Lime Technologies AB (publ)

And good morning, everyone, and welcome to our Q1 update. My name is Nils Olsson, been at Lime since 2006 and took over as CEO in 2021.

Hi, I'm Maria Wester. I joined Lime in November 22. Feel free to write any questions in the chat and we will answer them in the end of the session.

Perfect. Thanks for that, Maria. And as always, before we jump into more details about Q1, let's give a brief overview of us as a company. And we have always been running Lime with a very long term perspective. And I think that has left us with a fantastic footprint, as you can see. In more than 20 years now, we have grown in average 19% per year with an EBITDA margin of 25% in average per year. And then I think that's something to be really, really proud of. Looking into our why statement i would say that no matter how big we've been how how numbers turned out our goal has always been the same and that is to help companies to become really really strong in sales and customer care so they can help their customers in a really good way and as a supplier we are strongest when we can combine really great expertise with spot on software And it's also about solving mission critical problems and become a natural part of our customers core processes. We have done this for many years now. We have scaling our business into seven countries. And looking at the last years here, in 2020, we entered Netherlands. In 2021, Germany. We opened up our office in Poland, in Krakow, our development hub. And we have also, since 2021, welcomed user-like and sport admin as a part of the Lime Group. so today we are present in in seven markets we have 11 offices and we are around a little bit more than 450 employees and looking into some of the key success factors as we said we start with the long-term profitable growth running lime with a long-term perspective and something that is very important for us is our recurring revenue and today that stands for 62 of the total revenue We have a very sticky customer base and looking into that we are not depending on one, two or five big customers. We are doing deals with many customers every year and something that of course builds up Lime from the foundation is a very strong corporate culture. So let's look in here and do a sum up of Q1 before we go into a little bit more details of the numbers. So starting with some numbers here, we continue to deliver, I would say, a good quarter with profitable growth in a quite tough market. We amount a revenue growth of 17%, an EBITDA margin of 26%, and a strong ARR growth of 31%. so uh to do start the sum up here and looking into a little bit of the the market conditions i would say that we see a similar market as previous quarters and what do we mean by that it's that it is a little bit longer sales processes they take a little bit longer time and we also see more decision makers in the prospect Despite that, I would say that the order intake from new customers remains good in the quarter, and also that we have managed to build up a good pipeline going forward. Second, expect services. Growth in expect services was a little bit lower in the quarter compared to the first quarter last year. As you all know, it was also a little bit affected by fewer working days due to the Eastern and also that we delivered really strong numbers last year in the first quarter. From a business perspective, we see that it's also been a little bit tougher on the expect services side, especially if we look into to the existing customer side. Something that I feel very glad about is that we have a good mindset and we are using the time to focus on activities that really add value, such as proactive customer work. We are working with cost reducing projects. We are helping our sales team with pre-sales so we can really strengthen our offering and win more deals. Looking into the ARR, 31%, I think that's a really strong ARR growth in the quarter. And what I'm happy about is that we see a stable organic growth. And of course, when we add sport admin on top, we see a positive effect on the total ARR growth. And talking about Sportadmin, our latest acquisition, it has a nice growth and I would say a really good looking ARR profile, as well as strong products with great potential for the future. And now when we have had a chance to work a little bit closer with the sport admin team the last couple of months, I feel very optimistic about that because they have a really proactive and customer focused culture. And also when it comes to the product, it really feels that we are delivering great value to all of our customers and members. I hope you see that we have a little bit new UX on our presentation today. And as our company grows, we are taking important steps to make the Lime brand stronger, which had led to our brand refresh. Now we are also introducing Lime Connect, which is previously user-like, and we are adding Lime Sport Admin as part of our Lime brand. And of course, it includes the Lime CRM and Lime Go. And the goal by this is by using one brand for all of our products instead of promoting them separately. I think that we can make our brand much, much stronger, both locally and when we are expanding internationally. so long-term focus um we started the year with the usual onboarding with new employees in in lund and it's always a really really nice start of the year where we welcome 20 new limers into our company if we look into the candidate market it remains strong and we continue to recruit in all our markets now so we are also prepared for the big onboarding session in august Looking into the recruitment, we can see that also that the turnover, employee turnover remains very low. And I would say it's a combination, much thanks to the investments that we have made in our employees, our culture and leadership over the last years. That has been a focus area. But we also know that the employee turnover is a little bit lower in tougher market climates and usually then goes up when the market improves. so therefore it is really important to continue to recruit and continue to invest in employees to strengthen us in the long term so the agenda for today um we will talk about the order intake and look into some of our deals We will look into the revenue side and we also look into the profit and then at the end, the summary. So starting here with the order intake and as we have communicated before, our customer concentration is low. Today, our top ten customers stands for 7.2% and the biggest customer only stands for 1.1% of our revenue. And I come back to this in a tougher market conditions. It is very good for us that we are not depending on a few big customers, but making deals with many customers in different geographies, with our different products and in different industries. And if we look into some of our deals here, we continue to do really good deals in our industry verticals in Lime CRM. During the quarter, we welcome Many new customers, and if we take one real estate company, Gavlegårdarna, a really nice real estate company that we won in competition with many other suppliers. We have utility companies, Vestdal and Gudbrandsdal. Also glad today that we see that our offering works really well in the utility vertical in the Norwegian market. We have the wholesale companies Kinnan and Atliv Nordic and also our newest vertical membership. We see that we close a nice deal in Germany with Hessen Trade and Invest and also the Swedish company Säkerhets- and Försvarsföretagen. Going to look into a little bit online go, and I would say that we've had a focus to attract larger companies since we broke that out to a separate business unit. And we see that it has been successful, which has resulted in a better average deal size. And this puts us in a better position to continue our growth going forward. Looking into the quarter, several new customers, and to mention some of them, we can say Maskin AB, Elby Lux, Svealift, Kolli, and Inspect to our company and welcome them as new customers in the quarter. From Lime Connect perspective, previous user like them, we also, I would say, see good progress throughout the quarter and some really strong brands that we add to our customer list with Deutsche Telekom and also Malteser as new companies here in the quarter. And last but not least, we have Sportadmin, which also, I would say, had a good start of the year, where we welcomed new customers, including then the Swedish band champions, Villa Lidköping, and also, as you can see, AIKO Innebandy. Two really nice teams, and we are excited here to help them with the daily work and keeping their members engaged going forward. So... revenue and starting off with the ARR side and as you know as a product company it's important to look into the ARR growth and starting with a subscription alone we are growing 37% compared to Q1 2023 looking into our other part of that is the service agreement and you can see that that's a decrease of 26% and This is something that I've been communicated for a long time, that this is in line with our strategy. We are continuously working with converting customers with old upfront agreements into our subscription agreements. And that's a project that will be ongoing going forward. But as you can see then, it really builds up to a strong ARR growth of 31%, which is a combination of a stable and good organic growth in that with a combination of sport admins. Looking into our different revenue streams, and you can see in this slide the development since 2018. We started the transformation of our business 2015 going from upfront to subscription. And you can see here how each revenue stream has developed. And looking into the subscription part, it's really growing steadily, 35% in Q1 and 25% last 12 months. And today it stands for 57% of our revenue. service agreements um we you can see that we have a little bit declining there so it's five percent of the revenue and as i said we continue to transform that customer base in from service agreements into subscriptions up front uh the green part is more or less invisible in this in this page here now so it's less than one percent and if we look into the the The black color there with with expect services today, it stands for 37% of our revenue. And as I said, in the start of this call, we see a little bit slower growth in Q1 compared to the last years. And there are reason for that. And of course, we are working to improve that going forward. uh but if you if we zoom out a bit and look on the overall level it will continue to grow that's important for us but in the long run decrease as a part of the total net sales so revenue wise um we see that in the quarter we reach a 17 growth in q1 and last 12 months also 17 if we looked at the split between our segments sweden is growing 17 percent uh and the rest of europe also 70 17 last 12 months we see we see sweden uh 15 and the rest of europe 21 and the focus is still the same we want to build a more international company so strengthen the markets outside of sweden and we continue to do investments both on the marketing side both and employee side to to build up those countries over time So, Maria, over to you and talk a little bit about profit.

