Welcome to Vitec Software Group Q1 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to CEO Olle Backman. Please go ahead. Thank you, and a very welcome to this Q1 2025 presentation for Vitec. I am Olle Backman, the CEO, and you will have to do with me because Patrik is not available at the moment. As always, I would like to start with a general presentation of the group, starting with the big pictures here: customer perspective. We always start with that. We have nearly 26,000 customers that we serve, all business-to-business. We do that out of, today, 46 different business units. Business unit, basically a company. We have our feet on the ground in 12 countries, but we actually have sales in over 50 countries today. All in all, you should also remember that most of our business units are a very domestic business, or regional at best. Proforma sales, which is a bit of a guidance since we do lots of acquisitions, is up to SEK 3.7 billion after Q1. 88% of that was pro forma, recurring revenues. To my assistance, I have nearly 1,660 colleagues. You can see the sales distribution there by market, and it is quite evenly distributed between the origin of Vitec from the Nordic countries and then spreading further out into Europe with our footprint in the Benelux area. Our strategy chain, which we work with throughout the group, is always based on our values, and that is the products at the foundation. It is very important to remember that we are a product-based company. We like to keep things simple. That is more to do with efficiency. How can we improve? How can we make this in a more efficient way? It is a mindset. Trust and transparency that works towards our customers, towards the society as a whole, and always, of course, internally, because it's a great value for us to be able to share knowledge between the different business units. We work further into the brand promise, which is to rely on today and tomorrow, especially important in these times, perhaps, that we are a very stable company that has been here for a long time, and we really care about our long-term customer relations. Working through the business concept and objective, and then hopefully also reaching towards our vision, which is to shape a wiser and more sustainable future. Talking about that future and the growth that goes with it, we have a way of trying to describe how we grow. Of course, the business model, as I mentioned, all our business units are market leaders. They have a high percentage of recurring revenue, so they work with that business model. We develop these business units from a decentralized perspective, so we are a very flat organization. We make a lot of efforts into the product investments, which is very important for us in order to be that trusted company in the future. All of this fuels the organic growth of the business units. We top that up with acquisitions. Basically, we look for nice vertical market software companies, established and profitable. They have a proprietary software, which means that they own their own product roadmap. Of course, they already have a decent amount of recurring revenue. Basically, the characteristics of Vitec itself is what we look for in new acquisitions. Talking about acquisitions, this was the seven we did last year, and I'm not going to run through all of them, but the point here is that they come in all shapes and sizes, and they're also in a very spread-out geography. Really interesting here for us internally is, of course, we opened up a new home market with our first acquisition in Belgium last year. So far this year, we acquired the Dutch company Intergrip in January. Really nice addition. Also a great proof of a company that does not only have a mission-critical software for its customers, but also software that is critical to society as a whole. It was a really nice addition. If you look at it by vertical, we perhaps could cluster them together. We have our big footprint here in the energy field, in property management, healthcare, auto, finance, and so forth. Sometimes we buy companies that sort of jack into one of these existing verticals, or we can buy a company in a totally new vertical. This is another way in which we show our business units. You can see here the sizes and the proportion of recurring revenue and also the year of acquisition. This is pretty much like a blueprint of the M&A market as we see it in our existing geographies. The average size is roughly EUR 4 million-EUR 5 million company, some bigger, perhaps one out of 10 or so. That is pretty much what it looks like when we look into our pipeline as well. Organization, like I mentioned, it is a very flat organization. In these blue boxes, that is where the business units are. That is where all the business decisions are taken locally. That is where it all happens. To their aid, they have the VPOs, which is a Vice President of Operations. They are part of the group management team, but they work exclusively with these business units. They do not have anything else on their plate. They just work to coach them, to guide them, to make them a bit better year- by- year. We have a small group office at the headquarters supporting the business units. One of the things that we do drive centrally is this sharing of knowledge, which is a very important part, because when you have 46 companies that are basically doing the same thing, which is vertical market software, although directed at different industries, it is a very important thing that we can share our common culture, but we can also share concepts, best practices, and worst practices for that matter as well. We share both successes and failures. This just keeps on getting better with size. It is a very powerful thing within the Vitec group that really helps us to become better. Moving over to the numbers for the quarter then. Net sales was up 23%, up to SEK 880 million. The recurring revenue part increased by 28%. EBITDA margin at SEK 220 million, margin-wise percentage unchanged or unchanged in absolute terms. The margin decreased to 25%, dropped from 31%. Operating profit, which was SEK 153 million, same there, unchanged, but the operating margin at 17% compared to 21% last year. Reason for this is basically a bit of a mix in