Checkin.Com Group AB (publ) (CHECK) Earnings Call Transcript & Summary

Hello, and welcome to today's broadcast with Checkin.com Group. Joining us today are CEO, Christian Karlsson; and CFO, Martin Bauml. We'll begin with a presentation followed by a Q&A session. [Operator Instructions] And with that said, please go ahead with your presentation.

Thank you, and good morning, and welcome to today's webcast. My name is Christian Karlsson, and I'm the CEO. And together with our CFO, Martin Bauml, I will take you through our report for the third quarter of 2025. I hope you had a chance to review the report this morning, and so -- and we are very open for questions later on. The plan is that I will talk about the company's overall development and Martin will go through the financial parts. During the quarter, we saw a very big improvement, especially around our EBITDA margin. But at the same time, we continue to hunt for growth. For the quarter, our revenues was SEK 17.4 million, which is representing a 4% decline from the previous quarter. The decrease is mainly driven by a little bit lower volumes towards the travel and the iGaming segment out of the quarter, as already talked about a little bit from the start, but the revenue in the quarter was like minus 4% compared to the previous quarter and minus 6% compared to the same period last year. At the same time, we continue to streamline the organization to find profitability and also give us opportunities for growth going forward. We see especially that with the cost focus we had over the past 6 months that it now really start to show in the numbers. And the EBITDA margin for the quarter was the second highest for the company's history. And we continue to work to aiming for profitability and growth. And we expect the majority of the cost savings are expected to have a full effect during the fourth quarter. After the end of the quarter, we signed an agreement with a large fintech company, Visma Group. This agreement will mean that we will be an integrated part of the platform, and there has been a strong interest from their customer to accessing the technology we can provide, why this is important, but it also allow us to reach a lot of more verticals and also give us a fantastic distribution channel opportunities to really scale our software. We also expect the first customers to use our software in the coming weeks already. Also after the end of the quarter, we signed an agreement with New Zealand's largest casino group called SkyCity, which is a plan to go -- also go live in the end of the year. It's worth to mention like this type of agreements, it comes with like a monthly license fee from the signing date, like followed by a variable model based on the volumes of traffic running through the software after the live date. We at the same time see quite strong demand in so-called omnichannel solutions, meaning like companies transitioning from physical environment to a digital one. We have also previously partnered with the French group Casino Barrière within the same segment that we also expect to go live end of the year. Going forward, we believe the iGaming vertical will continue to develop in a positive way for us, and we see a quite strong momentum right now. The market for biometrics and facial recognition solutions is expected to grow by around 15% annually on a global scale. Our assessment is there are both directly and indirectly around like 4 million to 5 million companies that is in need of this type of technology. The development is primarily driven by global regulations, stricter requirements to verify who the end user really is and a growing threat from AI fraud or so-called deepfakes. At the same time in the industry we also see is an ongoing consolidation trend where we mainly see multinational companies acquiring specialized players within this field. About our financial targets, our financial targets has been this classic SaaS metric, the Rule of 40, which measures profitable growth. The goal has been to maximize the sum of the growth per share combined with the EBITDA margin with the ambition to reach 80% over time. We have previously communicated that we will not meet the targets for 2025. And yesterday, also it was decided through the Board that we will suspend this goal until further notice. And with that, I will leave over to our CFO, Martin, to review the financials.