Yes. EBITDA in the first quarter reached 25.6% compared with 25.5% for the same quarter as the year before. Looking at the latest one month, Q1 is at 25.7% compared to 25.5%, in line with last quarter's margin and our financial targets. On the right-hand side, we have the latest Raman's EBITDA development. As you can see, we reached a higher EBITDA margin of around 29% during the pandemic. Now we are back to a normal and lasting level to support our future growth. Investing in sales, marketing, staff, our products and so forth. The last 12 months in Q1-24, we have reached an EBITDA of 26% as we are now able to invest more in future growth. Since we have good growth in our revenues, we have a positive underlying pressure on the EBITDA margin. As we have already communicated, we will continue to prioritize growth over profitability. And looking at the OPEX development, on the left-hand side, we have our personnel expenses. That is the largest expense in non-profit and loss. Looking at the personnel expenses in relation to the net sales for the latest 12 months in Q1 24, it is at 57% compared with 56% in Q1 23. The 90% increase in our personnel expenses for the latest months is partially explained by our acquisition of Sportadmin and also that we have invested in more employee activities, staffing, compensation and benefits. The investment in our employees is contributing to a lower churn. On the right hand side, we have our operating expenses. As you can see, our operating expense increased by 14% in the quarter and 6% in the latest run months. The increase during the latest run months is also partially due to the acquisition of SpotAdmin and also that we're investing a bit more in future growth by marketing, physical sales and product development.

