Earnings call transcript: cBrain’s Q3 2025 focuses on strategic growth

cBrain A/S reported a strong performance in its Q3 2025 earnings call, highlighting significant growth in subscription revenue and ambitious future plans. The company is expanding its market presence and refining its strategic initiatives, aiming for continued growth in the coming years. The stock price showed a modest increase of 0.55% following the updates.

Key Takeaways

• Subscription revenue grew by 24% year-over-year in the first half of 2025.
• cBrain is expanding into new markets, including the U.S., Germany, and Ghana.
• The company is preparing a strategic growth plan for 2026-2028.
• Focus on digital sovereignty and scalability in government software.

Company Performance

cBrain demonstrated robust performance in Q3 2025, driven by a 24% increase in subscription revenue. Subscriptions now account for over 60% of total revenue, underscoring the company’s successful transition to a subscription-based model. The company’s growth trajectory from 2023 to 2025 has been influenced by its German customer, with overall growth rates of 27%, 12%, and 5% respectively.

Financial Highlights

• Subscription Revenue: 24% year-over-year growth in H1 2025
• Total Revenue Growth: 27% in 2023, 12% in 2024, and 5% in 2025
• Projected Business Growth: 10-15% underlying growth

Outlook & Guidance

cBrain is targeting 10-15% organic growth in the near term, with plans to accelerate growth through large customer acquisitions and market segmentation. The company is also focusing on expanding its partner channels and is in the process of preparing a detailed strategic plan for 2026-2028.

Executive Commentary

CEO Per Tejs Knudsen emphasized the company’s user-centric approach: "We started with the users. Starting by understanding how the users are working and then derive and automate the compliance, we actually made a success." He also highlighted the importance of process-driven AI in government software: "In government you cannot have users just sitting and chatting and having their own prompts. The whole idea is that we can use a process-driven chat."

Risks and Challenges

• Market Saturation: As cBrain expands into new markets, it may face increased competition and potential market saturation.
• Economic Uncertainty: Global economic conditions could impact government spending on digital transformation.
• Implementation Challenges: Rapid implementation, such as the digitization of a Kenyan ministry in 10 weeks, may pose operational challenges.
• Technological Advancements: Keeping up with rapid technological changes in AI and software development is crucial.

cBrain’s strategic focus on innovation and market expansion positions it well for future growth, although it must navigate potential risks in its evolving market landscape.

Full transcript - cBrain A/S (CBRAIN) Q3 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the cBrain Q3 2025 Investor Briefing Conference call. At this time all participants are in a listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your question via the webcast. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Per Tejs Knudsen, CEO. Please go ahead.

Per Tejs Knudsen, CEO, cBrain: Thank you and thank you for coming in. We’ll present our third quarter 2025 and we are ending our three year growth plan from 2023 to 2025 and therefore of course we are looking ahead for the next growth cycle. I’ll share some of the just short term results here, but also looking into what we are looking into in future. The focus for us is executing our long term strategy that’s unchanged. I’ll share a little on Q3 highlights and then talk about some of the preparation for the 2026 to 2028 plan which we’re working on currently. Of course going into the key for us, this industry commercial off the shelf for government software. If I just start on the long term growth, it’s based on four pillars. We are developing individual large customers. Up until now that has been the base for our business.

In the beginning of 2025 we said that due to the changes in the market and the fact that we’re now moving from we have to educate people of using standard software in government, we believe we see the emergence of these industries. Therefore, we’re changing a number of things and one of them is taking positions in selected niches. Still, core is building our subscriptions. There’s no change there. And developing partner channels. If you look compared to where we talked about two years ago, we talked about developing large customers, building subscriptions, and the partner channel. The new element here is talking about initiatives. If we look at our large customers, we see a continuous development. Some of the things we have recently announced is that we have won a contract with Aarhus municipality. That’s the core F2 platform.

