hi and welcome to this verticeit earnings call for the second quarter of 2026. my name is Jonas Lagerqvist i'm deputy ceo and cfo of the group and this is joanne lind ceo of verticeit this morning we disclosed the the group's interim report for the second quarter of 2026 and we will elaborate on this during this call. At the end of the call there will be a Q&A session. Feel free to use the Q&A function to send us any questions that you would want us to answer during the call. You can also join in if you wish to speak with us directly during the call. The agenda for today is of course the Scala acquisition that was finalized during the quarter. We will elaborate on the financials, we will share some highlights from the business, and we will finish off with a Q&A session. First, just a short background on Vertisit. Jovan, please.
Yeah, thank you. So Vertisit, our vision is connecting a world of retail, and by that we mean building the infrastructure for the physical customer meeting and we at the core of our offering we provide an in-store experience management platform to be able to orchestrate all all digital touch points in in store the in-store experience management platform covers everything from manage all of your stores, your locations, and data associated with that. Manage audience management, to know who do you talk to, who do you meet. And of course, the core is to manage the actual experiences, meaning managing content, meaning managing the application and of course also capture capture the outcome and results of the experience we we work with 2000 brands we we orchestrate more than 450,000 touchpoints in physical spaces and as you seen in the queue report now our ARR after the acquisition of Scala reached 440 million Swedish crowds. We are 300 employees spread around 13 offices globally.
The vision of the group I told you is connecting world of retail really be the infrastructure of a connected world of retail and the ambition is to be the number one in-store experience management platform globally. looking into the financial goals uh uh jonas do you want yeah our long-term goals in the in the long-term goals we state that prior to the to 2032 we should reach 1 billion swedish crowns in in arr so it's approximately twice the twice the amount that we have today and we will also be in a position where we have 35 profitability measured as cash ebta so as close to uh and to actual cash flow as it gets and uh during the way uh towards the these long-term goals we should always have a an arr growth annually uh exceeding 20 percent we should always grow our profitability measured as cash EBTA per share of at least 25% annually and we should always have more than 100% net revenue retention meaning that we should always keep growing on existing customers.
Yeah and of course the highlight of this quarter was the acquisition of Scala and And we can walk you through this a bit. So Scala is the pioneer within our industry. So if you look at the company, it was founded already in 1987. So it's the most well-known brand in our category. It has a real global presence with customers in every corner of the world and a large installed base. However, the vast majority of the installed base globally is perpetual licenses. So if you look at the actual revenue, it's not that high that you could expect. So they have a turnover of 200 million last year with 85 million that fits into our definition of ARR, meaning that it's either software subscriptions for updates of perpetual licenses, meaning maintenance, or it's a pure SaaS revenue. At the point of acquisition, there were a bit over 100 employees in the Scala business. They were also part of a bigger group named Stratacash, with a significantly larger organization. And I will look into, describe a little bit how we will reposition Scala within the Verticeit group. Worth mention is that we advertise it ourselves. When we started the company in 2008, after just a year or two, we actually become Scala partner ourselves. So when we started the company as a full service provider, we were a Scala partner until actually Scala was acquired by Sorana Cash. That was until the point where we, in 2016, actually decided to acquire DICE. And the reason for that was that Scala, from being partner only, decided to compete with the partners and go directly as well. And we said that it doesn't fit us. So we actually chose to acquire the dice at the the time and then dice have followed like basically the old recipe of Scala sell only only through partners and being device agnostic and software only and that means that we have a unique unique knowledge about the company from from working with them for a very long period of time and we also have employees in the group who have been working in the early stage when Scala was founded. If we look at the acquisition rationale, it's of course a significant expansion of the international partner ecosystem. I think that's very important especially in in the u.s market we add forte avi spl and and diversified among others that are really strong within the digital signage sector in in the north american market and we strengthen our position since scala is the most well-known brand in digital signage advertise it as a whole are strengthened by this acquisition and we can see that in in reach and in incoming inbound leads and tenders and so on. We accelerate our growth in North America and for those of you who have followed the company we have done a significant effort to push in that direction the last two years and the last year actually sebastian the head of dice have lived there with with his family and so it's really nice to see that we now get a strong footprint because 50 of the scala customers are actually actually north american customers we we also add a very large base of untapped source potential since scala have deployed millions of licenses throughout the years even though it's not sauce today it's it's an untapped potential to convert to sauce and recurring revenue and the profitability will be in line with our long-term goals so we have designed an