Welcome to Carasent Press Conference 2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Daniel Öhman and CFO Svein-Martin Bjørnstad. Please go ahead. Good morning, everyone, and welcome to this extra conference call regarding the acquisition of Data-AL, which we did yesterday. We were planning to start a little bit with discussing the market and why we go into Germany, and as most of you know, we've been looking and working with this for quite some time, and the reason is that it's the largest healthcare market in Europe, and you have a long, strong standing history of private clinics, and that builds up a large part of the German market. The exact type of clinics we're used to working with in Webdoc, so we know these type of customers very well. The competition is quite low. There are very many systems in Germany. There's more than 100 of them. There's no system that has a clear position as a market leader, even though quite a lot of them are owned by CGM, so CompuGroup, the same as the competition in Sweden. But they own very many systems that are run independently. Most of the systems are really old, from the 80s, maybe 90s, and are on-prem, and we feel that the time is excellent. Every time we're here, every time we talk with potential customers, we talk with other providers, we talk about other parties in the industry, we feel that this is confirmed that they are really ready now to start change systems. Cloud has just become allowed, and moving from on-prem to cloud means a lot, especially for the small clinics. The small clinics do not have any internal IT staff, so running an on-prem system is quite cumbersome for them. When moving to the cloud, you can just get rid of all those servers, you can get rid of those IT technicians coming to support you. So it frees up a lot of time, responsibility, and money. And that's also the reason why generally, when we move customers from on-prem to cloud in our Swedish and Norwegian products, we can roughly double the price. So we feel it's an excellent market, and there's a lot of studies to support that. Just looking at two studies, one external and one internal. So in 2024, in May, and this year, German authorities, they made a research into EHRs, and there were more than 10,000 participants. Those 10,000 participants used 85 different EHR system or practice management systems, as you usually call it here, and 72% of those doctors would not recommend their current EHRs to others. 50% dissatisfied with their support structure. 8% had switched systems quite recently, but many of them remained dissatisfied, and most importantly for us, roughly 40% would be willing to change EHR now or in the next few years, and it also fits quite well with the studies we did when, as you might remember, a couple of years back, we had already started development of Webdoc X, and we felt it was very important to find the right market for the product, so we don't try to meet all demands at once. We have to choose one market to go for, so we make sure that we meet the demands of that market really well, so we looked at all countries in Europe, and also we did research in many of those countries. One of the things we did was to interview a hundred doctors in a couple of different markets, and this is from the German market, where we could also see that most doctors had used their EHR systems for quite a long time, so it's the biggest market, it's very fragmented, the cloud is just allowed, and there is a big need to change systems, so we think it's an excellent market for us, and they have exactly the type of customers that we are used to working with, especially with the Webdoc system. Now, I will hand over to Svein-Martin. So, thank you. We yesterday announced the acquisition of Data-AL, and we believe this fits excellent with the strategy we have going forward. Data-AL was founded more than 30 years ago in 1988, and currently deliver the solutions, Data-AL for doctors and Data-Cur for therapists. We have now a local organization of 30 employees with a very strong knowledge of the market and of the local requirements, and more than 1,000 customers on the customer list. In 2023, Data-AL had revenues of EUR 4 million and EBITDA of EUR 500,000. And the rationale for us is that this organization has a very long track record, high competence related to the requirements, which is very n ecessary for us in the development for Webdoc. Data-AL also works with the same type of customers we want to address with Webdoc, and has typical profile of this sector with a stable market position and very low limited churn. Some highlights from the transaction that we acquired the whole company, 100%. The purchase price was EUR 8 million, corresponding to the enterprise value, with the potential for additional EUR 4 million in earn-out payments based on future growth. We have updated our targets to reflect this, as I will go through on the next page. In terms of financing and timeline, the deal was financed through cash on our balance sheet, and the signing and closing was done simultaneously, so we will consolidate Data-AL from November. Our updated targets is basically updated to reflect this acquisition, so the underlying organic targets we had for next year remains the same. And we expect this acquisition to contribute with around NOK 40 million revenues, which takes the target up from NOK 320 million to NOK 360 million for next year. And EBITDA and EBITDA minus CapEx increased by NOK 5 million- NOK10 million in these targets, so NOK 85 million-NOK 90 million on EBITDA level, and NOK 45 million - NOK 50 million on EBITDA minus CapEx. And the target, excluding Webdoc X or Germany, remains the same, of course. Heading back to you, Daniel. Thank you, Svein-Martin. Talking a little bit about next steps and where we are. At the moment, we are onboarding pilots for Webdoc X in Germany. We spoke