Vertiseit AB (publ)

Hi, and welcome to this Vertisit earnings call for the second quarter of 2026. My name is Jonas Lagerqvist. I'm deputy CEO and CFO of the group. And this is Johan Lind, CEO of Vertisit. This morning, we disclosed the group's interim report for the second quarter of 2026, and we will elaborate on this during this call. At the end of the call, there will be a Q&A session. Feel free to use the Q&A function to send us any questions that you would want us to answer during the call. You can also join in if you wish to speak with us directly during the call. The agenda for today is of course the Scala acquisition that was finalized during the quarter. We will elaborate on the financials. We will share some highlights from the business and we will finish off with a Q&A session. But first, just a short background on Vertisit. Johan, please.

Yeah, thank you. So Vertisit, our vision is connecting a world of retail. And by that, we mean building the infrastructure for the physical customer meeting. And at the core of our offering, we provide an in-store experience management platform to be able to orchestrate all digital touchpoints in store. The in-store experience management platform covers everything from manage all of your stores, your locations and data associated with that. Manage audience management. to know who do you talk to, who do you meet. And of course, the core is to manage the actual experiences, meaning managing content, meaning managing the application, and of course also capture the outcome and the results of the experience. We work with 2,000 brands. We orchestrate more than 450,000 touchpoints in physical spaces. And as you've seen in the Q report now, our ARR after the acquisition of Scala reached 440 million Swedish crowds. We are 300 employees spread around 13 offices globally. And the vision of the group I told you is connecting world of retail really be the infrastructure of a connected world of retail. And the ambition is to be the number one in-store experience management platform globally. Looking into the financial goals, Jonas?

Our long-term goals, in the long-term goals we state that prior to 2032 we should reach 1 billion Swedish crowns in ARR. So it's approximately twice the amount that we have today. And we will also be in a position where we have 35% profitability measured as cash EBITDA, so as close to actual cash flow as it gets. And during the way towards these long-term goals, we should always have an ARR growth annually exceeding 20%. We should always grow our profitability, measured as cash EBITDA per share of at least 25% annually. And we should always have more than 100% net revenue retention, meaning that we should always keep growing on our existing customers.

