Operator: Welcome to the Addnode Group Q3 presentation. During the questions and answers session, participants are able to ask questions by dialing #5 on their telephone keypad. Now I will hand the conference over to the CEO, Johan Andersson, and CFO, Kristina Mackintosh. Please go ahead.
Johan Andersson: Hello, everyone, and welcome to the Addnode Group report for Q3 2026. I am Johan Andersson, CEO of Addnode Group, and with me I also have our CFO, Kristina Elfström Mackintosh. Today, we are going to talk about our third quarter 2026, give an introduction to that and some further clarity, then we will end up with a Q&A. You will also see some supporting slides in the appendix. For those of you who are new to Addnode Group, I would like to start with a short intro. We provide software and digital solutions in selected niches. Our 20 companies are organized in three divisions in order to support each other and take advantage of synergies. The three divisions are Process Management, Product Lifecycle Management, and Design Management.
Johan Andersson: Our software and digital solutions help build a more sustainable and efficient society from zone and planning and building permit software for the public sector in the Process Management division, to digital solution for designing, building, and managing infrastructure and products, including lifecycle management in our Design Management and PLM divisions. We are building Addnode Group on three competitive strengths. Our domain expertise in selected niches, that we provide mission-critical software with high switching costs, and that we are the trusted partner to our customers. Addnode Group has about 40,000 customers, net sales of SEK 6 billion, a business model with 62% recurring revenue, and we have a healthy EBITA margin of around 16%. We are active on five continents. The majority of our business are in Northern Europe and North America, and we have done 96 acquisitions since the inception of Addnode Group in 2003. Looking at Q3.
Johan Andersson: We had organic growth, acquisitions, and cost efficiency initiatives that contributed to a significantly improved earnings in Q3. Net sales increased by 10%, of which 3% was organic growth, adjusted for positive currency effects. EBITA increased with 68% to SEK 250 million. All three divisions improved EBITA and supported that EBITA margin improved to 17.4%. Operating cash flow improved with SEK 73 million. Please observe that Q3 is the lowest quarter of the year as we get most of our prepayments in Q4 and Q1. We also secured the largest single contract for owned software in Addnode Group's history in the quarter. We acquired SpaceIntel, an AI-enabled software for facility management, and increased our investments in Bimify and in Inuse.
Johan Andersson: When comparing with last year's Q3 in 2025, please observe that renewals of some Autodesk agreements was made by customers in Q2 instead of as expected in Q3. This boosted Q2 last year with roughly SEK 80 million in net sales, with the corresponding negative effect in Q3 last year, with a zero effect for the full year. It was just a change between the quarters. As you can see in the graph to the right, showing net sales and EBITA from 2021 to rolling year-to-date 2026, Addnode Group is now back to year-on-year growth for both net sales and EBITA. Rolling 12-month year to date, net sales was almost SEK 6 billion and the EBITA was SEK 970 million. I will now move to the performance of our three divisions.
Johan Andersson: For you that are following Addnode Group regularly, we usually start with Design Management, but today I am going to start with Process Management to the left. For Process Management, net sales increased by 6% to SEK 417 million. Organic growth increased by 4%. As I described earlier, Sokigo, a company in the division Design Management, secured a strategic contract when the City of Stockholm selected our standard solution for building permit management. The contract has a total order value of roughly SEK 100 million over a period of 10 years. It confirms the division's strong market position. EBITA for the division increased by 16% to SEK 100 million, and EBITA margin increased to 24%. Acquisitions and improved operational efficiency contributed to the improved margin. The EBITA margin has improved for a ninth consecutive quarter, demonstrating the division's ability to combine both growth with increased profitability.
Johan Andersson: Now, division Design Management individually on the slide. Net sales increased by 21% to SEK 595 million. Demand for both software and service remains strong in the US, where investments in data centers are a key driver of growth. The comparative figure for the preceding year, as mentioned, was impacted by renewals of Autodesk agreements. EBITA increased by 184% to SEK 122 million, and EBITA margin increased to 20.5%. The improvement in EBITA was driven by a combination of easier comps as described, organic growth, acquisitions, and efficiency measures implemented in both Europe and US. The efficiency program that started in Q2 has been completed. It will reduce the cost base by about SEK 100 million on an annual basis, with about half of that reduction expected to take effect in H2 of this year and the other half in H1 of 2027.