about this in the quarter results call. We're having the first 50 clinics actually starting to use Webdoc X. They're not paying customers, but they are pilots. We have yet completed the acquisition, and as we've mentioned many times, we think it's extremely important to have a local organization that knows the market, have customers to work with, and we have a sales delivery and support structure. If we would have built up all that organically, it would have taken a very long time before getting anywhere. Also, new sales of a system typically grows exponentially, and it would start with one customer, and then this next two customers, and so on. It would have taken a very long time to get the strong foothold for Webdoc X. Now we can start converting some of the customers in Data-AL, and at the same time, also, get new customers in the market. Next step for us now this year is the integration of the acquisitions. There are two main topics to that. One is financial control. We feel that it's extremely important to have good financial control and have the right systems in place. The second area, which is very important for us, is to have our Webdoc X organization becoming part of Data-AL. We don't want to have two parallel companies or part of the companies working towards the German market. We want that to be one company, where Webdoc X, the Webdoc X staff will be part of Data-AL, even if they obviously continue to work out of Sweden, most of that team, we will be an important part of Data-AL. For next year, then their product should be certified, so that's the Webdoc X. Obviously, Data-AL is already, and Data-Cur is working with established, so it doesn't need the same certification. We will start getting the first paying customers of Webdoc X, and from 2027, we will really start the commercial rollout of Webdoc X. So then both converting Data-AL customers, but also, winning new customers at the same time, and that's when we will start seeing material growth from the Webdoc X product. That was all we had for now, and we will open up for questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead. Thank you. Hi, Daniel and Martin. I want to start with, I mean, the feedback from the sales personnel at Data-AL. What have the feedback been so far from those people? Hi, Fredrik. Thank you for the question. So, during the acquisition process, which has been quite long, we obviously gotten to know the organization quite well. I actually met all the employees already before the acquisitions, couple of times. So, we've really got to know the organization and also the sales team, and, they really look forward to having a new, more modern product to sell. So I think that's the key. And I also like the sales team here. It's, I mean, we've spoken a lot about how in Sweden, it to be more proactive, going out, meeting clinics, also working semi-cold customers here, they're really used to that, so they, they're driving around a lot, being actually physically in the clinics, and it seems to be a good model for working here. They, especially with the Data-Al, which they've had for a long time, it's, I mean, it's a system from the early nineties or end of eighties, they will get a much more than product to sell, so that will obviously help them quite a lot. So they're looking forward to it. Did that answer your question, Fredrik? Yeah, it did. I mean, you've touched upon it, but could you give us an update on your go-to-market strategy in Germany now that you have made an acquisition? I mean, will you focus on the current customers, or do you see an opportunity to approach new customers at the same time? Also, if you could elaborate a bit on the growth historically in Data-AL? Yeah. So, if you talk about first Data-AL, historically, it's kind of flat, so they're not gaining very many customers. They're gaining a few, and they are losing a few, mostly to retirement of doctors, who have used the system for quite some time. So it's quite a stable customer group of thousand customers. But it's a quite an old product. It's not that strange. It's not growing, and that's not what we were looking for. The go-to-market strategy is to if we looking at customers in our sectors, that goes for both Germany, Sweden or Norway. They have different demands depending on what types of customers they have and what type of staff they have, what type of care they give. I mean, we spoken about, we take Webdoc to surgery in Sweden now. Before then, we could not really sell to that type of customers. It will be same for Webdoc X. You start with the customers with the lowest need, and then you move upwards. So we will start converting customers in Data-AL that has the lowest need of a system that requires the fewest functions. And then over time, you can convert more demanding customers. So then at the same time, we also start selling Webdoc X to completely new customers with the same low need that we are at that point in time. The point here is that, I mean, we have a presence. We have safety. We can sell, and when we start converting, you know, like 10, 15 customers, then they can also talk to other customers. We will take it step by step, but both converting, but winning new customers. I mean, the best part is winning new customers. That's the steps going forward. Okay, I see. And given your updated financial targets, I assume that Data-AL has no CapEx, or at least that EBITDA minus CapEx and EBITDA is at the same level. Is that correct? Yes, that is correct. Okay, and last question from me. You pay up to EUR 12 million, leaving you with about NOK 250 million in cash. Now that you have made a German acquisition and is profitable on the EBITDA minus CapEx level, what can we expect in terms of capital allocation? Yeah, so as I think you know, we've done quite a lot with the capital allocation already. We did the share buyback, which, if we