Good morning, everyone, and welcome to the Q4 presentation with BTS. My name is Daniel Thorsson, analyst at ABG Sundal Collier.

With us today, we have Jessica Skon, CEO of BTS. I'll let you present the fourth quarter.

I will have a couple of questions afterwards. For both analysts and investors joining the call, feel free to add questions in the chat, and I will ask Jessica the questions afterwards.

Perfect. Thank you.

Hi, everybody. Good morning.

I'm going to start with an executive summary. Q4 marks a turning point for us.

It brings an end to our quarter-over-quarter decline in profit results for the last three quarters. Just to remind you, two out of our three units delivered growth in 2025, and we expect Europe and other markets to continue to deliver the revenue and profit growth during 2026.

The North America turnaround, which has been all of our focus for the last two quarters, is progressing very well. The unit is expected to return to moderate organic revenue growth and significantly improved quarter-over-quarter EBITDA performance already in the first quarter.

We have continued to have breakthrough AI innovations during 2025, which is benefiting us in three significant, very strategic ways. Number one, we have a much more competitive portfolio, one that we are getting daily feedback from our clients that is ahead of our competition within our space.

Number two, we have implemented and pushed new services that help our clients with their own AI maturity and adoption, going from initial training to workflow reinvention. Number three, which has just been absolutely profound, and we're learning from ourselves and bringing it to the market, is we continue to, I would call it, radical simplification of our internal operations.

In the fourth quarter, we even had a second wave of breakthroughs, which led to productivity gains. We expect to reestablish earnings growth throughout 2026.

To go into more details, the fourth quarter 2025, yes, it was a continued weak revenue performance in BTS North America, which we're very disappointed by, which resulted in a poor quarter. This wasn't a surprise.

It was, seen for the last few quarters, but it marks an end to that trend. Almost half of the Q4 profit decline was due to non-core things.

It was due to a mix of currency headwinds and then the severance that was related to our AI-based rationalization in the fourth quarter. BTS Europe had a revenue slowdown in the fourth quarter, but that was temporary.

Q4 the year before was an exceptionally strong quarter. BTS Other Markets had solid growth, but profit decline, which was due to BTS operations in Asia, and specifically in our Thailand operations, Korea, and China.

If we looking forward, the full year, or we look go backwards to the fiscal year 2025, obviously, this was a very disappointing year for us with no growth, a 25% decline in EBITDA. It's important, I think, to remember the real story of 2025.

It's a mixed picture. BTS operates in three units.

Two of the units, which is half of the business, performed very well, very well, even you could say, in a tough market, especially in Europe. With continued growth in BTS Europe and BTS Other Markets, in both top line and bottom line.

Half of the business did poorly. That was North America, the very weak revenue and profit performance.

There we made a lot of organizational shifts back in June, and the organizational turnaround is progressing very well. Both from bookings, win rates are up, opportunity pipeline is growing, and so forth.

We are very proud of the year. It was not wasted.

In true BTS fashion, we are, I think, can be very proud of our internal AI innovations and our external ones, and we're bringing those learnings to the market. If we look forward into 2026, as I mentioned, the BTS North America turnaround is progressing very well.

The unit, we expect, will return to organic revenue growth in the first quarter with significantly improved profit already in the first quarter, which should be one quarter ahead of schedule. We expect BTS Europe and Other Markets to continue to deliver on revenue and bottom-line performance in 2026, and the AI innovation will continue to benefit us in 2026.

If I double-click into the AI innovations of the year, I made a timeline for you all. Basically, we made a Wonderway acquisition in 2024, which you remember.

That gave us kind of our an AI technology platform that does AI conversational practice. In the first four quarters, basically, of its existence, we have it in 115 different different projects, 28,000 users, and we have clients who are now doing self-service on that platform.

In addition to that, we've launched an AI super companion coach that goes across our leadership development initiatives. On our executive communication practice, we've launched a digital mirror.

