Hello, and welcome to this annual report 2023 presentation and Q&A with RISMA Systems. With us today, we have the CEO, Lars Nybro Munksgaard. First, there will be a presentation, and afterwards a Q&A where the CEO will answer questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to RISMA Systems to start the presentation. Lars, your line is now open. Thank you, [Arun]. Perhaps I should start telling a little bit about RISMA, and, for those of you who haven't, who are not acquainted with, RISMA. RISMA is a platform for governance, risk, and compliance, and it was founded by myself 10 years ago. And when I started RISMA, I had the idea that what would happen in the '20s in software for governance, risk, and compliance would be that the customers would start looking for one platform to support all their activities within the scope of governance, risk, and compliance. And when I started in 2014, the market was very, very immature, but I could see that as the software markets mature, those who win the market shares are those who can offer a broad portfolio of solutions. The first example I can remember was Microsoft, who did it in the 1990s with Office software. And then, 10 years later, we had CRM systems, ERP systems, HR systems, and so on, where initially software covered a small niche of the total number of tasks that needed to be performed, but over time those who won were those who were able to provide a broad solution. And even though the market was extremely immature back in 2014, I envisioned that that would also happen perhaps around 10 years later, and that is actually what we see right now. We see that our customers have so many areas where they have to comply or have to make risk assessments, GDPR, IT security, contract management, incident management, CSRD now, and now a new regulation comes, DORA and NIS2, from EU. So the companies get more and more areas where they need to have some kind of IT support to be able to comply, and most have a combination of what we call point solutions, which, for example, could be a solution that would help with GDPR, and perhaps they also have a solution for IT security, but then they use Excel sheets for the remaining areas. But as the number of areas grow, they start looking for one software company who can support it all. RISMA is in a very unique position there because already 10 years ago we envisioned that this would happen, so it has been part of our strategy from the outset that our IT should be able to support that, and that has been part of our development strategy from day one. We see that some of the competitors who have a narrow solution, they now start to see that customers are looking for broader solutions, but to build a broad solution on a narrow solution is like building a castle on a hut, so that is very difficult. So therefore RISMA is in a unique position in the market, and we were listed three years ago on Nasdaq First North. We have more than 50 employees now. We have had a growth rate of 49% two years in a row, and somewhere between 500 and 600 customers. Then we are located in so far three countries: Denmark, Sweden, and Norway, and we are probably one year from now, my guess is that we will also be in a fourth country. When we are in that country, that means that we have also implementation experts in the countries, and actually that is something that is a strong driver for our growth because we see that most of some of the foreign competitors, they have a support center, perhaps in the U.K., covering all north of Europe or whatever, and it actually means something to a lot of our customers to have local people to support them. And we have built a software based on we have eight modules, and those modules can be used combined in different ways to support different solutions. So we can develop a unlimited number of solutions. We can take any framework, legal or international standards or sustainability. We can take any framework and build into our solution, and thereby we can actually present a proven solution in a completely new area, and that is also something we benefit from because whenever there is a new regulation that perhaps only is targeting a few number as small as you have the market, then the market is too small for those software companies who want to build the solution from scratch. But we have 95% of the solution already, so we can be quite quick to develop a new solution based on the eight modules or the software we already have, and here we have an overview of the solutions with EU regulations, other regulations, ISO standards, and then operational solutions that is used in more or less any of the legal or standard solutions. That is contract management, risk management, and incident management for policy management, and internal controls. Obviously not all of these solutions sell equally, but we try to be first with a solution whenever a new area comes, and that often opens new doors for us, and then when we start the conversation with the customer, often they are perhaps looking for, let's say, this new DORA solution, which is an EU framework on resilience in infrastructure companies. There perhaps we have 200 potential customers in Denmark, 200 in Norway, and 300 in Sweden perhaps, and then we start the conversation talking about DORA, but in that conversation we will often see that they perhaps already from the outset decide that they need one or two other solutions or start with the DORA solution but with the intention to move on to other solutions. And what we develop is the software, and then we try to select the best partners to provide it input to the different solutions. So, for example, when we have a GDPR solution, then we have partnered with one of the best, if not the best, Danish legal company in Denmark when it comes to GDPR, that is Plesner, and then they provide input to what questions the customer should reply to, and based on that information collection, then