Vitec Software Group B — Call Transcript 2026

Welcome to Vitec Software Group Q4 Earnings Call 2025. For the first part of the presentation, participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Olle Backman and IR Patrik Fransson. Please go ahead. Thank you, and a warm welcome to everyone attending this conference call today. My name is Patrik Fransson, Head of Investor Relations, and in the room with me is our CEO Olle Backman. As always, we'll first give you a short overview and then some comments on our year-end report released earlier this morning. Again, as we've done every time before, we will open up for questions after that. With that, I will hand over to you, Olle. Thank you, Patrik, and welcome everyone to this presentation. As I said, Patrik said, we will start with a brief overview of the group as such. This picture many of you have seen before, but it keeps on evolving all the time. So now we're serving 26,500 customers. All these numbers are per year-end. So by then, we had 47 business units. But as of now, as you've seen from the press releases, we have added another two companies to the group, so we're up to 49 BUs at the moment. Still 13 countries because they were both in existing countries. So the pro forma sales is roughly SEK 3.7 billion. And you can see the sales distribution there per market quite evenly distributed through our sort of more dominant home markets. In the later part of the Q during Q4, we added another home market, Poland, which we're very happy about. As you know, the definition of a home market is a country where one of our subsidiaries or business units has its origin. We have, of course, the four Nordic countries. We have the Netherlands. We have Belgium. As of Q4 last year, also Poland to that. Continuing on the diversification of sales here, it looks pretty much like it has for quite some time. It, of course, varies a little bit in the sales per market. But the point of this picture is that we have a great risk distribution throughout. We're not dependent on any single country, segment, or customer for that matter. And this is a picture showing us on what we call the responsible growth, which is one of our four key areas for sustainability as well. But this is kind of the dual engine of growth. We work with our business units, with the business model, which is, of course, striving to have a high degree of recurring revenues. And we develop them through our decentralized organization and really pushing the organic growth on the one side. And then we like to add acquisitions as we go along if we are lucky to succeed with that. And speaking of acquisitions, this is a picture for last year and first quarter up till yesterday or so. So we made two major acquisitions during 2025. Intergrip in the early parts of the year is a nice Dutch company added in January. And then in October during Q4, we added Polish NMG. With a strong start of this year, of course, we finished here in January and early February with Dutch Autonet and Swedish Infometric. Of course, these two acquisitions, we have worked a lot and hard with during 2025, but we just wanted to wait in the full-year numbers as you usually do when you start on closing up until the year-end. They slipped over into 2026. All four of them really nice additions, and they fit our criteria very well. Looking at the sales per vertical, as I mentioned, we now have 49 different business units, but we're roughly active in some 22 different verticals. You can see, of course, the larger ones where we have more presence, more business units, and active in more markets. That is energy, property management, healthcare, finance, and also real estate. They are the five, six biggest industries that we operate in. But as you can see, we're quite agnostic when it comes to new verticals. As long as the companies meet our criteria, we can add another vertical to the picture. This is a picture of the various business units as we've shown before. This is on a full-year basis. When we present it during the quarters, it's on a rolling 12-month basis for you to get a sense of the size and the distribution. As we've also said a lot of times, this is pretty much what the M&A pipeline looks like in terms of sizes. The average size of the nice VMS company is still there around EUR 4 million or EUR 5 million. You can see on the latest four acquisitions, I think that also shows roughly that average. And then growing into some of what I call our little superpower within Vitec, and that is sharing knowledge, which keeps on getting better and better with size, of course, and also with our own resources that we can accommodate this and facilitate it. So we have 49 different companies, but they are not competing in any sense. So it is full transparency internally where we can share knowledge, experiences, and also failures, of course. And this really fosters both a mentality of innovation. And hopefully, we can move a bit faster ahead because someone in the group has most likely already tried what you are thinking about back home. And we can share, like I said, really good examples from everything from development to tools we're using, pricing models, or whatever it may be. It is a very appreciated part of being part of a big group as opposed to being just run as an individual company. Just a short note on AI. I think we mentioned this last time as well. It's basically within these three sort of initiatives, we, of course, work with improving our own working environment and our own efficiency and also the kind of business development side of it. And then, of course, on the growth side where we implement AI into our features and our applications. So these are sort of the three streams that we are working on. And there are just some examples at the bottom there from some of the business units. But a lot of things are cooking. A lot of these forums, which I mentioned earlier, are full of great examples of both tools that we use but also applications and how to sell them and how to bundle them together with our software. Moving over to the sort of main topic for the day, of course, the report. These are the highlights. Like I said, I'm especially proud of that we were able to grow net sales on a total of 6% for the quarter and 9% for the full year. We will get into more on the distribution there, where most or absolute ballpark of that growth comes from the subscription-based revenues. The EBITDA level was flat compared to last year. As you remember, we also guided it a bit on the Q3 call. Q4 last year was exceptionally strong with a few large hospital projects in Finland running through the books. So it's really the Q4 2024 is exceptionally strong. So with that said, I'm quite pleased that we're able to basically match that for this quarter as well. And if you can see on the full-year total growth of 9% and roughly 2% and operational margin, 6% on the net profit increase, it's okay. It's not bad. But as I also wrote in my comments here on the Q4 report, I'm really pleased with the growth. But we have a tradition and also an objective to, of course, grow our profits faster than we grow our topline. And that has not been the case for 2025. So in terms of efficiency, there's more to do for sure, and we are working on that a lot. Other than that, when you dive into the numbers, perhaps it's shown on this page particularly, but one of the big items in the profit and loss statements are the reversal of earnouts, roughly SEK 200 million or so for the full year. Just a short comment, it doesn't affect the net profit. It doesn't affect the cash flow. I mean, it's two line items that are identical. It's just the accounting rules that makes that we have to put it like that instead of having it as a net. It is a proof that our sort of pricing model when it comes to acquisitions really work. We are prudent, and we say that, "Okay, fantastic. If the acquired company has a really promising future and the sellers want to have a part of that," we say, "Fine, I'll pay for it when I see it." So all the sort of subsequent payments of earnouts is connected to growth in profits. And if that sort of really high targets aren't met, then, of course, we're not paying it. So in this case, expectations were from the sellers' side that we will really reach overperforming. But in this case, they haven't overperformed. They have performed well. I mean, it's going according to plan. I mean, you can see that in the numbers. But it's just a way of sort of bridging the gap between a buyer and a seller but also sharing the risk. And in this case, we have been able to then reverse that risk in the sense that, "Okay, profit is okay, but it's not overperformed. So hence, we don't pay the earnouts." So I think that's a good point to just highlight. On top of that, of course, you can see that in the numbers, we had a bit of a currency headwind throughout the year, nearly 2% on the full year and then 3% on the quarter. And given that we have 75% of both sales and profits in other than Swedish krona, of course, it hits both the profit and the net sales. But currencies go up and down, so not much we can do about that. Another strong thing for the quarter was the cash flow, both for the quarter and for the full year. So cash conversion was good, and we really worked with the working capital there. And cash collection has been a sort of priority throughout the year. So we're very pleased about that. And cash flow for Vitec, as you know, you should really look at that full 12 months because we have Q1 being our absolute strongest cash flow quarter where we collect most of our prepayments. So you really need to look at this on a 12-month basis. But so if we look at the full 2025, if we take the operational cash flow and then we adjust it for the activations, of course, and the leasing payments, which I think is the prudent way, it's still an 85% cash conversion to EBIT or operating profit, which is a fairly good number. Just moving over to the sales per quarter, as you can see, it's a bit up and down. But overall, according to plan, we will get into the details, the split of organic and acquired in the pages to come. The EBITDA profit, same there, strong finish. But here you can really see the exceptionally strong Q4 from last year in that sense. And then Cash EBIT, which is our internal sort of metric, which is basically the operating profit but netted away from any capitalizations and amortization and depreciation on the intangibles. So this is really close to the cash generating. And here I'm pleased with the sequential increasing. If you can see throughout all of 2025, like I said, we had an exceptional 2024, and then we started up on a bit lower scale. But then we gradually, Q2, Q3, and now Q4, almost linear sort of increased the profits, which is what we aim to do. Then moving over to the split here of the recurring revenues. Here you can see the bulk and the basis for everything. That's the subscription-based revenues. It grew incredibly well, 8% on the quarter. You can see on the other quarters, it's been 6%, 6%, 6%, and then 8%. It is a bit of a Q4 effect where we have some of the reconciliations of our subscriptions take part in the later part of the year. So it's always a little boost there. But if you look at the full year, it's just over 6%, which is a really good number. Then in the bottom there, you can see the transaction-based, which has, of course, varied a lot throughout the year. We have committed that in all of the other quarterly calls. Basically, no change from that. So there's nothing sort of exceptional for the Q4 compared to the others throughout the year. Then just finishing off before the Q&A session here, I think it was a really good Cash EBIT margin expansion, consecutive improvements throughout the year, a really strong cash flow. Of course, we're very pleased that we were able to finish off three acquisitions in the last four months now, one during Q4 NMG in Poland and the two with the start of this year. A lot of work has been put into that, and it finally sort of materialized. With that, I think we will move over to 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 Investment Bank. Please go ahead. Thank you very much. And good morning, guys. Could you start by elaborating on the transactional revenues, which show much more stabilization now in the fourth quarter? Discuss maybe around the differences in year-over-year growth this quarter compared to the past. And if you can discuss these comparables going into the first quarter, if we can expect further stabilization for the start of this year. Well, yet again, on the sort of half of the transaction-based revenues are spread out through almost all of the other business units, and that is a very stable number. And then there is another half which comes from Enova, which is, of course, like we discussed many times, the grid balancing market. The grid balancing market has been more stable. But will it stay stable? It's very hard to predict. I mean, we have now one month into this year, and we see that it is still roughly more stable than during 2024. But if that is going to continue, like I said, I can't predict the weather in the Netherlands, unfortunately, so. But for now, it looks more stable than last year. So yes. Okay. That's very good. And then Q4 is generally renewal season for you, and we're already in February. So you should have quite some good visibility on growth pace in the recurring revenues for 2026. And given the uncertain times we are in now, would you consider giving us some indication of how the recurring revenue growth organically is progressing for Q1? Maybe without saying numbers, but maybe you can add in line with 2025 or in line with the fourth quarter or so on. What we can say is, of course, that the pricing mechanism within the growth is roughly 1% lower than last year. Just giving that the indexes that fuel that is roughly 1% lower. Churns are roughly the same as last year, around 1%. So we don't put specific guidance. But with that in mind, I mean, we are expecting 1% less from pricing, but still a few percentages up. I think the KPIs will sort of come in at roughly between 2%-3%. Last year, they were between 3%-4%. Okay. That's very good. So then in total, maybe some upsells and volume. Yeah, that has been the decade. Slightly more than the pace for. Yeah. I mean, all things equal, perhaps 1% down just from the pricing if we can keep up the upsell. Okay. That's very clear. And then, Olle, you state that you were not satisfied with the EBIT margin for the full year and gradually expected to reach at least 20%. What is the timeframe, and what kind of margin facing do you expect for the coming year? I mean, we actually hit the 20% mark, which is on operating profit. But it's also part of that goal is to increase, I mean, continuous improvements. That's what Vitec is all about, I mean, grinding, grinding, and gradually improving. And in that case, we didn't succeed during last year. So what I'm looking forward to and what we are pushing our business units towards, that's both through, of course, organic growth but also through efficiencies to gradually improve. No big numbers, but take a few steps every quarter to improve margins. That's what we aim for. Super. Thank you very much for taking my questions. Thanks, Predrag. The next question comes from Erik Larsson from SEB. Please go ahead. Hello. I had a question on sentiment. So obviously, looking at public markets, it's been clearly negative sentiment here over the past quarters and especially recently here. But at the same time, I have the impression that the general interest to acquire companies in your space, in the private market, has remained at a high level. So for you and your competitors being more operationally active, it doesn't really appear you see the same risks as maybe public investors do. So yeah, just wanted to hear your thoughts about that sort of disparity in perception. No, it's true that it's not necessarily true that we don't see any risk. I mean, we probably see parts of it, but we haven't seen it operationally. We can't see that our markets are sort of fading away, that we are increasing the competition. We have always competition, for sure. But we're not worse off than anyone else. We're using the same tools. We have the same talented people, so we can work with all of that as well. And on top of that, we have the infrastructure. We have the knowledge of the industries. We have the support staff, which know our customers. We have their confidence since many years. So it's all down to the brand promise to be able to rely on today and tomorrow. And if you sum all of that, you can do the math. I mean, we can count on these cash flows. We can make a fair assumption of the predictions. The risks or the fears that are out there, we can't really see them yet. Hence, the private market is still there. It doesn't move up as fast as the public market either, and it certainly hasn't moved down. But of course, over time, if there is a huge downturn, which has been here, we would expect it to materialize also in the private market because, of course, for some of these companies, it is a potential sort of next step to go public. So of course, we're looking forward to seeing some of slight sort of more modest pricings or what we could call it in the private market. But for now, the interest is still there. All these acquisitions we have done have been highly competitive. There's lots of people that are still very interested in these companies and see a great potential in them. Great. Thanks for that, Olle. I just had another question on your most recent acquisition here of Infometric. Could you just give any indication in terms of the revenue split, subscription, transaction services, etc.? Yeah, I can do that a bit. Like I said, it's roughly 45%. 40%-45% is the recurring revenue rate as we go on. And they have a highly interesting model, which we really like. So it is a SaaS company. They have their own software, which looks like all the other companies. But what they have is they also sell projects or they sell products. These are third-party component products, so not of our own. So we're just buying them on the open market, and we bundle it together either in projects or in product sales. But the conversion ratio from selling the products over to SaaS and software is close to 100%. So for every piece of hardware that gets installed because you need the meters out there. So this is IMD, so Individual Metering and Debiting, so for electricity and heating and water. Of course, you need the infrastructure out there. Currently, I think the conversion or the installed base is just over 20% in the market. For a foreseeable future, we can sort of fuel our recurring revenues with doing these projects and converting them over and having the long-term relationship that you have with your subscription customers. Roughly 45% is recurring revenue today on the software. Then the rest is, I think, 2/3 are our own projects, and 1/3 is pure product sales where typically other electrical contractors are buying the products from us. Okay. That's very helpful. That's all from me as well, so thank you. Thanks, Erik. The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead. Yes. Thank you very much. I follow up on Predrag's last question here on the margin journey ahead. Then how do you view your organic net recruitment pace going forward given increased productivity among software engineers? I guess you can become more efficient with AI, as you showed in the graph as well or in the slide as well, and need less developers. Is that the way we should see it, or? Like I said, we haven't heard from anyone in the industry and certainly not for ourselves that this has yet led to any sort of reduction in staff. But what we have been is a lot more cautious about recruiting. When you have people going to retirement or people leave for any other reasons, we really question, "Okay, can we shift around staff? Can we do things more with that efficiency?" So yeah, we're hoping for that. We have seen some of it, but it hasn't materialized super high yet. But for sure, we are sort of expecting, like any other technological shift that we have been through for our last 40 years, that we will become more efficient. But in software, also, in the decades and decades of improvement, most of that improvements end up with the customer. They get more bang for the buck. They get better software. They get more services. They get better features. So a lot of the productivity ends up at the customer's side. But for sure, we are expecting productivity gains. Yes. Following up on that one again, on that slide, you showed both growth levers from AI and cost reductions. Do you think you will see a greater effect from AI use cases, mainly on costs or on revenues a few years out? I think for now, we're mostly seeing it in actually products and in increased sort of pace when it comes to transforming legacy software, for instance, and things like that. So in that case, we're still seeing more on the revenue side than on the cost side because the difference between Vitec or any other VMS company and the horizontal is that we have 49 development departments. I have 49 of everything because that's the decentralized model, and that is working super well for us. So I think VMS companies, yes, we will have some efficiency in the sense that we will become more productive. And that should more be on the revenue side, actually, than on the cost side. Okay. I see. That's helpful. And then finally, which company or companies was the reversed earnout here in Q4 linked to? It's actually five companies in that sort of bucket because we do the it's based on the year-end numbers. So we have basically, if you take the recent acquisitions, so not the absolute latest one because that's too early, but acquisitions from the last two, three years. Yeah. I see. No, that's very clear. Yeah, that's all. Thank you very much. The next question comes from Fredrik Nilsson from Redeye. Please go ahead. Thank you. Hi, Olle and Patrik. I want to continue a bit on the discussion of AI from another perspective, perhaps. I mean, you have exposure to a lot of different industries, obviously. But if we focus on the most tech-savvy ones, what's the feedback you currently get from those regarding your product offering? Are they eager for new AI features, for example? A lot of our customers, or nearly all of them, want to discuss. And yet again, here it is that they should be able to rely on us to sort of that they can benefit from the AI functionality. And that's the beauty when you have a standardized software because we develop features which is based on the industry's total need. So they might say, "Okay, I have this need," but then we say, "Yeah, but this and this is in our pipeline." And they say, "Oh, great." So it's a benefit from the standardized software. But at the same time, they really want to hear that, "Okay, we're on it. We're working on it, and we have it in the pipeline, and we can also show them at present with some really nice features." But a lot of them are super conservative. They say, "Yeah, we want all of that, but please don't change anything." It's sort of the next sentence. So they are really sort of more or less reluctant to do any big bang changes because this is one of the moats around vertical market software, is that it is so embedded into the customer's processes. So it's a very slow-moving animal here. So yes, they want to benefit, but they don't want to change anything at the same time. So you will have to do this very gradually. But the big thing here is, or the important thing, is that they feel that they can benefit from these improvements over time. So a lot of them are not in a hurry. Great. That's interesting. Regarding other external costs, they were up almost 20% compared to the same quarter last year, which already was at a quite high level. Is that due to a different cost mix in acquired companies, perhaps, or am I missing something else? No, you're right about that. For instance, NMG in Poland, where it is sort of a bit market practice and market standard that a lot of the what we call employees, but they are still on contractors. So it is a bit different mix in that sense, yes, from the acquired companies. Great. Thank you very much. That's all for me. The next question comes from Thomas Nilsson from Nordea. Please go ahead. Thank you for taking my question and congratulations on a strong report. I just want to ask some of these obvious questions that I get from investors all the time. Do you at Vitec see any risk of seat compression going forward due to AI? That is, customers are becoming more efficient, and they may also hold back on recruiting, resulting in fewer hires and fewer software seat subscriptions. What do you answer when investors ask you that? Well, in the long run, yes, that is a possible development. And that is why we have been working for the past three years, I think, in the sectors where we see that. It's not across the line, for sure. And like I mentioned, we have less than 1% churn still this year. So it's not something that we see, but it is a potential future development. So we have been working with pricing models, more sort of value-based pricing because if our customers become more efficient through the software that we are providing, we are adding a great value for them. And really good if they can benefit from being more efficient, but we shouldn't get punished for it. So we must sort of work with the business models and the pricing models. And this is, yet again, not exclusively for Vitec. That is across every software company. We're not seeing it as of yet, seat compression—no. But it has been on our radar for many years because it is a potential development going forward. So the answer to that is looking into the pricing model and adding more value to our customers. And of course, we should be remunerated for adding value. Thomas, Patrik, just short also. Also, I think it's important this is nothing new. I mean, digitalization has always been about improving and do more with less people. So that's been ongoing for like 40, 50 years. That's the whole thing about digitalization. So that's nothing new. Yes, the pace might increase, for sure, but it's not a new thing for us to work on. It's always been there. So business is usual in that sense. It's always been the case. Will the pace increase? Probably. And then, like Olle said, that's how we're thinking of it and according to pricing models. Okay. Thank you very much. The next question comes from Victor Lindström from SpareBank 1 Markets. Please go ahead. Hello. Hi. Just one question for me here. Given the current market dynamics, would you say that you have changed your acquisition criteria when evaluating new M&A targets? Not changed it. I think that is one of the big things here that we are very consistent when we look for the criteria. Of course, pricing. We always try to pay a fair value within what we think is sort of possible. That's why also the pace has been a bit less. So we have tried just as hard. We have looked at just as many companies, but we have just lost more because we are still quite prudent when it comes to pricing. And of course, like we said initially, the downturn in public valuations, if that should impact on the private market, yes, if it is in the long run because some of them have the public market as sort of a potential next step. So yeah, we would look forward to that. But as of now, like I mentioned, there are a lot of nice companies out there. There is still high competition for these targets. And as long as we can sort of do our calculations and if it is within our criteria and our valuation models, we will try to continue. All right. Thank you very much. That was all for me. The next question comes from Daniel Lindkvist from Danske Bank. Please go ahead. Hi, guys. So just to follow up on Dan and Fredrik's questions earlier on. Basically, with the NMG, is there a seasonality to be taken into account? I mean, it seems like they've added quite some in Q4 given the expected size of the acquisition and also what you report if they would have been in the numbers for the full year. Well, first of all, NMG is growing quite extensively. It is a really growth case. That's what we expected. And then the model there, their customers are the grid owners in Poland. There are only seven potential customers. I think we do business with six out of seven. And the way these models work, you sign multiple-year contracts where you do a lot of development. So there is a high degree of services. And all that services is basically CapEx for our customers. And then that translates over into recurring revenue. Usually, 15%-20% of that services then fuels next year's recurring revenue. So NMG is growing fast, and they are doing a tremendous job. So we are expecting that to continue at least for a few years because they have lots of interesting prospects in the pipeline. Okay. Great. And then just with, I mean, now I'm trying to get my model to work here. So basically, on the cost of goods sold and other external expenses in relation to the NMG subscription-based recurring revenues, service revenues, and other revenues, is there something to take into account with the gross margins? Are the subscription-based recurring revenues on lower gross margins than we're used to, or are the third-party? No, the subscription for NMG, that's pure software revenue. So it is equivalent to the others. It's a 90%+ gross margin on the subscription part. Then the services, of course, that's ours that we put in. Yeah. There's no split of income from them in any way. That's also a high gross margin business. Then it's in other revenues that the third-party part of their business ends up. No, the NMG doesn't have a lot of third-party. They either have services or they have recurring revenue. That's what they sell. They don't sell any hardware. They don't sell any third-party components. Okay. And then just on the other external expenses, should I read that as the cost of revenue up there instead of in personnel expenses then, or instead of as in cost of goods? Okay, as in personnel expenses. Great. Then nothing further from my side. Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Okay. Thank you all for participating and the questions. And then just summing up, I think we posted a decent quarter. We were happy with the growth. We could have done better on the margins, although they were okay. And cash flow-wise, it was really strong. So that was a positive note. And of course, we managed to close these acquisitions that we're super happy with. So that would be all for now for us. So thank you for listening, and take care.

