Kinnevik AB

Starting the conference now. Good day and thank you for standing by. Welcome to the Cinevic Q2 Report 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, one, one on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star, one, and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rubin Ritter, Interim CEO. Please go ahead.

Yes, good morning also from my side and welcome to today's earnings call where we talk about the second quarter of 2026. I'm sitting here together with Samuel, our CFO, and together we will talk about update on the key priorities of the quarter. We'll cover net asset value, capital allocation, and then we have time for some closing remarks before we start Q&A. So when I joined in March as interim CEO, I promised to do a thorough and unbiased review of Cenevic's team, culture, ways of working, and the portfolio. And there was also a clear board mandate to make changes where needed to create a better starting point for a new CEO. In that context, our work in the second quarter was focused on four objectives. Objective number one, was to start the transition towards a smaller and more focused organization with an achievement-oriented culture. I see that as a big opportunity for Chinnewick. I believe this company should be a place where it feels like working to be part of a small team that is handpicked, closely aligned, where we have joint, clear objectives. where we have focused execution towards these objectives, where we have a joint sense of urgency that is motivating to everyone, and where we feel accountability for the outcome as a team. So in this context, I have discussed with the senior leadership, and we have redesigned the organizational structure to create more clear roles and clearer responsibilities. We have also moved forward to reduce the team size from about 45 colleagues at the end of 2025 to less than 25 colleagues today. We have also tried to make Stockholm the clear centre of gravity for this team. We do have employees in different locations, including London, and they are very important to us. But at the same time, we have made clear that we see the centre of this company in Stockholm and we bring everybody over every other week to be together here in the office as a team. We have also gone back to an office-first approach with the goal of spending more time together as a team to do the work together in the office. In this context, we have also started to change the culture and I hope that you notice that we have an increased pace of decision making. I think there were a large number of things that were relatively clear at Sinevik that they needed to happen and I think we have tried to adapt a new pace where we together discuss and debate and then we decide and then we implement and then we move on. The second objective was to reduce our cost base. Our purpose as a company is to be good stewards to our shareholders' money and capital. And with that mindset, we need to look at cost as every krona that we spend without impact, as a krona that we cannot invest to make a return for our shareholders. So with that in mind, we together decided that our cost is too high. And in the last earnings call, we communicated the goal to bring management cash costs down to around 200 million kroner per year as of 2027, which is a reduction by about 30% from the level of 2025, which was 313 kroner. So in this context, in the last months, the team has identified and also implemented a number of measures that are already sufficient to bring us to that target. But additional measures will continue to be worked on in the second half of the year to also create leeway for us to make also some new investments into the team where we see that as necessary. I also think there is a significant potential and a great opportunity that we can unlock by leveraging a more modern technology stack, which would enable us for more comprehensive use of AI. So that work has also been accelerated in the second quarter. The third objective is to be very selective in follow on investments to preserve capital. As you know, many companies in our portfolio are investing to grow very fast, and that is a good thing because the value of these growth companies lies in the future. And our role as investors is to support them on that journey, and sometimes that means that we will invest in follow-on rounds. This is a great opportunity for Cinevic to deploy additional capital, but at the same time, we need to be highly disciplined in our approach. First of all, because we want to be good stewards of our shareholders' capital. And then secondly, because in this particular situation, we also want to preserve capital to be able to invest under a new investment strategy going forward. And I think I can say that in the second quarter, we have been highly disciplined in capital allocation. Net investments amount to 57 million kroner in the second quarter, which is actually the lowest level since Q4 2019. In this context, I would also like to reiterate our goal to invest not more than 1.5 billion in follow-on rounds to bring our existing portfolio to profitability. The fourth objective was to