Vitec Software Group AB (publ)

Welcome to VITEC Software Group Q3 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 Ol Backman and IR Patrick Franson. Please go ahead.

Hi, and welcome to today's conference call. I'm Patrik Fransson, Head of Investor Relations, and with me in the room is our CEO, Olle Backman. As always, first, we'll give you a short overview of VITEC and then followed by our report released early this morning. After the presentation, we open up for question. So, Olle, with that, I hand over to you.

Okay, thank you, Patrik, and good morning, everyone. We will just jump back. That's us, if you haven't seen us before. But moving over to the introductory pages, which we usually use here, the VTEC in brief here. So basically, anything changed here? We had a few more customers, but we're still... 49 business units, because this is from the Q3 report. As you know, we added two other acquisitions, which I will get back to a bit later on, but that's for Q4. So roughly 3.7 billion Swedish in pro forma sales and the sales distribution is fairly the same as previous quarters. Same here with the exposure here on the diversification of sales from the largest business units to the smaller ones and also from a customer perspective. So the 10 largest customers only account for 7% of sales. So that gives us a great risk distribution. And moving over to this year's acquisitions, we did two in Q1 here, Dutch Åtanätten and Swedish Infometrics. So they have been with us since Q1. We didn't sign anything specifically in Q2 or Q3, but in the early days of Q4, I think it was just on October 4th, we signed them. Dutch first small add-on in Finland, smart tech and then Dutch These are two good examples of what we've been working on throughout the summer period, of course. Smartech being an add-on acquisition, we do usually one or two a year. They don't really end up in the big press releases and also in the statistics and the BU schedule, which we will show later. Because that is an add-on acquisition to one of our Finnish operations Tetomitta. But it's a nice addition adding a good new product line to our same customer segment there in the waste to energy market in Finland. And then Athermit, which is basically the holding name. So Athermes is the product name for the company. It's in maternity and postnatal care in Netherlands. Roughly 16 people. It's a really nice operation there that is really a good example of both mission critical Very much appreciated both of them and they are super welcome to the group, both organizations. This, of course, leading over to the positioning of the group. We have our 22 different verticals. So these two latest acquisitions, they end up in either healthcare or in waste energy. So there are existing niches from our part, but every now and then we add another acquisition that adds also another vertical to the group, but not in this case. So here we're strengthening already existing groups. And as I mentioned, these are the business units we've had during Q3. It's roughly the same and this is a 12 months of the sales and the distribution there between the recurring revenue and non-recurring revenue. And this is, as we have said before, roughly an average of also the pipeline for acquisitions, what it looks like in terms of size. So because we have sort of become the mirror image of the VMS market in Europe by now. How we work together with the business units. It's a lot about sharing knowledge, which is really sort of the superpower of being added to a group from a new company perspective. So here you will sort of tap into the big knowledge pool of companies that are doing the same thing, but directly towards different verticals. So this is a fantastic way of cross fertilizing knowledge and also speeding up development, but also trying to avoid mistakes, of course. So this is working super well for us and very much appreciated amongst the staff as well. I would like to describe a bit on what we see is the really value that we bring across to our customers in our vertical software niches. There's lots of discussion about the code that you can speed up. development cycles you can do much more on less time and of course at the lower cost yes that is absolutely true and that of course goes for us as well but that is only one part of the offering of a true vertical software SaaS offering so the core code is of course a super important part of it but then all the layers on top of the code is equally important all of them so I would say integrations, APIs and being part of an ecosystem. Sometimes we are part of an ecosystem. Sometimes we are the ecosystem or at the very core of the ecosystem, depending on our positioning. Then we are usually also the system of records that others would like to access. You can do that through APIs and we are increasingly The business logic is all built into these niche-specific solutions. That's what makes them better than the more generic horizontal solutions. Of course, compliance, security, audibility are super important, especially in this day and age. That's also a layer that is embedded into the product offering. Trust, governance and accountability, both on our terms. We want to be that trusted partner for our customers and for the whole industry as such. And then not to least sales and support in local language. And by local language, I don't just mean the language that you normally speak, whether it's Swedish, Dutch or Finnish or whatever. It's also the business language within your specific niche. So we know the lingo, we know because we are an integrated part of it. We have been here for a long time. We know the processes, we know What do you mean? And usually you know what we mean when we