Thanks, Christian. Yes, the quarterly report itself is still with a lot of numbers. So here, I will go through the headlines. So net revenues decreased to SEK 17.4 million in the quarter, which corresponds to a growth of minus 6%. We had some negative impact from exchange rates. So if we adjust for that, the growth was minus 3% instead. And if we compare it to the previous quarter, i.e., the second quarter of 2025, the growth was minus 4%. And gross profit for the quarter amounted to SEK 12.7 million, and that was a margin of 73%. And EBITDA was SEK 6 million in the quarter, and that was a margin of 35%. And as Christian already mentioned, that's actually the second highest quarter in the company's history. Cash flow from operating activities amounted to a little bit less than SEK 300,000, and we ended the quarter with a cash position of a little bit more than SEK 14 million, and the equity ratio was 92%. If we look into the net revenue more specifically, you can see in the chart that we -- the revenue went down by 6% compared to the same quarter last year, and the revenue was SEK 17.4 million in the quarter. And the main reason for that was a little bit weaker demand from our existing customers. We have previously in the last few quarterly reports mentioned our previous customer, RingCentral, and that the impact from the loss of that customer has not impacted the figures in quarter 3. But if you look at the year-to-date numbers, the majority of the decrease in the year-to-date numbers are due to the fact that RingCentral is no longer a customer. But going forward, we will not see any impact from this anymore. Going to gross profit. The gross profit in the quarter amounted to SEK 12.7 million, and that corresponds to a margin of 73% and that's in line with what we have seen in the last kind of 12 months. And if we go back to 2023, we had -- we were about 80%. So we continue to see a little bit weaker margins. And that has also led us to be more -- have more focus also on the cost -- of the direct costs. So we have looked at optimizing servers and other direct costs that impact the gross margin. And -- but the biggest impact is that as we discussed before as well, that many of these costs are kind of fixed or semi-fixed. So as the growth is coming back, we believe that the margins will also go up because of that impact. If we look at sales and marketing costs, again, this has also been a focus area to make this more efficient and look at the costs also in this area. So we invested SEK 2.9 million in sales and marketing activities in the quarter, corresponding to 17% of net revenues. And if we look at the first 9 months, we spent around 20% of net revenues in this area. Going to EBITDA, we have already mentioned a few times that we have been focused on cost savings and optimizations and efficiencies, and that will, of course, have a big impact on the EBITDA as we have seen in this quarter, and EBITDA landed on SEK 6 million in the quarter, corresponding to 35% margin. And if we look at the margin year-to-date, EBITDA is currently at 21% for the first 9 months. And finally, we ended the quarter with a cash position of SEK 14.3 million, and the equity ratio was 92%. And with that, I'll hand it back to Christian for some final remarks and the Q&A session.

Thank you, Martin. To summarize Q3 2025, the growth rate was minus 4% quarter-on-quarter and minus 6% year-on-year. The EBITDA margin improved to 35%. We still have a strong cost focus, and we expect it to reach full effect during Q4. Some important new signings after the quarter ended with Visma and SkyCity, and we're expecting a few new customer launches in -- now in quarter 4. And with that, I will leave over for the Q&A.

The total number of customers seems to be decreasing between quarters. Can you explain the main reason behind this trend and why some customers choose to end their cooperation with you?

Yes. It can maybe look like that, but we -- like the last 1.5 years now, we've been focusing a lot on like different type of distributor, like platform deals and hope to find better distribution of our software. That means that if we're working with some type of platform, it shows that it's one customer. If we just take an example, the recent deal with Visma, many of their customers will use our software, but it will just be counted as one customer. So in general, I think right now, it's more customers that are using our technology, but how it's reported, it probably will look a little bit less.

In May of 2024, you launched a new travel product with a European airline in the Irish market designed to handle all types of bookings. Has this product been expanded to other markets since then?

No, it's not been expanded. And right now, we not really see it will be expanded for the time being.

Understood. Given that the travel industry continues to underperform financially for you, why do you contain such a strong focus into this segment?

Yes. I think the travel industry has been quite good for us historically. But obviously, we had higher hope for the growth in the segment. We still believe we have a lot of opportunities there. But at the same time, we also need to invest in those areas where we really see that we have the momentum right now. So I still believe in the travel industry going forward, but right now, we will also spend a little bit more time and effort into other industries where we see more current momentum.

With the recent changes to the Board, how will the new Board structure help the company return to growth in between quarters, especially now that the financial targets has been removed?

Yes. I can't answer on behalf of the Board, but I can answer as part of the CEO for the people who's working with this every day. But like obviously, we've been doing a lot of changes in the organization, but it also should give us more opportunities to invest in growth. So this is something we're working with daily, and we can't just cut costs, we also need to grow our revenue. So it's a mix of things, obviously, we're doing. But one of those is to continue to invest where we really see that we have momentum, which we see in some industries right now.