the revenue. We had less services and less license sales, although they are a quite small part of our total business, but they are 100% margin business because we have all the resources already at our payroll. We thought we saw some increase in the activity in the market in the end of last year. We were hoping that to come through in Q1. Unfortunately, it has not done so. The turmoil around us has sort of postponed some of the rollouts of new projects, rollouts of new features, and things like that. That is still the picture that we see. We do not experience that we have actually lost anything, either customers nor businesses. It is just a lot of postponements of new initiatives. Although at a quite small scale, because we have this really stable business model with the recurring revenue, it is still sort of the cherry on top there that also falls through in the market. If we look at the operational result, I will get back to that shortly. It is still an okay quarter, not our best, but okay. If you look at it by quarter or the yearly, the graph here is just an expression of that. You have read that through the numbers, I think. Compounded growth over the past 10 years is 21%. If you look at EBITDA margin, same here. We are increasing in absolute terms, year -by- year. If you see the margin on the last few quarters, it has dropped a bit down to 25% for this quarter. Talking about what I mentioned here, which is sort of the cash-generating profit, this is one way that we measure internally because we do not do the activations and the amortizations and things like that on a business unit level. When we coach and guide our business units and set their targets, we use an internal KPI, which is basically a cash EBIT. This is just a bridge for you to understand the SEK 153 million which we reported. If you deduct the capitalization and you add back the amortization and the acquisition-related amortizations, you get the cash EBIT, which actually then increased with 12%, and the margin is 20% compared to 22%. This also stems very well with the actual cash generating. The cash flow was up, I think, 9% this quarter. Look at the distribution here. You can see the very important thing that the subscription-based revenues is growing healthy underneath. Then we have the transaction-based revenues on top, which is a great value add for our customers. As I mentioned before, they have a very different gross margin profile. It is a lot less profit in that dark blue part of the staple. All in all, a very good offering for our customers and very appreciated, which makes us take a greater share of the wallet. Growth then, as I mentioned, one acquisition so far this year. If you look at the organic pro forma, which is what we have been guiding for now for a couple of years, that is one quarter in this year and, of course, three quarters in the last year. We are expecting that to go down a bit because we still have some tailwind from the higher inflation year of last year. The price increases there are expected to go down a bit in this year. If you look at it in a more traditional way, we measure this on a full year basis. This was last year's numbers. We had an organic growth of 9% in comparison. The diversification of sales, as I mentioned, through the geographies, it's quite an even spread, but also a very nice diversification when it comes to breaking down the recurring revenue, of course, and also on the customer side. We have a very low customer dependency. That is just to sum it up a bit. Like I said, nice growth. One acquisition so far this year, and the cash flow from the operating activities was pretty much in line with what we expected. With that, I think that we will hand over for any 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 Predrag Savinovic from Carnegie. Please go ahead. Good morning, Olle. Thanks for taking my questions. I think first off, how much should we read into the comment around the mix shift? Is this an isolated event for the quarter, or is this something that we will see more of during 2025? The mix there, we are both hoping and expecting that some of these projects will start rolling out. Like I mentioned, we have not experienced that we have actually missed anything. Of course, with all the turmoil that goes around us, Vitec itself, we are not that affected, but our end customers might be. We are still hoping that we can pick up on the project and the rollouts so that this to be expected. Okay. If you could elaborate on this kind of transition around services and on the margin, I think if you can help us, where is this happening on the respective revenue lines and where is the margin impact hitting you in a year-over-year perspective? Yeah, it's basically two things. Number one is, of course, like I said, it's a bit less portion of our revenues, but we have services and we have licenses. Services is by far bigger. Licenses is roughly 1% today. The service department here is that we have all the resources available because we are doing all this with our own staff, of course. By that, it sort of flows down directly through the P&L. It's basically 100% gross margin impact if we get that up to speed. The same goes with the activation. The R&D efforts that we do, it's a bit less on that part as well. We will see if that is something that could be maintained over. It's an increased efficiency. It's still a bit early days to say whether or not that is here to stay. We are very focused on having the correct sort of level of R&D spend because that is our investments for future profits. These two things combined, and then of course, we have the transaction-based part of our recurring revenue, which has a lower gross margin. If that has a larger part of a single quarter, of course, that would affect the margin. We saw a lot of that during last year. We still have this quarter where, for instance, we have companies like Enova and BidTheatre. Bid Theatre was not part in Q1 last year. That will still sort of be visible here. They came in late in Q2 last year. I think all in all, we are expecting the, or I would say hoping and expecting that the project part will pick up at some point. The rest of the revenue should be fairly stable going forward. We also have on the OpEx