Good morning, I am Hans-Petter Mellerud, the CEO and founder of Zalaris. Joining me today for this webcast presentation of Zalaris' Q4 and full year 2025 results is our CFO, Gunnar Manum.

Please note that the presentation is being recorded. You can access the recording in the investor section of our website.

In today's presentation, I will first walk you through the key highlights of the quarter. Gunnar will then provide a detailed review of the financial performance.

After that, I will return to discuss the outlook for our business before we conclude with our regular Q&A session where you can submit questions through the chat function. Let's start with the highlights.

We closed 2025 with another quarter of solid performance, extending our all-time high revenue streak and delivering a year of profitable growth and strong cash generation. Fourth quarter revenue reached 396.5 million representing 8.7% organic growth year-over-year or 9.6% in constant currency.

For the full year, revenue totaled 1.5 billion, corresponding to 12% organic growth. Adjusted EBIT for Q4 was 50.6 million with an adjusted EBIT margin of 12.8%.

For the full year, adjusted EBIT increased to 194 million with a margin of 12.9% compared to 147 million and 11% in '24. Managed Services, now accounting for 80% of our revenue, delivered a robust 22% adjusted EBIT margin in the quarter, reflecting scale and operational discipline.

Consulting experienced a temporary setback in APAC combined with reduced capacity in some regions, resulting in a quarterly loss. We have identified corrective actions and expect normalization through this quarter.

Operating cash flow remained strong, reaching 68 million in Q4 and 162.5 million for the full year. This solid cash generation underpins both financial flexibility and shareholder returns.

The board will propose a dividend of NOK 2.5 per share for 2025, reflecting confidence in our financial position, cash generation capacity, and long-term outlook. Let's take a closer look at our financial performance in Q4, marked by strong growth and improved profitability.

As you can see, last 12 months revenue, that is 2025, reached 1.5 billion, representing a 33% increase over the past eight quarters. Adjusted EBIT for '25 was 194 million, up 31% from last year and 103% two years ago.

Our adjusted EBIT margin continued improving to 12.9%, up 4.5 percentage points over the two years. Operating cash flow for the last 12 months totaled 163 million, demonstrating strong cash generation.

Net interest-bearing debt was reduced to 217 million with a net interest-bearing debt to adjusted EBITDA ratio of 0.8. These figures reflect solid financial momentum and our ability to deliver consistent growth and profitability.

We are well positioned to continue this positive trajectory in the coming quarters. As we closed 2025, we saw strong performance with new signings, increasing our annual recurring revenue, or ARR, by approximately 80 million since Q3.

We are delivering on our sales target required to sustain a 15% growth in Managed Services. The positive market situation, driven by digital transformation, focus on core, and cost reduction, has contributed to our success.

We have a strong pipeline with an increased number of deals expected to close within the next three months. Some of our notable wins include agreements with the Norwegian Labour and Welfare Administration for SaaS payroll and HR for over 24,000 employees; a UK-headquartered customer for outsourced multi-country payroll; and a Swiss MedTech company for outsourced payroll; and last, a German carve-out customer for global payroll and HR services.

These achievements position us well for continued growth and success in the coming years. Our Managed Services revenue grew 15.4% year-over-year, reaching 317.6 million and accounting for 80% of our total revenue.

Managed Services now soon is a 1.3 billion standalone business. When adjusted for currency effects, the growth was 14.9%.

We achieved a net revenue retention of 110% year-over-year in constant currency, which we are also very satisfied with. We saw significant growth in all regions with DACH growing by 17%, Northern Europe by 12%, and UK and Ireland by 48%.

These figures demonstrate the strong performance and growth potential for our Managed Services segment. Consulting experienced a temporary setback in APAC, as I previously mentioned, driven by one-off cost overruns on fixed-price SuccessFactors projects finalized in Q4.

This was compounded by reduced capacity in certain regions and lower application maintenance services volumes from a large customer in Poland, resulting in a 9% year-over-year revenue decline for the quarter. We have identified corrective actions and expect gradual normalization through Q1 and are continuing monitoring the situation closely.

Also to remember that significant Zalaris consulting capacity was utilized to support Managed Services in implementing new customers or delivering change orders. While the revenue decline is a concern, it's important to note that our consulting capacity is being effectively utilized to support other critical areas of our business.

