Knowit AB (publ)

Ladies and gentlemen, welcome to the NOET Interim Report Q2 2025 conference call. I am Mathilde, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Per Valentin, CAEU. Please go ahead, sir.

Thank you and a warm welcome to this presentation of our report for our second quarter. My name is Per Valentin and with me I also have our CFO Marie Björklund. First, I would like to take you through some operational highlights during this quarter. The positive utilization trend continues in solutions, and for the second quarter in a row, we also have a positive utilization development in experience. We are pleased to have announced two acquisitions this quarter. They will support our growth in two important areas, FinTech and defense. And right now, I am at slide number three. The development continues to differ between countries. Norway is fairly solid, and we see improvement in Sweden. Finland and Denmark are smaller markets, but we still have larger challenges due to weak demand, and we need to further optimize our organization. The competition is still intense and we have challenging balancing prices against salaries. Long term, the ability to improve utilization rates have higher potential than the possible negative impact from our negative yield. But of course, that's the situation right now. We remain cautious in recruitment activities, but we continue to recruit in areas of growth and we now also see that we are ready to step up recruitment activities in areas where the demand will improve in the future. Next slide, please. We are very pleased that we have announced two strategic acquisitions this quarter for the first time since 2002. Milso is a consultant who is specialized in the defense area with deep experience from working with clients such as FME, Swedish Defense Material Administration, etc. Together with Milso, we look forward to develop our position in this highly interesting and growing sector even further. We also announced the acquisition of Insikon, provider of fintech solutions through its cloud-based platform for the insurance sector. I really think that these deals makes us better and better positioned in two areas of growth in the future. You can take the next slide, please. And we will now take a look at our business areas more in detail. Solutions, our largest business area, accounting for more than 50% of our total revenue, reported net sales of 803 million SEX for the quarter. EBITDA margin was 6.8, slightly below last year, but above when we adjust for FX and calendar FX. We are happy to see that utilization continues to improve. A key factor, of course, for further growth and increased margins. The geographical differences remain. Norway is more stable, and we now see slow but steady market improvements in Sweden. We face large challenges in Denmark and Finland. And in total at Solutions, we have made a deliberate choice not to lower prices in order to drive volume in a tougher market. We can take the next slide, please. Our digital agency Experience reported net sales of 267 million SEK in the quarter with an EBITDA margin of 2.4%. We have seen a continued positive trend in utilization for the second quarter in a row, but still the utilization is too low. Still, competition is very tough and we face price pressure in almost all of our areas in experience. The demand for data and analytics is rising, allowing us to take some more strategic roles and move up in the value chain. That's good. Our focus on sales remains high, and we are growing our order book with several new assignments. We can take the next slide, please. Business area connectivity reported sales of around 200 million SEK for the quarter. EBITDA margin was 6.7%. When adjusted for FX and calendar FX, the margin is in line with last year. We still face challenges from the downturn in the telco sector. Several new assignments in the second quarter provide energy and confidence, also in the telco sector, actually. We expect to move back into growth mode during the fall and have worked hard to optimize our organization. We can take the next slide, please. Moving into our management consultancy Insight reported sales of around 230 million SEK for the quarter. E-admitted margin was close to 4%. The profitability was impacted by continued work with restructuring and optimization. The market uncertainty remains and we have experienced clients postponing investment decisions until after the summer. The demand for services in the defense sector remains strong and we look forward to collaborate with our new colleagues at Milso. Together we have really great opportunities to win you interesting assignments. The demand for ERP system implementations remains good, and that's the business that we have in Norway. We can take the next slide, please. And now I would like to turn it over to you, Marie, and elaborate a little bit about financials more in detail. Next slide, please. Over to you, Marie.

Thank you, Per. We can take the next slide again. So back to the group as a whole. We delivered sales of approximately 1.5 billion SEK, a decrease of 11.3%. Adjusted for currency effect, the decrease was 8.3%. There is a substantial negative calendar effect with eight hours less in the quarter. and we are also in this quarter less employees than previous year. The average number of FTEs during the quarter is down by 7%, in line with a decrease in sales when adjusting for calendar and currency. The adjusted EBITDA amounted to 54 million SEC, and the adjustment in this quarter is concerning acquisition-related costs, 2.9 million SEC. The EBITDA decreased compared to the same quarter last year, mainly for two reasons. The weak calendar in the quarter and challenges in prices. Adjusted for currency, we do increase our prices against last year. However, not enough to cover salary increases, even though we have managed salary revisions in an efficient way during the spring. This leads to an adjusted EBITDA margin of 3.6% in the quarter, Last year it was 5.6. So here we have a decrease. We see that the market is still challenging. It's fragmented and competition is tough. But we do have areas where the demand is good, as Per mentioned earlier. Defense, cybersecurity, data and analytics, for example. Solution is improving utilization since one year now and experience utilization is trending upwards for the second quarter in a row. All in all, the utilization is slowly getting better for the whole group, but it is in a too slow way and we are, of course, not satisfied with that. And there is a great potential here for us where our normal utilization is on a substantial better level. Despite price pressures, we believe that our main challenge and also opportunity for growth and improved margins is our utilization. We have the right competences and we have done a hard focused work on our cost structure and we continue to seek improvements. Next slide, please. This slide shows the development over time and also on a rolling 12-month basis. Our adjusted EBITDA for the latest 12 months is at 323 million and revenues at 6.1 billion SEK at an EBITDA margin of 5.3. Next slide, please. This is an overview of our net debt development. We have 400 million SEK in used credit facility and NOID has a total credit facility granted of 1 billion 50. Future considerations amount to 40 million SEK, and the increase in this quarter is due to the revaluation of a Norwegian startup performing well, and the agreement with the minority shareholders has been extended, and the expected payout upon exit is now higher. Other liabilities, mainly leasing debts, amount to 448 million SEK. And this totals a net debt of 647 million SEK and divided with our EBTA on a rolling 12-month basis of 492. We are now at a leverage of 1.3. And this means that we have a stable balance sheet and a good financial position. And also this means that we are well within our financial targets, which is set not to exceed 2%. Next slide, please. We have a solid platform and a strong position as a digitalization partner in the Nordic region. Having a broad footprint is a strength, especially in tougher times, as it is important to ensure our stability. The share from the public sector is stable compared to last year, which is a positive sign as the share in this sector has decreased during our earlier quarters. The retail sector is also stable this quarter and our second largest segment, as well as industry, which is also in line. The negative development in the telecom sector, it primarily relates to one significant client, decreasing its share significantly during the past year and not yet compensated by other assignments. And for the first time this quarter, we report defense separately, an area that has shown good growth in the past year, good profitability, and it's a segment where we have a great focus. And with that, I hand over to you again, Per. Next slide, please.