Vertiseit AB (publ)

Hi everyone, welcome to Varberg and this earnings call. Vertisit has today released its year-end report for Q4 of 2025. My name is Jonas Lagerkvist, I'm Deputy CEO and CFO of Vertisit and with me I have Johan Lind, CEO of the group. So this morning we published our Q4 report and we'll go through it and deep dive into some of the most relevant topics. We will go through the acquisition that was finalized during the quarter of Muse and Stoked AI in Germany. We will look into the quarterly financials. We will present some highlights in the business during the quarter. We will also go through and discuss some key AI related topics. And we will finish off with a Q&A session where everyone can get their questions answered. Should you at any time have any questions, feel free to use the chat function. And should you want to join the call and talk with us, use the raise hand function. So please, Johan.

Yeah, so for those of you who are new to the company Vertisit, we are a SaaS company. We provide an in-store experience management platform for retailers and brands to facilitate the customer meeting by bridging the gap between online and in-person. where the core capability that we have is to be able to orchestrate all digital touchpoints in store, whether it's for branding purpose, tactic, communication, if it's sales support, or all the way to transactional loyalty. So the business model is quite straightforward. So our SaaS revenue is related to the number of deployed touchpoints in storage. Looking into the Muse and Stoked AI acquisition, it's a really interesting one. It's a highly strategic acquisition from our side. Most of our previous acquisitions have been exactly in the same scope as we have acted ourselves, where we have basically covered the full value proposition of the target company. But News & Stoked is a little bit different and I will walk through this with you all. So EUS is a small company, Hamburg based, 10 employees, founded 2010. They have been in the forefront of retail tech and consulting in this space. like 50-50 portion of in-store audio and in-store experience. And we will go in a little bit into the in-store audio because that's a very interesting one where AI will have a big impact. If you look at from a revenue perspective, the revenue was 3 million, 0.8 million euros in ARR, profitable in line with where the group is running as of now. If we go to the next slide, the important thing with Muse is that it adds a lot of AI expertise into the group, especially in the field of in-store audio, but also in other disciplines. They have been one of the disrupting companies within the in-store audio space. So what we see is that they add knowledge both in product development, consulting and operations. I will get back to that in the AI section later today. The in-store audio is a space which is pretty much as big as traditional digital signage or visual communication. But for many years we have been outside of this space due to that Insta Audio had been highly regulated, very service-oriented. And what we see now is that you could do on-demand audio messaging in store with AI. you could leverage also like music libraries that are AI generated, meaning that Insta Audio goes from a service oriented service to more of like a product sauce tech delivery with the margins that we want to have. Interesting thing is also that Muse are very well positioned when it comes to the fashion retail industry in Germany. They have a lot of strong local German brands in their portfolio that we can grow with. What we do is that we bring Basically, the whole muse into visual art and form a new in-store audio division and bring some of the key people into consulting. And also Marco will join Grassfish and he is one of the two founders of the company.

So moving into the quarterly financials, I think this is a chart that many of you are familiar with by now. And we're just proud to say that we keep development according to our track record. We are now passing 14 years of sequential ARR, so we've always managed to grow our ARR from quarter to quarter during now 14 years, which is somewhat of an achievement. Some high-level bullets from the quarter. is that we keep growing our ARR. The ARR amounted to 332 million by the end of the quarter. That's a year-over-year growth of 27%. And out of that 27%, 16% is organic. which altogether is a growth number exceeding our financial target of 20%. We also managed to deliver profitability during the second half of the year of 20%, which was the profitability level that we guided for when we communicated this target in Q2 2025. During the quarter we have expanded our AI capabilities both internally but also through the acquisition of Muse and Stoked AI and all across both our product development, our consulting business and in our internal operations. We strengthened our organization in Germany. We continued to grow during profitability. We've also had a really high inflow of high quality international leads on a level that we have not seen before, which gives us like a very positive stance going into 2026. We've also started an evaluation to relist the company to NASDAQ main markets in line with our ambition of building a strong quality company and being able to attract even more broader investor base. So 27% growth year over year, of which 16% was organic. When looking at the net revenue retention, it remained stable and even increased a bit, so just above 108%, meaning that more than 50% of our organic growth now comes from growth on our existing customer, which is a solid receipt that we have a competitive offer that we deliver quality and value creating solutions to our customers so that they want to keep growing their business and keep expanding with us. The churn rate on like an annualized level stayed at 3%, which is very low and that we are really happy for. And we see that the sales environment is improving when we now enter 2026. On net revenue level, we decrease our top line by eight percent. And that is very much related to decreasing system sales during the quarter. And when we decrease system sales, we do that in favor of delivering hardware through our partners, which is in line with our overall strategy in order to become more scalable and being able to expand more rapidly. So we deliver on the 20% EBITDA guidance for H2. And worth mentioning is that we have some one-off costs during the quarter of approximately 5 million that we are not adjusting for. So underlying profitability is somewhat stronger than the actual reported.

