Welcome to BTS Group Q1 Report 2025. During the question-and-answer session, participants are able Welcome to BTS Group Q1 Report 2025. During the question-and-answer session, participants are able to ask questions by dialing pound key 5 on the cell phone keypad. Now we'll hand the conference over to CEO Jessica Skon. Please go ahead. Thank you very much. Hello, everybody. Hope everyone's having a nice morning so far. First quarter 2025, for us, we can summarize the first quarter by basically stability. A stable first quarter despite the macroeconomic volatility. Major revenue contributions across the firm were coming from. The rebound continues in BTS Europe, actually reaching double-digit 10% growth in the first quarter. The Sounding Board coaching platform acquisition we announced at the last earnings call is off to a really strong start. Our AI solutions, about three quarters ago, we brought in a tech startup called Wonderway, and their conversational AI practice bots before, during, and after those pivotal moments and difficult conversations is global. It's in over 40 of our clients, 40 or 50 clients now globally. They've hit $2 million in bookings, and it's off to a very strong positive start. We made the acquisition of Siak in Thailand in Southeast Asia. Not only did that contribute positively to our revenue growth in the first quarter, but they also have a very strong sales pipeline. I think the first quarter was also marked appropriately by us redirecting some of our sales efforts to focus on the companies and the industries that we believe would continue to invest despite the volatility and overall conservatism of peers. That is what Q1 is marked by. If we look to BTS Europe, as I mentioned, the rebound continued that we started to experience in the fourth quarter, continues in the fourth. This is due to large contract wins. In fact, on that note, for the win rate of going after new clients and the heavy competitive RFP situations, our win rates have improved from about 35% on average to over 60% in the last four months. We won a lot of large work and large deals last year, and those continue to be executed. None of those have been delayed. We continue to have high pipeline sales, pipeline volume with a strong win rate that I mentioned. Of course, there's been some companies who are starting to show some conservatism or wanting to start projects a month later and so forth, but this has nicely balanced those delays. We see strong growth for us with the exception of Germany in the first quarter. Overall, net sales increased 10%. Profit is from SEK 9.8 million to SEK 14.3 million, and EBITDA margin improved from 9.6% to 12.6%. Obviously, BTS Europe's moves that they made in the last six quarters are on removing the low performers, increasing their productivity, high billability, good management of external contractors, and even lower office expenses all contributed to the bigger margin. Let's turn to our biggest market now, BTS North America. Of course, there's some increased uncertainty that we're feeling around the economic policy and the shifts and potential tariffs and so forth. I would say that our customers trend towards the cautious and conservatism that's continuing, although many companies in the first quarter also just ran the course. I would say we're starting to see a bit more increase in conservatism now, more so than we experienced in the first quarter. Of course, we spent time thinking and talking to our customers and seeing their thoughts on potential recession or tariff fears and what they're going to do about it. Of course, we're focusing on the places where we believe will be less impacted, like pharma bio, utilities, healthcare, U.S.-based manufacturing, and so forth. We continue to increase investments and sales, bringing AI as fast as we can across our services and portfolio and spending as much time as possible with customers being creative long-term. BTS Other Markets, their first quarter felt a lot like the fourth quarter in a way, but the acquired company Siak continued a strong performance with a healthy pipeline. The recovery remains slow both in Spain and China for us. One of the things that sometimes hurts BTS Other Markets is if the big global deals generated out of North America and Europe slow down, which is what happened to them in the first quarter. One more thing that hurt them is early holidays in the Middle East this year slowed down some of the volume there, but it is picking back up. On the bright side, we had several key, very strategic big projects being won in our Australian office, Asia, and Southern Europe, which for BTS Other Markets is some of the biggest deal sizes we have closed historically. There are three of them. That is building on. I will say BTS Other Markets is expected to pick up growth as we move forward. An exciting news was we made an acquisition of a really cool company in São Paulo, Brazil. It is almost a bringing together of equals in terms of size of the business there. They focus on culture and culture change. They also spend most of their time working with CEOs and CEOs' teams doing definitional culture work. They are very excited to join BTS because we have the scaled behavior change services to support the definitional work. There is a team of over 20 of them. In addition to culture transformation, they do leadership development, employee value proposition, and innovative culture and vision alignment. They are currently about $2.1 million in revenue. They have a strong portfolio of both local and multinational clients in the Brazilian market. We are thrilled to join forces with the Nexo team. If you look over at overall revenue performance and profit performance of the three markets, we have BTS North America, which only grew 3% in the first quarter. I'd say one of the reasons behind the margin drop from 10.7% to 9.8% was we had acquisition-related costs, legal fees, and so forth of the Sounding Board deal in the first quarter. Because the growth of our coaching business, so the executive coaching and overall coaching business requires us to use externals, those expenses are going up while we do not have enough work for