Henrik Molin: Hello, welcome to Physitrack's Q3 2026 results webcast. I am Henrik Molin, CEO and Co-Founder of Physitrack, and shoulder to shoulder for the first time, not an AI, I can assure you, I am joined by Matt Poulter, our amazing CFO. Let us kick this off. We will start with a little snapshot of the quarter, and I will walk you through the business updates from our two divisions, Lifecare and Wellness. Matt is then going to take the helm and walk you through the financial results a bit more in detail, and he will give you an update on the share buyback program. Then we will revisit our strategy and outlook, and after that, we will take your questions. As usual, use your Q and A function at the bottom of your screen. I think that is it. All right, let us go. All right, so a little snapshot.
Henrik Molin: Looking at the quarter, what worked really well and what perhaps did not work quite as well and where we actually ended up. Starting with what worked. Revenue was up 14% year-on-year to EUR 3.6 million. On a constant currency basis, that is 11%, so really nice growth. Lifecare was up 15%, and the core Physitrack platform, it grew by 26% year-on-year. That is a really great number for a platform that has been around for more than a decade, actually. We will talk more about that in a moment. Average revenue per license increased by 11% to EUR 190 per year per user, and churn remains steady at around 1% per month on a 12-month look-back basis. In Wellness, margins came up very nicely, and if you look at that, we are at 38% adjusted EBITDA margin, which is close to our overall financial goals.
Henrik Molin: Operating profit, EUR 0.2 million. Importantly, three new systems were launched during the quarter. Remote therapeutic monitoring, our electronic medical record system, our EMR, we will talk more about that in the coming slides, and it is in early access now. We have our educational modules as well that went live. We also secured two US healthcare system selections through competitive processes led by our New York team. Very nice win there. Lots of really nice things happening here. Well, adjusted EBITDA was down 8% year-on-year. This was largely planned and reflects the investments that we made in building out the US operations and of course, developing these amazing new systems that we just brought to market. I will revisit that a little bit in a moment.
Henrik Molin: Now, adjusted EBITDA less CapEx was EUR 0.3 million in the quarter. Wellness ARR contracted to EUR 0.7 million following the loss of one large customer. As we exited the quarter, group ARR stood at EUR 13.6 million, and net debt was EUR 3.77 million with that revolver at Santander. Net debt came down during the quarter, and we expect it to come down further.
Henrik Molin: Our educational modules are now live, and on the EMR side, we expect paid subscriptions to start contributing from January 2027. Overall, a quarter of really strong growth, a lot of product delivery, and some deliberate investment in the next phase of the business. Okay. Just quickly walking you through the financial highlights again, revenue EUR 3.6 million, adjusted EBITDA EUR 1.1 million, group ARR EUR 13.6 million, free cash flow EUR 0.2 million. Importantly, that is the eighth consecutive quarter of positive cash flow. Lucky eight.
Henrik Molin: Gross margin remains very strong at 89%, and recurring revenue represents 94% of the total. Now, let us look at that. It is a very resilient financial profile, and we are managing to grow the business while continuing to generate cash. We are going to dig a little bit deeper into that. Moving to Lifecare here. Really nice performance. 15% growth year-on-year, EUR 3.3 million of revenue contribution for the quarter. Adjusted EBITDA was EUR 1.4 million, and adjusted EBITDA less CapEx, EUR 0.6 million, representing an 18% margin. We have seen really nice growth throughout the year here, and as I mentioned earlier, the core Physitrack platform itself grew by 26%. That is a really strong number for a mature platform, and there is more to come there, particularly as we bring EMR and remote therapeutic monitoring into the ecosystem. Average revenue per license increased by 11%.
Henrik Molin: We implemented a price increase during the quarter, and we are now seeing that reflected in the numbers. What is really encouraging is that churn remains steady, and I think that tells us two things. First, our customers are clearly seeing value in the platform, and second, we are still underpriced relative to the value that we are actually delivering. So there is room here to continue expanding revenue per customer over time just with price adjustments.
Henrik Molin: The division remained profitable, gross margin 89%. Overall, this is actually the strongest growth we have seen so far this year, while at the same time, we are funding a really meaningful expansion in the United States and with a lot of innovation. So very pleased with Lifecare. Looking at Wellness, growth was relatively flat, up 2%. As I mentioned, we did lose one large customer, which brought annual recurring revenue to EUR 2.7 million.