there is a more or less automated gap analysis telling the customer where they have a problem complying with the legislation, and then based on that, the customer will in our solution first they will establish action plans to address the gap, and then they will put a control in an annual review to ensure that the gap stays green. And that is basically the process for any solution. Now I mentioned GDPR, and that is Plesner, and when it comes to anti-money laundering, we use another company in Denmark, Horten, and in Sweden and Norway we have also local auditors who ensures that whatever we have is aligned with the national legislation, and when it comes to EU legislation, it's often either similar or close to similar. So basically, what the customer buys when they buy a solution from us is that they get a platform where they can gather all the data they have on compliance and also on sustainability, and if they establish a control in an annual wheel, then they can ensure that they only have to document that control once, even though the control might support different compliance areas, and they get the best knowledge from the best knowledge providers in the industry, in all of our solutions, and not least they get local support from the implementation team. And then looking into the figures for 2023, we increased the annual recurring revenue with 49%, from DKK 22.7 million to DKK 23.8 million. The upselling also increased with a little less than 50%. The revenue churn decreased from 7% in 2022 to 5% in 2023. The net revenue retention was at the same level. The EBITDA was significantly improved from -DKK 20 million to -DKK 7 million. The customer acquisition cost, being the cost we have for getting a new customer, decreased from 129,000 to 19,000, and the license in the 1st year increased from 50,000 to 97,000 for these new customers. So you can see when we get a new customer, we typically sign a two- or three-year contract, and when we do that, we get the 1st year's license. So the customer acquisition cost is more or less paid from day one or close to at least. So that is quite good, and it's a significant improvement from 2022. And here we have a note I'll not go through that. It is just to illustrate that we are launching new solutions, more or less every month, and we have manned up in that department, meaning that we will, we will launch new products, yeah, in an even higher tempo, going forward. So, and often it is a new solution, but it could also be an improved version of a previously launched solution. Looking into our ARR in 2023, here you have an overview of how we came to the ARR end-of-year. We had 2022, a little more than 2022 in the beginning of the year, and then we had approximately DKK 10 million coming in, and we had a little bit of churn, some upsell and a little bit of downsizing of some of the contracts. So, but basically, the most important thing is obviously the increase, the total increase, but also that it looks healthy in the sense that we do not have too much churn. And actually most of the churn we had in 2023 was customers being acquired. We had two large customers who were acquired, and then obviously they had to terminate the contract. And the guidance for the coming year, we expect the annual recurring revenue to increase from approximately DKK 34 million to somewhere between DKK 45 million and DKK 49 million, and we expect the EBITDA to be around the same level as is today, namely minus DKK 7 million plus minus a couple of millions. In 2023 we had a cash burn of DKK 1 million, and then the good question is obviously how can you have a negative EBITDA of DKK 7 million and only cash burn DKK 1 million. But the reason is that as a software company that grows, and we invoice the customers for 12 months when we get the new customer, but we only get income for let's say that we get a new customer in November, then we get the full cash in the old year, but the income recognition is only two out of 12 in 2023 and the remaining part in 2024. And that means that with the growth we have there will be a difference of approximately DKK 6 million between the cash burn and the result. So that is also going to happen going forward. So basically what we're aiming at is to grow as much as possible with a stable cash account more or less, and by the end of 2023 we had a cash of DKK 13 million and on top of that we had DKK 12 million in unused credit facility. So we have plenty of access to cash, and we could have had cash positive operation in 2024 if we had just continued with the manning we had, but we chose to increase the manning with between 10 and 15 persons in 2024, and that means that we will have a little cash burn actually a little bit higher than it was in 2023. And the reason we do that is that we have a lead time from we make an investment in marketing activities or in hiring new sales resources to it actually result in an increased ARR improvement. There's a lead time of approximately 12 months. So if we invest more in sales and marketing in 2024 we expect to see a return on that in 2025 and 2026 and going forward. So I think that was more or less it. Perfect. Thank you for that, Lars. Let's move directly into the questions, and as you ended with the cash flow, I think I will take the question around cash flow in 2024. So the question is the growth initiative you're gearing up on, how do you believe that will impact cash flow in 2024? This year you burned around DKK 1 million. How much do you believe you will burn in 2024? Our best assumption is that we will burn around DKK 5 million ±1 or 2 million in 2024. Then the next question. How many company? Also, so the question was only how it related to 2024, not the result in 2025 of that. No, only related to 2024. Yeah. Perfect. If you have anything you can reply also to 2025. We expect that the additional investment we make in hiring these 10-15 people is that we will. No, let me say it another