Johan Andersson: Product Lifecycle Management net sales were unchanged at SEK 436 million. Organic growth decreased by 3%. Strategically important customer segments such as aerospace and defense remain strong in demand. We had a solid quarter for Nordics, Benelux, and the United States. German market is still stagnant. EBITA in the division increased by 10% to SEK 46 million, and EBITA margin increased to 10.6%. We have a clear focus for the division to improve margins. This has been successful, and we have improved EBITA. For example, you can see that the full-time employees are 14% lower compared with Q3 last year. The aerospace and defense industry is an increasingly important growth market for the division, where Technia's deep domain expertise, comprehensive offering, and global service capabilities position us strongly to capture these expanding opportunities. We are diversifying in Germany from automotive to aerospace and defense and other customer segments.
Johan Andersson: Just to stop for a few seconds, I mentioned this record deal with the City of Stockholm valued at SEK 100 million. It is a clear testament that our customers are investing in software that we can support with them over time. It is our largest own software deal for the year. It also manifests the strong position that we have in the market for the public sector and the technical department municipalities in Sweden. It is also something that adds to our base of recurring revenue as this is a 10-year contract, meaning that we will have a recurring revenue of roughly SEK 10 million from this contract for the next coming 10 years. I think it is a good testament to the good work and the market position that we have in the division, Process Management. We also made some investments in the quarter.
Johan Andersson: We are investing in technology and AI to leverage our global market position. We have made some acquisitions in Design Management here. We acquired in the quarter SpaceIntel. It is an AI-enabled software platform for facility management. We also increased our investments in Bimify and Inuse, and in the beginning of the year, some of you might remember that we acquired a company called ACAD-Plus. Together, these investments provide us with innovative solutions for the digitalization of buildings, smart property management, and connected industrial environments. By combining these companies' technologies with the Design Management division's strong market position, extensive customer base, and global sales organization, we have a good foundation to accelerate market penetration and boost our recurring revenue. A concrete example on how we already can see the value of these investments is our solution for Technological University Dublin.
Johan Andersson: That is my segue to our customer success stories for this quarter. The first example to the left in the slide is the one that I just mentioned. It shows how SWG and Design Management is supporting the Technological University Dublin. The university wants to support to create a scalable digital foundation for its campus operations and to support its 2030 sustainability targets. We did that by bringing it all together in SWG's Geminus platform, integrating facilities management systems, BIM digital twins, IoT, and other data sources into an AI-powered environment that automates monitoring, reporting, and building performance optimization. This has enabled the University of Dublin to optimize campus performance, support sustainability, and track decarbonization progress. It is a good example on how our industry knowledge and domain expertise, combined with AI and integrated data sources, can create new opportunities to improve efficiency and further develop customer operations.
Johan Andersson: The second example that you can see in the middle of this slide comes from Technia in division Product Lifecycle Management. As Electron Aerospace prepared for certified production of its electric aircraft, it needed a scalable cloud-based PLM environment to manage growing engineering and certification complexity. We supported Electron by deploying the 3DEXPERIENCE platform in the public cloud, unifying design, simulation, product data, and technical documentation into a single source of truth. This gave Electron a digital foundation to improve collaboration, reduce rework, and accelerate certification and aircraft development. The last example comes from Decerno in division Process Management. They have been working with Fastighetsbyrån for a long time, helping them and supporting them. It is a long customer relation. They wanted to evolve its intranet into a central knowledge hub and to improve access to information on sales, administration, and legal processes for the employees.
Johan Andersson: We did that, what in Sweden called Byråassistenten, an assistant for help. It is an AI-powered intranet assistant that delivers relevant answers and source-backed information through intelligent search and generative AI. This enables Fastighetsbyrån's employees foster access to trusted knowledge while providing Fastighetsbyrån with a scalable AI platform for future growth. These three examples reflect a broader trend across our business. Customers continue to invest in solutions that improve efficiency, increase transparency, and support long-term growth. Addnode's strong customer relationships, deep domain expertise, and the data embedded in our solutions position us to develop and deliver new AI-enabled solutions for our customers. I would like to hand over to our CFO, who will bring further clarity on the Q3 results.
