STRONGPOINT ASA (STRO) July 2026 Capital Markets Day Transcript

Good morning and welcome to this Q2 presentation by Strongpoint. My name is Jakob Teirabak and I'm the CEO of Strongpoint. With me to present the Q2 results, I have Marius Drevelin, our CFO. In today's session, I will share highlights from our second quarter. I'll provide a short overview of StrongPoint, in particular for the convenience of those less familiar with us. And I will then move on to explain some of the exciting customer success stories from this quarter, before handing over to Marius. After Marius' review of our financials for Q2, I will round off this session with outlook and some concluding remarks first out headlines we had a flat top line development in our second quarter compared to same quarter last year in our second quarter we experienced a 2% revenue decline. Recurring revenue on a 12-month rolling basis was also down by 2%. EBITDA reported was 5 million compared to 7 million Norwegian Kroner last year. It should be said however that in Q2 this year we did incur severance pay of close to 4 million Norwegian kroner related to personal reductions as we continuously seek to drive internal efficiency. Hence adjusting for this EBITDA is closer to 9 million Norwegian kroner on an adjusted basis for this quarter. Cash flow from operations was 49 million in quarter up from 20 million Norwegian kroner last year principally driven from changes in working capital with regards to customer success stories this quarter we landed our first major vision contract which is a big deal for us this is the first large-scale electronic shelf label or ESL which i'll say for the remainder of the presentation contract with strongpoint together with vision since we took the initiative to change our esl partner last year the 8 million euro contract is with coop estonia we have also landed new auto store project in both norway and the uk in the quarter and lastly although not strictly speaking in the quarter But on July 3, we announced our first order picking customer in the US with the highly respectable or respected Meijer, a major regional grocery retailer in the Midwest. This is a major breakthrough, which I will dive more into later in today's presentation. Before doing that, allow me to provide a brief explanation of StrongPoint as a company. So StrongPoint is a technology company focused on serving grocery retailers with efficiency-saving software and products. We have an annual revenue of around 1.3-1.4 billion Norwegian kroners, with around a quarter of that being recurring revenue. We focus on grocery retail more than general retail itself. It is a resilient business where our belief is that if you can serve grocery retailers, you can serve any retailer. Today, more than 80% of our revenue comes from grocery retailers. We have around 500 employees across Europe, and our software solutions are developed in-house by our own development team. In short, StrongPoint's purpose is to make grocery retailers more efficient and sustainable. So what about our technology solutions more concretely then? Well, we help grocery retailers tackle five key operational challenges while unlocking strategic opportunities from scaling e-commerce and digitalizing the store to using AI to reduce theft. Our offering solves the challenges and unlocks the opportunities within e-commerce, theft and shrinkage, store efficiency, pricing and promotion, and cash handling. Our portfolio of solutions include software and hardware, of which approximately half is third-party solutions and half is our own solutions and IP. That was briefly about our technology solutions. So where do we as StrongPoint operate? We have nine core countries which we focus on. These countries are in markets like the Nordics, the Baltics, Spain, and the UK and Ireland. These are countries where we have our own teams on the ground managing the entire value chain. From service, to installation, to service, to support. And why is that? Well, it's because that way we can build deeper customer relations, customer intimacy, as we talk a lot about, and seize a larger revenue share of the grocery retailer's technology spent. However, we are not limited to nine countries. We serve grocery retailers in over 20 countries with support from our partner network. Now, coming back to our second quarter and customer success stories. I want to point out two of our customer success stories in the second quarter and one that just arrived outside the quarter. Now, firstly, Coop Estonia. CoopEstonia is the largest grocery retailer in Estonia, with approximately 23% market share. It is also a long-standing StrongPoint customer. We have been serving CoopEstonia for over 10 years, and they apply a wide variety of our solutions, including self-checkouts, self-scanning, and Vensif. And now Coop Estonia has also chosen Strongpoint and Vusion as their combined exclusive ESL This is a significant step as it signifies the first major Vusion project following the launch of our multifaceted partnership that came into effect just over a year ago at the end of June 26, so almost exactly a year ago. We recognize that shifting from one ESL partner to another is causing a loss in financial