Speaker 6: Welcome to Vitec Software Group Q4 Earnings Call 2025. For the first part of the presentation, participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Olle Backman and IR Patrik Fransson. Please go ahead. Welcome to Vitec Software Group Q4 Earnings Call 2025. welcome to vitec software group q4 earnings call 2025 For the first part of the presentation, participants will be in listen-only mode. for the first part of the presentation participants will be in listen-only mode During the questions-and-answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. during the questions-and-answers session participants are able to ask questions by dialing pound key five on their telephone keypad Now I will hand the conference over to CEO Olle Backman and IR Patrik Fransson. now i will hand the conference over to ceo olle backman and ir patrik fransson Please go ahead. please go ahead

Speaker 7: Thank you, and a warm welcome to everyone attending this conference call today. My name is Patrik Fransson, Head of Investor Relations, and in the room with me is our CEO Olle Backman. As always, we'll first give you a short overview and then some comments on our year-end report released earlier this morning. Again, as we've done every time before, we will open up for questions after that. With that, I will hand over to you, Olle. Thank you, and a warm welcome to everyone attending this conference call today. thank you and a warm welcome to everyone attending this conference call today My name is Patrik Fransson, Head of Investor Relations, and in the room with me is our CEO Olle Backman. my name is patrik fransson head of investor relations and in the room with me is our ceo olle backman As always, we'll first give you a short overview and then some comments on our year-end report released earlier this morning. as always we'll first give you a short overview and then some comments on our year-end report released earlier this morning Again, as we've done every time before, we will open up for questions after that. again as we've done every time before we will open up for questions after that With that, I will hand over to you, Olle. with that i will hand over to you olle

