SmartCraft ASA

It's 2 o'clock and we welcome viewers to this broadcast where you can ask your questions in the live chat during the length of this broadcast. Today the company SmartCraft has published their report for the second quarter of 2026 and with me I have the company's CEO Jeremias Jansson. Welcome. Thank you so much.

Hello everyone and I'm going to go through the Q2 report for SmartCraft and it's going to be a pleasure to do that. So first a short disclaimer and then directly into the agenda. So what we're going to cover today is first, this is SmartCraft a little bit shortly. and for you who doesn't maybe know that much about our company then we're going to talk about a little bit Q2 highlights and then I'm going to be joined by our CFO Tobias who's going to talk about the Q2 financials and then we're going to do a summary and then you have the opportunity to do a Q&A. So let's jump directly into it. So first and foremost, this is SmartCraft. So I normally start by saying why do we exist and what we do basically. What we do is that we basically put all our focus on helping smaller companies in the construction sector, handymen and similar, to fix their daily life. That's what we're trying to solve for most of our customers. And by doing so, we hope that we help them to become more digitalized and actually give them a higher profit, of course, but also help them to make sure that what they do in their daily life has a high quality. So that's basically SmartCraft. Now SmartCraft to support that has a couple of software products and as you can see from this picture we have also put those software products into different buckets and the reason for that is that we in SmartCraft believe that it is very important that our software are tailor-made for the end customer so that they can really be efficient when using these ones. And what that has led to for us in SmartCraft is continuous growth over a very long period of time. So basically for SmartCraft, we have seen a growth in 15 years and continuing. And that is, of course, the financial outcome of us delivering solutions to our customers that helps them in the daily life. So that's basically SmartCraft in short. Now going in and looking at Q2 highlights. What have we done in Q2? What has happened in the quarter? So basically if we look at it and start from sort of the top we have had organic growth of about 7% which is something that we have had for the last quarters. Even if that is a slight increase year over year from Q2 in 2025, it's still a growth that we want to be higher and we will come back to that a little bit. The reason for the average growth as is in the company is basically a mixed performance around the four different business areas and also the years where we are doing our daily business. The Swedish market has become a little bit better for us during the last year. and also showed some good growth. So we have also the business areas of the smaller construction companies SMEC and also the business area of Enterprise. While we have had a little bit more challenging times in Norway and Finland and also therefore in the business area of HVAC. During this period of time and looking at one of the numbers that we worked very hard with is of course the Scher number. For about a year ago we were up to 10% in churn and we have managed to push that down both year over year but also quarter over quarter and the churn number has gone down but at the same time we still have some downgrade on our existing customers which is why our existing business part is not growing more. When it comes to the downgrade, if we look into that a little bit directly, you could say that it could be seen as a positive that the customers decide to not leave us but instead decrease their cost for the software when they themselves decrease in size as a company. What we also done during Q2, which I will deep dive into a little bit, is that we strengthen our executive team. We are moving in the direction of what we call one SmartCraft, where we try to become one company in all ways to support higher and faster growth. During the quarter, we also decided to do a change in our enterprise area, which led to cost saving that we will see from 2027 fully out of about 15 million. I will also deep dive into that a little bit. And as a headline, you can also say that we continue the strong cash generation from Q1 into Q2. If we go into a little bit and look at the numbers more or less, I normally use these ones when I present what we have added as sort of a fifth high level number is the return of equity, which we will come back to a little bit in the presentation as well, how we work with that. If we look at the other ones, as I said, the share number was a very good number. We do decrease a little bit in margin for this quarter and the background of that is basically that we are continuing to invest in our products at the same time as we have done some extra work on the centralization of SmartCraft