side, Q1 is by far the highest sort of proportion of the OpEx. We know that we have a bit lower due to the holiday seasonalities in Q2, Q3, because staff is by far our biggest cost. Also from an OpEx perspective, Q1 is usually a bit higher than the others. Okay. We should expect the OpEx to decrease in the second quarter. Could you give some more color on margins for Q2, Q3, etc.? Because given there is a large change year-to-year and sequentially, I know you do not want to do guidance, but understand the moving parts a bit more on how this can trickle down for the rest of the year. Like I said, like you said, we don't do guidance on specific quarters because also we really like to think of Vitec as a very long-term and long-term oriented company. Things are moving quite slowly as usual in our part. We don't see any dramatic changes in this regard. Yes, we have a bit more on the transaction-based part, but that came through most of it in Q2 or sorry, Q3 and Q4 of last year. In Q4, we had a lot of projects that came through. These projects, exactly like I mentioned, they had a lot of services. There were some licenses which fell through. We had a fantastic strong Q4 of last year. I say if you look at the sort of rolling 12-month basis, it's always what we'd rather like to think our best guidance for the future. Okay. That's clear. Thank you very much. Thanks, Predrag. The next question comes from Erik Sandstedt from Kepler Cheuvreux. Please go ahead. Hi there. Thanks. I've got a few detailed questions perhaps on amortizations, trying to get a better understanding of the difference here between the P&L and the cash flow, although you kind of briefly commented on it already. If we look at amortization of intangible fixed assets, it amounted to SEK 67 million in the quarter, right? I think this line has tended to be around SEK 30 million-50 million per quarter historically, although it was pretty high also in Q4. How should we think about this cost line going forward? Is Q1 sort of the new normal here? Yeah. I think I can flip back. If you look at the, you have them here, the 67. You can see quite a good increase from 38 to 67 and then 66, which has actually decreased. Yeah. The latest quarter is always kind of a good proxy. Of course, what we did is the larger acquisitions that we did, and especially the ones in Q4 of last year, they had intangibles on their own balance sheet. What happens then is that if you do not have any activations on your own balance sheet, the amortization will end up in the acquisition related. If you have it already, then it is already part of the PPA. It is a distribution between these two lines. I would say that Q1 is a good proxy going forward because, of course, these are all amortizations according to plan. They will stick with us for many years. It is really a distribution between these two lines when we do the PPA allocation. Yeah. Because that actually brings me to the second question. Because if you look at the acquisition-related amortizations, those were SEK 63 million in the quarter, right? And I think that's only sort of on par with the same period last year and clearly below the Q4 level of SEK 78 million. Is that related to your previous comment, or are there any sort of acquisitions where this? Yeah. Like I said, it's really a distribution between these two lines. That's one thing. The other is, of course, that as our companies sort of fall over the 10-year frame, they will be fully amortized from that row. That also happened last year. We had some of our acquisitions that were made 10 years ago, which were a bit bigger by then, actually fell out. Yeah, that will happen. Yeah. Has anyone fallen out in this quarter that explains that pretty low number, 63 million? Or is it more the mix between the two? It's more of a mix, but yeah, they fell out already January 1st. Yeah. Okay. Yeah. Good. Finally, on organic sales growth, because that continues to hold up pretty well, growing double-digit in local currency terms in, I guess, what is still a pretty tough market. Could you maybe share some more lights here and also maybe comment on pricing specifically, but more also generally, what is driving double-digit organic sales growth in a pretty tough market? Yeah. Like I mentioned, that's on the pro forma basis, which we think still it's a good guidance of the pace and the size that we have today. We have done three quarters in last year and one quarter this year. Gradually, the organic part is expected to go down a bit because we don't have the same tailwind from price increases. Price increases last year were perhaps in the 4.5-5.5% range. This year, probably like 2 percentage points lower at least, more on the 3-3.5% part, which we see so far this year. That is expected to go down a bit. The rest has been an upsale to existing customers, like mentioned before. We still see decent activity in the existing customers, which we can sort of sell things to. One of the things that we do sell then, that is actually the transaction-based products that we have. Because like I say, they are always sold to a customer that already has the subscription part. We can't just do the transaction-based part. There is always a subscription at the basis. Yes. I mean, how does this then relate to the cost of goods and services that is up quite a lot? I think you mentioned it already. Coming back a little bit to the question how one should look upon that going forward, because this relates, I guess, to the transactional part of the business, but cost of goods and services are up a lot year- on- year. Yeah. They are predominantly related to the transaction-based. They are the transaction-based, and then there is the external hosting. That's basically what's in there. If we have a higher degree or higher sort of gross number on the transaction-based revenues, we will have an increase in the cost of goods sold. That pretty much follows it. Same here, giving the distribution within the quarter, the sort of gross margin level that we have now, it could go up a bit, like I mentioned, if we get more service sales. If we pick up on that line, of course, gross margins will pick up a percentage or two. They are very closely related. Okay. Perfect. Thanks a lot. The next question