Earnings call transcript: cBrain Q2 2025 sees steady growth amid challenges

In the second quarter of 2025, cBrain, with a market capitalization of approximately $598 million, reported a 5% decline in first-half revenue, while maintaining a strong EBITDA margin of 25%. The company projects this margin to reach 36% for the full year. Despite a decrease in one-time license revenues, software subscription revenues surged by approximately 70%, and services revenue is expected to grow by 10%. cBrain’s stock showed a 2.04% decline, with the price dropping by 4.1 points to 200.5. According to InvestingPro data, the company maintains a "GOOD" financial health score of 2.93, suggesting solid fundamentals despite the revenue decline.

Key Takeaways

• Software subscription revenues increased by 70%.
• First-half revenue declined by 5%.
• EBITDA margin projected to reach 36% for the full year.
• Stock price decreased by 2.04% post-earnings report.

Company Performance

cBrain’s performance in Q2 2025 reflects a mixed picture. While the company faced a 5% decline in first-half revenue, it managed to maintain robust growth in its software subscription services. The focus on Commercial Off-The-Shelf (COTS) software for government and significant investments in AI technology underscore its strategic direction. However, the decline in one-time license revenues poses a challenge.

Financial Highlights

• Revenue: Declined by 5% in the first half.
• EBITDA Margin: 25% in the first half, projected to reach 36% for the full year.
• Software Subscription Revenue: Increased by approximately 70%.
• Services Revenue: Expected to grow by 10%.

Market Reaction

The stock price of cBrain fell by 2.04%, closing at 200.5. This decline reflects investor apprehension regarding the revenue decrease, despite strong growth in subscription services. The stock remains within its 52-week range, with a high of 238 and a low of 132.8.

Outlook & Guidance

cBrain continues to target a revenue growth of 10-15%, focusing on expanding its market presence in the U.S. and other international markets. The company remains committed to leadership in the COTS-for-government industry and is exploring new opportunities in environmental permitting and digital government services.

Executive Commentary

• "We intend to take leadership in this new fast emerging commercial off-the-shelf software for government industry." – CEO
• "We have spent more than 500,000 hours building this product." – CEO
• "We see AI as part of the, it’s really embedded in our platform." – CEO

Risks and Challenges

• Declining one-time license revenues could impact overall revenue growth.
• Market entry challenges in the U.S. could affect expansion plans.
• The transition to digital government services requires continuous innovation and investment.
• Competition in the government software market remains intense.

cBrain’s strategic focus on AI and COTS software positions it well for future growth, although the company must navigate challenges related to declining one-time revenues and competitive pressures in the U.S. market.

Full transcript - cBrain A/S (CBRAIN) Q2 2025:

CEO/Founder, cBrain: Thank you for inviting us in here. I’ll be sharing our first half of the results for 2025. Yes, we are a product company and talking about something we call commercial off-the-shelf software built for government. I will be sharing, I’ll have a little welcome, share a little numbers, and then I’ll focus on our strategy and the execution with this overall theme that we intend to take leadership in this new fast emerging commercial off-the-shelf software for government industry. In our presentation, there’s a few facts and numbers if you want to review them. Opening up my welcome, what we have seen during the first half year is really, I think, as solid as the move forward as we are embarking in this industry. We have had a three-year growth plan, 2020 to 2025, and we are now in the last two quarters of that.

What has happened during the three-year period is really a shift where we see this industry coming up. When we started this period, I felt that we were very much out trying to convince government customers that they should use standard software. We have seen strong strengths, especially during the last two years, that this is really becoming an industry. In the spring, we saw the White House issuing an executive order to move to commercial off-the-shelf software for U.S. governments. Our strengths, we have spent 15 years believing in that this will be happening, and we have a very strong product position. We spent more than 500,000 hours building this product. We have a Danish reference. Denmark is number one in the world in e-government. Being a prominent player in Denmark is a pretty good standard.

Moving forward, we have a dual market strategy, still focusing on building our large account. What happened here during the spring also is that we’re now beginning to push for winning two niches. The other thing we see is that we have a very strong product offering. Therefore, we’re talking about building the future of COTS-for-government with three strings: complete fully integrated platform, standard software purpose-built, and the fact that we can easily customize and thereby deliver fast. Going to numbers, I’ll just highlight a few things. If we look at the first half, we have a significant lower one-time licenses. We have a significant higher software subscriptions and a third element to our revenues and services. What we see is we have a solid underlying base business growing with the software subscriptions, which is not really important for us, but we also see growing services.

