Speaker #1: Hello everyone, and warm welcome to our Q3 call. My name is Tomas Davoe, and I've been at Lime since 2017. I started as CEO in the beginning of this year, and with me I have Anders.
Speaker #2: Hello, my name is Anders. I've been at Lime since September 2024, and I'm the CFO.
Speaker #1: And as usual, feel free to write any questions in the chat, and we will try to answer them in the end of the session.
Speaker #1: So, the agenda for today is to start with an overview of Lime and the sum up of Q3. We'll go into the order intake, we'll look at the revenue, the profits, and we'll end up with a summary.
Speaker #1: So, starting with an overview: we have always been running Lime with a long-term perspective, and that has left us with this fantastic footprint. In 25 years, we have grown on average 18% per year, with an average EBITDA margin of 25%.
Speaker #1: And of course, that's something that we are really proud of. And what I would say is the biggest reason why we have managed with this: year after year, it's our people and our great corporate culture.
Speaker #1: And we know that in order to win in the competitive environment that we actually play in, we need to be a little bit better in everything we do.
Speaker #1: And we believe in creating a culture that is great at combining high performance with a lot of care. And it doesn't matter the times, if it's been good times, bad times; our goal has always been the same, and that is to help companies become great at sales and customer care, so they can help their customers in the best possible way.
Speaker #1: We create value by being a true partner to our customers, by being local, close to our customers, and combining our software and expertise. And we have two revenue streams, which is the software and the services, and the ARR, or annual recurring revenue, which comes from the software stands for around 68% of our total revenue.
Speaker #1: And we've done it for quite many years now, since 1990, and we scaled our business into several markets, starting in Sweden. We've grown into Nordic, and since 2020, we entered the Netherlands, and since 2021, also in Germany.
Speaker #1: Now we are present in 7 markets, 12 offices, and we have almost 500 employees. If you look across our products, we have more than 7,500 customers and over 1 million users.
Speaker #1: So let me give you a sum up of Q3. If we look at the numbers, we have 11% ARR growth, 26% EBITDA margin, and 11% revenue growth.
Speaker #1: On the first bullet, I'm glad that we have been moving in the right direction. We are on the 11% ARR growth. The EBITDA margin is on 26.3, which can be compared to 25.0 in Q3 last year.
Speaker #1: And expert services, our consultant department, they keep growing with a good utilization rate. So I'm glad we're taking steps in the right direction. However, we are not satisfied.
Speaker #1: I still believe we have more to give, and more potential. On the second bullet, we've continued to make investments in our AI offering. And I'm happy to say that all our products now have AI capabilities to help our customers be more efficient.
Speaker #1: We rolled out AI Assist, which is like an assistant where you can ask questions about the database where you're in. And we roll it out to all our users in Lime CRM.
Speaker #1: And we are also rolling it out in the autumn to our sport admin customers. In Lime Connect, we've had an AI chatbot for many years, and now we also have a voice agent in beta, and that opens up a new market for customer communication as well.
Speaker #1: We also have Lime Go Agentic, a fully agentic product, and that we have out on the market now with very positive response among customers, both new ones and also some of ones that have migrated on the existing customer base.
Speaker #1: On the third bullet, I'm glad to see that we grow quicker outside of our home market. That shows that we can export our offering to other markets.
Speaker #1: And also, we have a lot to grow in. Norway has had good quarters, and the fastest growing market for whole Lime is the Lime CRM part in Germany, where we have great traction, and we continue to grow deeper into the utility vertical.
Speaker #1: And lastly, a few words about our position in a world where SaaS is changing faster than ever. So we are the European verticalized platform for business-critical customer processes.
Speaker #1: Powered by AI, still unmistakably human. Our position has always been to be a partner to our customer. That's why we have decided to keep everything in-house and own the whole chain, from development to sales, consultancy, and support.
Speaker #1: We help our customers become better at customer care with local people, experts, who speak the language, who understand the complexity in the verticals, and who know the regulations and nuances on the specific markets.
Speaker #1: It doesn't matter if it's Finland, Germany, or any other of our markets. That's always been our key factor to win. And in a world where software development becomes faster, and cheaper, this is more important than ever.
Speaker #1: Another upside as the world seemed to change by the day is our size and our culture that are more important than ever. We are big enough to have built up customer relationships, that we have a lot of experience, we have reference customers, but we are small enough, and we have a culture that makes us extremely agile and fast-paced.
