Earnings call transcript: Columbus A/S sees EBITDA rise in Q1 2024

Columbus A/S reported a notable increase in EBITDA for Q1 2024, despite a slight decline in revenue. The company’s focus on efficiency and strategic market expansion contributed to these results. According to InvestingPro data, the company maintains impressive gross profit margins of 89% and has demonstrated strong financial health with an overall score of "GOOD." The stock price saw a minor decline of 0.44% following the earnings release, reflecting cautious investor sentiment.

Key Takeaways

• EBITDA increased by 32%, with a margin improvement to 10.7%.
• Revenue showed a slight decline, contrasting with strong growth in the UK market.
• The company is focusing on AI-driven innovations and sector-specific ERP solutions.
• The stock price fell by 0.44%, closing at $11.30.

Company Performance

Columbus A/S demonstrated a robust performance in Q1 2024, with a significant rise in EBITDA and an improved margin from 7.9% to 10.7%. The company maintained its market position despite revenue challenges, particularly in the Nordic region. Growth in the UK market was a highlight, with a 17% increase. InvestingPro analysis reveals the company’s strong free cash flow yield and impressive profitability metrics, though it currently trades at a relatively high P/E ratio of 30.14x.

Financial Highlights

• Revenue: Slight decline compared to last year.
• EBITDA: Increased by 32% year-over-year.
• EBITDA Margin: Improved to 10.7% from 7.9%.
• Contribution Margin: Increased by 2 percentage points to 25%.
• Cash Flow from Operations: Decreased by 27%, but adjusted improvement from 3 million to 17 million.

Market Reaction

Following the earnings announcement, Columbus A/S’s stock experienced a slight decline of 0.44%, closing at $11.30. This movement reflects a cautious market reaction, possibly influenced by the slight revenue decline despite strong EBITDA performance. The stock has shown resilience with a year-to-date return of 13.66%, according to InvestingPro data. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. For deeper insights into valuation trends, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 stocks.

Outlook & Guidance

Columbus A/S has set an organic growth guidance of 7-9% and targets an EBITDA margin of 10-12%. The company plans a cautious expansion strategy while closely monitoring market conditions. With an Altman Z-Score of 9.49 indicating strong financial stability and a conservative debt-to-equity ratio of 0.28, the company appears well-positioned for its planned expansion. Future projections include a focus on AI-driven interfaces and ERP solutions tailored to specific sectors.

Executive Commentary

CEO Sean Kho emphasized the dual focus on growth and EBITDA: "We prioritize both growth and EBITDA, but not equally." CFO Brian Everson added confidence in the company’s long-term goals: "We believe in our goals, and that’s what we fight for."

Risks and Challenges

• Geopolitical tensions affecting certain market segments.
• Prolonged decision periods in a challenging business environment.
• Uncertainty in financial markets impacting strategic options.
• Nordic market challenges could affect future growth.

Q&A

During the earnings call, analysts inquired about the strategic review process and the company’s staffing strategy. Columbus A/S reported no significant increase in employee attrition and highlighted its cautious approach to rehiring, maintaining efficiency and cost discipline.

Full transcript - Columbus A/S (COLUM) Q1 2025:

Mikael, Moderator/Host: Welcome to today’s event where we have the pleasure to present Columbus. Today’s topic, of course, the financial results from q one twenty five, how the year has started, and how you see it going forward. As always, we are joined by CEO, Sean Kho, and CFO, Byla Everson. As always, there’s a box down below. Do ask some questions during during the event or or after.

But firstly, we will take the presentation, and then we will take the main part of the the questions at the end. But for now, I will hand the call over to you, Sam.

Sean Kho, CEO, Columbus: Thank you very much, Mikael, thank you for all that have joined the the conference. Brian and I look forward to presenting our financial results from ’1 this year for you. To start us off, I will just if you can just switch to the disclaimer, I will give you ten seconds to go through the formalities. Yeah. And I will start by going through some financial highlights and followed up by some observations on what drives the market performance going forward.

So the revenue in Q1 twenty twenty four ended with a slight decline for us. And the main part causing this are some continued quite challenging conditions in the Nordic market, whereas The UK continues on a positive trend and it’s up 17% in the quarter. We’ll come back to a little bit the outlook for The Nordics. I think we have seen a turning point and we I’ll come back to just commenting on how we see that play out. Our EBITDA increased by 32% when adjusted for the extraordinary gain of 20,000,000 from the M3CS legal case we had in Q1 last year.