contribution from our former ESL partner and Maurice will talk more about exactly that. However, we are convinced that the shift is the right one. This major agreement with Coop Estonia is the first with Vusion as our partner, but certainly not the last. Secondly, Ötostor automation projects in the UK and Norway. In the second quarter we announced two Ötostor installation projects for leading retailers in UK and Norway respectively. These are projects for the traditional auto-store automation solution and both are to support their e-commerce fulfillment processes. The larger of the two projects is in the UK and again underscores our UK's business continued transformation building on its shop fitting routes from the ALS acquisition into becoming a provider of technology solutions while also highlighting the spillover effects of our focus on grocery retail into other retail sectors in this case the dui sector and thirdly although this was strictly speaking just outside q3 it is such a big deal we want to talk about it here as well. Namely, our first agreement in the US for e-commerce order picking. An integral part of our strategy is to dominate, and yes, I did say dominate, grocery in-store fulfillment with our order picking solution. In 2024, we had a major breakthrough with our win with Sainsbury's, the second largest grocery retailer in the uk and since then we have been adding on or been chosen by several other leading grocery retailers in europe and even as far away as as new zealand and now we can say we have made a breakthrough in the us the largest grocery retail market in the Western world. And that breakthrough is not just with anyone, but with Meijer. It is worth understanding the American grocery retail landscape a bit more. This is a market that has, in essence, two levels, a national level and a regional or state level. I think most of you would know the two most known major players on a national basis, namely Walmart and Kroger. And then there are regional or statewide grocery retailers. Meijer is one of the most prestigious regional grocery retailers and has operations across six states and over 500 stores. Just to put their operations in perspective, Meijer's turnover is close to the same size as the entire Norwegian grocery market. And still there are around 15 larger national and regional grocery chains in the U.S. and dozens of same or similar sized grocery chains as Meijer. So in short the U.S. market is big what is particularly important to note is that our solution will be used to fulfill all of Meijer's in-store e-commerce orders and I can assure you that Meijer went through an extremely thorough evaluation of the global market for e-commerce software providers they decided we are the best This is the perfect testimony of our solution, and we look forward to supporting our new American customer and continue our venture into the U.S. Now, I want to also provide an update on two of our strategic projects. Firstly, our order picking partnership with Sainsbury's. As I already shared, the first Sainsbury's stores with our order picking solution went live in Q3 2024. At the end of this quarter, our solution was operational in a double-digit number of stores, which admittedly is fewer than we originally anticipated. As a consequence, we have agreed with the customer for a temporary reduction in the order volume commitment versus what was previously agreed at the start of the contract. This is a large and complex project, and it has proven to require additional work from both parties in order to ensure a smooth integration, launch, and adaptation. Our operational teams are working closely together, testing new features and developing the solution further according to the needs of the customer. This is continuing into Q3 to ensure a successful rollout and a return to the initial agreed upon order volume commitment. Regarding CashGuard Connect Well, CashGuard Connect is a fully closed loop cash management solution This means end consumers are able to pay with cash at the manned or unmanned tills and the grocery retailer will never have to touch banknotes again This means a lot more efficient cash handling and operational efficiency for the grocery retailer and increased safety for their staff and customers. We're still developing the solution and that is progressing well. We're doing large-scale testing and we are proud to say we have signed a new pilot agreement with an additional Spanish grocery retailer. With regards to legal proceedings these are going well these are legal proceedings to secure the exclusive rights to the IP of the of the solution and although not yet concluded we remain confident to secure these now I'll hand over to Marius our CFO to share more details on our financial performance Marius thank you Jacob I will now go through the key financials for the second quarter this year starting with revenue

