SmartCraft ASA

Good morning and warm welcome to the SmartCraft Q4 2025 report. It's going to be a pleasure to guide you through our Q4 numbers and information. Please read the disclaimer when you're watching and listening to this cast. So what are we going to cover today? Well, on the agenda, we're going to talk about this is SmartCraft. We're going to talk about the Q4 highlights. We're going to talk about the Q4 financials. We're going to do a summary and then we're going to give the opportunity to have a Q&A. So if you have questions or want to know different things, then you can post that and get the possibility to get direct input in this call. Now, who are we that are going to present today? So first, my name is Jeremias Jansson. I'm the CEO at SmartCraft. I've been with SmartCraft since the beginning of January. Prior to SmartCraft, I worked at both Quinex and Unit 4, and I have about 25 plus years experience in the software industry. It's really, really fun to be part of the SmartCraft team. With me today, we also have Kine Kragholm Olsson, our Interim CFO, who's going to present herself when we come into the financial section of today's presentation. So let's jump into it. Now, first and foremost, I want to tell you a little bit what SmartCraft is. And if we look at SmartCraft, why do we exist? What do we do? Where do we operate and who are our customers? And without being too long in that presentation, we can say that what we love and what we want to do is to offer solutions to help our customers to plan and work more efficient. And who is our customers? Well, normally our customers is in the construction sector and the property management sector. And they tend to be smaller customers in general. Now, to handle this and help our customers with all these different topics, we decided in Q4 last year to go over to a business area structure. And what you see in this slide is basically how the company is split into different business areas. The three business areas to the left, the electro, the HVAC and the SME construction, is targeting more or less smaller companies. The enterprise segment targets companies who are a little bit larger and in that case also a little bit more in the property management sector. Now this is very important for us with the business area because it makes it possible for us as a company to make sure that we keep the good knowledge about what our customers are doing in one area. So for example in the electoral, we are trying to be a specialist into understanding how we can help electricians all over our customer base to improve their daily lives. It's a very, very important topic for us. To support in this, as you also can see on this slide, we have different products. And of course, I love our products, but the fact is that the products, in a sense, is not the most important thing for us. The important thing is how these different products helps our customers, as I said, in their daily life. That is our passion. Now, how do we then do that? Well, you know what? It's not easy to be a small company in the construction sector. It's so many different things that you have to do every day when you go up in the morning. Of course, you have a business to run, but you also have customers to manage. And that basically means that you have to think about, okay, how am I efficient with time? and for example if you're a company with four six persons employed you are of course the boss of that company you're the founder you're the owner but you're also co-worker normally you're out there on the field working as well and then to plan and think about how to be efficient it's not that easy without support you have to communicate because in many cases you're driving around in a car, for example, to different small workplaces. And then you have to find a way to communicate to your other coworkers in a very efficient way. Then you have to think about safety. Most of the people that we have as a customer has a big passion for their coworkers. They're close to them and they want them to be safe. And then, of course, they want to make sure that they run their business in a proper way. This is how we help our customers by making sure that they have tools in their daily lives that supports them without being a distraction. Now. In this quest for making it easy for our customers to be efficient, but at the same time not be distracted, we are very happy that we have placed ourselves in a very strategic position when it comes to the new AI era that started a couple of years ago. What makes us special in this place is of course the fact that through decades of serving this customer group, we have gathered a lot of data and knowledge about this space. And why is that interesting for our customers that we have managed to do that? Well, basically, the fact is that if you're a small company, as I talked about, and you have a couple of coworkers, you are probably in a position where even if you have a big passion of trying to find solutions in this area of AI, you have limited time and place to do that. And that's where we can step in. Because of our fact of gathering data over this waste period of time, we can help our small customers to basically be more efficient because we know how the daily life works. And more important, we also know how to gather that data and structure that data so it can give us the outcome. In this presentation, we will talk about some solutions that we have done, especially one that we have pushed in the offering process for electricians. And what we do in that solution, I will talk a little bit more deeper into this presentation, but basically we're using the data we have to make sure that they can offer their work in a faster way to the customer, which of course enhances their profit margin enormously. Now, data is important when we talk about using AI. Another thing that is very important is that in our system, the data is part of a workflow. And what do I mean with a workflow? Well, if you think about it, The idea is that you have a point-to-point solution, which means that you basically are doing one task in a solution, and then you do another part in another solution. That becomes very tricky for a small customer. What you want to do is a workflow. So