To support our end-to-end coaching portfolio, we have AI coaching fit-for-purpose, three different offerings for our clients. These AI coaching offerings are not stand-alone.

They're also integrated in Teams, Slack, and Salesforce CRM. We have retrofitted and completely changed our simulation platforms across the business, giving our clients the ability to enjoy speed to develop, scale to deploy, and for some clients who want to, they can build their own simulations.

Within our CRM offering, we've also launched an agentic practice offering for our go-to-market sales clients. It was a really big year of innovation for BTS.

If you add up the revenue associated with our AI services and our AI technology, it was 19.6 million in bookings last year, which will obviously carry forward into 2026. Now if we talk when we talk to our clients about partnering with them, we have our traditional practices which you're used to seeing, and we've built those out with your support over the years.

Now we're overlaying essentially our own AI technology offering across our practice areas. The feedback that we're getting in the market is, yes, there's plenty of shiny objects and HR tech startups, but most of our large clients are looking for an integrator.

They're consolidating. They're looking for less vendors.

I think BTS is very well-positioned to to play that role. We have been innovating with companies for 40 years how they learn, how they drive change, how they improve performance.

Now it feels like the beginning of the next era. Of course, the AI productivity gains that we did in 2025 are going to have a material impact on 2026.

Just to remind you, the total severance that was paid in 2025 was 8 million SEK in Q2 and Q3 and another 10 million in December, resulting in 2026 5 million reduction in costs from our May AI breakthroughs and $2.6 million reduction in operating costs based on our Phase 2 AI breakthroughs, and we expect more to come. I would say a realistic conservative estimate in 2026 is probably about $1 million USD, 10 million SEK, and best feel on that right now is the majority of that would start to hit in the third quarter.

Given all of this, we believe that our results will be better than 2025. This would be consistent with how BTS historically starts the year.

Thank you very much.

Excellent. Thank you very much, Jessica.

I have a couple of questions,

but

just to let everybody know that if you have questions, feel free to write them in the chat and the Q&A field, and I will ask them to Jessica. I start off with one in North America in Q1.

You are extremely clear on recovering to growth in Q1 and also see profit going up in the first quarter versus last year. Is that driven by what you have seen in January, February, or what you expect to see in March kind of?

Both.

Both. Okay.

It has started off well, and you expect to see it continue throughout Q1. It's not only that you started off slower in January, but you see that we're going to do a lot in March and that going to save the day.

No, we're not hoping for a hockey stick in March.

Yeah. I see.

That's very clear. On the guidance in 2026, would you consider the EBITDA guidance to be driven mainly by sales growth or lower costs if you have to divide them?

It's obviously both, but which is the biggest one?

You can imagine how good it's going to be with good growth, right? I would say it is 50/50.

We expect double-digit revenue growth in Europe and other markets to continue, and we expect North America, at least in the first half, to have moderate organic growth. Because we did so much cost savings, that's kind of the cherry on top, right?

So.

I see. On AI, you share very interesting proofs here with numbers, etc.

While we can all see the reality that the global stock markets are extremely feared about AI for global management consulting firms, software firms, everything,

and

all the companies I talk to at least, they haven't really seen anything on the threatened side, but they see all the favors they can do internally. Where do you think the reality is from what you see?

Do you see that your customers have a lower demand because of AI recently, or do you only see that you can favor from it? Because there is a big discrepancy.

Obviously, there's things that are in favor for BTS, and there are things that are posing challenges for us. Some interesting proof points, and I didn't mention this yet in the presentations, but an additional advantage for BTS is a new client base opportunity.

If you think of the AI hypergrowth companies to go after as clients, our West Coast office in particular is doing a great job of that. In fact, I can tell you that Anthropic has chosen us as their go-to-market enablement partner.

