Knowit AB (publ)

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Ladies and gentlemen, welcome to the NOID First Quarter 2026 Interim Report Conference Call. I am Judith, the Caller's Call Operator. I would like to remind you that all participants will be in a 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, CEO. Please, go ahead, sir.

Thank you, and welcome to this presentation of Novice Report for the first quarter of 2026. My name is Per, and with me, I also have our CFO, Marie Björklund. Well, as a start, Probably most of you saw after this report was published this morning, we also released that I have an intention to step down as CEO. And I will stay over Q2 and then hand over in August. And this is a decision that has developed through an open and constructive dialogue between me and the board. The timing is right, both for me personally and I think it's right for Novit as well. And as you all know, the past three years have been demanding, adapting to challenging markets and weaker economies. We have taken difficult but necessary decisions to strengthen our efficiency and long-term resilience. Truly proud of how we have navigated this period. And this period, I think it's now largely behind us. We have a stable foundation for the future. And with that said, the focus now shifts back towards growth and innovation in high speed with AI all over it. And I think that the future with this long-term growth and long-term change in this business requires a long-term leadership perspective. I've been part of Norwich for 27 years in leading roles and the past 15 years as CEO. So I believe this is a natural transition point. I am very pleased that Fredrik Ekerold will step in as acting CEO from August. He is currently the head of our largest business area solutions, and he's been part of our management team for almost 10 years. He brings deep knowledge of our business, our culture, and our clients know it will be in very good hands during this transition. And of course, I will help in all ways to make it a really good transition as well. That's really important for me. Well, now over to the report and some operational highlights in the quarter. We see continued improvements in our operations. Utilization is up in all business areas with solutions as the engine in that development. Important is that we gradually improve utilization in Sweden, especially in experience where we also see organic growth for the first time since a couple of years and expanding margins in the quarter. In light of the rapid technology development driven by AI and structural changes, the market we need we need to continue optimizing our organization. This includes retaining some competencies with others. This is really important for long-term growth, but that impacts EBITDA this quarter. Next slide, please. We will now take a look at our business areas in more detail, starting with solutions. Our largest business area accounted for around 50% of total revenue, reported net sales of 717 million SEK for the quarter. The EBITDA margin was 9.3%, in line with the same quarter last year. We continue to see a strong utilization trend. We saw a slow start in the quarter, but the development was really solid in March. We continue to protect profitability through cost control and operational adjustments. These adjustments have impacted EBITDA and EBITDA margin this quarter. We have several ongoing initiatives to truly become a data-driven organization and see great opportunities driven by AI, both for delivery and operational efficiency. Well, over to experience our digital... Next slide, please. Over to... experience our digital agency reported net sales of 276 million SEK in the quarter with an EBITDA margin of 6.3%, a small improvement compared to last year. We achieved solid operational progress across the business. Utilization has improved, which is a key driver for us when we And we've been able to maintain a stable margin. In Sweden, we deliver a clear turnaround. Utilization is strong, margins are improving, and we're back to organic growth. The actions we've taken are really working. Although in Norway we are downsizing part of the business in the quarter, the focus has been on sharpening our client offerings to ensure that we have the right competencies in place. This affects margins, deliberate investments to improve our future performance. We also continue to evolve our offerings into more advisory roles, helping our clients to understand how to use AI and to use that in a broader digital transformation. That's an area where we see strong demand and clear long-term potential. Moving next slide, please. Moving over to business area connectivity, reported net sales of around 145 million SEK for the quarter. EBITDA margin was 5.4%, improving compared to last year. We continue to see stable delivery and strong utilization. The margins have improved for the third quarter in a row. indicating that the measures we've implemented are having sustainable effects. We think that geographical flexibility is becoming more and more important for efficient delivery and margin expansion, and this will also position ourselves for further growth. Although we have seen some short-term impact from individual clients, for zoning projects also in connectivity during the quarter. At the same time, our ongoing effort to reduce dependency on single clients are paying off. We have a more balanced client portfolio today, which makes us more resilient going forward. Over to business area insight reporting. Next slide, please. reporting net sales of around 226 million SEK and an EBITDA margin of 1.7%. And of course, that's clear with that margin. We had a weak start to the year with softer demand and negative margin development. This has been particularly evident with traditional management consulting where market conditions are challenging. That said, we are having more dialogues with clients and activity levels are picking up. However, decision-making processes remain slow with continued delays in conversions into actual projects. As we have been talking about before, we are actively investing this quarter as well in areas where we see strong and growing demand, such as ERP, We start ERP delivery in Sweden right now, cybersecurity and defense. And of course, these are important focus areas that will support both our relevance and our growth going forward. So both parts where we downsize and parts where we actively grow in insight continuously. Next slide, please. Over to our new business area product, reported net sales of around 95 million SEK for the quarter, with an EBITDA margin of 12.8%. This new business area is developing steadily with strong deliveries across several segments. To highlight some areas, we have a strong demand in areas such as defense, security, trusted identity and smart mobility. I think that these are segments that we are highly relevant and where market demand is growing quite a lot. We have strong opportunities in helping clients leverage AI. But just as importantly, It will also, especially in this business area, strengthen our own scalability, allowing us to grow without relying solely on adding more people. And to be clear of the business model in products, we are operating in the intersection of traditional consulting and software development projects. And I think that this is an area that will remain resilient and even grow in the face of AI driven disruption. So it is really interesting to follow for the next coming years, five to 10 years. Next slide, please. And now I would like to turn to Marie and go through the figures a little bit more in detail. Next slide, please as well.

