Columbus A/S (COLUM) Earnings Call Transcript & Summary

Hi, and welcome to today's event where we have the pleasure to present Columbus. To help us through today's presentation, we are joined by CEO and President, Soren Krogh Knudsen; and CFO, Brian Iversen. Today's event, a little bit -- we'll look a little bit at the Q3 results, but taken more as an offset ramp to look at the new strategy, New Heights, that you have released here, both with the financial targets we will look, but also a little bit about the building blocks that is in this -- that the new strategy is composed of. As always, you're very welcome to ask questions down in the box down below, do it both in English and in Danish. If it's Danish, I'll try and translate to the best of my ability. But we will do the presentation in English. But for now, I think I will hand the call over to you, Soren.

Thank you very much, Michael, and thank you to all the participants. Thank you for the interest you're showing in Columbus. We've been looking forward to talking to you today. As Michael was just saying, the presentation will primarily be about our new strategy, but we'll also touch on Q3 and year-to-date results. So the way we're going to run it is basically, I will start with a very short introduction to the company to those of you that don't know it that well, a bit about where we stand today. Then Michael will just bring you up with the latest quarterly result on Q3 and the guidance for the rest of the year, and then we'll come back to the strategy session. So if we -- we should start looking just briefly at who we are in Columbus. We are a digital transformation company with about 1,600 employees. Last year's turnover was about DKK 1.4 billion. And as you can see, what we do is we make digital transformation happen. We do that through 5 business lines, so 5 functional areas, which we have across our geographies. The biggest one by far is called Cloud ERP and it's actually comprised of 2 separate lines based on 2 separate technologies, 2 very big business lines for us. We have also a big business line called Digital Commerce, which is -- the name says it, concerned with delivering all the platforms necessary for conducting e-business, both business to consumers and the business to business. We have a Data & Analytics practice as well. Customer Experience, the difference between Customer Experience and ERP is that these are the core systems that are more focused on touching our customers' customers. So it can be field service, it can be CRM systems, and it can be shop floor management systems as well. So also one of our, I would say, fastest-growing business units currently. And then our latest business line, Security, came in through a recent acquisition. As the name says it, they are focused on security, and that is, of course, cybersecurity. It's a very specific aspect of cybersecurity, which we need to provide to our existing customers. And the soft branch of cybersecurity is known as IGA. And very short, that means the art of managing roles and rights within the system and ensuring that we limit risk by not providing too much access to your system landscape once the bad people get in because eventually they get in. So it's about limiting the damage more than the perimeter security. The geographical setup, as you can see on the map, we have a real center of gravity in the Nordics. That's both market and delivery-wise. The U.K. as well is a very big and important market for us, as well as the U.S. and Germany. So, slightly smaller ones, but still important and growing markets for us. Then we have the delivery centers, which are in Poland, and they are in the Czech Republic, they are in Chile and they are in India. So that's the setup of the company. Moving on to the next slide, a very, very brief start of explanation of both our current position and where we came from and where we're going to. An easy way of looking at this is that Columbus is not a new company. I think we're 34 years old now, and we've really started our journey in the supplier landscape within IT and technology. And that means, I would say, almost like waiting for customers to decide what they want to build, and then they're asking us if whether we can help them build it. That's the starting point there. And then as we move through the Focus23 sort of the mid circle there, we started to define this ambition that all the knowledge we have about how to best solve problems never really came through because we were invited very late to the table. And this ambition is based on that, we think if we can be part prior to the functional specification, if you [ tail ] -- before the customer actually decides what they want to build, if we can be part of the conversation before that, we can often educate on a better way to build it, and that's what we've been trying to achieve in Focus23. That's what's brought the growth that we'll be talking about, and it's a continued journey in that direction that we're planning with our new strategy, New Heights. So as you can see, I think the -- what maybe is a little bit special about this one is often a company will aspire to go from one place to another place. That's not what we're doing here. We want to maintain this position we had in the past and that we still have as the response -- the supplier fully responsible for delivering the solution to the customer and combine that with some advisory. And that makes it a little bit unique. Many of our competitors, direct competitors are either aiming one way or another. So that's sort of the market position we're aiming to be. We don't want to go full management consultancy. We don't want to go back in the supplier space. We think we found an absolute sweet spot that we're expanding from here. We also -- compared to our size, we have a fully globalized operating model, which we implemented over the last 3 years, very heavy work for us. I think with 1,600 people, that's borderline, the smallest you can be to have what we have, but it gives us some great advantages now. Obviously, all the very big global competitors have it, but then they lose some of that nearness to customers that we can provide. So that was just a short introduction. And then Brian, I think you will just cover the Q3.

