Litium AB (publ)

Hello and welcome to today's webcast with Litium, where the CEO Patrik Settlin will present the company's Q4 report for 2024. After the presentation, a Q&A will be held. If you have any questions for the company, you can send them in the form to the right. With that said, I leave the floor to you, Patrik.

Thank you and welcome to the last part of the program. My name is Patrik Settlin, as Ludvig said, and I am CEO of Litium, at least today and tomorrow. Today is a special day. We have an appointment with Martin Bilenius, who will also be here in the studio with us. Our marketing manager Malin Modolla will also be here in the studio. Ask questions about the Q&A in the chat and we will answer them in a moment. For new listeners and new shareholders, we will start by talking about what Litium is doing and what is happening on the market. A repetition for some, a new one for others. Then we will go into the Q4 and Q&A report for 2024, followed by a little forward look. Then Martin will come in and I will finish with the Q&A. That's how we will roll this drag. For those of you who know us, you know that we are a tech company in commerce. We have a product called Litium Commerce Cloud, which is used to drive advanced digital trade all over the world. The product itself is built as a construction site, the most important parts that need to be driven are advanced and volume-based trade. It needs something like the products, a PIM, something that shows up, like digital merchandising for those who are going to buy things. We have our CMS and front-end parts, and then we have all the logic that involves moving data out to the purchase decision, but also to take it home and then deliver it to the e-commerce parts. All of this is packed together in an -in-one solution, but you can also break up these parts when they are on their own, and we have accelerators so that they can be quickly delivered. Then other connections are also required to other systems, such as an economic system, a logistics system, and other things to drive personalization or market management, for example. There we have something we call App Cloud, and you can also build your own integrations and adapt the platform as much as you want. And that is done together with a partner. We deliver a partner model and work with them. We think they are the best at e-commerce and digital commerce in the Nordic region. We have 40 and 50 solution partners today, who together with your customers spread the sour platform to the exact needs. When that is done, we drift and deliver it in the so-called single-tenant SaaS, and you subscribe to your platform. That's what it looks like. And this is something that many customers have discovered and think is good. We have about 200 customers today, and we have a lot of nice companies with us. We have the entire range from B2B, who sell ground, stone, plate, ventilation, commercial properties, and so on, to steel, to distribution, to those who are really cutting edge on so-called -to-consumer business models, such as Revolution Race, who have been a customer to us for many years now. We are very proud of this, and we also see customers who sell via the Leasing platform across the world. Most of the time, I know, it's over 150 countries that you deliver and have digital access to. So that's something we are very proud and happy about. And the most important thing for us at Lithium is this, that our customers should outclass their competitors in digital trade. And when it goes well for our customers, it goes well for us, which brings us to our own Q4 and the whole year 2024. You who have been with us at the reports that were published this morning, I saw that we again delivered on our financial goals. We hit it in 2023, and we did it again now. Our financial goal was to be positive on EBIT, so to say, cash a bit in, and to really make money in the company. It's a journey we've been on for a few years, to turn to profitability. And we did it. We had a pretty significant improvement, and if you look back one more year, we have an even stronger improvement. We improved four million from last year, but if you look back two years to 2022, we have improved 13 million, and that's something that I feel proud of. And it also shows that the cost efficiency program that we have set in 2023 has really been affected. But it's not just about saving costs and turning to profitability, it's about growth, of course. And we also, despite the tough market, managed to manage to grow during that time. Now, the most recent one is our annual recurring revenue, which is the most important copy of the company, up to about 72 million. And it was a growth of about 5% at the time. The important thing is that I think that 100% of our income is just returned, so-called ARRB recurring. It's a very strong one, compared to some other even-priced peers out on the market, which we usually compare with. It's also worth noting that for the first time, at least during my time, the last five years, it may have been a little different earlier in the company's history, but the last five years, in any case, the revenue is moving, and as a part of that, it's above 20% of the revenue mix in Q4, which is pleasing for several reasons. One is that it indicates that it's starting to become a better market for our customers, it's a slightly better sales position for them, because this is based on parameters such as sales volumes, and also how much platform is used technically. But it's also proven to be a price model, business model, which we have set up a few years ago, and it really works and starts to give some effect. We've had a rather ungrateful, or bad timing to introduce that model, but when the market turns up, we also get, hopefully, more revenue from that model. Looking at the target market, we've experienced, and we've experienced this since autumn, that optimism is starting to return in the target market, and that they're looking for new technical solutions, and also the willingness to invest has increased. The decision-making is faster, there are more business opportunities in the course of time, and the sales processes are faster again. We've had two years now, and we've been quite a lot forward and backward in the sales processes, and a lot of clashes between management and management, and it's quite natural in the type of situation we've been in, but now most people are just thinking about a new market, and the weather is a little bit better, and they're acting accordingly, which is nice. We're at Lithium, we're self-financed, we're in a good position, to continue to grow