That’s natural as the business is growing. We have these lower one-time licenses, which means that we’re coming in with a total lower revenue of 5%. We also have a lower export, and that’s because part of the one-time licenses, or a major part of that, is actually on the export level. Moving into the forecast, we maintain our revenue growth of 10% to 15%. If I look into this, it requires that we’ll be growing a little more than doubling our one-time licenses compared to last half year last year. We’ll have a continuous growth on software subscriptions and we’ll be flat on services. Is this possible? If we do this, we’ll have a full year estimate where we have one flat on one-time licenses. Software subscriptions is growing around 70% and services 10%. Clearly, these are estimates in the range of the forecast of 10% to 15%.

I took the liberty of forecasting a 12% here to share and indicate numbers. Going in and looking at the revenues for the last three years on one-time licenses, and that’s to illustrate what’s happening. What you’ll see is that looking at the half years here, in 2023, we had 42, then 15, giving a full year of 57. Then we had a 69 full year one-time licenses, and the estimate is hanging flat. In reality, I have one-time licenses of 57, 69, 69. Our reason for maintaining the forecast is that we believe we’ll be catching up on the one-time licenses to the same level as previous years. For those of you who have been following us for some time, yes, we had a large one-time contract in Germany, which has, of course, influenced the one-time licenses.

This is also the reason we have had the high level of one-time licenses in the first half and smaller in the second half. This contract has now been fulfilled, and of course, we hope to have more on that one. The catch-up will clearly be in other areas where we, yeah, that could even be also in Denmark. We also see a number of international businesses, which is what we are focusing on. Being a little bold here, as you know, I’m actually the largest shareholder. If I have a look at this, I think the key for me is really seeing this underlying development and the ability to win this industry. When I’m asked, you know, what is cheaper and do not meet this 30% growth in the second half? I’ll say, of course, I’ll not be satisfied, but it’s not really strategically important.

If we grow more than 30%, that will require we have one-time licenses coming in to bring us higher. That’s possible. Again, of course, I would be happy, but still not that strategically important. I think the key for us is really our focus on executing this COTS-for-government opportunity. Underneath, what I also see is if you look at the first half numbers, we are actually delivering a pretty solid EBITDA margin of 25%. We now also share the EBITDA because we can see many people are looking into that. We are coming in with an EBITDA margin of 36%. The point is we really have the financial strengths. Even though we in the first half had a slight decline in revenue, we still have a very solid and sustainable business. You will also in the scheme to the right see the liquidity ratio of 188%.

This is a very solid company. Moving to the strategy, take leadership in the fast emerging COTS-for-government industry. If I do a little status on the 2023 to 2025 growth plan, what happened for us, I share with the revenue, the EBITDA, and the EBIT. The two things we are really focused on is revenue and EBIT. In 2022, we had 188 and 49 on the revenue and EBIT. The estimate, the goals was that we would land around 350 and 60 on EBIT. If I look at where we end up, we land around 300 on revenue and 70 in the EBIT. This is a coincidence. If I really look at what happened over, we have come in 15% in total lower on the growth, but 15% higher on EBIT. In reality, we may see a company which is actually slightly more profitable than expected.

I’m pretty proud of being able to make that happen during the transition and all the good things we have prepared here. The opening in, if we come in in the market with 56% of software subscriptions, I think that’s a pretty strong opening in for the future. Looking to the future, looking ahead, huge industry, we have the product reference, a strong financial position. What’s next? What’s our plan? Clearly, we’re working in the autumn now to prepare the plan for what’s beyond 2025. There are two main things which I want to highlight. One is the go-to-market strategy. We kind of summarize it, build large accounts and dominance in selected niches. That was really what we’ve been focused on in the first half here, preparing that dual strategy. Up until now, we have had to focus on building our super accounts.