Kristina Mackintosh: Thank you, Johan. I am now going to take you through the development of net sales from Q3 2025 to Q3 2026. You can see here on the graph that the Q3 2026 net sales amounted to just over SEK 1.4 billion, compared to just over SEK 1.3 billion last year. That is a total increase of approximately 10%. This growth is coming from organically. The currency-adjusted organic growth was SEK 42 million, which was an increase of 3%. The increase is mainly derived from division Design Management. As Johan already pointed out, net sales in the comparable period was impacted by early renewals. Acquisitions contributed by SEK 68 million, which is a growth of approximately 5%. We had positive currency effects in the quarter of about SEK 17 million, and that is mainly relating to both Norwegian kroners and the USD.
Kristina Mackintosh: We also have another way of presenting the net sales growth from the divisions, which is the next slide. This slide illustrates the division's contribution behind the net sales growth during the quarter. Looking at the Design Management, contributed by SEK 105 million, which is up 21% in total compared to last year. It is worth noting also that the prior year comparisons were affected by the early contract renewals that we talked about. PLM contributed by SEK 1 million, which is in line with last year's net sales. Here we have a positive currency effect of SEK 2 million. So the organic growth was -3%. Process Management contributed SEK 22 million, which is a growth of 6% compared to last year. Here we have a positive effect of SEK 7 million, and therefore the currency-adjusted organic growth was 4%.
Kristina Mackintosh: Now I am going to talk a little bit about the net sales by category. In this graph, we are presenting the net sales by category, and we emphasize that the offering consists of the mission-critical digital solutions, our deep domain expertise with a strong and recurring customer base, which reflects the high customer retention. The majority of our net sales, which you can see here in the graph, representing just over 60% of own software and services, representing the value we bring to our customers. Our strategy remains focused, profitable organic growth supported by innovation, customer value, and a strong recurring base. Over the last 12 months, recurring revenue represents 62% of our net sales. I am going to go to next presentation about the EBITA development from last year to this year. This bridge illustrates how we have delivered profitable growth in the quarter.
Kristina Mackintosh: We continue to drive growth through innovation, customer value, and growing share of recurring revenue, while at the same time improving operational efficiency across the group. EBITA amounted to SEK 250 million this quarter, compared to SEK 149 million last quarter. The increase is about 68%. As a reminder also, the EBITA comparison quarter was impacted by contract renewals that we talked about. Even taking this into account, the quarter reflects improved underlying profitability, supported by operational efficiency, restructuring initiatives, and disciplined execution across the businesses. Let me take you through the EBITA development in the quarter. Design Management division was the main contributor, about SEK 79 million of EBITA was up 184% compared to last year's Q3. The restructuring program that was initiated in Q2 had now been implemented, and we are starting to see the benefits of this coming through.
Kristina Mackintosh: Product Lifecycle Management contributed by SEK 5 million in EBITA. As you remember from last slide, the net sales were flat year on year almost, but EBITA increased by 10%, which was supported by the restructuring actions in which we implemented last year, primarily in Germany. Looking at Process Management, contributed by SEK 14 million of EBITA. That is an increase of 16% compared to last year. Overall, the EBITA improvement reflects our focus on profitable growth. While growth level varies across the divisions, we continue to strengthen the profitability through operational improvements, recurring revenue, and a disciplined execution of our efficiency programs. Looking at the strong operational performance, we grew EBITA margin from 11.4% to 17.4% in the quarter. Now let us have a look at the cash flow.
Kristina Mackintosh: Starting with the cash flow from operating activities in the quarter improved by SEK 73 million, which is mainly driven by higher operating profits. If you look at the year-to-year cash flow from operating activities, the increase was significantly based on improving working capital. Investments during the quarter mainly related to software development and also M&A related payments. In these investments last year in Q3 was included acquisitions of the Norwegian company and the Brazilian company. Financing activities in Q3 included new loans for financing settlements of earn-outs that are falling due in Q4. Now I would like to hand over back to Johan for the outlook and focus.