And we think this confirms the robustness of our strategy and business model, and also the soundness of the EBITDA 15 plan that we presented prior. So we continue to work towards that goal. This means that our EBITDA margin for this quarter was 10.7%, that’s up from 7.9% in the same quarter last year, again, when adjusted for the extraordinary income associated with the M3 CS EU case. Our contribution, so direct business contribution increased by two percentage points to 25% in Q1 compared to 23% in Q1 twenty twenty four. And this is primarily due to our improved project execution and also, I would say, strong cost discipline.

I’ll just come back to some of the components of that. This is the primary driver of our EBITDA 15 plan that you’re seeing that gradually kicks in here. The cash flow from operations decreased by 27%. However, again, when we adjust for the extraordinary gain in Q1 last year, the cash flow actually improved from 3,000,000 to 17,000,000 quarter over quarter. And again, that underpins the soundness of the development of the business.

Next slide, please. Yeah. So if I just comment on the development of both the EBITDA improvements, but also the flattish to slightly negative top line. So some of the things driving our both top line and profit would be the commercial conditions that we operate under, and that there’s a price point on the hourly rates, which is developing positively and actually exactly in accordance with our expectations. So that part is good.

The next thing is the efficiency. So to which extent are we able to take all the hours we have available to deploy towards customers and make them successful or deployable so that we are actually also generating revenue from it? And that part is also developing positively. We started just a smidge slower than we would would have preferred to, but we’re seeing a very positive development on that. So that leaves the third one, which is the the headcount.

How many consultants do we actually have available that drives the overall capacity that we have? And as you can see there on the on the both the on on the right side, especially on the lower one, we have dropped slightly in headcount over the past twelve months, but we do see now that we have reached the low point and we’re starting to put on additional headcount again. So here the here’s actually the the the main decision criteria for Brian and me to look at is how fast do we want to do this. In a normal business environment, we could act pretty fast based on on our our stock of work and our pipeline. But based on, I would say, the current business conditions, the the external factors, we are going forward at a slightly more cautious pace in terms of rehiring.

We want to make absolutely sure that we that we stay on track with the EBITDA improvement program, and we prioritize that quite high. Also, that there is a little bit of a risk that we can see temporary setbacks again in the in the workload with with all of the the well, basically, the new stream that we see affecting our customers at the moment. So so that is the the the reality So we are starting to act in in all the successful business units. We’ve rebuilt or we we have maintained and continue to build out our pipeline.

It is strong, we can hire additional headcounts, but we need to be cautious we don’t get ahead of the curve to the same extent we would if we just saw a really sort of more if the business outlook was was was very clear to us, I think now we we are seeing a little bit more of a a duality in many of the scenarios. And then final comment here on the on the lower left side, I will also comment on the on the strategic review. We are still in the process. We are still developing the the the options that that have been presented to us, and we will come back when there’s when there’s something more specific for us to to to present on this point. And then I will come back to some of this under the q and a sessions.

Brian, I think we will take the details first. Yep.

Brian/Byla Everson, CFO, Columbus: Yes. Thank you, sir. So let’s move to the financials a bit more detailed. Our three usual slides. Number one is the service revenue per business line.

And, I actually just did the count. It’s the first quarter in first of the last 14 quarters we saw a growth. So this is the first one with a slight decline. Yep. So, that is of is, of course, not super, but, there is also a tough environment out there.

If we look at it per business line, Dynamics, like the the group ended with a minus 2% in the in the quarter, compared to last year, slight decline. M three and and Dynamics was was mainly, they mainly looked into a decline in our Norwegian and Danish market in the core. Entry, decline of 9%. To that story is that last the same quarter last year was extremely good and strong due to some closures and final work in some major projects, and they as I have been talking about being in a shifting mode during the the past quarters. So we feel pretty confident that they slowly get back on a growth pattern, the coming quarters as well.

Digital commerce, with the same story, they have also been through a big restructuring and have main part of their business in Sweden and in the retail market, which which is probably the heaviest, headwind you can face in in our region right now. So therefore, they ended with a 11% decline. Data and AI continue a strong, growth pattern. We’re happy to see that. That is a extremely important business line, and and and we really are looking for more talented, consultant in in that business to to sustain the the growth going forward as Sean also mentioned.