Thank you, Per. So back to the group as a whole, we delivered sales of approximately 1.4 billion SEC, a decrease of 9% compared to last year. Adjusted for performance effects from acquisitions, divestments, and FX, the decrease was 4.5%. The number of working hours in the quarter was slightly lower with two fewer hours, which had a negative impact. We also had fewer employees than last year. The average headcount during the quarter was down by 5%. EBITDA amounted to 83.9 million SEC compared to 104.5 million last year. EBITDA was affected by restructuring costs of 18 million SEC related to layoffs during the quarter. Just to be clear, since I got a question on this, this has not been adjusted for in the 83.9 EBITDA. Apart from this, utilization continues to move in the right direction. However, competition remains high, leading to continued price pressure. Increasing prices to offset salary revisions remains one of our top challenges. The EBITDA margin was 5.8% compared to 6.6% last year. However, if we adjust for currency, calendar effects, and restructuring, the margin was slightly higher than last year. As mentioned, the market continues to be challenging, but we see significant potential to further improve margins and growth. Next slide, please. This slide shows the development of our net debt and confirms that NOID continues to have a healthy balance sheet and a solid financial position. At the end of the quarter, net debt amounted to 339 million SEC, corresponding to a net debt to EBITDA ratio of 0.7, which is well within our financial target of maximum of two times EBITDA. Interest-bearing liabilities are stable, and other liabilities mainly reflect IFRS lease liabilities that do not indicate increased financial risk. With low leverage and significant headroom versus target, we are well-positioned to future possibilities and to maintain financial discipline. 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 $316 million and revenues at $5.7 billion SAC, at an EBITDA margin of 5.6%. And again, restructuring costs have not been adjusted for. Next slide, please. We continue to demonstrate a strong and diversified customer portfolio, which is particularly important in an uncertain market environment. Our broad exposure across sectors reduces dependency on individual customers or markets. Development in the public sector is strong, up 5% since last year, supported by a solid market position, especially in Norway, and also continued good delivery to key clients. This contributes positively to overall stability and growth. The retail and service segment shows a decline, reflecting mostly one major client being cautious. At the same time, industry-related revenues have declined, as several clients remain cautious following a prolonged period of economic uncertainty. The defense segment continues to develop positively, driven by increased demand and a strengthened position among our key customers. Overall, we consider the mix across sectors to be healthy and well-balanced, positioning us well to navigate an uncertain market while maintaining long-term stability. And with that, I leave it to you, Per, to sum up. Next slide, please.

Thank you, Marie. Well, to summarize, we continue to see solid operational improvements with the utilization rates trending upwards. That's a clear sign that we're becoming more efficient and making better use of our capacity. The rapid development in AI is accelerating digital transformation across industries, not just increasing demand, it's also opening up entirely new types of assignments for us That's really interesting. This creates strong long-term opportunities, but in the short term, the utilisation or organisational adjustments we're making to capture those opportunities do have an impact on ourselves, as you have seen now in Q1. These are conscious trade-offs to position ourselves for the future. And finally, of course, our new business area products is performing well, both increased sales and improved margins in the quarter, fully in line with our expectations. And with that said, we are now opening up for some questions.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questionnaires on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question is from Daniel Thorson, ABG.

