Ladies and gentlemen, welcome to the Knowit Interim Report Q3 2023 conference call. I'm Andre, the operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your touchtone telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Per Wallentin, CEO. Please go ahead, sir. Thank you, and warm welcome to this presentation of Knowit's report for the third quarter of 2023. We can take next slide, please. Well, my name is Per Wallentin, and I'm the CEO of the company, and I also have Marie Björklund, our CFO, with me here to take us through some numbers later on. Next slide, please. First, I would like to take you through some operational highlights during the third quarter. We have been faced with weakened demand all through 2023, and this trend continues in the third quarter. We do, however, see stabilization in the quarter. Our utilization rate is still too low, and that's why margins are not satisfactory. We face the largest challenges in Sweden, where sales cycles are long and projects are postponed, unless deemed business critical. We continue our focus on reduction of general costs, with many initiatives implemented in the quarter, as well as in Q2 before summer. This includes cost savings from travels, conferences, et cetera, but also reduction of staff in areas where demand is weaker, and also in pure administrative roles. So far, we have reduced our capacity with around 165 employees due to lower utilization, and, with this said, we maintain recruitment in areas where demand is high, and we are able to quickly utilize the consultants in new projects. We can take the next slide, please. We will now take a look at our business areas more in detail. Solutions, our largest business area, reported net sales of SEK 884 million for the quarter, corresponding to 1% decline. The EBITDA margin was 7%, margin decreasing following lower utilization. We still face challenges in maintaining high utilization, but this is somehow stabilizing during the quarter, and Sweden is impacted more than the other markets. We keep high focus on cost reduction and reallocation of resources. We also work as to consolidate our operations with the purpose of creating ability to take on biggest, bigger customers and increase efficiency. All of this, of course, gives results, but we are still not on a satisfactory, satisfying level. We can take the next slide, please. Looking into Experience, our digital agency. Reported sales of SEK 331 million in the quarter, a decrease of around 2%. The EBITDA margin was 2.2% due to low utilization also here in Sweden. Norway and Denmark show stable development. Year-over-year, Finland is improving from quite low levels. We maintained high focus on cost reduction to secure future profitability, and that has also impacted the result. These cost reduction initiatives have impacted the result in Q3. We can take the next slide, please. Our business area, Connectivity, reported SEK 252 million in the quarter, a small growth compared to last year, and the EBITDA margin was 10.4%. The development in the quarter is very strong and especially in the current market situation. We maintain a high level of proactive dialogues with our clients, which leads to results. We also work hard with sales to find new projects and new clients. Our Polish operations deliver very strong results, thanks to their ability to adapt to market changes quickly. We have a really high competency in the Polish operations. We can take the next slide, going into our management consultancy, Insight. Insight reported net sales of around SEK 170 million for the third quarter, growing by 4%, including acquired entities. EBITDA margin was -6.3%, and Insight normally has a seasonal effect in Q3 with lower utilization and a slower start, but this was stronger this year as several projects were postponed and downsized. The largest challenges is still to utilize general management consultants, for example, strategy projects, etc. This is also the areas where we see the postponed projects impacting overall margins. The business area has maintained a relatively high recruitment level for in the quarter for roles where demand is high. For example, defense, energy, cybersecurity, and legal. And in the quarter, we see a positive net recruitment due to that focus. These new employees have quickly been utilized in new projects. We also have implemented several measures to reach solid profitability long term. To ensure full effect from these initiatives, we have, of course, the highest priority the coming months. We can take the next slide, please. As you might have seen, earlier today, we are very pleased to tell you about the deal that we press released today, a new frame agreement with the Norwegian Police. Together with two other main partners, Knowit will deliver digitalization services to the police, covering a wide range of competencies like architecture design, as well as security and data analysis. The contract is worth NOK 4 billion over four years, estimated net sales for Knowit SEK 200 million-SEK 400 million a year. With that said, we can take the next slide, please, and I would like to hand over to Marie, who will elaborate on our financials more in detail. Thank you, Per. Next slide, please. Looking at the Group as a whole, we delivered sales of approximately SEK 1.5 billion, same level as we reported for the same quarter in 2022. This is an increase of 1.5% and unchanged when comparing Knowit now and including the acquired units a year ago. Adjusted for FX effect, revenues declined by 3%. Connectivity and Insight are