Lime Technologies AB (publ)

Hello and welcome everyone. I'm Thomas Davout and I've been at Lime since 2017 and joined as CEO 1st of January this year. And with me I have Anders. Hello, my name is Anders and I'm the CFO at Lime and I've been at Lime since September 2024. And feel free to write any questions in the chat and we will try to answer them in the end of the session. If we look at the agenda today, looks like this we'll start with an overview of lime and sum up of q1 we go into the order intake the revenue profit and end up with a summary we have always been running lime with a long-term perspective and that has left us with a really fantastic footprint in 25 years now we have grown on average per year around 18 and we've had an average ebitda margin of 25 and of course that's something that we're really proud of The biggest reason why we have managed with this year after year is our people and our fantastic corporate culture. And we know that in order to win in this competitive environment, we need to be a little bit better in everything we do. And we believe in creating a culture that is great at combining high performance with a lot of care. And no matter the times, good or bad, our goal has always been the same. to help companies become really really good at sales and customer care and help their customers in a really good way and as a supplier we are strongest we combine our software and expertise so we can be a true partner to our customers we have two revenue streams the software and the services The ARR, or annual recurring revenue, coming from the software today stands for 68% of our total revenue. And we've done this for many years now, scaling our business into several markets. We started in Sweden, we grew to the Nordics, and in 2020, we entered the Netherlands, 2021 in Germany. So now we are present in seven markets, 12 offices, and we have around 500 employees. Across our product, we have more than 7,500 customers and over 1 million users. So let me give you a sum up of Q1 2026. If we look at the numbers, we have 9% ARO growth, 25% adjusted EBITDA margin and 8% organic revenue growth. On the first bullet, as I said before, we have two revenue streams, the software and the services. And what I'm happy to see this quarter is that there is a trend in the right direction since last quarter in both these revenue streams. On the software side, we go from around 7% in Q4 to 9% this quarter. On the services side, we had a slight negative growth in Q4 last year, and now we have a 3% growth in Q1. Second, AI. I mean, we've continued to make investments here and we are starting to see them pay off. November last year, we released our new AI offering in LimeConnect and we already have around 10% of the customer base that have adopted it. If we look internally, we can see concrete real improvements in our departments. For example, looking at the engineering department, some teams are running five times the speed that we had just a few months ago. And we're going to keep investing here. And I expect us to be more productive internally and also that we incorporate more offerings in our product over the next 12 months. And finally, Germany, our biggest addressable market by far. And as you might know, this is a strategic market for us. And I'm happy to share that we have welcomed yet another five new customers in the utility vertical in LimeCRM this quarter. Three bigger cases in the Lime CRM platform and also two smaller ones that will start to use the new grid connect solution. And that shows that the acquisition we did in the beginning of this year is already giving results. The CRM team in Germany is actually the fastest growing team that we have in any part of Lime. And the team has really done an outstanding job. And this momentum is also a result of the investments we've made in local presence and go to market for the past three to four years. And we're just scratching the surface. So to wrap it up, a positive trend on both revenue streams, real traction on AI and an increasingly solid position in one of Europe's most important markets. So many good things that we bring with us. As we noted at our Capital Market Day in March, AI is no longer a trend. It's a central part of our customers' expectation of their software. But before we go into AI, it's worth reminding ourselves what our customers actually buy from us, because that's far more than just the software. Approximately 20% of our offering is the tip of the iceberg, the software meeting the customer. The other 80% is everything that is beneath the surface of the iceberg, where we deliver far more than just a code. Our customers want us to help them to become better at customer care, whether that's sales, support, or other parts of the customer journey. And we are a partner to them, and we own the entire value chain. So apart from our fantastic engineers, we also have a sales engine. We have consultants who advise and help. We have free support included. On top of that, 30 years of CRM and customer journey expertise. We have deep vertical knowledge. We have regulatory competence with NISTU, DORA, GDPR, AI Act and so on that we build into the software. We have complex integrations. We have thousands of customer relationships built up over decades. and that all of that that's our mode and it's not something that ai can replace but what ai can do is make the 20 at the top dramatically better and we have the tools to make that happen one of our biggest challenges as a crm supplier has always been to get sales rep and other users to actually log into the system or log into this event for example after a sales meeting to write what's happened put up a to-do But now we are moving towards a world where all of this actually happens automatically. That means better data flowing into the system, leading to deeper insights, leading to proactive signals and ultimately higher stickiness. I believe that this will increase the relevance and the value of the CRM system. And when we look at our customer, what we see is that they want to invest in AI, but they don't know how it should be integrated into their operations. and this is where we are a natural partner advising and guiding them through the entire ai journey to help them improve in existing business processes it's precisely the same positioning we've always had where we have both the software and the services but now applied in a new way with ai so let's have a look at the order intake we have done many many nice deals during the quarter if we look at our customer concentration to start with you can see that it's really low our top customer stands for one percent of our revenue and our top ten for less than seven percent and in the deals starting with lime crm we continue as i said our nice streak in germany utility with three more customers uh joining big ones two of them on this uh on this slide with hilden and torga We have in the membership segment, we welcome Fastehetsägarna. And when we look at the existing customers, we have HSB Skåne starting to work with the work order module. We have Varberg Energi who started to work with the AI solution for their customer support. And last but not least, we also actually make our biggest deal ever with Göteborg Energi. And if we go to LimeConnect, we continue to grow with our customer Interspot in Austria with the Connect AI offering. We also welcome new customers, among them DPD Deutschland, which is like DHL, and also using the customer service and AI. And one nice deal to highlight in LimeGo, it's Legula Hospitality, which is a hotel and restaurant group. they will use lime goal for prospecting pipeline management sending quotes and signing agreements a great customer profile for us in sport admin among many organizations we have we have welcome for example helsing boy hockey leading a vikings vikings and eco synth and going into our revenue a little bit more deep This slide shows the revenue stream development since 2019. And if we go actually back to 2015, we have completed several strategic transformations. First, moving new customers from upfront sales to subscriptions, and later converting existing customers from service agreements to subscriptions. Now we are in the middle of another transformation where the software side is increasing as a share of our total revenue, which is a result of us being able to deliver technical services more efficiently. And when AI is helping us to drive the time down in our technical implementations, we can, as a result, deliver our projects faster. And that makes us even more competitive. thereby we can leverage our software business however our position is the same as it's always been and our service side is still something that is very needed and highly valued by our customers and if we look at the expert services we have better staff now in the in the department compared to the same period last year and i expect that that will continue to have a growth during 2026 but still that the services will decline as a share of the total revenue over the long term consistent with a strategic shift towards higher software share and in total recurring revenue represents 68 percent of the total revenue as i said and if we look at the overall growth we reached six percent in q1 eight percent organically and seven percent or eight percent organically over the last 12 months If we break it down by geography, Sweden grew 6% in Q1, 5% last 12 months. Rest of Europe grew 8% in Q1 and 10% last 12 months. And as I said before, I'm happy to see a trend in the right direction since last quarter. And we continue to grow faster in the rest of Europe compared to Sweden. And that is also encouraging. It demonstrates that our vertical strategy in product offering resonate beyond sweden and we can take our offering outside of sweden that is critical for our long-term growth ambitions with that handing over to you anders thank you thomas so starting with the profit the adjusted ebitda in the first quarter