Now we are pursuing this global leadership position in two selected niches where we intend to become a kind of the category-defining standard or take monopoly or what we want to talk about. We’re talking about the paperless industry. We’re talking about environmental permitting. Clearly, again, looking to what’s happening, I think it’s again nice to see that we can take these next steps and still maintain a profitable business. On the product roadmap, yes, one complete fully integrated platform, purpose-built for government, easy to configure. This is what we have been focused on for a number of years, and I think we have a pretty strong reference in the market. Taking this into operations, this is, and I’m sharing with you some of my internal slides. This is basically how we are explaining our employees what’s going to happen.

You have the go-to-market strategy, you have the product roadmap, and in the middle, we have our product blueprints because this is actually the key differentiator. We’re taking something to market, which I think is very different to our competitors. Looking into the product blueprints, in reality, it has four main areas. At the center, you have what we call the case and process kernel. Yes, government is working with cases and processes. That’s the core. You’ll see that the core here is divided into something called kernel and configuration because what we deliver is a 100% standard kernel, which we can configure. The solution that the customer is seeing is a combination of the kernel and the configuration. In some way, you could compare this to a spreadsheet.

If you want to do a budget, you have a spreadsheet application, and then you are actually typing in pages with your actual budget. It’s exactly the same architecture. We are going into the markets. You have a kernel, and you can do the customer-specific part in configuration. We also technically call this declaration. Around this kernel, we have three other areas. To the left, you’ll see what we call the portal. The portal, that’s where you do all the self-services. That could be citizens or companies and so on. That’s also part of the platform. At the bottom, you have what we call registers because you may have citizen registers, companies’ registers, and so on. To the right, you have what we call mass operations. As an example, you may go into your registers, find 2,000 citizens, and initiate 2,000 cases.

What we have built here and the platform we are going to the market with consists of four elements: the core case and process component, the portal, the self-services, the registers, and the mass operations. I will claim we are probably the only vendor in the market who is able to come up with this complete and fully integrated solution. All of this is hardly separated between the kernel and the configuration. Going back to my map here, kind of internal map, the explanation for our employees, this is the preparation also for what’s beyond 2025. We have four elements. The first thing on marketing, the instruction to marketing is you have to position us as the leader in COTS-for-government, and you have to take lead into the two verticals: paperless ministry and environmental permitting.

Second, on sales, we are building up against these two verticals, and we’re building our super accounts divided into initiatives on established markets and what we call new markets. It’s clear that Germany and Denmark, where we have most of our revenues, are established markets, and we are building on being in a market. In new markets, we have other situations. If we look to the delivery, who actually have to get the kernel out, get it configured, and delivered, we are focusing very much on the packaging around this. We are strengthening our delivery methods, being faster and faster to deliver. We’re focusing very much on our solution references, best practices we’re bringing in, and we are also working with partners to take over that part of it. Last, on our services, key here is really automation.

Because we have a standard product, we can be more and more efficient in everything from performance monitoring to if things are not working fast enough and so on. That’s my internal map. I’ll end up sharing a little more on the sales, starting with the two verticals. First, on the paperless ministry, one thing you saw during the spring was we had what we believe is the milestone. We’ve been able to take the Danish model, actually taking the Danish IT ministry and copy and adapted that for the Kenyan ministry. We have also seen nice statements from the Kenyan ministry talking about rolling this out. Being able to take a copy of the Danish ICT ministry copy and adapt that in 10 weeks for the Kenyan ministry, I don’t think anybody in the world can set up a complete ministry copy and adapt in 10 weeks.

In Denmark, we actually do it in a few weeks, but being able to do that international, I think that is really a very unique point. We have done a few other mentionings here in the spring. We actually had one more Danish ministry, and I also mentioned that it actually takes three weeks to set up a new Danish ministry. That’s, of course, still building our references. The reason we got this new ministry was due to some resort changes that the Danish ministry set up a new ministry. The last thing I want to mention is that all of our municipalities, the third largest municipalities, have decided to roll the paperless ministry into run their operations. Again, here’s a signal that we’re beginning to see local governments and municipalities also as a market for the paperless ministry.

One last thing I want to mention here is that this whole area of sovereignty is clearly a major thing in Europe right now. Working with the Danish Ministry of Digital Affairs, they are right now testing using what’s called Collabora. This allows us to run Microsoft and Collabora parallel in M2. This means that they can use their Microsoft, and it’s not a challenge. If they want to use something else, they can just switch a button and use Collabora. This means freedom. This is not really a discussion of one or the other, but it’s a question of having that freedom. You can choose them. This is one of the strengths of M2 that you will, as a government, be able to use your Microsoft and be happy about that.

