Yubico AB

Hi, everyone. Thank you for joining us for our Q1 2026 briefing. I'm Gerard Chong, the CEO of Ubicle, and with me is Najana. We are going to walk through the agenda. I'll give a quick recap of our company overview. I'll talk through our Q1 highlights. Sanjana would focus on the financial overview and deeper insights to the business. I will then close up with remarks and we'll be opening up for questions and answers. Quick overview, I think most of you are aware we are expanding our organization. We made adjustments to our workforce to be more efficient as reflected in numbers. We want to really commit to the investors that our growth to directory is prioritized priority. And we also want to make sure we are paying attention to our gross margin as well as our EBIT. Quick market update trends. I think most of you are very familiar with what we've announced three days ago with OpenAI. and the partnership, what we see is clearly in terms of how the AI-enabled world is impacting the cybersecurity world, we can see that attacks are being much more scaled and precise in the way they are targeting accounts and how they take over accounts. What we also see is that while there's great tools for a lot of organizations to be able to defend themselves. What we see is that the tools are not even, which means the attacker actually have the advantage of the tools versus defenders. And the reason we say that is that when you identify a problem, it usually takes the attacker much longer time to find a solution and fix it, rather than attackers who can just attack right away. So what this means is that we are going to see or we are seeing a massive amount of increase in attacks, specifically very, very targeted and scale phishing attacks. And we believe that with the announcement, not just about the partnership, but clear message from OpenAI that they themselves are using our technology, it is really clear that the foundation for how companies need to protect themselves and defend against attack is with our technology. Highlights from the quarter. I think it's always important to talk about development as it pertains to how we grow our business from the perspective of product innovation and product capabilities that we provide to the market. and key partnerships as we accelerate the business. As discussed, we've already announced the OpenAI partnership and isn't just about, again, the program itself. It is a long-term commitment with OpenAI to protect more users in this fast-changing AI world. We've also announced other partnerships with big organizations like IBM and Auth0, which is part of Okta, in terms of how we work with a broader ecosystem to protect more enterprise users. We've also made some operational efficiency decisions. We have to take accountability for the investments we made in 25, not as successful as we intended, making the corrections to be much more effective and efficient as we scale the organization. produce capable new products and penetrating new markets. And finally, I'm very proud to be appointed as the Chief Executive Officer in the permanent role, but also very excited to have Phupac Engbom, who joins us as the new Chief Marketing Officer to really help us expand and accelerate our go-to-market activities. A quick one-year look back. As I've described in a previous briefing, my focus is to really deepen relationship with customers. I think Yubico's foundation for the future of how we protect many organizations starts with our strong customer base. And I'm very proud that we're building very strong customer deeper relationships as evident by the OpenAI partnership. But beyond that, we're also very excited to continue to launch more new products. And it isn't just about launching new products to launch a product. It is about adding a lot new capabilities that our customers want from Ubercall to make sure that they can protect the organization and their users much, much more effectively and accelerate the adoption of the technology with as little friction as possible. So you can see in the milestones, wherever the word, yes, which is Ubico as a service, that is a huge expansion of the ability to reduce friction, to adopt the technology. And what you also see is that we've established additional capabilities to be very relevant for certain markets where they need something specific for regulation and compliance. We've launched the CCN product series specifically for the Spanish market in Europe. Europe is a huge opportunity for growth for UberCo's 2026 ambition. So we're providing capabilities that are very relevant to that market. And finally, we've continued to expand on our broader ecosystem for channel and distribution so that we can cover and expand globally with not just effective more troops in the ground, but more effective enablement where they can understand the value proposition of our products in the field. Q1 saw a huge uptick in our public sector. There is a war that we're facing in several parts of the world. And this has increased defense spending, and we see some of that investments in that sector. We continue to see a strong pipeline in the public sector and defense sector as things continue to get very heightened because of cyber attacks as part of overall warfare. So we are... very much invested to make sure that the defense sector and governments and militaries all over the world can successfully use our technology. Obviously, there's no indication of not investing in the other industries and areas of growth. We still see very strong demand in finance and technology with retail and manufacturing flow followed very closely behind. Some of the figures here for Q1. We continue to invest in YubiKey as a service, and that is evident in our growth in ARR. We continue to be much more refined in the way that we produce products and go to market as what we try to focus and build upon on what we've stated before, which is to bring our gross profit in line with our expectation. the profitability itself continues to be an area that we want to focus to do better. Overall, with the announcement of OpenAI, it gives us really the product relevance for not just with the top AI companies, but every company that is going to invest in AI has to pay attention to what the most influential companies in the world are using to protect their workforce and their users. So we're very excited to continue the partnership and also continue to work with new partnerships that we will announce as well throughout the year to accelerate and bring awareness to our technology. With that, I'll hand it over to Snejana.