Yeah and of course the highlight of this quarter was the acquisition of Scala and we can walk you through this a bit. So Scala is the pioneer within our industry so if you look at At the company, it was founded already in 1987. So it's the most well-known brand in our category. It has a real global presence with customers in every corner of the world. and a large installed base. However, the vast majority of the installed base globally is perpetual licenses. So if you look at the actual revenue, it's not that high that you could expect. So they have a turnover of 200 million. last year with 85 million that fits into our definition of ARR, meaning that it's either software subscriptions for updates of perpetual licenses, meaning maintenance, or it's a pure SaaS revenue. At the point of acquisition, there were a bit over 100 employees in the Scala business. They were also part of a bigger group named Strata Cash, which is a significantly larger organization. And I will look into, describe a little bit how we will reposition Scala within the Vertisit group. Worth mention is that Vertisit ourselves, when we started the company in 2008, after just a year or two, we actually become Scala partner ourselves. So when we started the company as a full-service provider, we were a Scala partner until actually Scala was acquired by Svrata Cash. That was until the point where we in 2016 actually decided to to acquire DICE and the reason for that was Scala from being partner only decided to compete with the partners and go directly as well and we said that it doesn't fit us so we We actually chose to acquire Dice at the time. And then Dice have followed basically the old recipe of Scala. Sell only through partners and being device agnostic and software only. And that means that we have a unique knowledge about the company from working with them for a very long period of time. And we also have employees in the group who have been working in the early stage when Scala was founded. If we look at the acquisition rationale, It's, of course, a significant expansion of the international partner ecosystem. I think that's very important, especially in the US market. We add Forte, AVI, SPL, and Diversified, among others, that are really strong within the digital signage sector in North American markets. We strengthen our position since Scala is the most well-known brand in digital signage, where Tysit as a whole are strengthened by this acquisition and we can see that in reach and in incoming inbound leads and tenders and so on. We accelerate our growth in North America and for those of you who have followed the company, we have done a significant effort to push in that direction the last two years. The last year actually Sebastian, the head of DICE, have lived there with his family. So it's really nice to see that we now get a strong footprint because 50% of the Scala customers are actually North American customers. We also add a very large base of untapped SaaS potentials since Scala have deployed millions of licenses throughout the years. Even though it's not SaaS today, it's an untapped potential to convert to SaaS and recurring revenue. The profitability, will be in line with our long-term goals. So we have designed an organization around Scala where we have a requirement of 35% cash EBITDA. And I will describe a little bit how we managed to do that. The acquisition structure is a share and asset structure. It was actually a distressed situation where Stratacash needed to sell Scala really rapidly. So we had, I think, four days to give them an indicative offer and less than a month to finish off this transaction. So we decided that we buy the European entities, but in the rest of the world, the US and the rest of the world, we actually acquired the assets. So it's a mix share and asset acquisition. I think it reduced the risk significantly. I'm pleased that we actually chose that path in this transaction. We performed a direct share issue to finance this with a price premium to current share price. The rest is just an expanded credit facility with Nordea Bank. Looking into the integration, what we have done is that we have reduced from more than 100 employees down to 35. That's only possible due to a very rapid integration and also an integration where we are really strict on some strategic pillars. So one pillar is that Scala is now a strategic software offering within Dice, meaning that Scala no longer have its own organization. They have the development team around the product, but But the actual organization is the Dice organization, meaning that we don't have duplicate key account managers or duplicate support or duplicates in anything, basically. So it's a new second product to Dice. It's partner first, partner only, meaning that we give back all direct sales to the partner community and all business from now on is only through partners. We gradually transition also the install base from professional licenses to a true SaaS offering. It will take years to complete. We implement the device agnostic offering. We no longer offer Scala, technology in terms of hardware, media players, etc. So instead we have stepped back to the original Scala IDE on being device agnostic and invite device partners. We have closed down all facilities, all warehouse facilities and And so it's really important now to execute really rapidly on bringing direct customers to partner, stop doing full service deliveries, which they actually have done and being like 100% aligned with this strategy because that's what make this equation works. All integration costs including payments for people on GardenLead is all recognized already in this Q2 report. amounts to 28.7 million Swedish crowns. So there are no like future costs to expect due to this acquisition. Of course, there are cash flow effects, but in Q3, and maybe a small, small, small portion in Q4, but not more than that.

Jonas, financials. Yes. So we increase our ARR. We come out at 440 million at the end of the quarter, which is just above 50% growth compared to last year. Of course, the majority comes from Scala, but we also keep growing our ARR organically. So everyone has seen this slide before, but we are still very proud of keep performing organic growth from every quarter to quarter and have continued to do so for many, many years. So this is an important fundamental in our business to actually have a positive net revenue retention, keep growing on existing customers, and then add to the organic growth with acquired growth, like the Skala example. So the whole advertisement group continued to grow and grow during profitability. Just about 50% ARR growth, which exceeds our financial target of 20% annually. Cash EBITDA compared to Q2 2025 has doubled during the quarter, also indicating that we will manage to actually reach also this financial target related to profitability. So Scala, of course, like John said, we had Global reach, global network of customers, a global network of partners, some 85 million in ARR, and a very nice potential to convert perpetual licenses into future SaaS revenue. As mentioned in the report, we also see a strong international pipeline and continuing to receive evidence of our market position as we are now more and more frequently invited to really substantial international tenders also on the North American markets. In the SAAS metrics for this quarter, they are somewhat disturbed when it comes to comparison due to the inclusion of Scala mid-quarter. So many of the metrics actually exclude Scala. But of course important to understand how the actual organic businesses is performing. So we strengthen the natural revenue retention during the quarter to 177%. And we also reduce our churn from four to 3% in this quarter. So the annualized churn, so the churn on an annual basis. In the quarter, isolated, we had a net growth of 2.9%. Annualized, that means just about 12%, which is a little bit below what we are used to. But given the activities that were performed during the quarter, we are quite satisfied with that number anyway. especially as the NRR is strengthened and the churn remains low. Revenue-wise, we are still including Scala, which was consolidated from the 1st of June. So one out of three months during the quarter was including Scala in the financials. So we are still around 50% share of revenue. Scala contributed with approximately 10 million in revenue during this quarter. Profitability wise, we adjust the DBTA where we adjust for the costs relating to the Scala acquisition and the Scala integration and also a minor share of costs relating to the relisting process that we are also in the middle of. As communicated before, we are investigating the opportunity to move from Nasdaq First North and relist the company on Nasdaq main market. We will get back to that on a later point in time. EBITDA strengthened from 17% last quarter to 18% in Q2. also the cash EBITDA margin has been strengthened. Moving into some highlights for the quarter.