Henrik Molin: What I am particularly pleased about here is the improvement in profitability. Adjusted EBITDA margin is now 38%, and adjusted EBITDA less CapEx is 29%. That is a really nice development. Revenue retention has also improved to 96.6%, and we are now back to growth while rebuilding the enterprise ARR base. We have spent quite a lot of time resetting this business, as you know.
Henrik Molin: We focused on the fundamentals and getting profitability back to where it should be, doing stuff that is profitable, not dealing with customers that are losing us money, and so on. So it has been a nice cleanup effort, and we are now seeing the results of that work. More to come from Wellness, but we are definitely moving in the right direction. Okay, looking at the execution priorities. It is quite a busy slide, but let us start at the top left there with North America.
Henrik Molin: You have seen a couple of really nice US healthcare system selections announced, including one with integration into Epic MyChart, and another with a potential contract value of almost $400,000. That is a great testament to the hard work being done by the New York team, and as our Head of Growth, Kevin, likes to say, "It is impossible to lose." That is the real ambition here, just making sure that we can really do those really nice big wins. The RTM, remote therapeutic monitoring solution, is now open for trials across all US customers. The US is also our number one priority for the new EMR. We are starting to see the different parts of that strategy come together.
Henrik Molin: Looking at margins and cash down the bottom left, it is a very, very nice story here to see that we have delivered eight consecutive quarters of positive operating cash flow while also reducing net debt. We are accelerating revenue while remaining profitable. Adjusted EBITDA, it came down a little, and the margin is 31%, but I think that is quite marginal in the context of everything that we have delivered. We have built and launched several major new systems, expanded the US presence, and we have invested really here in creating a much bigger commercial opportunity for the business. That is a very nice combination, and I think we can just accept that lower EBITDA margin, and that is going to be temporarily.
Henrik Molin: Looking at the product unification and value expansion top right, we opened early access to the EMR on 28 September, and we have already had almost 5,000 users sign up so far. We are now rolling that out step by step, and the feedback so far has been amazing. We have also launched educational modules inside of Physitrack, and we will begin commercializing these in the Q4. One thing I want to highlight here is how we actually managed to deliver so much innovation in such a short period of time. We brought our teams together in Poland for what we call a PhysiCampus. Essentially, we hired a hotel. We moved in together. We lived together, worked together, ate together, coded together for a couple of weeks.
Henrik Molin: This model was inspired by some really, really nice, successful companies like the FAANG businesses, whatever you call them these days, and companies like Atlassian, where people live together and they do these things either on campus with hotel rooms that they have as part of that, or that they travel together and they do this. The results were quite extraordinary. When you get talented people together in one place working towards the same goal, you can move incredibly fast, and that is what happened to us. We will definitely continue doing these PhysiCampus. The next one is scheduled for mid-November, and it is going to be really, really exciting to be part of that. Again, just to put things into perspective, the core Physitrack platform grew by 26%, even without having launched the EMR and monetizing the remote therapeutic monitoring piece.
Henrik Molin: I think that's a real testament to the strength of that underlying business model. Finally, bottom right, Wellness. Again, we've been resetting that business and getting back to sustainable growth and stronger profitability, but without compromising on innovation. Some really, really interesting things that have been launched as of late. I'm really, really excited about what we can do there on a standalone basis, and also by integrating that into the Lifecare ecosystem. Nice, good progress there as well. Everybody talking about right now, the EMR. Of course, we'll talk about that a little bit more. There's an extensive interview with me from this morning where we speak more about that. Then also, obviously, the launch announcement on 28 September is a good source of information too.
Henrik Molin: We're very excited about this, so I'm going to talk about it a little bit more if that's okay. When we started building the EMR, we looked at the situation that was facing healthcare providers around the world from a macro perspective. We also saw things from a micro perspective that are really, really interesting. These are people that are incredibly time constrained. These guys want to work faster, they want to work smarter, and above all, they want to spend more time with their patients rather than sitting in front of a computer doing administration. There's an interesting disconnect here. In their personal lives, of course, people are getting increasingly used to working with AI agents. They can ask questions, give instructions, get things done almost instantly now. That's a trend that's changed the world in the last, let's say, 9 to 12 months.