the full-time people at only 3% growth. That affected the EBITDA margin. BTS Europe, we already talked about double-digit growth, great second quarter or second quarter in a row in terms of the rebound and wonderful improvement in terms of EBITDA margin. BTS Other Markets at 2% growth, primarily thanks to the Siak acquisition with margin of 7% versus 7.5%. We have APG shrinking about 9% and a drop in margin as well. Just one thought there on APG is just overall change in revenue mix. Their buyers are buying smaller average deals and reduced customer commitments just due to the nervousness of the market in the States. Something exciting as well is in the last four months, I would say we've taken the next step towards maturity of overall AI adoption across the 22 countries. It's no longer kind of just grassroots and experiments and all of that, but we've put in a major operation called Operation Archimedes where all the consultants on all new projects are using prompts and have an AI Advisor supporting them so that they can learn the absolute latest and best prompts from any office around the world. It's having a big impact. I would say for sure people have more joy in the work because of AI. We just did a big global survey, and on average, our consultants are saying it's saving them four hours a week, which if that's the average is quite significant. It's not just the consultants. We're also seeing pretty significant productivity gains from our software engineers, our operations people, the folks that work in help desk, and so forth. On top of that, because we purchased Sounding Board primarily not just for their global coaches, but also for their absolutely fantastic tech platform, right? I can honestly say feedback from big multinational companies right now is telling us it's the best coaching platform on the market, which is wonderful feedback to get. We're starting to migrate our existing work over to their operations team and tech because they're 8x more efficient than we are. We will start to see those savings in overall maintenance, OpEx, and SG&A over the next three quarters. For this, I would call it phase one of productivity gains due to the automation of moving work over to Sounding Board and the internal adoption of really cool prompts. AI is for this first phase. We have one assigned of $5 million in cost savings that will start to benefit us in the third quarter, the fourth quarter, and then it will be fully realized through the first quarter of 2026. With that, I'll leave you with the slide you're used to seeing quarter after quarter, but we continue to be very proud of being the story of the long-term profitable growth year after year. It feels good to provide stability despite what's happening in the market. You can see here is our overall performance since we went public in 2001. Our average growth is 12% CAGR, and the average EBITDA growth is 15% per year. We also have stable and growing dividends since our IPO, and the dividend for 2024 is SEK 6.1. The goal is to distribute 40-65% of profit after tax in the long run. Finally, in terms of our outlook for 2025, the outlook remains unchanged. We continue to believe that our result EBITDA will be better than in 2024. We say that with some reservations about the currency developments given the current uncertainty and volatility surrounding the U.S. dollar. With that, dear investors, I will turn it over to you for questions. Thanks. The first question is from Daniel Tushan from ABG Sundal Collier. Please go ahead. Your line is open. Yes. Hi, Jessica. Good evening, I guess. Yes. From your time. First one, I recall when we talked in March, you said that you expected both organic growth and higher margins in 2025. Now we're starting off Q1 here with 1% organic growth, slightly lower margin year over year, although you are sharing a quite positive outlook on the coming quarters. Do you still have the same confidence to see both these metrics and higher at year end? I do. I do. Our original plan had a slow start to the year, which is never my preferred way to start the year. Because of that, I still have the same view. Excellent. On these AI cost savings here in the end, that's quite interesting. Do you think that there is a risk that this is a sector-wide phenomenon and will therefore also reduce perhaps project and hourly prices, putting some pressure on sales while more neutral on margins when all of your competitors are realizing this as well? Yeah, it's a great question. We haven't seen that yet. However, there's some really cool advances our simulation team is able to starting to make right now. I mean, the large language models were not very good at math, right? Or graphs or beautiful visuals up until just a few months ago. Because of that, now we're really pushing and rethinking our simulation platforms, which I find incredibly inspiring, to be honest. If those prove to work as well as we are hoping they will, time will tell. If our clients accept them and the risks that come with that sort of platform, to your point, what could happen is we can build them really fast, right? If we build them really fast, then it would probably reduce our price to build, but it would increase the spend on the utilization and the scale. That's the only thing I can imagine, and that is not happening to us at the moment, but that could potentially be an implication. There is a positive to that as well because a lot of our clients wish that we could develop the SIMs more quickly and launch them more on demand. I think that one would help us with our competitiveness. Okay. Makes sense. Interesting. Interesting to follow indeed. Yeah. Two more questions. I have one here. You mentioned in the report that you had some acquisition-related costs in North America in Q1. Could you quantify them roughly? Yeah. $400,000-$450,000, something like that in legal fees. Okay. Okay. That's fine. Finally, can you share any thoughts on how North America has started off here in Q2, like in April and May, because that was really when the turmoil started? Yeah. I would say that, first of all, I agree that that's when the turmoil started. It really wasn't beforehand. In the