amounted to 49.9 million SEK, corresponding to a margin of 25.0% compared to 25.1% for the same quarter last year. Looking at the LTM figures, the adjusted EBITDA amounted to 187.6 million compared to 175.9 million, corresponding to an EBITDA growth of 7%. The adjusted EBITDA margin amounted to 25%, same as last year. Now moving over to our cost development. Personal expenses, which are our largest expense within OPEX, amounted in the quarter to 115 million SEK, an increase of 3%. Last 12 months personal expenses amounted to 433.7 million SEK, an increase of 6%. The increase both in the quarter and last 12 months is mainly driven by a higher number of employees as well as normal salary indexations. even though we have continued to invest in talent in q1 to support our continued development of the business the fde growth rate last 12 months has slowed personal expenses as a percentage of net sales have improved amounting to 58 on ltm basis so moving over to our operating expenses Operating expenses in the quarter amounted to 37.7 million SEK compared to 32.7 million SEK last year. Expenses last 12 months amounted to 138.8 million SEK compared to 124.3 million SEK last year, corresponding to an increase of 12%. The increase both in the quarter and last 12 months is primarily driven by product related costs and growth related items, such as AI, cloud and hosting services and product licenses, as well as investments to support continued growth in Sweden and across international markets. Back to you, Thomas.

