Lime Technologies AB (publ)

And welcome to Lime Technologies Q3 update. My name is Nils and I've been with the company since 2006 and been running as CEO since 2021. And we also have Anders here.

Yeah, and my name is Anders. I've been at Lime since December of last year.

Perfect. Thanks for that Anders. And I mean, if you have any questions, just feel free to write them in the chat in the end, and we will answer them at the end of this call. So before we jump into the more details of Q3, let's always start with this fantastic overview. And as you know, we've always been running Lime with a very long-term perspective, and that has left us with a fantastic footprint. In more than 20 years now, we've been growing and in average 19% per year with an EBITDA margin of 25% in average per year. And that's something that I'm really, really proud about. But no matter how more or less big we've been, how many markets we had, how many customers we had, we more or less always have had the same goal. And that is to help our customers to become really strong in sales and marketing and in customer care so they can help their customers in a good way. And we do it at our best, I would say, when we combine really strong software and our expertise within specific verticals. So we can help really helping our customers within their core processes. We've been doing this for many years now, and we've been scaling our business more or less international from 2010 onwards. We opened up Norway and Finland. We opened up Denmark in 2014 and also went a little bit more south into Europe in 2020, starting up Netherlands and then in 21 in Germany. And the latest years here with acquisitions, we have welcomed Lime Connect in 21, Sport Admin and PlanPlan in 24 as part of the Lime Group. So looking at this today, we have over one million users of our software. We have a long tail of customers, over 7,500 customers. Today we are present in seven countries, 12 offices with more than 500 employees. And looking at some of our key success factors, sorry for that. I think that more or less starting from the bottom, I think what makes Lange really unique is the strong corporate culture. That's something that we fuel with onboarding programs every year and something that is really key for our growth going forward. As I said, we have a big customer base, but also a sticky customer base. So the top 10 customers stands for less than 7%. We are also increasing the share of recurring revenue. So today it's 76% of the total revenue or recurring revenue. So it's a stable foundation in the bottom and something that we believe in is long-term profitable growth, combining growth and profit over time. And that has left us with this footprint. So, let's dig in then to the q3 report and then starting with the numbers of course we have a revenue growth in the quarter that amounts 11 we have an ebitda margin of 25 and an arr growth of 13. and putting some some color on on the quarter i would say in general i'm i'm happy to see a good progress in q3 The market climate in general is a little bit challenging, given the global situation. But if we're more or less focusing on what we can control, what we can affect, we are ramping up our sales activities in a really good way, direct after the holiday period, and also ending the quarter with winning, I would say, several key customers, both on the domestic market, but also on the international market. Over the last quarters, we've been having a good momentum in new sales, and that's something that I've been talking about more or less in all these calls. We see a little bit different this quarter where we also see a little bit better activity among our existing clients. And this combination leads to an improved overall growth, which, of course, I would say is really positive. Going in a little bit to our products and looking into our flagship product, Lime CRM, I think we continue to demonstrate a really competitive strength in the product. And that we also can see that we are validating our vertical strategy, which is focused, as you know, on utility, real estate, wholesale and membership organizations. looking at our offerings to and if yes going in a little bit on the utility market and we've been doing the nordic offering for many years and the offering towards nordic utility companies remain highly competitive and we will come back to show you a couple of deals later on but this is also true in on the german market where we both have like the individual deal sizes are bigger but also if we look at the overall market size are sustainably larger than the nordic region and in q2 we had a great success with with winning two utility companies on the german market and now we are very happy to to welcome another one you said mine franken an all-time high deal when it comes to to actually scope so so that's something that i'm really happy about in the quarter Something that I said also makes, I would say, more and more clarity is the verticalization. And that truly is a successful combination of when you combine software and deep industry expertise. This enables us to address mission critical processes for our customers. And then it's also there we create real value, strengthening both, I would say, our own, but also our customers competitiveness. At the same time, The approach directly supports when it comes to AI, and it's been a lot of talk and discussion about that the last couple of months. Because when we understand the specific processes, the decision points that are defined in each vertical, we know exactly where AI can help out and make the biggest difference for our customers. And that allows us to more or less to embed AI as a natural part of our platform, rather than just adding one or two or three features in the software. So the increased software, increased efficiency that we have had and what we can offer our customer also opens up, I would say. And that's an all other discussion for new pricing models. We are talking about the way that the software industry has been working for many years with a with a seat based pricing model. Where we are elaborating and looking into, okay, how can we do the pricing going forward in different verticals? Should it be based on property portfolio? Should it be based on number of members in the membership organization? And that's something that we will continue to elaborate with going forward. So let's then look into the agenda. And as you know, we are always looking into the order intake. We are looking into the revenue. Anders will talk about the profit. And then we will do a sum up in the end before we hand over for Q&A. So looking into the order intake then, and as I've communicated, our customer concentration is still low. Today, our top 10 customer stands