. Thank you.

Thank you. Dear participants, as a reminder, if you would like to ask a question, please press star 1 1. And now we're going to take our next question. And the question comes from Nizlan Naize from Deutsche Bank. Your line is open. Please ask your question.

Thank you. I just have two from my end as well. Rubin, thank you for your thoughts. And I was just curious, there must be some sort of conversations that come your way that says, look, with valuations crashing the way they've had, aren't there any opportunities in the market also to sort of deploy capital in some very interesting assets that are now probably attractively valued, maybe in sectors that are topical like ai how do you sort of deal with those kind of topics that come your way given chinovic at the end of the day is an investment holding company um some color there would be great and second i guess we've thought you know half so halfway into april have you all seen the valuations of the peers that you're using um as as comps stabilized so far in q2 or has it all

also been volatile with the geopolitical sort of news that's out there some color there on what's going on with the comp base would be great quarter today thank you yes great thank you maybe i can comment on the first question and then samuel can take the second question so i think you have you know a great observation that obviously volatility always also creates opportunities And it is exactly in that context that I also see Chinovic's 5 billion of cash available to investments as a great asset to be able to potentially act on opportunities. And I also expect the world will continue to be volatile going forward. So I think in that context, that balance sheet just becomes a very strong asset in the way that I look at it. In terms of AI, I mean, Chinrik already today has exposure also, you know, not only to software companies that are taking this new technology on board very decisively, but also to some AI native companies. And here maybe I can also point you to the piece that Samuel already has referred to on our website on building business, our thoughts on building businesses in the age of AI.

Yeah, Nisla, on what we're seeing in peers in April to date, I'd say that volatility remains very high. If you look at cloud ETFs, they were up 5% yesterday and a week ago they were 10% lower than they are today. So it seems to continue to sort of bounce around. both in terms of share prices, but I'd say sort of the volatility and the underlying drivers seems high as well with new AI product releases every week and clearly what's going on in the Middle East and the posturing from the US administration. So volatility is persisting in April. In terms of absolute levels, they are roughly around where we ended Q1. But again, very, very volatile still out there.

Thank you both, very helpful.

Thank you, Nisla. Dear speakers, there are no further questions for today. I would now like to hand the conference over to Ruben Ritter for any closing remarks.

Great, yes. Thank you all for your participation, for your time, for your questions and the good discussion. Maybe just to reiterate, as you've also pointed out in the Q&A, Q1 has been a tough quarter in many ways to our shareholders, to the team, to the company overall. A lot of things have been happening. And I also think that during Q2, we will just be very busy as the world continues to be volatile. And as we start to take some of the steps that we have been discussing, we have been talking about the cultural shift that we want to work on, how we want to work on preserving cash for optionality for the future and how we want to move towards a gradual portfolio concentration by balancing that with the time that it might need. And I think many of those changes will also take time and hard work. But at the same time, when I try to see through this, I also see many positive things. I'm just really convinced that the changes that we have talked about will make the company stronger. And I really think that the cash position that the company has will create options going forward. And as we just discussed, I think that's particularly valuable in a world that is as volatile as ours. I do think we have great companies with great potential. in the portfolio. And even though we have talked about the NAV impact on this quarter, I think we just should not forget that these companies are there and that they continue to execute. And I see a quite good path and a good chance that their value will also become much more tangible going forward. So I think this provides the basis for the company being significantly stronger in the future than it may seem today. And that is what we as a team are really focused on. So thank you again for your time and have a good day.