Yes. Thank you, Soren. And briefly, Q3, we continued the strong growth, so that we saw already in Q1 and Q2 with 15% organic growth in Q3. We also continue to see a headwind from our biggest [ market ] foreign exchange in Norwegian and Swedish krone that, of course, hit us a bit on the revenue size. But when we look at it organically or in constant currencies, we still end up in a very strong growth position. On the bottom line, we ended at 6% for the quarter and year-to-date, 6.9%, which is also an improvement compared to last year. But as we also have said, there's definitely more to come at that end, and we are working hard on improving the bottom line percentage or EBITDA margin. Recurring revenue is kept on a fairly stable level around 15% of our total revenue, also a focus area to improve this area of business or mainly our Care business. And the last figure I would like to mention in connection with Q3 and also year-to-date is our strong cash conversion or cash flow -- operational cash flow that is [indiscernible] agenda. It's basically proving that it's a sound business that we are running, and we are able of generating cash to our balance sheet. And as you can see on the slide, we also have a -- one of our key KPIs is the efficiency that again have improved compared to the same quarter last year, around 4 percentage points. And that is the reason why you see the deviation between the quarters is due to holiday and seasonality that we see in our business and especially the 2 mid-quarters, 2 and 3, we see a slightly lower efficiency percentage compared to some of the others. So I think that's more...

Brian, for someone maybe first time looking at a consultant, the efficiency is simply how efficient you are to get your employees to bill hours, is that correct, largely speaking?

Yes, exactly. So I think maybe we should get the terminology straight here. When we say efficiency, we mean the percentage of hours that are sellable. So all the people that are consultants, how many of those hours do we convert? And that is probably the most important KPI for a consulting company. It doesn't stand alone because you also have to take into consideration something like overhead, which is not included in this one. So we need to make sure that we also have a KPI that covers, well, okay, fine, you sell all the consultants, but how much overhead do you have? So that's an important one as well. But the efficiency speaks about all the hours available, how much do we get sold. And when Brian say, a strong operations cash flow of DKK 0.3 million, it should be seen in conjunction with this seasonality. So all consultancies, I would say, especially if you are based in the Western Hemisphere kind of will have a stronger Q1 and Q4, and then you have Q2 and Q3 in the middle, whichever -- and particularly Q3 has a less strong cash flow due to many projects being on hold while the summer holidays are going and therefore, Q3 tends to have the poorest of cash flows. So those are some of the trademarks to look after.

Perfect. Thanks.

All right. So just finishing off Q3, we maintained our guidance and still look into a growth of around 12% to 15% in organic growth of 12% to 15% in constant currencies and a margin or EBITDA level in the area of 7.4% to 9%. Yes. All right. Then I will pass back to you, Soren, on the strategy.

