Hjalmar Jernström: Q3 2026 Investor Presentation. My name is Hjalmar Jernström, and today we are joined by Pricer's CEO, Magnus Larsson, and CFO, Claes Wenthzel. Welcome.
Claes Wenthzel: Thank you.
Hjalmar Jernström: Questions can be submitted during the presentation, and they will be addressed during the Q&A session. With that said, I hand over the word to you, Magnus.
Magnus Larsson: Thank you, Hjalmar. Hello, everyone. I am really happy to be here. With me, I have Claes, as Hjalmar said. We will speak about the Q3 presentation. We will also speak a little bit about what is going to happen into the future. If I start with Pricer in brief, many of you on the call know us quite well. Compared to last quarter, we can see that the number of stores connected to Plaza and the associated ESLs has been growing.
Magnus Larsson: Our vision is to be the preferred partner for in-store communication and digitalization. There will be a few stories about this one. It is not only our wish to be a preferred partner, but actually we get the feedback that we are the preferred partner. If I start with the highlights of the quarter, we have a financial performance that is reaching historical levels.
Magnus Larsson: We have a continuous gross margin improvement, so it has actually been improving now three quarters in a row. Gross profit has also increased three quarters in a row. We have an adjusted EBIT margin that almost doubled versus the equivalent last year in Q3 at 12.9%. So it has been, I have to say, a very strong performance, and we are really happy. Why is this? Claes Wenthzel will speak a little bit about it, but it is on the COGS that we have, the customer mix and the market mix, but also a continuous work to actually improve our cost baseline, both on the COGS side, but also on the OpEx side. Recurring revenue reached 7.5% almost as a percentage of net sales. It has been driven by a very strong growth in Pricer Plaza, our SaaS service.
Magnus Larsson: It is up 39% compared to last year, and it is actually also up 20% compared to the last quarter, Q2. This is the result of our continuous work to sell new Plaza setups to our new customers, but also migrating existing one from on-prem to Plaza. Of course, this is adding a lot of growth to the profitability as well. If I look at the order intake, we had a large growth of 27% versus last quarter. It has been driven a lot by a strong North America, where we have seen that on the European market, on some specific economies, it has been more dampened. We have seen a lot of price pressure reflecting the amount of a little bit less opportunities, but it feels like it is also turning. We have had two events. One was Groceryshop in the US, and the other one was NRF Europe.
Magnus Larsson: There has been a lot of interest for Pricer Avenue, not only from leading retailers but also from brands. Especially on the US market, we had a lot of pre-booked meetings with fast-moving consumer goods companies actually asking us for a meeting, which is the first, and we do believe that it is the A/B testing that we did earlier this year that might be the result for this increased interest. We also saw a lot of trends in the IoT space, but I will speak a little bit more about that later. We have a brand-new customer win, Orange. Orange is a leading telecom operator, not only in France but in many markets. So we got a contract now to deploy all their 561 stores across the estate in France. It is a full package, so it is the ESLs, it is the implementation services, and every single store will be connected to Plaza.
Magnus Larsson: This is actually something the first 100 stores will be done already now in Q4. So this is, of course, extremely nice to get such a large order from a number of store point of view in France, which has been one of our key markets for such a long time. As always, it was a very competitive situation. But as you can see in the quote here from Fabrice, also saying that Pricer emerged as the ideal partner, and I think that was a big chunk of the deal, actually, the way we approached the opportunity. Continuing on order intake, so very strong order intake, especially on the North American market. Accelerated delivery of Sobeys, and as you might recall or might know, we take the order intake for Sobeys in per quarter when it happens.