Perfect. Thanks for that, Maria. uh then to make a little bit of a summary then looking into our financial targets and as you can see we reached a growth of 17 percent the last 12 months compared to our target that is that we should be above 18 percent in in medium term we have an ebitda margin of 26 percent compared to the goal of being above 25 percent in the medium term if we look at the net depth in relation to ebda it's uh it's 1.3 compared to the the goal there that it should be less than 2.5 and also if we look into the dividend policy that the dividend should correspond to at least 50 percent of the net profit And in 2023, the board has proposed an increased dividend amounting to 46.5 million SEK, and that corresponds to 56% of the net profit. And just some final words here. I think that we did a lot of good things in the quarter and that we should be really, really proud about. And as a growth company, there will always be room and room for both progress and things to get better all the time. We continue to invest in recruitment. We continue to invest in our internationalization. And something that can really help us going forward is that may be the thing that I really value the most. And that's the attitude that we show and that productivity that gives us actually the possibility to perform over time. So with that said, thanks a lot for listening in and let's see if there is any questions in the chat.

Yes, we have some questions. How do you see growth outside of Sweden developing and what is the development in Germany?

It's a little bit, of course, as always, it's a little bit different depending on each market. If we go into Germany specific, I think that we are in a positive trend. We have a focus on utility companies in the German market. We know that that takes a long time to build up. We have that experience both from the swedish market from the norwegian market now we've been more or less attending as visitors a fair for since we since we went into the german market but this year we did more or less go all in on that fair and had a really really nice stand and and we could really build up a brand within the utility industry something that i'm i'm positive about that is that effect of that is that we see that we have built a built a much stronger pipeline and now i don't i it's important to say that those deals in the utility segment with stats that again takes a long time, but it's a good start. And we feel that we are meeting the right type of companies, the decision makers, and also that we have an offering that suits the market. So with that said, I also have a parallel track in on the German market from a Lime CRM perspective. And that is also, of course, we get other leads in and we meet other companies. So we have a much better pipeline today.

compared to a year ago when it also comes to deals outside of the utility vertical thank you do you expect the growth within expert services will accelerate or remain the same during the year

No, but of course, I don't want to be on this kind of growth level. It's nothing that we have on our agenda. So we are working to improve that, of course. I'm really glad to see that the whole expect services department and are really taking taking actions to to to improve going forward that's the mindset that i was talking about so i expect i expect higher growth going forward in the expect services department and it's important to understand that That's the stability of Lime. Now it's one quarter. We need to see it from a much broader perspective. I mean, we have countries, we have verticals, we have products, we have different revenue stream. And as always, it goes up and down. But I think that the mindset that we are having in the expect services department will help us to grow faster going forward.

Thank you. How do you feel the business climate is right now?

But as I said, it's more or less the same situation. I think there is more decision makers. It takes longer time. And of course, We need to live with that because that's the situation on the market right now. So the important is to focus on the things that we can actually do better. And I think what I'm glad to see in the quarter is that we do many activities. We create new business opportunities. We know how to treat treat the deals that we are in and what kind of sales process that we need to run so it's a situation that we've been living with now for for such a long time so so uh I I would say that we do it we yeah we need to focus on the things that we can affect more or less could you give some flavor to how the different verticals is performing Yeah, but I think that the newest one, membership, I mentioned two nice deals here in the quarter. And I think that we have a good offering and you can really see that in the deals that we are closing. It helps out when we start to build up the references. It's easier to both contact new ones and also to get more leads in. Looking into utility, especially, I would say I'm happy to see the Norwegian market in the utility. We are doing a good job there. On the Swedish market, it's always like that when it's a lot of public tendering processes. So it's a little bit, it's not that it's, yeah. the same flow of deals every every quarter and and i think that we are steadily in contact with many many companies and and have a quite good good good pipeline in the utility real estate uh also an important deal for us uh to win um and uh and also to see that we have a strong offering in both to the public and the private sector in the re in the real estate segment uh one segment that i'm not that i don't really see that kind of traction in is more on the on the consultant side and so so uh there are uh we we need to do better more or less compared to what we are or what we are doing in this quarter how is the acquisition strategy looking going forward We are, as always, we are meeting a lot of companies all the time. I've said this before, but it's like building up a sales pipeline. So you need to meet many companies to see if there is a good match and also have that pipeline over time. We are looking into many companies and also looking into our different products to see, okay, is there any acquisitions that could suit our different, if it's Lime CRM, Lime Go, Lime Connect or Lime Sport Admin. So we are working on multiple acquisitions. fronts here and and um but it's nothing that we have very like now we did sport admin in in the 9th of january so so it's nothing close nearby here thank you that was the last question thank you thank you and thanks for listening in if you have any other questions never hesitate to just give us a call so thanks for today bye bye thanks bye