Sure. Thank you very much, Brian. And yes, I hope that sort of sets the scene that you have a little bit of an understanding of the company. Otherwise, I hope to be able to convey that to you in -- over the next slides, and then I'm happy to take any further questions, of course. So this slide is called New Heights. There's a little bit in the name. And on the slide, as you can see, so 2024 to 2026, we've opted for a new 3-year strategy, which we also had before. Why is it not 5 or 10 years? So I think it's fairly self-explanatory, but we're not super CapEx heavy. We are subject to possible changes in technology that sort of limits -- a 10-year outlook is very hard, and we don't benefit a lot from making 10-year plans. We think 3 years is an optimal planning span for us at the moment. New Heights refers to what type of strategy this is. What I'm going to present to you is not a turnaround strategy. It's not a radically different strategy from the one we came from. It's an acceleration of what we've already been doing. There are some new things, but in essence, we were very pleased with the results of Focus23, and we don't see a need to change everything just because there's a new 3-year period coming up. So hence, we chose the name New Heights because we think with Focus23 we sort of got off the ground to some level of altitude. And now we're looking for New Heights to accentuate many of the same things, add a few new selective things. And so it's more of an excellent strategy, if you will, than a new strategy. And that's why we call it New Heights. So any strategy, I think, is a good thing to just know where you're starting from. So if you don't know your starting point and where you're going to, it's going to be pretty hard. So on the blue side here, the left side of the slide, what you will see is the things -- some of the things we found very favorable in the Focus23, the outgoing strategy, and that puts us where we are today. A big objective for us with Focus2023 was to grow the -- both the size of the customer and the engagement size for us as a consequence. So what it means is that we are going for larger and larger companies. And we are -- and hence, also, we tend to win bigger and bigger arrangements or activities or contracts with them. The main reason for this is that these bigger companies tend to have more of an investment mindset. They're not looking to quickly finish a project and get rid of us again. They are more -- they're looking for a partnership. Sometimes we have a lot and then they have activity with one customer and then they scale down a bit, but we never quite stop. And they're not looking for us to stop. And that means that our cost of sales goes down, our knowledge about that customer is forever growing. So the relevance and level of service we can provide to them increases and then the perceived quality from the customer goes up and then we get into a very positive spiral. So we don't like to have customer arrangements where we sort of sell something, deliver something, don't see them for 5 years and then start all over again. We're looking for continuous partnerships. Second one speaks a little bit to what has happened also. We focused our business a lot, and we've conducted a number of divestments. So we sold business units that were concerned with very small customers. We can -- we sold business units that were concerned with geographies that we didn't think we had a viable future in for one reason or another. And we've completed also a sale of a software development business that we had, a very successful divestment, I would say. But nevertheless, it was a different business model. So we've done that. Then, the third one, the one true Columbus, that's really been the heavy one in terms of internal work. And what it means is that we've completely rewired the whole company. So we -- Columbus, when I joined, had -- was very clearly a result of a lot of acquisitions that weren't fully integrated. And as a result, you have duplication of processes, duplication of systems, duplication of roles, employment contracts, incentive schemes, organizational models, and that makes it very, very hard to steer the company and get any level of transparency. So that whole streamlining has been done. And we now have a completely different level of transparency across the company, and just makes it a very different experience to run the company as a CEO now than 2.5 years ago. And then we've gone down this path of further specialization into industry verticals. It's something I already knew when I came in, but I believe the time is really over for consultancies that try to be everything for everybody. You need to choose both in terms of the functional areas that you're good at, but also you really need to know your industry verticals. So you can't expect to be successful within, let's say, dairy manufacturers. So -- or it could be, let's say, any retail shop, if you haven't done it before. You need to know how their value chain is set up. You need to know who their suppliers are, who the customers are, the regulation, that they're under the technology changes they face in other areas than the one where we are working. Otherwise, we really can't hope to be a good partner for them. So these are the things we changed. And these are largely also what we want to continue to build on. So the orange side there speaks to continuing down that path going closer to the business side of our customers, understanding the challenges they have and the outcomes rather than just saying, hey, we master this technology, do you think you could use it. That's a really poor way of starting our conversation. Second bullet is a very big change. We are opening up for acquisitions again. We are fairly reluctant to do them in the past 3 years, and that's mainly due to that 1, 2 Columbus bullets. I didn't really believe in buying companies at the same time where you're trying to streamline all of what you already have. So we've gone on a staggered approach. I think we're now ready, and I see acquisitions as a much more viable approach for us now. I