Pricer AB (publ)

Good afternoon and welcome to Pricers third quarter 2025 earnings presentation here at DNB Carnegie. My name is Hjalmar and I work as an analyst and we are joined here today by CEO Magnus Larsson and CFO Claes Wetzel. Welcome gentlemen. Thank you very much. And we have a lot to speak about. So let's get started right away. The floor is yours.

Excellent. So thanks, everyone, for joining. We're going to present now our third quarter for 2025. It's myself and Claes, as mentioned by Hjalmar. And as always, let me just start with Pricer in a brief for those of you who don't know us since before. So our vision is to be the preferred partner for in-store communication and digitalization. We work within retail tech. We're a leader within retail tech. And we have been around for nearly 30 years or actually more than 30 years. And we have to date 28,000 stores sold across the world. Looking at market development and the Q3 highlights, of course, the first thing I want to lift is that we managed now in Q3 to have the best net sales so far in this year for a quarter, 598 million. It's better than both Q1 and Q2. We had a very great increase in our recurring revenue. Why is that? So it's partly due to all the SaaS services we sell through Pricer Plaza, but we've also changed our business model and our pricing model for all software services, also older installs to a subscription model only. So even if you, for whatever reason, are not able to actually connect your store to Price at Plaza, you will still need to renew the software for your installed base or your installed server. And the new pricing model is recurring. So basically, as of now, we are in principle only recurring when it comes to software sales. And this is why you can see the almost 50% increase in recurring revenue in this quarter compared to last quarter. You will also see that it's a quite high increase versus Q2. It's almost 20% increase versus Q2. This is one of the drivers behind the margin improvement. We're on 23%, not for the quarter. And it's, of course, partly part of the recurring revenue, but it's also product mix. And I think Klaus will speak a little bit more about it in detail. One of the highlights for me personally is, of course, that with our EBIT result, managed to it's a positive result and it's actually not only for q3 but with the result of q3 we take the entire result for the full year into positivity so i'm super happy for that Something I'm a little bit less happy with is, of course, the order intake, which was bleak now in the quarter. We could see that there are many different reasons, but the key reason is the fact that there is still a lot of market uncertainty affecting the retailer's decision to invest. We have quite a few customers where we know there is a project they want to deploy, they want to get started with, but it's being pushed into the future. So we haven't lost them, and we do expect that the orders will actually come at a later stage. But it's clear, it's not only ourselves, we see it also for our competitors, that this unwillingness to invest is affecting the market growth at the moment. Then on the Nordic side, as you probably know if you followed us, we have been moving from a partnership sales model on the Nordic and Baltic market into a direct sales market approach. Since August, we have a full team in place. We can actually see that we're now getting traction on the order side. You don't really see it in the Q3 report, but I expect that it will be visible as of Q4 and forward on. And one first example of this new direct mode sales is that we got a direct frame agreement this week with Norris Gruppen, who is one of the leaders on the Nordic market, but also then in Norway, obviously, for those of you that are Nordic, that we announced a couple of days ago. So it's a frame agreement we expect to serve all the stores over the coming couple of years. One thing I would like also to speak about is that we have another customer. It's one of the largest Nordic customers that we have. They now had their first store on Price of Plaza and they have an ambition to actually do all their stores as soon as possible. So there will be a couple of hundreds by Christmas and then some more by beginning of next year. So it's a very clear trend also in the Nordic market for Plaza and connecting your stores. Looking at the organization, and for those of you that will look more on the OPEC side of our business, we