Speaker #1: Being from Europe, on the other hand, has not historically been a reason for customers to buy from us. Choosing US software has been the most common thing to do in Europe, and it's changing rather quickly.
Speaker #1: And it gives us a nice tailwind. Data sovereignty is talked more and more about in our customer dialogues and procurements, and that's something we clearly see in our analysis of customer calls as well.
Speaker #1: And as most of you know, our three biggest competitors, they are from US, so I believe that this can help us on our growth journey going forward.
Speaker #1: All in all, we have the same position as we've always had, only now it serves us better than ever. So let's have a look at the order intake.
Speaker #1: If we start to look at our customer concentration, you can see that it's really low. Our top customers stand for less than 1% of our revenue.
Speaker #1: Our top 10 for less than 7%. And if we look into the deals, starting with Lime CRM, we have yet another touchvälke that's come in this quarter with touchvälke Visma.
Speaker #1: We've also grown in the utility segment in Finland, together with Alva, who have expanded their solution. On the membership segment, we welcome Kommerskollegium as a new customer.
Speaker #1: In the wholesale segment, in Finland, we welcome Telatek. And in Sweden, Universal Power Nordic. In the real estate segment, among others, commercial real estate solution with Holger Blomstrand.
Speaker #1: Going over to Lime Connect, we made also utility deal with an existing Lime CRM customer, which is touchvälke Vitten, but they're now also add the Lime Connect product.
Speaker #1: And we continue to expand with existing customers here as well. For example, with Porsche and AXA, which is really nice. In Lime Go, as I said, Lime Agentic has had a good reception these last week and months.
Speaker #1: And we have a customer that's been with us since 2018 called Tixer, who have now gone over to the Agentic solution. And really likes it.
Speaker #1: And we also welcomed a new customer, Arbetshälsa, that are also working in the Agentic platform. On the sport admin side, we have welcomed many new organizations, among them Fisk Sätra, IF, and Unneriets HK.
Speaker #1: And we already have a lot of organizations in the top two football leagues in Sweden, and we continue to expand here with a new league partnership together with Ettan Fotboll.
Speaker #1: So with that, let's go into revenue. If we look at the overall growth, we reached 11% in Q3 or 10% organically. Over the last 12 months, it's 9%.
Speaker #1: If we break it down by geography, Sweden grew 7% in Q3, rest of Europe grew 20%. And as I said before, I'm happy to see that we continue to grow faster in rest of Europe compared to Sweden.
Speaker #1: Now we've been on similar numbers two quarters in a row. It demonstrates that our vertical strategy and our product offering resonate beyond Sweden, which is critical for our long-term growth ambitions.
Speaker #1: With that, I hand over to you, Anders.
Speaker #2: Thank you so much. So turning over to our profitability, the adjusted EBITDA increased by 17% to 51 million SEK in the third quarter compared with 43.7 million SEK last year.
Speaker #2: The adjusted EBITDA margin improved to 26.3% from 25.0% last year. Looking at the last 12 months figures, adjusted EBITDA increased by 10% from 183.5 million SEK to 202 million SEK, with an margin improving to 25.5% from 25.1%.
Speaker #2: The margin improvement is mainly a result of revenue growing faster than our costs, which I'll go through in more detail on the next slide.
Speaker #2: Personal expenses, which is our largest expense within OPEX, amounted to 104.8 million SEK in the third quarter. And increase of 8% compared with last year.
Speaker #2: The increase was mainly driven by a higher average number of FTEs and normal annual salary increases. Recruitments have mainly been in customer-facing roles. On the last 12 months basis, personal expenses amounted to 422.5 million SEK, an increase of 7%, reflecting the same underlying drivers as for the quarter.
Speaker #2: Personal expenses as a share of net sales, continue to decrease, amounting to 54% in the quarter and 56.9% on last 12 months basis, showing that we continue to grow revenue faster than our personal cost base.
Speaker #2: Then turning over to the other operating expenses, other operating expenses in the quarter amounted to 36.2 million SEK, compared to 34.0 million SEK last year, corresponding to an increase of 6%.
Speaker #2: On an LT, last 12 months basis, other operating expenses amounted to 145.4 million SEK, compared with 131.2 million SEK. An increase of 11%. The increase, both in the quarter and on last 12 months basis, is primarily driven by higher product-related costs, growth-related items, including cloud and hosting services, and product licenses.