You can tick the button that this is not a question of sovereignty because, yes, if we got in trouble, we could just use it. Users can really use it freely in parallel. Going to the second sales element, environmental permitting. Last summer, the U.S. government issued a report for the Congress around environmental permitting, and cBrain was mentioned. I think it’s very rare for vendors to be mentioned in Congress reports. I think it’s even more rare for foreign companies to be mentioned. We were mentioned as a leader in this space, not only due to the functionality, but also to the things we’re doing in the AI. This is, of course, essential for us because we see this as a door opener in the U.S. market.

What happened during the spring was that the White House issued an executive order that now you have to digitize environmental permitting because it’s essential across energy and a lot of areas. What happened was that the CEQ office, who actually issued this report, has sent out a set of standards. What happened was that because we’re still pretty close, within a two-month period, we’ve been able to set up and meet these standards. We have presented them in New York. I cannot claim this, but I have a feeling that we are probably right now the only vendor who can supply and deliver a system on these standards. As far as I know, at least we are the only one so far that’s been able to show them.

I’m sure there’s a lot of my competitors out there who are right now focusing to be able to meet these standards. I can share that we are having a lot of people going to the U.S. and trying to utilize this opportunity. Ending off on this, talking a little on the established markets, one thing we are proud of. In the spring, we delivered, we had a new heat pump brand system, a larger system going live in Denmark. The previous system was characterized that it probably took five months from the first application came in and until a citizen had a reply. In our systems, 67% of the applications that came in actually got a reply within 24 hours. For an agency and for a government being able to send out grants in 24 hours instead of five months, clearly that’s something really having an impact on citizens.

Here we’re showing the power of this platform. We have in Denmark more than 75 customers. Of course, we are building our business. We try to win new agencies. We are adding more users and modules, and we are adding new process solutions like the heat pump, which we just did. Here first of July, actually, we have delivered a new hunting license register in Denmark. We have actually, I think, close to spent two years of getting it. It’s been a large project for us. This is really using the entire platform. It’s a one fully integrated platform. It’s the kernel with the case and process. It’s the self-services with the portal. It’s registers for hunters. It’s the mass operations and so on. Really utilizing the entire platform, I think this is really a win for us. We’re serving about 200,000 hunters with this.

This is really a national, quite a complex solution. Just wanted to mention in Germany, yes, we continue working with Deutsche Rentenversicherung during the spring. This is also one reason that’s limited to how many new projects we can take out right now with Deutsche Rentenversicherung because during the spring here, they have actually put live around 5,000 users. We are really into a very interesting period. I mentioned also that we are beginning to look to expand with partners in Germany because going live with this number of users, we have a very different story in Germany. Again, pushing a little to the cBrain going for partners. New markets, we are working with UNDP. We have announced that, and I think that’s opening a lot of things for us in Africa. We had a number of other things we have mentioned.

We are working on a proof of concept in Nigeria. We are working with the extended producer responsibility in Thailand. We have delivered an AI system in the UAE, which has gone live here during the spring. We are working with the climate software in California. Yes, we are around and getting our first product and first solutions in, which is the kind of openings for in the future building our next super accounts. Once we end up talking about partners, in the spring here, we are doing a quite important project. Our partner in Romania has won a tender. They won it just at the end of last year. They have won a tender to deliver a new national pension platform. In some way, it could look similar to Deutsche Rentenversicherung.

Here you have all the national pensions in Romania, and they are replacing, I think, five or six old systems. They have decided and won the tender using F2 as a kernel for this. That project is very interesting for me because it delivers in Romanian. It’s delivered by a partner. I have to say, Romania is not my number one language. Not very few of our employees speak. This is demonstrating that we can work with a partner on a large project and putting the F2 platform in. We also have a number of others. I already mentioned UNDP. We have mentioned that we have done a partnership with Helm in Saudi Arabia, the largest actually company in Saudi on government. We have built a working on a joint venture in India.

We have a partner in Ghana, where we also have a joint venture and where we delivered first solutions. Yes, we are still in the early stage with the F2 partners, but I think we see progress. Thank you. I think that was my presentation of the first half.