think also deserves -- I mentioned that the market has just changed. So I think the valuation of some of the target companies we're looking at is much more reasonable. So -- and as Brian was mentioning, our cash flow has also changed, so it just makes it for a more attractive game for us to be in. The global model can obviously grow from now. It's sort of set up correctly, and we can add resources to it as we will. And that means -- also I saw one of the questions coming in, I'll get back to it about access to talent. It gives us a lot more leeway there in terms of employing where we can find them. Short story about the growth and what Focus23, the outgoing strategy, was meant to and has achieved for us. As you can see there in -- up until Q1 '21, we suffered from negative organic growth. It's not a good situation to be in. But at that point of time, perhaps the market was different and valuations were forever going up. But we saw that and the Chairman, and these were -- so when I started to have discussions about entering the company, I saw that as a very dangerous thing going forward. Then Focus23 was launched with a focus on organic growth. We achieved it there in Q2 '21. And I would say up until Q2, Q3 '22, you see a growth there, which is not insignificant, but not impressive. And I actually also think it needs to be mentioned that at that point, we saw the market growing with about 10%. So you're growing but you're growing at best -- at the same pace of the market. You're not taking any market share. Then you can see the right 4 columns, which is effectively from Q4 '22 and then the first 3 quarters of '23. We have a higher growth percentage, but that is in a market that's significantly contracted compared to before. And it means that we are really taking some market share now. So that's about the organic growth. In New Heights, the new strategy, which we're talking about today, we've set ourselves a financial goal, which is to maintain basically the promise of the old strategy. We had 10% organic growth, and we achieved it. And as Brian was just showing you before, we're a little bit above now certainly in local currencies. We are just above on -- in Danish. So you could ask, well, why aren't you going for more here? And there are really 2 reasons for it. The first one is the market is more difficult now. So 10% is ambitious to -- that's the rate we're now comfortable with, but it does require something others. But the second and perhaps the biggest reason for it is that we're really looking to improve our EBITDA margin going forward. And I don't believe we can be successful at sort of accelerating both the growth very quickly, adding to that in a very difficult market, and at the same time, improve the quality of revenue, meaning the EBITDA margin. So we're running 10% organic growth, 15% EBITDA targeted margin at the exit of the strategy. And then as I said before, we want to add acquisition growth to it on top of the 10% top line growth. Good. So this one is just a bridge that shows our target revenue. We have an ambition of crossing DKK 2 billion on the organic side and then acquisitional growth -- any acquisitional growth could come on top of that. I think it's important to be clear on we're not hell-bent on buying a lot of companies from day 1. We are still very selective. It needs to make sense for us. It needs to be worth the integration because we are going to integrate the companies we buy. We're not going to repeat that thing of setting up a big piecemeal landscape where we don't have transparency and synergies across. I'll just mention that at the bottom right, it says entering life science. I think that will -- I'll just mention that. And that one really talks about something that is already ongoing for us. It can seem quite daunting to go into the life science sector. So let's just open that one up. For us, life science is a hybrid term. Again, what does it mean? For us, it means the private sector life science, so it's not national health care, not publicly run health care. It will be within the pharmaceutical and med-tech space. And the customers we are going for are largely the same in terms of segmentation as in our 3 existing industry verticals. And that means we're not going for the brands you probably know the best. So it's not a Novo Nordisk play, it's not Rush, it's not Novartis, it's not Pfizer, these mega global companies. We're going for the segment just below that. And we have a number of good reasons for that, but that is a very successful strategy for us in the other sectors. I think it's also -- you can almost guess it's something with our size. Some of these are simply too big for us to deal with yet. We can hope to grow into that. But it's also about the technology plans. The very big ones are typically already invested in. So we choose to go for the ones we have, and we've tested it. We already have a little bit more than 50 clients from the life science sector, and we can see that it's working. We are learning. They appreciate the services and now we've just decided to double down on that investment going forward. All right. Then the EBITDA improvement program, which is very important for us and I think needs to be explained in a bit more detail. The bridge you see in front of you, the dark blue column to the left is this year's guidance. And the far right blue column is then the exit EBITDA margin we target to have in '23, and then the gray ones in the middle are the improvement zones. This is highly simplified, but I think it provides a pretty good picture of where the improvements should come from in terms of percentage points contributed. So the first one, which is called project value, what does it mean? It is when we work within our core industries for the customer segments I just said before on the target projects that we know we are the best at, when we use our operating model, the way it was intended to, so we have the right mix of delivery capacity coming from our centers in Poland, Chile, from India. We have the right junior/senior mix, which means that we're not aiming to be a