Speaker #2: It also reflects continued investments in AI across our products and operations, as well as other investments to support further growth in Sweden and in our international markets.
Speaker #2: Back to you, Thomas.
Speaker #1: Thank you, Anders. So let's turn to our financial targets. And as you know, by now, we have reached an era of growth of 11% compared to the target of 18%.
Speaker #1: Again, going in the right direction, which I'm happy about. Still, we can do more. We reached an EBITDA margin of 26.3%, but in the last 12 months, it's on 25, which is also trending the right way towards our target of 27% in the medium term.
Speaker #1: The net debt in relation to EBITDA is 0.3, compared to the target of being below 2.5, which gives us significant financial possibilities to invest in growth and create greater value for our customers and shareholders.
Speaker #1: And for 2025, the dividend was set to 54% of the net profit, which is above our target of at least 50%. To sum it up, we keep moving in the right direction on all levels, basically.
Speaker #1: And with the positive trend and our position more relevant than ever, we are fully focused on carrying that momentum through the rest of the year.
Speaker #1: And with that said, we are happy to take any questions you might have.
Speaker #2: All right. So first question, is it's been a while since the last meaningful acquisition. What's the timeline for the next?
Speaker #1: Yeah, it's well, we did actually a very small acquisition here in the beginning of the year, right, Anders? Was it.
Speaker #2: Yes, it was in the beginning of January.
Speaker #1: So we did one, but yes, we are continuously talking to a lot of different companies. And I have a lot of dialogues ongoing. And with that said, we don't rush into anything.
Speaker #1: We are very much evaluating everything. It needs to be a good product-market fit. It needs to be a good culture. And it needs to be a good price.
Speaker #1: And we are looking mainly on two different things. And that in line CRM, to parts where we can complement our offering, also could be interesting to get a customer base, somewhere, and on the LIME Sport admin side, is the other part where we are looking into mainly international expansion just like we've done in the Netherlands.
Speaker #1: So when it's up to see. But we are continuously having dialogues.
Speaker #2: Yep, perfect. Next question, expert services in rest of Europe, grew 38% year on year. Any particular drivers that explain the strong growth?
Speaker #1: Yeah, I would say that, as I mentioned, Norway had a good quarter in general. So we've had quite some big projects in Norway. And then of course, also Germany, where we have more and more traction, where we continue to expand with some of our existing customers, and we have quite many new projects that we are delivering on.
Speaker #1: And they are quite big projects. So of course, that has an effect.
Speaker #2: Good. Next question, coming here. Could you elaborate a bit more on sport admins, league partnership with Etam Football? Deal size, timing, in addition, with sport admins, new platform, how you do intend to increase the revenue per customer?
Speaker #1: Okay, so let's start with the corporation. Well, Etam Football have had a corporation before together with a competitor of ours. And now they decided to go with us, which of course, we are really happy about.
Speaker #1: It doesn't oblige all the customers to buy so we already today have, I think it's around five of the customers in Etam in division one, which is the third league in Sweden.
Speaker #1: But what they are doing is promoting one specific supplier and a partner. And in this case, it's us. So we are having new dialogues ongoing.
Speaker #1: And hopefully, we'll see more customers joining a LIME Sport admin here. And the second question was if let's see, with the new platform, how do you intend?
Speaker #1: Well, I mean, we have more than one million users in our app. So it's a big reach. And I think we can do even more to support our customers and also end users with how you do better sales through the sport admin app, maybe how you can get some discounts in different ways.
Speaker #1: So we are looking into how we can create more value for both the teams and the end user. And then, of course, a part of the internationalization strategy is, of course, this as well, that we already know how we can get more revenue per member, as is said here.
Speaker #1: So that's also part of our internationalization strategy when we find new acquisitions.
Speaker #2: Perfect. Next question. On AI and growth, you mentioned LIME GO your agentic AI product. To what extent is AI already contributing to growth? Can you quantify the impact in terms of percentage points of growth, or is it still too early to see tangible impact on top line?
Speaker #1: Yeah, so let's break this down a little bit, and we can start with LIME Connect, where we had an AI offering in the product for a long time.
Speaker #1: And there is a substantial part of our revenue, and it's been for quite some time. It's increasing. So that's really nice to see. And as I said, we also have voice bots coming out there, which is opening up a new market.