Thank you, Jared. So let's deep dive a bit further into the financial results for the quarter. I'll start with sort of quarter on quarter development of our order booking, net sales and EBIT. As we saw in the key figure slide, the negative currency impact continues this quarter as well, both on order bookings and net sales. The organic change in order bookings is 14% down and net sales is 10% negative organic change. When it comes to EBIT, we have in the quarter 14.9 million SEC or 3.1%. If we compare to the Q1 2025, we have a negative currency impact of 26.5 million. And the cost for the reorganization program of 21 billion. So the like for like change organically in the EBIT is negative 30 million or five percentage points we are missing. If we look into the order bookings, this quarter Q1, we still see the small and mid-sized transactions are the majority of our order bookings. The larger enterprise deals are taking still longer time to close and we don't have large deals above 3 million this quarter. On the positive side, EMEA has developed very strongly delivered solid bookings and YubiKey as a service represents now 12% of the total bookings. One step deeper to look into the perpetual bookings. The perpetual bookings are 15% down versus Q1 last year. We see, again, continued trend of small and mid-sized transactions in perpetual orders. We see in these orders strong growth actually in e-commerce and EMEA as well performed well, while the large enterprise deals in Americas take longer time. The sales follow closely the perpetual bookings. And we're happy to see also that the repeat purchases from existing customers are representing roughly 80% of the perpetual enterprise order bookings. This is clearly sort of an evidence or testimony of our strong customer relationships and deepening these relationships as Jared already discussed. If we look into our business model with subscriptions, the subscriptions bookings are more volatile. And in Q1, it's typically a bit of a slower quarter for subscriptions as customers are sort of taking multi year, you know, commitments. So we see in this quarter, also, we don't have like a big subscription orders above 3 million, but we do have mid sized between one and 3 million in subscriptions. It's very worth mentioning that 22 million of the 47 million bookings is renewals, which we are very proud and satisfied. That means that our customers continue to renew their subscriptions on a multi-year basis. The quarterly net sales from subscription actually has increased with 29% excluding the currency impact. And this is very much driven by our increase of annual recurring revenue that we have booked or that we have reported during the previous quarters. So if we look at the annual recurring revenue development versus the last quarter Q4 2025 and adjusting for the currency impact, on a life-for-life basis, we are growing with 4%. We have a gross retention rate of 99.1% and a net retention rate above 100 at 102.6, which is great in terms of securing that we continue growing in our subscription sales going forward.

And I'll add one comment on this part. So it's really important as we, the reason for such a strong retention rate is the capabilities that we're delivering with the product. As you saw earlier, described a new, almost every quarter we're delivering something with our subscription. So it really isn't subscription necessarily, it's the value that we add to the product that then translate into customers not just wanting to renew, but and then also expand their deployment. So for us, the value creation is much more important from a product launch and release perspective, obviously, than just saying subscription or ARR. So that's why we see that strong focus on the growth, very, very low churn, and the continued expansion. Obviously, our focus now is to make sure that this capability is available throughout all the markets that we do business. And that's been one of the gaps that happened in 25 with this capability of product offering was not available everywhere. So we're really expanding to all a lot more markets where customers can realize the value of the product.