Henrik Molin: The way that people interact with technology as consumers has fundamentally changed. When they go to work, they're often using systems that feel like they were built 20 years ago, or maybe even 40 years ago. A lot of menus, a lot of clicking around, lots of boxes to tick, a lot of text-heavy interfaces, and we wanted to fix that. So we took everything that we learned from more than 10 years of serving healthcare providers around the world. So the data, the workflows, the patient engagement side, the relationships there. We had our own experience as well as pioneers in AI, and we built an EMR with agentic AI at the core. That's the important distinction here. AI isn't an add-on. It's not a little feature sitting somewhere on the side. It's right at the heart of the system.
Henrik Molin: You can talk to your EMR, you can give it instructions in plain language. You can ask it to perform tasks rather than having to navigate through a bunch of menus or, God help us, click around a lot of tech stuff, MS-DOS style. Of course, you can still use the traditional interface if you want to. This is a very natural transition for clinicians who want to move gradually towards an agentic way of working, and that is very much the future here. What's really exciting is that we've built this as a complete solution. From patient onboarding and scheduling to clinical documentation, billing, insurance reimbursement, and of course, home exercise prescription. Home exercise prescription is really at the heart of it because ultimately, that's what you want your patients to leave with.
Henrik Molin: So a clear plan for how they are going to get better, and very, very tightly integrated with Physitrack, with the remote therapeutic monitoring as well. So instead of having a lot of disconnected systems, the clinic can operate through one unified platform. I think this has the opportunity to become the go-to AI platform for clinics. Starting in physical therapy, of course, which is a market we know super well, but the opportunity is obviously much broader than that over time. Because we are really doing something here where we are rethinking how clinical software should work, we start with the human beings who actually use it, and that is why we are so excited about this. Anyway, enough said about that. The traction is really, really nice, and the numbers have actually ticked up even further than this. These are numbers from, I believe, from Monday morning.
Henrik Molin: But we have had a very, very nice response here. Almost 500 clinics and almost 5,000 individual users have signed up to early access for this. Remember, we only opened this up on 28 September. We are talking about a very short time period here. What we are doing now is we are releasing access to the system step by step. It is live. It is run by customers, and I believe the beta is now 50 clinics. What we do is we work with them step by step. When we are comfortable, we will increase or expand the beta, but we have a wider release on 2 November. Hopefully that whole list will be able to profit from this and learn from what we can do and then give us feedback as they go.
Henrik Molin: So far, feedback has been really, really encouraging, and you have seen some of these quotes on socials. Still early days, of course, but when you look at the level of interest, you combine that with the size of our existing customer base, the strength of our distribution, I think it is fair to say that we could be sitting on a very significant new source of recurring revenue here. Potentially even explosive. We will see.
Henrik Molin: We are not going to say too much here, but we know these customers really well, and we understand the workflows and the pain points, and we spent more than a decade building trust in this market, and now we are bringing it in a completely new way. We really think we have hit a home run here. To be continued, so we will see. We will give you updates throughout the progress, and we will see what comes through with that. Now with that, before Matt just gives up on me and falls asleep, Matt will take you through the financial results in more detail and also talk about the share buyback program. Matt, over to you. Let us see. Financial results. Here we go.
Matt Poulter: Thanks, Henrik, and good morning, everyone. Henrik has walked you through what we have built this quarter. I am going to now show you what it did, the numbers, how we grew, where we invested, and how we paid for it. To repeat some of the earlier slides, revenue was EUR 3.6 million, up 14% on last year and 11% at a constant currency basis. On Q2, we were up 6%, and that is our strongest growth of the year, with 94% of our revenue being recurring. Adjusted EBITDA was EUR 1.1 million at 31% margin, compared with a 38% margin a year ago. That is where the investment shows up. We built out our North American team and launched 3 products in 1 quarter, and we planned for exactly that. One probably point to note as well, adjusted EBITDA refers to last year.
Matt Poulter: This is actually the first quarter that we have no adjusting items. I think that reflects the point of the business is we have put a hell of a lot of the restructuring, buying companies, legal fees, et cetera, all through adjusting items over the years. We are now a new business. All of that is behind us, and we are not forecasting or expecting there to be any adjusting items going forward.
Matt Poulter: EBITDA really is the metric, and adjusted EBITDA is that metric for prior quarters. If you add the growth and the margin together, we come out at 45 on the rule of 40. That is the balance we are really striking there, growing faster and staying firmly profitable. Free cash flow was over EUR 0.2 million, down from EUR 0.5 million for the same reason. It also marks our eighth quarter in a row of positive operating cash flow. Next slide, please, Henrik.