Speaker #1: But that's new, so it's no revenue yet. If we go to LIME Agentic, as you were talking about here, it's very new. But I mean, we had one webinar and after that webinar, we had 50 deals created just from that webinar.
Speaker #1: Which is ongoing dialogues, not one deals. But it still says something about traction we have. And we have order intake coming into the agentic product on our revenue.
Speaker #1: But it's still very early. If we take LIME CRM, we have had AI agents out now since before the summer. And they have started to generate revenue.
Speaker #1: They sometimes are sold separately. And sometimes are sold as part of a whole LIME CRM solution. So it depends a little bit also how you allocate that in the different deals.
Speaker #1: And we also have just now AI Assist, as I said, out on general availability. And that's also very new, but it's starting also to convert into revenue.
Speaker #1: So all in all, apart from Connect, we are early on. But I'm happy to see that we have started the journey, and we are starting to see revenue coming in on that side as well.
Speaker #2: Perfect. Here is one question that's very similar to the one before. So we go to the next one. How big is the interest from new customers in LIME GO Agentic relative to traditional?
Speaker #1: I would say quite big difference, to be honest. We feel that we don't have such a modern offering in the old product. It's still very good.
Speaker #1: It solves very nice things. So there are customers who really love the classic one. The new agentic product, of course, has more modern solutions.
Speaker #1: So it gets very nice reception. When we are showing it and when people are trying it. So I would say it is a big difference.
Speaker #1: And we've seen it now in the order intake in October. Where more and more are coming from the agentic side.
Speaker #2: Good. Next question then. How are you yourself using AI in customer support? What have been the key learnings and results?
Speaker #1: Yeah, thank you for that question. And I maybe I can expand it a little bit more, because we are not using it only in customer support.
Speaker #1: I would say we're using it in all our different areas. So for example, we have a new AI, what do you call it, investor page.
Speaker #1: If you haven't seen that, you can have a look at that. It's really nice. We have an AI recruitment bot, which helps us to scan our CVs.
Speaker #1: It also actually does the first interviews for us for new program. In development, we have a much higher pace. And so on. And of course, then also in support.
Speaker #1: So one of the things that we are doing is, of course, we have the chatbot in several of our different products. We have agents that help us automize our answers.
Speaker #1: When we have tickets, it also helps us to classify our different tickets. So I would say instead about slowly, we're just making ourselves more and more efficient in all places.
Speaker #2: Perfect. I'm looking through the questions here to see if you have any additional ones. It seems like we have no more questions at this time.
Speaker #2: Okay, so we have one just coming in. And it reads, you mentioned continued growth in Germany with the utility segment, but also good growth in Norway.
Speaker #2: What is the driving the growth in Norway?
Speaker #1: Yeah, it's to start with, we have a good team in place. We've had a new a few new sales rep coming in here last year, who've contributed to a few really nice deals.
Speaker #1: As I said, that is also helping us grow on the expert services side. And we have a lot of consultants who've been with us for a long time now, who started to be the backbone of that office.
Speaker #1: So it's really nice. And maybe the biggest thing that I should highlight is that we have a good traction in the utility segment. We are a market leaders in Norway as well, in the utility segment.
Speaker #1: And we have a lot of customers, especially in the net segment. So that is helping us as well.
Speaker #2: Okay. One more question. Many consulting companies are experiencing a tougher market, not least due to AI. Expert services grew 13% in this quarter. What is driving the growth?
Speaker #2: And do you expect it to continue?
Speaker #1: Yeah, I mean, I think the market conditions are pretty similar to what they've been the last couple of years. So we have also been struggling, as many of you know.
Speaker #1: For example, last year with being fully staffed in expert services. But I'm really happy to see that the actions that we have taken internally are good.
Speaker #1: And that we have seen that they gain results. So now we have a nice growth on the expert services side. And I mean, we have changed our financial targets.
Speaker #1: So we are not pushing the expert services side for growth. It should be a contributor to the software, a profitable contributor to the software.
Speaker #1: So we wanted to continue to grow. Not necessarily with 13% as this quarter, but hopefully that we continue to grow. That's what we aim for.
Speaker #2: Okay, perfect. That's sums up all the questions.
Speaker #1: Absolutely. So if well, we did actually answer everything. But if you have any more questions, don't hesitate to reach out to us. You know where to find us.
Speaker #1: And with that said, just wish you a fantastic day.