Speaker 5: Thank you, Patrik, and welcome everyone to this presentation. As I said, Patrik said, we will start with a brief overview of the group as such. This picture many of you have seen before, but it keeps on evolving all the time. So now we're serving 26,500 customers. All these numbers are per year-end. So by then, we had 47 business units. But as of now, as you've seen from the press releases, we have added another two companies to the group, so we're up to 49 BUs at the moment. Still 13 countries because they were both in existing countries. So the pro forma sales is roughly SEK 3.7 billion. And you can see the sales distribution there per market quite evenly distributed through our sort of more dominant home markets. Thank you, Patrik, and welcome everyone to this presentation. thank you patrik and welcome everyone to this presentation As I said, Patrik said, we will start with a brief overview of the group as such. as i said patrik said we will start with a brief overview of the group as such This picture many of you have seen before, but it keeps on evolving all the time. this picture many of you have seen before but it keeps on evolving all the time So now we're serving 26,500 customers. so now we're serving 26,500 customers All these numbers are per year-end. all these numbers are per year-end So by then, we had 47 business units. so by then we had 47 business units But as of now, as you've seen from the press releases, we have added another two companies to the group, so we're up to 49 BUs at the moment. but as of now as you've seen from the press releases we have added another two companies to the group so we're up to 49 bus at the moment Still 13 countries because they were both in existing countries. still 13 countries because they were both in existing countries So the pro forma sales is roughly SEK 3.7 billion. so the pro forma sales is roughly sek 3.7 billion And you can see the sales distribution there per market quite evenly distributed through our sort of more dominant home markets. and you can see the sales distribution there per market quite evenly distributed through our sort of more dominant home markets In the later part of the Q during Q4, we added another home market, Poland, which we're very happy about. As you know, the definition of a home market is a country where one of our subsidiaries or business units has its origin. We have, of course, the four Nordic countries. We have the Netherlands. We have Belgium. As of Q4 last year, also Poland to that. Continuing on the diversification of sales here, it looks pretty much like it has for quite some time. It, of course, varies a little bit in the sales per market. But the point of this picture is that we have a great risk distribution throughout. We're not dependent on any single country, segment, or customer for that matter. In the later part of the Q during Q4, we added another home market, Poland, which we're very happy about. in the later part of the q during q4 we added another home market poland which we're very happy about As you know, the definition of a home market is a country where one of our subsidiaries or business units has its origin. as you know the definition of a home market is a country where one of our subsidiaries or business units has its origin We have, of course, the four Nordic countries. we have of course the four nordic countries We have the Netherlands. we have the netherlands We have Belgium. we have belgium As of Q4 last year, also Poland to that. as of q4 last year also poland to that Continuing on the diversification of sales here, it looks pretty much like it has for quite some time. continuing on the diversification of sales here it looks pretty much like it has for quite some time It, of course, varies a little bit in the sales per market. it of course varies a little bit in the sales per market But the point of this picture is that we have a great risk distribution throughout. but the point of this picture is that we have a great risk distribution throughout We're not dependent on any single country, segment, or customer for that matter. we're not dependent on any single country segment or customer for that matter And this is a picture showing us on what we call the responsible growth, which is one of our four key areas for sustainability as well. But this is kind of the dual engine of growth. We work with our business units, with the business model, which is, of course, striving to have a high degree of recurring revenues. And we develop them through our decentralized organization and really pushing the organic growth on the one side. And then we like to add acquisitions as we go along if we are lucky to succeed with that. And speaking of acquisitions, this is a picture for last year and first quarter up till yesterday or so. So we made two major acquisitions during 2025. Intergrip in the early parts of the year is a nice Dutch company added in January. And then in October during Q4, we added Polish NMG. And this is a picture showing us on what we call the responsible growth, which is one of our four key areas for sustainability as well. and this is a picture showing us on what we call the responsible growth which is one of our four key areas for sustainability as well But this is kind of the dual engine of growth. but this is kind of the dual engine of growth We work with our business units, with the business model, which is, of course, striving to have a high degree of recurring revenues. we work with our business units with the business model which is of course striving to have a high degree of recurring revenues And we develop them through our decentralized organization and really pushing the organic growth on the one side. and we develop them through our decentralized organization and really pushing the organic growth on the one side And then we like to add acquisitions as we go along if we are lucky to succeed with that. and then we like to add acquisitions as we go along if we are lucky to succeed with that And speaking of acquisitions, this is a picture for last year and first quarter up till yesterday or so. and speaking of acquisitions this is a picture for last year and first quarter up till yesterday or so So we made two major acquisitions during 2025. so we made two major acquisitions during 2025 Intergrip in the early parts of the year is a nice Dutch company added in January. intergrip in the early parts of the year is a nice dutch company added in january And then in October during Q4, we added Polish NMG. and then in october during q4 we added polish nmg With a strong start of this year, of course, we finished here in January and early February with Dutch Autonet and Swedish Infometric. Of course, these two acquisitions, we have worked a lot and hard with during 2025, but we just wanted to wait in the full-year numbers as you usually do when you start on closing up until the year-end. They slipped over into 2026. All four of them really nice additions, and they fit our criteria very well. Looking at the sales per vertical, as I mentioned, we now have 49 different business units, but we're roughly active in some 22 different verticals. You can see, of course, the larger ones where we have more presence, more business units, and active in more markets. That is energy, property management, healthcare, finance, and also real estate. With a strong start of this year, of course, we finished here in January and early February with Dutch Autonet and Swedish Infometric. with a strong start of this year of course we finished here in january and early february with dutch autonet and swedish infometric Of course, these two acquisitions, we have worked a lot and hard with during 2025, but we just wanted to wait in the full-year numbers as you usually do when you start on closing up until the year-end. of course these two acquisitions we have worked a lot and hard with during 2025 but we just wanted to wait in the full-year numbers as you usually do when you start on closing up until the year-end They slipped over into 2026. they slipped over into 2026 All four of them really nice additions, and they fit our criteria very well. all four of them really nice additions and they fit our criteria very well Looking at the sales per vertical, as I mentioned, we now have 49 different business units, but we're roughly active in some 22 different verticals. looking at the sales per vertical as i mentioned we now have 49 different business units but we're roughly active in some 22 different verticals You can see, of course, the larger ones where we have more presence, more business units, and active in more markets. you can see of course the larger ones where we have more presence more business units and active in more markets That is energy, property management, healthcare, finance, and also real estate. that is energy property management healthcare finance and also real estate They are the five, six biggest industries that we operate in. But as you can see, we're quite agnostic when it comes to new verticals. As long as the companies meet our criteria, we can add another vertical to the picture. This is a picture of the various business units as we've shown before. This is on a full-year basis. When we present it during the quarters, it's on a rolling 12-month basis for you to get a sense of the size and the distribution. As we've also said a lot of times, this is pretty much what the M&A pipeline looks like in terms of sizes. The average size of the nice VMS company is still there around EUR 4 million or EUR 5 million. You can see on the latest four acquisitions, I think that also shows roughly that average. They are the five, six biggest industries that we operate in. they are the five six biggest industries that we operate in But as you can see, we're quite agnostic when it comes to new verticals. but as you can see we're quite agnostic when it comes to new verticals As long as the companies meet our criteria, we can add another vertical to the picture. as long as the companies meet our criteria we can add another vertical to the picture This is a picture of the various business units as we've shown before. this is a picture of the various business units as we've shown before This is on a full-year basis. this is on a full-year basis When we present it during the quarters, it's on a rolling 12-month basis for you to get a sense of the size and the distribution. when we present it during the quarters it's on a rolling 12-month basis for you to get a sense of the size and the distribution As we've also said a lot of times, this is pretty much what the M&A pipeline looks like in terms of sizes. as we've also said a lot of times this is pretty much what the m&a pipeline looks like in terms of sizes The average size of the nice VMS company is still there around EUR 4 million or EUR 5 million. the average size of the nice vms company is still there around eur 4 million or eur 5 million You can see on the latest four acquisitions, I think that also shows roughly that average. you can see on the latest four acquisitions i think that also shows roughly that average And then growing into some of what I call our little superpower within Vitec, and that is sharing knowledge, which keeps on getting better and better with size, of course, and also with our own resources that we can accommodate this and facilitate it. So we have 49 different companies, but they are not competing in any sense. So it is full transparency internally where we can share knowledge, experiences, and also failures, of course. And this really fosters both a mentality of innovation. And hopefully, we can move a bit faster ahead because someone in the group has most likely already tried what you are thinking about back home. And we can share, like I said, really good examples from everything from development to tools we're using, pricing models, or whatever it may be. And then growing into some of what I call our little superpower within Vitec, and that is sharing knowledge, which keeps on getting better and better with size, of course, and also with our own resources that we can accommodate this and facilitate it. and then growing into some of what i call our little superpower within vitec and that is sharing knowledge which keeps on getting better and better with size of course and also with our own resources that we can accommodate this and facilitate it So we have 49 different companies, but they are not competing in any sense. so we have 49 different companies but they are not competing in any sense So it is full transparency internally where we can share knowledge, experiences, and also failures, of course. so it is full transparency internally where we can share knowledge experiences and also failures of course And this really fosters both a mentality of innovation. and this really fosters both a mentality of innovation And hopefully, we can move a bit faster ahead because someone in the group has most likely already tried what you are thinking about back home. and hopefully we can move a bit faster ahead because someone in the group has most likely already tried what you are thinking about back home And we can share, like I said, really good examples from everything from development to tools we're using, pricing models, or whatever it may be. and we can share like i said really good examples from everything from development to tools we're using pricing models or whatever it may be It is a very appreciated part of being part of a big group as opposed to being just run as an individual company. Just a short note on AI. I think we mentioned this last time as well. It's basically within these three sort of initiatives, we, of course, work with improving our own working environment and our own efficiency and also the kind of business development side of it. And then, of course, on the growth side where we implement AI into our features and our applications. So these are sort of the three streams that we are working on. And there are just some examples at the bottom there from some of the business units. But a lot of things are cooking. It is a very appreciated part of being part of a big group as opposed to being just run as an individual company. it is a very appreciated part of being part of a big group as opposed to being just run as an individual company Just a short note on AI. just a short note on ai I think we mentioned this last time as well. i think we mentioned this last time as well It's basically within these three sort of initiatives, we, of course, work with improving our own working environment and our own efficiency and also the kind of business development side of it. it's basically within these three sort of initiatives we of course work with improving our own working environment and our own efficiency and also the kind of business development side of it And then, of course, on the growth side where we implement AI into our features and our applications. and then of course on the growth side where we implement ai into our features and our applications So these are sort of the three streams that we are working on. so these are sort of the three streams that we are working on And there are just some examples at the bottom there from some of the business units. and there are just some examples at the bottom there from some of the business units But a lot of things are cooking. but a lot of things are cooking A lot of these forums, which I mentioned earlier, are full of great examples of both tools that we use but also applications and how to sell them and how to bundle them together with our software. Moving over to the sort of main topic for the day, of course, the report. These are the highlights. Like I said, I'm especially proud of that we were able to grow net sales on a total of 6% for the quarter and 9% for the full year. We will get into more on the distribution there, where most or absolute ballpark of that growth comes from the subscription-based revenues. The EBITDA level was flat compared to last year. As you remember, we also guided it a bit on the Q3 call. A lot of these forums, which I mentioned earlier, are full of great examples of both tools that we use but also applications and how to sell them and how to bundle them together with our software. a lot of these forums which i mentioned earlier are full of great examples of both tools that we use but also applications and how to sell them and how to bundle them together with our software Moving over to the sort of main topic for the day, of course, the report. moving over to the sort of main topic for the day of course the report These are the highlights. these are the highlights Like I said, I'm especially proud of that we were able to grow net sales on a total of 6% for the quarter and 9% for the full year. like i said i'm especially proud of that we were able to grow net sales on a total of 6% for the quarter and 9% for the full year We will get into more on the distribution there, where most or absolute ballpark of that growth comes from the