Neovici Holding (Stockholm:NEO B) Q3 2024 Earnings Call

0:00 Yes, it's Wednesday, November 27th. I'm here with Jan Berggren, who is the CEO of Neovici. How are you? I'm great, thank you. How are you? I'm great. Nice moustache. You're in the moustache camp this November morning.

0:13 The whole company is with me. Of course it's nice. Nice, good purpose if nothing else. But that's not what we're here to talk about today. We're here to talk about your Q3 report that you released this morning. What are you most pleased with in it?

0:26 We have invested in growth and that is the result. Above all, recurring income has increased. That's right, because you are a SaaS company and recurring income is important, right?

0:37 It is one of your key figures that we are looking at. The entire market is looking at it. ARR is the only investor that cares about today. It seems to be a plus that there should be profitability. The turnover increased 5.75% to 16 million SEK during the quarter and recurring revenues increased by 40% to 68.7 million SEK. What is behind this increase?

1:03 New prospects, new customers, growth and recurring revenue from existing customers. So you grow with existing customers? That's right. It's an important component. It also shows that customers are satisfied. They continue to trade new services, new processes. And if we just go in a little bit, because not many of the viewers may know Neovici. And it's not so strange, because this is just your second report that notes a company. You were immediately noted on Nasdaq First North the second of July this year. Do you want to go briefly into why you are noting the company now?

1:44 A quality mark is number one. We have a global perspective and we have customers outside of Sweden. The further away from Stockholm, the more important it is to have such a public mark. Nasdaq is opening doors in itself. We should also remember that it is business-critical processes, so it is important for customers. You have had a fairly weak reception on the stock market so far. What do you think it depends on?

2:09 It's a mess out there. We are unknown. We haven't done any bull and bong marketing, so it's coming now. We go from a tech company to a more market and expansion company. It's also a reason that we went to the stock exchange so that we can be seen more. We come out with reports, we have IR investments, we have a completely different approach now on the market. But the cold reception is due to the fact that we are not known. That's my theory. And you still have a bit of profitability left, right? The EBITDA result decreased somewhat during the period and so did the cash flow. What's behind that?

2:51 The growth again, we have a focus on growth and not profitability right now. But next year, our goal is that with existing customers, new customers and that type of potential acquisitions, will be cash flow positive during 2025. You also noted during Q3 that there have been some costs related to that. Exactly, it also costs money. Do you want to remind the viewers briefly about what the business model looks like in the company as a whole? You have mentioned that it is a SaaS model, but what is it that you sell?

3:33 We sell a solution to a gigantic problem. We have a process machine that handles any process that is digital. But we have to remember that the B2B flow is only 10% digital. So there is an enormous market. And if you add up all the problems, it's what I call trillion dollar trickle. It's like trillions of dollars that disappear in different types of erroneousness in the world today. Right, and just to explain this, in terms of players, this is about, for example, invoice handling, supplier orders and matching this type of system, for example, in retail, have I understood correctly?

4:15 Exactly, it's more the whole chain, from purchase to payment, and that you make sure that it can be handled automatically, that everyone agrees. So you don't need as many people in the economics department to look at the invoices that are marked?

4:31 Exactly. The invoice should be a given agreement. If it is correct, a machine can control it better and faster today. Right. After the quarter's start, you have also launched a new product, Retail Brain. Do you want to briefly tell us what this product does?

4:51 To be extremely brief, it is about making the store data-driven. All the way out in the store, articles, shelves, everything. And those who work in the store get help to make better decisions and discover things, things that do not sell and so on. It's a very exciting product family or service family that is on our Cosmos platform. I have understood that this is not just a concept, but this is a solution that you already have out there, that there are certain retail chains that already apply the Retail Brain in the stores.

5:28 Exactly. It's already out there. This is not science fiction. We use our AI agents to help traders to make better decisions, but also to discover things. We usually talk about a fling package if you want your Kelloggs and then they're out on the shelf. Then you get annoyed, but this brain helps to make these decisions. Order flings today, otherwise they're out tomorrow. Very, very simplified. Interesting. Let's take a look at the future. 2024 is almost over. What do you most look forward to in 2025?

6:05 Continued innovation. Continued establishment on the market. Get out Retail Brain, for example. Get new customers. Get cash flow positive. Now everyone will remember this forever, so it's really important to live up to that. And we also see existing customers, increasing contracts and helping our customer suppliers to become even more effective. So this is a network effect that is possible. Yes, super exciting. Thank you so much, Jan, for being with us today.

6:36 Thank you for having me.