Matt Poulter: When we now look at the revenue growth, 5 years ago, the quarter for us was EUR 1.4 million of revenue. This quarter it was EUR 3.6 million, which is the highest quarter yet. Lifecare fundamentally drives most of that. Revenue grew 15% to EUR 3.3 million, and our core Physitrack product grew 26%. We raised prices in May, and since then, the revenue per license is up 11% to EUR 190 per year.
Matt Poulter: Churn has stayed at 1%, and the license base has grown for 2 quarters running. It is clear that customers are resetting the increase and they are staying with us. Wellness is a smaller simple business now, and that is growing again, up 2%. Group annual recurring revenue finished at EUR 13.6 million, up 6% on last year. It was flat on Q2, but Lifecare kept building, and that was offset by 1 large customer we lost in Wellness.
Matt Poulter: Underneath the Lifecare base, it keeps compounding. Next slide, please, Henrik. Now we turn our attention to profitability. The margin for the quarter was 31% and 33% year to date. The chart on the left is how we run the business day-to-day, profit by CapEx by division. Lifecare made EUR 1.4 million of adjusted EBITDA at 42% margin and EUR 0.6 million after CapEx. It did that while funding the US expansion alongside the additional development needed for the 3 product launches this year. Wellness has also turned a corner. A year ago, it made EUR 54,000 in the quarter. This quarter, it made EUR 125,000. That is at 38% margin, up from 17%, and the restructuring is now paying off. Group costs after CapEx rose to EUR 0.4 million from EUR 0.2 million.
Matt Poulter: That is as a result of expanding the senior leadership team, which we brought in at the end of last year, and also the team now driving the US push. This will be years launches too. What are we getting from that investment? From a sales front, and specifically in North America, we signed two US selection deals this year. One is a US metropolitan safety net healthcare system, which goes live in Q4, and then the academic system follows in 2027. The EMR moves to pay subscriptions from January and CapEx held flat at EUR 0.8 million, our busiest product quarter ever.
Matt Poulter: Just on CapEx as well, in the day and the age that we are working in, we are not forecasting there to be any further expansion on the current CapEx levels, and we are hoping over the next few quarters that CapEx spend will tail off, but we are not expecting that to be increasing significantly at all. Also to point out, RTM and educational modules are live, and EMR is in the early access. So we have three there, new revenue streams.
Matt Poulter: Over the next three quarters, these are probably the things to watch, and as a business, we are really excited about that. Next slide, please, Henrik. Looking at the financial position, operating cash flow was EUR 1.1 million, more than 100% of adjusted EBITDA. Our profit is coming through as cash, and after CapEx and interest, free cash flow is EUR 0.2 million. The charts tell the longer story.
Matt Poulter: Through 2022 and 2023, the business used cash. Since then, it has turned around with eight straight quarters of positive operating cash flow. Year to date, free cash flow is EUR 0.1 million, which includes settling a legal matter from 2018 in Q2. That is all fully behind us now, and the chart shows the underlying trend without it. Net debt came down to EUR 3.7 million from EUR 3.1 million in June. What that is showing is even with that additional investment in CapEx and EBITDA we have seen this quarter, we were actually still able to pay a small amount on the RCF as well. That represents 0.8 times million adjusted EBITDA. The facility is drawn at EUR 4.2 million, cash is EUR 0.5 million, and liquidity is EUR 1.9 million, including EUR 1.4 million headroom undrawn on facility. So we are all comfortably within our covenants too.
Matt Poulter: Really what we are trying to say here is that we are funding growth from our own cash flow, and we are paying down debt at the same time. Last slide, please, Henrik. Now we turn our attention to the share buyback. What we are doing this quarter and this year is small. But it has done one job, and that is to fund our new management incentive plan without issuing a single new share.
Matt Poulter: So we want to reward our senior members of the team, but we do not want that to have a negative impact on our shareholders by diluting their shareholdings. The capital reduction we completed in July has made that all possible. It canceled EUR 24.9 million of share premium and then created EUR 8.1 million of distributable reserves for the parent company. We are planning on spending about EUR 120,000 this year and, subject to board approval, EUR 250,000 a year from 2027.
Matt Poulter: That is in line with the cap outlined by our banking partner. Alongside that, the 10% authority approved at the AGM. Firesto Securities runs it independently, so nobody at the company directs any of the trades at all. By the end of September, we had bought 47,236 shares at an average of EUR 0.76. That is all held in treasury shares. Each year's grants are capped at the shares we buy back that year. Management does well when shareholders do, and nobody gets diluted. In a nutshell, this quarter has represented faster growth, investment from a profitable base, profit turning into cash, and debt coming down. Three launches are live, and next, we turn them into revenue. Now back to Henrik.