have sort of put in the functionality there. So business language as well as the actual spoken language is super important, which also sets you apart from a more generic solution. I think it's important to keep these layers in mind because they are part of the moats of course around it. You may be able to do parts of it or so, but it's very hard to do all of it and it takes a lot of time. a lot of effort and especially a lot of knowledge and domain specific knowledge, which is not something that you can just invent or be trained at school. So this is part of why we think that adding together nice vertical market softwares that are niched in their respective and the best of breed in their businesses makes good sense and we can also sort of learn a lot from each other on the how we do things but not perhaps not learning from the various niche logic because that is very specific to each of them. Moving over to some examples here. I'm not going to go through all of it. You can read that also on the web pages of each and every business unit. But I can just take Docubiz for instance in Denmark as an example here. It is a purchase to pay system. You might think that has been around for quite some time and it has been automated. Yes, but Earlier, the automation was built on strict rules that the suppliers invoices had to follow in order to be automatically matched. Now, with the new AI functionality they have built in, it's much more intelligent so we can basically handle any type of invoice in a very automated way and of course the system is also learning. If you have corrected it once you get a really good and precise suggestion the next time that supplier invoice comes up. So it's just increasing value to our customers by still doing the same thing that we have done all along. And there are lots of other examples that we will post on and off, both on our group website, but also on the various business units websites. So please look into that and see all the development that is going on. Coming over to the financial metrics and the report as such, I think the highlights for the quarter, of course, continued to grow at 15% in total sales. EBITDA also up 15%. Cash EBIT, which is our internal metric close to the cash generation, was up 13%. And all in all, a very solid quarter continued to grow for the third consecutive quarter. quarter this year. So these small incremental steps that we take each and every day are paying off. So we're fairly happy with that. And on the year to date basis, we're 13% up on sales and 14% up on cash EBIT. So that's also very encouraging. Looking at cash flow, of course, important. A bit better than the corresponding quarter last year, also roughly 60 million up on the year to date. And here, of course, you need to remember that we basically have all of the cash flow in our first quarter, and then they are pretty flattish on both Q2, Q3, and Q4, which is, of course, an issue. result of our fantastic model where we have a large degree of recurring revenue that is prepaid usually. So all in all, a solid cash flow quarter as well. In terms of growth, like we mentioned, if you see the red bar there, which is the rolling 12 months on a yearly basis, it's a very nice linear development. We're keeping the pace, so we're very happy about that. When you look at it quarter by quarter, same here. So it's at 15% up compared to the same quarter last year. And the CAGR growth there, as you can see over the past 10 years, is an impressive 19%. Of course, profit improvements is even nicer. So you can see that as well on the consecutive quarters. We are a very stable organization and a stable performing on these metrics as well. And you can see the rolling 12 months there on the left hand side, really up because we really We're really fond of these longer term metrics, not necessarily quarter by quarter. So it's really looking at the long term development of the group. And the cash EBIT as you see in the third consecutive quarter really sort of wrapping up you can see from the previous years it's usually the same picture and a fairly strong sort of ending and that is of course this is inclusive of acquisitions so You have to remember the years where you made some really substantial acquisitions in each and every quarter, so it can be a bit distorted for that. But other than that, it's a solid improvement quarter over quarter that we are quite happy with. Organic growth, very important. So it's still when we look at the subscription-based, which is the really solid and super important part where everything, all other things sort of emanate from. It's another 4%, the same as last quarter. which is also in line with expectations given that we have a fairly low or low help in terms of price increasing from the CPIs of last year. So 4% still there. If you look in the report, there's also a schedule there where we have measured the proforma organic and that is actually encouraging up to 6%. which then says that the latest acquisitions are growing a bit faster than the rest of the group. So that's good to remember. Another 15% increase in the transaction base. So also the same as the last quarter. So all in all, summary wise, I think we did a very solid growth, both in sales and in profitability. A good organic contribution, fairly roughly in line with our own internal expectations. increased M&A pace with the two acquisitions that we posted here in October. That's really nice to finally get some results from the hard work there. We continue to be ready to acquire. a good deal amount of cash and the funding is available and we are continuing to explore new opportunities there. So that's about it what we had on the presentation and now we will open up for Q&A.