take into account the dividend we did afterwards, was at roughly NOK 14. We did a share buyback. We have done dividend, and now this acquisition. We have more remaining cash than we need, obviously, as we are going cash flow positive, and we have not really yet decided on what the next steps are. We see both many acquisitions opportunity, but we also see that, I think that in general, we need to do more to prove to everyone that we are the right actor to do acquisitions. I think we'll get there, but I think that we shouldn't hurry in that direction. It's much more important to get the present business growing quickly with good cost control than doing further acquisitions, if we get to that. So, we'll have to get back to our investors on what the next steps are with the cash position, but I think we've done quite a lot, and we need to come back to you all on what to do with the remaining cash. That's all from me. Thank you very much. Thank you. The next question comes from Rickard Anderkrans from Handelsbanken. Please go ahead. Hi, thank you for taking my questions. First question or topic would be interesting to hear a little bit on the revenue per user potential you see here. It seems to be quite a bit lower than the sort of Carasent group average. It would be interesting to hear, you know, how you will transform that and the time it takes to reach, you know, higher levels. Yeah, it would be interesting to hear a bit more if you could put it perhaps in perspective also to Carasent current average. Thank you. Yeah, so thank you for the question, yes. So the average customer of Data-AL are smaller than for the rest of the group. So you typically have quite small clinics here in Germany. You have many doctors having senior clinics or you have a few doctors. So typically, Data-AL has smaller clinics as customers than we have in Webdoc, and especially for the other systems. So that differs a bit from back home. The other part is that it's an on-prem solution, and then with an on-prem solution, you know, the customers have all the costs with the service and data support and so on. So when we go to cloud, I mean, as I mentioned earlier, we typically double the income. What I think is really interesting about Germany, and also to mention why we, when I said earlier that we go with Webdoc for the ones with few less functionality needs in the beginning, what's really important for us is to go towards doctors early, 'cause doctors earn much more money per hour than physiotherapists and similar occupations, so that means that we can charge more. The value we provide by making sure that they are efficient, is much higher for someone who can charge like 2x, 3x more per visit than other occupations. So we're going for doctors, and what's good about Germany also is that the German doctors meet much more patients per hour than Swedish doctors, and the turnover per doctor in terms of revenue is much higher than in Sweden. So the potential to charge quite well is good, but if you're looking at the customers today, they're getting a quite old on-prem solution, which looks quite dated. They're doing quite a lot to improve that, but it looks quite dated. So that means that your pricing power is much less than for what we have with Webdoc, I would say, in Sweden. And also it's worth noting that when we have converted customers from on-prem to cloud in our local markets, the step up on revenue has been around 100% for the same product. And over time, given that Germany has come quite short in terms of digitalization compared to the Nordics, it's also a potential to add more features and functionality, so we can have a strong net retention for a long time, I would say. All right, thank you. That's, that's helpful. I would be curious to hear a bit more on the dynamic on the customer base in terms of, you know, what share of segmentation of the customer base with older on-prem solutions. I guess if you acquired an on-prem solution two, three years ago, you're unlikely to switch in the near term. Just to get a sense of the sort of conversion potential here in the next few years. Yeah. So, it will take some time. The market is almost completely on-prem at the moment. There are a few cloud-based solutions growing, but they just have a very small part of the market so far. It was, I mean, up until roughly two years ago, depending a little bit on which Bundesland, it was not legal to be in the cloud. So it's a really new situation for them. And also there have been very few players actually investing in their product. So you have won quite a lot of customers, and then you may have been milking those positions. The systems look very different from what you see in Sweden. The systems in Sweden do not, or Norway, do not look modern by any standards, but this is a different league actually. So I think that it will be coming step by step, but it's a huge market. I mean, we don't need to win all of them. The most conservative part of this market will probably not be in the cloud for quite some time. But as you saw from the survey there, roughly 40% in that government study were open to changing systems this year or the coming years, and that's quite a high number, I would say. That's higher than what I thought before we saw the study. That study was not there when we decided on Germany. So, I think that speaks quite a lot, and if we can make sure that they get their old medical records with them and so on, it's not that difficult to change systems. But there's also what's happening on the customer side, is that many of the doctors running private clinics are quite old, and they're retiring. And that's the point when a new doctor comes in, where it makes sense to bring a new system. And there's also a change kind of in the mentality. So many of the youngest does not really seem to want to own their own clinics to the same extent as the old