Johan Andersson: Thank you, Kristina. As you know, our financial target is to improve our EBITA with 15% year-over-year over time. If you look at the graph here, you can see from 2016 to 2026 rolling 12 month, the compounded annual growth rate is 20%. Our business model is based on a strong combination of organic growth, value-accretive acquisitions, recurring revenue, and constant improvements. We work constantly to boost efficiency and the profitability of our companies. Our focus is on increasing customer value through AI, drive organic growth, increase recurring revenue, and at the same time enhance our operational efficiency and do value-accretive acquisitions. As you know, our comparability between periods is affected by the renewal cycle of three-year Autodesk contracts. 2026, the cycle has been negative for reported net sales.
Johan Andersson: For 2027, we would like to highlight the three-year cycle, meaning that we see that more three-year contracts are expected to be renewed compared to 2026. This will support continued organic growth. We have proved that we can double our EBITA every 5 years, and we are going to continue that journey. Addnode Group is well-positioned for continued growth, supporting our 40,000 customers. With that, I would like to open up for Q&A.
Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Erik Larsson from SEB. Please go ahead.
Erik Larsson: Hi, and good morning. I have a few questions. First off on design, if we can talk about how we should think about the comparisons here the coming quarter. First off, you have these changed incentives from Autodesk. Should that impact Q4, or I guess, is that an impact until February before that rolls over? Then second, in terms of these three-year deals coming up for renewal, I guess Q4 might be a headwind, but is it a tailwind already in Q1? How would you describe that? Thanks. Can you hear me?
Kristina Mackintosh: We do not hear your question, so we are trying to get that back. We still cannot hear the question, so we are trying to get to the bottom of a technical issue.
[Company Representative] (Addnode Group): We still cannot hear you, but we are trying to pass through that issue just now. Vi kör via din telefon då. Okej, men nu hör ju de vad vi säger och pratar.
Kristina Mackintosh: Ska jag registrera mig först eller?
[Company Representative] (Addnode Group): Ja. Skriv bara x så går det fort. En bokstav räcker.
Johan Andersson: Email required.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead.
[Company Representative] (Addnode Group): Jag kan ta den där.
Johan Andersson: Du måste klicka in den först.
[Company Representative] (Addnode Group): Jaha.
Fredrik Nilsson: Thank you. Can you hear me now, Johan and Kristina? I guess not.
Johan Andersson: Inna först.
Fredrik Nilsson: Thank you. Can you hear me now, Johan and Kristina?
Johan Andersson: Yes.
Kristina Mackintosh: Can you hear us?
Fredrik Nilsson: Yes, I can. There might be quite a significant delay, I assume, though.
Johan Andersson: Det är för din
Fredrik Nilsson: Thank you. Can you hear me now, Johan Andersson and Kristina Mackintosh?
Kristina Mackintosh: We can hear you. Can you hear us?
[Company Representative] (Addnode Group): Can you hear us?
Fredrik Nilsson: Yes, I can. There might be quite a significant delay, I assume, though. Thank you. Can you hear me now, Johan and Kristina?
Johan Andersson: Ja, det är för det här. Jag måste logga ur det här. Let's try this again.
Fredrik Nilsson: Hi again, Johan and Kristina. Can you hear me now?
Johan Andersson: Yes, we can hear you. Can you hear me?
Fredrik Nilsson: Yeah, I can hear you. Yeah.
Johan Andersson: Okay. Let's try this. Sorry for the delay. We'll sort that out later, but we're open for questions.
Fredrik Nilsson: Okay, great. I take a few of my questions then, I guess. Regarding Design Management, perhaps I were a bit too defensive in my estimates, but I didn't expect the cost savings to impact this significant this early. Is it anything else driving the quarter-over-quarter improvement?
Johan Andersson: No, I wouldn't say that. There are no sort of extraordinary things. We have growth in the quarter. That helps. You have to remember that with the new business model, we have 100% gross profit on our Autodesk sales. We also had strong server sales supporting it as well, that you can see described in the interim report as well. It's more of an operational performance and cost savings and a combination of that.