way. Our target is our ARR grow with approximately DKK 1 million per month, and that has been the case for more than a year. Our next target is to move that to 1.5 million per month, and that is not something we do overnight. We need to be able to attract more leads. We need to be able to have trained sales resources who can deal with these leads and so on, and that is basically what we invest in in 2024. And whether we will reach DKK 1.5 million in additional ARR per month in 2025 is still uncertain because there are so many uncertainties related to 2025 that we cannot predict that right now, but what we can say is that if we want to go that direction moving from DKK 1 million in extra ARR per month to DKK 1.5 million, then we need to make these investments. Perfect. Then the next question is how many companies need to comply with these two, DORA and CSRD? Can you give some market insights and market size numbers? In Denmark it is 1,100 companies. It's a little less than that in Norway, and I think 40% more or something like that in Sweden. The next question is the cash flow was better in H1 compared to H2. What was the reason behind this? Have you already started investing more in H2, or why was there this quite big difference between H1 and H2 when looking at operating cash flow? Only a limited part of the reason is linked to the cost. We increased the marketing cost a little bit from H1 to H2, and we also hired one more person, but the main reason is that we have hardly any license income in July, and since we invoice every 12th month, that means that as we didn't sell anything in July either in the previous years, then we can actually say that July and half of August is something where we do not have any income. So for us, even though Q4 is usually our best quarter, 2nd half year will probably always be worse for us than 1st half year, or 1st half year will be better for us than 2nd half in an average. You grew 49% in 2022 with a cash burn of DKK 26 million, and you grew 49% in 2023 with a cash burn of just DKK 1 million. What have changed internally in this period, and is it a cash burn over growth ratio you expect to be able to hold in the future? Let me take the first question first. What happened was that we launched a new strategy, where we, the purpose was to more or less have a balanced cash flow in 2023 to prove to the market that we were able to do that, and actually the only reason why we didn't have a positive cash flow was that for we had to repay some tax because of a changed approach from the tax authorities on a tax exemption. That's a long story, but then that cost us DKK 1.8 million. Otherwise, we would have been cash positive in 2023. But we proved that we could become cash neutral, and that was basically part of the strategy. Whether that, in a long-term perspective, was the right solution is something you can argue both one way or the other because perhaps we should have hired more people in 2023 having a little bit bigger cash burn, and then we probably would have had a higher growth in 2024 than we predict right now. We would have. That's almost for certain. But on the other hand, if you tell the market that, well, we can become cash positive and you never prove it, then they can also always question it. But here we proved that we could improve the cash flow with more than DKK 20 million in 1 year, and maintaining a higher growth rate. So that was kind of the strategy. And the second question, what was that? 2nd question is, is it a cash burn over growth ratio you expect to be able to hold in the future? I can definitely see from an investor perspective why that is an interesting question because, obviously it is, for most companies, but for us where we have this delay from when we invest in growth and then it shows in the top line DKK 12 million 12 months later on. It's a strategic decision whether we want to burn cash or not, and we are evaluating that all the time. And as I said, we could easily have had a positive cash flow in 2024 and still maintaining a probably similar growth to the one we have announced now, but then that would cost us in the growth next year, and it would not put us in a position where it was likely that we could move adding DKK 1 million per month to adding DKK 0.5 million per month. So for us it's a strategic decision whether we want to be cash positive or not, but at least we have proved now that we can be cash neutral. So, it's the ratio between the cash burn and the growth that was definitely important to us two or three years ago, but now where it more or less balances, then it's a matter of strategic decision whether we want to have a cash burn at all or not. Yeah. Then there's a question here around your metrics. When you report new sales, is that completely new clients that has not bought from you yet, or is it also selling of new compliance areas to an existing client? For example, if a client uses your NIS2 and they want to buy a CSRD solution, is that considered an upsell or a new sell as it is not an upsell on an existing module? When we sell a new solution to an existing customer, we consider it an upsell. Perfect. Can you provide some insights into how much revenue is generated from each country and how the growth rate looks in these countries? In 2023, when we look at the additional ARR which was around DKK 11 million, then approximately DKK 1 million came from Sweden, DKK 2 million came from Norway, and the remaining part from Denmark. But when I say DKK 2 million comes from Norway, then it's the income grew DKK 2 million. So let's say, for instance, that's not precisely the case, but let's say that Norway had DKK 4 million in ARR beginning of the year, then they had DKK 6 million at the end of the year. And as the manning has not changed that much in Norway and Sweden, it's only salespeople and implementation people that works in these countries. Well, actually we had an exception person starting