Yeah, so of course obviously the biggest highlight is to get a grip on all new customers, partners that we have in the Scala ecosystem. And I think it maps perfectly into verticals that we already are strong in. So it adds customers in the QSR space, it adds customers in fashion, in finance and so on. And I think as we go and we have now a frequent a frequent plan of meeting all the partners meeting and customers to really get a deeper understanding and after that of course we will deep dive into some highlights in the customer base and in the partner community there. Another highlight in the quarter is the Circle K. We continue to grow with Circle K market by market and this quarter we start to expand into Poland and roll out in Poland. We actually started as of last month with this one and it's a quite rapid pace. They have currently 350 service station and they will continue to grow in the market. But that's really nice. We can see like Circle K is really expanding market by market with our offering. We also had the GrassFish Summit. It's a yearly investment that GrassFish are performing every second year in Sweden and every second year in Vienna. This year it was in Vienna. And the demand for tickets to this event was higher than it ever had been. So it was a great, great success. It's really an investment that we do to create and facilitate a place where the community within in-store experience management can meet. 90% of the attendees are current partners in the ecosystem and it's really well perceived by the audience.

Okay, so we are now in the Q&A session. We have received quite some questions, and I will try to present them all. In case you don't believe that you have yet your answers properly answered, you are more than welcome to get back to us at any time, of course. There is a question on the revenue contribution. Scala contributed with 11 million in revenue and approximately 2 million in profit for the quarter. And given that detail, there is a question whether whether verticit grew organically the rest, and also on profit, so approximately 20 million in revenue growth and 14 million in profit growth, and whether or not we could explain or elaborate on this. And I would say that, yes, the rest was organic verticit growth, and the increased profitability was of course that we had a favorable revenue mix during the quarter and also a favorable margin during the quarter. There is a question on on our plans for the US now that we have an increased amount of staff on the ground. How are you targeting big customers in US?

Yeah, so in the US market, the main strategy now with such a large footprint with Scala partner is, of course, to sell indirect via the Scala partners. But some of the integrators are also partners to Visual Art and GrassFish. So in We will also use those integrators more actively to expand on opportunities that we have within the GrassFish visual art ecosystem, meaning expand with QSR brands that we have a strong footprint with on the visual art side, and also expand with some of the global concepts and global platform framework agreements we have with GrassFish. How hard is it to convert perpetual licenses to SaaS? It's hard, but it's doable. We have done it before. So we have done it in previous acquisitions. We have done it, we transformed Dice at a point in time. We converted Scala back in the days. But it's a big undertaking. So it's something that you perform over years. It's not something that you can do in a quarter or so. So I would say there will be perpetual licenses in the market for Scala for at least three years into the future.

What incentives are there for partners to contribute to this conversion from professional to SaaS?