Magnus Larsson: Good growth on the US announced contract in US, the DeCA contract and some others. Also, we have had a lot of positive customer engagements on the US market, both with existing customers looking at how to modernize the networks or the store networks, but also with new potential opportunities. In Q2, we reported good traction in the Scandinavian market and Pacific market. That is actually continuing into Q3, so good growth in Norway, Sweden, but also Australia and New Zealand. It has been really nice to see. The Pacifics were a little bit low last year, so it is nice to see that it is really coming back strongly this year. On the European market, we saw lower order volumes in France, driven by Carrefour, and this is something we alluded to and actually communicated in our previous report.
Magnus Larsson: Still, we do get orders from Carrefour, so we do have an ongoing, consistent relationship with them, and will continue to be a key supplier into the future as well. Then we have seen generally a weak demand or weaker demand in Eastern Europe, even though we can see really positive signs in Hungary specifically. What are the trends that we see? What are the key insights that I can share? Well, you might have seen this slide before if you followed our presentations. Today, I am going to focus on sustainability as a competitive advantage and tech transformation. I want to talk about one of our customers in the UK called Company Shop. What they are is they are a surplus supermarket, which means that they get surplus groceries from the tier 1 retailers in the UK. Their target group is very specific.
Magnus Larsson: It is people that have a salary level or a disposable income that is below a certain level. Those are the only one that is actually allowed to shop. Why do they need our ESLs? They get the surplus, they get it in the morning, they start with a specific price, and then continuously over the day, they lower the price until they have actually sold everything. You are helping people with less disposable income, but it is of course also fantastic for the sustainability perspective. As you can see here, there has been last year, 11.5 million meals saved in food and drinks. Of course, you have had the productivity improvement for the staff or for the company. It is actually addressing two areas at the same time.
Magnus Larsson: This has been in the UK, this is something they have now start to notice, and it has been a lot of write-ups in the magazine on this one. We have been shortlisted also now for the best innovation within sustainable retail innovations. Let us see in November, I have a positive feeling knock on wood. Moving into technology. IoT, we can see a real growth in demand from IoT solutions within store and in-store IoT. It is mimicking what you get online, but a little bit more than that. Looking at what kind of data can you collect in the store, and how can you actually use that data to improve the store experience? How can you use that data to actually increase also the profit? We get a lot of requests. There is a lot of discussion. It is very much driven by AI as well.
Magnus Larsson: We could see that I spoke about it earlier on the convenience stores, that they were not really interested in ESLs at large scale before, but now driven by AI, they are starting to now look how can we now deploy all these IoT devices. To really make this attractive, we also see clear trends that it has to be standardized. You do not want to have one set of applications and communication for thermometers, another for cameras, a third one for ESLs. We can see it will be more and more standardized. We believe that this is a market that we have to be in. We see there is a lot of opportunities in this market. Our approach will be that we will combine our existing ESL portfolio with all the benefits we bring to the market and above all our customers.
Magnus Larsson: We will next year gradually add complementary connectivity to new protocols to actually connect supporting standard ways of communicating. We will also look at adding a whole lot of different IoT devices. From a value point of view, we will develop our own IoT devices that we will actually sell, but we will also partner with companies that can offer IoT devices that we do not want to have on our own and might not be that we are going to resell them. It might be actually that we just enable them to connect, and we take it as a software service from our point of view. We see a lot of new in-store use cases for retailers that this will actually lead to. In essence, more connected devices, there will be more Plaza revenue and there will be more add-on revenue.
Magnus Larsson: We do believe that this will be a big thing and we clearly see all the trends, we see the interest, and we see the need to come with something. We are preparing, as you can imagine, for this. Plaza is set up now or we are doing that development, and we are looking at the device side. There will be more information later, but I wanted to also now communicate that this is something that we are adding, something that you will see in our portfolio, and that will be launched. Claes, back to the real data.
Claes Wenthzel: Yes. As you can see, very strong gross margin improvement, and this is mainly driven by the customer mix as Magnus said, but also much more effective supply chain now. Even the Plaza development and also freight has had an impact. We have taken much more by boat this year compared to last year whereby we were flying more, and that has an impact. If you look on the sales, the sales is down compared to last year, even if it is the best quarter of net sales this year. The main reason why it is down is actually that we have no large new customers with low margin in this quarter. What is also important to note here is that we have decided to close our German factory.