Henrik Molin: All right. Good stuff. Thanks, Matt. Okay, strategy and outlook. Just to wrap things up here, revisiting this briefly. This is where we think Physitrack is so well-positioned to win. What is happening now is that we are moving into a very interesting position in the clinical workflow. Historically, we were very strong in home exercise prescription and patient engagement. Now we have added RTM, and with EMR, we are moving right into the center of how clinics actually operate. We are becoming part of the clinical backbone, if you like, of these organizations. That is a very powerful position to be in because you are establishing those workflows, well, then the revenue becomes very sticky, and it is not something that customers are going to change every six months. We are becoming essential infrastructure for the clinic.
Henrik Molin: At the same time, we are unifying care, education, the administrative side of running a practice. These are some very, very nice opportunities to expand revenue within the same customer relationship. Importantly, we are not just helping clinics operate more efficiently, we are also helping them generate revenue. With better patient engagement, remote monitoring, more efficient billing, new products, more utilization of their time, we become a very important revenue-generating tool for these guys, rather than just another software expense. That is a very, very powerful proposition. Now, if you are looking at the financial side of the business, also very attractive. Highly recurring revenue, high gross margins, strong customer retention. Increasingly, we have multiple products that can be sold into the same customer base. As revenue grows, we believe that it can translate into very durable profitability as well.
Henrik Molin: We have an established global footprint with a particularly exciting opportunity now in North America. When you put all of those components together, I think we are in a stronger position than ever. All right. Lastly, just revisiting the financial goals. I am going to read those out because they are an important part of how we think about building this business. The medium-term adjusted EBITDA margin target, and again, this is the first quarter in a while that we did not have any adjustments, and I believe that is going to stay this way. The adjusted EBITDA margin targets are 40% to 45%. That is the target, it has not changed.
Henrik Molin: As we continue to focus on the rule of 40, combining revenue growth and profitability, we will be accelerating organic revenue growth, and we build towards that 40% to 45% margin range, and we continue to generate positive cash flow as a result of that. Now, at the same time, we are growing the business nicely, and we have the ambition to double this business in the medium term. At the same time, it is generating nice cash. Eight consecutive quarters of positive operating cash flow is something we are pleased about, and that gives us options. We can reinvest it in the business, accelerate the growth, reduce debt, and of course, return capital to shareholders. So exciting times for Physitrack. A lot happening, and we have a very clear idea of where we want to take this business.
Henrik Molin: With that, we are going to conclude the presentation as part of today's webcast, and we will open it up for questions. Again, please use the Q and A function at the bottom of your screen. We will read out your questions, and we will answer them. Thank you very much for joining this part of the presentation. Let's get right into the questions. See you on the other side. Okay. Thank you for that, Matt. Let's see what questions we have, and you can use the Q and A function on your Zoom panel here. Let's start with this one. EMR sign-ups, new versus existing customers. Of the 480 clinics, 4,700 plus users that signed up for the EMR early access so far, how many already use Physitrack today and how many are new to the group?
Henrik Molin: In other words, how much of this is potential churning of the existing license base and how much is new licenses? Of course, with the caveat, we have actually, we have more. The numbers are higher. We are close to 5,000 now and over 500 clinics. But let's just break that down a little bit. Around 59%, 60% are existing customers. 7% are former customers that were with us at some point but canceled their licenses and are looking to come back. 34% are new to the group. So a nice mix there. Let's We can do some maths there as a follow-up just to figure out what that's actually worth in ARR, just so we can put some numbers on that. So first of all, you would have to apply a conversion rate to the sign-ups. So that's to say that the existing customers convert at 35%.
Henrik Molin: That will be roughly 3,000 of the sign-ups so far. Now, that part then is worth about half a million ARR at the founder rate of $40 per month. So that's nice new business. Of course, if you have a higher conversion rate, given we have a close relationship to these guys, maybe it is higher, but even at that rate, it's quite nice. Now, for new customers, you are probably looking at a lower conversion rate. So let's just call that 20%, but you are looking at roughly the same ARR there because you have to be a Physitrack customer just to qualify to get the EMR there. So you will probably get $60 a month there. Then it's another half a million ARR. So this adds up nicely.