pyramid. We don't want to be a very junior organization. We want to be quite premium. But at the moment, we are overly premium sometimes. I mean we use cannons for small birds. I don't know if that translates, I think it's a Danish expression. But -- so when we set it up correctly, we have high customer satisfaction, and we have a much better margin. So as we focus the business more and more, we see the margin going up, and we expect that to contribute 2.1 percentage points. And the delivery mix is sort of -- sorry, the most specific part of -- the first project value is the right customer, the right sectors. The delivery mix covers the next. That's about the right shoring and the right seniority mix. The efficiency, I saw there was a question, which I'll cover after, again, is improving the ratio to which we basically are able to sell our time to our customers. We've improved that a lot over the last couple of years, but there is a little bit more to be -- they gotten from that, that when we plan to continue improving. That's 2.1%. And then the 1.3%, which we call scalable model, is -- in simple terms, it means that we've divested a lot of our business, and we've streamlined a lot of our business. So the current setup we have is a little bit big for us in terms of our shoes. So we can handle a lot more business with the back office function and the management overhead we have at the moment without adding to that trust. And that gives us an advantage as well. There's a lot more to it, but I think that's sort of the brief explanation of how it works. So the strategic bets that we are basically placing is that we continue to expand our ability as a full partner. So we continue to invest in our service portfolio, expand into to new areas, but those areas will typically be deeper into areas where we already are. We're not looking to add sort of new, new areas where we have no expertise. We expand our playing field. We go into life sciences, as I said before. The third one is the seizing the market opportunity as a constant partner. This is where Brian said before, we had 15% of our revenue is recurring revenue on long contracts. And these are agreements we have with our big customers that aside from us delivering projects and new functionality, they often award contracts to us to overlook and optimize on an ongoing basis the system landscape. And that is not on an hourly basis. That's typically a time contract where we get a fixed sum for doing that. And we like that mix of time and material billing and then constant revenue. And we would, at minimum, want to grow that at the same rate as revenue. Preferably, I would like to grow it a little bit faster. So I wouldn't mind if I can push that up towards 20% of total revenues. But we're moving superfast on projects right now. So it's more like a -- yes, you -- so -- but if we can increase growth in our Evolve business or Care business further, we are going to take that opportunity. And then obviously drive home the EBITDA program that I just showed you before. Then the final slide, trying to expand a little bit on what we're actually doing for the customers and what drives our demand. I often sort of get questions around. So when times are tough for customers, why don't -- do they just stop a little bit with investing in the technology platform? So why don't you -- what's the risk of them just pausing revenue streams towards us as Columbus? And I really don't see that. We didn't even see that during COVID. And so I'll try to just expand a little bit on why we think that is, so what drives some of these big investments that ultimately we are benefiting from. At the moment, supply chain disruptions has proven to be one of the biggest drivers of activity for us, and that's actually quite new. And this is due to -- and it's a very unfortunate background actually because it's due to a very worsened geopolitical environment. A lot of our big industrial customers are looking to reshore some of their production facilities. They're looking to derisk a little bit. Many of them are heavily set up in China. They're looking to set up additional facilities in Vietnam, in the Philippines, in Thailand, in India as well. And that drives simply acquisition of companies, setting up new companies, and it's all something we need to help them build in a system landscape. Automation pressures. As somebody wrote in the question field, skilled workforce is still scarce. We're not talking that much about it right now because times are a little tougher, but it remains one of the big problems for the next many, many years. So big investments from our customers in automating workflows and freeing up capacity. Some people mistake this for companies trying to free up people so they can fire them. It's the very opposite. They're trying to free up their highly intelligent workforce to do more intelligent work by taking away the bottom part of repetitive chores that they're doing that don't really add value. Digital channel talks about optimizing the e-commerce setups across the customer portfolio. That -- we saw a big push during COVID because that drove improvement, but there is a long, long way to go to optimize that, and we aim to increase our exposure to this and investment in it. Sustainability and compliance. There's a lot to it. And I'll just mention the latest and greatest that the CSRD reporting directive, that sounds really boring, but for us, it's a good thing. It means that all our customers need to report on ESG agenda items in a very heavy and very thorough format. And that needs to come from the systems that we work on, and they're looking to get that reporting automated and integrated with their operational KPIs. It's just started, to be honest, and it's just a big source of activity. And then the final one there is about resilience and security, which is a new area for us. We still think the risk profile of most of our customers is way too high, and we think they will invest in bringing that down, and we are positioning ourselves to that. I think that's what I -- Michael, that's what I have time to say now.