Claes Wenthzel: This has affected our depreciation this quarter by SEK 7.7 million, and it will affect the coming five months with SEK 7.7 million as well. After that, the depreciation will, of course, significantly go down as the factory in Germany is closed. The reason we do this is of course the margins that we get from our supplier in Asia are better. Then very strong EBIT, as you can see, SEK 65 million this quarter and a net profit of close to SEK 44 million. Then if you look at the cash flow here, as you can see, it is very similar to last year. The reason why the cash flow is pretty weak now in Q3 is that our inventory is peaking now in Q2 and Q3.
Claes Wenthzel: As you can see, last year, we had a very strong cash flow in Q4, and you could expect something similar will happen even this year. So cash flow as a whole looks very good. Then if you look at net sales, as I said, sales development is the best this year, even if the disappointment that is going down. But if you look at the gross profit, it is the best quarter for more than two years, actually, regardless that the sales has gone down.
Magnus Larsson: All right. So before the Q&A, let me summarize. In this quarter, we had really strong financial performance on historically high levels, high gross margin, high adjusted EBIT, high adjusted EBIT margin. The strong growth of the recurring revenue and the number of connected Plaza stores, 40% almost versus last year, 20% versus last quarter. We have added another 500 additional stores, and we believe that we will continue at at least this pace for the coming couple of years. So we actually do believe that we will add quite a few stores. We also see that the uncertainty of the macroeconomic situation that I talked about before, we still see that it continues to impact customers, but also it appears that the market sentiment is changing.
Magnus Larsson: We have now actually had three quarters in a row where, compared to the previous year's quarter, we have had an increase of the order intake. So order intake this year is much stronger than last year, sort of indicating that we see this shift. So there is price pressure on one hand. On the other hand, we also see that, yes, people are starting to invest. Especially North America, we have been able to take much more than before. So that is pretty much what we were planning to present now. So I guess over to you, Hjalmar.
Hjalmar Jernström: Yep, perfect. Thank you so much. Let's start at the gross margin, because I think it is the clear standout there. Of course, a very good margin now in the quarter, and you mentioned there are some sourcing components to this, whether it is shipped via boat or flight. There is also the market mix and the sort of margins that you can report in different margins. Magnus, can you elaborate a bit how this split weighs towards this margin that we saw now and the sustainability maybe of assuming that you can ship via boat heading to the future? What factors determine sort of the sourcing costs that goes into the gross profits?
Magnus Larsson: I think on the sourcing cost, with the supply setup we have now and under the new supply management, we are working a lot with getting the cost down, and we have had really good traction in that. As Claes mentioned, we have changed from doing a lot of transportation by air to by boat, which is, of course, affecting the cost positively. It has also been on the market mix. We can see that in customer mix, we are able to charge higher prices on the North American markets than, for example, in Europe. We see the contribution also of additional recurring revenues. Every single store we add will be good profitability increase for us, which is why we are actually pushing also much for the connected stores, in addition to actually making the installed base really an asset for future upsells.
Hjalmar Jernström: Yep.
Magnus Larsson: On the level work with sustainable level, Claes, any comments?
Claes Wenthzel: No, I think with the customer mix we have now, you could say this is the base.
Hjalmar Jernström: Yeah.
Claes Wenthzel: But that can change. If you take new large order on other price levels, then of course that will have an impact.
Hjalmar Jernström: Yep. Was there any currency impact? Have we seen this now in the quarter, and what can we expect going ahead? I guess, of course, it depends on the end market.
Claes Wenthzel: The currency effect has been very limited. It is 1%, 2% maybe on the top line. It is not more.