subscription-based revenues. we will get into more on the distribution there where most or absolute ballpark of that growth comes from the subscription-based revenues The EBITDA level was flat compared to last year. the ebitda level was flat compared to last year As you remember, we also guided it a bit on the Q3 call. as you remember we also guided it a bit on the q3 call Q4 last year was exceptionally strong with a few large hospital projects in Finland running through the books. So it's really the Q4 2024 is exceptionally strong. So with that said, I'm quite pleased that we're able to basically match that for this quarter as well. And if you can see on the full-year total growth of 9% and roughly 2% and operational margin, 6% on the net profit increase, it's okay. It's not bad. But as I also wrote in my comments here on the Q4 report, I'm really pleased with the growth. But we have a tradition and also an objective to, of course, grow our profits faster than we grow our topline. And that has not been the case for 2025. So in terms of efficiency, there's more to do for sure, and we are working on that a lot. Q4 last year was exceptionally strong with a few large hospital projects in Finland running through the books. q4 last year was exceptionally strong with a few large hospital projects in finland running through the books So it's really the Q4 2024 is exceptionally strong. so it's really the q4 2024 is exceptionally strong So with that said, I'm quite pleased that we're able to basically match that for this quarter as well. so with that said i'm quite pleased that we're able to basically match that for this quarter as well And if you can see on the full-year total growth of 9% and roughly 2% and operational margin, 6% on the net profit increase, it's okay. and if you can see on the full-year total growth of 9% and roughly 2% and operational margin 6% on the net profit increase it's okay It's not bad. it's not bad But as I also wrote in my comments here on the Q4 report, I'm really pleased with the growth. but as i also wrote in my comments here on the q4 report i'm really pleased with the growth But we have a tradition and also an objective to, of course, grow our profits faster than we grow our topline. but we have a tradition and also an objective to of course grow our profits faster than we grow our topline And that has not been the case for 2025. and that has not been the case for 2025 So in terms of efficiency, there's more to do for sure, and we are working on that a lot. so in terms of efficiency there's more to do for sure and we are working on that a lot Other than that, when you dive into the numbers, perhaps it's shown on this page particularly, but one of the big items in the profit and loss statements are the reversal of earnouts, roughly SEK 200 million or so for the full year. Just a short comment, it doesn't affect the net profit. It doesn't affect the cash flow. I mean, it's two line items that are identical. It's just the accounting rules that makes that we have to put it like that instead of having it as a net. It is a proof that our sort of pricing model when it comes to acquisitions really work. We are prudent, and we say that, "Okay, fantastic. Other than that, when you dive into the numbers, perhaps it's shown on this page particularly, but one of the big items in the profit and loss statements are the reversal of earnouts, roughly SEK 200 million or so for the full year. other than that when you dive into the numbers perhaps it's shown on this page particularly but one of the big items in the profit and loss statements are the reversal of earnouts roughly sek 200 million or so for the full year Just a short comment, it doesn't affect the net profit. just a short comment it doesn't affect the net profit It doesn't affect the cash flow. it doesn't affect the cash flow I mean, it's two line items that are identical. i mean it's two line items that are identical It's just the accounting rules that makes that we have to put it like that instead of having it as a net. it's just the accounting rules that makes that we have to put it like that instead of having it as a net It is a proof that our sort of pricing model when it comes to acquisitions really work. it is a proof that our sort of pricing model when it comes to acquisitions really work We are prudent, and we say that, "Okay, fantastic. we are prudent and we say that "okay fantastic If the acquired company has a really promising future and the sellers want to have a part of that," we say, "Fine, I'll pay for it when I see it." So all the sort of subsequent payments of earnouts is connected to growth in profits. And if that sort of really high targets aren't met, then, of course, we're not paying it. So in this case, expectations were from the sellers' side that we will really reach overperforming. But in this case, they haven't overperformed. They have performed well. I mean, it's going according to plan. I mean, you can see that in the numbers. But it's just a way of sort of bridging the gap between a buyer and a seller but also sharing the risk. If the acquired company has a really promising future and the sellers want to have a part of that," we say, "Fine, I'll pay for it when I see it." So all the sort of subsequent payments of earnouts is connected to growth in profits. if the acquired company has a really promising future and the sellers want to have a part of that," we say "fine i'll pay for it when i see it." so all the sort of subsequent payments of earnouts is connected to growth in profits And if that sort of really high targets aren't met, then, of course, we're not paying it. and if that sort of really high targets aren't met then of course we're not paying it So in this case, expectations were from the sellers' side that we will really reach overperforming. so in this case expectations were from the sellers' side that we will really reach overperforming But in this case, they haven't overperformed. but in this case they haven't overperformed They have performed well. they have performed well I mean, it's going according to plan. i mean it's going according to plan I mean, you can see that in the numbers. i mean you can see that in the numbers But it's just a way of sort of bridging the gap between a buyer and a seller but also sharing the risk. but it's just a way of sort of bridging the gap between a buyer and a seller but also sharing the risk And in this case, we have been able to then reverse that risk in the sense that, "Okay, profit is okay, but it's not overperformed. So hence, we don't pay the earnouts." So I think that's a good point to just highlight. On top of that, of course, you can see that in the numbers, we had a bit of a currency headwind throughout the year, nearly 2% on the full year and then 3% on the quarter. And given that we have 75% of both sales and profits in other than Swedish krona, of course, it hits both the profit and the net sales. But currencies go up and down, so not much we can do about that. Another strong thing for the quarter was the cash flow, both for the quarter and for the full year. And in this case, we have been able to then reverse that risk in the sense that, "Okay, profit is okay, but it's not overperformed. and in this case we have been able to then reverse that risk in the sense that "okay profit is okay but it's not overperformed So hence, we don't pay the earnouts." So I think that's a good point to just highlight. so hence we don't pay the earnouts." so i think that's a good point to just highlight On top of that, of course, you can see that in the numbers, we had a bit of a currency headwind throughout the year, nearly 2% on the full year and then 3% on the quarter. on top of that of course you can see that in the numbers we had a bit of a currency headwind throughout the year nearly 2% on the full year and then 3% on the quarter And given that we have 75% of both sales and profits in other than Swedish krona, of course, it hits both the profit and the net sales. and given that we have 75% of both sales and profits in other than swedish krona of course it hits both the profit and the net sales But currencies go up and down, so not much we can do about that. but currencies go up and down so not much we can do about that Another strong thing for the quarter was the cash flow, both for the quarter and for the full year. another strong thing for the quarter was the cash flow both for the quarter and for the full year So cash conversion was good, and we really worked with the working capital there. And cash collection has been a sort of priority throughout the year. So we're very pleased about that. And cash flow for Vitec, as you know, you should really look at that full 12 months because we have Q1 being our absolute strongest cash flow quarter where we collect most of our prepayments. So you really need to look at this on a 12-month basis. But so if we look at the full 2025, if we take the operational cash flow and then we adjust it for the activations, of course, and the leasing payments, which I think is the prudent way, it's still an 85% cash conversion to EBIT or operating profit, which is a fairly good number. So cash conversion was good, and we really worked with the working capital there. so cash conversion was good and we really worked with the working capital there And cash collection has been a sort of priority throughout the year. and cash collection has been a sort of priority throughout the year So we're very pleased about that. so we're very pleased about that And cash flow for Vitec, as you know, you should really look at that full 12 months because we have Q1 being our absolute strongest cash flow quarter where we collect most of our prepayments. and cash flow for vitec as you know you should really look at that full 12 months because we have q1 being our absolute strongest cash flow quarter where we collect most of our prepayments So you really need to look at this on a 12-month basis. so you really need to look at this on a 12-month basis But so if we look at the full 2025, if we take the operational cash flow and then we adjust it for the activations, of course, and the leasing payments, which I think is the prudent way, it's still an 85% cash conversion to EBIT or operating profit, which is a fairly good number. but so if we look at the full 2025 if we take the operational cash flow and then we adjust it for the activations of course and the leasing payments which i think is the prudent way it's still an 85% cash conversion to ebit or operating profit which is a fairly good number Just moving over to the sales per quarter, as you can see, it's a bit up and down. But overall, according to plan, we will get into the details, the split of organic and acquired in the pages to come. The EBITDA profit, same there, strong finish. But here you can really see the exceptionally strong Q4 from last year in that sense. And then Cash EBIT, which is our internal sort of metric, which is basically the operating profit but netted away from any capitalizations and amortization and depreciation on the intangibles. So this is really close to the cash generating. And here I'm pleased with the sequential increasing. If you can see throughout all of 2025, like I said, we had an exceptional 2024, and then we started up on a bit lower scale. Just moving over to the sales per quarter, as you can see, it's a bit up and down. just moving over to the sales per quarter as you can see it's a bit up and down But overall, according to plan, we will get into the details, the split of organic and acquired in the pages to come. but overall according to plan we will get into the details the split of organic and acquired in the pages to come The EBITDA profit, same there, strong finish. the ebitda profit same there strong finish But here you can really see the exceptionally strong Q4 from last year in that sense. but here you can really see the exceptionally strong q4 from last year in that sense And then Cash EBIT, which is our internal sort of metric, which is basically the operating profit but netted away from any capitalizations and amortization and depreciation on the intangibles. and then cash ebit which is our internal sort of metric which is basically the operating profit but netted away from any capitalizations and amortization and depreciation on the intangibles So this is really close to the cash generating. so this is really close to the cash generating And here I'm pleased with the sequential increasing. and here i'm pleased with the sequential increasing If you can see throughout all of 2025, like I said, we had an exceptional 2024, and then we started up on a bit lower scale. if you can see throughout all of 2025 like i said we had an exceptional 2024 and then we started up on a bit lower scale But then we gradually, Q2, Q3, and now Q4, almost linear sort of increased the profits, which is what we aim to do. Then moving over to the split here of the recurring revenues. Here you can see the bulk and the basis for everything. That's the subscription-based revenues. It grew incredibly well, 8% on the quarter. You can see on the other quarters, it's been 6%, 6%, 6%, and then 8%. It is a bit of a Q4 effect where we have some of the reconciliations of our subscriptions take part in the later part of the year. So it's always a little boost there. But if you look at the full year, it's just over 6%, which is a really good number. Then in the bottom there, you can see the transaction-based, which has, of course, varied a lot throughout the year. But then we gradually, Q2, Q3, and now Q4, almost linear sort of increased the profits, which is what we aim to do. but then we gradually q2 q3 and now q4 almost linear sort of increased the profits which is what we aim to do Then moving over to the split here of the recurring revenues. then moving over to the split here of the recurring revenues Here you can see the bulk and the basis for everything. here you can see the bulk and the basis for everything That's the subscription-based revenues. that's the subscription-based revenues It grew incredibly well, 8% on the quarter. it grew incredibly well 8% on the quarter You can see on the other quarters, it's been 6%, 6%, 6%, and then 8%. you can see on the other quarters it's been 6% 6% 6% and then 8% It is a bit of a Q4 effect where we have some of the reconciliations of our subscriptions take part in the later part of the year. it is a bit of a q4 effect where we have some of the reconciliations of our subscriptions take part in the later part of the year So it's always a little boost there. so it's always a little boost there But if you look at the full year, it's just over 6%, which is a really good number. but if you look at the full year it's just over 6% which is a really good number Then in the bottom there, you can see the transaction-based, which has, of course, varied a lot throughout the year. then in the bottom there you can see the transaction-based which has of course varied a lot throughout the year We have committed that in all of the other quarterly calls. Basically, no change from that. So there's nothing sort of exceptional for the Q4 compared to the others throughout the year. Then just finishing off before the Q&A session here, I think it was a really good Cash EBIT margin expansion, consecutive improvements throughout the year, a really strong cash flow. Of course, we're very pleased that we were able to finish off three acquisitions in the last four months now, one during Q4 NMG in Poland and the two with the start of this year. A lot of work has been put into that, and it finally sort of materialized. With that, I think we will move over to questions. We have committed that in all of the other quarterly calls. we have committed that in all of the other quarterly calls Basically, no change from that. basically no change from that So there's nothing sort of exceptional for the Q4 compared to the others throughout the year. so there's nothing sort of exceptional for the q4 compared to the others throughout the year Then just finishing off before the Q&A session here, I think it was a really good Cash EBIT margin expansion, consecutive improvements throughout the year, a really strong cash flow. then just finishing off before the q&a session here i think it was a really good cash ebit margin expansion consecutive improvements throughout the year a really strong cash flow Of course, we're very pleased that we were able to finish off three acquisitions in the last four months now, one during Q4 NMG in Poland and the two with the start of this year. of course we're very pleased that we were able to finish off three acquisitions in the last four months now one during q4 nmg in poland and the two with the start of this year A lot of work has been put into that, and it finally sort of materialized. a lot of work has been put into that and it finally sort of materialized With that, I think we will move over to questions. with that i think we will move over to questions