Henrik Molin: Just for the sign-ups that we have seen so far in the few weeks, it is worth about EUR 1 million ARR, give or take. It is all theoretical. It is all about making sure that we have a nice conversion rate with a really nice product. So far, so good. Keep an eye on those sign-ups. All right, second question here, and I am going to give this one to Matt. Cost base from here. Adjusted EBITDA fell to EUR 1.1 million or 31% margin because of hiring in North America and the three product launches. Is Q3 the full run rate for OpEx, or will cost keep rising in Q4 and 2027 as the US health systems go live and the EMR is rolled out? Over to you, Matt.
Matt Poulter: Operating costs in Q3 were around EUR 2.5 million. We do expect them to ease slightly in Q4. I would expect that over the next couple of quarters, maybe H1 next year, the costs are going to probably stay around this amount. That is both with CapEx and OpEx as well. Just linked to that is the launch and marketing that we need to spend in terms of the EMR, and then also having any additional product engineering people to get us across the line. Also, if we need any customer support or success linked to that. I would say ballpark OpEx and CapEx is run rate now is around that going to be till H1 next year.
Henrik Molin: Yeah. Just to clarify, we expect to have a lot of automation in the customer excellence piece. For the support piece, there is so much wonderful technology now that you can use AI agents and chatbots and things like that. That is a great first line of defense. We are implementing a low-cost customer excellence service where you can get brief onboarding calls, 10, 15 minutes, as part of this whole thing.
Henrik Molin: There is a little bit more handholding that we expect to do, but we are optimizing the cost base for that so it does not run away. Again, there is so much that you can do now with automation and pre-recorded stuff, and that is how we expect to do it. So we do not expect any big pressure there on OpEx. Next question. Margin path back to 40% to 45%. The adjusted EBITDA margin was 31%, and it was 38% last year because of the North American team and the product launches. Is Q3 the low point? I am going to bounce that over to Matt again.
Matt Poulter: Similar to question 2, the OpEx we are seeing now is mainly linked to marketing and launch activity, not additional people. Our cost base is largely fixed. Similar to the HEP platform, as the revenue grows, we do not expect the costs to grow at the same pace. We are investing now for future revenue growth, so the cost base will remain relatively flat. When the revenue grows up like a rocket ship, that is where we expect to see the margins expanding. We are not forecasting the margins at all to fall from this point. If anything, I would expect them to expand slightly in Q4. Then as we are starting to recognize revenue on the EMR, that is where we are going to see a much more fuller expansion on that back to the 40% to 45% medium-term target. For now, we are envisioning that remains unchanged.
Henrik Molin: Well, thank you for calling that a rocket ship. It is fully theoretical at this point in time. We were at 38% margin last year. Remember, we only had the legacy platform for Physitrack in terms of the products that we could sell, then some Champion Health, which was clocking in at a much lower margin than it is now. You can imagine with the EMR and RTM, and to a certain extent, the educational modules, these are all super high gross margin products, and there is no real additional cost base attached to it. If we have this type of conversion that we think we will have of these sign-ups, then you will see an automatic, very dramatic margin expansion. I do not see why we would not come back to where we are supposed to be, which is 40% to 45%.
Henrik Molin: That said, we do not have any specific margin guidance for Q4 or for 2027. Right now, we are investing nicely into the next round of development for the EMR, which is the PhysiCampus on 13 November, then additional marketing spend. There is nothing dramatic. With revenue, you will see that expansion coming as well. Okay, next question. US health systems, timing, and size. The US metropolitan safety net healthcare system is due to go live in Q4. What ARR does it add, and when will it show up in revenue? For the academic system still in contracting, what is left to agree on, and how big could the contract become? All right, starting with the US metropolitan safety net healthcare system, we are expecting to go live in Q4, so that is when revenue will start coming in.
Henrik Molin: The annual license is around $26,500 in the first year with a 5% annual increase. That is the ARR for that. What is interesting here is the additional revenue opportunity from RTM. We charge that at $8 per active patient episode. Just to put that into perspective, if each of the 86 practitioners has 10 patients enrolled in RTM, that is around $80,000 in additional annual revenue, or roughly three times the license fee. It is quite a bit of upside beyond the initial contract here. On the academic healthcare system side, we are still in the contracting phase, but everything has been agreed, the proposal has been signed, and everything is set to go. These are large organizations, and there is always a need for second legal reviews. That naturally takes some time.