organization around scala with with where we have a requirement of 35% cash APTA. And I will describe a little bit how we managed to do that. The acquisition structure is a share and asset structure. And it was actually a distressed situation where Stratacash needed to sell Scala really rapidly. So we had, I think, four days to give them an indicative offer and less than a month to finish off this transaction. So we decided that we buy the European entities, but in the rest of the world, the US and the rest of the world, we actually acquired the assets. So it's a mix share and asset acquisition. I think it reduced the risk significantly and I'm pleased that we actually chose that path in this transaction. We performed a direct-to-share issue to finance this with a price premium to the current share price, and the rest is just an expanded credit facility with Nordea Bank. Looking into the integration, so what we have done is that we have reduced from more than 100 employees down to 35, and that's only possible due to a very rapid integration and also an integration where we are really strict on some strategic pillars so one pillar is that scala is now a strategic software offering within dice meaning that scala no longer have its own organization they have the development team around the product but but the actual uh actual the organization is the dice organization meaning that we don't have duplicate key account managers so duplicate support or duplicates and anything basically so it's a new new second second product to today's it's partner first partner only meaning that we we give back all direct sales to the partner community and all business from from now on is only only through partners We gradually transition also the install base from professional licenses to a true SaaS offering. It will take years to complete. We implement the device agnostic offering. We no longer offer Scala technology in terms of hardware, media players, etc. So instead we have stepped back to the original Scala idea of being device agnostic and invite device partners. So we have closed down all facilities, all warehouse facilities. And so it's really important now to execute really rapidly on bringing direct customers to partner stop doing full service deliveries which they actually have done and and being like 100 aligned with this strategy because that's what's make make this equation works all integration costs including including payments for people on garden lead is all recognized already in this q2 reports amounts to 28.7 million swedish crops so there are no
like future costs to expect due to this acquisition of course there are cash flow effects but um in in in q3 but um and maybe a small small small portion in q4 but not more than that jonas financials yes so we increase we increase our error we we come out at 440 million at the at the end of the quarter which is just above 50 growth compared to compared to last year of course the the majority comes from from from scala but we're we're also keep growing our arr organically so everyone has seen this slide before but we are still i mean we're still very proud of of keep performing um organic growth from every quarter quarter to quarter and have continued to do so for for many many years so this is an important important like fundamental in in our business to actually have a positive net revenue retention keep growing on existing customers and and then um add to the uh to the growth additive add to the organic growth with acquired growth like the skull example so the whole advertisement group continued to grow to grow and grow during profitability just about 50% ARR growth which exceeds our financial target of 20% annually cash EBTA compared to the compared to Q2 2025 has doubled during during the quarter also indicating that we will manage to actually reach also this financial target related to profitability um so scala of course like john said we we had a global reach global a global network of customers a global network of partners some 85 million in in ar and a very nice potential to convert perpetual licenses into future SaaS revenue. As mentioned in the report, we also see a strong international pipeline and continuing to receive evidence of our market position as we are now more and more frequently invited to really substantial international tenders also on the North American markets in the in the sauce metrics for this for this quarter there's there are somewhat like disturbed when it comes to comparison due to the inclusion of Scala mid-quarter so many of the many of the metrics actually exclude exclude Scala but of course important to understand how the how the actual organic business is performing so we strengthen the natural revenue retention during the quarter to 177 percent and we also reduce our churn from from from four to three percent in this in this quarter so the annualized churn so the churn on an annual basis um in the quarter isolated we uh we had a net net growth of 2.9 percent uh annualized that means uh just about 12 which is uh which is um a little bit below what we are what we are used to but given the uh given the activities that were performed during the quarter we we we are quite quite quite satisfied with that number anyway especially as as the the NRR is strengthened and the churn remains low revenue wise we are still including including Scala which was consolidated from the first of June so one out of three months during the quarter was including Scala in the financials. So we are still around 50% share of revenue. Scala contributed with approximately 10 million in revenue during this quarter. So, profitability-wise, the adjusted EBTA, where we adjust for the costs relating to the Scala acquisition and the Scala integration, and also a minor share of cost related to the relisting process that we are also in the middle of. As communicated before, we are investigating the opportunity to move from Nasdaq First North and relist the company on Nasdaq main market. We will get back to that at a later point in time. EBTA strengthened from 17% last quarter to 18% in Q2.
