Hi, everyone, and welcome to this web presentation of the Excitec Q1 report. My name is Carl Öberg, and I will be moderating this presentation. Presenting today will be Group CEO Niklas Ek and Group CFO Carl Arneson. If you have any questions during the presentation, either use the raise your hand function or write directly through the chat here in Zoom. With that, I hand it over to you, Niklas and Carl.
Thank you, Carl. Hello, everyone. This is Niklas Jek speaking. I am the CEO at Excitec and we'll start off by making a short recap about our business as a reminder what we do. After that, we will cover Q1 financials and a short market update and also our priorities going forward. We are Excitec, making IT work together and we exist to deliver digital solutions that improve our customers' businesses and waiting to be a one-stop shop to the customer. We do this by selecting different softwares and develop in-house integrations that can be reused. By implementing different software and provide long-term support, we aim to be a single point of contact for our customers. The digital tools that we use can address areas like reducing financial administration through automation or use data for better decision making. Excitec is a Nordic company started out from Linköping, Sweden. Today we are around 600 employees with Sweden being the biggest segment. We have been successful in the last 10 years with growth both organic and from M&A. Our EBITDA has followed our growth nicely with an exception in 2024. Best of breed is how we approach our customer solutions many of our delivers are centered around the erp and the finance system which act as the the core by selecting the right components and ensuring they work seamlessly together through our in-house integration we can take full responsibility for the entire solution our customer base today is around 5 500 organizations and our target market is medium to large size companies in the nordics no one customer typically is more than around one percent of our revenue so very low risk in the individual accounts we combine the software packages we work with to fit different industries and we have customers in many different industry sectors as you see in the slide these are the primary software providers and partners that we work with at this time we are resellers of software and the selection has grown to over 20 software components we combine these softwares with integrations that we develop in-house we have a revenue share partnership with these software providers where we market and sell their software to new accounts and make customers successful in using the software over time the business model is built on three revenue streams the sales and marketing is focused on selling software together with integrations this is sold on a subscription model where you pay as you use this revenue stream has grown to 25 of our net revenue and just under two-thirds of our revenue is from professional services where we implement the software and make the customer successful in using the software over time. We also do custom development and custom integrations when needed. And the third revenue stream in our business model is that we offer our customers a single point of contact support on a recurring fixed priced model. Excitec runs one of the largest trainery programs in the and has done so at scale since 2015 we are very proud of this and today almost 40 percent of our employees started their careers with us as trainees the trainee program is our primary source for recruiting new talent and an important driver for our long-term growth looking ahead we plan to welcome a new group of trainees this fall as usual and the size of the 2026 program will be in line with 2025. So let's dive into specifics for Q1. I will start off with the highlights and then leave the word to Carl Arneson, our CFO, for the financial details. Overall, I'm satisfied with the development in the quarter, especially the strong profitability. We deliver strong earnings with an adjusted EBITDA of 49 million sec and a margin of 21 percent. Organic growth was one percent in the quarter and while this is moving in the right direction we clearly see potential to increase the pace going forward. Recurring revenue from software continues to grow strongly reaching 232 million sec on an LTM basis up 17 percent year on year and finally order intake from new customers was strong up 38 percent in the quarter reflecting solid demand and good sales momentum with that I will hand over to you call thank you Niklas and hi everyone and starting then with our net sales we report a plus 1% organic growth in Q1 versus last year and but if we include the divested operations for ZEDCOM, the total growth for the group was instead minus 1%.