We have changed a lot in Scala, but most importantly we have made it much more favorable to go with SaaS. They will have higher margins, a significantly lower price than what Scala used to have on SaaS. And we also incentivize the partners so that they get the five-year discount when they convert from perpetual to SaaS, meaning that they will have a very nice margin for the coming five years, even if they start from a low installed base, because the model with Dice Scala is that The higher volume you have, the bigger discounts you get. So that we prioritize the partners that are loyal to us, have proven that they can run and operate the customer over a long period of time and keep them. But I think the model that we have put into place are appreciated, and we have had meetings with some of the largest partners, at least four of them, the last month, and they have been really positive to the approach that we have taken in regards to this.

We have Fredrik Nilsson, analyst at Redeye, who would like to join the call. Hi, Fredrik.

Thank you. Hi Jonas and Johan. Hi. Can you share some more info about the Volvo deal? What does it mean for the independent retailers using your software today? And why do you think you lost if you did that, the deal?

Yeah, it's a good one. We actually discussed, we said that it's so easy to only present the positives. So in this quarter, within the automotive sector, we had this new global framework agreement with Stellantis from the Skala acquisition that grows really nice. But we also mentioned that we actually lost the integrator deal for Volvo Car Sweden in a tender. We don't actually know how it will play out. It was a tender to push prices. It had really low requirements on most of the items that we are strong at, especially the platform and the technology side of things. And they brought a lot of global competition into the tender and it was rewarded to Mood Media in the US. So they have a thousand employees, but they have a very, very limited organization in Europe and in the Nordic. I don't know if they have any. So we will see how it plays out. Of course, we still do a lot of things for Volvo with other contracts for corporate communication. We do the Volvo studios on a separate agreement. Also related, we do have separate agreements, of course, with Volvo Trucks, Hertz and among others. And we also have partners in the ecosystem, we do other markets. But we were really surprised that they chose to go for a full service provider for the Swedish market without like a proper global setup. But we will see how it evolves, but it's less than 1% of the total ARR if we lose everything and I don't expect that to happen in at least a short period of time because every dealer have separate agreements that spans over at least a year.

Great. That's a good color on that. So there was another question about the contribution from Skala. I have another point of view on that, but I mean, 10 million for a month when you expect 200 million in annual sales, it sounds a bit low. Could you elaborate on that?

So the 200 million that is the estimated turnover of the Scala business previous year. Reason for being vague on the exact number is that it was a an equity deal in Europe and an asset deal in the US. So we were actually carving out assets and contracts from a larger entity. So that was the approximate revenue for last year. If we were to take that exact amount going forward, it would be approximately 200. In this amount, there are some hardware components and that's part of the integration. And as everyone knows, we have the ambition to push hardware sales to our partner. So the top line going forward is very much dependent on in what pace we manage to phase out that hardware. So that's one reason if you look at the revenue going forward. And the other one is, of course, that it's been consolidated for one month, but it's also a big business that we moved from one ERP system to another. So there was also limited invoicing performed during that month.

Yeah, especially as I said, the biggest portion of the business is U.S. and in U.S. it was an asset deal. So, of course, like not all revenue streams are up running as normal. But I think We have described it quite well. We have designed everything around the recurring revenue, which will amount to at least 85. I assume we have a nice potential to expand that significantly on the perpetual license sales, which is part of the rest. And then, of course, we have the consulting revenue where we support the partners to be successful in their implementations. And the risk is, of course, the third part where where it's also by design that we will phase out the hardware and in what pace that actually occur is not given at this point in time.

Okay, I see. So I mean, 120 million in annual sales, that might be a little too defensive assumption, but 200 might be a bit high then also. Is that how I should interpret it?

Yeah, I think there is a risk that we churn out the hardware a little bit quicker, and then I assume that you could be somewhere in the range between 150 to 200.

Okay, that's clear. Thank you. And last question from me. You touched upon it. Consulting is actually down slightly year over year despite one month of skala in the numbers. Could you help us understand those figures?

Yeah, I think it was due to some brands that actually had significantly lower number of projects in Q2 than usual. We don't see any big trends there, but it was It was some customers that we are used to running on a higher level that had lower consumption of consultancy in the quarter.

Okay, that's all for me. Thank you very much. Thank you so much.