have invested over the last couple of months and quarters in our organization, in the commercial organization, very much on the marketing side, on the sales side, on the product management side, all the parts of the organization that will actually help us build the value proposition of today, but also the value proposition of tomorrow. And that will more in larger extent also engage with our customers directly. This has generated a lot of positive traction. Once again, not visible this quarter, but hopefully visible in the quarters to come. And as mentioned, the fourth quarter has started well from an order intake point of view. What are we actually solving? We've been looking at different industry trends and the macro trends. And today I'd like to focus on two of them. When our customers come to us, often it is to help them with improving the operational efficiency in the store. But it's also increasingly more on the in-store experience. How can they make the shoppers buy more? How can they actually get additional revenues from CPGs, the brands? So I've got two examples. If you think about the operational cost pressure, I would like to take our customer SOK in Finland and the partnership that we have forged with them since 2023. It was a pretty long sales process, but we got a contract during autumn 2023, which we announced to the market. They started with 15 stores in 2023. And by today, we have deployed more than 6 million labels across 450 stores. So this is way above the initial discussions we had with them. And we will continue to deploy additional stores. They have some, I think around 1,000 stores in total. Why did they select us? Well, the key reason was to get the operational efficiency in place. But it was also to improve the work environment for the staff, and especially looking at replenishment and picking online orders. So they wanted to make sure there would be less time spent, but it would also be easy for the staff. And they can see now that when they did the pilot, they said, well, there was basically only one choice. You're the only one with a solution that works for us as we need. But it was also now we can see afterwards when they started to do employee engagement service that they have an increase in positive answers on the work environment. They can also see that it's faster to actually get an employee fully productive in the store. And I'm really happy for the cooperation, and it's Jarkko Mäkkinen, the head of development at SOK, says that Pricer has proven to be the partner that they wanted, acting as an extension of our own team. And of course, we feel the same way. It's a very inspirational customer to work with. So this is very much on the store operational side. And if you're more interested in this case, I think you will have it now, or it will come very soon, a video actually from SOK where they speak about why they selected us. The next thing would be then addressing the in-store experience. Price Revenue is a product that we conceptually launched in New York in January at the NRF event. We are now come to the place where we are starting pilots. So yesterday we actually had our first Pricer Avenue aisle live. It's in a store north of Stockholm. It is very much a store where we will let our engineers just verify that everything is working as it should. But if you want to see it, you know, you should go northwest of Stockholm and see if you can locate the store. It's really nice. And what you also see on the picture here is what we call the floating canvas. This is something unique to Pricer. It's a patented way of doing and actually we're the only one with the current look and feel of the general ESL on the market where you can do it. We, unlike everyone else and unlike our old models, we have not made our thin so frames are so thin on the ESL that you can easily then build a picture over two ESLs or of three or five, actually any number of ESLs you want, you can build the merchandise in the promotion area. So we're going to do, in addition to what we just installed in Sweden, we will do pilots, more of a commercial nature, in Finland, in France, and in the UK now during October and November. So there will be more updates on this, but we can see there is a huge interest in price revenue. And I think it's also fueled by the fact that there's no one else on the market that is actually doing it this way. So having done now the shameless marketing of Avenue, I hand over to you, Claes.

