Vitec Software Group AB (publ)

Welcome to VTech Software Group QTU 2026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers, session participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Ole Backman and IR Patrick Franson. Please go ahead.

Thank you, and a warm welcome to everyone attending this conference call today. I'm Patrik Fransson, Head of Investor Relations at BTEC Software Group, and with me is our CEO, Olle Wackman. First, we will give a short overview of BTEC Group, and then follow by comments on our report we reached earlier this morning. After the presentation, we will, as always, open up for questions. So, Olle, with that, I'll hand over to you.

Thank you, Patrik, and a warm welcome as well from my side. So we'll just jump ahead, as Patrick said, into the report. And this is us, Olle and Patrick, your hosts for the day. And just taking the VTEC in brief picture, as we always do. So 27,500 business-to-business customers, we're serving that at the moment. We do that through the 49 business units or companies that we have. FIT Underground sales in 13 countries, but all in all we have sales in over 60 countries by now. Proforma sales, roughly 3.7 billion Swedish, 85% of that is recurring revenue, which is an important part of our business model. And to my aid I have the benefit of having 1,870 colleagues by now. And you can see the sales distribution there on the right, and we're going to get back to that. And talking about sales distribution, we have a really broad exposure, but what we like to say, a very limited dependency. So you can see the largest customer, the business units of the total, it's just 8%. And of course, 10 largest customers only account for 7% of the total sales. So that gives us a great risk distribution in that sense. And also on the geographical markets, you can see down there, they're quite evenly distributed, 25% in Sweden, 24% in Finland, 14% in the Netherlands, and so forth. So good distribution, and this is also something we that we normally look for and really appreciate in the M&A investigations that we do is to search for companies that have a similar good risk distribution. Talking about growth, how we do that, we call that the responsible growth path. So what we look for when we acquire companies is of course that they are vertical software companies, that they are established and profitable to start with, that they own their own software, the IP rights, so they have a proprietary software, and they have a business model based on recurring revenue. And then if they are successful, we continue to really nourish that business model, making them market leaders if they are not already market leaders when they come into the group. And then we further develop that through the decentralized organization. We look very closely and monitor product investments. And, of course, we don't just invest for the fun of it. We invest in future growth, in the organic growth. And going forward then, being a perpetual owner, we continuously develop our companies in order to make these small but nice incremental steps all the time to continue on the growth path. And talking about acquisitions, this is the four latest ones. So two for last year and two earlier on this year. We did not conclude any acquisition during Q2, but we finished 2 really nice one in Q1, Dutch Autonet and Swedish Infometric. And you can see on the bars there that in total that these two have a combined sales of roughly 190 million Swedish kronor added to the group. And when we look at the different verticals that we serve, we have a great variety of those, roughly 22 different verticals. You can see the top five ones there in percentage, property management being the biggest one with 18%, followed by the auto industry for 15%, and then healthcare and then welfare sector of 11%, and then we have energy and utilities of 8%, bank finance roughly 9%, and then it goes on. And in these bubbles we can have sometimes just one business unit or we can have multiple business units in multiple countries as well. And talking about the business units, this is a chart that we have shown you a lot of times before. So there's basically no news here apart from the fact that, of course, it has also been amended for Enova and Bid Theater. on the new way of accounting for their revenue according to the agent's principles. So Enova is in this bar here roughly 100 million, and it used to be roughly 300 million. And Big Peter is roughly 36 million, and it used to be roughly 150 million earlier on. You can read more about that in the report. One big benefit of being part of a purely software-focused group is the shared knowledge, which really contributes to the success and just keeps on getting better and better with size. And here we gather forums internally where we share knowledge, we share successes, we share failures. I mean, it's also a great catalyst for spreading good or best practice or good practice. across the group and especially of course with AI coming in here at a great speed we can really have these good examples so what has been used what works what did not work what were the experiences how did the customers react how did the internal organization react and so forth so we have lots of these different forums usually Two, three times a year just over teams and sometimes they meet up physically as well just to further share the knowledge and making it easier to reach out across the business unit. So a great benefit across the group here. And then talking about AI, I mentioned some on the report here. Of course, there are lots of things going on at the moment and At this time of year, we have just concluded the strategy sessions for each of the business units. We do that throughout May and June, and it has been super encouraging to really learn and see what's in the pipeline, what they have already done, how far they have come, or are some of them on the more early stages, but everyone is doing It could be both internally and in the customer applications as well. And we firmly believe that it is a deep learning here and goes faster and faster. And