Those were the highlights. Let us have Gunnar going through our financials.

Gunnar.

Thank you, Hans-Petter. This slide highlights our 8.7% year-on-year revenue increase for the quarter, marking our strongest quarter yet with revenue of 396 million.

When measured in constant currency, the increase year-on-year was almost the same at 8.6%. Revenue in Managed Services grew by 15%, while Zalaris Consulting saw a reduction of 11%.

The increase in Managed Services was mainly driven by revenue from new customers that have gone live since the fourth quarter last year and then additional services and increased change orders from existing customers. The change order volume was particularly high in the quarter, contributing 17% to total revenue Managed Services, up from 12% in the previous year.

As Hans-Petter mentioned, Consulting experienced a temporary setback in APAC, driven by one-off cost overruns on fixed-price SuccessFactors projects finalized in Q4. This was compounded by reduced capacity in certain regions and lower AMS volumes from a large customer in Poland.

Looking ahead, we continue to have a strong revenue visibility going forward, with a projected revenue increase of more than 6% compared to full year 2025. The chart illustrates our anticipated growth based on signed contracts in Managed Services that will be implemented after the fourth quarter, excluding known churn.

The total net additional annual recurring revenue is 68 million. The annual recurring revenue figure reflects the impact of a top-three customer who, as mentioned in the third quarter 2024 report, will not renew part of its services starting in January 2027.

The top graph illustrates the annual run rate for recurring revenue from Managed Services as of the fourth quarter of 1.05 billion. Additionally, 68 million net new annual revenue from signed contracts and expansions will come in future periods.

The bottom graph shows the estimated timing of this additional revenue. In addition to the projected recurring revenue from Managed Services, change orders comprise approximately 12% of recurring revenue, while Zalaris Consulting has generated 337 million in revenue over the past 12 months.

This equates to an estimated minimum future annual revenue of 1.589 billion, calculated using the average currency rates for the fourth quarter. Any increase in Zalaris Consulting revenue relative to 2025, as well as new contract signings in Managed Services in the coming months, will contribute to further growth.

Now this slide presents our adjusted EBIT for the fourth quarter. The adjusted EBIT was 50.6 million, an increase of 7% year-on-year, with an adjusted EBIT margin of 12.8%, which was marginally lower than last year.

The adjusted EBIT for Managed Services was 65 million, which was 7.8 million more than last year, mainly due to the increased revenue. The adjusted EBIT for Zalaris Consulting was -1.3 million compared to positive 5.8 million last year.

The main reason for the decrease in EBIT was the low revenue and the one-off cost overruns on fixed-price SuccessFactors projects finalized in Q4, as explained earlier. The condensed profit and loss slide provides a detailed overview of our financial performance, highlighting our key cost components.

The increase in license costs is attributed to higher revenue from our payroll and HR solutions, including SuccessFactors. The increase in personnel costs was mainly due to annual pay increase from July, less cost capitalized to customer and development projects of 7.3 million, and a small increase of 12 FTEs compared to last year.

Other operating expenses decreased by 9.4 million and was mainly due to less legal costs related to the Argon process last year and less use of external consultants. The EBIT was 40.9 million for the quarter compared to 37.7 million last year.

Net financial expenses were 37.1 million, which included the redemption premium on the bond loan of 19.1 million along with 6 million in associated issue costs for the old bond loan written off. Now these are both one-off items.

Net profit for the period was negative 1.9 million compared to positive 13.4 million last year. Our net operating cash flow was 68 million for the fourth quarter compared to 57.4 million last year.

The increase was mainly due to higher EBIT and less interest paid. The operating cash flow for the full year was 162 million, 31 million higher than last year's figure of 131 million.

During the quarter, we refinanced our €40 million bond loan with a €40 million revolving credit facility with Nordea. €35 million was drawn on the facility at year-end.

For the early redemption of the bond loan, we paid a redemption premium of 19 million. Switching to the new facility will reduce annual interest expenses by minimum 16 to 18 million.

The net interest-bearing debt as of 31 December decreased by 28 million during the quarter to 217 million, which converts to a leverage ratio, measured by the net interest-bearing debt divided by adjusted EBITDA, of 0.8. That concludes the financial section, and I hand over to Hans-Petter to present the outlook.

Thank you, Gunnar. Let's now turn to our positive outlook for Zalaris.