Also the cash EBTA margin is this has been strengthened moving into some highlights for the quarter yeah so of course obviously the biggest highlight is to get a grip on all new customers partners that we have in this in the scala ecosystem and i think it maps perfectly into verticals that we already are strong in so it it adds customers in the qsr space it's in add customers in in fashion in in finance and so on and i think as we go when we have we have now a frequent plan of meeting all the partners meeting and customers to really get a deeper understanding. And after that, of course, we will deep dive into some highlights in the customer base and in the partner community there. Another highlight in the quarter is the Circle K. We continue to grow with Circle K market by market. And this quarter, we start to expand into Poland and roll out in Poland. We actually started as of last month with this one. and it's a quite rapid rapid pace they have currently 350 service stations and they will continue to grow in in the market but that's really nice we we can see like circle case really expanding market by market with with our offering we also had the the grassfish summit it's a yearly investment that the grass fish are performing every second year in in sweden and every second year in vienna this year it was in vienna and the the demand for tickets to this event was higher than it ever had been so it was a great great success it's it's really an investment that we we do to create or facilitate a place where the community within in-store experience management can meet so it's 90 of the attendees are current current partners in in the ecosystem and it's it's it's it's really well perceived by by the audience
okay so we are now in the in the q a session we have received quite some quite some questions and i will try to i will i will try to present present them all in case you don't believe that you have yet your answers properly answered you are more than welcome to get back to us at any time of course um there is a um a question on the on the on the revenue contribution um scala contributed with 11 million in revenue and approximately 2 million in profit for the for the quarter uh and uh given given given that detail there is a question whether or whether whether vertice it grew organically the rest and the um also on profit so approximately 20 million in in revenue growth and 14 million in profit growth and uh whether or not we could actually could explain um could explain or elaborate on this and uh and i would say that that um yes we have we have the rest was organic advertising growth and uh and the increased profitability was, of course, that we had a favorable revenue mix during the quarter and also a favorable margin during the quarter.
There is a question on our plans for the U.S. now that we have an increased amount of staff on the ground. how are you targeting big customers in u.s yeah so in in in the u.s market the the main strategy now with such a large footprint with scala partner is of course to sell indirect via via the scala partners but some of the integrator is also partners to visual art and grassfish so in we will also use those integrators more actively to expand on opportunities that we have within the grass fish visual arts ecosystem meaning expand with qsr brands that we have a strong foot to print with on on the visual art side and also expand with some of the global global concepts and global platform framework agreements we have with with grassfish but the vast majority of of business will be carried out by daiskala partners how hard is it to convert perpetual licenses to sauce it's hard but it's doable we have done it before uh so we have done it in previous acquisitions we have done it we have trust we transformed dice at the point in time we converted scala back in the days but it's it's a big undertaking uh so so it's it's something that you perform over over years it's it's not something that you you can do in a quarter or so. So I would say there will be perpetual licenses in the market for Scala for at least three years into the future.
And what incentives are there for partners to contribute to this conversion from perpetual to SaaS?