Conference Moderator: Thank you, dear participants. As a reminder, if you wish to ask a question, please press star one, one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one, one again. Alternatively, you can submit your questions via the webcast. Please stand by while I compile the Q&A queue. This will take a few moments. We are going to take our first question on audio line. It comes from the line of Mads Kwitsgaard from DNB Carnegie. Your line is open. Please ask your question.

Thank you for the presentation. I have a few questions. I will take them one by one. First, coming back to the one-time license fees, you guys were a significant contribution here in the second half. Will it primarily come from Germany, or do you also expect a good contribution from other markets like Denmark and in the U.S. and so on?

CEO/Founder, cBrain: You said you had a few questions. Do you want me to take them one by one, or I can answer them?

I’ll take them one by one. I guess it’s easier for you guys. If you prefer all my questions at once, we can do that.

No problem. I just wanted to be sure. The question, do we expect the one-time license to come from Germany or from other markets? We expect them to come from other markets. We have a number of options, both internationally, but it could also be in Denmark.

Okay, you also expect licenses from Germany, right? Just to be sure.

Yeah, yeah. It’s not we have to close down Germany. It’s just that we in the previous year, as you know, had had some significant big one-time licenses.

Okay. How secure are these contracts to the license fees? I’m just trying to understand whether there’s a risk for you that these projects will be postponed into 2026. Also, when you receive the license fees, will it be announced by a stock exchange announcement, or how do you expect to communicate it to the market?

Okay. Clearly, there’s a risk. I think we have a pretty large pipeline of things we’re working on, and that is across the U.S., Germany, Africa, and Denmark, for that sake. The point here is that yes, there is a significant risk because I can be in a situation where a few orders actually bring us home. I could also be in a situation where we go over. As these are binary, yes, of course, there is a risk. Secondly, we have short delivery time because clearly, because it’s standard software, you know we can in reality have them at a very late time in the year. One of the challenges we have is we can even have technical issues here because, as you know, government have yearly budgets.

Depending on their budgeting schedule, I can be in a situation where we, in the second half of December, have a lot of business, or in the second half of December, I’m told, "We would like to postpone this for next year." There is, and therefore, when you look at our business with the three main areas: one-time licenses, subscriptions, and services, the subscriptions and the services are pretty transparent, but the one-time licenses will give fluctuations. I also think that’s what we said in our statements around risk factors.

Great. Thank you. What about the announcement question I have?

We will probably not announce them unless we’re changing our guidance. I think what you see is that most of our announcement is more on press releases. We have had a discussion on what to announce and what to announce, and because there is a discussion around this. As you’ve seen over the last period, we have taken a shift where we announce as an internal information when we believe this has a change to the forecast, while we send out messages as press releases if we believe it has a value for us as press release. You’ll not be able to read them and then say, "Okay, he came in.

Okay. Fair enough. On Denmark, you saw a slowdown here in the first half. Can you be more specific on where you see the slowdown? Also, what made you so confident that these projects will be completed here in the second half for the Danish business?

I don’t know if I’m so confident, but we have a number of projects in Denmark where we have seen that decisions have been postponed. We know the projects. These are projects we’ve been working on for some time. If we look in general, I think we have seen, especially in the second half, that a number of the agencies we are working on is doing planning and reorganizing and so on. Danish government, there’s a lot of signals also from the Ministry of Finance on how you’re using your money, how you’re going into IT. It’s not that they’re not focusing on IT, but I think a number of the agencies are looking into this. This is really on a much higher level than IT. IT is just, they’re really, you know very well, for instance, we are working with the agency of environmental permitting.

We’re working with this new super tripart agency. They have 1,800 employees. You know getting things in place and finding your feet in a new way, these are major changes. It’s not a surprise that the top priority right now is calling cBrain for new orders. I think in some way, they had to deliver on a national agenda. They have been charged, I think what they’re doing right now in the SKAL, as they’re called, they are, you know, they are free, and they have to free up over the next year’s 10% of total farming land. It’s the biggest national project I think you’ve ever seen in the world. It’s extremely ambitious. You have to do that with a lot of politics going around, a lot of IT going around, and new agencies set up and so on. I think they have a lot on their plate.

There’s nothing that’s telling me that there should not be IT projects in here for the future. This is an example of things we have been challenged with.

