Hi, and welcome to today's conference call. I'm Patrik Fransson, Head of Investor Relations, and with me in the room is our CEO, Olle Backman.

As always, first we will give you a short overview of Vitec, and then followed by our report released early this morning. After the presentation, we open up for questions.

Olle, with that, I hand over to you.

Thank you, Patrik. Good morning, everyone.

We will just jump back. That's us, if you haven't seen us before.

Moving over to the introductory pages which we usually use here, the Vitec in brief here. Basically, anything changed here?

We had a few more customers, but we're still 49 business units because this is from the Q3 report. As we had two other acquisitions which I will get back to a bit later on, but that's for Q4.

Roughly 3.7 billion Swedish in pro forma sales, and the sales distribution is fairly the same as previous quarters. Same here with the exposure here on diversification of sales from the largest business units to the smaller ones, and also from a customer perspective.

The 10 largest customers only account for 7% of sales, so that gives us a great risk distribution. Moving over to this year's acquisitions, we did two in Q1 here: Dutch AutoNet and Swedish Informetric, they have been with us since Q1.

We didn't sign anything specifically in Q2 or Q3, but in the early days of Q4, yeah, I think it was just on October 4th, we signed first the small add-on in Finland, SmarTech, and then Dutch Atermit Software. These are two good examples of what we've been working on throughout the summer period, of course.

SmarTech being an add-on acquisition, we do usually one or two a year. They don't really end up in the big press releases and also in the statistics and the BU schedule which we will show later, because that is an add-on acquisition to the one of our Finnish operations, Tietomitta.

It's a nice addition adding a good new product line to our same customer segment there in the waste-to-energy market in Finland. Then Atermit, which is basically the holding name, Atermes is the product name for the company.

It's in maternity and postnatal care in Netherlands. Roughly 16 people.

It's a really nice operation there that is really a good example of both a mission-critical software, but also very critical to society. Very much appreciated, both of them, and they are super welcomed to the group, both organizations.

This, of course, leading over to the positioning of the group. We have our 22 different verticals.

These two latest acquisitions, they end up in either healthcare or in waste-to-energy. They are existing niches for our part, but every now and then we add another acquisition that adds also another vertical to the group, but not in this case, here we're strengthening already existing groups.

As I mentioned, these are the business units that we have had during Q3. It's roughly the same, and this is a rolling 12 months of the sales, and the distribution there between recurring revenue and non-recurring revenue.

This is, as we have said before, roughly an average of also the pipeline for acquisitions, what it looks like in terms of size and so because we have sort of become the mirror image of the VMS market in Europe by now. How we work together with the business units, it's a lot about sharing knowledge, which is really sort of the superpower of being added to a group from a new company perspective.

Here you will sort of tap in to the big knowledge pool of companies that are doing the same thing, but directed towards different verticals. This is a fantastic way of cross-fertilizing knowledge and also speeding up development, but also trying to avoid mistakes, of course.

This is working super well for us and very much appreciated amongst the staff as well. I would like to describe a bit on what we see is the really value that we bring across to our customers in our vertical software niches.

There's lots of discussion. You can speed up the development cycles, you can do much more on less time and, of course, at a lower cost.

Yes, that is absolutely true, and that of course goes for us as well. That is only one part of the offering of a true vertical software SaaS offering.

The core code is, of course, an super important part of it, but then all the layers on top of the code is equally important, all of them. I would say integrations, APIs, and being part of an ecosystem.

Sometimes we are part of an ecosystem, sometimes we are the ecosystem or at the very core of the ecosystem, depending on our positioning. Then we are usually also the system of records that others would like to access, and you can do that through APIs, and we are increasingly sort of finding the business models how to monetize that as well.

Of course, the workflows, the business logic, it's all built into these niche-specific solutions. That's what makes them better than the more generic horizontal solutions.

Of course, compliance, security, auditability super important, especially in this day and age. That's also a layer that is sort of embedded into the product offering.

Trust, governance, and accountability, both on our terms, we want to be that trusted partner for our customers and for the whole industry as such. Then not the least, sales and support in local language.

By local language, I don't just mean the language that you normally speak, whether it's Swedish, Dutch, or Finnish, or whatever, it's also the business language within your specific niche. We know the lingo, we know because we are an integrated part of it, we have been here for a long time, we know the processes, we know what you mean, and usually you know what we mean when we have sort of put in a functionality there.

Business language, as well as the actual spoken language, is super important, which also sets you apart from a more generic solution. I think it's important to keep these layers in mind because they are part of the moat, of course, around it.

You may be able to do parts of it or so, but it's very hard to do all of it, and it takes a lot of time, a lot of effort, and especially a lot of knowledge and domain-specific knowledge, which is not something that you can just invent or be trained at school. This is part of why we think that adding together nice vertical market softwares that are niched in their respective and the best of breed in their businesses makes good sense, and we can also sort of learn a lot from each other on the how we do things, but perhaps not learning from the various niche logic because that is very specific to each of them.