Yes, Q3 is the best quarter for this year. You see, we have a strong gross margin and gross profit, and we see effect in our production costs now from the weaker US dollars. We have had a negative currency effect compared to last year with about 10 million, which affected our EBIT, of course. But still, we have a return on sales of 6.5% for this third quarter. If we then look at the cash flow, the operating cash flow for the first nine months is... positive and 16 million cash flow has been affected by the high accounts receivables and it has actually increased by 120 million in the third quarter so this is just a it's a timing effect and that will be of course a positive effect from this now in the coming quarter And if you look at the order intake, it's of course weak as Magnus said, but the backlog now when we go into the fourth quarter is higher than last year. On the sales side, it is the best this year and it's 598 million. Gross profit is also the best for the year with 139. And even then, the total result is, of course, the best for this year.

Good. Thanks, Claes. So going to the summary. Well, as I mentioned, the geopolitical situation is still affecting retailers' decision to invest. They believe in digitizing the stores. They are digitizing the stores. But we can see a lot less activity on the market. And I know, of course, there are questions, is the market growing? Yes, we believe that over the coming couple of years, there will be a massive growth. But we can see that this year, and actually last year, we had poor growth in the market. If we look at the top four players, I would say that we had a standstill in the market last year, and there would probably be something similar here as well. But we still see the same interest from our customers. It's painful. It's, of course, something we don't want, but we actually still have the positive dialogues. And I think that's important to remember, especially when you feel frustrated over the lack of sales or lack of results. It will come back. I'm really happy that we managed to return to profitability this year. It's, of course, painful for everyone when you're actually not making money. We have committed in the Q2 report that we'll be profitable for the year, and I think we can repeat that commitment to the market. Clear recovery in net sales. We improved our gross profit a lot versus Q2, but also versus Q3 last year. The price for Avenue pilots, I'm super excited to see them in place. The first install looked beautiful. And now when we do them fully for our additional customers, France, UK, Finland, I expect a lot of interesting dialogues afterwards. The direct frame agreement with Norgeskuppen, very positive. I do expect more frame agreements coming out of the Nordic market within this year. And I would like to also close with saying that we have a strong position to really capitalize the future demand, the future opportunity. And I believe that with our setup, with our current portfolio, but above all also with what we do now on the Avenue side, there will be a lot of opportunities for us to grow into the future. So please bear with us. There will be improvements.

Thank you. Thank you so much. And let's dive into the Q&A then. First on the jump then in recurring revenue, which of course is very interesting. You mentioned there that you can also have a recurring revenue setup with sort of the non-plaza customers, if I got that correctly. Could you just elaborate a bit on this initiative and this pricing?

So what we've done is we see that, of course, recurring revenue is a solid base for us to stand on. And we want to move all customers over to Plaza to get them connected. But we also see that some customers, they need to do the proper planning. They need to do the setup. And if you have almost 1,000 stores, as an example, you need to plan that transformation properly. pretty carefully, but we do not want to wait for the revenue. So what we've done is that all customers with an old install that will still be installed on the server, we changed the price model and said that, you know, now you've got the latest version, but it will be a recurring revenue model. So this is the key reason. So all the new softwares that we sell will be sold as a SaaS service. I'm sure there might be some exception, but at large, this is what we do. So this has been one of the key reasons for the impact now in Q3.

Yeah. And what does this mean for the prospects of recurring revenue? I mean, I know you don't have a recurring revenue target currently, but what is the implications of this and how much can it grow? I mean, just depending on now addressing also non-plaza customers.

I think the key growth will come from connecting customers. So we have several projects ongoing. If you take Carrefour as an example, I think we're connected I can't recall the exact number, but somewhere roughly 500 additional stores this year. And we believe that all stores that we haven't connected so far, let's say we sold 28,000 stores. We have a number of Plaza stores today, but there's probably at least 10 to 15 stores still to actually connect. connect and that will of course be one chunk of the forthcoming recurring revenues. The other one will be now as we get stores connected and our software team spend more time on developing applications and functionality rather than the basic plaza functionality, we see that we will also be able to package and sell much more up sales to our customers and new functionalities that they will need to pay for. And we've come to a point now we have the R&D capability fully in place. We have the plus of fully developed to the extent that we want. But we also have the product team that is now really good at packaging it in a way that will be easy for our sales team to do it. So I see that there are quite a lot of opportunities to actually grow this continuously.

It sounds like a lot of focus on recurring revenue currently, Dan.

Absolutely. It's actually, when we're communicating internally, it's really the number one objective. It's to get more customers and to make sure that every single customer is connected.

Yeah. And on the pricing side, you mentioned the Avenue pilots currently running. Could you give us maybe some granularity on the pricing that you're expecting for this model? Is it mainly recurring and what would sort of the margin profile be potentially?