Then let’s move to the contribution margin. Sean mentioned that early on. We saw a two percentage point increase. This is, one of our absolutely key KPIs. And here, we saw that the the dynamics maintained a strong level, of around 26%.

Some of you might have remember that last year, there were a few percentage points higher, but they have been merged with CXE, during q for for the first time here in q one, and that has dragged down a few percentage point on on the on the on the margin, when we look at it combined now. M three, flattish or one percentage point, decrease. Again, they had a really strong quarter last last year in q one, but it’s definitely on on the right level, and we feel confident that they will, they will continue on that that solid and and important high level. Digital commerce, flat development, 11%. It’s a improvement compared to the last three quarters, but not compared to to to q one last year.

So here again, we feel confident that they slowly get back on track after a major restructuring and and adjustment of of the of the organizational setup. Data AI, they had a bad quarter last year, So let’s not talk too much about that. They should be in the around twenties, and and that is also a strong level for a strategic business line that that that often will have higher growth in new consultant that do impact a bit on the profitability during such steep growth. Good. Then let’s move to my last slide, service revenue per market unit.

And, again, I almost said Sweden is down 11%. They still see some tough environment up there, ending up in a in a bit longer decision period of of new projects and start of these. When I talk to people, it’s not like we are losing project based on on that, but it’s really just a slower pace that that we are moving at and and and that that that do still have slight negative, impact on our our top line. Denmark, for the first time, many quarters, a slight decrease of 6%, primarily our Dynamics business that that saw a slight reduction in activity in the quarter. But, again, here, we we feel fairly confident that we slowly will get back under the growth track again.

UK continued to be a strong growth, growth market, with some good wins, and, they’re slowly taking the after taking over Norway as our third biggest country, and they really continue a strong strong growth there. Norway is also a bit, dull to so to speak. Dynamics is again, seeing some heavy headwinds and and and some geopolitical, tensions still impact some of the major decisions points up there. US, it’s a smaller number, but we, feel like we have seen the bottom, the past quarters and and start to see a slight growth now or not slight 50%, still on a small amount. And we are happy to to see that we have made some changes in organization over there and and and and start to see some positive outcome of that.

Mhmm. Good. That’s all on this. Then let’s move to the outlook slide. As as we announced the January 17, we expect organic growth of around seven to 9%.

I think it’s important here to say that we, of course, follow that very closely. It’s it’s a it’s a tough market out there, but but, we still do see some some, some very positive trends and projects coming in. So I mentioned as primarily in tree and some also in dynamics to to see some strong activity, and and we expect these to kick in over the coming quarters. EBITDA margin, 10 to 12%. Here, we also feel confident that that that we are on that right track.

That is our EBITDA 15 plan and and and a key a key point this year, of course, to improve our contribution or contribution margin as we spoke about. So here, we also, maintain. So we maintain both of our, points. Good. Then we move to questions.

Mikael, Moderator/Host: Perfect. Let’s jump into them. When when you are in in a process of looking at the strategic possibilities, have you seen any large amount of employees leaving you? And and how about applicants? Are you able to get the people?

Because it looks like you wanna scale a little bit up. So the first question here around the strategic process, whether that is impacting your ability to keep employees or maybe even growing them when you need to do that going ahead in the coming quarters. Yeah.

Sean Kho, CEO, Columbus: So a very important question and something we are actually doing our our very best also to handle to take some of the anxiety out of the out of an exercise like this that can be there for the employees. And I I can say we’re not seeing any increased attrition of of employees in general at all. So we we work with we are limited in terms of how much information we can give, but we we we to keep them as up to date as we possibly can. When it comes to new hires, I would say it’s I would split that one in two. So when it comes to functional employees, consultants, it is it’s not causing any delays at all or hampering our abilities to attract talent on on the contrary.

Some of the more senior positions when we recruit for them, there’s definitely an additional part of that conversation where they’re very interested in, well, what could the future be once I’ve joined? And so we again, we have to to to be very diligent in in in not neglecting this and saying, well, it would be what it would be. We we need to really try to explore options with them. On that one, I think it’s fair, you know, there could possibly somebody saying, you know, call me once this is concluded. I would like to see it before I make up my mind.