Great. And looking into SaaS metrics, it looks like a lot of red dots. So I think we brought this into the presentation just to give you a high level understanding of what's the impact. So what Jonas just mentioned is that growth on existing customer is super strong, representing more than 50% of organic growth. So, net revenue retention is strong. The customer acquisition costs are highly impacted on a year-over-year basis, but that's explained by visual art now being included for 12 months and the business model would with visual art is having a higher spend on sales organization and marketing. But what we should look at is really the actual cuck. So it's still way more cheaper to actually grow organically than even the even the cheapest acquisition that we do. So the actual CAC and CAC ratio is still really, really strong numbers compared to most SaaS companies I looked at. If you look at the average revenue per account, it's diluted in Q4 and it's diluted due to MDT being... MDT was a part of the ARR number the quarter before, but it was fully integrated in the end of the quarter, meaning that all accounts and the impact on the SaaS metrics was in Q4. uh so when we bought mdt we it was we aimed for deutsche telecom and mcdonald's but we also have a long long tail of smaller customer which which pushed down the average revenue per account and so that's why it looks like a trend shift in that kpi But overall, I think the SaaS metrics are really solid. And if you have any other questions on those KPIs, don't hesitate to reach out to us. Looking at some business highlights, we often get a lot of questions on customers and how expansion on new contracts are going and so on. And I just want to mention like a three. So three of the customers with highest impact on the growth in the quarter was Stadium, where we roll out the retail media network. Saling Group, the biggest contract we secured last year, which have now exceeded 8,000 licenses that are active. Circle K is a slightly older contract, but where we during the year have expanded into the US market. And other highlight is of course that we now see that we execute on the strategies that we have for each brand. NRF in New York, the biggest retail conference in the world. We were represented with both Dice, GrassFish and Visual Art, but with slightly different approach. So Dice were together with the Digital Signage Federation, a shared space where they met with partners. Grassfish had partner dinners outside. We had in New York events at the Porsche dealership, as an example, working together with large integrators on that one. And Visual Art had their own booth at NRF and had really nice numbers in footfall and lead generation there. So it's nice to see that we actually can execute on different go-to-market strategies and different value propositions in reality and not just in theory. Circle K, just to give you a little bit of an overview. So this is the map now, where we can see all of the locations that now are running our system. So Circle K is now exceeding 16,000 units deployed. And the cool thing with that is that It's still just 14% brand penetration, because this concept is actually designed from a global perspective, even though we go after market by market. When another topic that is high priority for the year in our company is to leverage AI in product consulting and operations. And I think we have gained a lot of traction. Just the latest quarter. We brought some key people from the Muse acquisition into our AI task force, where we have equipped all employees with the right tool sets. We can see that we have more than 30 agents and wipe-coded components that help us in daily operations as of today. In consulting, we start to see a lot of productivity gains. We improve on content workflows. And the same goes for product, where... Almost a year ago, we launched the first AI targeting scheduling mechanism into the product. We now bring in-store audio and messaging in as a module. And we also bring new modules for actually generate content and enhance content quality and so on into the product. Uh, so I think it's super exciting times to, uh, to really like every week we see like new opportunities in the landscape. Um, when I, um, at the same time, I get, of course, a lot of questions from, from, uh, in investors, customers, and people I meet like, okay, like how, how will AI impact. The software industry, how will it impact Vertisit and what are the opportunities and threats and so on. A short description of our analysis right now is that the higher up in our vertical stack that you are, the most gain you can have from AI. So from an opportunities perspective, we have productivity gains in our consulting offering. Basically, we can build applications and content and solutions and even integrations much faster than before. in product development, especially like isolated modules to our platforms can be developed much faster than before. Also like the UX experience and adoption to different vertical specific needs or even customer needs are there. Threats is of course that It's a threat that the consulting are affected by more and more like in-house competition. But to be frank, in our business... It's not bad. We don't do consulting for the sake of consulting. It's like a tool to secure that we deliver value for our customers so that they deploy our solution and that it generates more licenses. So even if it's short term, it can have an impact on consulting. It can also be a boost in adaptation. Another threat is, of course, increased competition in product development. And I think it's like what we can see in gains in productivity and speed and innovation. It's the same for our competitors. So it's just to be on our toes and continue to lean forward and keep a high pace. We also see... Like, we have not seen it in practice, but we can see it in theory that there will be an opportunity for even for customers to build like slim CMS layers that are basically vibe coded in connection to their their internal stack. But in those cases, they will still need an underlying infrastructure, a device management, play out everything that we have. So looking into barriers, resilience, we are really vertical. It's a vertical integration that we provide. Everything from What meets the customer in terms of content and UX in the applications. Data layers to make that content personalized and targeted. It's customer specific modules applications beneath that. You have the product modules, you have our core CMS, but you also have the core capabilities, the infrastructure and the actual play out and device management where our software is installed in devices. Which is actually the IXM grid. Yeah. So if you look at the points, like deeply integrated into customer's ecosystem, it's on device, it's device management for all operation systems where we can control units that are like seven years old. And of course, also that we are when we are infrastructure is also very high demands when it comes to security and workflows etc. where of course you need to meet the highest standards in the market. But so If you look at it from a positive point of view, I think what we see with AI, I think we can bring more solutions faster to a lower price point to the market. from a logical perspective, that should give us more deployment, more licenses, and we don't see any risk, at least the coming years, for infrastructure to be affected. Do you have any more points to that, Jonas, or reflections? No.