A related question is the matter regarding working capital and how working capital will be affected by the Skala acquisition. And I think that's a really good question. So everything from the balance sheet and so on is now consolidated. So no material effects from any hardware inventory or anything like that. But what might happen going forward, which we know from previous acquisition, is that when you do large changes, you do changes in ERP, customers do not instantly recognize the invoicing formats and so on. So there can, like during the integration phase, like the first quarter or two, there can be a slight increase in accounts receivables due to that customers simply are not used to new invoice formats, bank accounts, companies and so on.

Yeah, and it can also be like onboarding for some major end customers where when you start the invoice from a new customer due to the asset deal that you actually need to go through an onboarding process before you are vetted as a new supplier.

Continuing the questions on the integration, the question is has the Skala organization integration run according to plan and is that only addressing the organizational part of the integration?

Yeah, so the biggest part of the integration in this case, when you reduce from more than 100 employees down to 35 and associate most of those resources around the product, it's of course the biggest and most important part to execute on. And we are through that in this process. So that's why we are confident with stating exactly how much restoration we are doing for the garden leave for the resources we don't bring over. The second part is like the normal integration that we do. We integrate everything from the management system to all of the IT platform, the ERP, the full ERP stack basically. And we also bring over all contract into a unified system to be able to capture the error and the source metrics and so on. And it's all running according to plan. So the organizational part is done. The integration for the rest of the components take three months as usual. So it will be finished in Q3. And it looks really nice. As I mentioned in the CEO comment in the report, we will also look into expanding into APAC due to that we have a significant number of partners. in both India, Japan, around Singapore and the countries around Singapore. And we think we need to be able to be closer and support those partners to be successful there long term. So we don't see it as part of the integration project, but it's an activity that will continue even after after Q3.

Comparing Scala's SaaS metrics to Vertisit's, what differences are there between the companies?

I think we haven't seen that, but I can do some assumptions. I think you actually have a slightly lower growth. That's one thing. I think that can change when when you invest more in the platform and also support the partners better. I think since a significant part of the licenses are on perpetual, there might be a little bit of a higher churn in Scala compared to Vertisit. Because I think when you have perpetual license, you decide if you want to buy updates, the maintenance basically. And it's very different from a pure SaaS offering where you have the software running in the cloud. And if you don't pay for the service, you don't have the service. So I think that's the two components that at least I look closely into right now. to see how it will affect.

In the beginning of the year, we, or Verticeit, stated that we experienced a somewhat slower ARR growth, but expected it to gain and become a bit stronger during the second half of the year. Is that still the case?

Yeah, we believe so. And I mentioned that we are in some really large tenders. Actually, we are in two QSR tenders that are among the biggest potential customers on Earth when it comes to digital signage. But we don't want to overhype them. I should say that it depends a bit on those. I think we will manage to keep current growth pace even without them, but of course if we would land one of those or we have a second tier pipeline of tenders now, which will materially affect growth. So it's, as you say, you can expect at least the growth pace that we had in this quarter, but potentially if we land one or two of the big tenders that are out there now, we can, we will materially over deliver on that one.

Yes, and we received a question that I can address. What are currently the main obstacles to moving from First North to the main market? And I would say that there aren't any real obstacles as we communicated. We are in the process of evaluating this. So even though no formal final decision has yet taken, we are doing all the necessary preparations. But for information, it can be interesting to understand that the process of moving from First North to main market is even a bit more extensive than doing the initial IPO. Of course, depending on the structure that you have in the beginning. But it's a quite extensive process. So we're in the middle of preparing it. Okay, let's finish off with this question. What do you think investors underestimate the most about Vertisit's business today?

I think the future like I think The scalability, the underlying scalability and the potential of bottom line profitability as we grow.

Good. I think we covered most of the questions. Please feel free to reach out to me or to Johan at any time should you have any further questions. And apart from that, we will see each other again in this forum after the Q3 report. And we wish you all a very nice summer until then. Have a nice day.

Thank you so much for taking your time. Bye.