Speaker 6: 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 Investment Bank. Please go ahead. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. 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. 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 Investment Bank. the next question comes from predrag savinovic from carnegie investment bank Please go ahead. please go ahead

Speaker 8: Thank you very much. And good morning, guys. Could you start by elaborating on the transactional revenues, which show much more stabilization now in the fourth quarter? Discuss maybe around the differences in year-over-year growth this quarter compared to the past. And if you can discuss these comparables going into the first quarter, if we can expect further stabilization for the start of this year. Thank you very much. thank you very much And good morning, guys. and good morning guys Could you start by elaborating on the transactional revenues, which show much more stabilization now in the fourth quarter? could you start by elaborating on the transactional revenues which show much more stabilization now in the fourth quarter Discuss maybe around the differences in year-over-year growth this quarter compared to the past. discuss maybe around the differences in year-over-year growth this quarter compared to the past And if you can discuss these comparables going into the first quarter, if we can expect further stabilization for the start of this year. and if you can discuss these comparables going into the first quarter if we can expect further stabilization for the start of this year

Speaker 5: Well, yet again, on the sort of half of the transaction-based revenues are spread out through almost all of the other business units, and that is a very stable number. And then there is another half which comes from Enova, which is, of course, like we discussed many times, the grid balancing market. The grid balancing market has been more stable. But will it stay stable? It's very hard to predict. I mean, we have now one month into this year, and we see that it is still roughly more stable than during 2024. But if that is going to continue, like I said, I can't predict the weather in the Netherlands, unfortunately, so. But for now, it looks more stable than last year. So yes. Well, yet again, on the sort of half of the transaction-based revenues are spread out through almost all of the other business units, and that is a very stable number. well yet again on the sort of half of the transaction-based revenues are spread out through almost all of the other business units and that is a very stable number And then there is another half which comes from Enova, which is, of course, like we discussed many times, the grid balancing market. and then there is another half which comes from enova which is of course like we discussed many times the grid balancing market The grid balancing market has been more stable. the grid balancing market has been more stable But will it stay stable? but will it stay stable It's very hard to predict. it's very hard to predict I mean, we have now one month into this year, and we see that it is still roughly more stable than during 2024. i mean we have now one month into this year and we see that it is still roughly more stable than during 2024 But if that is going to continue, like I said, I can't predict the weather in the Netherlands, unfortunately, so. but if that is going to continue like i said i can't predict the weather in the netherlands unfortunately so But for now, it looks more stable than last year. but for now it looks more stable than last year So yes. so yes

Speaker 8: Okay. That's very good. And then Q4 is generally renewal season for you, and we're already in February. So you should have quite some good visibility on growth pace in the recurring revenues for 2026. And given the uncertain times we are in now, would you consider giving us some indication of how the recurring revenue growth organically is progressing for Q1? Maybe without saying numbers, but maybe you can add in line with 2025 or in line with the fourth quarter or so on. Okay. okay That's very good. that's very good And then Q4 is generally renewal season for you, and we're already in February. and then q4 is generally renewal season for you and we're already in february So you should have quite some good visibility on growth pace in the recurring revenues for 2026. so you should have quite some good visibility on growth pace in the recurring revenues for 2026 And given the uncertain times we are in now, would you consider giving us some indication of how the recurring revenue growth organically is progressing for Q1? and given the uncertain times we are in now would you consider giving us some indication of how the recurring revenue growth organically is progressing for q1 Maybe without saying numbers, but maybe you can add in line with 2025 or in line with the fourth quarter or so on. maybe without saying numbers but maybe you can add in line with 2025 or in line with the fourth quarter or so on

Speaker 5: What we can say is, of course, that the pricing mechanism within the growth is roughly 1% lower than last year. Just giving that the indexes that fuel that is roughly 1% lower. Churns are roughly the same as last year, around 1%. So we don't put specific guidance. But with that in mind, I mean, we are expecting 1% less from pricing, but still a few percentages up. I think the KPIs will sort of come in at roughly between 2%-3%. Last year, they were between 3%-4%. What we can say is, of course, that the pricing mechanism within the growth is roughly 1% lower than last year. what we can say is of course that the pricing mechanism within the growth is roughly 1% lower than last year Just giving that the indexes that fuel that is roughly 1% lower. just giving that the indexes that fuel that is roughly 1% lower Churns are roughly the same as last year, around 1%. churns are roughly the same as last year around 1% So we don't put specific guidance. so we don't put specific guidance But with that in mind, I mean, we are expecting 1% less from pricing, but still a few percentages up. but with that in mind i mean we are expecting 1% less from pricing but still a few percentages up I think the KPIs will sort of come in at roughly between 2%-3%. i think the kpis will sort of come in at roughly between 2%-3% Last year, they were between 3%-4%. last year they were between 3%-4%

Speaker 8: Okay. That's very good. So then in total, maybe some upsells and volume. Okay. okay That's very good. that's very good So then in total, maybe some upsells and volume. so then in total maybe some upsells and volume

Speaker 5: Yeah, that has been the decade. Yeah, that has been the decade. yeah that has been the decade

Speaker 8: Slightly more than the pace for. Slightly more than the pace for. slightly more than the pace for

Speaker 5: Yeah. I mean, all things equal, perhaps 1% down just from the pricing if we can keep up the upsell. Yeah. yeah I mean, all things equal, perhaps 1% down just from the pricing if we can keep up the upsell. i mean all things equal perhaps 1% down just from the pricing if we can keep up the upsell

Speaker 8: Okay. That's very clear. And then, Olle, you state that you were not satisfied with the EBIT margin for the full year and gradually expected to reach at least 20%. What is the timeframe, and what kind of margin facing do you expect for the coming year? Okay. okay That's very clear. that's very clear And then, Olle, you state that you were not satisfied with the EBIT margin for the full year and gradually expected to reach at least 20%. and then olle you state that you were not satisfied with the ebit margin for the full year and gradually expected to reach at least 20% What is the timeframe, and what kind of margin facing do you expect for the coming year? what is the timeframe and what kind of margin facing do you expect for the coming year

Speaker 5: I mean, we actually hit the 20% mark, which is on operating profit. But it's also part of that goal is to increase, I mean, continuous improvements. That's what Vitec is all about, I mean, grinding, grinding, and gradually improving. And in that case, we didn't succeed during last year. So what I'm looking forward to and what we are pushing our business units towards, that's both through, of course, organic growth but also through efficiencies to gradually improve. No big numbers, but take a few steps every quarter to improve margins. That's what we aim for. I mean, we actually hit the 20% mark, which is on operating profit. i mean we actually hit the 20% mark which is on operating profit But it's also part of that goal is to increase, I mean, continuous improvements. but it's also part of that goal is to increase i mean continuous improvements That's what Vitec is all about, I mean, grinding, grinding, and gradually improving. that's what vitec is all about i mean grinding grinding and gradually improving And in that case, we didn't succeed during last year. and in that case we didn't succeed during last year So what I'm looking forward to and what we are pushing our business units towards, that's both through, of course, organic growth but also through efficiencies to gradually improve. so what i'm looking forward to and what we are pushing our business units towards that's both through of course organic growth but also through efficiencies to gradually improve No big numbers, but take a few steps every quarter to improve margins. no big numbers but take a few steps every quarter to improve margins That's what we aim for. that's what we aim for