Fredrik Nilsson: Okay, I see. Great. You mentioned strong demand from data center build out. Could you give us a rough number of Design Management's exposure to data centers?
Johan Andersson: No, we don't have any exact numbers of it.
Fredrik Nilsson: Okay.
Johan Andersson: What we mean by the exposure data center is that these are buildings and infrastructures, and that is what we support with our software. Our customers are the architects or the technical consultants who are involved in the construction, but also the owners of the data centers who want our help with structuring the data so they can build a digital model and have a good maintenance of that over time. Both services and software that we are exposed with to that. It's a broad definition. It's both to our existing customers who are supporting the build out of the data centers and sort of the new customers who are the owners, the hyperscalers.
Fredrik Nilsson: Okay, I see. Thanks. Regarding the margin in Process, I think it is the highest level seen in the last 10 years at least. Was it an exceptional quarter, or should we expect the rolling 12 months margin to continue to expand?
Johan Andersson: I think it is a very strong quarter, supported by the acquisitions that we ordered out. We have a good utilization in our business and a strong execution of it. I think this is a good margin that we hope to maintain, but I cannot promise you that we can continue the journey on a sequential basis. It is more of we are hoping to keep this margin as we move forward. Hopefully we can do a little bit better, but I think it will be tough to maintain the trajectory quarter over quarter. We can still do a little bit better, but it will not be +1%, +1%, +1%. That will be tough.
Fredrik Nilsson: Okay. That is fair. Last question from me. The news regarding the automotive sector is still quite negative. As far as I remember, your exposure in Sweden is limited. Regarding the German market, are things getting worse or is it rather stable at a low level?
Johan Andersson: I think it is the latter. We are still doing business with them, and they are actually buying from us, but it is stable on the low level. I think that is the best way to describe it. We are in line with our earnings there, so I think we have solid margins in our business that we are executed in Germany right now.
Fredrik Nilsson: Okay. That is great. Thank you very much. That is all for me.
Johan Andersson: Thank you, Fredrik.
Operator: The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead.
Daniel Thorsson: Yes. Thank you very much. I start off with one on Design Management here. As you said, you expect a higher share of three-year deals in 2027 and 2026 supporting organic growth. Do you also assume anything on kickback levels potentially changing, or are they already set for 2027 in that assumption?
Johan Andersson: Thank you for the question. Yes, we expect support in 2027. We still have a Q4 left here in 2026. I just want to remind you that I am talking about 2027. 2026 in the Q4, we expect that we will be on par with what we delivered last year in Design Management. It has to do that we had a very strong quarter last year with new sales in that. I just want to point that out. Then with regards to Autodesk and margins, our expectation is that the setup we have this year will be valid for 2027 as well. So no changes in that.
Daniel Thorsson: Okay. Is that because you know it will be it, or is it because you assume that it will be it?
Johan Andersson: We have been informed that is what to expect.
Daniel Thorsson: Okay. Thank you. Then secondly, on Process Management here as well, in line with Fredrik's question on the margin, the SEK 100 million contract with Stockholm Stad in Q3, did that include any upfront license or implementation work worth highlighting as a driver for the strong margin in the quarter?
Johan Andersson: No.
Daniel Thorsson: Or is it just recurring with that?
Johan Andersson: The effect of that contract, you will probably see more, if any, for the product will probably be more in Q3. The explanation for the strong Q3 is not in that contract. It is more that we will get a SEK 10 million recurring, and there will be some servicing in the beginning, always with implementation, but that is a small part of the total value as this is actually a standard software that we deliver to the Swedish municipality markets.
Daniel Thorsson: Okay, perfect. That is clear. Finally then on Q4 here, you touched upon it already here, but you have said that a more flattish development organically year-over-year is reasonable, and with a cost program realizing in Design Management here already in Q3 and the record margin in Process Management. Is this enough to drive a positive EBITA growth year-over-year, despite, for example, a flat organic sales growth in Q4?