Great. My final question is on the competitive landscape in Denmark. Recently, we saw Fujitsu’s e-doc solution being sold to JT Revery, and we have now seen Formpipe’s public business being sold to STG. Does it change your strategic view on the Danish market, maybe focusing also on the municipalities? How do you view the changing landscape here? You know.

I should not necessarily comment on what our competitors are doing, but it’s clear that I believe that this means you’re seeing some kind of consolidation when products are sold around. Whether it’s a sign of strengths or weakness, that’s something you can discuss. I think compared to the products you’re mentioning, I think we have a very different offering. These are more, I’d say, classical type products in this space where what we’re doing here is coming in with this platform. I don’t think that doesn’t really affect us. I also have to say, I don’t really see them as our key competitors. I think the competitors are now, of course, you’re talking to the Danish market, but I see our competitors much more as international competitors.

On the other hand, yes, as you saw, Aalborg Municipality now decided to actually embark on F2 in the first round here on the paperless ministry. This means that actually now Copenhagen City, Aarhus City Municipality, and Aalborg, our three biggest ones, have now decided to use F2 as their platform for the paperless ministry. That’s pretty interesting because we haven’t really focused on the municipalities. This has been the market for some of the competitors here. The fact that we have been invited in, I see a first step in here. Yes, it may mean that we are moving more into local government and municipalities. I take this as a kind of a positive sign.

Thank you. That was all from my side.

Conference Moderator: Thank you. Now we’re going to take our next question. Just give us a moment. The question comes to the line of Mikkel Rasmussen from ABG Sundal Collier. Your line is open, please, after the question.

Thank you, guys, for the presentation. I just have two. The first one is on the growth investments. This year, you’ve set aside around DKK 30 million for the year. You’ve only spent a minor portion of that in H1. How should we think about it, that going into H2? I mean, is it even realistic that you’ll spend the entire amount?

CEO/Founder, cBrain: Yes. Okay. Fine. I’ll take that. Yes, it’s correct that in the beginning of the year, we knew that we wanted to take a number of steps and prepare, let’s say, for the strategy beyond 2025. Some of the initiatives we’ve taken here were the introduction of the two initiatives, the paperless ministry and the environmental permitting. We also, let’s say, under the radar, are doing a number of reorganizations and things internally to be able to move on from there. The $30 million, we expected to, we have divided them in a certain area, which we have not shared. Of course, you could expect to see investments in the U.S. or Germany or Africa and so on. It’s also correct that we have only used a smaller part of that during the first half. Is it realistic to use all of that in the second half?

It depends on the type of investments. Be also aware that a major part of our, clearly, is, as you also know, is, of course, cost of people. What we have done is we have some initiatives around strengthening the organization. I would expect that we see some catch-up on costs there. It’s also correct we are evaluating a number of options. That could even be investing in taking over or investing in the company in Africa or the U.S. or what we would like to do. The only thing I can say is we evaluate a number of options. Yes, we still have a significant part of the funds here, which have not been allocated as of now.

All right. Thank you. The next question is on Kenya. I remember in June, you announced or you sent out a press release stating that the Kenyan ICT Minister had assured his intention of doing a large-scale rollout of F2 in Kenya. Is there any color in the progress on that? Maybe also, if it materializes, how do you expect the potential horizon or, yeah, is it a timeline to look like?

This is kind of sensitive for me to comment on because when you work with governments, if there’s one thing they don’t like you to do, it’s to talk about it. I have to say that the reason I sent out the message in the spring that they have revealed, I think that was the statement, they have revealed a plan to do this. The reason I sent this one out was that it was published in Kenya. We did send that out as a press release. We felt that as they are releasing it, I think it was fair to share it. We are having intensive projects going on, working with them, and we have a system which is ready to go live. We have also announced that. It took us 10 weeks to get it ready to go live. There are preparations around there.

There are organizational discussions around there, and there’s a number of things. I can’t really take you into the project, everything from discussing the hosting models. In Kenya, there is a national hosting agency under the ministry, which is similar to State and CT in Denmark. We have a lot of work going on, but I can’t really share neither the timeline or commercials and so on. The good story for me, if I take the other way around, is that the fact that Kenya or the Kenyan minister has been out talking about this, that opens up a lot of other talks around in other African countries. That’s one thing. The second thing is that it’s also opened a lot of conversation with agencies in Kenya because they are now aware of this project.

I’m really sorry about that, but that’s the nature of the type of business we’re doing.