So in fairness, there might be a few here that have delayed our process a little bit. So so that’s that.

Mikael, Moderator/Host: And then to the strategic process, in general, there’s how the invest investigation are going. There’s a question, how is the uncertainty in the financial, the market changed anything in the strategic process? Anything of your thinking whether the turmoil you are seeing out there, uncertainty. And then there’s a question regarding the timeline. Is it correctly understood that you should expect that in q three?

So firstly, how much you can comment on the strategic process? A little bit on is there something changing out there by the the uncertainty, the the financial turmoil? And say and and then thirdly, a very hard question on the timeline whether you can give that or not.

Sean Kho, CEO, Columbus: Yeah. Okay. Yeah. So so I think in does the current turmoil have an effect? I I think we we have to say yes.

It definitely does. To to which extent, I I can’t really go into to numbers here, but it does have an effect. It it does cause uncertainty in the market both in terms of the the ability to finance and and and things associated with that, but also things that are associated with future demand, which which are harder to to predict. However, there there when we go goes through a review like this, we we I think in most scenarios, it’s expected that we would only end up with one at the end. And and that’s not to say that there there are still interested parties to talk to, but but I think it’s fair to say that the overall impact on a on a on an exercise like this is negative.

Mikael, Moderator/Host: Yeah. Yeah. And then a little bit on the timeline whether you are able to comment on that or not.

Sean Kho, CEO, Columbus: I’m I’m not able to to to to comment on the timeline. I’ll go back to what I’ve said previously. From from an executive team point of view or from my point of view, I have an interest in conducting this exercise as quickly as absolutely possible, but still heeding that we have to do this very well. We have to do it very correctly. We have to look at all all things available to us.

But I don’t think it’s beneficial for for for any company to be in a in a review longer than necessary. So we are pushing towards finalizing whatever that then may be. There there’s a separate speed is a separate priority for for for us. So we will we’ll push that as as fast as we can.

Mikael, Moderator/Host: And next question, how much visibility do we have in your backlog and pipeline concerning your organic growth guidance range of seven to 9%? You alluded a little bit to it. So it it’s to get a feel of it and and maybe and I know you can quantify it how much is order backlog and how much is pipeline. And I know you can always add some percentage to probability to a pipeline, but, of course, it’s more uncertain than uncertain time. So a little bit about how much visibility you have and maybe a little bit about comments on how much is backlog and how much is pipeline that that that you expect this turnaround in the growth from the q one to to reach your guidance.

Sean Kho, CEO, Columbus: Yeah. Okay. Very good. So just an overall answer first. We have a we have a pretty, I would say, pretty decent transparency of our pipeline, which is not so unlike what we would have under normal, more normal circumstances.

And and if you look at how we gauge the velocity of our business going forward, it’s primarily based on three things. The most accurate one we can have, which tells us something about business performance in sort of the four to eight weeks outlook, is just looking at our efficiency, our current efficiency, because when you are when you have the size that we have and we spread a number across a number of geographies, we spread across a number of projects and customers, we never see very rapid developments either up or down of this one, because it’s spread across so many things. So it’s always a very slow moving development. So we know that we have now a decent efficiency level to work from as commented on before. The next thing that can have an impact is just to look again at the stock of work.

Is there anything which is about to expire sort of in the near future That could have could have an impact. We have a full understanding of that, of course. That can be it is technically possible to have abrupt changes on them, but but we very rarely see that. And then the the the the longer outlook, which is sort of extending ten weeks and then beyond that is the pipeline. Where we also see a I would say, I do think we see a decent pipeline.

We’ve also closed contracts already where we’re just not fully up to speed yet. So they’re not yet revenue generating to the extent we’re expecting them to when we’re fully up to speed. So the tricky part here in terms of the 79 to to to 9%, which I also tried explaining before, is our confidence in all of those numbers to now start hiring because we we need we do need to increase headcount again, and we are going to increase headcount, but how fast are we willing to move forward? Because there’s an inherent risk in that. It takes us time to bring them on board.

It takes us a little time to bring them up to productivity level. And if we then see a sudden downturn again, that’s a risk. On the other hand, if if we’re now going into plain sailing, that would be nice, but perhaps not quite expected yet, we would be lacking those people very fast. So I think there was another question, what do we prioritize more? Yeah.