So we have changed a lot in in Scala. But most importantly, we have made it much more favorable to go with SOS. So they will have higher margins, a significant lower price than what Scala used to have on SOS. And we also incentivize the partners so that they get the five-year discount when they convert from perpetual to sauce meaning that they will have a very nice margin for the coming five years even if they start from a low installed base because the model with with the Dye Scala is that the higher higher volume you have the bigger discounts you get so that we we prioritize the partners that are loyal to us have proven that they can run and operate a customer over a long period of time and keep them but i think the model that we have put into play place are appreciated and we have had meetings with with some of the largest partners at least four of them the last month and they have been really positive to the approach that we have taken in regards to this we have frederick nilsson analyst at red eye who would like to join the uh the call hi frederick thank you hi jonas and joan hi can you share some more info about the volvo deal what does it mean for the independent retailers using your software today and why do you think you lost if you did that the deal yeah it's a good one we actually discussed we said that in it's so easy to only like present like the positives so in this quarter within the automotive sector of we we had this new framework global framework agreement with Stellantis from the Scala acquisition that grows really nice But we also mentioned that we actually lost the integrator deal for Volvo Cars Sweden in a tender. We don't actually know how it will play out. It was a tender to push prices. It had really low requirements on most of the items that we are strong at, especially platform and the technology side of things and they brought a lot of global competition into the tender and it was rewarded to mood media in the us so they have a thousand employees but they have a very very limited organization in in europe and in in the nordic i don't know if they have any employee so we will see how it plays out of course we still do a lot of things for volvo with other contracts for corporate communication we do the volvo studios on a separate agreement we do also related we do have separate agreements of course with volvo trucks hertz and among others and we also have partners in the ecosystem we do other markets but we were really surprised that they chose to go for a full full service provider for the swedish market without like a proper global setup but we will see how it evolves but if it's less than one percent of the total ARR if we lose everything and And I don't expect that to happen in at least a short period of time, because every dealer have separate agreements that spans over at least a year.
Great, that's a good caller on that. So there was another question about the contribution from Scala.
I have another point of view on that. but i mean 10 million for one for for a month when you expect 200 million in annual sales it sounds a bit low could you elaborate on that yeah so the 200 million that that is the estimated turnover of the scala business previous previous year um reason for for for being for being vague on the on the exact number is that it was it was where there was a it was a an equity deal in in europe and an asset deal in the us so it was we were actually carving out carving out assets and contracts from from like a lot from from a larger entity so um so that was the that was the the approximate revenue for last year uh if we were to take that exact exact amount going forward it would be it will be approximately 200. uh in this amount there are uh there are some hardware components and that's as part of the integration and as everyone know we are we have the ambition to push hardware sales to our partner so the uh the the the top line going forward is very much dependent on in what in what pace we manage to phase out that hardware so that's that's one that's one reason like if you if you look at the revenue like going forward and the other one is of course that it's been consolidated for for one month but we it's also a big business that we are that we move from one erp system to another so uh so there was also limited invoicing performed during that month yeah especially as i said the the biggest portion of the business is us and in us it was an asset deal uh so of course like not not all revenue streams are up running as as normal but i i think we have described it quite well we have designed
everything around the recurring revenue the which will amount to at least 85 i i assume we have like a nice potential to expand that significantly on the perpetual license sales which is part of the rest and then of course we have the the consulting revenue which where we support the partners to be successful in their implementations and and the risk is of course the third part where where the it's also by design that we will face out hardware and in what pace that actually occur
is it's not given at this point point in time okay i i see so i mean 120 million in annual sales sales that might be a little too defensive assumption but 200 might might be a bit high then also is that high i should interpret it yeah i think the risk is that we shurn out the hardware a little bit quicker and then i assume that you could be somewhere in the range between 150 to 200 okay that's that's clear thank you and last question from me you touched upon it
consulting is actually down slightly year over year despite one month of scala in the numbers could you help us understand those figures yeah i i think it was due to actually due to some some brands that actually had significantly lower lower number of projects in q2 than usual so So we don't see like any big trends there, but it was some customers that we are used to are running on a higher level that had lower consumption of consultancy in the quarter.
Okay, that's all for me. Thank you very much.