growing, while Solutions and Experience are decreasing in sales. EBITA, adjusted for acquisition and integration costs, which for this quarter was minor, amounted to SEK 74.9 million for the quarter. This is a decrease compared to the same quarter last year. This leads to an adjusted EBITA margin of 4.9% in the quarter. Last year, it was 6.2%. As we already mentioned, this margin decrease is due to the slowdown in demand, causing lower utilization, affecting several markets and all business areas, except Connectivity, who is still stable. Sweden is hit especially hard. But on another note, our hourly rates are under pressure, but still they increase compared to a year ago, so the negative growth of comparable figures is still coming from our utilization. Actions to increase the profitability was initiated already in the second quarter, and it has started to give effect in this quarter. In total, so far, we have agreed with 165 employees that they will leave, or they have already left the Group in 2023. Following all these initiatives, we have one-off costs of around SEK 14 million in the quarter, relating primarily to staff reductions. A cost-cut program is ongoing, and we save SEK 20 million during the third quarter. Savings include cost of travels, conferences, and events that will be kept at the minimum, but also some staff costs and other external costs. We will continue savings during the fall, and our main focus right now is to increase our margins. Next slide, please. This slide shows the development over time and also on a rolling 12-month basis. Our adjusted EBITA for the latest 12 months is at SEK 529 million, and revenues at SEK 7.2 billion, and then at an EBITA margin of 7.3%. Next slide, please. This is an overview of our net debt development. We have SEK 600 million in used credit facility. Knowit has a total credit facility granted of SEK 1,050,000,000. Future considerations amounting to SEK 62 million has decreased since last quarter due to payments of earnout for Ascend, Creuna, and also a revaluation of the last earnout concerning Creuna, which is due in 2024. Leasing debts amount to SEK 571 million, an increase towards last year because of new leasing contracts taken in several places, mainly in Stockholm. The amount has a small decrease since last quarter, and this is because of amortization. This totals a net debt of around SEK 1.1 billion, and divided with our EBITA of 707 on a rolling 12 month basis, we are at a leverage of 1.6. I wanted to mention the working cap in our cash flow. We have a higher accounts receivable than usual, and this is because this quarter ended on a weekend, and payments due on September 30th was to an extent, paid on the following Monday, that is, on October second. This was expected from our side and something that we normally have when we see a closing on a weekend, but of course, this affects also the cash balance negative. All in all, we still have a stable balance sheet and a good financial position. And most important, we are well within our financial target, which is set not to exceed two. Next slide, please. We do have a solid platform and a strong position as a digitalization partner in the Nordic region. There is, of course, no safe haven, but having a broad footprint is a strength in tougher times, and the share from the public sector has increased, as you can see, compared to last year. This is mainly driven by an increase in the defense sector, where we see high demand. In other parts of the public sector, we notice greater caution than previously, and competition is becoming more difficult. But above all, we know that clients remain focused on business-critical projects, also in an economic downturn. Back to you, Per. Next slide, please. Thank you, Marie. Well, to summarize, we present a quarter where the we meet a weaker market, but the negative trend from Q2 has stabilized. We have a really high focus on reallocating resources to areas where demand is high. We have a strong focus on sales and internal efficiency. Several measures to reduce costs have been implemented, but we do not see full effect yet. The market outlook for the coming year is uncertain, and market visibility is low, but Knowit is strongly positioned to continue delivering growth and profitability even in such a market. And last but not the least, the digitalization trend remains very strong among our customers. The speed of change is actually increasing with the development of AI, even in economic downturns. And with that said, we are now open for questions. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Raymond Ke with Nordea. Please go ahead. Yes. Hi, Marie and Per. Can you hear me? Yes. Yes. Thanks. Great, so am I correctly understanding that most of the 165 employees that were laid off were laid off in Q2? It's a mix of Q2 and Q3. Yeah, and you write that it has cost about SEK 14 million in restructuring costs in phase out of employees here in Q3. What about Q2? It was, it wasn't as much, otherwise we would have mentioned it in the second quarter. I think it was around SEK 2 million. Okay, um. Yeah. Okay, but so you laid off more in Q2, but the cost was less in Q2? No, no, no, it was a mix of Q2 and Q3. Oh, okay. Those 165. It is a mix, but it's also, we took higher costs, and it's during the time that our employees are on garden leave. But there are two ways, either they are on garden leave or they work their full time before the notice period. And then we haven't taken these costs, so there's a difference there. That makes sense. Thank you. And