and grow profitably, so it's a good situation for my successor, Martin, to come in and take over. The possibilities of the trade space are open, so to speak, it's always an advantage. Martin, who will be coming in, will soon perform, but in my eyes it's a perfect opportunity to get this company to move to the next phase. We're going to switch from a focus that has been, now we have reached this goal, to look at growth again, and Martin has a very nice track record of driving growth in a company that has been called Medjuste for many years, and has taken over the world. I think it's Sweden's largest SaaS company today, with a billion dollar turnover. Martin will tell you more about that. Martin will perform tomorrow, and I'm staying for a while to take care of it, and I think this will be great for the company. Before we let in Martin, I would like to tell you a little more about the financial success rate. The ARR that we're working on, this is the graph for the whole, it shows that our long range of quarters with improvements continues. As I said in the previous slide, the moving revenues have increased, which is nice, and something we are looking forward to continuing. Looking at revenues and gross marginals, we have blue stacks of revenues, and yellow dots are gross marginals. The revenues have increased, about the same as ARR, 5% roughly, 100% recurring as we said, and the revenue mix is worth noting that we are now up to 21%, which is a moving 79 fixed turnover revenues. So the gross marginals are always, or often, a bit sluggish between quarters, and over the whole year you get a more even curve, we have been down for several years, around 70%. We have a lot of new technology that we are counting on to improve the gross marginals, and gradually it will happen when we move forward over time. The revenues, we have been on a journey and have improved a pretty striking formula. Looking at the costs, we have blue stacks, yellow dots, EBITDA, which is not EBITDA, but EBITDA, the state of the area. The costs increased a bit in Q4 compared to last year, but quite marginally, and since the revenues increased more, we have improved the gross marginals. The EBITDA marginals were about 25%, and I think it is worth noting that this is the eighth quarter in a row, which we incrementally improved compared to the previous year. As I mentioned earlier, EBITDA has been the same period over the last two years, with an increase of 13 million in absolute numbers. Some investments, cash flows, product investments, we were basically on the same page as last year, we continued to invest in the surplus revenues in the business, and it was even a bit up this time. The focus in the quarter, Q4, has been mainly on deep functionality around the product management and order management, and to make our already good experience even better, so we are rewinding our experience for those who are working with Lithium every day, and moving forward in the zone to get Ecom from here. That's why we do this. The cash flow is solid, we have 7 million in cash now, and we close Q4. And since we are now positive on the EBITDA side on a year-round basis, it indicates that we have a stable cash flow to wait for. Then we will look a little forward, then I will let Martin in here, who will present himself. But a part of the forward look, we can divide it into two parts, one is how stable the business is, and that has been important for the past two years. Now the situation has changed a bit, the market has grown a bit better, but now we are getting into growth, but it will still start with, as the money says, business resilience, resistance, stability. As I said, we have a SaaS model, very good in these times, or always, one might say, and we also have 100% of our revenues that are recurring. We have high stickiness, as they call it, in the product, we deliver in a customer text, our e-commerce platform, when we are doing digital trade, it is really core software, so everything that has to do with digital sales goes via a platform that we deliver. The installed base we have, they have customized and adapted to their needs, and it is also very integrated, it is in the text, so we have invested in customers, and we work very much with our customer satisfaction, so we will continue to be chosen by customers who already have a table. And it works well. We have a very strong position, and good and we have a good platform to grow further and grow further. Growth and opportunities for scale-based. We have a bit like Commerce Cloud, top modern, I would say e-commerce platform, which is in the market for a few years now, we invest and improve it all the time, it builds more deep functionality, usability, it is modular, it is fast, it is flexible. Our value offer works both well when the customer wants to grow, but also when you want to become more efficient and save process time, so that you can drive your business even more effectively, or do both, as most do, that you get both more sales and make it more effective. We have released a lot of new technology during 2024, which is good in several ways, it is mainly service technology to drive all platforms, and it is also the business model for the customer, which makes it more dynamic, more scalable, more cost-effective also. And App Cloud architecture, which means that we can build out, or every customer can build out a platform much easier and faster, so we deliver finished apps, such as an integration app, so that it is good for both our customers and also for us and our partners. We have an business model that is designed to grow with customers, and that is something that we have time to believe will boost our growth, and that is definitely an advantage. When markets turn upward, we also go with them when customers succeed better out there, which is the whole point of business models. We want to align ourselves with customers, so that we will benefit from the same things, so that it goes well, basically. We have a very big opportunity, we have had it for a few years, we have had it, we have had good meetings in the B2B sector, we have a strong position, we have a good product market fit for our platform, the market is huge, and the digital transformation is going faster and stronger. So this is our focus area when we look at the future of the Scalberg Initiative, and that is something that will continue to be under Martin's leadership. Martin, you are here today, I'm sure many of you are curious about you. You formally took over Moran, but I thought it was a good opportunity for you to present yourself, so here you go. Perfect, thank you.