Perfect. Perfect. Let's jump into the questions. We have a lot coming from the outside. But the first one is, you touched a little bit upon. What is the target efficiency rate of your employees? Let's start by that, whether you have some target or whether you want to share that with the public?

Yes, and we certainly do. So I'll tell you what the target is right now and then there is a slight chance that, that will go up a little bit in the coming years. But we target 70%. And there is a reason why we -- so just to explain what that means. It means that some of our biggest units in our biggest countries can run significantly higher. But we are not -- the EBITDA15 plan doesn't mean that we start to sort of just squeeze all the profits out. We're still heavily invested in setting new business units up in new countries and placing our bets. And typically, the smaller business units we have in the beginning are not able to keep up with the very high ones. So they will drag us down a bit. So 70% is not an answer towards the maximum level, but its maximum average with the investment profile we have right now.

Perfect. And then next question comes. Then you must be a little bit heavily dependent on growth in your employee base and regarding the tight labor market? Or is it all priced and you don't need to grow your employees? So it's a little bit on the feeling on what is price and then a little bit on -- are you actually able to grow 10% a year if you need also to grow your employee base to do that, if I guess, if we should keep around the same efficiency.

Yes. That's a very good question again and something which is so important for us to get right. So if we look at the access to employees and how the labor market is developing for us now, I would actually say that compared to -- it's one of the few advantages compared to before February when Russia went into Ukraine. One of the few things that are actually a little bit easier is that our attrition of our good employees has gone down. So we lose a lot -- less employees than prior to this, our job satisfaction is quite high, and the access to new talent is actually easier now. So competition is -- actually, has gone down a little bit for talent. My expectation is that it's very short lived. And as soon as we see an improvement of geo and macroeconomic factors, then we will be right back at that cut throat competition for talent. So the best for us is that we can -- we have a very, very fluent delivery model. So I'm not depending on finding people in Denmark to solve Danish problems. I can find people in Sweden. I can have people in Poland. I can have people in India. I can have people in the U.K. And that helps us a lot in terms of evening out this capacity issues, and that is the reason why we can target 70% as well. So I think that's part of the answer. The other part is can we get all of it from -- can we get all of the 10% from just increasing pricing? We cannot. I mean, we are not able to increase our pricing with 10% per year and certainly not now. And I would -- I will not go into exactly how much. We have a very specific number for what we need to do, and I don't think that would be prudent to say, but it's certainly not all of the 10%. Our current staff can deliver a little bit more, but it goes then to say, yes, we look to increase the number of the employees as well in the industry.

Perfect. Then there's a question, a little bit general. How does the management plan to pursue shareholder value creation over the next 3 to 5 years? I know delivering on this plan is probably a big part of it. But also maybe to look at another part of shareholder creation is, of course, cash flow and using that cash flow wisely also. So, any thoughts in general on this question?

Yes. I think you said it, Michael. But I mean it might be old fashioned, but a strong P&L with some growth, good bottom line or EBITDA as we lay out here for the strategy and then, of course, the capability of generating cash. And then you can, as you said, add on that and using this cash, or some of it, by buying companies and integrate them in our model and our setup and increasing the pallet of deliveries or widen it towards our customers. So I think that's basically it. I don't think -- we should not make it more rocket science.