Speaker 8: Super. Thank you very much for taking my questions. Super. super Thank you very much for taking my questions. thank you very much for taking my questions

Speaker 5: Thanks, Predrag. Thanks, Predrag. thanks predrag

Speaker 6: The next question comes from Erik Larsson from SEB. Please go ahead. The next question comes from Erik Larsson from SEB. the next question comes from erik larsson from seb Please go ahead. please go ahead

Speaker 3: Hello. I had a question on sentiment. So obviously, looking at public markets, it's been clearly negative sentiment here over the past quarters and especially recently here. But at the same time, I have the impression that the general interest to acquire companies in your space, in the private market, has remained at a high level. So for you and your competitors being more operationally active, it doesn't really appear you see the same risks as maybe public investors do. So yeah, just wanted to hear your thoughts about that sort of disparity in perception. Hello. hello I had a question on sentiment. i had a question on sentiment So obviously, looking at public markets, it's been clearly negative sentiment here over the past quarters and especially recently here. so obviously looking at public markets it's been clearly negative sentiment here over the past quarters and especially recently here But at the same time, I have the impression that the general interest to acquire companies in your space, in the private market, has remained at a high level. but at the same time i have the impression that the general interest to acquire companies in your space in the private market has remained at a high level So for you and your competitors being more operationally active, it doesn't really appear you see the same risks as maybe public investors do. so for you and your competitors being more operationally active it doesn't really appear you see the same risks as maybe public investors do So yeah, just wanted to hear your thoughts about that sort of disparity in perception. so yeah just wanted to hear your thoughts about that sort of disparity in perception

Speaker 5: No, it's true that it's not necessarily true that we don't see any risk. I mean, we probably see parts of it, but we haven't seen it operationally. We can't see that our markets are sort of fading away, that we are increasing the competition. We have always competition, for sure. But we're not worse off than anyone else. We're using the same tools. We have the same talented people, so we can work with all of that as well. And on top of that, we have the infrastructure. We have the knowledge of the industries. We have the support staff, which know our customers. We have their confidence since many years. So it's all down to the brand promise to be able to rely on today and tomorrow. And if you sum all of that, you can do the math. I mean, we can count on these cash flows. No, it's true that it's not necessarily true that we don't see any risk. no it's true that it's not necessarily true that we don't see any risk I mean, we probably see parts of it, but we haven't seen it operationally. i mean we probably see parts of it but we haven't seen it operationally We can't see that our markets are sort of fading away, that we are increasing the competition. we can't see that our markets are sort of fading away that we are increasing the competition We have always competition, for sure. we have always competition for sure But we're not worse off than anyone else. but we're not worse off than anyone else We're using the same tools. we're using the same tools We have the same talented people, so we can work with all of that as well. we have the same talented people so we can work with all of that as well And on top of that, we have the infrastructure. and on top of that we have the infrastructure We have the knowledge of the industries. we have the knowledge of the industries We have the support staff, which know our customers. we have the support staff which know our customers We have their confidence since many years. we have their confidence since many years So it's all down to the brand promise to be able to rely on today and tomorrow. so it's all down to the brand promise to be able to rely on today and tomorrow And if you sum all of that, you can do the math. and if you sum all of that you can do the math I mean, we can count on these cash flows. i mean we can count on these cash flows We can make a fair assumption of the predictions. The risks or the fears that are out there, we can't really see them yet. Hence, the private market is still there. It doesn't move up as fast as the public market either, and it certainly hasn't moved down. But of course, over time, if there is a huge downturn, which has been here, we would expect it to materialize also in the private market because, of course, for some of these companies, it is a potential sort of next step to go public. So of course, we're looking forward to seeing some of slight sort of more modest pricings or what we could call it in the private market. But for now, the interest is still there. All these acquisitions we have done have been highly competitive. We can make a fair assumption of the predictions. we can make a fair assumption of the predictions The risks or the fears that are out there, we can't really see them yet. the risks or the fears that are out there we can't really see them yet Hence, the private market is still there. hence the private market is still there It doesn't move up as fast as the public market either, and it certainly hasn't moved down. it doesn't move up as fast as the public market either and it certainly hasn't moved down But of course, over time, if there is a huge downturn, which has been here, we would expect it to materialize also in the private market because, of course, for some of these companies, it is a potential sort of next step to go public. but of course over time if there is a huge downturn which has been here we would expect it to materialize also in the private market because of course for some of these companies it is a potential sort of next step to go public So of course, we're looking forward to seeing some of slight sort of more modest pricings or what we could call it in the private market. so of course we're looking forward to seeing some of slight sort of more modest pricings or what we could call it in the private market But for now, the interest is still there. but for now the interest is still there All these acquisitions we have done have been highly competitive. all these acquisitions we have done have been highly competitive There's lots of people that are still very interested in these companies and see a great potential in them. There's lots of people that are still very interested in these companies and see a great potential in them. there's lots of people that are still very interested in these companies and see a great potential in them

Speaker 3: Great. Thanks for that, Olle. I just had another question on your most recent acquisition here of Infometric. Could you just give any indication in terms of the revenue split, subscription, transaction services, etc.? Great. great Thanks for that, Olle. thanks for that olle I just had another question on your most recent acquisition here of Infometric. i just had another question on your most recent acquisition here of infometric Could you just give any indication in terms of the revenue split, subscription, transaction services, etc.? could you just give any indication in terms of the revenue split subscription transaction services etc

Speaker 5: Yeah, I can do that a bit. Like I said, it's roughly 45%. 40%-45% is the recurring revenue rate as we go on. And they have a highly interesting model, which we really like. So it is a SaaS company. They have their own software, which looks like all the other companies. But what they have is they also sell projects or they sell products. These are third-party component products, so not of our own. So we're just buying them on the open market, and we bundle it together either in projects or in product sales. But the conversion ratio from selling the products over to SaaS and software is close to 100%. So for every piece of hardware that gets installed because you need the meters out there. So this is IMD, so Individual Metering and Debiting, so for electricity and heating and water. Yeah, I can do that a bit. yeah i can do that a bit Like I said, it's roughly 45%. 40%-45% is the recurring revenue rate as we go on. like i said it's roughly 45% 40%-45% is the recurring revenue rate as we go on And they have a highly interesting model, which we really like. and they have a highly interesting model which we really like So it is a SaaS company. so it is a saas company They have their own software, which looks like all the other companies. they have their own software which looks like all the other companies But what they have is they also sell projects or they sell products. but what they have is they also sell projects or they sell products These are third-party component products, so not of our own. these are third-party component products so not of our own So we're just buying them on the open market, and we bundle it together either in projects or in product sales. so we're just buying them on the open market and we bundle it together either in projects or in product sales But the conversion ratio from selling the products over to SaaS and software is close to 100%. but the conversion ratio from selling the products over to saas and software is close to 100% So for every piece of hardware that gets installed because you need the meters out there. so for every piece of hardware that gets installed because you need the meters out there So this is IMD, so Individual Metering and Debiting, so for electricity and heating and water. so this is imd so individual metering and debiting so for electricity and heating and water Of course, you need the infrastructure out there. Currently, I think the conversion or the installed base is just over 20% in the market. For a foreseeable future, we can sort of fuel our recurring revenues with doing these projects and converting them over and having the long-term relationship that you have with your subscription customers. Roughly 45% is recurring revenue today on the software. Then the rest is, I think, 2/3 are our own projects, and 1/3 is pure product sales where typically other electrical contractors are buying the products from us. Of course, you need the infrastructure out there. of course you need the infrastructure out there Currently, I think the conversion or the installed base is just over 20% in the market. currently i think the conversion or the installed base is just over 20% in the market For a foreseeable future, we can sort of fuel our recurring revenues with doing these projects and converting them over and having the long-term relationship that you have with your subscription customers. for a foreseeable future we can sort of fuel our recurring revenues with doing these projects and converting them over and having the long-term relationship that you have with your subscription customers Roughly 45% is recurring revenue today on the software. roughly 45% is recurring revenue today on the software Then the rest is, I think, 2/3 are our own projects, and 1/3 is pure product sales where typically other electrical contractors are buying the products from us. then the rest is i think 2/3 are our own projects and 1/3 is pure product sales where typically other electrical contractors are buying the products from us

Speaker 3: Okay. That's very helpful. That's all from me as well, so thank you. Okay. okay That's very helpful. that's very helpful That's all from me as well, so thank you. that's all from me as well so thank you

Speaker 5: Thanks, Erik. Thanks, Erik. thanks erik

Speaker 6: The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead. The next question comes from Daniel Thorsson from ABG Sundal Collier. the next question comes from daniel thorsson from abg sundal collier Please go ahead. please go ahead

Speaker 2: Yes. Thank you very much. I follow up on Predrag's last question here on the margin journey ahead. Then how do you view your organic net recruitment pace going forward given increased productivity among software engineers? I guess you can become more efficient with AI, as you showed in the graph as well or in the slide as well, and need less developers. Is that the way we should see it, or? Yes. yes Thank you very much. thank you very much I follow up on Predrag's last question here on the margin journey ahead. i follow up on predrag's last question here on the margin journey ahead Then how do you view your organic net recruitment pace going forward given increased productivity among software engineers? then how do you view your organic net recruitment pace going forward given increased productivity among software engineers I guess you can become more efficient with AI, as you showed in the graph as well or in the slide as well, and need less developers. i guess you can become more efficient with ai as you showed in the graph as well or in the slide as well and need less developers Is that the way we should see it, or? is that the way we should see it or

Speaker 5: Like I said, we haven't heard from anyone in the industry and certainly not for ourselves that this has yet led to any sort of reduction in staff. But what we have been is a lot more cautious about recruiting. When you have people going to retirement or people leave for any other reasons, we really question, "Okay, can we shift around staff? Can we do things more with that efficiency?" So yeah, we're hoping for that. We have seen some of it, but it hasn't materialized super high yet. But for sure, we are sort of expecting, like any other technological shift that we have been through for our last 40 years, that we will become more efficient. But in software, also, in the decades and decades of improvement, most of that improvements end up with the customer. They get more bang for the buck. They get better software. Like I said, we haven't heard from anyone in the industry and certainly not for ourselves that this has yet led to any sort of reduction in staff. like i said we haven't heard from anyone in the industry and certainly not for ourselves that this has yet led to any sort of reduction in staff But what we have been is a lot more cautious about recruiting. but what we have been is a lot more cautious about recruiting When you have people going to retirement or people leave for any other reasons, we really question, "Okay, can we shift around staff? when you have people going to retirement or people leave for any other reasons we really question "okay can we shift around staff Can we do things more with that efficiency?" So yeah, we're hoping for that. can we do things more with that efficiency?" so yeah we're hoping for that We have seen some of it, but it hasn't materialized super high yet. we have seen some of it but it hasn't materialized super high yet But for sure, we are sort of expecting, like any other technological shift that we have been through for our last 40 years, that we will become more efficient. but for sure we are sort of expecting like any other technological shift that we have been through for our last 40 years that we will become more efficient But in software, also, in the decades and decades of improvement, most of that improvements end up with the customer. but in software also in the decades and decades of improvement most of that improvements end up with the customer They get more bang for the buck. they get more bang for the buck They get better software. they get better software They get more services. They get better features. So a lot of the productivity ends up at the customer's side. But for sure, we are expecting productivity gains. Yes. They get more services. they get more services They get better features. they get better features So a lot of the productivity ends up at the customer's side. so a lot of the productivity ends up at the customer's side But for sure, we are expecting productivity gains. but for sure we are expecting productivity gains Yes. yes