you start with one task, then you finish that. That task leads to another task, then you finish that, and that leads to a third task. Then you have a whole process. Now you could say it's become easier to build code and that's probably true in the AI era. But to think about how to structure the workflows and combine that with data that is not public but instead used by customers and gathered by us. That's something that is much more complex and we have that possibility. Then, another leverage that is important for us is our customer relationship. The truth is that without customers, we are nothing. That's true for most of the companies, but especially true when you have many customers as we have, dependent on us every day. And that customer relationship we can use to test scenarios on how they can be more efficient through the data, through the workflows, through the customer behaviors that they are using and that we can see in our system. This gives us a pattern of the working day, a pattern on how they work, where it works and how it happens during the day. All those things combined makes our position very unique. Now on top of that, as I mentioned before, many of our SME customers doesn't have the bandwidth of testing out lots of different tools. They need to have one go-to tool for the day. And many times that's our tools, our products. For us to combine all these different things in the AI and deliver that to the customer, in the end, will put us in a much stronger position, but will also put our customer in a much stronger position. So I'm really looking forward to all the enhanced functionality that we can give to our customers through the benefit of AI. Now, another good thing with the AI is that today we're sitting with extremely large TAM. There are lots of positive and possible customers out there. Now, the historic truth has been that many of our customer segment has choose to not have a solution at all. The reason for that is many, but with the enhanced use of AI, we think that this is going to be a way of increasing the TAM for us. It's going to be a possibility for us to reach even more customers and making the possibility to serve more percentage of our total TAM even better. Now, let us step in a little bit to the Q4 highlights. So, if we look at Q4 2025 from a more financial view, we can say we continue to grow with an 8.4 year-over-year growth, 6.5% organic, which is decent, but of course it's pressured by the climate around us. We continue to increase our adjusted EBITDA capex, which is also good. We are trying to always make sure that we are cost conscious at the same time that we invest in the new technology that is possible. Regarding the cash flow, we actually had a dip in that number year over year. However, that is built mainly by a couple of different extraordinary situations. The biggest two ones of that is actually the additional tax payment we have done. And the other big differentiator year over year is that we have paid a lot more in AP. And when Kina goes through this, she will talk a little bit more in detail about the cash flow, but more or less those two buckets is about 16 million together of the differences. There are also some other extraordinary costs that was related to the fact that we switched into new business areas and also some changes in our Norwegian operations. Skjørn remains flat year over year, but we're still a little bit positive because it actually still is the third quarter in a row where Skjørn goes down. But as it says, year over year flat. Now, when we look at and try to see what happens on the market, of course, the numbers that we perform is an extremely important indicator. But another indicator is actually what happens with our marketing effort and how much traction we see is on the market. And as you can see, we have several strong numbers here. which gives us a little bit of a positive for the future. Even, of course, in the end, it's about converting this into sales as well, where the soft surrounding macroeconomic climate has pushed downwards. But we can see that the interest is there for our products. Now, as I alluded to before, we started actually pretty early with thinking about how we can use AI to get proven revenues. And this is especially true for SmartCraft Spark and SmartCraft Flow, which are of course new products that we have developed and that we've launched on the market in recent times. And when we look into SmartCraft Spark, we can see that we have already got into a situation, as you can see from these different data points, where we got a lot of customers to use these tools, even if we are in early days. And of course, we want to grow this much, much more. And how do we know that? Well, we can see, for example, that they're using these products essentially for doing quotes. As I talked to you a little bit earlier about, the quoting part and how much time that takes for an electrician or a person working in HVAC is actually much bigger than you could think. And since they are small companies, it means that every offer they want to send out takes time from the daily other work that they could do where they can get revenues for it. So our way of making sure that the quotation goes much faster for them by gathering the data for them is a huge enabler for them. And it will be more things to come in this area for sure. We are dedicated to use AI in reality not as just a history storytelling tool. Now, another positive thing that happened in Q4 was that we managed to continue our expansions and do some new entries outside of Scandinavia with our product lockup. We are, of course, looking at our product stack and see how can we get those products into more countries. And as we informed you about before, we want to enter the UK strongly. And Lokka has now managed to take their first customer in the UK while also expanding into more customers into Finland. And that's very positive because Lokka is a product which can be globalized step by step. And again, also here, it's early days. We're humble that it's not easy to go into new countries with products, but we see some good starting points and success with this product. With that, I will hand over to Kina to present herself and the Q4 Financials. Here you go, Kina.