Please then also note that the net sales excludes the capital gain from the divestment of the ZEDCOM business that we also finalized during Q1. During the quarter, we saw growth in net sales in our Swedish and Norwegian segments while other Nordics declined and I will come back to the development per segment shortly. Our growth comes mainly from recurring revenues in this quarter and furthermore Sweden was the only segment with growth in professional services. The overall market sentiment is still that customers tend to be a bit cautious and push decisions for for minor system updates and standard adjustments into the future while new projects proven from our sales department are developing more positively also described by nicholas here in the previous slide moving over to our adjusted ebitda we report a 49 million sec profit which is a seven percent uplift versus the first quarter last year main drivers behind the uplift uplift this is continuous growth in recovering revenues but also by a solid cost control also worth mention here is that the capital gain from the divestment of the sedcom business is not included in the adjusted EBITDA also mentioning in recent quarters we still feel that we can deliver even stronger performances and profitability almost across all our segments even though we see we've seen an uplift in Sweden here in Q1, the efficiency in especially Sweden and Norway can be improved. And this is something that we also prioritize in our daily operations. LTM, the adjusted EBITDA of 161 million SEC equals a 2% growth versus the full year last year. Here we see a consolidated view over the net sales and adjusted EBITDA margin for the total group. The adjusted EBITDA margin of 21 percent is a certain uplift versus q1 last year and it's also our best reported quarterly margin since q2 24. as i mentioned here in the previous slide main reasons behind this improvement are stronger recurring revenues and the solid cost control across the line and it's also satisfying that we see an increase in the net sales per employee in general so let's continue with the net recurring revenues from software this has been a highlight for us for a number of years and for the last 12 months we see a growth of 17 percent compared to last year in this revenue stream that made up approximately 25 percent of our total revenue last year and this growth is driven both through through new sales price increases but also to a certain degree from M&As. Overall, the organic growth in recurring revenues as per Q1 summarized to approximately 2% of the total growth. This development is, of course, a very important contributor to our earnings and also strength with our business model. But it's also a good indicator for us that we see a strong offering and that our customers continue to use and deploy the software that we deliver. And also, finally, please also note that these revenues are net revenues. Regarding our different segments then, starting with Sweden, Sweden delivers a minus 1% growth in Q1 year on year, although the organic growth was plus 3% if we excluded divestment of the ZEDCOM business. The adjusted EBITDA margin also developed positively and ended up at 23% versus 18% last year. So we continued the margin uplift trend from last year, also in Q1. The higher margin here year-on-year can, of course, be explained also here by stronger recurring revenues and a slight uplift in consulting services, but also to a disciplined cost control. Norway reported a plus 2% growth in net sales, year on year. And here we also find it satisfying that we continue to increase our adjusted EBITDA and margin in Q1 from 14% last year to 15% this year. The main reasons behind the uplift is in higher efficiency, but also cost control. We maintain the margin of 15% also in this quarter. It's the same as we had in Q3 and Q4 last year. And 15% is also the highest level we've had for Norway since we entered the Norwegian market back in 2021. But even though we're happy with the improvement, we still feel that we have even more opportunities in Norway going forward. A stronger growth and an improved margin here in Norway are key focuses for us going forward. finally our third segment of the nordics and the covers our offerings in denmark and finland reported a growth of minus seven percent and the organic growth was minus four percent the declined year year on year can fully be explained by the development in our danish operation that had an exceptionally strong q1 in 2025 and our ambition here is of course to as soon as possible to come back to positive growth meanwhile finland delivered both strong
sales numbers as well as a margin contribution to the group and by that i hand over to you again niklas thank you carl i will continue with a short update on the market conditions and our priorities is for 2026. The market situation is essentially unchanged, although we saw some improvements towards the end of the quarter. Sweden stands out with stronger development than our other markets. As mentioned earlier, order intake in new sales was strong in the quarter, reaching the highest level we have seen in the first quarter to date. At the same time, we see shorter sales cycles from lead to signed deals, as well as improving lead quality. Over the past few years, we have seen more cautious approach to IT investments leading to pent-up demand. As market conditions improve, we expect this to gradually translate into increased investment activity. M&A