Over the past two years, our average annual growth has been approximately 18% or 14% adjusted for currency effects. This growth has been driven by both expansion and winning customer relationships and new Managed Services contracts.

Building on this trajectory, we have set a target to grow Managed Services by 15% annually and Consulting by 5%, delivering 2 billion in revenue by '28 with an EBIT margin of 13% to 15%. Achieving this growth will take share of Managed Services revenue from about 79% to 80% as it's been in 20 today to approximately 85% of total revenue.

Our growth strategy remains anchored in multi-country payroll for mid-market and enterprise customers, HR services and our Global Capability Center offering, and a full suite of SAP consulting services now operated as a global business unit with a strong foundation in recurring and re-occurring revenue from application maintenance services. To support this strategy, we are sharpening our land-and-expand approach, deepening relationships with existing accounts while expanding into new geographies.

Our ambition is to establish a presence in all G20 countries with full coverage across Western Europe as the first milestone. With the '25 revenue landing at 1.5 billion and approximately 100 million already secured for '26, combined with net additions beyond contracted churn for '27 and a strong pipeline, we believe this target is well within reach.

As previously communicated, we experienced project execution challenges and cost overruns in APAC in Q4, and corrective measures have been implemented and we are back on track in Q1. Looking ahead, further margin improvements will be driven by AI and automation, moving us closer to fully automated payroll; continued exshoring to enhance cost efficiency; and scale and productivity gains.

Delivering on our communicated EBIT target of 13% to 15% implies an EBIT of 260 to 300 million by '28. However, as I will outline on the next slide, our ambitions extend beyond this range.

Artificial intelligence remains a central topic in our investor dialogue. In '25, we moved from experimentation to structured implementation, with AI increasingly embedded in our operating model to improve scalability, enhance quality, support margin expansion, and build structural capital.

For the period '26 to '28, we are targeting 10% annual productivity improvement driven by digitization, process standardization, and AI deployment across our delivery model. These structural efficiency gains are expected to more than offset incremental costs associated with migrating our SAP infrastructure to SAP Cloud.

Our target is to deliver profitability within our communicated 13% to 15% target. Over the following years, continued productivity improvements and operating leverage are expected to support margin expansion beyond this range.

We have implemented a program equipping employees to use AI as a daily productivity tool, supported by mandatory training and governance under our CTO. Within Managed Services, 15 key processes are under review for AI-enabled automation, with several already digitized or partially automated.

AI is also actively used in sales support, software development, and project execution. For example, a client-specific solution was developed and delivered in less than three weeks using AI-supported methods, at a significantly lower cost than what we otherwise would have had.

The objective is clear: increase productivity, shorten implementation timelines, and scale without proportional headcount growth. Our payroll and HR outsourcing services are structured and repeatable, making them well suited for automation.

AI supercharges our digitization efforts through helping improve data accuracy, reduce manual handling, combined with enhanced process consistency. Through our shared services model, AI investments are leveraged across our multi-customer base, enabling clients to access advanced capabilities without having standalone development costs, increasingly positioning our delivery model as services-as-a-software.

All AI initiatives are governed by defined business cases and strict oversight. We operate fully within GDPR and EU AI Act frameworks with compliance, data governance, and security embedded by design.

We also benefit from SAP's substantial investment in embedded AI within SuccessFactors and S/4HANA, allowing us to leverage the ecosystem-driven innovation efficiently, combined with disciplined capital allocation. Let me conclude.

We closed 2025 with another quarter of solid performance, extending our all-time high revenue streak and delivering a year of profitable growth and strong cash generation. For the full year, revenue reached 1.5 billion, representing 12% growth.

Adjusted EBIT for Q4 was 50.6 million, corresponding to an adjusted EBIT margin of 12.8%. For the full year, adjusted EBIT increased to 194 million with a margin of 12.9% compared to 147.5 in '24.

Managed Services delivered a robust 22% adjusted EBIT margin in Q4, reflecting scale benefits and continued operational discipline. This underscores the strength of our recurring revenue model and the structural improvements we have implemented across our delivery platform.

Operating cash flow remains strong, reaching 68 million in Q4 and 162.5 million for the full year. This solid cash generation supports financial flexibility, continued investment in technology and AI, and shareholder returns.