Moving over a bit to some examples here, I'm not going to go through all of it, you can read that also on the web pages of each and every business unit. I can just take DocuBizz, for instance, in Denmark, as an example here.

It is a purchase-to-pay system. You might think, okay, that has been around for quite some time, and it has been automated, yes, but earlier the automation was built on strict rules that the supplier's invoices had to follow in order to be automatically matched.

Now, with the new AI functionality they have built in, it's much more intelligent, we can basically handle any type of invoice in a very automated way, and that, of course, the system is also learning. If you have corrected it once, you get a really good and precise suggestion the next time that supplier invoice comes up.

It's just increasing value to our customers by still doing the same thing that we have done all along. There are lots of other examples that we will post on and off, both on our group website, but also on the various business units' websites.

Please look into that and see all the development that is going on. Coming over to the financial metrics and the report as such.

I think the highlights for the quarter, of course, continue to grow at 15% in total sales, EBITA also up 15%, cash EBIT, which is our internal metric close to the cash generation, was up 13%. All in all, a very solid quarter, continue to growth for the third consecutive quarter this year.

These small, incremental steps that we take each and every day are paying off. We're fairly happy with that, and on the year-to-date basis, we're 13% up on sales and 15—or 14 up on cash EBIT, so that's also very encouraging.

Looking at cash flow, of course important, a bit better than the corresponding quarter last year, also roughly 60 million up on the year-to-date. Here, of course, you need to remember that we basically have all of the cash flow in our first quarter, and then they are pretty flattish on the both Q2, Q3, and Q4, which is, of course, a result of our fantastic model where we have a large degree of recurring revenue that is prepaid usually.

All in all, a solid cash flow quarter as well. In terms of growth, like we mentioned, if you see the red bar there, which is the rolling 12 months on a yearly basis, it's a very nice, linear development.

We're keeping the pace, we're very happy about that. When you look at it quarter by quarter, same here, as said, 15% up compared to the same quarter last year, and the CAGR growth there, as you can see, over the past 10 years is an impressive 19%.

Of course, profit improvements is even nicer, you can see that as well on the consecutive quarters. We are a very stable organization and a stable performing on these metrics as well, and you can see the rolling 12 months there on the left-hand side really up, because we're really fond of these longer-term metrics, not necessarily quarter by quarter, it's really looking at the long-term development of the group.

The cash EBIT, as you see in the third consecutive quarter, really sort of wrapping up. You can see from the previous years, it's usually the same picture, and a fairly strong sort of ending, and that is, of course, this is inclusive of acquisitions, you have to remember the years where you made some really substantial acquisitions in each and every quarter, it can be a bit distorted for that, but other than that, it's a solid improvement quarter over quarter that we are quite happy with.

Organic growth, very important, it's still when we look at the subscription-based, which is the really solid and super important part where all other things sort of emanate from, it's another 4%, the same as last quarter, which is also in line with expectations given that we have a fairly low sort of or low help in terms of price increasing from the CPIs of last year, 4% still there. If you look in the report, there's also a schedule there where we have measured the pro forma organic, and that is actually encouraging up to 6%, which then says that the latest acquisitions are growing a bit faster than the rest of the group, so that's good to remember.

Another 15% increase in the transaction-based, sort of also the same as last quarter. All in all, summary-wise, I think we did a very solid growth both in sales and in profitability, a good organic contribution, fairly roughly in line with our own internal expectations, increased M&A pace with the two acquisitions that we posted here in October, so that's really nice to sort of finally get some results from the hard work there, and we continue to be ready to acquire.

We have a good deal amount of cash, and the funding is available, and we are sort of continuing to explore new opportunities there. That's about it what we had on the presentation, and now we will open up for Q&A.

Morning. Starting with the transactions revenue, a bit higher than expected.

Would assume is driven by Enova, is that right? Anything you would like to highlight in terms of drivers for that in Q3 so that we don't or should extrapolate something from the numbers in this quarter?

That's the first one. Thank you.

It's based on a lot of things, actually. Both, we have lots of transaction-based, especially in the real estate agent market, both in Sweden and Norway, the real estate market really picked up.

That's also contributing. We also had contribution from one of the latest acquisitions, which is AutoNet.

They also have a sort of a variable part that they offer to their clients in the spare parts. There are actually lots of different aspects to that.

Enova as well, yes, given the high energy prices and the volatility in the energy market, they are up compared to last year. All the others are fairly easy to extrapolate, but Enova is always depending on the energy market, where that is going.

We are an integrated part of that, so.

Okay. Just fast, would want to disclose the non-Enova part of the uptake in transactions, which seems to be broad-based improvement?