Hjalmar Jernström: Okay, thank you. Another driver like you mentioned is, of course, the price of Plaza, which we saw an impressive development now both sequentially and year-over-year. Could you elaborate a bit on the drivers here? Is it new rollouts, or are you upselling existing customers for this service? Can you maybe mention something on the drivers here?
Magnus Larsson: It is actually both. So in essence, every new store, if you take the 561 that we just won with Orange, all on Plaza, all the Sobeys stores, all on Plaza. Pretty much all new customers go for Plaza day one. We are in discussions with almost all of our large established chains on migrating from on-prem to Plaza, so that happens as well. I think generally there is an understanding that this is the future. A few years ago, we could discuss about why you want to move into SaaS. Now I think all retailers basically see the benefit. Then making it an established one, you need to do it in a controlled way to make sure they have a generic way of managing the network of stores.
Hjalmar Jernström: Yep. It sounds like existing customers are very positive towards shifting, had they already not done that. Can you give some kind of indication of what potential you see in terms of recurring revenue from the Plaza base? I guess not the entire customer base is addressable to some extent, but do you have some rough numbers?
Magnus Larsson: No, I think that the growth that we have seen now in the quarter with adding some 500 stores, that is probably sustainable growth pattern in terms of number of stores for the coming couple of years, most likely.
Hjalmar Jernström: Yep.
Magnus Larsson: Yeah. Then, of course, it depends a little bit on what services they buy and what is the size of the store, what the revenue would be. But I am happy to add any store.
Hjalmar Jernström: Yeah
Magnus Larsson: regardless of size.
Hjalmar Jernström: Yep. Thank you. You also mentioned looking at the revenue side, Europe, outside of the Nordics, is a bit soft. Is this sort of in line with what you anticipated from Carrefour, what you announced at the start of the year, or has there been a development in some direction, or is this sort of what you were expecting when we look at France and maybe Carrefour?
Magnus Larsson: Yeah, I think Q3 is in line with our expectation. H1 was better than expected.
Hjalmar Jernström: Yep.
Magnus Larsson: We have a large number of stores with Carrefour. We are an important supplier and will continue to be an important supplier for a long time. We do expect to do more work with them.
Hjalmar Jernström: Yep. We have a question on the line here regarding Europe. While we are on that, I figured we could address that. The question is: As more of the European business becomes upgrades and replacements in the installed base rather than new roll-outs, how does the margin of that type of sale compare, and how large is the replacement opportunity in the next couple of years?
Magnus Larsson: We can see that goes in phases. We know when we deployed someone that roughly when is it time to upgrade. Very often there will be some kind of procurement round and of course, from a retailer point of view, they also always want to see, can we get a better price? Of course, we want to keep the price level, they want to get it down, but we also been working with costs, so we have the possibility to do something. Typically, we would make adjustments to the price. There will be competition, but we always, and this is true for not only for us, but also competitors normally, that if we want a store, a chain, it is very likely that we will stay. It of course happens that it does not play out that way, but we are in a good position.
Magnus Larsson: Of course, we try to utilize that as much as possible as well.
Hjalmar Jernström: Yep. On the topic of price pressure, how do you see that your competitors are doing right now? Are they trying to price themselves into the market? Or the price pressure that you referred to, is this in a general sense, or are you seeing some of your competitors maybe acting particularly aggressive right now, for example?
Magnus Larsson: It is depending on the market and the competitor, I would say. But we can see that sort of the price floor has decreased as of last year. It seems that it will stay. We also see that, of course, competitors is trying to find ways of increasing the price.
Hjalmar Jernström: Yep. Perfect.
Magnus Larsson: So.
Hjalmar Jernström: Yep. Thank you. We have some more questions coming in here on the gross margin. Maybe we can go back to that a little bit. If we take the margin step up now that we saw from Q2 to Q3, I guess this refers then mainly to the gross margin. Is there anything significant behind it beyond the customer and the market mix that we saw from sequentially between the second and the Q3?