the Q2 revenue decreased by 2% to 342 million we had 15% growth in our international operations led by the UK with 25% growth this is driven by continued growth in autostore projects Vusion ESL installations and shop fitting. In addition, Spain had a solid growth of 35% due to Vusion ESL product sales. And finally, there was an 8% growth in the Baltics. We are happy with the revenue growth in our international markets. However, this growth was offset by a 22% decline in the Nordic markets. mainly due to lower ESL revenue this includes reduced hardware sales as well as a reduction in service and license revenue from our former ESL partner part of this decrease in the Nordics was mitigated by an increase in vent safe and scales deliveries during the quarter continuing on to recurring revenue 12 months rolling this decreased by 2% to 372 million compared to Q2 last year now in this there are three key developments first there was a 6% growth in service agreements this includes our own solutions third-party solutions and related spare parts second there was a reduction of 20 million or 40% year-on-year in license and service revenue from our former ESL partner as Jacob just mentioned. Third, we have agreed to a temporary reduction in volume commitment on the Sainsbury's order peaking, also leading to a reduction in license revenue. It is our top priority to ensure that this rollout becomes a success. If we move on to EBITDA, this ended at 5 million compared to 7 million last year. And also, as Jacob mentioned, the Q2 EBITDA this year includes severance costs of 4 million, leading to a pro forma EBITDA of 9 million, while also providing the basis of a lower cost base going forward. The revenue growth in our international segment, as well as lower costs in our development division, contributed to improved profitability, while these improvements were offset by reduced profitability in the Nordics due to the revenue decline that I talked about. We continue to expect fluctuations between the quarters, but from an overall perspective, over the last two years, as we can see here we are gradually improving. So these were the key drivers of the EBITDA for this quarter. Now let's look at the cash cash flow moments. We started the year with 99 million in cash and ended Q2 with 98 million. This includes a positive contribution from the operating result of 15 million and positive effect of 38 million from working capital which I will address shortly we had capex of 14 million relating to our cash guard connect project in Spain and our own post solution development in the Baltics other cash outflows include premises payment under IFRS 16 of 16 million and interest payments of 8 million. Now let's move further into the key components of the working capital development. Overall for the year, working capital decreased by 38 million to 55 million at the end of Q2. This is due to a positive impact on accounts payable and inventory. The inventory reduction mainly relates to grocery lockers and shop fitting. To conclude on the financial part, we will look at the development in net interest-bearing debt. During the second quarter, the net interest-bearing debt decreased from $91 million to $57 million, stemming from the reduction in working capital. Disposable funds were $98 million at the end of this quarter, up from $68 million in Q1. Finally, the equity ratio remained stable at 45%, well above our equity covenant of 30%. With this, I will hand it back to Jacob for some final remarks.

Thank you, Marius. Let's see if we get this right. Now, outlook. I would begin to start off by repeating that we do not provide short-term guidance. What I can say though is that our path towards stable and sustainable profitability will not always be a straight line. As projects delivery vary and fluctuations between quarter are to be expected. Now our priority remains building ever stronger relationships with our customers as we focus on customer intimacy as our North star. We remain focused on growing internationally particularly through our global SaaS e-commerce opportunities and at the same time we know it is equally important to strengthen our traditional Nordic and Baltic markets. Both will play an important role in our future growth. That said, in order to increase our financial results in the near term, we have identified a set of cost improvement initiatives that we will be pushing over the coming quarters, including optimizing administration and IT costs and improving productivity and support and development organizations. At the same time, we must have full focus on delivering successful implementation of signed e-commerce order-picking agreements to realize the projected recurring revenue and subsequent bottom line. This is the case with Sainsbury's, Sonaa MC, Iceland and now also Meijer. Looking further ahead, we remain firm in our belief that grocery retailers will continue to invest in technology. That is positive for StrongPoint. The continued interest in our solutions and the confidence our customers continue to give us provides me with confidence in StrongPoint's long-term prospects. Our long-term ambition remains healthy revenue growth and a EBITDA margin above 10% as for next presentation we have our Q3 presentation on October 28 for any questions related to investor relations please contact Marius directly these contact details are shown on the screen and of course on our web page. I would also like to invite you all to our Q&A session at 11 o'clock CET today and with that thank you so much for watching