the value proposition are broadening the scope, what we deliver to the customers, things that previously might have been out of scope or too expensive or taken too much time. That is now more feasible for us, so we can really improve the scope and in parallel, of course, our internal efficiency in doing so. And we firmly believe that the combination here of, of course, domain knowledge, proprietary data, and the skill set and the deep Corporation that we have with our customers really underpins this market position that we have and the competitive advantages that goes with that. Now we have a few examples here if you take a very broad ERP-like system which we have in Hitek Fastighet in the PropTech sector here in Sweden. Already two years back they have been really focused on AI, what that can do for us, starting off internally and then also widening that to the customer. so nowadays we have quite a few agentic ready it's more of an ecosystem so it's really going from a system of records to an ecosystem with a system of records in that sense so we have language support we have We have AI assistance in customer support, both at our customer side and also our own customer support, of course, internally really enhancing that. Then go for Finis Actite, which is in the healthcare sector, and it's really all about continued automation of the clinical documentation within the health sector, and of course here really combined with compliance and security. It's also very sort of business critical, system critical for our customers that this works. And then we really are on the brink of releasing a brand new version. And that version has really been sort of fast forwarded a lot, given the AI applications that we have done. So that's more internally still. And then Vita Kennedy, which is a very sort of domain-specific and very pointy products for automating better forecasts. And both the quality of the forecast, but also the way that we can harness more and more different forecasting models, drawing out the best conclusions from that and delivering it for customers with the benefit and help of AI. So that was a few examples of what we're doing in that field. Then moving over to the numbers. So the highlights for the quarter, I really think that of course the continued growth in sales and a 15% in total, roughly 4% of that, just over 4% organically and 11% growth in the subscriptions, 20% growth in the transactional software revenues and this is after we have recalculated everything according to the identical method and it proves that there are multiple of business units that have these revenue streams and it is kind of a sign that it is a good momentum in the economy in the fields that they are operating in and especially here we can mention the real estate agents that have quite a big portion of, and always have, as long as we have owned them for over 15 years now, part of that revenue is transaction driven. And there's a good momentum in that market. So there's a vast amount of business units that are all contributing to that 21% growth in transaction revenues. And of course the cash EBIT which is our internal metric very close to the cash flow. 18% growth and one percentage point up on the margin from 24 to 25. It's really encouraging to see. And talking about cash flow, all according to plan really. This is highly what is expected. As you will remember, we have basically all the year's cash flow in Q1, which is a fantastic model, and we're super happy with that. And then the rest of the three quarters are fairly sort of even as a total. So it's really perfectly in line with expectations and slightly better than last year. If you continue to see the growth, this is growth in total sales. You can see the bars there by quarter or by year and also rolling 12 months there. And if you take the 10-year average growth there, it is 19%, which is, of course, super strong. And this year, so far, we are at 15% after six months. More important is, of course, the growth in profits here. This is the EBITDA result. You can see the increase in both the margin in absolute terms and also margin-wise for the quarter. And the growth here over the 10-year period has been 24%. And then CashEbit, our internal metric here. As I mentioned on the quarter here, one percentage up on margin from 24 to 25 and increase also in absolute terms, of course, actually making it one of our absolutely best quarters in terms of CashEbit's performance. And the organic growth, important I can mention, we divide that by subscription, which is the maintenance revenues, the SaaS fees, the hosting fees, that grew 4.4 actually in the quarter. So just under the mark there, 4.4. Also in line with expectations, we are seeing less of a tailwind from price increases than last year, just due to the fact that they are usually CPI linked, and that has roughly gone through by now. And then you can see there the 21% growth in transactional revenues. And to sum things up, it's been a fairly sort of okay The strong quarter, I would say. We're happy with the results all the way through. And it's really very much according to plan, I should say. And like I mentioned in my text on the CEO comments for the report, we are seeing some sort of life in the tunnel in some of our business units. There is more activity today. You can, when you contact the customer, We've got a meeting in a week or two rather than, okay, don't call me. I will call you in three months' time. So these kind of effects, we haven't yet seen it in the revenues, but we're for sure building up order book and the momentum for the next few quarters ahead. So we're The courses are optimistic on that side, and the same goes for the M&A environment. More things to look at, more dialogue on the way. We haven't lost anything. as usual we use the same criteria we are very sort of consequent and around the valuation multiples what we think a nice VMS company should be valued at and hopefully we will be able to deliver something on the M&A as well but always using the same characteristics and the If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad.