Lime Technologies AB (publ)

Hello everyone and good morning and welcome to Lime Technologies Q3 update. My name is Nils Olsson, been working at Lime since 2006 and took the CEO position in 2021. And today I'm very glad to have Anders here, our new CFO.

Hello everyone. I'm very glad to be on board with Lime. Looking forward to the journey going forward.

Perfect. Thanks for that. And let's start giving a brief overview of Lime before we jump into the Q3 presentation. So yes, and before we start, feel free to write any questions in the chat and we will answer them at the end of the session. So let's start looking into a bit of what Lime really is about. And we always been running Lime with a very long term perspective. And as you can see, that has left us with a fantastic footprint. In more now than 20 years, we have grown in average 19% per year with an EBITDA margin of 25% in average per year. And I think that's something that we, of course, are very proud about. But no matter how big we've been, how many office we had, how many customers we had, we more or less have had the same goal from the start. And that is to help our customers to become really, really good and strong in sales and customer care so they can help their customers in a good way, meaning that we focus on the end customer. And we do our best. We help our customers at the best when we combine really strong software, which we deliver in our four platforms with great expertise. And we help our customers to solve mission critical problems, which means that we become a natural part of the company's core processes. Over the years, we have scaled our business into several markets. And we started with Norway and Finland in 2010. We opened up Denmark in 2015. And from 2020, we entered Netherlands and Germany. And we also welcomed Lime Connect and Sport Admin to the Lime Group. And today we are present in seven markets, 11 offices, and we have almost 500 employees. And looking into some of our key success factors, as I started with, I think the long-term profitable goal, combining that gives us a really, really strong foundation. We have a goal to have increased the share of recurring revenue. And today we see that we have 64%. So we are moving in the right direction there. and it's a predictive model and so so i think that's that gives us a good starting point and we also have a sticky customer base meaning that we do business with many customers uh every month every year and we are not depending on one or two big customers and something that i would say is the foundation of lime that has built the success over time is a strong corporate culture we are combining strong performance with care So looking into a little bit of Q3 then, and I give you a little bit of a sum up before we jump into the more detailed slides. And as you can see, we closed the third quarter with 18% sales growth, 25% EBITDA margin and 28% ARR growth. So overall, I would say strong numbers. and as always the third quarter is a little bit special when it comes to the summer holidays in july and it also of course spills over into august august and the beginning of september uh this year were a little bit more challenging than usual uh in this period and it was It was tougher to close deals bid with both new and existing customers. However, I'm very, very pleased with our mindset and our activity level to get closer to our customers. And this led to a great pipeline development over the month and a much, much better finish in the quarter with many nice deals in all our business units. And I will come back to that in a few slides. But looking into our four different business units starting with lime crm and we are focusing on speeding up lime crm especially on the expected services side we know that there are no shortcuts and the solution is to really work close with our customers and focus on creating value for them and of course solving their pains and challenges and as i said i'm really happy with our mindset and a way of working and doing this also means that we are increasing the pace on the sales side and that will leave us with a good position when the market is opening up. If we look into LimeGo, I would say that the good performances continue. Our focus on attracting larger companies is getting results and the value of our average deal has increased over the year. Due to this, we can see the good development. We are strengthening the LimeGo team with a number of nice recruits, both on the sales and in product development. And talking about Connect, we also see a good trend continuing there. And this quarter, we have done some really nice product features, released some nice product features. talking about one of them our first version of our mobile app during the quarter and it has been one of our most requested features and i would say it has a great potential both to our new and existing customers um and another thing that i see have seen a good progress in within the quarter in lime connect is a strong development in our marketing team We have done many webinars over the quarter, and I would say it gives us a steady stream of leads, both that we can target on new sales and in upselling. And if we look into sport admin, the business in sport admin is a little bit more term based, where you see many deals happen at the end of each term. so a strong start in each term is really important for good sales in the coming period and i'm pleased if we're looking to how we handle the start in the autumn great activity levels and we have built a strong pipeline which i really hope that that could give us a good good closing for the end of the year but of course there is some nice deals which i will come back to also now in cube three last bullet point investment in future growth and i think it's important that we continue to focus on long-term profitable growth we are doing this