Yes, thank you very much, Per and Marie. I start with a question on the 18 million restructuring costs for layoffs in Q1. Are they related to headcount reductions we saw in the quarter, or will we see these in Q2 as another step down in number of employees?

This is related to the quarter. A lot of them is actually connected to experience in Oslo, where we close one part of the operations that we did close earlier in Sweden. So that's the main part of it. It was an extra lot this quarter. I think that we will continuously have some small parts of that in the future as well, but not in the size that we had this quarter.

Yes, but to your question, Daniel, all of them have not left the building during the quarter, so... the major part will leave during the second quarter. And how many? In number of employees.

Exactly, that was what I was thinking about. And approximately how many are this related to?

I would say it's around 20, a little more.

Okay, around 20 left to leave in Q2.

Yes.

Okay, that's very clear. And then secondly, around net recruitment, is it likely to believe in positive net recruitment in the second half of 26, or what's your current plans for Q3 recruitment?

Well, I think that there is a possibility to that. We have always had these questions when we close Q1, and I've always said that we need to wait until end May, start in June, to see our plans for Q3 and the net recruitment, because the Q3 net recruitment phase, the last year, it's been quite late in Q3. Like for five, six, seven years ago, it was start August. Now it's rather a little bit later. So I think that we have to wait, but... With that said, we are performing higher utilization rates one step at a time, and now we are actually backing quite high figures in some areas. And that's the only sign for the next phase, and that's next recruitment. But I don't think that we will be extremely aggressive, but there is a possibility, yes.

Okay, that's clear. That's interesting. And then I wanted to also know if you could share any practical customer cases where customers are asking you to run any larger sized AI implementation projects, or is it mainly ad hoc tasks you are seeing in the market?

Oh, it's actually some large project. We have some really large projects connected to the defense industry. That's not possible to talk about, but you will see that in the two years. And I suppose that you already see that in the two years connected to our growth in that segment. The largest project connected to that that we have right now is restructuring data and creating platforms together with some of our partners doing that. But I don't have any... Kiki, do you have any exact...

in one of the municipalities, like the implementation of using AI to a larger extent, but I think it's mostly that it exists in projects that now have a component with AI all over again.

I think one thing that has been really clear for us connected to AI is in our business area products, because that's the really That's really the sweet spot of software sales and software development and consulting. Because with AI, when we have a combination of our own software and consulting, we are able to lower the cost of building that software, but we still can gain from the consulting around that software. And that's really interesting. So in that area, I think that we have already seen some gains, and we'll continue to do that.

Yeah, okay, I see. That's clear. And then the final one, just understand what you hear from your customers nowadays. Are they delaying the planned project during the quarter for any specific reason, or are they rather reducing the size of a project, and they go with a smaller team because they want to do something, but not really sure how everything will look like in a year's time, like What other effects do you see from customers?

If we start with insight, and of course that's the big disappointment in the beginning of the quarter, traditional management consultancy, we see that in that area it's a lot of postponements. They wait. But with that said, parts of insight connected to ERP and cybersecurity events are growing. But uh in traditional software development projects with some of our big customers we see that the and we are actually driving that we have connected to one big retail customer we have introduced we have a lot of teams usually it's like eight nine people we have introduced AI agent in those teams so that we can reduce and that is something that we did already late autumn beginning of this year as well reduce the amount of people in the team from maybe nine to eight and maybe it's possible to take it down to seven and six as well and being able to be first doing that we are actually seeing that we can increase the business connected to that customer so We see that as well. And then the third part is that we see completely new blue fields where we have not been able to drive projects at all, where the complexity and the amount of data has been so complex before, so it was not possible to do anything with that data unless we had AI for example one example that I've been talking about before is our project together with the defense industry called Yggdrasil where we are able to use information from from big data to enhance security so it is changes all over the place and I think that that will continue for even if we see that the technology is more and more getting in place and that technology is of course evolving right now as well but you have to bear in mind that the change will depend on the change speed together with our customers. So that change in how to work and how to produce new things together with the customers will continue for several years from now. And it will be a really interesting journey. The most important thing for us is to be able to change fast and adapt new things. And I think that we really have shown that we are able to do that. And our focus, even this quarter, has been not holding the old, but get rid of the old and just start the new things.