The board will propose a dividend of 2.5 NOK per share for 2025, reflecting confidence in our financial position, cash flow capacity, and long-term outlook. Looking ahead, we see continued structural demand for outsourced payroll and HR services.

Increasing regulatory complexity, cost pressure, and digital transformation initiatives are accelerating the shift towards scalable, specialized service providers. Over the next three to five years, we expect AI-driven efficiency gains to strengthen our operating model and support further margin expansion.

For most organizations, developing proprietary AI capabilities remains costly and complex. Our multi-customer operating platform allows us to share development investments and deliver scale, compliant solutions out of the box.

While payroll delivery will always require human oversight due to regulatory complexity and compliance requirements, AI materially reduces manual processing, improves quality, and enhances scalability. We see significant opportunities in combining AI-enabled automation with deep payroll expertise, strengthening both our competitive position and long-term margin profile.

With solutions and services delivered in Europe, we believe Zalaris is well positioned in geopolitical environment where data sovereignty, compliance, and regional delivery capabilities are increasingly important. With that, Gunnar, let's go to the Q&A.

What questions do we have?

Yes, Hans-Petter. We have some good questions, actually several.

First one: Do you expect the Polish customer to increase activity heading into 2026?

No, we do not do that. That is for now a permanent reduction, and we are looking to sell to new customers to compensate for that.

Then

we have several questions relating to AI, not surprisingly. I combine the first one.

Do you see any potential of lower FTE base in Zalaris driven by implementation of AI? How do you assess Zalaris' internal AI capabilities versus your competitors?

Do you have any examples?

Yeah. Over time, clearly with a 10% productivity improvement target, the revenue per employee then will go up, and the number of employees, if not going down, our aim is to keep that stable or slightly downward trend.

Definitely not increasing linearly with growth because that's what productivity is about. Where we are in terms of our competition, it's a tough question.

We focus mainly on ourselves, don't look too much what others are doing. I think we're very, very far advanced.

We have very concrete tangible projects where we already see results. I think that's also where our focus is going to be for now.

In terms of internal capabilities, I think starting with the top, it helps being a tech nerd and a computer scientist from background to see the benefits of this technology and see it as a true advantage for a company like ours. Also going back to when I founded Zalaris, my goal then was to use information technology to drive efficiency out of business processes.

I must admit, I've never been as excited as I am now when I see the potential with AI and what our team under our CTO is capable of doing. I think we are doing really well with a combination of tech talent, but also with a deep understanding of the business processes, as well as the ability to roll that out to our organization.

Thanks, Hans-Petter. Another AI-related question: How do you assess the AI threat to Zalaris' business, e.g.

agentic AI could over time replace some of Zalaris' repetitive analytical managed services business, and Claude Code could decrease the need for consultant hours as it brings massive efficiency to integration projects, etc.?

Surely I understand why you're asking. If there's agentic AI that can replace payroll, first of all, I think we're already fairly highly automated.

Our solution that the customer typically buy from us is quite a complex setup with tens and may even hundreds of integrations to our solutions, lots of historical data, lots of users. It's not just to replace one part of it with, say, some agentic AI.

To the extent there is room to use agentic AI, that's exactly why I'm so excited, because we're providing that agentic AI, and we'll see some of the benefits from that. We see agentic AI, it's a very interesting opportunity for Zalaris, but it's also an interesting opportunity for us from a market perspective because we can set up and deliver agentic AI solutions that we can sell to all our customers instead of all customers investing in that themselves.

For us, we see that both as an opportunity to reduce our own costs, but also to develop new revenue streams to support our customers, reducing the total cost and improve the total quality of their HR processes.

Are there any wait-and-see signs among clients looking to outsource HR and payroll as they look to see how much positive cost impact they can handle themselves with new AI tools from their current suppliers?

Not that as far as we can see, to be honest. We do not see that.

Again, coming back to it, payroll in particular is made for computing. I think even computers have almost been designed to do payroll processes.

It's not like payroll has lots of room to say that you need AI in the first place to actually operate an effective payroll process, because we already have almost fully automated payroll processes. What AI helps us with is to both analyze opportunities to improve further, analyzing log data, analyzing user patterns so that we can improve our solutions, as well as you also correctly ask in terms of Claude Code and other solutions, it definitely helps us implement new customer-facing solutions and even tailor those solutions more to customers' needs that can latch onto our rock-solid backbone of transaction processing.