Yes, agreed. I think -- I mean, our perception is very linked to this 10% and 15%. I mean, could we deliver higher organic growth than 10%? I think we could, but not whilst improving the EBITDA. And we see one of the major improvement factors for shareholders is to have a more robust EBITDA and it's driven by 2 things, just the sheer aspect of profitability is one thing, but the second thing is also -- I think it's a more prudent thing to do in a very fast-paced world at the moment that you want to set yourself up in a more robust way so that if your business model is slightly hit by something at some point, well, then you have -- it's a very simple vanilla thing to say, I guess, but I'm looking to build in some robustness into the model. And perhaps the other thing is just to mention that Brian and I have been -- and this is not new. We already started this 2.5 years ago. When I joined, I've looked to just try to increase the transparency towards shareholders about what we do, say what we do and report on how it's going. That comes with a risk because we're going to be kept accountable as always, and that's what we want to do. But I think that also should drive value. We're trying to be as predictable and transparency as possible. Perhaps also [ vanilla to say ], but it's our ambition.

Yes. Good. Good. Then there's a question. How good is your visibility going into '24? And how does the pipeline look? So a little bit about the visibility in market. It has been tough markets. So do we have bad visibility? Or is it kind of good when you also -- do you have some comfortability in your pipeline?

Yes. Yes. So I think it's a good question because it's sort of twofold, right? Do we have good visibility? Yes. Do we like what we see? It's a different question, of course. So with the new systems and the way we work much more structured, we have pretty good visibility into 2024 already. And we can see the market is a little bit more difficult, but we actually like what we see. And it's twofold. One thing is that -- so if you think about how a company like us is operating, a lot of the projects we're already working on carries over way into '24, like -- so it's not -- we don't have to sell. We have a backlog of things that reaches part of our revenue objective for '24. So that's part of the story. The other part of the story is the pipeline of new sales. How strong is that? And we have a strong sales pipeline. I have said before and I can also say now. Has the market changed a little bit? It has changed. So the way I see customers changing, particularly the big ones that we work more and more with is they're a little bit more reluctant to pass one huge contract that spans 3 years in one go. So typically, they will try to carve out some projects. They will try to piecemeal it a little bit more. They want some proof of value earlier on in the process. And that means that we have to be sharper in terms of delivering that value early on. From a sales perspective, it's more work for us, and it's been going on for 2 years. So I think it's fine. But obviously, it's an additional burden. But what I really like about it is that, to be honest, many big ERP or any big IT investment, public sector, private sector, ERP systems, sales systems, any systems have been suffering from a huge delay, cost overruns, all of these things we've been used to for 20, 30 years. This new interest from the Board of our customer, not just the CEO, CIO, but the Board means that we are sort of -- have a better approach to delivering value and access to them, and it just makes for an overall better experience for the customer, which is good for us when we aim to have long lifetime relationships.

I think it's actually a very good question because nothing worse than an investor getting new targets and then '24 starts with the low point. So I've just gone to your EBITDA program. So the first question here is, is this a hockey stick model or is it a linear? And I know it's not going to happen like this, but you have to choose one of them. Is it going to go progressively or is it -- will it -- will you reach it out in the end?

Yes. So it's -- yes, this is -- so I think I want to say 2 things. The first thing is just that there are -- so this is real business with real customer and real -- so a linear thing -- to promise a linear things is difficult. And it's certainly not intended to be a hockey stick. We have already started the journey and all the things we need to improve way before we launched the EBITDA15 plan. We wanted to start to come through to fruition already next year and then -- in '25 and in '26. So I guess the 2 options you give me is, I'll do everything I can to keep it as linear as possible.

And I know it's not going to be linear. And secondly, actually, on the revenue side, do you expect markets to improve a little bit? The hesitance by customers looking in a longer period, do you expect markets not to be booming, but to be a little bit easier to operate in because there are so many problems by your customers who needs to be solved and they can push out investment for a short period. But then at some point in time, they need to invest into IT if they want to be stay in business actually.

Yes. Yes. And again, there are 2 answers to that. The first one and the one that we've actually based our plan on is, no, we don't expect it to get easier in the next 3 years. So our underlying planning assumption is that by delivering 10% organic growth, we will be outgrowing the market significantly. And that's based on both some research that we commissioned and -- well, it's mainly based on that. I could find any research report that would fit anything I wanted to say. But what we did is we went out and we ordered a bespoke report where we said only look at our countries, only look at our verticals, only look at our service areas and then come back with the best number you can give us. And that's basically the number we went with. Currently, we perceive things a little bit better than that report, but the planning assumption is -- and that's also why we didn't go for more than 10% organic growth is that we think with 10% we're already outgrowing the market.

