Neovici Holding AB ser. B

It's Friday the 30th of August and with me here in the studio is Jan Berggren, who is the CEO of the fintech company Neovici. How are you? Very well, thank you. Great to have you here. Today you released your quarterly report for Q2 and Q1 of 2024. Are you happy with the results?

Yes, it's our first report since we went to the stock market on the 2nd of July and the whole team and I are proud of the growth. New customers, new businesses, old customers, new businesses and above all new functions in our Cosmos platform.

If we quickly dive into the figures, you decreased the turnover by some minus 2% during Q2, but still ended up with an increase in turnover of about 7% for the first half of the year. And you have a somewhat negative EBITDA result for Q2, minus 1.6 million, when you count on achieving profitability.

Next year, the first half of the year, 2025, that's our set goal. So we're counting on that. And this negative EBITDA is due to costs for growth. We're building an organization and continuing.

You're investing in future growth. And you've taken in some money for that, so you have that in the bank account as well, according to the plan. Completely according to the plan. So you took in about 30 million before you went to the stock market. Are you going to be able to afford that? That's our assessment. Exciting. If you look at another important key number, ARR, recurring revenues, it increased by 39% to 67.8 million kronor during Q2. What does this strong increase depend on?

The main thing is the existing customers that grow in volume and buy new functions. That means that the volume grows and thus also the turnover. New functions are of course also a positive contribution. So you have satisfied customers. What does churn look like? Peppar peppar, ta i trä. Vi har noll procent eller noll kunder i körn. Det här är ju processer som man inte gärna byter. Men det kräver ju också att kunden är nöjd. Annars så vill de ändå byta. Så det är vi väldigt stolta över.

It's important, of course, that you have that customer relationship, that you can continue to build from a base, add functions. Is that the plan as the growth occurs?

As the Americans used to say, land and expand. You build out the functions in the platform and help the customers. That's exactly what we've thought, and it works this far.

You mentioned in the beginning that you went to the stock exchange on the 2nd of July and this is your first report as a listed company. Why did you choose a stock exchange and why now?

Good question. We think the timing is right. Small companies and tech companies have had a lot of trouble on the stock market. But we see that this is turning. An important thing for us is that it is a quality mark, especially when we have customers abroad. Sweden and Stockholm are far away. Then it is very important for compliance reasons that Nasdaq is in our platform. Then we see that this will come, we believe that this is quite right, not only we are coming to the stock market now, we in itself, today what I know is that we are alone in financial automation. And there are more that follow, hopefully, because the market is very, very big.

So you are making a dedicated effort to be seen more and communicate with the stock market?

Exactly. This is a lead in our strategy, because we have had more or less R&D status and helped our customers, and they have helped us develop this platform. So now it's expansion mindset.

Since you are new to the stock market, let's take this opportunity to briefly explain what you do. I read in the report that you develop advanced algorithms and AI-based solutions for the automation of business processes. This sounds complicated. Can you explain what this is about for someone who is not so technologically trained?

That sounds cool, right? There's a lot of technology in this, and we love algorithms. We know that algorithms can do faster, more precise work than what people can do today. And that has become an AI hype. Five years ago, or only three years ago, it was very difficult to explain what an algorithm was. We don't need that anymore. But I usually compare it with... A simple example is that 100 years ago, laundry was the most common profession in Stockholm. Today, without thinking about it, or at least I do, I don't know how others do it, but you have a robot that washes it.

You mean a washing machine?

A washing machine. It's actually an advanced robot that manages temperature and other things. You don't think about it that much, but it should just work.

You mentioned earlier that business processes are quite old systems and that only 10% of the world's invoices are digital, that you still send paper invoices.

Exactly. It's scary. In 2024, we have over 500 billion invoices that are written on paper, trees, water and everything else. You can actually build a staircase from these invoices to March and back. So much paper, it's hard to grasp. But 10%, it's scary that we haven't come any further. And this costs a lot of money. It's about 30 times Sweden's GDP in friction between companies. In friction, I mean fraud, leakage, processes that take a very long time and delays. The money simply doesn't end up where they should. So it's a huge market and we can't do this ourselves. We welcome other companies to the stock exchange.

And this problem for many small companies with bluff invoices, for example, is something that your system learns how to discover and flag and even send back. Is that right?

Exactly. We have Cosmos. If you can visualize the platform as a part of a space, we have an orbit around it. Even if they come in, we quickly discover them and send them back. If there are major deviations, we also send them back. We don't take it in, as other systems do, in the books and then act. We have a border guard, a key master, who keeps an eye on everything. A gatekeeper. A gatekeeper and sends it back immediately. Only America has read a report that fraud in financial institutions has increased by 54% between 2022 and 2023. That's a big problem. It's a gigantic problem.

And for those who are watching this, they may know Fortnox, which has been on the stock exchange longer than you. How does your platform differ from what they do?

It is a fantastic company. They have had an incredible growth journey. We have integrated ourselves with Fortnox. Some of our small customers are mainly smaller companies that use Fortnox. And then we have integrated ourselves with Fortnox, for example, in and out. So if you simplify it a lot, Fortnox is a digital platform on the web, where you do it in the same way as you have done it for several hundred years. While we think one step further, we let the algorithms do the work, it becomes an automation and it leads us closer to this autonomous financial process. That is to say, people just need to get in like a self-driving car when it comes. You tell them where to go and then the system takes care of the rest.

And you have existed since 2009, even if you are new to the stock market. Would you like to tell us something about what your customer base looks like today, for example?

Yes, as I mentioned earlier, we are an R&D company that roars with customers. This is in its infancy, so we have managed to find early adopters. ICA is one example. They have helped us and we have helped them with many processes. It is still in its infancy. Today, customers must be receptive to this change. It is a transformation journey and 90% of these companies are not ready. They are starting to become ready. It will go faster, but today So we are still looking for of these early adopters. So we have ICA, 7-Eleven is also such a modern company in Sweden and Norway. OKQ8 can be mentioned.

But it still goes fast forward. You say that you are an R&D company that happens to have customers, but you happen to have quite a few customers. Paying customers. Yes, paying customers. In 2023, you doubled your turnover and you expect a fairly strong growth in the future. What will drive that most?

The timing on the market is very correct, not just the stock market, but we have an established need for these solutions. In Southeast Asia, where we have now established offices, we are talking about growth of 5-7%. It's a completely different pace there than in Europe. So Europe may be left behind, but all these companies have awakened and there we see enormous growth potential for us. We expect an increase in revenue between 20 and 50 percent this year. We will continue with that pace next year. I'm talking about organic growth. It builds on new customers, new businesses, even in the other countries. We're talking about Thailand and Indonesia in Southeast Asia. and Mexico and Latin America.

That's right. Organic growth. Many who go to the stock market also want to be able to use their stocks as currency for acquisitions. Is that something that is on the map for you as well?

If the opportunity arises, absolutely.

What are your biggest opportunities in the future?

New markets will continue to grow naturally, and we would like to have this 50% growth. We have great expectations for these growth countries that I just mentioned. One challenge for us, is to get talent in, so we have to keep doing that. But we've succeeded in that very well, and we see that it generates a great opportunity. Because we need an organization to be able to deliver at this level. Exciting. Thank you very much, Jan. Thank you very much.