That's example that I briefly talked about, but we had a pharma customer in Germany that have a process to compensate trial patients for the fees they incur. Within a period of just three weeks, we built an application using AI tools that could latch onto our travel expense processing solution and where we can combine the solid foundation that we do in terms of payments and security, data privacy, etc.

with a modern, flexible interface tailored to the customer's needs. That's where we see AI in the first place for now.

Do you see increased price pressure in projects now as you and other suppliers anticipate increased internal efficiency over the coming two to three years?

No, we do not see that as of yet. I think we should also all be aware of also it's not for free.

There are lots of investments for everyone involved in this in terms of time, licensing, etc. I think currently we as well enjoy a period where potentially some of these tools are priced more favorably than what it actually costs to provide them.

Over time, I think this will be a balance. For now, we just see AI as a positive tool and development for Zalaris that will help us drive efficiency out of our processes and help customers get higher-quality services.

Then

we move on to some other subjects. Can you give some color on the potential in public sector in Norway now that you have secured NAV as a customer?

Yeah. Everyone living in Norway know NAV is one of the largest public institutions in Norway and is also quite a complex customer.

We think that when we deliver NAV successfully, that definitely will be opening up the public sector as such for to deliver definitely SaaS-based payroll services. We still are quite or somewhat neutral in terms of the opportunity to fully outsource payroll processes for the public.

The public needs modern, efficient SaaS solutions like the ones that we now will be delivering to NAV. There are lots of opportunities in both the municipality space with a number of large municipalities also currently out there in RFP processes, and we're part of that, as well as other large state- or government-based institutions with tens of thousands of employees.

As you probably all know, the state and government is one of the biggest employers in Norway with more than 50% of our GDP coming from that sector. It's a pretty good opportunity for us that we have not explored at all in the past.

Thank you. Then we have a question related to our revenue target.

Your 2 billion 2028 target looks somewhat aggressive when accounting for your current backlog. What makes you confident and how good is your visibility in the order intake through 2026 and H1 '27 to support this 2 billion target?

To be frank, if you look at our historic growth, as I mentioned, we've been in 18-ish percent over the last years, 14% in constant currency. We see no reason why we couldn't do that.

In the market, I think the numbers that you see now with the backlog is reflecting also some churn in the higher end of our normal trendline. With the pipeline of opportunities that we are currently working on, as well as we constantly see also bigger deals now landing on our sales teams, we are quite confident that we will close business to reach this 2 billion annualized revenue target for '28.

Again, let me remind you, it was 2 billion annualized revenue by the end of '28. That's what the target is.

It's not delivering 2 billion for the full '28. We think that's well within reach.

We'll just continue the hard work that we're doing. There's huge optimism in our sales force with the potential that we see, based on also the improved positioning that we also have in the market, where we experience customers look to us as one of the leaders in this space.

Then

we have a couple questions related to our license costs. Is the migration of PeopleHub to RISE increasing the license costs line item, or is the cost accounted for in another line item?

Will the license costs versus revenue fluctuate on a quarterly basis, or is it somewhat sticky, reflecting the equally sticky revenue mix contracts?

That's a lot of questions. I'll try to answer.

I should first start off and say that they are both on the license costs line and under other operating expenses. The cost increase we didn't see that in Q4 because we don't go live on RISE before July this year.

Yeah.

I think it's also important to also understand the absolute, say, size of licensing to our revenue stream. I think you could easily say that, say, the pure-play payroll license for a normal payslip that we process is more in the 2% to 3% of the total revenue, or say between 2% and 5% depending on the size of the customer.

It's not a huge cost, we'll be doing well with the increased costs. Yes, it will increase somewhat, but we have through our SAP RISE deal got also much more capacity, such that we're probably can double the volumes without increasing linear costs compared to where we will be starting off, as well as we have a solution that will last up until 2040.

In addition access to more of the developments that SAP does on the AI front. For us, we think overall, even though costs increase slightly, we will be compensating that with efficiency gains and additional volumes that we'll have on the platform.

We are very confident and happy about the choice that we made.

Thank you, Hans-Petter. I think that concludes the Q&A session this time.

Thank you all for listening in, and feel free to contact us on [email protected] if you have further questions, and we'll do our utmost to respond to you. Have a great day.