You know, the growth on the top line or the continuous EBITDA performance. We do prioritize both, but not equally so. I think we have an extra eye on our EBITDA margin at the moment. And also just because it’s prudent, because I would like to to supercharge the top line growth, but I need something predictable to play against. And at the moment, I I think it’s a little bit too unpredictable what I have to invest in.

So so so it’s not that we don’t prioritize the growth, but if I if I was to choose, I would say it’s it’s a seventy thirty to the advantage of the EBITDA or something like that.

Mikael, Moderator/Host: Yeah. Perfect. And then there’s a there’s a little bit of a question around also, that’s that’s a question, and I think maybe already answered it. You know, looking at your 26 goals, and the question here is you are focusing more on the bit, but that’s what you can control internally. But there’s also a a question here.

Has the business condition changed since you gave your 26 goals? I think it was the end of twenty three or mid autumn fall, sorry, ’23. So a lot has happened since that. So you are pulling off the business climate that when you gave those targets and for to until now.

Sean Kho, CEO, Columbus: Yeah. Yeah. Correct. We did give the those targets or the or the business climate that that sort of defined our strategy was back in the in the in q four of of twenty three. So so the conditions have obviously changed, but it’s worth noting that if you remember, 04/23 was not all blue sky either, you know, that was post Ukraine Russia, that was inflation driven, much worse, I believe, now.

Trying to remember exactly where we were. I think the interest rates was up already back then. You you will remember better than me, Michael. You you try these things. So so it wasn’t a a plain sailing business environment at And and and and what did it mean for us?

It it meant that we already expected the growth rate of the market to be quite heavily reduced. So we we had that in our strategy. So I’d say we had most of it in our strategy, but many things have changed. But but the overall market growth, which which is really what we have to consider because we we have a history of of beating the market growth by approximately double up in the in the in the quarters over the last couple of years. So so we did know that that market growth was was going to to be quite heavily reduced.

And I think that’s sort of where it’s been. So part of it we expected the the the trade tariffs and and and all of these things, I I did not expect to this.

Mikael, Moderator/Host: You you did that, so I would have liked to know. Did you have any comments there, Ryan? I saw you were

Brian/Byla Everson, CFO, Columbus: No. No. No. No. But but I I’m I’m it’s probably fair to say the headwind has been a bit bit harder than expected at that time.

But but on the other hand, I I I still think we we we believe in our goals, and that’s what we fight for. And and if we look at some of our good colleagues out there, I also still believe that we are beating somehow the the the market, however you do it. So and so I think it it’s it’s it’s a it’s a fair comment, but we try not to use it as a as a nice excuse internally at least.

Mikael, Moderator/Host: And and I guess going back to to to when you announced the targets, a lot of that was internally driven. It was efficiency measures. It was prices. Maybe also commenting a little bit about that on in in this quarter because the margin looks pretty healthy. Efficiency is the same.

The the people you send out to how many people you have out there, but still margins are going up, you know, without efficiency go up. Contribution margin is going up. Can you kind of allude on that? Is that cost consciousness in the rest of the organization? Is that better prices coming from what you also were targeting to to maybe move to a little bit of the better and higher margin projects as such as such.

So so a little bit comment on on efficiency not moving, but actually you’re moving on on on margins at least when you exclude the the the legal case from yesterday from last year.

Sean Kho, CEO, Columbus: Yep. And there are a number of factors. So I think the hourly rates we’re able to achieve because we work for the right the right size customers in the right sectors is is definitely a driving factor. I think also the quality of work, which means that we have the so we have no issues with guarantees or or or anything like that is is a major component. I think subcontractors is a separate topic, which we worked with a lot over the over the the past couple of years.

So we sometimes we will use subcontractors for for specialist reasons or peak demands or something like that, but I don’t think it was had had been well enough managed in the past. So so subcontractors specifically have are are are us more of a we’re very wary of having sort of pass through revenue and which which contributes negatively. So we’re we’re able to see the subcontractors we have now contribute to our EBITDA 15 plan. Then I would say as a specific comment to that you said we had the same efficiency as as last year. Now it becomes a little bit technical, but I’ll try.