in Sweden and in another position, quite last week I think. But normally it is so. So the cost is relatively low in Norway and Sweden, and so from now on they are going to provide positive cash flow, and that has taken some years for us, but obviously that helps us when we have to finance the next country we go into. We know when we go into a country then we know that we have to subsidize it from Denmark, at least two years, and after the two years they can pay their own bills, and in the 3rd year they start sending money back. That is what we saw in Norway and what we saw in Sweden, and that is also what we envision will happen in the fourth and the fifth and the sixth country. So, for us, it's also a strategic decision because if we want to grow ARR rapidly, we need to do it in the countries we are in. We cannot start in a fourth country and then expect them to grow a lot of ARR in the 1st year. They have to build up their own pipeline and so on. So we have to take a strategic decision. Where do we want to put our money where we get the most ARR growth in the short term, or do we want to start country number four and five and so on, which obviously is important on the longer term. Because one thing is because we increase the growth rate by being in more countries and we have less of a. It's also a risk mitigation to be in a number of countries. So that is something we discuss at board level continuously. How should we balance that? Yeah. Can you elaborate on the traction and growth in the newer products of NIS2, CSRD, and Norwegian Transparency Act? Are you experiencing increased focus and demand in the market, and how much revenue is coming from these new products? Now we are talking about 2023, and in 2023, I think we have approximately or more than 25% of our new ARR came out of the sustainability solutions, and their CSRD was by far the solution that sold the most, partly because we only launched the Norwegian Transparency Act solution in November last year, so it was limited how much we sell of that. And we also sold some NIS2, but it is mainly in 2024 that the companies will start looking for NIS2 solutions. So but you can say that NIS2 and DORA are both solutions where the companies need to comply from the beginning of 2025, so we expect and we expect to launch the 1st version of the DORA solution in May, and we are probably those who launch a solution first, to my knowledge at least. So, obviously we focus a lot on DORA, not especially because we get new customers on board that could also buy other solutions. Is Rule of 40 a KPI that you aim to obtain during 2024, 2025, and forward? No. In 2023 we easily managed to fulfill the Rule of 40 as the cash EBITDA was only DKK -1 million. It was actually sorry that was due to the tax. It was actually slightly positive, and we had 49% growth. So if you calculate the Rule of 40 you take the cash EBITDA, and add that to your growth percentage, and if that is higher than 40 then it's considered a success, and that is something that a lot of investors are looking for for good reasons. But for us with the delayed consequence of investments in 12 months delay then, whether we are going to fulfill the Rule of 24 is a matter of strategy, and it's not always the right strategy to in a specific year to go for a to have more than 40 when you combine these two things. So that is not something that is part of our strategy. Yeah. Then we are at the last question, and I think you have already addressed most of it, but I will ask it anyway, and then you can put some more information on it if you have anything. The question is: You state that in the guidance you are initiating further growth initiatives that will have an impact in 2025. Can you put any more information on this? What kind of initiatives, how big an investment, and how do you expect it to have an impact in 2025? Yeah. The 10-15 new positions is, many of those is in marketing or sales, but it's not exclusively there. We also invest a little more, or some more in product development, and for us product development can be two things. It can either be the coding, the software itself, that is one department who's responsible for that, and then we have another department who's responsible for filling in, knowledge from our knowledge partner. They do not code, but they, with the knowledge partner they maintain, the questionnaires and so on, the gap analysis, and we invest in both of these, areas as well. I think we are in a position where we actually spent most of our resources the first seven or eight years almost exclusively on development, and we had one and a half sales resource, and because we knew that it would take a long time to build a solution that could support all these areas, so we spent a lot of money in the first years developing something that we knew we could only sell six years down the line. And there we are not there anymore, so I think with the recent recruitments in both software development and product development, I think we have a reasonable size for now in those departments where we will grow now is primarily in sales but also in marketing, going forward. So, as to the expectations of the investments and the outcome of that, I said that we are aiming at moving from DKK 1 million additional ARR per month to DKK 1.5 million, and this is part of it. Whether it is enough what we have invested so far, we don't know, but we are on a path to finding out, and we are sure that these recruitments will be providing a big contribution to achieving that goal. And that was actually all the questions, so that finalizes the Q&A, and before we end the webcast I will just hand over the word for you if you want to end with some final remarks. No, I don't have anything, so yeah, if there are no more questions then that's it. Perfect. Yeah. Thank you everyone for listening in today, and hope to see you again next time. Have a good Friday and a good weekend. Bye. Bye.