Yes. So a summary and turning to our financial targets. As you know by now, we have reached an ARR growth of 9% compared to the target of 18%. And as I said, we're happy with the trend in the right direction. At the same time, we are not where we want to be. We reached an EBITDA margin of 25%, which is lower than 27%, which is our target. And the margin expansion will come gradually over time. And we expect full impact in the medium term, which for us is around two to four years. The net debt in relation to EBITDA is 0.4 compared to the target of being below 2.5. Of course, giving us significant financial headroom to invest in growth. We increase the result per share. And for 2025, the board of directors proposes a dividend of four and a half krona per share, which equals 60 million SEK and 54% of net profit, which is higher than our financial target of at least 50%. To sum it up, we have really taken steps in the right direction and the trend of the growth on both the services and the software is going in the right direction. We continue to expand in Germany and we see real and concrete value from AI, both for ourselves and our customers. And we are really looking forward with excitement towards the rest of the year. And with that said, we open up to questions.

Yes, perfect. So first question coming in reads software sales in Q1 showed a positive step change in sequential growth rate. Does this reflect the rate expected for the rest of 2026?

Well, we are happy, as I said, with the growth rate going in the right direction. But I mean, if we look at our target, that is 18% on the software side and the ARR. So while we're happy with us taking steps in the right direction, I don't think it's where we want to be. Of course, the 18% is a combination of both the organic and the acquired growth. But the lion part or the biggest part here should come from the organic growth. So no, we're not happy with this as an end goal.

Next question then, other external expenses were up 17% year on year, excluding one of items. Could you elaborate a bit around this increase and should we expect similar increase going forward? So as I've just mentioned, we have in the quarter continued to invest in our product and at the same time we've had costs that relate to higher sales. so you can say going forward we will have we will naturally have increased costs however they will scale over time more in relation to sales growth next question and it reads expert services back to growth in this quarter Is Q1 expert services growth representative of our expectations for the rest of the year, or do you expect further growth improvements?

I'm happy to see that the expert services department are better booked and that chargeability levels come up to levels that we expect. We can't really foresee the rest of the year, but we can at least look into Q2. And if we do that, we see that We have a pace in us, and I believe we will continue to have a similar pace. And the biggest difference is probably the numbers that we meet from last year, where Q1 was pretty strong last year and Q2 was not as strong last year.

Okay, next question. Can you quantify the value of the major German contracts and the large Swedish contract? How large are these in total?

Yeah, but absolutely. And I mean, let's go into the utility segment then, because that's where we proactively are focusing in Germany. And to start with, I mean, the actual market in Germany, as I said, is really, really big. So that in itself gives us a really, really interesting market. If we look at the municipalities there compared to Sweden, they are also bigger for natural reasons and hence the deals become bigger as well. So if you have some kind of average, maybe double the size than a big deal in Sweden. So it's definitely something interesting. And also what we see is that actually the what do you say, the sales cycles goes a little bit quicker in Germany compared to what it's been in Sweden. So there are a little bit different rules when it comes to tenders and so on. So that's also something that's really positive.

Okay, good. Can you see that the utilization rate in Q2 is in line with Q1 or better for expert services?