doctors did. What I like, that they'll have done really well, they are collaborating with some of the centers that rent space to doctors, that way you don't have to run your own clinics. So I think that's a very interesting customer group also. All right. Thank you very much. And final question in terms of, you know, allocating resources and investment here. If you could provide a split or any color on investments between capturing new customers versus sort of converting or upgrading existing ones here in the coming few years. I think it's a bit too early to say, actually. I think like most parts, it's also a bit of a learning process. We have a good experience when moving customers from Metodika to Webdoc in Sweden, but we've done that step by step, not forcing anyone. And that makes for a much more successful move. If we've tried to force them, they will just find errors in what they're missing from the old product. But if you give them the option, and you make that option attractive, then it's their own choice to move, and they tend to move-- [audio distortion] Then it's their own choice to move, and they tend to move. Get this right before doing anything else. I think if we get this right, and when we get this right, then that's an opportunity and a possibility, but we're not there at this point in time. Next one from Emilia DNB: Have you seen any other cloud providers in Germany that already have traction in this market, indicating that the market is ready for cloud migration? Yeah, yeah, sure. There are a couple of cloud-based solutions, and they are getting traction. They still, together, have a very low small part of the market, but they're gaining customers. Also, when meeting clinics, talking to doctors, they don't seem to be very worried. When Webdoc was rolled out in the early two thousand and tens, there were quite a lot of doctors asking about the security of having it in the web and so on. I think it's a similar situation that we had ten, fifteen years back in Sweden. Also worth mentioning in this is the Data-Cur. So also one of the products of Data-AL, Data-Cur for physiotherapists, is a pure cloud solution, so it's quite newly built, gaining quite a lot of customers. So, that also shows that for that segment, at least, it's possible to grow quite quickly with a cloud solution. Next one from Christian Binder. Data-AL EBITDA margin of 12%-13% seems rather low for a mature software company. What are the reasons for that? Suboptimal pricing or growth investment? Yeah, I think the Data-Cur has taken quite some investments, and also they are working with Data-AL, meeting new legal requirements and so on. The same as you have to do with all of this type of solutions you have. There are a lot of new requirements coming, to that extent, it's quite similar in Germany. It's just that they started from a lower base, but it's coming more and more. So I think that's part of it. And I also think we see this quite often in these type of founder-led companies. We saw the same in Medrave and Metodika before we acquired them. They were stable at around 10% margins, and then we can do like optimizations on both pricing and the cost side too, and these companies within our group now are generating quite significantly higher margins. So I think it's possible to optimize the margin structure as well for us. Yeah. Next one from Emilia. Any additional functionality needed in Webdoc X to serve the current customer base of Data-Al? Yeah. So for the customers with the lowest requirements, we should be able to start moving customers of certification and a little bit more. With the one with the highest requirements, so the last of the thousand customers, it will be a couple of years away. So it's a stepwise process with both new and existing customers. Next one from Anders Wright at Consensus. I think it's sort of the same question, but what is the biggest difference between Data-AL and Webdoc? Will Webdoc replace several of the end customers software solutions or just Data-AL? So at this point in time, it will replace Data-AL for some of the customers they have. And then with new customers, and for those new customers that have other systems from Data-AL, it will just replace that system to start with. But also really worth mentioning is that we typically use much fewer systems here. So we still meet a lot of clinics that do, for example, medical records on paper with pen, and then they just use their system to invoice the insurance companies. So, there is much less digitalization here. I think over time, as Martin mentioned earlier, there are a lot of possibilities when it comes to, you know, different types of patient portals, patient communication platforms, and so on. We have Vårdrummet in Webdoc, which brings quite a lot of revenue and adds quite a lot of value. I think over time, that makes sense. What's really important, though, is to have in mind what does the remuneration models for our customers look like? So, at the moment, we see fewer digital visits in Sweden than during the pandemic, quite a lot. And one of the main reasons was that, okay, during the pandemic, you didn't want to meet people, but our customers paid the same for a digital visit as a physical visit. Now, in many models, it's back to, you know, getting 20% of the payment when it's digital, something like this, or sometimes none at all, and then you don't drive digitalization. I think the major reason why we see much fewer digital visits here is the remuneration models, and we need to follow that. Next one. Have you been in dialogue with Data-AL's customers? What is the feedback and how many have you been in contact with? Yeah, so we've been conducting interviews. And I think this, it seems like they are similar to what we showed as the general view of the systems they have in the country. No major difference. But many of them, you