conduct an internal portfolio review. Together with the investment team, I've reviewed more than 35 companies. The key questions that we asked ourselves is, which companies have the potential to be a long-term success and to make a lasting difference to their customers? And then as a result of that, which of these companies have the potential to be long-term holds for Cinevic based on their financial profile, their track record, but also their strategy and potential going forward. So clearly the bar needs to be very high. And I think the good news is that we have some great companies in the portfolio with a strong and growing track record and high ambition and a sound plan for the future. And I think if they deliver on that plan, they do have the potential to play a defining role in our portfolio going forward. On the other hand, the board also has been very clear that we want to transition to a portfolio that is more concentrated, that is more cash generating, and that has a more balanced risk profile going forward. And of course, not every investment that we have made in the past will also have a place in the portfolio of the future. Now, of course, we have a new CEO coming in with Helena as of August, and it will be her responsibility to continue to develop the portfolio going forward. And I hope that by doing this portfolio review, we have created a good basis for her to get to know the portfolio quickly, to form her own view and to take the right decisions, of course, together with the board. Now, coming to the financial performance, while we have been focused on these four priorities, we have also benefited from positive developments in our portfolio. Today, we can report that our NAV has increased to 29.6 billion kroner or 107 kroner per share. That is an increase of about 6%. This positive increase is primarily driven by the multiple expansion of our portfolio companies listed peers. At the same time, we have seen strong growth in the portfolio of about 28% on average year-to-date in our larger holdings, as well as EBITDA margin improvements by about 4 percentage points to negative 6%. We have been able to keep cash almost constant at 7.4 billion, which is in line with our objective to preserve capital. And I think we can say overall that this has been a very good quarter for our portfolio. We also have some important management changes that I would like to take the opportunity to address. So we have decided together with Samuel that now is the right time to make a change. Samuel will be leaving Genevik at the end of August after 13 years with the firm. And I'll have the chance to come back to this after Samuel's presentation. Kasper Höstrand will be interim CFO until a permanent successor is appointed. He has joined us recently as part of our investment team. I'm very confident that in combination with Helena's experience and the finance team that we have in place, he will be able to cover this important role really well and do a great job. It is not news to you that Helena Saxon will be joining us as new CEO as of August 1st. And I just would like to point out that I already have an active dialogue with her and we align on the most important developments and decisions. I'm also excited to announce that we have Hanna Björk joining us on September 1st. She will join as Director of Communication and Investor Relations. So most of the participants of this call will get to know her quite well going forward. She has many years of experience in this field, and I think she's exactly the right profile, and I'm very excited that she will be joining the team. And now I'd like to hand over to Samuel.

Thank you, Ruben, and good morning, everybody. So as usual, I'll take you through the NAV development and capital allocation for the quarter, and then I'll hand it back to Ruben before we open up for Q&A, after which Ruben will come back with some closing remarks. That means we are on page four of today's presentation and on the trading of the different public market peer sets that are relevant to our private valuations. And what we're showing on this page is not just the headline average move for each peer group, but the dispersion underneath it, because that dispersion really mattered this quarter. As you may recall, in Q1, we said that the public market drawdown in that quarter was relatively indiscriminate. Q2 was different. The re-rating was more selective, and we saw quite meaningful differences across different subgroups. Firstly, the average public SaaS peer multiple was up by around 20%, but the median that we show in the top red square here was up by only around 5% to 6%. And that informs that it was a concentrated move impacted by significant outliers, in particular among the large-scale peers. And hence, the headline average number overstates what happened for the typical company. Second, the market seemed to move from debating AI risks last quarter to rewarding more concrete AI tailwinds this quarter. The companies driving this in part overlap with the aforementioned outliers, but we saw the strongest multiple expansion in companies where AI is a more immediate demand catalyst in companies