just on the contract with the Norwegian Police there, considering its size, how should we view the use of subconsultants in this and profitability of this contract compared to the Solutions division overall? It's such a big contract, and we are actually happy to announce that this contract is already starting off late this year, actually. So it's a quick start on it. We will use subcontractors, as we mainly do in all of the big deals, especially connected to public sector. So there will be a substantial amount of public sector subcontractors. The profitability in this special deal, this is public information, will be really good and fair due to quite high prices. Okay. And did you say it was worth an estimated SEK 200 million-SEK 400 million annually? Was that, d id I get that correct? That's right. Okay, thank you. All from me. Thank you very much. The next question comes from the line of Daniel Djurberg with Handelsbanken. Please go ahead. Thank you, operator, and good morning, Per, Marie, and Annika. Good morning. Yeah, I was wondering, first of all, I think a little bit of congratulations to, in my view, strong report, given the circumstances in the market. I would like to ask you a little bit on the cash flow, though. Marie, you mentioned you talked about it, but then I was disconnected, so I didn't hear really on the working capital build. We see that the current assets is up 17%. Obviously, I understand that large clients of yours are holding into payments, but can you comment a little bit on what you see between the DSO and the DPO, and going forward on bad debts, risks, et cetera? Yeah. We're following the accounts receivable, receivables closely, of course, but we don't have any high risks on bad debts other than normal. But the closing of the quarter was on a weekend, so we have a portion of the accounts receivables being paid instead of the Friday; it's being paid on the Monday. So I would say this is around SEK 100 million coming. Okay. In on Monday instead of before. So that is the explanation, and it was expected from our side. Actually, the effect was a little bit lower than we expected. We worked hard to try to receive as much as possible before the weekend. But that's the explanation. Perfect. Yeah, so the delta is much less than if it would go on the Monday instead, break even, I guess. Exactly. C ash flow from operating activities. Yeah. That's good. Yes. Uh, thanks. So something good to have in mind also for 2024, because I think that we have a couple of quarters ending on a weekend that then as well. Good. Another question, if I may, a little bit on the SEK 4 million reduction charges. Is it fair to assume that it's mostly within the Insight business that have this, I think it was SEK 11 million loss in the quarter, or is it evenly spread over the business areas? Well, it's not actually more in Insight than anywhere else. I would say if any business area having more, it's Experience. Okay, thanks. And also, if I may, a little bit on. You obviously, you're breaking some, and you're pushing the throttle at some areas, and you talk about, you know, the cybersecurity and also defense, et cetera, to be strong areas. Can you talk a little bit on your internal processes to re-educate to if that is possible in these kind of markets or if it's more in, you know, other types of markets that that works, and if that is on your.. Yeah In a scale? Yeah. Yeah, it's in a bigger scale than for many, many years, right now, due to the situation on the market in other places. And of course, to get into the defense industry, it's long lead times. It might be up to half a year or something, but we try to do that where it's the right competence, because I think that the defense industry will remain high in demand for quite a few years, many years, as you might have noticed yesterday. There was a lot of people from NATO in Stockholm talking about the defense industry and procurement processes for Sweden into the NATO system. We were there, of course, on place talking with those people as well. So, we think about this not only as a short-term initiative to gain profitability in Q4 or Q1, but also long-term for 2024 and 2025 and further on. Perfect. My final question, if I may, would be a little bit on the, on the right sizing, so to say. Is it possible to work the demographic at the same time, or is it so that senior consultants or experts is, you know, more in demand for that, that is pinpointed by the client, so you can't really lay off elderly people like myself and take in a little bit younger? Yeah, I understand what you mean. It's hard to celebrate that structure. We are on that as well. As you know, as you see, we actually have some areas where we have high demand, even in Insight, and in those areas, we're able to elaborate that, or have that focus. We have a lower employee turnover, of course, now than before, but we still do have some employee turnovers. We are able to work with that, with that focus as well. Perfect. I will get back in line. Thanks. Thanks. There are no further questions from the phone. Okay, we have a few questions from the webcast. The first two coming from, Thomas Nordås. Why are you growing your FTEs while dropping EBIT? It's because we still focus on growing the areas where we see a high demand. Second question from Thomas: Are you laying off people in Insight to mitigate the EBIT development? Uh, yes. Great. Then we have two questions from Halvor Aasen Dybdahl. First being, how is the utilization among junior talent compared to senior talent? It is quite all