Fair enough, dear. That’s all from my side. Thank you so much, and great initiative with the conference call. Thank you.

Conference Moderator: Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star one, one on your telephone keypad. Alternatively, you can submit your questions via the webcast. At this moment, we’ll proceed with any written questions. Mr. Knudsen, please go ahead.

CEO/Founder, cBrain: It says, "How has the traction been for new one-time licenses in the second half? Have you received any orders so far?" Yes. Guidance seemed high. I think to some extent, I have already commented on this. Yes, clearly, we are working if I start with the first traction. Yes, as I commented, I think we have a larger pipeline both in Denmark and international, which we are working on. I can’t really comment more. Yes, of course, we are having orders coming in, but I can’t really comment on that. The guidance seemed high, although if we are coming in on this, it actually means that the second half delivers a 30% growth. On the other hand, if we meet that, it means that we are having the same one-time licenses in this year as we had last year.

You could also argue that even meeting that means that it’s not that high. I think that’s kind of what I can tell. I don’t know, Ejvind, our CFO, do you want to comment on this or any additional comments? No. Ejvind said no. Thank you. Let me move to the next. What gives you the confidence that your go-to-market strategy will work in the U.S.? I love that question. I have no confidence that our go-to-market strategy will work in the U.S. The reason I put it this way is very few software houses historically have been ever able to go from Europe to the U.S. In some way, we are against the odds. We are also very much aware that the U.S. often has not invented here when they look to outside software houses. Historically, some software houses have made it.

If you take the ERP industry, actually, SAP was a German software house that made it in the U.S. There were a number of other vendors who made it, Baan, as an example, who made it in the U.S. You also see Navision, which is originally Danish, which has been part of Microsoft business. I believe that with this new category, COTS-for-government, this will be a new category. That could be something that will catch up in the U.S. Therefore, trying to give you a little bit of honest confidence, when I see a U.S. White House executive order telling that you have to go to COTS-for-government, I have to do it fast. If I compare our product offering compared to what I see with our U.S. competitors, I think we have a strong product offering, and that may invite us in.

The other thing is this environmental permitting, where we have done something in Denmark, which has not been done in the U.S. The reason we’re talking to them is that a few years ago, that was actually under the Biden administration. They issued this $431 billion Anti-Inflation Act investment. In reality, that was very much a climate initiative, but it was passed with the Congress as an anti-inflation initiative. The core to this is really initiatives around energy, sustainability, and so on. Whatever you want to do, for instance, in the energy space, you have to go via environmental permitting. Often, it takes years to be allowed to build a new plant or build grids and so on if you don’t have the environmental permitting. Even with the U.S. government, who is very eager to speed this up, they still have to respect that.

Therefore, they focus a lot on the environmental permitting. The previous government actually created an Office of Environmental Permitting called CEQ at the White House, and they were the ones who were issuing the report around how do we do this. Clearly, we were curious, so what will happen with the new government coming in? It’s clear to see that the new government and the DOGE initiatives and so on have actually posed a lot of initiatives and investments in the government sector, but not in this space. What we have seen is that the CEQ is probably in an even stronger position. If we look at the executive orders that were given for CEQ in Easter by the new government, they actually kind of shift from being advisory to being instructions.

What they were now charged with by the new government and the executive orders was, instead of just advising, please come out with a number of standards which you have to comply to to support the environmental permitting. It’s clear that going to CEQ from being advisory to being much more instructive, they have got much more power. I have personally been to the U.S., have met and had meetings with them, had run workshops with them, and meeting with the heads of the CEQ. I have a feeling that they are pretty confident that they are charged with much more power now. Therefore, seeing the switch as accelerating this. Going back to my confidence, being able to be a first runner and being able to comply with these new, this means that even though we are not a U.S.

company and we are yet open about that, I now see we’re talking to people in both D.C., talking to people in California, talking to people in a number of states. Of course, they are a little worried. This is a foreign company. On the other hand, they can see that we are having a strong conversation with the CEQ office, and the CEQ office is mentioning us and so on. I hope, hope is, of course, not the answer, but talking to the confidence, I start by saying, of course, I don’t have confidence because we are a foreign company trying to get into the U.S. Very few have done it. On the other hand, I see two things here, which are very different to compare. We have a COTS offering in here directly supported by an executive order.