Speaker 2: Following up on that one again, on that slide, you showed both growth levers from AI and cost reductions. Do you think you will see a greater effect from AI use cases, mainly on costs or on revenues a few years out? Following up on that one again, on that slide, you showed both growth levers from AI and cost reductions. following up on that one again on that slide you showed both growth levers from ai and cost reductions Do you think you will see a greater effect from AI use cases, mainly on costs or on revenues a few years out? do you think you will see a greater effect from ai use cases mainly on costs or on revenues a few years out

Speaker 5: I think for now, we're mostly seeing it in actually products and in increased sort of pace when it comes to transforming legacy software, for instance, and things like that. So in that case, we're still seeing more on the revenue side than on the cost side because the difference between Vitec or any other VMS company and the horizontal is that we have 49 development departments. I have 49 of everything because that's the decentralized model, and that is working super well for us. So I think VMS companies, yes, we will have some efficiency in the sense that we will become more productive. And that should more be on the revenue side, actually, than on the cost side. I think for now, we're mostly seeing it in actually products and in increased sort of pace when it comes to transforming legacy software, for instance, and things like that. i think for now we're mostly seeing it in actually products and in increased sort of pace when it comes to transforming legacy software for instance and things like that So in that case, we're still seeing more on the revenue side than on the cost side because the difference between Vitec or any other VMS company and the horizontal is that we have 49 development departments. so in that case we're still seeing more on the revenue side than on the cost side because the difference between vitec or any other vms company and the horizontal is that we have 49 development departments I have 49 of everything because that's the decentralized model, and that is working super well for us. i have 49 of everything because that's the decentralized model and that is working super well for us So I think VMS companies, yes, we will have some efficiency in the sense that we will become more productive. so i think vms companies yes we will have some efficiency in the sense that we will become more productive And that should more be on the revenue side, actually, than on the cost side. and that should more be on the revenue side actually than on the cost side

Speaker 2: Okay. I see. That's helpful. And then finally, which company or companies was the reversed earnout here in Q4 linked to? Okay. okay I see. i see That's helpful. that's helpful And then finally, which company or companies was the reversed earnout here in Q4 linked to? and then finally which company or companies was the reversed earnout here in q4 linked to

Speaker 5: It's actually five companies in that sort of bucket because we do the it's based on the year-end numbers. So we have basically, if you take the recent acquisitions, so not the absolute latest one because that's too early, but acquisitions from the last two, three years. It's actually five companies in that sort of bucket because we do the it's based on the year-end numbers. it's actually five companies in that sort of bucket because we do the it's based on the year-end numbers So we have basically, if you take the recent acquisitions, so not the absolute latest one because that's too early, but acquisitions from the last two, three years. so we have basically if you take the recent acquisitions so not the absolute latest one because that's too early but acquisitions from the last two three years

Speaker 2: Yeah. I see. No, that's very clear. Yeah, that's all. Thank you very much. Yeah. yeah I see. i see No, that's very clear. no that's very clear Yeah, that's all. yeah that's all Thank you very much. thank you very much

Speaker 6: The next question comes from Fredrik Nilsson from Redeye. Please go ahead. The next question comes from Fredrik Nilsson from Redeye. the next question comes from fredrik nilsson from redeye Please go ahead. please go ahead

Speaker 4: Thank you. Hi, Olle and Patrik. I want to continue a bit on the discussion of AI from another perspective, perhaps. I mean, you have exposure to a lot of different industries, obviously. But if we focus on the most tech-savvy ones, what's the feedback you currently get from those regarding your product offering? Are they eager for new AI features, for example? Thank you. thank you Hi, Olle and Patrik. hi olle and patrik I want to continue a bit on the discussion of AI from another perspective, perhaps. i want to continue a bit on the discussion of ai from another perspective perhaps I mean, you have exposure to a lot of different industries, obviously. i mean you have exposure to a lot of different industries obviously But if we focus on the most tech-savvy ones, what's the feedback you currently get from those regarding your product offering? but if we focus on the most tech-savvy ones what's the feedback you currently get from those regarding your product offering Are they eager for new AI features, for example? are they eager for new ai features for example

Speaker 5: A lot of our customers, or nearly all of them, want to discuss. And yet again, here it is that they should be able to rely on us to sort of that they can benefit from the AI functionality. And that's the beauty when you have a standardized software because we develop features which is based on the industry's total need. So they might say, "Okay, I have this need," but then we say, "Yeah, but this and this is in our pipeline." And they say, "Oh, great." So it's a benefit from the standardized software. But at the same time, they really want to hear that, "Okay, we're on it. We're working on it, and we have it in the pipeline, and we can also show them at present with some really nice features." But a lot of them are super conservative. A lot of our customers, or nearly all of them, want to discuss. a lot of our customers or nearly all of them want to discuss And yet again, here it is that they should be able to rely on us to sort of that they can benefit from the AI functionality. and yet again here it is that they should be able to rely on us to sort of that they can benefit from the ai functionality And that's the beauty when you have a standardized software because we develop features which is based on the industry's total need. and that's the beauty when you have a standardized software because we develop features which is based on the industry's total need So they might say, "Okay, I have this need," but then we say, "Yeah, but this and this is in our pipeline." And they say, "Oh, great." So it's a benefit from the standardized software. so they might say "okay i have this need," but then we say "yeah but this and this is in our pipeline." and they say "oh great." so it's a benefit from the standardized software But at the same time, they really want to hear that, "Okay, we're on it. but at the same time they really want to hear that "okay we're on it We're working on it, and we have it in the pipeline, and we can also show them at present with some really nice features." But a lot of them are super conservative. we're working on it and we have it in the pipeline and we can also show them at present with some really nice features." but a lot of them are super conservative They say, "Yeah, we want all of that, but please don't change anything." It's sort of the next sentence. So they are really sort of more or less reluctant to do any big bang changes because this is one of the moats around vertical market software, is that it is so embedded into the customer's processes. So it's a very slow-moving animal here. So yes, they want to benefit, but they don't want to change anything at the same time. So you will have to do this very gradually. But the big thing here is, or the important thing, is that they feel that they can benefit from these improvements over time. So a lot of them are not in a hurry. They say, "Yeah, we want all of that, but please don't change anything." It's sort of the next sentence. they say "yeah we want all of that but please don't change anything." it's sort of the next sentence So they are really sort of more or less reluctant to do any big bang changes because this is one of the moats around vertical market software, is that it is so embedded into the customer's processes. so they are really sort of more or less reluctant to do any big bang changes because this is one of the moats around vertical market software is that it is so embedded into the customer's processes So it's a very slow-moving animal here. so it's a very slow-moving animal here So yes, they want to benefit, but they don't want to change anything at the same time. so yes they want to benefit but they don't want to change anything at the same time So you will have to do this very gradually. so you will have to do this very gradually But the big thing here is, or the important thing, is that they feel that they can benefit from these improvements over time. but the big thing here is or the important thing is that they feel that they can benefit from these improvements over time So a lot of them are not in a hurry. so a lot of them are not in a hurry

Speaker 4: Great. That's interesting. Regarding other external costs, they were up almost 20% compared to the same quarter last year, which already was at a quite high level. Is that due to a different cost mix in acquired companies, perhaps, or am I missing something else? Great. great That's interesting. that's interesting Regarding other external costs, they were up almost 20% compared to the same quarter last year, which already was at a quite high level. regarding other external costs they were up almost 20% compared to the same quarter last year which already was at a quite high level Is that due to a different cost mix in acquired companies, perhaps, or am I missing something else? is that due to a different cost mix in acquired companies perhaps or am i missing something else

Speaker 5: No, you're right about that. For instance, NMG in Poland, where it is sort of a bit market practice and market standard that a lot of the what we call employees, but they are still on contractors. So it is a bit different mix in that sense, yes, from the acquired companies. No, you're right about that. no you're right about that For instance, NMG in Poland, where it is sort of a bit market practice and market standard that a lot of the what we call employees, but they are still on contractors. for instance nmg in poland where it is sort of a bit market practice and market standard that a lot of the what we call employees but they are still on contractors So it is a bit different mix in that sense, yes, from the acquired companies. so it is a bit different mix in that sense yes from the acquired companies

Speaker 4: Great. Thank you very much. That's all for me. Great. great Thank you very much. thank you very much That's all for me. that's all for me

Speaker 6: The next question comes from Thomas Nilsson from Nordea. Please go ahead. The next question comes from Thomas Nilsson from Nordea. the next question comes from thomas nilsson from nordea Please go ahead. please go ahead

Speaker 9: Thank you for taking my question and congratulations on a strong report. I just want to ask some of these obvious questions that I get from investors all the time. Do you at Vitec see any risk of seat compression going forward due to AI? That is, customers are becoming more efficient, and they may also hold back on recruiting, resulting in fewer hires and fewer software seat subscriptions. What do you answer when investors ask you that? Thank you for taking my question and congratulations on a strong report. thank you for taking my question and congratulations on a strong report I just want to ask some of these obvious questions that I get from investors all the time. i just want to ask some of these obvious questions that i get from investors all the time Do you at Vitec see any risk of seat compression going forward due to AI? do you at vitec see any risk of seat compression going forward due to ai That is, customers are becoming more efficient, and they may also hold back on recruiting, resulting in fewer hires and fewer software seat subscriptions. that is customers are becoming more efficient and they may also hold back on recruiting resulting in fewer hires and fewer software seat subscriptions What do you answer when investors ask you that? what do you answer when investors ask you that

Speaker 5: Well, in the long run, yes, that is a possible development. And that is why we have been working for the past three years, I think, in the sectors where we see that. It's not across the line, for sure. And like I mentioned, we have less than 1% churn still this year. So it's not something that we see, but it is a potential future development. So we have been working with pricing models, more sort of value-based pricing because if our customers become more efficient through the software that we are providing, we are adding a great value for them. And really good if they can benefit from being more efficient, but we shouldn't get punished for it. So we must sort of work with the business models and the pricing models. And this is, yet again, not exclusively for Vitec. That is across every software company. Well, in the long run, yes, that is a possible development. well in the long run yes that is a possible development And that is why we have been working for the past three years, I think, in the sectors where we see that. and that is why we have been working for the past three years i think in the sectors where we see that It's not across the line, for sure. it's not across the line for sure And like I mentioned, we have less than 1% churn still this year. and like i mentioned we have less than 1% churn still this year So it's not something that we see, but it is a potential future development. so it's not something that we see but it is a potential future development So we have been working with pricing models, more sort of value-based pricing because if our customers become more efficient through the software that we are providing, we are adding a great value for them. so we have been working with pricing models more sort of value-based pricing because if our customers become more efficient through the software that we are providing we are adding a great value for them And really good if they can benefit from being more efficient, but we shouldn't get punished for it. and really good if they can benefit from being more efficient but we shouldn't get punished for it So we must sort of work with the business models and the pricing models. so we must sort of work with the business models and the pricing models And this is, yet again, not exclusively for Vitec. and this is yet again not exclusively for vitec That is across every software company. that is across every software company We're not seeing it as of yet, seat compression—no. But it has been on our radar for many years because it is a potential development going forward. So the answer to that is looking into the pricing model and adding more value to our customers. And of course, we should be remunerated for adding value. We're not seeing it as of yet, seat compression—no. we're not seeing it as of yet seat compression—no But it has been on our radar for many years because it is a potential development going forward. but it has been on our radar for many years because it is a potential development going forward So the answer to that is looking into the pricing model and adding more value to our customers. so the answer to that is looking into the pricing model and adding more value to our customers And of course, we should be remunerated for adding value. and of course we should be remunerated for adding value