Yeah, so that answer is pretty similar to what I said before. I see that the utilization rate would probably be similar to what we've had during Q1. So we have a good pace. We are pretty good, well staffed. And for what we see now is that this will continue during Q2. Great.

Next question then. What are your recruitment plans like for 2026? Will you be able to show operating leverage on the margin?

yeah i mean if we take the margin expansion i would say that that comes from two parts one is that while we are getting more and more parts of our revenue coming from the software we see a natural margin expansion since the software has a higher gross margin and the other one is connected to ai and the fact that we are getting more and more productive with that so we see that with the the personnel that we have we can still make a lot more and and really be efficient so yes we don't expect our um our net recruitment the personnel cost to grow at in the same pace as it's done before and that will will lead to the margin expansion over time yeah good and then we have another question related to just recruitment and it reads basically what roles have you accelerated if any yeah so we actually are telling ourselves now when we recruit okay but do we really need to recruit or can we look at an AI agent or any other way of making this more efficient instead? Where it stands out that we still really need personnel is on the commercial side and on the sales side. So if we take one part that we recruit more in percentage wise, definitely that's on the commercial side.

Next question then. Do you see any increased momentum outside of the utility vertical in Germany following the reference customers within utilities?

So if I understand the question correctly, it's maybe utility outside of Germany. Yeah. So one other market that we really have a good growth and traction in when the utility vertical is in Norway. so the the biggest growth in norway comes from the utility vertical vertical and we've also something that we have invested in for a long time and it's just as in germany taken us a long time to to be uh be there but we have really you know come in there we are part of the tribe and uh and yeah we continue to to make really nice deals okay

Next question then. What is the feedback from the early AI adopters so far?

Let's start with LimeConnect. As I said, we had a new AI offering in November. We actually had three to four years ago, that's when we started with AI offering in LimeConnect, but we made it ourselves instead of a third party as of November. and it's been really really well received both on existing customers and new customers and one one evidence of this is okay we have 10 of our customer base that is actually using it now but also that the win rate in the deals that we're in are actually around double the size they compared to the last the last ai offering If we look at LimeCRM, we've gotten very good feedback that we are really helping out in existing processes, not just putting AI as something new, but we're actually helping to make existing processes better. If you have leads coming in, okay, can we help uh qualifying and prioritizing those leads for example uh could we help predict any customers that might churn it becomes very relevant to the the business critical processes that our customers have great next question when do you expect the improvements in the three smaller areas go connect sport admin to contribute to higher overall ar growth So what I'm really happy with is that we have really started to see the trend in the right direction for these three business units. As you're saying, I would like more in order for them to contribute to the growth in a better way. But if we take them one by one, Lime Go, we are really in a transformation where we are going from a small customer segment to a little bit bigger customer segment. And we are seeing kind of the tail of the churn for this smaller segment. So that is really nice and it's helping us. When we look at Lime Connect, I've already talked about the AI offering. That's the big thing that will help us drive that. And in Lime Sport Admin, we have really been able to focus in 2026 on on prospecting, on talking with a lot of new customers and also to get the development speed really up. That can help us get new models out and also help us with the expansion and internationalization in the Netherlands. So that's how I see it coming.

Perfect. next question then you have launched several agents recently including in customer support sales and marketing within lime crm how strong is the business case for customers adopting them can you share some flavor on adoptions rate or attention upsell yeah i mean what what what is really

What I really like, as I said, is that we see a positive feedback from the ones that have started it. Both, as you were mentioning here, the agents that are helping out in the prospecting, insurance prevention in customer in customer support and so on and we don't disclose exact numbers on it and but what we can say is that we we build not only the generic uh the generic agents but also go down into each vertical to see okay how can we improve the processes for utility companies, for real estate companies, and so on. So that makes it, of course, even more focused. And we get good feedback on that as well.

Yeah. Perfect. I think we have answered all the questions. There are some questions that are similar, so that's why we have already answered them.

So that's it. So with that said, then, thank you so much for listening in and wish you all a great day.