So that’s true. We have the same efficiency, but two things come into play here. The first one is that the redundancies that we made and we already told about previously, we’re still carrying some of those costs on the books in Q4 in Q1, sorry, in Q1 this year. So and as long as we carry them, the cost, we also let it show in the efficiency because that’s the only way of looking at it. If you paid for something, you might not be able to deploy it anymore, but we still look at it as part of our efficiency because otherwise we we cheat ourselves.

So that’s one part of it. Then the other part of it is, and this is where it becomes technical, we also, as part of that exercise, went through some of our managerial resources or support resources. We thought we’re working so closely with customers that they should also have an efficiency target. And we’ve done this successfully before, so now we did it again. So we took a number of people and say, okay, you don’t have an efficiency target right now.

You’re not direct customer facing, but you should be. And then we add a target to them. As when we do that, then immediately our efficiency actually drops on the other side. We’re not we don’t have a higher cost, but we make those hours available for selling. And if they’re not sold from day one, which they’re not, efficiency will go down a little bit until we convert that into true revenue.

So we’re giving ourselves a little bit of a larger engine to to work with and that that affects it too.

Mikael, Moderator/Host: Makes sense. It’s a it’s a reallocation. Yeah.

Brian/Byla Everson, CFO, Columbus: Yeah. But but we decided not to to bring that into, let’s say, the the the report because it’s some others put some special items line. We prefer not to use that one. And then I can see there is a a simple a single question regarding if people have been laid off, if they’re not just continuing working. And that will also be my take, of course, but but it’s not always, unfortunately, how it works.

No. And there’s also different laws in in in in Sweden, Norway, Denmark. So so often we see when people are made redundant, it’s it’s it’s it’s rarely that they contribute the last two or three months to to the business Yeah. For different reasons. Yeah.

So it so it is it is it is a bit expensive to move downwards the ladder, so to speak.

Mikael, Moderator/Host: Check. And then there’s a little bit of of of more detailed questions on on the growth here in in q one twenty five. How much is this geopolitical, meaning clients may be having a little bit of prolonged process? How much is it how much you bill customers? And is there effect of the firings you you did or the personnel reductions you did that that you actually can go out and and and build those maybe with a low efficiency, but at least you would have been able to bill them for for for for for some work done maybe.

So it’s a little bit of a question whether what what is impacting the growth here the most?

Sean Kho, CEO, Columbus: Yeah. Okay. Well, the I I think the first thing Brian and I have to say is we we rarely prefer to blame external circumstances for our results because it it just it it it doesn’t lead to any anything good. So we we take responsible for responsibility for the for the results as they are. Could we have had a higher top line growth under the given circumstances?

I believe we could, but not while still developing so positively on the EBITDA margin. So it would have been so we have slowed down the intake of employees. We have firmed up our approach to subcontractors, as I said before, and that is sometimes at the expense of revenue. So imagine, you know, we’ve taken in a number of great consultants that that would have been possible now, we could have sold some of them some of the time, and that would have always given us a top line contribution. But it would probably have pulled us back in the short term on the on the EBITDA margin.

And I I also have to say, I believe in in sort of in recognizing sort of the period we are in. There’s an advantage to saying, okay. Now business conditions are tough a little bit on the outside, so let’s let’s let’s make do a major push on the EBITDA 15. And then as soon as we see a shift, we do a major a major push on on the on the revenue. I think there’s a little bit of I have a 50 managers throughout Columbus.

And if I send, yeah, a little bit of both a little bit of both would be nice. Know, that that’s not a clear signal from from from us as an executive team, so I’m trying to be as clear as I can. And and at the moment, we have asked them to be a little bit cautious and that has an effect on on the the revenue side. Another way of looking at it would just be to say, do we know of customers that have been negatively affected of the tariffs, which is much more sort of practical and we do. I mean, there are US customers of ours that have big exports to Canada.

There are some in here in in Europe that may not be super hard hit now, but if unless something is resolved, they think they could take some kind of a hit and they’ve slowed down their investments some somewhat. So so we we do see some specific examples from time to time.

Mikael, Moderator/Host: Perfect. And then what is your exposure to the public sector? I guess the the the the Danish growth, what if you heard a little bit from your competitors, it looked like the public was better than the private. So how how are you exposed actually in in in your business? I think to recall reminding when we have discussed this that you are much more private than public.

Is is that correctly understood?