I think we can move into the Q&A and I look forward to receiving any questions on this because I know that this is high on all software investors' agendas right now. So we received some questions in regards to the list change that we're evaluating and what we can say there is that it is currently being evaluated by the board and more communication will of course come as this evaluation progresses and any decisions are taken. And now we have Fredrik from Redeye that would like to join the call. Fredrik, hi.

Hi, Jonas and Johan. I want to start with a comment in the CEO letter. You mentioned that you believe that your market position is stronger than ever. Could you perhaps elaborate a bit on that? Why is it and how do you see that's the case?

Yeah, like it's an observation, like how much attention we get when we are out in the market. So we, as you know, in the first quarter, we have been at NRF, we've been at ISC and I can just see that the footfall and the traction there is better than it ever been. But what we also see is that the international leads that we get are more like global and they also come from a bigger portion of those outside of our core territory. Of course, the majority of our contracts and customer relations is from Nordic and the Dutch region. But now we see a big portion also from North America, Middle East, even India and so on.

Interesting. Great. And if we look at the organic ARR growth, your outlook in the last quarter were quite optimistic. You mentioned some tariff-related softness in Q2, spilling over and so on. Yet in Q4, the growth is roughly similar to Q3. I mean, why is that? And do you think the current inflow of business opportunities, as you mentioned, is enough to take you back to about 15%?

Yeah, it's a very good question. What we have seen is that our business opportunities are a bit larger in size. The cycle of closing more international business is longer. So the pipeline looks healthy, but we wish that we had closed a little bit more business in the last quarter than we did. So I would say that we are not 100% satisfied with the growth pace organically, even though it is still healthy figures. But most important, we should have a slightly stronger cash flow than we have. So that's the two focus areas for us now is to bring out a stronger profitability cash flow and of course improve slightly on the organic growth. And to give you some sort of direction for the year, I believe the year to be stronger than last year when it comes to growth. Still, Q1, Q2 is normally weaker than Q3, Q4. And Q3 is normally the strongest when it comes to profitability.

Great, that's helpful. So also one question about AI. As you mentioned, you demonstrated some features at GrassFish Summit last year. So regarding that features and other features in general, what's the feedback so far and what's the general interest in AI from customers currently?