Thank you, Jeremiah. So my name is Kina. I'm the interim CFO at SmartCraft and I've been with SmartCraft since 2021. So diving into more of the details from the highlights that you already presented, Jeremias, we are reporting an ARR of 522 million. That's a total growth of 8.4 quarter of year over year. And underlying for that is a 6.5 organic growth as well. We see continued improvement in churn with 0.4 percentage point quarter over quarter and also Q4 has the highest organic growth in ARR quarter over quarter since Q2 2024. So we are seeing some small positive signs within churn but also downgrades in Q4. The total reported revenue for Q4 is 144 million. That's a 5.4% increase year over year. We're still focusing on transition even more revenue from non-recurring to recurring. And Q4, we have a 95.9% recurring revenue share. The EBITDA minus CAPES margin is, of course, important for us. We see an increased margin compared to 2024 of 2.5 percentage points, but there's a decrease compared to Q3, but that's also a seasonal trend that we've seen in the past years as well. We continue our R&D CapEx, and we have continued our investments for strategic development projects. and the level of R&D is 7.2% in Q4 isolated. For the full year of 2025, we are approximately at 8%, and that's in line with what we have previously presented as well. Q4 is the first quarter where we are doing our segment, the new segments for business areas. So some highlights from all of the different business areas are coming now. SME construction that operates within Norway and Sweden have a reported revenue growth of 10.6% year over year. under that is organic growth in the recurring revenue of 7.4% year-over-year, and they have a margin of 55.1%. That's a small decrease from year-over-year, but we see that they are affected by higher recruitment costs, but also some increased marketing spend related to trade fairs in Q4. HVAC and plumbing is at the moment only present in Norway. They have reported a revenue of 32.6 million in the quarter, and that's a 1.5% growth year over year. Organically, for the recurring revenue, that's 1.7%. They have a margin of 42.9% at the adjusted EBITDA. And they also report some decrease, but it's mainly affected by transition in personnel that you mentioned earlier, Jermias. But they also have conducted trade fairs that we did not attend to in 2024 because they're only every second year. Electro is currently present in Norway, Sweden and Finland. They have recorded revenue of 17.7 million, growing 11.1% year-over-year. The underlying growth for the recurring revenue there is 9.8%. They report a margin of 24.6 in Q4 2025, and that's an increase compared to 2024. And we see effects by streamlining the product portfolio within Electro that have a positive effect in the adjusted EBITDA. Enterprise, they are present in Sweden, Finland and UK and they have a recorded revenue of 37.3 million in the quarter. That's a decrease in 0.7% year-over-year but underlying is a growth in the recurring revenue of 4.3% year-over-year. So this is where we see the biggest effect in the transition from non-recurring to recurring revenue. The adjusted EBITDA margin is 20%, and that's an increase compared to 2024. And we see that that's driven by strong renewals, better contract quality, but also a strong focus on cost control throughout the year. The overall financial position is very strong. As you mentioned earlier, Jeremiah, with the cash flow, we have a decrease in operational cash flow, and the tax payments are in a high degree prepayments of tax in Sweden. And then we have timing differences with payments of accounts payables, where the accounts payables were significantly higher by the end of Q3. For the full year of 2025, we have seen that it's normalized since we've made some changes in invoicing routines for annual invoicing in 2023 and 2024. Our full balance sheet is not very much has changed there. We have a solid equity position of 74%. We hold 4.05% in treasury shares, but the story is that we're still net cash positive and we have a negative net working capital as well. That's very positive for us. So back to you, Jermis.

Thank you so much, Kine. Very great to see the numbers present in this distinct way. So, as we all can see, of course, we have had growth in Q4, but of course, we're always working with the factor of trying to increase that growth, to sell more, to give more value to our customers. and we try to explain how we think about this in this slide. So basically first we have the base or maybe the root which is basically our current offerings that is on the market and there of course we're working with these products thinking about how to put a pricing structure into those products, how to sell more efficient, how to reach more of our tab. and that is of course our fundamentals and our daily business. On top of that we have for a period of time been thinking about how to build the future winners and that's where the improvement can be found probably. We have invested into Spark and Flow and also other function and features in our other products and what we're trying to do is to do different scalable platforms where we can basically accelerate our cross-sell on our existing customer base at the same time of course reaching reaching new customers and a new target market and that is our second pillar to try to achieve our medium-term organic growth target On top of that, we also will do acquisitions, M&A. When the price is right, when the timing is right, and when the value is right for us. And of course, in every changing market, Every month, every possibility, you have to think about, is this the right situation for us? So we are actively working with the pipeline M&A, but we also are very cautious about what to buy and how to buy it. So basically, this is the pyramid of what we're working with daily to ensure that we are profitable while growing and that we can scale our solution. Now as a final slide before we go to the Q&A I just want to remember everyone that we will of course also do relisting from Oslo to Stockholm Nasdaq and that is planned to happen now in Q1 and you can of course go in and look at our information around this if you want to have more detail But the important thing is to remember why we're doing this as well. And the most important part of this is, of course, that we have a large portion, actually about 50% of our revenues in Sweden. We want to, of course, find a way of having liquidity in our share. And we also know that Sweden has a very strong investor community. So that was the background on why we are doing this release thing now in Q1. Now, friends, viewers, customers, investors, co-workers that is listening into this, let's say thank you for listening into this presentation and let's move over to hopefully some good, great, fantastic Q&A.