Perfect. Then there's a -- yes, there's actually a suggestion, you should think about getting a commission research made to remind people around that you -- if you deliver or might trade around 2.5x EV and net company and IT in 2016, will trade at 16x on net company. And so it's just a suggestion from the audience that maybe someone should do the calculation and show that if you deliver here, there could be some shareholder value. So I have read it up now. It's scary. I am most likely to investigate concerning potential acquisitions, which areas of your business? Is it countries you're looking at? Or is it the areas of expertise or business areas you would be most likely to look at?

Okay. So I think for this one, in the name of transparency, I said I cannot answer which one we are most likely to because I would probably already know. And so that would be wrong. So I'll tell a little bit more in general, how I think about acquisitions. So first of all, what is it not? We are not going to try to break into a bunch of new countries where we're not today. I don't think that would be fruitful for us. I think we have plenty of geographical presence to grow in. So we're going to try to grow where we are already strong. So there are basically 3 -- and it doesn't mean that we will not go into a new country. There might be -- there are some very specific countries we are interested in, but it's not a geographical expansion plan that we're looking at. So we're looking at either doing a capacity buy in a country where we are already strong, for a business unit where we're already strong, but just becoming even bigger at where we are. That's a very likely one that we will see. 2, it could be a country where we are quite strong, but we have a business unit there, one of the 5 areas I told you before, which is not as strong as they usually are, and we are not patient enough to wait for our -- we know the model is working, but we're not -- we don't have the patience to wait and we want to boost it with an acquisition. That's a very likely one for us to do. And then I think the third one, which I think is the least likely but might happen is we decide that we need a new service area, completely new skill that we don't process today. And if I -- I mean, also in terms of transparency, if I knew about something that we wanted to build, I would have put in a strategy in and made it transparent. So at the moment, I don't see it, but in a 3-year time span, it could happen. It could be to front-load some of the considerations we're going through. I am continuously looking at, is there something in AI where I need more and are we falling behind? Or do we have sufficient internal resources to cover it? And -- but that would probably -- such an investment would probably go into our existing business lines, but it could be sort of an example.

Yes. And you touched upon AI. We can't have a technology event without touching AI. It needs to be mentioned. No, I'm joking. The last question, can you help us a little bit is -- how do you work with AI? And is this a growth driver for you or risk? So we are almost running out of time. So [indiscernible] but if you can touch very shortly upon Ai in your business, growth or risk?

Yes, it's an excellent topic for short answers, I think. So the shortest I can say, AI in the short term and the 3 years ahead of us is definitely a growth driver. I mean all our big partners, Microsoft, Infor, others are launching new services, new functionality, new technology every day that the customers have access to. But they don't know how to integrate and how to do it, and that's a huge driver of activity. And I cannot think that we will even be halfway down in 3 years. I know that some people will say this will be done by tomorrow, but working with it every day, that's not how it works. There's a long way to ensure that, that's phased in correctly with the customer. So one of the pillars we have in our strategy, I didn't bring that slide, is called the rapid adaptation partner. So we don't have to develop that much AI technology. We have to go to our big partnership companies and make sure that all the technology they do find good use at customers because they don't do that very well. So in the long term, is AI risky long term? Sure. I mean not just for Columbus, but I think there's a much more modeled picture in a 10-, 20-year planning horizon, yes.

Perfect. Thank you, Soren and Brian, for taking us through your company answering question. Thank you for the audience for listening in. And I would like to mention that if you want to have a little bit more about the strategy, you have a very good slide on your investor site that goes a little bit deeper into it. And we will also do an introduction to this year where we'll go deeper into this, the 13th of December, or at least look for it in the calendar. But I think it will be around that time. So thank you, everybody, for joining in, and thank you, Soren and Brian, for taking us through your company.

Thank you.

Thank you, Michael. Thank you to everybody.