I think just the last six months and the last quarter in particular, when we look into basically all tenders or processes that we are part of, it's top on the agenda. Like your product needs to be agent friendly, needs to be able to integrate into the workflows that the customer basically design. So it's like highest on the priority on the customer's agenda when selecting a platform today. Together with security, obviously. Security is also ramping up in significance now.

I see. That's all for me. Thank you very much.

Thank you very much. Now we have Rickard, analyst from Carnegie. Hi, Rickard.

If we have Rickard with us, we don't hear you yet, Rickard. Or we can take... Maybe a question in between? Yes.

We have a couple of technical questions, financial questions about the personnel costs, the cost of staff that are up approximately 10% compared to last year, even though cost savings were implemented in Q2. During the year that we have done cost savings, we have also made two acquisitions, which have added quite a few employees. And, and also looking into looking into the quarter isolated, we, we had, there were like 5 million in extraordinary costs that were that were adjusted for, and as previously mentioned. roughly the same amount that actually exists in the P&L that we're not adjusted for. And I would say that both of these items amount to about 10 million items that will not be carried forward. And the split between administrative costs and the cost of staff is about 50-50 on these. That should be somewhat of a guidance of the actual running cost level that we are on right now. And another relevant question is, of course, FX effects. And as people might know, the Swedish crown has been appreciated during the quarter, which has quite a material effect on ARR in absolute numbers, as 50% of our SaaS revenues are in non-Swedish crowns. So that's also the reason that we always talk about growth in fixed currencies. So of course it has an impact on the absolute reported number in ARR. And I would say in, but on bottom line level, on EBTA level, it has a minor impact since we have a good hedge in the shape of having both revenue and costs in the same currencies, like throughout the organization. But of course, there is an effect on EBTA as well, but I would estimate that to approximately like 5%. Some questions regarding gross profits. We have somewhat reduced our gross profits on SaaS. We have increased the margins on SaaS. I would say on the systems side, our margins are typically somewhere in the 27-28% range. Now we had a stronger quarter this quarter, a weaker quarter one year ago. And that is very much dependent on the character of the actual rollouts being performed on the markets that we sell hardware.

And it can fluctuate quite heavily. So it totally depends on what type of projects we are running and in what competition.

Yeah. So Richard, let's give it a new try. Can you hear us? Can you hear me now? Yes.

Hi, Richard. Okay, great. Thank you. And thank you for presentation. And my first question is, you present that you roughly have around 14% brand penetration on Circle K. And looking at other similar like very big customers, what level are you on these? Should we say Circle K lower than average or on average?

It's a little bit lower. If you take our key account customers representing 75% of our turnover, the average penetration for the concept for the markets that they are designed for is around 30%.

Okay. Thank you. And also, if we look on the NRR, I mean, Is this the sort of level, given the penetration you have on your largest customers, that we should look for going forwards, slightly below 110%? Or do you see the increased, as you say, increased sentiment that it might accelerate during 2026?

Good question. Normally we say that we are satisfied if we have 50% of the organic growth from existing customer base. So if we grow like 16% organically, the NRR should be one under date in that example. So I think I expect that pattern to be solid throughout the year. So if we manage to increase the organic growth, most likely NRR will follow. And if not, it will follow the same pattern in the other direction.

Okay, thank you. That was all for me.

Thank you very much, Richard. Thank you so much. And then there is the recurring question regarding acquisitions and whether or not we plan to endure and keep the current or planned pace of doing two to four acquisitions per year. and um and that is uh that is of course repeating our growth strategy um like aside from growing uh growing organically by approximately like 15 to 20 percent uh we do uh selected acquisitions uh like um along along the way and uh these can be like the like the larger larger ones like more transformative strategic acquisitions like we've done um for for example visual art And we have our roll-up acquisitions, which is smaller in size, more or less acquisitions of customer base, which we are supposed to integrate really rapidly, maximum three months. But we always do these acquisitions sequentially. So we never do overlapping acquisitions. Meaning that we have room in a year to perform two to four acquisitions. And there is no change to that ambition. So I think that is what you can expect from us also going forward. And I think that was it for this time. So we thank you all for participating and listening in to this earnings call. And should you have any other questions or comments, feel free to reach out to me or to Johan anytime. Thank you very much and see you here again soon. Thank you so much. Bye-bye.