last few weeks, there has been an increasing number of examples of insights that are coming from our teams talking to clients. I would say four weeks ago, the only examples I had was from just a couple of manufacturing clients who do a very small amount of spend with us. Their CEO said that we're freezing everything. Our team offered them some additional things and was able to keep the deal, but that was it. Now, just in the last week, week and a half, there's a big tech company. It's got loads of cash, but they are putting all of their money, all of it into data center growth right now. Now, we are still doing projects and work with them, but that's the sentiment inside. The other sentiment in that particular firm is people are just waiting to be given direction. They're waiting to be given approval on their priorities for the year, which usually tech companies stall that when they're just trying to hold, right, on spending. That's just one company. That's not an N of 30 or 40 or 50. We had one regional bank just in the last week say they're thinking about postponing a project we were going to start in the fourth quarter. I would say, yes, it's starting to pick up. It's still an N under 10, right, in terms of volume and noise. There are plenty of companies who are staying the course. I hope that's helpful. Okay. Yeah, absolutely. Interesting to hear those customer cases. Thank you very much. My pleasure. The next question is from Rikard Engberg from Carnegie Investment Bank. Please go ahead, Rikard. Good afternoon and good evening, Jessica. I have a question regarding WonderWay. You are for the first time presenting bookings of $2 million year to date. Can you talk a bit about how it has been received by the clients and what sort of volume can we look from this segment in the future? Yeah. I'm so happy with this mini acquisition we did. First of all, we are now providing AI conversational practice bots in seven of our nine practices. So it's not just like it's a little standalone thing. It's kind of increasing the competitiveness across the board in the company. The clients are loving them right now in one of two moments. Moment number one is they're going to do some training, often with our simulations, and they want to inject conversational AI practice bots into the simulations. Easy. Makes a ton of sense. It's just better. It's more accurate. And the data is more accurate in terms of how good their people are at doing certain things. So the reporting's better. When they start to use them in the simulations, they are asking to prolong the license or put in place an annual subscription so that people can continue to use them and practice them whenever they need it. Those are the two main use cases. As I mentioned, and this has been for a while now, we are using them in all three of the markets, other markets, BTS Europe, BTS North America. They are being used at clients like Coca-Cola, IBM, Salesforce, Thermo Fisher. Those are just a few off the top of my head. They are loving them. We are releasing next week the do-it-yourself platform so our clients can build their own conversational practice bots now on our platform. They do not have to use our people to do it. That also means that our team can whip them up pretty quickly as well. The platform was really well architected for typical BTS use case because it honors the client's unique performance and high performance standards while also taking the BTS IP into effect. It is great. For a first one-dot-oh push of putting AI across the simulations and the practices, I think it is absolutely fantastic. At the same time, I think it opens our eyes and makes us excited about how to take this further, right? We are also thinking about different versions of this that are maybe more integrated into our clients' CRMs or their own platforms and then what is possible if we are not only doing AI conversational bots, but we are also pumping other simulations in through the same thing. That will be something we explore longer term. For a first 12 months, it's been really good. Okay. Great. One question about the cost saving programs from AI. Should we be looking at 2024 as a base for those $5 million U.S. dollars, or should we look at last rolling 12 months? You can use 2024 as the base. That's what you asked, right? 2024? Yep. Yep. Yeah. Yep. Okay. Great. Thank you. That was all my questions. There are no more questions from the telco. I hand the word back to you, Jessica and Michael, for greeting questions. Hello. This is Michael Wallin, Head of Investor Relations. We've got a few questions here. I'll start with the first question from Alexander regarding acquisition-related costs. Can you specify the amount in order to understand underlying EBITDA in the quarter? I think you mentioned that, Jessica. Yeah. Yeah. The legal fees associated with the Sounding Board acquisition in North America were around $400,000-$450,000 in the first quarter. Yeah. This is also specified on page eight in the report. We'll move on. Question here from Carl Norrien. You mentioned other markets is expected to get back to growth. Are we talking growth as in 10% or low single digit? Are we talking already Q2 or later? Yeah. I mean, our view is it will be Q2. And I would call it mid to high single digits is what it's looking like at the moment. Of course, it can shift a little bit, but. Next question from Carl. How is SEAC performing? It looks a bit softer than expected in Q1. Appreciate some of it is related to holidays, but even despite this, it looks weak. I mean, our view on SEAC is that it's been doing quite well, both in terms of the inorganic growth that's hitting and the pipeline. It was the Middle East that was soft in the first quarter compared to how they were performing in the second half of last year. We are expecting a rebound there already in the second quarter. So that's my view. Yeah. There are no further questions, written questions at the moment. I don't know if there's anything still on the conference call. No more at the telco. Great. I'll hand it over to you, Jessica. Okay. If there's no more questions, I appreciate the time, everybody, and have a wonderful day.