You can see with Avenue, we will see a few different revenue streams. One is, of course, selling DSL, which We will not take it on our balance sheet, so we will still sell it as a product. But we will sell the software. With the powered rail that we have in the system, we have a unique setup that we actually do expect that we will be able to license for people that want to use it and sell it for their own IoT devices or for in the stores that we have. If they want to use it, they will have to pay a license fee. Then we have the ability to do the merchandising. We're still looking at the price model, but we see that there is a real chance to actually get some increased revenues, hopefully more than smaller amounts, on the merchandise side. That's one of the things that we really want to test now when we do the new stores, France, UK and Finland. How should we work with the merchandise side especially? But I see, in essence, three different kind of revenue streams.

Yeah. Is it possible to start up selling the Avenue already in early 2026? Or when do you expect to maybe see sort of a ramp up?

It would be. We will actually have volume or we'll do small volume production during the first half. mainly because we know that customers, they will never go for a full deployment immediately. Typically, when we approach our customers, they want to test it. They test it in one part of the store, then they might do an extended part of the store. But we will say as of the second half next year, that's when we're ready to do volumes. And I expect us to do volumes. It will not be a bulk of our revenue, but I would expect it to be at least on a level where we can speak about it and say it's actually making a difference.

Yeah, yeah. And then if we move on to the order intake, maybe you mentioned Europe and also one impacting factor being that you're going to a direct to market approach here. Could you elaborate just how this is impacting the order intake here in the third quarter and why this sort of like dampens the order intake that we saw in Europe?

Two key reasons. One is actually Nordic-Baltic. where we can see that the transformation from distributor sales to direct sales. Now, since all the Nordic customers know that we're doing this, they've been waiting, which means that some of them, they're waiting to invest, but it also means that some of them said that if they were not in a hurry, they probably took the investment and put it into next year's budget. So it's money that will come our way, but it's more of a timing issue. We can also see when we address franchisees, and now we have an organization in Sweden to do franchisee sales. Here I see on a daily basis that we get store orders in. But it's coming now and we got the full team in place at the end of August. But we can see that they're all busy and we have had several orders both from a store level until then the frame agreement like Norisgruppen. The other one was Carrefour where we had a very high order intake from Carrefour in Q3 last year. That order we got in Q2 this year, not exactly the same size, but still the large Carrefour order of the year came Q2 this year.

So it's reasonable then, I assume, to expect some sort of catch-up, but maybe not Q4. I mean, you mentioned some budgets, they are taking it into 2026. So a gradual catch-up maybe from here.

I think there will be a gradual catch-up. And above all, I think the key message is that there will be a catch-up. This is not lost sales. This is sales that we will get. And we are, of course, in discussions with like Norriskuppen and others on what are their investment plans for the future. We have a pretty good idea on what will happen and when.

Yeah. And then if you move on to the Americas region, could you just give us sort of like the current view of the impact from the tariffs? I mean, you mentioned that this has been an issue and of course, maybe an ongoing issue as well. But still, I mean, there is for you some order intake in the Americas, which is...

sequentially improving even if i recall correctly it is yes and i mean maybe this is outside of the us it's canada but could you elaborate a bit on the drivers here and sort of like what are what do you currently see from from the tariffs i think we can split it in us and canada and if i start with us we still there is still a slowness to make no investments there are discussions they have started again but they are quite slow but we can see that that suppliers that actually had a contract in place, it seems like volumes are actually accelerating to make sure that they get things deployed as soon as possible with the rationale, we know the tariffs we have today, but we don't know the tariffs of the future. and i think that is the key rationale where you can see there is some acceleration on the market but i think key rationale is that we want to digitize we have the contract let's do it now before it will be way too expensive but for the rest we see that you know there is still courses they are still waiting so there's not a lot there are of course sales but not as much as as we would expect it. It's actually much lower. In Canada, on the other hand, we see a lot of interest. We see that Sobit deployment is progressing extremely well. We see it's catching a lot of interest. So in addition to the order that we got in December, then we're busy deploying it according to schedule. There's a lot of Sobit franchisees that are constantly placing orders. we can see that there are spillover effects that we have other other customers we have the metro group in canada as well and of course they look at all the new stores with four color labels and we see a lot of incoming interest also here where we do believe that canada will will be a really good market for us over the coming couple of years both so this metro group canadian tire they're soon fully deployed but we have now done the first four color orders so they will gradually start shifting their installed base over more and more towards four-collar. So that will be continuous sales as well. Maybe not on the same level initially, but eventually.