We’re starting off with around 5,000 users, growing to about 20,000 users. This is actually the largest contract we have done in Denmark so far. We have also announced a contract with what’s in Danish called Kombitankis Sikataje, which is an agency to deliver a national grants management system. That’s an example of the type of solutions. I’ve talked about that before. Another area we have delivered this quarter was actually a grants management program for the largest reforestation grant program. Grants management is one, so to speak, of the solution areas. On top of our platform we have talked about two niches which we’re focusing on: permitting and payable administrative. Environmental permitting is an existing category and that itself is a large market.

Right now we are focusing on that in the U.S. and of course that’s kind of a high risk, but it’s also a high reward because we see this as a door opener to get into the U.S. The reason we have the focus here is also that due to the size of the market it makes sense for us to take a focus and a lot of things going on in the U.S. in this specific area. Due to some of the early stage results we, for instance that we have mentioned by the White House reports and so on to focus on that, the second area, paperless Ministry, we have done some work actually during the last two quarters beginning to position ourselves and build the offering for that one.

I’ll get much more into that one because we’ve seen some quite interesting development in that space. If I look at Cert 1 subscriptions, it was encouraging with our half year results that subscriptions, which is kind of our underlying business, growing 24% year over year. First half, which also means that 60%, a little more than 60% of total revenue in first half was actually subscriptions. The fact that you have long term subscription contracts with governments and that covers 60% of your business, of course that gives a lot of sustainability. That’s also one of the reasons we can continue to have pretty high earning margins. Last thing I just want to briefly touch is on partners. We continue to develop and we are still in an early stage on the partner billing partner channel.

We have a number of initiatives, but I’ll just mention two of them to exemplify where we are. In Romania, they have taken in the F2 platform to build a new national pension system. Quite a large project, but using the F2 platform and processes and case and processes underneath. For us, that’s very encouraging because it’s actually delivered in Romanian language, which means we are not talking to the customers. Everything is done by the partner, and they’re also doing the local adaption. Ghana is another example. We have delivered five first smaller projects there, but we have a joint venture, we have a partner, and I take this as an example to demonstrate that we are beginning to see the shape of a partner model where we can work with partners across the world.

As said, and that has also been part of our last three-year work, it is still in its early phase, but clearly partners in the long term will have to lift us moving on. Preparing for the 2026 to 2028 plan, clearly we have a lot of focus on that, and we are having, of course, our strategy meetings. We presented the first draft for this and discussed that with the board yesterday. We are beginning to have the outline for that. I wanted to share a little on what could be in this. Clearly the market is the commercial off-the-shelf, this standard government software for governments. As we talked about before, there are a lot of players on the way, and we can see most of our colleagues in the industry are beginning to talk about cuts and standard software.

Therefore we’re looking to find our sweet spot in something which we believe is really a huge market. We’re doing a lot of analysis trying to understand how this market will look like and where to position ourselves and building the go to market strategy. These are some of the things that we’ll talk more about when we announce the 2026 plan. It’s also clear that we are targeting our product offering according to the go to market strategy and the sweet spots. We have talked about this before but we believe that the underlying business in cBrain have a growth of 10-15%. We have a continuous income of new customers. We are selling extra modules, extra users. We forecast that on the longer term you’ll see a growth of 10-15%.

Part of the growth strategy is also how can we lift that from 10, 15 to significantly higher. It’s clear that if you’re facing a huge market, if management, if they’re clever, they should be able to find a way to lift that. What we have been talking about so far and that was part of the 2023 to 2025 plan was we believe an accelerator. Here we talk about super accounts but larger customers coming in. What we saw during 2025 to 2026 was actually that we had a first large customer which was our German customer. If we look a little deeper into the numbers here you will find that the total growth in 2023, 2024 and 2025 was 27%, 12% and 5%.

The reason for being that that’s effect of having Germany, which is a German customer, coming in here, which we have talked about, and clearly that influences, and as you have one-time licenses in, that will give in these peaks. If we take out the, if we had the estimated growth without Germany, we see an estimated growth around 2020 and 15% during the three years, which, as you can see, is slightly higher than the underlying we expected. This is of course a positive thing, but in the long term we still stick with the 10-15% growth, and therefore of course we have to look at what can lift us higher up. It’s clearly we have been working to find the next super account.