That's the company behind Claude, for example, and they're using us both for our approach to driving change and enablement, but also using our technology as kind of an evidence point that there is also a new customer base, which is very exciting for our team. If I think about how the clients are reacting to the moment, I would say they've shifted quite a lot over the course of the year.

They started the year being very apprehensive, very slow to adopt AI, many of the buyers saying, "We can't have it yet in our function," and IT is on lockdown, and they're only giving everybody one tool. By the end of the year, we saw much more of a stronger appetite to experiment, right, in terms of "How can we do leadership development differently?

How can we drive scaled change? What should we do for our sellers?

BTS, do you have ideas on how to do things differently?" I think they're still slow in general, but I think the appetite is changing.

Maybe I'll let you ask follow-up questions because there's probably a lot to.

No, that's fair. We'll take one from the chat here from Oskar Rönnkvist from SEB.

You say significantly improved EBITDA already in Q1. Can you specify what it means in terms of EBITDA year-over-year when it's up significantly and not only quarter-over-quarter in absolute terms?

We're basically doing what we've historically done, right, which is we start the year, if we see it, with better than as a forecast, and then we learn more as the months progress. North America in particular, because of the cost savings that we did in 2025 plus the return to moderate organic growth in the first quarter, is what gives us the confidence.

For us, significantly better is 15% or higher.

Okay. That's clear.

Second question from Johan Sundén. It's related to this as well: how good visibility do you have for EBITDA outcome in North America in Q1 '26?

It's probably similar to my question already, but the follow-up is, how is license revenue expected to develop quarter-over-quarter and also year-over-year in North America in Q1?

We have good visibility. We're halfway into the quarter right now in terms of costs and revenue.

In terms of license development quarter-over-quarter in North America, it's a mixed story on license. It's like old school and new school, right?

On the old-school stuff, fortunately for us, only about 2% of the company's total revenue is related to content license, and I kind of think that market's dead, right? We don't have that much more license for our clients to cancel from us on the content side.

At the same time, growth in our Verity product from the Wonderway acquisition and all those AI technologies that I shared with you are progressing very well. There will be a turning point sometime in 2026 where the license of the new products helps our overall license picture grow, right?

My best gut feel is that will probably happen by the third quarter, but it'll be a mixed bag until then.

I

don't anticipate any major decline in license, let me just be clear, it's more iterations here or there client by client.

Because licenses were down in Q3 and Q4 last

year.

Okay. Not much more from this level down.

Johan Sundén also had a follow-up on the EBITDA margins in North America, how they are expected to develop year-over-year in Q1. You already answered that by saying profits move up more than 15%.

I don't know if you would like to add anything on margins, but.

Not really, but it will be significantly better, so.

Yeah. No, true.

We have another one on capital allocation with a record low valuation trading at 7x the EBITDA

it

actually did in 2025, and you expect growth in 2026. Why does the board not consider buybacks as an alternative to drive EPS growth?

We've been talking about that.

Okay. What was the conclusion?

We have not concluded yet, but we've had discussed.

Okay. Discussed, not concluded yet.

I see. Then we have a question from Jonatan Sjöberg.

Could you please help one understand dynamics in the license sales as a percentage of revenue? It has historically been around 10% of sales, but it is now 7%,

and

total sales are down, so that's down even more.

This is specifically unique to the North American market. In the fourth quarter, there was one deal that we had done the last three years with one more traditional software company, not an AI growth company, and they did not renew that in the fourth quarter.

Instead, they said, "We're not going to work this way with you because it was a new buyer, new budgets, but you're going to continue to be our partner this year." We couldn't take that revenue in the fourth quarter like we had year-over-year.

That's the real reason behind the decline in the fourth quarter.

Do you think licenses will be back to 10% of sales over time?

I do. Yes, because we have a whole bunch of new technology now that's unique and in demand and supportive of the value proposition, so.

Excellent. We have another one from Oskar Rönnkvist at SEB.