right. I think that we see a little bit tougher times to utilize more general roles connected to junior talents, but that is, it's not a battle of junior or senior consultants. It's more that in certain competence areas or industries, we see a lower utilization. Yes, and the juniors we recruited during the fall, they are in assignments now, most of, most of them. Yeah. Yes. How has the price developed during the quarter? Do you see any price pressure in especially the Stockholm region? Yes. We do see pressure, as I mentioned. The prices have, they have increased against last year and also during the quarter. But yes, there is a pressure. There is another question related to price, because you said hourly rates are increasing. How are the hourly rates increased in percentage compared to salary increases? Well, we don't disclose those details, but so far, hourly rates increased more than salary increases. All right. Another question from Halvor Aasen Dybdahl: How does the market for M&A look at the moment? Do you have any potential acquisitions in pipeline? No, our main focus right now is the focus that we just presented in the report, to work with the margin, high focus on cost, high focus on sales to increase utilization. What do you consider to be the most important thing for clients to accelerate investment decisions? Connected to, yeah, I think that it's very important right now for quite a lot of customers to handle the quite big changes that we see connected to AI and connected to actually the lower costs of digitalization. Because with AI, the cost of implementing new systems, new ways of working, new processes, et cetera, will go down. They will face challenges from competitors that will digitalize, and with that said, lower their costs. So it's a race of digitalization amongst quite a lot of our customers. Great, thank you. There is another question on cost cutting that we may have already touched upon, but anyway, how do you cut costs? Are you cutting number of consultants, overhead costs, or other OpEx? Well, we reduced the capacity with 165, and that includes both consultants and also overheads. I would say that the overheads is in relation to total higher than consultants, and it's also at the headquarters. Concerning the costs, the SEK 20 million that is cost is not a salary saving of consultants or overhead. It does include some staff costs, but that is more like onboarding costs and education. But the major part of costs, that is the conferences and travels and so on, which I said it's kept at a minimum. Great. We have a question from Tom Guinchard at Pareto Securities. Can we expect similar cost savings effects in Q4 and Q1 as Q3 per day or higher in Q3 as conferences, kickoff, et cetera, is concentrated to Q3? Well, it is true that we have high costs normally in Q3, but we will continue the savings as long as our margin is under pressure. So, when taking that into consideration, yes, we will have similar effects in both Q4 and probably in Q1. All right. And then there is a question from David Bjerkeli at Hvaler Invest AS. Do you see stable as opposed to further falling demand in all markets, or are there significant differences in the different countries? There are significant differences. We saw that in Q3. We foresee that for the future and for 2024 as well, but we see a stabilization. There was a big decline in demand before summer, and we see a stabilization of that. For example, we have a lot of public sector, as you all know, and if we exclude the part of public sector that is defense, because that is very positive, we see that there was no extra budgets for 2023. We foresee that that is not going to come for 2024 either. But with that said, there are budgets and the demand is there, but it's on a little bit lower level, and then we are able to adapt to that. Great. There are no further questions from the webcast right now, so I hand over to the operator. Thank you. We have a follow-up question from Daniel Djurberg with Handelsbanken, and please go ahead. Yes, thank you, operator. Yeah, I had a little question to Marie, just for my curiosity. On Q3, obviously you have half of the quarter is more or less vacation times and so forth, and you redo provisions during the year. And are those provisions the same across your business units, or is it, you know, that some units have perhaps higher profitability on back of higher provisions during the year? Or is it apples with apples in the units? Well, it's spread between the units, but I would say that Experience is sticking out a bit with higher provisions. Perfect. And may I also ask you on my last question, on obviously you don't guide, but it would be interesting since it's, I think it's a bit dangerous to extrapolate on Q3 too much, given the vacation, et cetera. But when you look into the October start, and also September, only you can comment a bit on the overall, is it fair to assume similar trends as we saw in Q3, or is it something that has changed materially year-over-year compared? We can see that the market now, we believe is quite stable, but of course, I mean, we took a lot of measures and actions and, let a lot of people go. So, of course, we're hoping that that will give an effect on the, utilization. But the market is stable, but it's quite tough. Yeah. Perfect. Thank you so much, and good luck in Q4. Thank you. Thank you. That was the last question from the phone. Nothing further in the webcast either. All right. Thank you, everyone, for listening in, and hope to hear from you soon. Thanks. Thank you.