We had hoped that we were able to get that in in 2024-2025, thereby meeting a significantly higher goal, but that was not the case. Still, we are pretty satisfied with looking at an underlying growth. If we take that out of 2020, 2015. If we look into the 2026 plan, we see that betting on the individual large customers, we’re still working on that, but we’re trying to add two extra lines to that. We are talking about segments and partners. We are talking about an extended plan. These are some of the things we’re adding because clearly the question from investors is how do you intend to lift from the 10-15 up to significantly higher? I’ll talk a little about into the segments and the understanding here. I’ll go back because our understanding of what is really our core, our unique selling points.

You can probably not read this, it does not really matter, but this is an email from 2006 from the Danish Minister of Social Affairs, which was kind of the beginning of this. Because in those days in Denmark you have created a standard for what is called Electronic Case and Document Management. In Denmark it is called FIST, which means Shared Electronic Case and Document Management. What happened in those days was Denmark created a standard. Denmark was very early out compared to the rest of the world, and they selected three vendors. It came out that it was not very successful. Users were not happy and implementation did not go very well. Our claim was that one of the challenges was that you started with archiving and compliance. In reality you said we need to be in control of our data and our government.

You created a compliance platform and tried to explain to the users, you have to use this. Users saw this as something extra and they did not really like it. That was the reason we were allowed to talk to the Minister of Social Affair because they said, okay, we are part of this, it is not working. We got allowed to run a project where we began with the users. We started all over. Of course we still had to do the compliance. Starting by understanding how the users are working and then derive and automate the compliance, we actually made a success. Reality is that as we went into this market, the three existing vendors, they have all been sold and we today have all the Danish ministries.

Even though we were not part of the original tender and the original plan, by being user centric, we actually managed to take over that market. That is the basis for beginning to talk about our positioning electronic case and document management. If we look electronic, if we look international, this is covered by more than 10 different categories. Today people are talking about correspondence management, records management and so on. We believe that there may be a very nice sweet spot for us to by taking and copying what happened in Denmark. The user centric approach that has been the basis for moving in and what we see now is in Germany. Germany have created standards with something called E-Akten. They are very similar to the Danish standards in those days.

Like the Danish standards, they are based on compliance and they’re now facing a lot of problems in Germany. This summer the German government actually came out with a new law saying that you are allowed to wait another year to implement your E-Akten. They actually make a little fun of it. I say in the law, it says now is the last time we tell you that you have to get it in place. Reality is you can read a lot in the German press. You can even see German agencies writing to citizens, sorry, we are delayed. Because we’re implementing new systems, we see a lot of response back from users who are not happy. We have a kind of dishevel here that we’re seeing exactly what happened in Denmark in those days.

Of course that means that we are looking to move into that. That’s the reason we are focusing on this project we call the Paperless Ministry, because this is where we started. We started with the Danish ministries and department and ran from that. Already now, during the first two quarters we’ve been working here, we are beginning to see feedback telling that agencies, local governments and so on more or less have the same. That’s the reason we are looking into this category to say that may actually be our sweet spot in this market. These, as I said, are early learnings from projects. We are beginning to see F2 being a kind of an electronic case and document management platform built for government, fully integrated.

Of course it’s pretty interesting for us if we can position ourselves into that. For instance, the E-Akten market in Germany. If Germany had that market I can share. We see exactly the same markets coming up around the world. Moving into on our web page you’ll be able to see this paper we’ve done on this. We’re talking about from paper to platform, the Danish success with electronic case and document management. Of course we have an extremely strong reference and really what this document says is that across the world governments are heavily investing in transforming, implementing these platforms. Many countries have discovered that implementation is far more complex than anticipated. We can share this Danish story saying Denmark had exactly the same issues but had the breakthroughs by reversing the traditional logic.