that short term has costed some money as well. Good cash generation, as I said, and if we talk about sort of a non-organic total growth, it's about 8% year over year on the annual recurring revenue. If we look into the change in enterprise that I mentioned, we can say that what we're trying to do in SmartCraft is step by step getting the company to a little bit of a different company. So we're trying to make sure that we invest the money that we have into the right products in our product buckets and that we make sure that when we see something in a business area that we think we have to change to make sure that we enable growth, then we push hard for that. In the case of enterprise, the starting point of doing this change was actually about exactly that. We want to make the enterprise business area more similar to the other business areas in the sense of their organization. to create more common function within it, clearer ownership and therefore get faster delivery and a better alignment between the teams in a couple of countries. Doing this change also gave us a financial benefit in the form of a saving of 15 million on annual cost savings. It also gave us a one-off cost for doing this restructure of 7.2 million, which is in the numbers of the quarter. During Q2 we also continued to build on ramping up our executive team. So from the start when I came into SmartCraft and started to talk about One SmartCraft, I also talked about the fact that we are going to take in good competences into SmartCraft to make sure that we can grow the company in a faster way. Joining me today in the presentation is Tobias, who is our new chief financial officer. He started in June and I'm very happy to have him on board. And then we also recruited Daniel Kelsen to work on the HVAC and plumbing business area as leader for that. and this is a very important hire for us because that business area as you can see from the number is a business area that has had a little bit less growth than the other one in the last year and what I'm hoping of course and our plan is that together with Daniel and the build in that team to go back to a higher growth number in HVAC and plumbing which will then of course also affect, if you look from a country perspective, the Norwegian numbers that we have. Joining us also a little bit later this year is Thomas Staven. Thomas has had a long career in tech and is a fantastic person when it comes to product and technology and taking him into SmartCraft at the same time as we're putting Christian Saleko into a direct role to lead AI and technology part within SmartCraft. We're hoping we'll of course enhance our AI offering and our tech platform. But we also invest into the company in trying to find the same platforms, same routine and Karin who's joining us as a head IT is an example of a couple of co-workers that is joining us for this. Now, one of the most important things still in our transformation as a company is to use the new technology at all time to become more efficient over time and also produce software to our end customers that they can use more and more. And in the past, I've talked about why we think we have a unique position in this as a company that we can use to deploy different solutions to our customers. So this one is sort of not new. We're sticking to this idea. If we look into that one a little bit from what have we actually delivered, we of course deliver new features and functions within our products at all time. So we basically have two different parts of this that is important. One part is how we make sure that in our solutions we build capabilities that can make the customer get more efficient from our solutions. The other part is, of course, to use AI in our own production of software, which was a project that we ran through Q1 and Q2 to make sure that our development teams, especially from the beginning, are using AI to develop our products in a faster but also even more reliable and efficient way. So to summarize the Q2 a little bit in headlines, we are continuing on the path that we have decided. That means transforming SmartCraft into one SmartCraft. We have a couple of different products and we will continue to do that. They are niche for different areas. However, we want to run as one company and therefore get those scaling benefits for that. And that is what we're trying to do. with attracting new talent for our leadership, with making sure that if we are in a situation where we see that we need to change the structure of a business area like enterprise, we do that. And if we think that we have to make any part of SmartCraft more efficient, we do that as well. We will continue doing this also through Q3 and Q4 so there are more things that we are of course planning to do as a company in making sure that we push ourselves closer to become one SmartCraft. With that I will hand over to my good colleague Tobias who will talk a little bit about the Q2 financials. Here you go Tobias.