Sean Kho, CEO, Columbus: That is % correct. So we do have, I some very few public sector customers, especially some in in Sweden, but I’m going to go out on a limb here. We don’t even measure it. I think it’s less than 5% of revenue. Less than 2% of revenue.

Brian/Byla Everson, CFO, Columbus: Yeah. Yeah.

Sean Kho, CEO, Columbus: Yeah. So we are private sector company. And then I I can see here there was a follow-up question, Michael. Yeah.

Mikael, Moderator/Host: Is the the 62% efficiency of Yeah. Billing Do does that mean you have sets you have decided to say no to autos Yeah. Because of too low probability?

Sean Kho, CEO, Columbus: Yeah. I I understand the question, and it it it makes us sound like we’re crazy if we only have 62% out out there, but but but I actually have to answer yes. We still say no. We’re not we’re not panicking. We if we just go out there and lower prices, you know, we’re ruining the ruining the price points for for all eternity and we we continue more or less the path that we were on.

Of course, we might be in some in some business unit in some country where we are significantly lower than 62%, we we we would be willing to perhaps contemplate a deal we would not under normal circumstances. But I don’t think the correct response to this for us would be to just lower the prices, lower the prices. That’s not a strategy.

Mikael, Moderator/Host: Perfect. Daily toss, a deal with random strategy. It it was the question. It’s Yeah.

Brian/Byla Everson, CFO, Columbus: Yeah. Yeah.

Mikael, Moderator/Host: I think I’m not to your strategy. And then lastly, a question from me, you know, you know, or for me. The dynamics, you know sorry. The ERP systems. We have talked about this that that that is a good area right now, and it was a good area with higher growth because of all the on because of all the supply chain issues.

And I guess this this hasn’t lessened less. I think a company now needs to know where it produce everything, where it sells everything. Any thoughts about that? Because I think in Microsoft, you small saw a small slowdown in their numbers in the three sixty five dynamics business, but actually still a pretty strong growth. So any any thoughts about your main area that ERP is going forward?

Sean Kho, CEO, Columbus: Yes. And I think I think, Michael, maybe we should make a note, and and I would like to to bring a few slides But let me let me just try to, to do it very quick. I just came back this Saturday from spending a week in The US last week with some of our major software, partners. So so two things.

We believe as a company in Columbus and and our suppliers as well on on on being very sector specific. So the the the service we provide, the software we provide has to be highly customized for the industry verticals that we work with, which is also why we don’t do public finance and all of it. We’ve chosen some that we’re really good at. That has been sort of the the the winning formula for us in the in the past five years. Now we see something in addition to that, which is going to be super interesting in the in the next, I’m gonna say, five to ten years, and it’s probably going to start really kicking in in a year or eighteen months from now.

It’s just a a very rough prediction. And that is the era of agentic. We’re going to call it that, and then I’ll come back in a later presentation what it means. So what you should imagine is that today, all of the software platforms we provide have their own interface. It can be browser based or it could could also be separate.

But essentially, there’s a form that that employees will work with. There’s a graphical interface that we work with, which is specific to each platform. The future probably looks a little bit different and especially according to Microsoft’s view. This thing about understanding what does headless mean. Headless means that there’s no specific UX for each platform.

It means that you interact with it. It could probably be through Copilot. You interact with natural language, so you’re not sort of in this form based regime as before. And the most abstract thing to get your head around is that you mainly, as a human being, are not concerned with the transactions themselves, but instructing an agent and and and telling the agent what to do and how to deal with these transactions going forward. And then this agent entity will do the actual work.

So it’s a major shift and and I see a major upside in activity level for us because this is a completely different way of working and building organizations and operating model design, which which will be, very profound, I think. Even if only 30% of Microsoft’s vision comes through within this, it will be a profound way of profound level of change. But I I think we’ll if if if if there’s an interest for it, it it becomes a little bit technical at some point, but we’ll try to do a three slider on it at some point.

Mikael, Moderator/Host: Yeah. But perfect. I think that was the last question. Thank you to you, Brian, and Sean for taking us through your results and and through the question. I think we have got a lot further on by how your thinking is about the future.

So thank you very much for that, and thank you for the people listening in and and asking me very good questions.

Brian/Byla Everson, CFO, Columbus: Thank you.

Sean Kho, CEO, Columbus: Thank you for joining. Thank you.

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