Instead of starting with archiving compliance, we began with users and productivity and then of course derived the compliance. We created a model which has been driving the digital transformation, both efficiency and quality, in Denmark and we can see remarkable results. The fact that we can now show that we digitized the Danish ministry in three weeks and we’ve been able to copy and adapt that for 10 weeks for Kenyan ministry, these are pretty outstanding if you’re talking about German agencies and ministries who are spending years and still not with satisfied users. A good story for us as we are beginning to build our go to market strategy is that we have now been able to take this in.

We have all our small references in Emirates, Germany, Ghana, Kenya, Guyana, Romania, U.K., U.S. which demonstrates that the Danish platform can actually be applied internationally. What we are also writing to you in the third quarter messages is that we are very much focused on building that platform for growth. Therefore, if you ask why are you spread around, it’s because we are building the proof that this is a truly global niche and we believe it’s a pretty huge niche we are looking into. Again, if we’re looking at our positioning and I’m referring to this, but you’ll see fast implementation is of course we can see the international documentation, for instance the 10 weeks in Kenya.

Digital sovereignty is a key in here because we have a component which is open and this means we have a pretty strong offering in here now in Europe and other places because we have a component which you can use whatever editing tool you want to use, Microsoft or Collabora, do you want to use Outlook or another system? We have not coded ourselves in to any of these and we have the independency. Therefore we have a very strong offering in the sovereignty. That is another element. One of them I would like to highlight again is some of the shared lessons here. We are talking about the German E-Akten program. They are talking about building blocks in Germany. We can align them exactly side by side with the Danish standards.

We can tell that yes, we saw the same thing in Denmark, but we turned it around. We’re trying to position ourselves as kind of the Danish eagle as we are moving into Germany. Ending up this presentation, scaling our platform, and I said that’s kind of the accelerator adding to the large accounts. The focus with this platform is that we can continue focus on licenses rather than projects because it’s clear that if you have to do many projects, there’s a limit to how fast you can grow. If we can focus on photocopying our platform, that’s a very different growth scenario. We see some examples because the fact that Romania pension system with a solution is now built on our platform without sequent booming the project. That’s a good story.

If we look at almost municipality, local government, this is very much the platform they are buying into. We see the service builder as one of our components. We see a number of Danish agencies and others who are now beginning to acquire that to build themselves. If we can outsource the complexity and focus on scaling our platform, we see that as a way to grow sovereignty. I already mentioned that. Clearly coming in with a platform who does not only deliver that but also aligns. I think the new agenda on sovereignty is obvious. I also mentioned here the UN, because UN is having a lot of focus on how to move into the third world and sovereignty is a key thing here. Clearly AI. Yes, you can ask why should cBrain care about AI?

It makes a lot of sense because what our competitors are focused on is offering chat-centric offerings for users. Our argument is that in government you cannot have users just sitting and chatting and having their own prompts. The whole idea is that we can use a process-driven chat. It is actually the process that sometimes asks the user, sometimes at the chat, and this will be a much more efficient use of that. The second thing, we are running on premise. This means government data is not leaving the site. Therefore, we think we have a strong offering and positioning in here. These were the highlights. I wanted to share with you some of the directions and where we see the next growth cycle.

With that I think we spent three years, we have built a pretty good platform and now we are preparing for the next growth cycle. I think with that I’ll end my presentation.

Conference Operator: Thank you. We will now begin the question and answer session. As a reminder, to ask a question please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star one and one again. If you wish to ask a question via the webcast, please type it into the box and click Submit. There are no questions on the telephone. I would like to hand over for any webcast questions.

Per Tejs Knudsen, CEO, cBrain: Can the participants, they can just speak freely or you can ask questions, but there’s nobody right now. Does anybody want to ask a question?

Conference Operator: As a reminder to ask a question on the telephone, please press Star one and one on your telephone. That’s Star one and one. No questions on the telephone line.

Per Tejs Knudsen, CEO, cBrain: Thank you for listening in and of course feel free to reach out to us. We are very happy to answer questions also one by one. So thank you for today.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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