Vertiseit AB (publ)

Hi and welcome to this earnings call for Vertisit's Q2 report for 2025. My name is Jonas Lagerkvist, I am Deputy CEO and CFO of Vertisit and beside me I have Johan Lind, CEO of the group. So today we have disclosed the numbers and the outcome of the second quarter for 2025. And as we do every quarter, we meet for this earnings call broadcasted from Varberg. This is today's agenda. We will give you some details on the recently finalized MDT acquisitions. We will go through the financials for the quarter and elaborate on what we have done during this period. And we will finish off with a Q&A session where we will answer all the questions that will arise during the call. So please use the Q&A function to post your questions. Should you wish to join the call and talk to us live, then use the raise hand function and we will let you in during the Q&A session in the end of the call.

Yes, so for those of you who are new to the company, Vertisit, we are a SaaS company offering in-store experience management platforms to enhance the customer experience in stores. Our customers are leading brands and retailers that use our tools in their operations, particularly in store to operate all digital touch points, everything from where they run everything from brand communication to tactical sales to the sales support tools throughout the customer journey. In the Q2, just as we finished Q2, or the day after we finished off with the MDT acquisition, and I will go through some of the rationale and the highlights from that acquisition. MDT in short, it was founded already 2002. For us it means that we now take a leading position in the German market. We dominate like the Nordics, we have been strong in Daesh, but the German market is of strategic importance for the group, as Germany is one of the largest economies in the world. MDT have two main accounts which are of strategic importance for us is Deutsche Telekom and McDonald's and just to grasp the scope only McDonald's is 1200 plus locations only in Germany and it also adds to what we already have with visual arts in the Nordics and Spain and some other countries for McDonald's. In total, we had 30,000 licenses, 20 million in ARR, and that's not included in the disclosed numbers in this report. It's 15 employees and they operate with a very solid EBITDA margin above 35%. And their sales strategy is also in line with how we grow our business with sales through partners. This is just some examples of how it looks like in reality. So this is pictures from McDonald's and Deutsche Telekom. As we say, they already have a partner strategy with different type of partners. Everything from AV integrators like CanCom, DigMedia, Flyer Alarm, which is more of a long tail strategy, MIB. And they cover like different type of partners and verticals. Looking into our operations in the Vertizit group, we operate through Dice, GrassFish and Visual Arts. And MDT will be fully integrated into GrassFish. And I will give you some flavor on that one on the next slide. So MDT fits like 100% to GrassFish. GrassFish and MDT have more or less overlapping functionality from a platform perspective. Also from a strategic perspective they really fit. This time we will run a full integration where we aim to do it in three months. three months. So that's aligned with the strategy that we updated you all on in Q1, where we say we now aim for more of a roll-up approach, where we fully integrate smaller targets but with a higher frequency. So within three months, we should be able to integrate the management system, our way of working, ERP, IT infrastructure and organization. and join forces on the GrassFish Aqua development.

The acquisition was performed on a company valuation of 4.3 times ARR at 87 million on a cash and debt free basis. And we also made use of the previously communicated new financing structure that has been set up together with our main bank, Nordea. So we use these new credit facilities together with our existing cash in order to finance the acquisition. So moving into the financials for the second quarter of 2025, we continue to have a stable ARR growth, now exceeding like 13 years of sequential ARR growth every quarter. We closed the quarter on 290 million Swedish crowns in ARR. And as Johan pointed out, the MDT contribution of 20 million is not accounted for during the quarter as the acquisition was finalized after the quarter, but will be included during Q3. Compared to last year, ARR growth amounted to 66% and of these 66%, 16% was constituted by organic growth. and we think this is a stable outcome of the quarter and we're also performing in the range of 15 to 20 percent that we're used to and that we have communicated to perform on going forward in terms of organic growth. During the quarter, we had a 4% growth isolated in Q2. The NRR, the net revenue retention was 107%, meaning that we continue to see that half of our growth come from our existing customers and half of our growth come from newly acquired customers. And the churn rate is definitely under control on an annual basis. So MDT will in Q3 contribute with 20 million. So on today's levels or Q2 levels, we will be on 310 million. So we're almost a third of the way towards our long-term targets. And on the level that we are on now, we would require a 17% organic growth rate throughout 2032 in order to organically reach the long-term target of 1 billion in ARR. But we still have and we maintain our strategy where we are to grow organically together with selected acquisitions. But at this growth rate, we would reach the goal organically in 2032. Compared to last year, we have a sauce share of total revenue, which is somewhat lower than we had before. pre the visual art acquisition. And that is of course, one of our very important tasks in order to increase profitability is to work so that the revenue mix moves back towards having at least 50% SaaS component of total revenue. So the EBITDA margin came out at 13% on an adjusted basis, which is very much in line with our own expectations and our own plan, where we said that we would be on a somewhat lower level during the first half of the year, during the visual art integration, which was finalized in Q1. So during Q2, as we previously announced, we've been focusing on identifying, evaluating and realizing the synergies from the acquisition and in the organization. which has been both evaluated and realized by the end of the quarter. Thus, the EBITDA adjustments of just below 17 million.