Perfect. Hello everyone. Before I get into myself, and who I am, I would like to start by giving a big thank you to Patrik. It's an impressive journey that you have made with Lease the last five years. I mean, we took a company that at that time made relatively large losses, to today being a very, very nice company that makes a profit. On top of this, I also think that you have created a very, very good place, a good platform, where we can now take the next step. So, regardless of what you choose to do as the next mission, I'm sure it will be gallant, and if you miss us, then we know that the door to a policy of Malta is open to you. So, good luck with whatever you choose to do, Patrik. My name is Martin Bilenius. I will be acting as CEO formally during the morning. My background in soft goods comes earlier from a role that sees a role in a global SaaS company called Medius, where my primary goal was to grow and grow from about 300 million to blow up the billion dollar wall and create Sweden's largest SaaS company. With that said, I must say that this next chapter, the history with Militium, feels incredibly inspiring. I see it as an enormous potential with Militium, and I really believe that with the right investments, a growing team, a clear and clear -to-market strategy, and a continued, flexible focus on building and delivering a product that generates increased sales and value for our customers and partners, I definitely see a great potential for Militium to become the shining star in Europe, as an e-commerce platform in business to business. As Patrik mentioned, and with the stable foundation that we have acquired at Militium, the focus will now shift towards growth and new customer acquisition. I need to get a little warmer in my clothes, but my hope and ambition is to be able to communicate and present new goals in this area in a short period of time. I can't emphasize enough how important it is to have a healthy new customer acquisition in Militium. According to me, Militium is in a very, very good place. I have super competent and talented people on board. Of course there are things we can do better. The ambition is of course to create a very nice company together with all these employees, which generates a high customer value. Once again, a big thank you to you, Patrik, and to you, existing as a new shareholder. I just want to say that I really look forward to working together with you and for you. Thank you very

much. Thank you for the warm words, Martin. Look forward to the journey. It will be exciting to follow. It was good. Some key takeaways from today. I want to remind you of this when I think of Militium and today's journey. We have received some questions. Yes, exactly.

We start with some questions from customers. The variable income is starting to increase. What kind of customer is it that drives these volume-driven incomes?