We have the permanent environment offering fulfilling in new standards supported by an executive order. Yes, that’s the reason I’m investing. A number of my colleagues, actually, we have a colleague right now in the U.S., and I’m personally going to the U.S. in two weeks. Still spending time on it. That was a longer term, but I wanted to elaborate a bit.

The next question. Sorry.

What size? This is the next question. At what size of orders from Deutsche Rentenversicherung, an existing customer, would you have to comment and press release? That’s a good question. Because, as I said, these releases are not internal information. These are actually press releases. We see the press releases as something which is important for us in the markets. Press releases, what we do is we have press. For instance, if we are working in, now we talked about the Kenya paperless ministry, we talk about UNDP. If we do things here which we believe will be influential to meeting other customers and bring confidence, that’s where we’re bringing them out. It’s not really the size of the order. Therefore, if you ask me what size of orders, it’s not really the size of the order. You see impact in the markets, which is really the background.

What we’re trying to do with our press releases is going back. If you go back to my little map on what I’m asking our marketing to do, I tell them that I have given them three instructions. Build our position in the market around COTS-for-government. Build our position in paperless ministry and build our position in environmental permitting. What we value on our press releases is really how does that fit into this overall positioning and the job of marketing. I have to say our press releases are not really meant for investors. They are built for building our positioning in the market. I don’t know if there’s any more. I have got one question, which is not out here, which I can take. We have a little more time, I think. I would like to know if there’s any more from the outside.

Conference Moderator: There are no further questions on audio lines. Please proceed.

CEO/Founder, cBrain: Okay. I have one question, which was really, do you see the need for capital investments in the F2 digital platform? And if so, can you identify three priority areas? Clearly, we will continue to invest in the platform. I would expect the level of investment to be at the same level, which is actually a pretty high level. I think we invested about 40,000 hours just at the latest version of F2. If I have to talk a little about the priority areas, it is clear that one area which we’re focusing a lot on is AI. I didn’t spend that much time on AI in my presentation. I’ve done that previously. It is clear that we see AI all over. We see AI as part of the, it’s really embedded in our platform. We see two types, so to speak, of AI.

The kind of the more generic, we have our F2 AI Assistant, which is kind of a parallel to using ChatGPT, but with the difference that it’s running on-premise and can be using internal data. Instead of just, you know, if you want to write a memo or something like that and just using, doing that with ChatGPT, that’s a challenge for government because they don’t want to take the data out. We can run directly on data internally and use the same. There will be a generic type. Really, an area I see a lot of focus on is what you call the specialized AI. This may be something you’ll see some also press releases around, but we see a shift from what I call prompt-based, prompt-based, and process-based.

What employees are doing in government today, and they’re using AI, but they are in a certain situation, and then they ask ChatGPT or something. What we see now is we can embed the AI to work closely with the process. Basically, when you open up a case, take the example of what we have done in the Emirates for the Minister of Finance, where they are using AI to help citizens actually to conform with invoicing. They’re putting in invoicing systems there, and they are helping using AI. What we do is we’re putting in a process, which is really the core of cBrain. Then what we do is we say, "Okay, we can now have employees, citizens, and AI working in parallel." We embed the AI in taking over the work from citizens and civil servants. We don’t see AI as standing alone.

Being able to do what I call the process-driven AI instead of the prompt-driven AI, I think this is something we can do due to our platform. AI is clearly a key area of investments. Two other areas, clearly, we are strengthening the entire platform. If you look at our platform, the four components, the case and process kernel, the portal for sales services, the registers, and the mass operations. Two areas we’re doing a lot of work on are actually on the portal side and on the register side because we see business coming in there. These could be areas where you’ll see announcements. That’s kind of my three, if I had to choose three areas: AI, and I was happy by saying AI, AI, and AI, but I’ll say AI, portals, and registers. I think we have only five minutes left.

Anyone else who wants, or do we want, Ejvind, do we want to have comments? Or you can have a final comment.

Maybe on the last discussion we just had about the product, one of the things that has been working too for a period is also being able to do instant updating.

Yeah, yeah. No, that’s a clear idea.

To make it easier to just switch to the next version and deploy more on an instant basis, new things on the platform.

I think that was all from our side. Should we end up the presentation?

Thank you for listening.

Thank you for listening.

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