remains an important part of our strategy. We see increased market activity and are evaluating selective opportunities to strengthen our offering and support long-term growth so let me briefly touch on our three key business priorities for 2026 starting with business next the cloud version of abysma business this is about accelerating the migration to cloud erp we have had a strong start in q1 with high activity among existing customers increasing interest in migration and solid new sales across all segments for microsoft the focus is on scaling our platform offering here as well we see a strong start to the year with high market interest and several new customers added during the quarter and finally organic growth where the focus is on increasing the overall growth pace we see clear potential to to improve and while development is moving in the right direction we we remain focused on accelerating growth going forward this is a reminder about our financial goals we have a goal to increase our net sales by at least 15 per year over time and our performance target is to increase our ebitda per share by at least 15 per year over time as well our stability measures is
that our net debt must not exceed two times our ebit da and the last one is that our policy is to distribute 20 to 40 percent of the profit after tax so this concludes the presentation do we have any questions carl yes and let's move on to the questions and first up we have thomas nilsson from novia and the first question is organic growth remained modest at plus one percent what are the main bottlenecks reaching a higher organic growth rate is it customer demand sales capacity implementation capacity or market conditions yeah so so the organic growth is the
one that we're not uh pleased with in the in the first quarter it's it's one percent but we are always aiming higher but but it's not our capacity it's not the sales capacity or implementation capacity capacity i guess it's a combination of customer demand and market conditions so so when when we look at our different revenue streams we see growth in the recurring revenue from from software so so we're pleased with that one so it's down to the professional services and and a reminder to to all is that even though we see strong new order intake from from new customers coming into us still 80 percent of the revenue in professional services comes from existing customers so it's uh so it's an important part to to see how our existing customers are are acting and it has been a bit passive over the last two years and it's not really much of change in that market conditions so so it's a combination of of the market and the customer demand but but we still think that we can do more and we are not happy with just one percent we were aiming higher than that um so that was the one about organic growth yes and the second question is giving the current developments in ai do you see any signs in your customer base when it comes to renewing contracts and signing up for long-term support agreements and no is the short answer we can't see anything about that customers churning our support agreements due to to ai new okay and the third question is how do you intend to address the often discussed seat compression risk how much of your revenue is seat-based versus non-seat based and are you considering changing your invoicing to be indexed to other metrics than the numbers of physical users yeah i think overall it's it's a change in the market and And it's mainly driven by the software providers, how they are invoicing the customers. And they have been in transit in the last couple of years. So they are looking more and more into transaction-based invoicing rather than seat-based. And I think that will accelerate in the coming years with AI and cloud consumption and so on. so and it was a question about how much of it is seat base i don't have that in in my head really we can look into that if it's interesting but but we see we see a change in in the market and from the software providers that they are not looking at seat base anymore as they used to so so we're seeing a change in there so it's more of a transaction based invoicing okay before we move on to the rest of the q a's we have jacob benon who has raised his hand so
please go ahead and unmute yourself we can hear you i can't hear you jacob are you trying to say something yeah okay then we move on to the q a's uh we have a question from philip uh do you You don't mention M&A in the report. What's your view on this going into 2026?
Yeah, I just mentioned it in the presentation here, but we still see M&A as an important part of our strategy. And if we compare to the M&A activity, if we compare it to one year ago, we do see more activity now. I think that the first half of 2025 was a bit passive and it was a bit cautious market overall when it comes to M&A. But after the summer holidays in 2025, so the whole fall and the first quarter of 2026, we do see more activity, both when it comes to interesting companies out there that we would like to talk to. And also we're getting more questions from external parts about companies looking for acquisitions. So I think it's more activity now. And we are still searching for the right acquisitions for us. So still an important part of the strategy, for sure.
Let's try again with Jacob. I think we need to unmute him.
Let me see if I can do that.
Now I think we can hear you. Please try, Jacob. Yes, hello.
Yes, now we can hear you.