know, are a bit older, not really looking for a system to change because they have a couple of years left to retirement. But quite a lot of them have many years back left, and we believe will be open for looking at new solutions. Great. Next one, Emil Tannerstad, what do you expect in terms of average revenue per customer in Germany? So at the moment, we're calculating with similar as Sweden. Oh, per customer, per user. We're calculating with similar revenues per user. Over time, as I mentioned earlier, since you have a much bigger turnover per doctor than in Sweden or Norway, it should be possible to add more value. So, in a really good scenario, I mean, we started going up to 1%-2% of the revenue as we have in Sweden, but at the moment, the market doesn't look like that, but they're not buying the same type of product that we sell in Sweden either. And we will not for a while have the same rich functionality that we have in Sweden. So, at the moment, we're calculating per user is similar. Yeah. Next one, migration to the cloud could be a struggle for customers who are used to on-prem solutions. There might be also employee resistance to the new product. How would you address that? So, employee resistance. Yeah. So we're not forcing anyone to do anything. I think that's a key part. I mean, we're happy to have a customer in either system, and I think it's worth mentioning again that what we're buying is not just a list of customers. What we're buying is the competence, the team, the knowledge about the market, and the ability to also, you know, get new customers from other systems. So this is not an acquisition to just convert existing customers. It's acquisition to make sure that Carasent is a Swedish, Norwegian, German company with a good local understanding, being close to customers. I think that's a really important part. And I think it's more important not to force customer into anything, because then typically end up in a lot of problems. Customers who willingly change is a completely different thing, but it helps when you already have an existing relationship with the customer, and you can also make sure that a move is really smooth. So that's an important part of it. Next one is another one on acquisitions. I think we have addressed it, and then couple more questions here from Emilia. Any additional OpEx or CapEx needed to get this business started, how do you think about the financials as you start to grow in this market? What type of growth and margins would you expect? Probably need to staff up on sales support functions as migration requires a lot of resources. Yeah, I think it's similar to Sweden, where we can really hold costs stable. I don't expect costs to rise, if anything, the other direction. Then obviously, if we have a really strong growth quite some time from now, then obviously there can be the need to add someone on sales, someone on support, delivery, but that will be quite minor compared to the additional revenues. Next one, the potential earn-out payment, how much growth is required by Data-AL to achieve it? When would the earn-out be paid out? I think we have decided not to be more concrete about this than what we posted in the release, but you could say that they would need to see a significant step up in the growth compared to history to achieve the full earn-out. Next one, what is the range in AI revenue per customer? We have talked about that. And then we have some final questions here from Rasmus Persson. On the add-on side, do you expect to be able to make some of the same add-ons you have in Sweden to Germany? The same add-ons, I would say it's not like that many of them can move in their present shape. We have some parts that are developed already to move. For example, we have the new billing part of Webdoc Sweden, which is the same for Webdoc X, so we use exactly the same module. I think that over time, they could also be the same for example, certain types of patient communication platforms and so on. But in general, they're quite different, quite large differences in the systems between the countries. Next one, do they have customers throughout Germany, or, is it regional like Sweden? So it's much less regional than Sweden, actually. That was a bit of a surprise to us, and I think Data-AL is a proof of that. So Data-AL has customers in almost all parts of Germany. Even though typically, you know, you have system analysis in the system, you talk with Data-AL if you're a healthcare provider. So you have that part that makes it a bit local, always, I would say, but they have customers in all parts of Germany, and a big difference from Sweden is that how you connect and how you send information for billing and so on is the same for the entire country. So that's a big difference. And then the final question: Data-Cur looks like it's in for therapeutic work. What are your plans for this software? So I think it's interesting software. It's quite quick. It's a small team building it. They've been very successful, so we actually look forward to supporting them in that. It's a different customer segment than Webdoc, and they're a modern solution, smaller solution than Webdoc, which I think can move quite rapidly. If I remember correctly, they have 80 customers already? 50, I think. 50, okay. Yeah, 50 customers for the Data-Cur solution, and that's been quite a short time. When we started looking at Data-AL, they were just starting to go to the market with that product. So from, yeah, roughly zero to fifty customers in what can be like half a year or something like this. It's quite an achievement. So, we think that's a good complement to Webdoc X. So that was all the questions we had in the chat and on the phone. So thank you all for your interest today. Just let us know if you have any questions, and we look forward to speaking to you in the future. Thank you for now. Bye.