Thank you so much. a related question is the uh is the is the matter regarding working capital and uh how working capital be will be um will be affected by the scholar scholar acquisition and i think that's a that's a that's a that's a really good question um so we have the um everything from like from the balance the balance sheet and so on is is now consolidated uh so no no like material effects from uh from any hardware inventory or anything or anything like that but what uh what what might be this uh what might happen uh going forward which we which we know from previous acquisition is is that when you when you do uh large changes you do you do changes in erp uh customers do not instantly recognize the the invoicing formats and so on so there can there can like during the during the integration phase like the first quarter or two there can be there can be a slight increase in in accounts receivables due to due to that customers simply are not really are not used to used to new new invoice formats bank accounts companies and so on yeah and it can also be like onboarding for some major end customers where where when you start the invoice from a new
customer due to the asset the deal that you actually need to go through an onboarding process before you are vetted as a new supplier. Continuing the questions on the integration the question is has the Scala organization integration it ran according to plan and is that only addressing the organizational part of the integration yeah so the biggest part of of the integration in this case when you reduce from more than 100 employees down to 35 and associate most of those resources around the product it's of course the biggest and most important part to execute on and it we are through that in this process so we that's why we are confident with stating exactly how much restoration we are doing for the garden lead for the for the resources we don't bring bring over and the rest the second part is like the normal integration that we do we we integrate everything from the management system to all of the the it platform the erp the full erp stack basically and we also bring over all all contracts into a unified system to be able to to capture the error at the source metrics and so on And it's all running according to plan. So the organizational part is done. The integration for the rest of the components take three months as usual. So it will be finished in Q3 and it looks really nice. as i as i mentioned in in in this ceo comment in the report we will also look into expanding into apac due to that we have a significant number of partners in both india japan uh around singapore and the countries around singapore and we we think we need we need to be able to be closer and support those partners to be successful there long term so we don't we don't see it as part of the integration project but it's an activity that will will continue even after after q3 comparing scala's sauce metrics to vertice it's what differences are there between the companies i think there we haven't seen that but i can do some assumptions i think you actually have a slightly lower growth that's one thing I think that's I think that can change when you invest more in the platform and also support the partners better there might like we we are um i i think since a significant part of the licenses are on perpetual there might be a little bit of a higher churn in uh and and scala compared to vertice it because i think um when you have perpetual license you decide if you want to buy updates the maintenance basically And it's very different from a pure SaaS offering where you have the software running in the cloud. And if you don't pay for the service, you don't have the service. So I think that's the two components that at least I look closely into right now to see how it will affect.
In the beginning of the year, we stated that we experienced a somewhat slower ARR growth, but expected it to gain and become a bit stronger during the second half of the year. Is that still the case?
Yeah. We believe so. And I mentioned that we are in some really large tenders. Actually, we are in two QSR tenders that are among the biggest potential customers on earth when it comes to digital signage. But we don't want to overhype them. But I should say that it it depends a bit on those um i think we can we we will manage to keep like current growth pace even without them but of course if we if we would land one of those or we have another like a second tier um pipeline of tenders now which will materially affect growth so it's as you say you you can expect at least at least the growth pace that we had in this quarter but And potentially if we land one or two of the big tenders that are out there now, we will materially over deliver on that one.
Yes, and we received a question that I can address. What are currently the main obstacles to moving from First North to the main market? and uh yeah and um and i would say that uh the there aren't any aren't any real obstacles uh as we communicated we we are in the process of uh evaluating this so even though even though no like formal final decision has has yet taken we are doing all the necessary preparations but uh but um like for information it can be interesting to understand that the process of moving from first north to main market is uh is even a bit more uh extensive than uh than doing the initial ipo um like of course depending on the structure that you have in the in the beginning but uh but it's a quite uh quite extensive process so we're in the middle of preparing it um okay let's uh finish off with uh with this question what do you think investors underestimate the most about vertice its business today i think the future like i think the scalability the underlying scalability and the potential of of bottom line profitability as we grow good i think we covered covered most of the most the questions um please feel free to reach out to to me or to johan at any time should you have any further questions and apart from that we will see each other again in this forum after the q3 report and we wish you all a a very nice summer until then have a nice day thank you thank you Thank you so much for taking your time.