Can you add some color on the magnitude or quantify the positive orders in North America? I guess it is up year-over-year.

Sure. I think the data point I can share with everybody here is that the bookings in North America in the fourth quarter was around 25% or 26% higher than the fourth quarter the year before.

It was actually over 40%, but then when I took out the decline from that one renewal, we brought it down to 26%, 27%. That's probably the best data point I can give you in terms of increased demand coming into 2026.

Perfect. Let's see.

I think we have a couple of more here. License revenue, again, they are still under pressure.

How important are these for your margins going forward?

This is going to sound silly, but not that important in the short term. If the AI tech can take off in terms of the portfolio of the new products, it will be significant upside.

Okay. Clear.

Can you elaborate a bit on how your license revenue works? Are these one-time fees for perpetual licenses, or are those recurring?

Thank you for the clarification. The license, the old-school license, which is the majority of our license, do not have a renewal date on them typically.

Maybe that 5% of them did that, right? Most of them were initiative-based, and it was clients saying, "Okay, we want you to build a custom simulation for us, but we want to bring it in-house and deliver it and do the rollout, and we'll pay you license for the use of that simulation as a one-time event."

Typically, they use it then for somewhere between 3 to 12 months, and then it's over. The new tech offering has renewal dates, and it's just a slightly different, more sticky service.

Okay. That's clear.

How should we think about employee growth in 2026?

You

are still a consulting firm, have been driven by number of employees historically, maybe less so in the future, but how do you think?

There's two categories of employees. There's our billable consultants who generate revenues for us, and then there's the operational staff, right?

The operational staff about a year ago was 41% of our total employee base, and we could see we were going to have quite improvements in that total percentage. I expect the number of operational staff to continue to decline.

We are expecting to increase the number of our billable consultants and revenue generators in all three markets this year.

Okay. Net-net, you feel right-sized, if we exclude future M&A obviously, but on an organic basis?

In terms of total headcount delta, the interesting.

In '26.

Obviously, the billable consultants are more expensive than the operational ones. We have plenty in low market as well.

It's probably going to be about flat, to be honest. Yeah.

Okay.

Cool. Fair enough.

We have another question from Jon Hyltner. You say that you expect growth in Q1 '26.

That refers to year-over-year growth, I assume, he said, and is that both for the group and for North America?

Correct. That's quarter compared to Q1 the year before,

and

that would be both for North America and for the group.

For the group. Excellent.

That's clear. We have another one here: could you elaborate a bit on how your unit economics have changed after this new AI revolution in BTS?

Not that much yet. If you look at the average pricing across our services, we have had very little change, both in the fees we're charging to build and customize and co-create and the fees that we're using to deploy.

That said, given the new simulation platforms, it is faster for us to do the customization and the co-creation process, right? I think that our speed will yield smaller upfront fees in some cases, which will allow us to deploy faster, and for us, the revenue is in the deployment.

That's the profitable part of the business, and our clients usually want to move quickly. I think that overall, it will be beneficial to us to get to deploy faster than to quickly customize or co-create.

That'll be the biggest change. Then with the AI technology with much higher margins on that offering, that would obviously be the other one.

I see. I also have a question on the full-year guidance on '26 that EBITDA will be better than last year.

If we look at the non-recurring items in 2025, only if we assume 0 in '26 as a base case, that will drive 10% EBITDA growth.

Correct.

On a flat underlying performance, and you already guide for growth in Q1 and for lower costs full-year '26.

Yes.

Doesn't it sound like a significantly better EBITDA guidance rather than a better EBITDA guidance?

It does, and we always start the year this way, so. Yeah.

I know. Excellent.

I will see if we have any final questions in the chat. No, we don't.

I had the opportunity to have mine, and we got all the questions from the chat as well, so.

Super.

Thank you very much. If you would like to have any final words, otherwise, I think this Q4 presentation is finalized with BTS.

Super. Thank you.

Thank you very much.

Okay.