by keeping investing in sales marketing product development and recruitment and during the quarter we have recruited more than 30 new employees onboarded them here in august which means that we are always we are building for the future and already now we are starting to fill up the positions for the onboarding in january In general, we know that the game on the market is tough and demanding, but it's something that we've been playing successfully for over 20 years. And with a strong position, we think that we have every possibility to keep gaining market shares regardless of the market conditions. So jumping into a little bit more slides on Q3. and today we will cover the order intake the revenue the profit and in the end some summaries and of course questions but starting with the ordering take and as we have communicated before Our customer concentration is low. Today, our top 10 customers stands for 7% of the revenue and the biggest customers, 1% of the revenue. And I would say in this type of business climate, it's very good for us that we're not depending on one or a few big customers. We are making deals with many customers in different regions, in different geographies, in different industries every month. in general if we look at the market situation i would say it remains similar to previous quarters with long sales processes and more decision makers involved and as i started with i think this quarter in q3 was a little bit slower than than expected in the beginning but it gave us despite this we we built the pipeline and Our ordering take closing the quarter is quite solid, I would say, with many important deals in all business areas. Looking into some of the deals that we closed, you can see that on the right hand side and we continue to do business in our industry verticals in LimeCRM. During the quarter, we welcome companies like the utility company Skagerrak Energi, a really nice brand, Finnish wholesale companies Masino, that's actually our biggest illiette on the Finnish market, and the Swedish comparison site Plisjakt, It's also nice to see that we are building a stronger and a better reference base in our membership vertical with the case, as you can see, Privathamnäkarna. And continuously, we are working with our transformation deals. This time, I'm really glad to announce Oboz, which is actually one of our first Lime CRM customers back in the days. LimeGo, we welcome customers such as Park Nordic, where they offer parking solutions for commercial buildings and office buildings. And if we look into Connect this quarter, just to give an example where we welcome LeaseTech, this is a new customer for us and a Swiss digital leasing provider. one thing that i really like with this this uh this deal is that it shows that we not only have a strong offering on the german market but it's also actually growing in the dutch region and from a sport admin perspective uh one of our core um core verticals in in sport admin is uh is swimming and therefore it feels extra good to welcome svenskilitz evening to sport admin and it's in it's an organization who wants to improve the sports of swimming so let's look into the revenue side and starting with the ARR. And as you know, we are a product company and a very important KPI for that is the ARR growth. Looking into the different drivers there, you can see our subscription alone is growing by 31% compared to Q3 23, which is a strong number. And looking at the service agreements, you can see that they are decreasing 22% in the quarter, which is in line actually with our strategy. It means that we are converting customers with with old upfront agreements into new subscription agreements. And that's an ongoing project that I've been talking about, and we will continue working with this kind of transformation. But in total, it builds up to a 28% growth in our ARR, which is a strong number. Looking at our different revenue streams, and you can see that this is the revenue streams development since 2018. And looking at subscription is steadily growing 31% in Q3 and also last 12 months you see a 31% growth in subscription. And today that stands for 60% of our revenue. Service agreement stands for four. So it means, as I said, we continue to transform our customer base. from service agreements into subscription. And in total, this adds up to 64% recurring revenue, which I'm really happy about to see that kind of development moving around from 60 up to 64. And this is exactly in line with our strategy. The old upfront payment model is more or less the same amount as last quarter, less than 1% today. And expect services today stands for 35% of the revenue, as you've seen, and we see a little bit slower pace on the expect services side. And I will definitely say we were working for better improvements in that area. So it will continue to grow, but in the long run decrease as a part of the total net sales going forward. If we look at the revenue side and looking at the growth, we reached 18% in Q3 and the last 12 months we have 18% as well. And if we look at the split between our segments, we see Sweden grows by 25% and the rest of Europe 6%. And last 12 months, 19% in Sweden and 15% in the rest of Europe. And of course, the growth in rest of Europe is nothing that we are satisfied with. But we need to look into two different angles here. Looking at the software side, we see a growth that are an okay level in the quarter. But looking at the full revenue, where we also include the expect services side, we are definitely not satisfied and we have an improvement potential going forward. And as I said, over time, we want to build a more international company. That's where we put our focus to put in more employees. We put in more marketing money. So we are building a stronger brand so we can go on an international expansion. Yes. Anders, let's look into the profit side.