delivering, for instance, developer tools, data infrastructure, and cybersecurity services. Meanwhile, the multiple expansion in the application layer and other peer sets more relevant when valuing our portfolio was somewhat more muted. So this was a quarter where de-averaging really mattered, and we've updated the peer group spreadsheet available on our website to reflect the nuances in public market SaaS that this slide aims to provide. At the very bottom range of this chart, you see how multiples changed in our larger companies, where the moves in these various peer sets meant the spread of minus 7% to plus 18% in terms of multiple change in our investees, and a median increase of 4%. So moving on to the next page, page 5, and what this meant for NAV. Our NAV was up 6% in Q2, ending the quarter at 29.6 billion SEC, or 107 SEC per share, with the portfolio growing in value by 8%. In constant currencies, NAV was up 5%. The short version is that public market valuation tailwinds helped, but we also had some company-specific effects. Health and Bio was up 16%, in part driven by some solid operational developments at Citiblock, but primarily by Spring Health, which was up 29% in SEC fair value terms in the quarter. Spring closed its acquisition of Alma during the quarter, and on a combined basis, the company is now targeting $1 billion worth of revenue over the next 12 months, with gross margins in the high 50s and continued EBITDA profitability. As a consequence of the acquisition, our ownership stake was diluted from 14% to 12%, and we remained the company's largest investor. The acquisition means that we're valuing the combined company at a somewhat lower multiple than would be applicable for spring on a standalone basis. And as a reference point against Hinge Health, we are now carrying the company at a 15% to 20% discount on a gross profit basis and a 40% to 45% discount on a revenue basis. At Oviva, we took down our forward outlook slightly, driven mainly by a delay in the company's rollout plan, but that adjustment was more than offset by peer multiple expansion. Our software companies were up 7%, again mainly driven by peer multiples, and with PERC as the largest contributor of software NAV in the quarter. For context, relative to Navan, our valuation of PERC now implies a 5-10% discount on both a gross profit and revenue basis after the re-rating that's happened after Navan's IPO in late October last year. At Muse, we also adjusted our outlook downward slightly, here to reflect softer US macro trends, providing some headwind in that market. But again, this modest forecast adjustment was more than offset by positive peer multiples. Our earlier stage emerging companies were up 12% in the quarter, driven entirely by the revaluation of Wordsmith, which I'll get back to in a second. And the remainder of the portfolio, what we called prior strategies, was down 4% in aggregate, mainly driven by some multiple contraction at Betterment and a 0.2 billion sec write-down of our climate tech businesses. Transaction activity was limited again this quarter. Over the last 12 months, there have been transactions in 33% of the private portfolio by value, and those transactions have cleared at a 10% weighted average premium to our prior NAV marks. And turning to page six, that transaction deceleration was reflected in our capital allocation in the quarter, in combination with our increased discipline and selectiveness when we review follow-on investments. We invested in total 57 million SEC in the quarter, and our largest investment was our participation in Wordsmith's $70 million funding round, in which we participated with our 29 million SEC pro rata share. Wordsmith has had a strong start in our portfolio, with revenue up 14x over the last 12 months, and the funding round represents a value uplift of more than 3x relative to our entry price in Q1 last year. Meanwhile, as Ruben mentioned, we agreed two smaller divestments in the quarter with expected proceeds of 133 million SEK that will close and be accounted for during Q3. We have agreed to sell our stake in ODA for around 100 million SEK and in USKAN, a smaller asset dating back to our old Avito investment, for around 30 million SEK. Buyers in both transactions are existing co-investors, so both companies are in good hands. And these smaller exits put an end to two very different chapters while releasing some capital and rationalizing and concentrating our portfolio. Adjusting our quarterly capital allocation with these two agreed divestments means we would have been net divestors in the quarter of 76 million SEK. This all means that at quarter end, net cash stood at 7.4 billion SEK or 7.6 billion adjusted for these agreed divestments, up 75 million SEK from the end of Q1. So we remain in a very strong financial position with plenty of flexibility, and that's reinforced by the cost savings that we're implementing and that will begin to take effect during the second half of the year. as well as by our expectation to invest no more than around 1.5 billion SEC of follow-on capital into the existing portfolio. With that, I'll hand the call back to Ruben.