for around 6.2% and our biggest customer stands for 0.8% of the total revenue. And I continue to say this, that in this kind of tougher market climate, I think it's very good because we're not depending on one or five or ten big customers. Instead, we are doing deals with many customers each month, each quarter, every year in different regions, in different verticals. As I mentioned, the market climate more or less remains the same as before. In general, we have seen good development in new sales in some quarters, especially on the LimeCRM side. And this quarter, we see a little bit more business activities towards existing clients. And of course, that's something that has that kind of positive effect on the growth side. We are welcoming several important new customers in LimeCRM, both in the home market and internationally. And I'm really, really glad to see that the long-term Yes, strategy and efforts are paying off when it comes to verticalization. This quarter, as I said, we are welcoming the big utility company in Germany, USET Mainfranken. But also, if we look at the other regions where we're focusing on utility, we have in Norway, ARNET OS, a really nice utility deal. But also here in Sweden, where we have a really good market share, Sörmlands Vatten & Avfall, also a very nice customer. If we look also more on the Danish market, where we have a different focus on verticalization, we're more focusing on membership organization, I'm pleased to see that in Q3, we are welcoming two strong brands in the membership organization. From a Connect perspective, where we see that we are mostly in Germany, we are welcoming important customers, two-week cruises. And also, I would say something that I think is quite interesting going forward, where we also in Lime Connect are winning Stadsverket Gestalt. That's also something, okay, how will we then elaborate this going forward with Lime CRM and Lime Connect? If we focus a little bit on online connect, I think that we have a big and important launch of our new AI service coming up here. And that's something that will be important going forward this fall. And also, of course, in the beginning of next year, too, that we have a good rollout of that new services. we will help the customers with faster response times we will have smarter assistance and a more intuitive i would say user experience looking into the feedback of course we tried it with several customers and so far the feedback feedback is good From a sport admin perspective, you see some nice logos at the bottom of the slide. We see that we have started the Q3 with better new sales compared to the spring. And I think that's very positive to get back in that kind of momentum. I'm also pleased to see that we are closing deals both on the Swedish market, of course, where we have a very strong position, but that we also started the fall with closing a couple of new customers in the Netherlands. From a more feature perspective and functionality, we have that kind of combination that we would like to both serve the grassroots clubs, which is the majority of all, but also, of course, the elite clubs. Therefore, it feels really good from a product perspective that we can now support the leisure activity card. Maybe from a Swedish perspective, you're known as if you have kids to make more kids be able to do sports. And also from more like, okay, a little bit more focusing on the elite side, improved scheduling and match booking functionalities in the software. So moving on over to revenue and starting with the ARR. And as a product company, of course, as you know, it's very important to look at the ARR growth. And this is something that we will follow even more closely as one of our core KPIs going forward. We are continuing a long-term transition, more or less, where we are constantly improving our platform. And because of this, we can deliver customizations, integrations, and workflows much faster to our customers. this gradually reduces the proportion of expect services and strengthen all recurring revenue as a part of this like strategic shift we are welcoming 35 new employees in august and the big difference here is a little bit more emphasized on the sales side compared to previous year where we have a lot of have had a lot of focus on the expect services side and this investment in general is aimed to more or less fuel the future growth and also where we hope to improve margins going forward. Looking into our subscription alone, we are growing that by 16% compared to Q3, 24. For you who have been following us for a while, you see that we have a decline there of 39% when it comes to service agreements, and that's according to plan. We are still transferring customers from the old service agreement into subscriptions, and that is something that we will continue going forward as well. In total, this builds up to a growth of ARR of 13%. Looking at the recurring revenue, and this more or less shows the development of our different revenue streams since 2018. As I said, subscription is growing 16% in Q3. Last 12 months, 20%. Service agreement stands for 2%. And as I said, continue that kind of transformation. And in total, that adds up to 67% recurring revenue. Upfront, more or less same as previous quarters, less than 1%. and in expect services we see an improvement in relation to q2 25 in q2 we deliver a more or less flat growth i think it's a little bit positive which is nice of course of one percent compared to the the the drop there in q2 and today expect services stands for around 32 of the total revenue and we won't expect services to continue to grow but in the long run decrease as a part of the total net sales so looking into the review and give a little bit flavor on that as well and as i mentioned we have 11 in q3 and the last 12 months is also 11 if we look at the split between the segments sweden is growing by eight percent and the rest of europe 18. and looking i mean we are still um a little bit behind our target here and deviation between outcome and expectations are mainly in expect services where we see that yeah the little bit grow growth of one percent or so in in in the quarter the main reason for that is still the same as before mainly affected by the technical development that i mentioned that our platform makes it easier to do implementation integration customization which is very positive from our customers point of view But of course, it's also that we are affected by the macro climate where we are having a harder time. And still, that's true, making sales towards existing customers, even if Q3 was slightly better compared to previous quarters. So looking at the last 12 months, we grow 11% in Sweden and 12% in the rest of Europe. So Anders, let's talk a little bit about profit.