Perfect. Hi, Niklas, Carl, and Carl number two as well. just a couple of questions from me wanted to start with recurring revenue from recurring software subscriptions maybe this is a question directed to Carl I didn't really understand the organic growth here in Q1 it's grew by 14 if I'm not mistaken and Brightcom was fully included in the numbers in the comparable period so if i'm not mistaken the growth of 14 should be completely organic or am i missing anything here thank you uh yeah we're comparing the ltm numbers year on
year so so we're we had a 17 growth in in ltm q1 aspect q1 this quarter versus q1 last year where a two-third of this was organic. So if we look back at the LTM number in Q1 2025, there are some differences there where Brightcom is also included. So the Brightcom acquisition may have an impact on the comparable number from Q1 last year.
Okay, great. But is there any reason we cannot compare Q1 2026, the revenue there of, I believe it was 61, 62 million, compared to the 54 in Q1 2025? I mean, that growth should be organic, or is there anything that...
Yeah, the quarterly revenues from the current revenues are totally correct and 100% organic, as you mentioned. We often, but since these recurring revenues sometimes change a bit when it comes to invoicing periods, we measure the recurring revenues on an LTM basis. So that's why we use different metrics there. You can look at, of course, both the Q1 numbers compared to each other, but a better metric is the LPM number.
Okay, perfect. And just to be clear, did you say that there were two-thirds organic growth or one-third organic growth in that? Two-thirds.
Two-thirds organic growth of these 17%.
Thank you. And a follow-up then. Would you say that the demand And when it comes to growth in software subscriptions, is more tilted from new customers buying their first software from Excite Tech or is it existing customers buying additional softwares?
It's a combination, really. So we are always looking to do the cross-sale of existing customers since unfortunately not all of our customers are using all of the solutions. So we are actively working with the cross-sales, but it's a combination. But when it comes to like an ERP system or finance systems, it's usually new customers coming in. And then we can work with the customer and develop them over time. And then we can add more solutions like a BI system or a CRM system and integrations and so on. But it's a combination. I don't have the actual number in my head. What's the share of it?
Thank you for that. And I believe I had some technical difficulties here, but you talked a bit about M&A. So maybe just repeating because there was no mentioning around M&A activity in the CEO letter, which is a contrast to Q4. Or how is activity in the M&A market, how it has been now in Q1 compared to last quarter?
Yeah, if you compare it to the last quarter, I think it's mainly the same. I said previously here that if you compare it to one year ago, we do see more activity now. So the first half of 2025 was a bit passive and the whole market was a bit cautious. But after the summer holidays and in the fall of 2025, we did start to see more activity. So that both from when we approaching companies wanting to talk about them, about acquisitions, and also external parts bringing in potential acquisitions to us, that activities up as well. So some more activity, and it's still an important part of our strategy. So we're working actively with it.
Okay, thank you. I appreciate the color there. And if we continue to talk a bit about capital allocation, I mean, you have a history of acquiring companies at somewhere around seven times EBITDA, sometimes higher, sometimes lower, before realization of synergies. And just looking at my forecasts now, I think that Excitec trades at slightly above nine times EBITDA. And this gap between your own valuation and the valuation multiples of potential M&A targets, that has closed somewhat compared to the history. So my question is, have you discussed anything internally about making share buybacks or synthetic share buybacks of your own shares? And if so, what is your conclusion?
Hi, Jacob. Carl, I can answer on that one. Of course, when it comes to share buyback, that is something that is pretty new for the first north listed companies. Nothing that we can comment on here in the quarterly call. But, of course, we've seen and we are aware of the possibility to do that, of course. But, as you mentioned also, it's correct that our valuation, of course, has declined to a certain degree after the year-end. It's true.
Yeah. I see, Fulhu, I understand that you can't comment on it. in in super much detail but thank you uh anyways and um the final question for me is also regarding ai and uh you answered a question here before about ai in um uh how do you say this the support revenue and i'm a bit curious about because it seems like software revenue is still growing very nicely so so far your customers aren't starting to vibe code their own erp systems at least. But what about consulting? Are you seeing any change in behavior from your customers compared to Q4 regarding AI that may or may not affect your consulting business? Thank you.