It's a mixed answer. Maybe a boring answer, but it's really a mix of B2B and B2C customers. I think that's why the first one has a different character. We have a technical parameter, how much traffic, for example, or how much orders flow through the platform. It's a pretty even distribution sometimes. It's fun to see.

You mentioned earlier that the willingness to invest has increased. Is there a difference in the investment appetite from B2B and B2C customers?

You could say that there is a 0 degree difference. B2C is still tough. Even though many companies are in the air, with better markets, and they don't know what to do with the trade, of course, it's a bit worrying. It affects everyone, not just B2C and B2B. There are still some effects from the low-conjunction. We're not out of that yet. Some B2C customers still have it tough. I'm still focused on keeping alive and strong. Not to switch to technology. As I've been saying for many years, the digital transformation in B2B is more of a trend to enter a time of change in B2B. That's what we expect to see. B2B has been around for a while now. They're solid, stable businesses, and the possibility to invest in a new set of companies because they've built up cash for many years. All in all, B2B's willingness to invest is higher.

A question about Toyota Material Handling, still a customer at Lithium.

Yes, there are different parts of big companies, but Toyota Material Handling International is our customer. We're happy to be here.

Why don't you report CERN if it's high stickiness?

We've talked about CERN. It's an interesting SaaS metric to highlight. There are many different SaaS metrics. We're mostly into Net Revenue Retention. We follow all these metrics in the company, but we've decided not to highlight them publicly. The reason we're not talking about this today is that we haven't done it publicly. We need to choose a time to do it. We usually say that our CERN is low, but we can interpret that as we want. It's not an exact number.

There are many growth issues. What are the biggest opportunities to increase sales to new customers?

Martin has already answered that question. We can leave that to Martin. We can come up with more detailed initiatives, but it's up to Martin and his team to come up with that.

I agree with that. The growth has decreased from .9% to 5.1%. What do you see in that trend? What are the future opportunities?

We're building a SaaS company with revenue growth. We've had a declining trend during that time. We've focused on profitability. That's been important to us. We're switching over now. There will be more growth and new production focus in several ways when we move forward. If you're in that trend curve, it can take a while to get up and turn up before you get even more momentum. We can only talk about what's out there in the market. We're experiencing a good market situation now. It doesn't matter how many customers we have today. We still don't get a lot of effect in revenue growth. Looking ahead, there are good opportunities for the company. Martin is in charge and the team is in place. If we look at the technology we have now, we're at a completely different level than three years ago, there are good opportunities to take it on a real journey.

A question about cash flows. You mentioned earlier that it's stable. Liquid matter has decreased from 11 to 7.1 million. How does the cash flow look forward? Is there a need for additional capital acquisition?

No, there is no need for that. Ebit is positive for the whole year. The change in the quarter is volatile. It can depend on the calendar effects, if you get a payment on a Friday or Monday. If you look back over time, there is no need for any capital acquisition. We are stable. We expect a stable cash flow.

Yes, and then maybe it's hard for you to answer, but you are in place. What strategic changes or growth initiatives can be expected as investors in 2025?

Martin was right. We are in a good situation now. Martin will have to come back to that when we move forward. I will support and support from the side. Was that all?

Yes.

Then it's up to me to thank you. Thanks for the warm words, Martin. It's about lithium, not about me. I want to say that this year has been very fun and a very fast five years. We have built many nice things together. We have done cool and good things in the company. We have had great colleagues and employees. And other interests in the company, from the board of directors and owners. Thanks a lot for the trust you have shown me. The collaboration we have had. And... I don't think I should show the feeling. But I like lithium a lot. We will continue to work well together when we move forward. I will support from the side. Martin and the team will have new heights. I'm happy with that. Keep in touch. If you want to see the latest and greatest about lithium, follow us on different channels, LinkedIn. Or the investors' website. There you will always see the latest and hottest. And customers who sign up and go live. And all the excitement that happens in the company. So follow us there. I think we are happy there. Close for today. Go hard!