Perfect. Thank you very much. And thanks for all the years, Per. So there's still a couple of months left that we can discuss before you leave us.

We will have high speed these months as well. And hopefully really high speed this autumn as well. I think that that will happen.

Excellent. Thank you.

The next question is from Fredrik Liesel, Handelsbanken.

Thank you. Thank you for taking my questions as well. And first, Per, thank you for all the years and all the discussions. It's been a pleasure. I wish you the best after you leave as well, of course. I would like to come back to platforms and that division where you sort of collect your various parts of software or half semi-ready sort of software so that you can sort of push on to your clients and tailor-made for your clients' purposes. But I would like to get a better understanding on how many platforms you have in there, how ready they are, how much of sort of R&D internally you will need to do in order to get them ready, if any. So a little bit more color on the platforms would be interesting. Thank you.

Yeah, I think that it actually would be in place to have a more deep dive in that connected to investors in the future. I understand that it can be a little bit unclear to understand what it is, but let's say that depending on how you define it, it's between six and eight platforms in different areas. They are quite extensive, a lot of code and a lot of... different capabilities. But with that said, they are not software as a service platforms. We had one or two of those software as a service platforms, but we did sell them because what we are good at is scaling people, not software as a service. So I think it's really important that these platforms also need customization. And I think that more and more of consulting will go this way because the cost for handling these platforms is actually, we have done quite a lot of investments during the years in these platforms, not in the balance sheet, but together with the customers. And the cost of doing that is rapidly going down right now. But the need for partly platforms and partly consulting around these platforms is increasing. So the cost for maintaining the platform will be close to zero. We will do it with AI and we will do it together with the customers. But this is more of a... a possibility for us to really own the competence connected to one vertical, both connected to people, but connected to proprietary competence that we have connected to the code that we have. uh and i i i've seen some example of of competitors to us starting to do the same and i think that that part of consultancy will grow faster than than all the rest the coming years because it is so useful for the customer to be able to have that relationship with the consultancy

will you then be able to safeguard your value in sort of a price model that fits this better so that you say it's a lot of competence put into this so when you sell it at partly a product and partly as services you don't the customer don't sort of expect that it should be cheaper in any way if you understand what i mean i understand what you mean

we are able to utilize the value that we create in an easier way than the company selling solely software as a service or the company selling solely consultancy. I think that the mix will create the possibility for us to utilize the relationship with the customer in a completely different way. And we see that already. We are also working quite a lot in the other business areas with a lot of examples doing the same. But in those areas, we have some small part with our own code, but the mix is different. It's a little code and a lot of consulting. Here it's more like 50-50.

Very clear. Interesting discussion. I have just one more question on the management consulting. As you alluded to, disappointed in the quarter and a lot of projects are postponed. I mean, how long can you hold on? How long can you sort of take the pain and take the financial risk meanwhile clients are sitting and not being able to decide, or have we seen you already sort of right-sizing the FTE based on the management consulting side due to this, or is that in front of us?

Yeah, I don't think that we do hold on, because if you divide insight in three parts, one, the traditional management consulting, one is the cybersecurity and defense part, and one is the ERP part that we did start up a couple of years ago, and During this recession, it has actually been a cost doing that. And as I told you, we did start a new subsidiary this quarter connected to ERP in Sweden, of course, with a cost as well. But I think it's really important to be bold enough to do start things in a recession to be able to utilize it. Of course, the short-term results and margins would have been better if we didn't do that long-term. it is really good for Nowit and for the shareholders in Nowit. And looking at these three parts, the part where we really struggled, the traditional management consultancy, strategy consulting, et cetera, et cetera, that part has been shrinking quite a lot the last years. We continue to downsize that part. And I think that we might be able to or have to do that one step more or something like that. Or probably I think that we are in some sort of a bottom right now and we'll be able to get back to growth. But that part is actually so much smaller now in insight compared to three years ago. So the risk mitigation is already in place. So we are quite happy with the structure that we have inside right now.

Very clear. Thank you very much.

As a reminder, if you wish to register for a question, please press star and one on your telephone. For any questions, please press star and one on your telephone.

Yeah, we don't have any questions from the webcast at the moment, as far as we can see.

All right. Thank you all, and see you in Q2. And for me, that will be my, what is it, 62nd quarter to report Q2. So see you then, and, well, have a good time.

Thank you so much, everyone.