Speaker 7: Thomas, Patrik, just short also. Also, I think it's important this is nothing new. I mean, digitalization has always been about improving and do more with less people. So that's been ongoing for like 40, 50 years. That's the whole thing about digitalization. So that's nothing new. Yes, the pace might increase, for sure, but it's not a new thing for us to work on. It's always been there. So business is usual in that sense. It's always been the case. Will the pace increase? Probably. And then, like Olle said, that's how we're thinking of it and according to pricing models. Thomas, Patrik, just short also. thomas patrik just short also Also, I think it's important this is nothing new. also i think it's important this is nothing new I mean, digitalization has always been about improving and do more with less people. i mean digitalization has always been about improving and do more with less people So that's been ongoing for like 40, 50 years. so that's been ongoing for like 40 50 years That's the whole thing about digitalization. that's the whole thing about digitalization So that's nothing new. so that's nothing new Yes, the pace might increase, for sure, but it's not a new thing for us to work on. yes the pace might increase for sure but it's not a new thing for us to work on It's always been there. it's always been there So business is usual in that sense. so business is usual in that sense It's always been the case. it's always been the case Will the pace increase? will the pace increase Probably. probably And then, like Olle said, that's how we're thinking of it and according to pricing models. and then like olle said that's how we're thinking of it and according to pricing models

Speaker 9: Okay. Thank you very much. Okay. okay Thank you very much. thank you very much

Speaker 6: The next question comes from Victor Lindström from SpareBank 1 Markets. Please go ahead. The next question comes from Victor Lindström from SpareBank 1 Markets. the next question comes from victor lindström from sparebank 1 markets Please go ahead. please go ahead

Speaker 10: Hello. Hi. Just one question for me here. Given the current market dynamics, would you say that you have changed your acquisition criteria when evaluating new M&A targets? Hello. hello Hi. hi Just one question for me here. just one question for me here Given the current market dynamics, would you say that you have changed your acquisition criteria when evaluating new M&A targets? given the current market dynamics would you say that you have changed your acquisition criteria when evaluating new m&a targets

Speaker 5: Not changed it. I think that is one of the big things here that we are very consistent when we look for the criteria. Of course, pricing. We always try to pay a fair value within what we think is sort of possible. That's why also the pace has been a bit less. So we have tried just as hard. We have looked at just as many companies, but we have just lost more because we are still quite prudent when it comes to pricing. And of course, like we said initially, the downturn in public valuations, if that should impact on the private market, yes, if it is in the long run because some of them have the public market as sort of a potential next step. So yeah, we would look forward to that. Not changed it. not changed it I think that is one of the big things here that we are very consistent when we look for the criteria. i think that is one of the big things here that we are very consistent when we look for the criteria Of course, pricing. of course pricing We always try to pay a fair value within what we think is sort of possible. we always try to pay a fair value within what we think is sort of possible That's why also the pace has been a bit less. that's why also the pace has been a bit less So we have tried just as hard. so we have tried just as hard We have looked at just as many companies, but we have just lost more because we are still quite prudent when it comes to pricing. we have looked at just as many companies but we have just lost more because we are still quite prudent when it comes to pricing And of course, like we said initially, the downturn in public valuations, if that should impact on the private market, yes, if it is in the long run because some of them have the public market as sort of a potential next step. and of course like we said initially the downturn in public valuations if that should impact on the private market yes if it is in the long run because some of them have the public market as sort of a potential next step So yeah, we would look forward to that. so yeah we would look forward to that But as of now, like I mentioned, there are a lot of nice companies out there. There is still high competition for these targets. And as long as we can sort of do our calculations and if it is within our criteria and our valuation models, we will try to continue. But as of now, like I mentioned, there are a lot of nice companies out there. but as of now like i mentioned there are a lot of nice companies out there There is still high competition for these targets. there is still high competition for these targets And as long as we can sort of do our calculations and if it is within our criteria and our valuation models, we will try to continue. and as long as we can sort of do our calculations and if it is within our criteria and our valuation models we will try to continue

Speaker 10: All right. Thank you very much. That was all for me. All right. all right Thank you very much. thank you very much That was all for me. that was all for me

Speaker 6: The next question comes from Daniel Lindkvist from Danske Bank. Please go ahead. The next question comes from Daniel Lindkvist from Danske Bank. the next question comes from daniel lindkvist from danske bank Please go ahead. please go ahead

Speaker 1: Hi, guys. So just to follow up on Dan and Fredrik's questions earlier on. Basically, with the NMG, is there a seasonality to be taken into account? I mean, it seems like they've added quite some in Q4 given the expected size of the acquisition and also what you report if they would have been in the numbers for the full year. Hi, guys. hi guys So just to follow up on Dan and Fredrik's questions earlier on. so just to follow up on dan and fredrik's questions earlier on Basically, with the NMG, is there a seasonality to be taken into account? basically with the nmg is there a seasonality to be taken into account I mean, it seems like they've added quite some in Q4 given the expected size of the acquisition and also what you report if they would have been in the numbers for the full year. i mean it seems like they've added quite some in q4 given the expected size of the acquisition and also what you report if they would have been in the numbers for the full year

Speaker 5: Well, first of all, NMG is growing quite extensively. It is a really growth case. That's what we expected. And then the model there, their customers are the grid owners in Poland. There are only seven potential customers. I think we do business with six out of seven. And the way these models work, you sign multiple-year contracts where you do a lot of development. So there is a high degree of services. And all that services is basically CapEx for our customers. And then that translates over into recurring revenue. Usually, 15%-20% of that services then fuels next year's recurring revenue. So NMG is growing fast, and they are doing a tremendous job. So we are expecting that to continue at least for a few years because they have lots of interesting prospects in the pipeline. Well, first of all, NMG is growing quite extensively. well first of all nmg is growing quite extensively It is a really growth case. it is a really growth case That's what we expected. that's what we expected And then the model there, their customers are the grid owners in Poland. and then the model there their customers are the grid owners in poland There are only seven potential customers. there are only seven potential customers I think we do business with six out of seven. i think we do business with six out of seven And the way these models work, you sign multiple-year contracts where you do a lot of development. and the way these models work you sign multiple-year contracts where you do a lot of development So there is a high degree of services. so there is a high degree of services And all that services is basically CapEx for our customers. and all that services is basically capex for our customers And then that translates over into recurring revenue. and then that translates over into recurring revenue Usually, 15%-20% of that services then fuels next year's recurring revenue. usually 15%-20% of that services then fuels next year's recurring revenue So NMG is growing fast, and they are doing a tremendous job. so nmg is growing fast and they are doing a tremendous job So we are expecting that to continue at least for a few years because they have lots of interesting prospects in the pipeline. so we are expecting that to continue at least for a few years because they have lots of interesting prospects in the pipeline

Speaker 1: Okay. Great. And then just with, I mean, now I'm trying to get my model to work here. So basically, on the cost of goods sold and other external expenses in relation to the NMG subscription-based recurring revenues, service revenues, and other revenues, is there something to take into account with the gross margins? Are the subscription-based recurring revenues on lower gross margins than we're used to, or are the third-party? Okay. okay Great. great And then just with, I mean, now I'm trying to get my model to work here. and then just with i mean now i'm trying to get my model to work here So basically, on the cost of goods sold and other external expenses in relation to the NMG subscription-based recurring revenues, service revenues, and other revenues, is there something to take into account with the gross margins? so basically on the cost of goods sold and other external expenses in relation to the nmg subscription-based recurring revenues service revenues and other revenues is there something to take into account with the gross margins Are the subscription-based recurring revenues on lower gross margins than we're used to, or are the third-party? are the subscription-based recurring revenues on lower gross margins than we're used to or are the third-party

Speaker 5: No, the subscription for NMG, that's pure software revenue. So it is equivalent to the others. It's a 90%+ gross margin on the subscription part. Then the services, of course, that's ours that we put in. No, the subscription for NMG, that's pure software revenue. no the subscription for nmg that's pure software revenue So it is equivalent to the others. so it is equivalent to the others It's a 90%+ gross margin on the subscription part. it's a 90%+ gross margin on the subscription part Then the services, of course, that's ours that we put in. then the services of course that's ours that we put in

Speaker 1: Yeah. There's no split of income from them in any way. That's also a high gross margin business. Then it's in other revenues that the third-party part of their business ends up. Yeah. yeah There's no split of income from them in any way. there's no split of income from them in any way That's also a high gross margin business. that's also a high gross margin business Then it's in other revenues that the third-party part of their business ends up. then it's in other revenues that the third-party part of their business ends up

Speaker 5: No, the NMG doesn't have a lot of third-party. They either have services or they have recurring revenue. That's what they sell. They don't sell any hardware. They don't sell any third-party components. No, the NMG doesn't have a lot of third-party. no the nmg doesn't have a lot of third-party They either have services or they have recurring revenue. they either have services or they have recurring revenue That's what they sell. that's what they sell They don't sell any hardware. they don't sell any hardware They don't sell any third-party components. they don't sell any third-party components

Speaker 1: Okay. And then just on the other external expenses, should I read that as the cost of revenue up there instead of in personnel expenses then, or instead of as in cost of goods? Okay, as in personnel expenses. Great. Then nothing further from my side. Thank you. Okay. okay And then just on the other external expenses, should I read that as the cost of revenue up there instead of in personnel expenses then, or instead of as in cost of goods? and then just on the other external expenses should i read that as the cost of revenue up there instead of in personnel expenses then or instead of as in cost of goods Okay, as in personnel expenses. okay as in personnel expenses Great. great Then nothing further from my side. then nothing further from my side Thank you. thank you

Speaker 6: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. as a reminder if you wish to ask a question please dial pound key five on your telephone keypad There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. there are no more questions at this time so i hand the conference back to the speakers for any closing comments

Speaker 5: Okay. Thank you all for participating and the questions. And then just summing up, I think we posted a decent quarter. We were happy with the growth. We could have done better on the margins, although they were okay. And cash flow-wise, it was really strong. So that was a positive note. And of course, we managed to close these acquisitions that we're super happy with. So that would be all for now for us. So thank you for listening, and take care. Okay. okay Thank you all for participating and the questions. thank you all for participating and the questions And then just summing up, I think we posted a decent quarter. and then just summing up i think we posted a decent quarter We were happy with the growth. we were happy with the growth We could have done better on the margins, although they were okay. we could have done better on the margins although they were okay And cash flow-wise, it was really strong. and cash flow-wise it was really strong So that was a positive note. so that was a positive note And of course, we managed to close these acquisitions that we're super happy with. and of course we managed to close these acquisitions that we're super happy with So that would be all for now for us. so that would be all for now for us So thank you for listening, and take care. so thank you for listening and take care