Hello, everyone. My name is Tobias Lindqvist. I joined as the CFO for SmartCraft in June. So this is my first quarterly report. So happy to meet you all. I'll start with ARR. So we ended the quarter at 514 million, which is up 8.1% compared to last year. We had an organic growth of 6.8%, which is slightly better than 6.0 we had in the Q2 last year. If we look at where the growth is coming from, it's very much from enterprise, which was up 11.9% in organic growth, and SME construction, which was up 8.7%. Sweden is especially interesting, and where we look at the SME construction, their ARR in Sweden is 153 million, which is up more than 11% year over year. And almost all the increase from having ARR for SME construction is from Sweden, 15 out of the 17 million increase in ARR. We added 10 million in net new ARR during the Q2, which is 14% more than we had last Q2. Our customer base has grown with 366 customers year over year. Churn, as we mentioned, is particularly good. Improvement of 1.9 percentage point to 8.1. What is important with organic growth is that it's not only driven by price increases. Pricing is helping, but we're also seeing growth from upsells, new customers and better retention. The mix of there between varies between the different business areas and markets. In some cases, there is some more price sensitivity and where we're putting more focus on upsell and expanding our customer relationships. Finally, the quality of earnings has also improved. Our recurring revenue now equals 96% of the total revenues, up from 95% last year. So overall, I think the ARR looks quite healthy. Growth is holding up, and especially then Sweden and SMEC is the most positive signs. If we're moving over to revenue, reported revenue was up 7.8% year-over-year with an organic growth of 6%. That's a clear improvement from 5.2% in Q1 and importantly from the negative 0.2% that we had in Q2 last year. So we're seeing a gradual improvement in the revenues and the underlying trend Also here it is SME Construction which was the strongest contributor to the revenue with a revenue growth of 11.7% and an organic growth of 10.3%. On cost, adjusted operating expenses increased by 9.8%, faster than the 7.8% in the revenue. So we're not seeing yet the operating leverage, which we normally would have expected. And there are a few factors behind this development. As Jeremias mentioned, we are building one SmartCraft following the change into business area structure we did last year. And with that, we have given opportunity to harmonize systems and processes across the group, which includes areas such as CRM, ERP, etc. At the same time, we are also continuing to strengthen the organizations with the relocations from key personnel to Sweden. Looking at the results, the EBITDA result adjusted EBITDA was 2.2 million improvement from last year, reaching 52.6 million. So despite the high cost, we have a better adjusted EBITDA result. However, development of CAPEX increased with 3 million. So as a result, the EBITDA adjusted EBITDA was 0.8 lower than last year. The focus is now to making sure that we can leverage on the investments that we've done in development and also in the organization. If we're looking at this slide showing then the development between the different areas and development in revenues, organic growth and adjustability The development, as you can see, is different from the different amongst the business areas. And that also leads to that we see different opportunities for moving ahead. SME construction is the standout. We have good growth in both ARR, revenues and also high profitability. So there it is. This is driven by, as mentioned before, Sweden. But so here is a continued growth yearning that we have ahead. Enterprise is different. We have a good ARR development, slower in revenue, and also the margins are lower than other business areas within the group. This is also why the restructuring that we have made or putting in place now is important. We're reaching uplift in the margins to similar levels as group level. Electro remains positive, but there is room for improvement. ARR is growing slowly, 4%. Organic revenue is up 6.5%. And margins is stable, but lower than the average. So here we have improvement of possibilities both in sales and the margins. HVAC and plumbing here we have revenues slight improvements top line but very good profitability so here it is for us to focus on driving top line Moving to the next slide, the cash generation. So we had a good cash generation in the quarter, 8 million improvement from Q2 last year, ending at 33 million. We were helped with the cash flow by lower tax payments this year compared to last year. We were 4.5 million compared to 14.2 million last year. But at the same time, we also saw improvements in working capital and higher customer prepayments, which is also encouraging and evidence that supporting our ARA growth. ROE was 9% and this is an area where we see a clear upside both in terms of improving the result but also say to more capital efficiencies ahead. In terms of capital efficiencies, we are having an ambition to act on the share buyback that was decided by the AGM in May. Yeah, continuing on the capital allocation and so forth. We have a very solid cash positions of 140 million. We have positive net interest bearing assets of 180 million. So we are in a good cash position. That gives us flexibility to both to first, of course, invest in our existing business, investing in product development and growth top line. Secondly, when it comes to M&A, we are actively working, focusing on finding selective M&A opportunities which supports to expand our offerings and footprint. And thirdly, its ambition to act on the share buyback program, the mandate that we were given by AGM in May. So overall, we have a strong capital base which will give us room for not only acting in one area, but in all the three areas simultaneously. With that, I am returning back to Jeremias.