comes from Patrik Schwartz from Pareto Securities. Please go ahead. Thank you. Hi, Olle. I have a question on the product mix. Transaction revenues were up on volume. Is this specific to Bid Theatre and Enova, or is this broader among your subsidiaries? They are by far the biggest one in that category. Still, there are lots of other business units that also have transaction-based volumes. They are by far the two biggest ones. Okay. Thank you. On seasonality, normally Q1 is lower on transaction revenues from ABS. Was this true this quarter also, or did we see an increase? Lower on the transaction from Enova, I should say. Enova is still expected to have larger volumes in Q2 and Q3 due to the seasonality. The other companies that have transaction-based, they are much more even throughout the year. It is basically Enova that has a big seasonality effect. Okay. Thank you. You now had about three quarters where cost per employee has been up about 6% year- over- year. Is this starting to become a larger trend, or how should we think about that? If you look last year, 6% up, that was pretty much in line with just the salary increases within the IT industry. We are looking for very talented and highly sought-after people. Last year, salary increases were in the 5-6% range. Expected to be a bit lower this year. Yeah, we will basically follow the IT industry in that sense. Okay. Thank you, Olle. I'll get back in line. The next question comes from Christian Binder from Rede ye. Please go ahead. Hi. Thanks for taking my question. I just have one quick follow-up. Looking at the M&A front, you already said general economic uncertainty does not affect your recurring revenues that much. When it comes to M&A, have you seen anything in terms of sellers maybe turning a little bit more cautious, or is the market still unaffected, so to speak? Yeah. We still experience a good pipeline. There are lots of companies to look at. We have a really good funnel in that sense. It is dragging out a bit in time. There are longer discussions. There is more uncertainty, of course, from both buyer and seller. In this case, as we have done in many, many years, we have a really focused approach. We have set criteria, and we are back to the fact that Vitec is to be relied upon. We have the funding available. We are, what we think, a very stable partner in that sense. Yeah, from a seller's perspective, of course, a bit more uncertainty, I should say. We have experienced that discussions are taking a bit longer, perhaps. It does not change anything in our strategy or the way we think about what we are looking for or how we should price things. All right. Perfect. Thank you so much. The next question comes from Erik Larsen from SEB. Please go ahead. Good morning, Olle. I hope you're good. I just have one question. I know you don't usually comment, or I guess never comment on single business units. Given the tangible deviation to expectations here, I'm just curious if you saw any earnings decline in any of your particularly larger subsidiaries. Of course, I'm always interested in Enova since that's a bit more difficult to assess. Yeah. Exactly. Like I said, Eric, we don't comment on the profitability on the individual business units. What we can say, first of all, this is not the margins here. When we look at it operationally, like I mentioned, because that's how we measure our business units, profit was at a 20% margin level compared to 22%, and it was 12% up. Really no drama, nothing that sort of makes us think in any different way. Of course, we're always cautious on costs. We're always looking ahead and then seeing, okay, what's the activity like out there. No, there were no really surprises for us in this quarter. Pretty much business as usual. All right. That was my only question. Thank you. Thanks. The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead. Yes. Thank you very much, Olle. Many questions already asked here, of course. I looked at the earnings paid out here in Q1. They were SEK 175 million. Do you have any kind of outlook or guidance for the rest of 2025 in planned paid out earnings? Yeah. If you look at the short-term part there, I think it's roughly a bit over SEK 100 million or so left, if I remember correctly. If you take the short-term. Yeah. That is to be expected to be paid out. The companies that relate to that, they are performing really well. We are expecting that to sort of be materialized. Yeah. No, I agree. Okay. That's fine. That's fine. And then also, out of the 1,600 employees, roughly how many work with fully service-related projects and revenues, if that's possible to measure? Unfortunately, that's not possible to measure because the smaller business units, they are one individual has sort of many roles. They can be a developer, they can be a tester, they can work in customer success. It's really hard to measure. Yeah. I see. A final one. We already got some questions on Enova and Bid Theatre. Are there any of these two companies that have particularly tough comps in any quarter in 2025 here versus 2024 that you would like to highlight? No, not apart from, like I said, Enova has an expected seasonality. Yet again, I don't know what the weather will be like in the Netherlands in May and June, so. Fair enough. Okay. Thank you very much. Thanks. The next question comes from Viktor Lindström from Nordea. Please go ahead. Hi. Good morning, Olle. Just to follow up on the OpEx question. You mentioned that you expect OpEx to decrease here going forward. Does that still include that annual salary increases? Are those completed, or should we expect those to kick in from Q2 and onwards? Both salary increases and also price increases. When we reach the end of Q2, during the first half year, both price increases and salary increases will be done. Up until this point, roughly, I think 40% has fallen through. It all depends on the different sort of patterns in each country. Okay. Thanks. That's all for me. Thanks. There are no more questions at this time. I hand the conference back to the speaker for any closing comments. Okay. Thanks all for listening in. We're looking forward to the AGM, which we hold next week. You're most welcome up to Umeå if you have the opportunity. Thanks for listening.