Johan Andersson: There are room for that, as you said that with regards to, we are talking about the flat organic growth that we could expect at best in the Design Management, so there is room for that, yes.
Daniel Thorsson: Okay, perfect. Thank you very much.
Operator: The next question comes from Erik Larsson from SEB. Please go ahead.
Erik Larsson: Thank you. I just have one question on cash flow. We have seen some improvements here for about a year in line with what you said in the beginning of this transition. When we conclude Q4, would you say that we are done with this transition, and is all Autodesk licenses paid on a yearly basis now, or is there any geography or product or what have you, where you could still receive payments three-year upfront, or is that door completely shut now?
Kristina Mackintosh: Yes. Thank you, Erik. Just to remind the rest of the audience also that this is related to the period before when we were selling the Autodesk contract to the customer, and then we would receive a supplier invoice from Autodesk. That has mainly gone through it as of now, and it was mainly coming from the United States and from Europe in Design Management Symetri. We see that that liability is almost all out now. Very minor on the balance sheet. As Johan also mentioned in Q3, that is normally the lowest quarter for our cash flow from operations, and that is because of the maintenance agreement that we normally invoice in Q4 and also in Q1. We are pleased to have gone through that whole cycle with the Autodesk contract and coming back to a more stable cash flow situation.
Johan Andersson: All right. Great. Thank you.
Operator: The next question comes from Fredrik Lithell from Handelsbanken. Please go ahead.
Fredrik Lithell: Thank you very much. I will start with one question on the three-year contract comment regarding 2027. We have the last year talked about three-year contracts and where customers have moved from three-year to one-year contracts because they have not really received any discounts on the Autodesk side. So what makes you optimistic that they will renew a three-year contract into a new three-year contract in 2027? Is there a discount that Autodesk can put back or anything like that?
Johan Andersson: Well, thank you for your question. No, to be clear, it has nothing to do with discounts. There are no discounts available for choosing any type of contracts. What we have is that the total bulk of our three-year contracts that we have signed with our customers that are active today, one-third of that total bulk has been on a more preferable plan for the customers, and that plan ends in 2028. So that means that we have less than three years left until 2028. So they cannot renew on that preferable plan. But they want to stay on that plan, so they renew for one year. So that means that one-third of our three-year contracts makes more sense for the customers to renew to a one-year contract to stay on that.
Johan Andersson: So that means that we know how many three-year contracts we have, and we know the cyclicality of that. You remember the three year of that. Then we can see how many contracts will be renewed in 2028. We know from historical patterns how many is expected to renew. With that as a basis, we feel comfortable to say that we will have an organic growth in that business if we have some sort of normal business as we are having today. That is expected.
Fredrik Lithell: Okay.
Johan Andersson: It has nothing to do with any new sort of renewals. It is more what we can see in the contract base and what is expected to be renewed on a historical pattern.
Fredrik Lithell: Okay, that clarifies it for me. Thank you for that. Just a few housekeepings also then. In the efficiency program that you have implemented in Q3, did that drive any redundancy costs that are treated as EO items in the quarter or anything like that?
Kristina Mackintosh: Yes. Thank you for the question. We presented last quarter in Q2 the amount that was relating to the restructuring program, and that was taken in Q2 already.
Fredrik Lithell: Okay, all right. A final one, just also housekeeping. The revaluation of contingent considerations in the quarter, is that something you could elaborate a little bit on what drove that figure?
Kristina Mackintosh: Yes. What we do normally every quarter, we look at the earn-out revaluation.
Fredrik Lithell: Yeah.
Kristina Mackintosh: We have over SEK 500 million in earn-outs in the balance sheet, and we do that revaluation on a quarterly basis. You will see this effect normally quarter by quarter.
Fredrik Lithell: Okay.
Kristina Mackintosh: It is not a major impact on the current profit and loss.
Fredrik Lithell: Okay, perfect. Thank you very much.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
Johan Andersson: Great. Thank you all for your patience with the Q&A session, and sorry for the technical issues there. But some great questions anyhow, and I know we all have a busy day, so thank you all.
Kristina Mackintosh: Thank you.
Operator: The host has ended this call. Goodbye.