And how much potential do you see in the Sobis store network to grow there? I mean, what is the current like sort of penetration rate? And I mean, if you gain traction there, what's sort of like the potential that we could see?

I see it. Sobis and where there are different formats, they have roughly 1500 stores. There's still a lot of upside.

Yeah. All right.

No numbers, I'm afraid.

No, that's fine.

I expect more.

Yeah. You mentioned then some pilots running starting in October and November here for Avenue. Could you elaborate a bit on this? Is this new customers or current customers?

So it's existing customers and it's customers who always said that we will only do a few. We will select the customers we want to work with. We want customers where, of course, they will test it in their store environment and see, does it work for them? How well do they like it? But we also want to test the commercial model. We want to make sure it's not just another label. We want to make sure that all the merchandise abilities are in place. We want to make sure that we have either their private brand or that they have another brand they work with as part of the campaign. So we've been extremely selective in this process. We will do more promotion around these pilots. That's also been a requirement. We want to talk it and we need to talk about it.

All right, thank you. Then we got a question on the line regarding the SOK that you mentioned. Could you just clarify a bit, are you expecting to see additional rollouts here or have you already received these orders?

We're expecting to see more. So they've been driving it as a structured process. They've been doing a lot of deployment now with 450 stores. but they still have more than 500 stores. Different formats still. There's been a focus on the large formats, even though we also won the smaller formats, which we were not certain that we would win. I think originally they were thinking about having maybe dual vendors, but they decided to just go with us because they were so happy with how things were working. But we do expect to get more like store-by-store orders into the future, more than like a structured. So I don't think we will have...

a very large po but i think we'll continuously have a good run rate business that will be on a good level thank you and then on the uk i mean a lot of questions regarding uk we know that it is a market with great potential we see we see some some deals being made in this market could you elaborate a bit on what you're seeing right now sort of like the current picture of the activity in the uk

We see a lot of activity. I mentioned many reports that I expect something to happen now during autumn, and I guess it just did. Everyone is looking at it, and we see investment decisions are either being made or will come within the coming... six to 18 months, I would say. Or maybe as of now and within the coming 18 months. But everyone is looking at ESL. I expect a question to pop up. And yes, we are doing pilots with several of the tier ones. So we are in discussions. Yes, we were also in discussion. We were in final stages of negotiations with one of the large ones that were recently won by a competitor. But We actually said no. There were some commercial conditions that were I never seen before, actually. So we said this is unacceptable. So we declined.

Okay, okay. Then we got some questions on the working capital. Could you maybe elaborate a bit on, I guess, mainly on inventory? Do you feel that the levels that you currently hold are satisfactory? I mean, do you feel that they are... Maybe they could lean in some direction one or another if we look forward for the next maybe two quarters.

The inventory level now is higher than we actually expected. So we expect inventory to go down. from the levels they are at the moment. And also regarding working capital now, also in the quarter, the accounts receivables has increased a lot. And as I said, it's just the timing effect. So that will also change.

All right.

Thank you.

Thank you so much, Magnus and Claes, for coming here today and presenting and answering our questions. And I'll leave it to you for any concluding remarks.

All right, so thank you, Hjalmar. Thank you, Claes. Thanks for everyone watching. Thanks for joining. I hope you found it interesting. I hope you got something more out of the call than you could actually read out of the report. I would like to summarize saying that I am very positive looking at the future. Not very happy with 2025, but I see that things are improving. They were improving in Q3. We will make a profit for the full year. We have the dialogues in place to actually... make sure that we come back and deliver better into the future. So thanks a lot.