The short answer is no. We do not see any major changes in the consultancy business. and and overall when it comes to ai we we see ai as something that strength and both are offering and our long-term position so i think that our position uh at excited is really good when it comes to ai since we are the ones on top of the software providers so bringing value to to the customers implementing the systems and solving the the customer issues with the different tools and sometimes it will be the standard software from the software providers and sometimes it will be integration, sometimes it will be something with AI. So we are working very much with that part to see what we can bring to the customers. But so far, it's not from the customer's side that they are asking us questions every day to implement AI in their everyday business. But at the same time, we see the embedded solutions from the software providers. They are working accurately with AI, so it's already implemented in some of the places. So it's a lot of questions out there, of course, and the customers are curious, but they are not replacing us with their own solutions or their own AI experts in any way so far. okay thank you that's very valuable uh that's all for me thank you very much thank you jokob let's move on with the q a's so now we have a question regarding that around ai how many inbounds do you get from customers wanting to implement ai in their software stack do you see any trends uh how many inbounds um well to to be frank not that many really so so it's more us going out to the customers informing about what's new in the actual softwares and what we can help them with so by now after the first quarter we do not see that high activity when it comes to to air from our existing customers and that's the the most important part to to be close to our existing customers to see what the actual needs are out there but so far not that much nope thank you and another question on the ai given that integrations now can be significantly faster than ai done with ai how does this affect your integration platform going forward can you still charge the same amount for your work yeah we think that we can do more for more customers with the with the same effort and And I think that will over time increase the demand out there. So if we look at an integration from a couple of years ago that was a bit too expensive for customers to invest in. I think that can, if we can lower the bar here and we can do more for the customers with existing force, I think that's something really good for us. And I think over time that can improve our margins as well. so but we are of course also looking at the different models how we will charge customers for for different solutions and maybe when it comes to just integrations that that will be the the first part that's not really based on on hours as before still it's it's a lot of hours out there but but we are working with other models as well and i think that we can do more with the same effort and that that overall is something good for us yes and a related question to to the integrations do you see any trends in that software companies do their own integrations with other software logically this would make sense for the companies to easier onboard new customers no not really no no i think we still have an important part to to play here and i I think that would be even more important when it comes new softwares out there with AI. We are the ones with the customer relations and we are the ones implementing and taking care of the customer over time. And as I showed in the picture, best of breed, the in-house integrations that we build and that can be reused, that's really important. And we are always looking to find new ways to integrate new systems. so I think we're in a good position there.
Perfect. Then we have a question from Oskar Höven Matteson and he is asking how is Brightcom developing?
Yeah, good. As I mentioned in our focus area, the Microsoft scaling, that's an important part for us and we see that the offering is strong when it comes to microsoft business central and we are bringing in customers every every quarter so we are happy with that i think we're in a good position to to continue have growth with the microsoft business central and then another question from oscar how is the utilization in the consulting business is the cost base and capacity balanced against current demand or do you see a need for adjustments we have seen better utilization especially in in sweden that's what i mentioned here before so we have seen better in in sweden in q1 but this is something that we work with every every day to to be balanced against the demand so and and it's a bit different but between our different segment it's a different between our different offerings so so we're we are always looking to to see if if it's a higher demand with some offerings we are moving people over there and so so that's kind of an adjustment that we are working with every day so so it's a bit different when it comes to the different offerings for for sure and the third question from oscar is are there structural reasons for the lower profitability in norway or can it reach levels comparable to the swedish market in the long term yeah in the long term we we are aiming to to reach the same levels as in sweden and at the same time we are reaching to to uh have higher levels in in sweden so uh so we we would like to to improve all of our segments really so but there's nothing really structural or anything like that so so we are working with that and uh if we look at the last five quarters now we we reached a level of
stability in norway that we are really pleased with so i think we can both grow from there when it comes to organic growth and also to keep improving the the margins to to reach sweden's levels that's all questions that we have from now if no one else had any questions and i don't think so so then that concludes this presentation thank you very much for listening in and we would like to wish you a continued good day thank you very much thank you everyone thank you