Magnus Larsson: That is what I said. It is on the cost side, both the freight cost and the development on Plaza. As you see, development on Plaza this quarter was very good.
Hjalmar Jernström: Yep.
Magnus Larsson: But there is also slowness. We negotiate new pricing, then it will be manufactured. Now we have some lead times for the manufacturing, and then it will go by boat. We can say that the price that has been negotiated some time ago, it will take 3 or 4 or 5 or 6 months until we can see it in effect in the results.
Hjalmar Jernström: Okay. Yep. That sounds promising, I guess, looking into 2027. There is also a question here on cash allocation. You mentioned some initiatives here on product development, of course, but could you maybe speak briefly and generally on how you view capital allocation right now? Are you considering, for example, share repurchases versus other types of investments?
Magnus Larsson: That type of forecast we have not done, and we will look to.
Hjalmar Jernström: Okay. Yep. I figured Orange was an interesting topic, of course. Interesting to see a customer similar to this. Is this a business where you see potential to add other customers as well? Has Orange had a previous set up or is this their first installation of this type of product?
Magnus Larsson: As far as I know, this is the first one. I am actually quite convinced it is the first one because they probably tried it, but this is the first real deployment. I think it might be good open for new opportunity. We certainly have other opportunities that we are working on that are similar to Orange. We sold it to Orange in France, and of course, as a sales guy, I hope to be able to address their other markets. They have quite a few stores in Europe.
Hjalmar Jernström: Yep. Thank you. We have a question on the line regarding the outlook. When you speak of the outlook and the geopolitical environment, could you be a bit more specific what you are referring to? Whether you see this mainly in Europe? Which markets are you specifically maybe referring to in this sense and maybe some more granularity on the outlook.
Magnus Larsson: We have seen more in Europe. In North America, of course, last year we could see there was a clear slowness and towards the end of last year, we could see that the sentiment was changing from our point of view, and we see quite a lot of opportunities in the North American market. Of course, we have also demonstrated growth in both net sales and order intake. In Europe, it is more market specific. We are seeing markets where we have good growth and expect to have more growth. In Scandinavia, as an example, we are growing. We have been growing now compared to last year. So the direct sales approach is working really well. Whereas in other markets, we have seen it has been slower.
Hjalmar Jernström: Yeah. Okay. Thank you. On the product development, you mentioned developing of new products. Of course, you have been communicating with customers, you know that there is underlying demand for this type of product, but how certain can you be? Is there any risk involvement with this type of product development process and how certain are you developing this type of product that there will be a market demand?
Magnus Larsson: We are very certain there will be a market demand. Then, of course, always when you launch a new product, it is very hard to really assess how successful it will be. Of course, there is a belief and we see the need. Then, of course, we need to make sure that we develop what the market wants. But we have a pretty good idea.
Hjalmar Jernström: Yep. Okay. Thank you so much. I believe we have addressed most of the questions. Let me just check if there is one more, actually, on the recurring revenue. On the growth now that we saw in Q3 of the recurring revenue, is there any single customer or single contract that drives this growth, or is it more of a widespread type of growth?
Magnus Larsson: There has been a fair amount of Sobeys stores. Then it is across really all markets.
Hjalmar Jernström: Okay.
Magnus Larsson: Yeah.
Hjalmar Jernström: If we look at the installed base of Plaza and the recurring revenue at large, is there any customer split here that is maybe sort of driving the major share of this, or is this diverse?
Magnus Larsson: I would say it's probably still more new customers. We have a number of projects where we see that they will migrate. Then I think we will see that more in the numbers, then it will be probably bigger deploys in a specific quarter.
Hjalmar Jernström: Okay. Thank you so much, Magnus and Claes, for coming here and answering our questions today.
Magnus Larsson: Thank you very much, Hjalmar. Thank you very much for joining us. It's been a pleasure to be here and present this quarterly result. We will speak again.