It is broad-based, it's really sort of across. That's part of what we discussed, in seeing an increased sort of activity in the general economy, then our sort of transactional-based usually follows that.

Okay. Also you said that the pro forma organic growth was higher than the reported organic.

What assets are driving that? If you could disclose anything on that, would be interesting.

Also, the drivers for the better performance in those. Is it generally higher organic growth rate in the acquired assets, or the market that is picking up in those, or for those?

The difference between the two are of course accounting-wise, the standard definition is the same business units which we had in Q3 last year. All additions since then is part of the pro forma package.

Yes, so that means that NMG, Informetric, and AutoNet are sort of included in the pro forma, and those three are growing sort of above the group average, yes.

Would you say it's thanks to better demand, or improving demand, or do they have a structurally higher growth rate in those assets?

They operate in three totally different areas, but all three are growing. NMG is energy utilities in Poland, Informetric is housing in Sweden, and AutoNet is car dismantling business in the Benelux area, it's super different.

They are all growing, and it's really nice that we have been able to spot and to buy and to integrate really nice growing companies.

Perfect. I'll get back in line.

Thank you.

Thank you.

Yes, thank you for taking my question. I'd like to also ask about the transaction-based revenue, which grew 15% in Q3, significantly faster than subscriptions.

Can you talk more about what's driving that strength and how sustainable you consider that current growth rate to be?

It grew 15% also in Q2, it's not something super strange in that sense. That's the whole point with transaction-based, it is, like I've said before, usually connected to the drivers in the general economy or the specific sort of niche-specific things.

Taking Enova out of the picture, which is based on energy volumes, prices, and volatility, Enova is sort of dependent on that part, all the other 48 business units, and most of them have some part of transaction-based, and it is one of these signs that we see that the economy is picking up. I think it's really sort of encouraging that it is growing in that sense.

Especially, of course, the housing markets here in the Nordic have been really strong lately, so that's good for us.

Thank you very much.

Thanks.

Hi, Patrik and Olle, thanks for taking my questions. I have a few ones.

Firstly, if looking at the strategic changes you made to your management structure here recently, could you explain a bit more what's the strategic rationale behind this, and why are you doing this as of now?

It's something that we've been talking internally about a long time. You have to go really way back in time when we didn't have that CEO role, then the CEO, my predecessor Lars Stenlund, our founder, sort of he was the only one, and then as the company grew, we added more and more and more business units.

He became sort of a bottleneck in decision-making and having a really flat organization. Then we implemented both the VPO role and later on also the COO role to oversee that.

Then our group has grown even more, and the VPO model has really sort of been in place for quite some years now, nearly 10 years. I was just discussing with the board, but also internally for nearly a year, how can we keep this sort of decentralized organization, and for me also to be really close to operations at the same time?

Then our CFO, Peter, has been with us now for two years, he was able to take over some of my other responsibilities for the support functions. That sort of left sort of enough time on my plate to have a direct engagement with the VPOs in that sense, hence the COO role no longer needed because that became the bottleneck itself, so.

It's not about performance or anything like that from Gert's side. He's been super instrumental for what we have done in the past 10 years, but it was just time to make a sort of slight change, and also really like to stress, it is a change in group management.

We're not changing anything how we operate in from the VPOs and the business units, it's really a management thing.

Right. Thank you very much.

Then, secondly, if you look at the past two years, particularly, there's been somewhat higher seasonality effects in the fourth quarter. Should we expect this to occur this quarter as well, or for the upcoming quarter as well, or anything we should be aware of?

Not something that we see right now. In some business units, there is a small seasonality, budget behaviors from public customers and so on.

Whether that will be the case this year, it's always hard to predict, but we're really not seeing that much sort of change. That's, yeah, hard to say.

It's

usually there, but you never know. It's the customers'

decision. I see.

Thank you very much. That was all for me.

Morning. Morning, how are you?

All right.

Yes, a follow-up, more of a philosophical question maybe, on development spending to sustain growth over time, and thinking about the total cash product development, both expensed and capitalized. If you think it's going to grow slower than, or faster than, or in line with subscription revenue, if we use that as base?

What would you say the, I don't know, 3 to 5 years or something like that, just thinking about the scalability on R&D, given the new efficiency-enhancing tools that we all have? Thank you.

That's certainly in the department of philosophy. We are seeing increased efficiency in R&D for sure.

The expectation is that we will be able to do more with the same resources. In absolute terms or absolute hours, we're not expecting anything dramatic, but the outcome, sort of the productivity gains are for sure there.

Spending in absolute terms probably roughly the same, but going forward, we will see more with the same. In percentages, over time it should ideally go down a bit.

Thank you.

Thank you all for listening in, and interesting questions, as always. We hope that you will read the report, and speak to you for the next fourth quarter report.

Thank you for today.