Henrik Molin: The rollout work has started, and we are looking at around EUR 130,000 in annual revenue there, with EUR 390,000 over 3 years. EUR 260,000 is committed over the first 2 years. We expect this to go live and generate the revenue in early 2027. RTM would come on top of that, so the revenue potential is quite a bit larger than the initial license value. I will just point out here that the EMR, that is not an enterprise play. We are not planning to sit in really long tenders or request for proposal processes for that, because an EMR is such a big intervention in a clinical system, so it is likely to take a lot of time and a lot of sales resources.
Henrik Molin: The EMR is mainly for small to mid-size companies up to, say, 100, couple of hundred users on there and not the really big guys that were out there within the US. More questions. Regarding the EMR, are you able to tell where most of the subscribers are coming from? I assume it is the US. Well, we have our 3 key markets there. We have the UK, we have Australia, we have the US.
Henrik Molin: Those 3 markets have taken turns being the biggest sign-up market in the early rollout. I think currently it is the UK that is leading the charge. We actually have a really solid footprint in the UK with home exercise prescription. We own a big chunk of the NHS healthcare system, and we are kind of a standard product there for ATP, so it is not surprising that people are really interested in the EMR there.
Henrik Molin: Also the nature of that healthcare market. There is a lot of self-pay and the insurance reimbursement process is not that super complex, and when you work with the NHS, if you have referrals in public healthcare and you deal with that as a private clinic, the process is quite easy. Our EMR is something that would be very suitable for that with just some local adaptations. But it is between those 3 markets. Quite interesting. But we have had sign-ups from quite a few markets. I think it is over a dozen different markets, English-speaking, that have had interest here. So it is one to watch for sure. Let us see. All right. Concerned that you might be missing out on potential opportunities and revenue by not spending more? Well, it sounds more like a statement than a question.
Henrik Molin: But there is a way to actually grow a business and to accelerate without throwing money at everything that moves. I do not think you necessarily have to run a business with a super low margin to be successful. So there is a fine balance there, and I think we found ours. I think a business that does the right thing in the software space should have a really high gross margin, so closer to 90%, where we are.
Henrik Molin: If you look at the processes in terms of OpEx, you should be able to automate a lot of things. Now, in this day and age with AI and the way that you can work with smaller teams, or you can optimize workflows without throwing people at it, you should actually be able to have really healthy margins on it. So I actually do not see that we are being held back. Remember this, we are B2B, so in terms of customer acquisition, it is not a play where we have to pay significant amounts of money just to acquire new customers.
Henrik Molin: It is not like a consumer market where you invest a lot of money to get consumers to sign up. So you have ridiculous CAC levels, and that is basically paid growth. In our situation with B2B, word of mouth is really important, and also the fact that you market to your existing user base with people that have confidence in you already and they are already using your tech, the costs are significantly lower. You are talking mailers and socials, basically just to spread the word. If you have a really nice product, then word of mouth is even stronger with existing customers. So there are some natural drivers there inside of our business that make it possible just to have those high margins without compromising on the growth velocity.
Matt Poulter: Yeah, just to add to that as well, we do monitor the return on investment as well on spend. So we like to try spend a little, but try lots of different ways, work out what the most effective approach is, and then that is when we would then invest the money where we know we are putting our chips on a return that is going to give us more, as opposed to just scattergun approach, just dumping loads of money and just praying for the best that it works out. It is much more strategic. Investment analysis goes on where we spend in terms of marketing.
Henrik Molin: Yeah. Of course, with engineering and product these days, some of the game has changed so significantly in terms of how you can build prototypes and how you can then roll them out with great engineering firepower that uses AI for leverage. The EMR is a perfect example where we have 400,000 lines of code, and this is a product that we only really seriously started working on earlier this year. Whereas in a normal or a pre-AI scenario, you would have had probably dozens of people work on that for multiple years, and so you would have plowed several million EUR of CapEx into that.
Henrik Molin: In our case, it is actually very modest, thanks to all the learnings and all the tools that we have been able to use following just being early on the ball with AI ever since 2022, when we had our first integration into ChatGPT, before that was even a thing for consumers. All right, so there we are. Do not worry about the high margins, people. We are accelerating nicely despite that. All right. That concludes the questions that we have, unless there is anything else. Thank you for watching, and stay with the story. Exciting times ahead. Have a great day. See you.
Matt Poulter: Thank you.
Operator: Goodbye
