eEducation Albert AB (publ) (9IX.F) Earnings Call Transcript & Summary

Hello, and welcome to today's presentation where we have Albert Group presenting the Q3 2025 report. With us presenting, we have the CEO, Fredrik Bengtsson; and CFO, Erik Bergelin. [Operator Instructions] And with that said, please go ahead with your presentation.

Good morning, and thank you for joining. I am Fredrik Bengtsson, CEO of Albert, and I'm joined today by our CFO, Erik Bergelin. Together, we will take you through Albert's interim report for the third quarter and first 9 months of 2025. After the presentation, we will open up for questions. Over the past 6 months, Albert has gone through a fundamental transformation. We have restructured, we have reduced costs, and we have refocused on our core strengths. The result is clear. We have stopped bleeding and we have turned profitable. In Q3, Albert delivered its first underlying EBITDA profit of SEK 3 million compared to a loss of SEK 8.4 million the same quarter a year ago. That is a swing of more than SEK 11 million year-on-year. Albert started as a pioneer in adaptive learning and has always been about one thing, improving learning outcomes. We have done so by combining smart technology with inspiring content. We have been working with adaptive learning and intelligence-driven pedagogics long before AI became a headline. And we will continue to develop learning platforms that harness the latest technology to enhance the learning experience. Technology is a tool, efficient and individualized learning is the goal. Now we continue our work from a position of profitability and strength. This has been our outspoken ambition, and now we have shown that it can be done. Across our platforms, more than 10 million learners have engaged with our content and smart digital learning tools. This scale gives us deep insight into how children learn, and we can make both effective and more enjoyable learning outcomes. Our business units, Albert operating Albert Junior, a personalized learning experience for families. Albert Junior has a leading consumer position in the Nordics. Sumdog, a trusted classroom platform used in schools across the U.K. and Swedish Film operating the Grand Film & Skola, a stable educational streaming provider in schools across Sweden. One strong bond unites our group. We make learning personalized, curriculum aligned, fun and effective for every child. Net revenue reached SEK 40.8 million in Q3, a stable performance across both B2B and B2C despite the divestment of Strawbees. Group EBITDA was SEK 18.7 million in the quarter, pushing us into positive EBITDA also for the year-to-date or SEK 3 million for the quarter adjusted for one-off items. This is an important milestone. Albert Group reached profitability in the quarter also when deducting one-off revenues and costs from the divestment of Strawbees. We strengthened our liquidity, adding SEK 27 million in cash and removed roughly SEK 1 million in monthly losses. With a leaner organization and lower fixed cost base, we now operate from a strong financial position. The global market for digital learning continues to expand, particularly in mathematics where demand is urgent and results are measurable. PISA results show declining performance across Europe, creating a growing need for acceptable -- sorry, accessible data-driven solutions. The market is developing and the addressable share is growing as schools across our markets continue to adopt and embrace digital learning. Albert's hybrid model across both home and school segments give us a balance and reach. Albert has its reach roots in mathematics and adaptive learning. This is our stronghold and at the center of the group's offer. With Sumdog well established in U.K. schools and Albert expanding in the Nordics, we operate from a strong platform. While profitability is now established, growth remains modest. Financial discipline has been our primary target since I joined. Our next phase is about disciplined growth, strengthening customer lifetime value through deeper relationships and high retention, improving conversion and engagement through product and pricing optimization and scaling Sumdog in the U.K. and sharpening Albert Junior's go-to-market strategy under its new leadership. Here, I want to take a moment to welcome those who have recently joined our group and also to thank all our great staff across the offices in Stockholm, Gothenburg, Edinburgh, London for your energy and dedication through these changes. You are our stars and what you bring to the group helps hundreds of thousands of learners across Europe every day. Your mission is important. Your efforts make a difference. Thank you all. Going forward, growth within our group will be driven by evidence and economics. With a strong financial position and positive EBITDA, we are in a position to invest in technology, ensuring that Albert Group remains in the forefront of digital learning. Now over to Erik, who will guide you through the financials from the third quarter and first 9 months.

Thank you, Fredrik. Yes, the execution in the last 6 months have been very important to build a healthy business again. Focus has been on reaching the financial goals set by the Board last year, positive EBITDA run rate in '25 and positive cash flow in '26. These results could, of course, not have been there without paying tribute to our history. Each of the brands teams have over the history of the group built amazing brands that now are performing, not only on bringing value to our customers, but also our shareholders. I will walk you through the same core financial metrics today as last quarter's report, net revenue, EBITDA, EBITDA margin, cash flow and cash balance. We will also show adjusted numbers where applicable. Our net revenue in Q3 is SEK 40.8 million and similar to '24. Since net revenue on group level has been a secondary focus to our primary financial goals on EBITDA and cash, there is no surprise to us not to grow our net revenue right now. Once we see our EBITDA and cash improving, there will be funds available to growth initiatives where the ROI is healthy. Looking at EBITDA, where we ended the quarter on SEK 18.7 million, a result largely impacted by the divestment of Strawbees assets, which were a key activity for us to strengthen our liquidity and create a group of brands with a better strategic fit. And of course, a very positive signal is that Q3 adjusted for one-off revenues and costs has an EBITDA of SEK 3 million and it is the first quarter in our history with a positive adjusted EBITDA, signaling that we have a healthy core of brands. Similarly, with the EBITDA margin, non-adjusted, we see the EBITDA margin being plus 46%, impacted by the divestment of Strawbees assets. And removing the one-off costs and revenues, we see an adjusted EBITDA margin of 7%. The trend line for the adjusted EBITDA margin is clear. And going forward, we will continue to double down on activities that strengthen both our profitability and our net revenue growth. Similarly to the EBITDA, we now see effects of our decisions and execution on our cash flow. Obviously, heavily impacted by the divestment of Strawbees' assets. We end the quarter with plus SEK 21 million in cash. The Strawbees divestment did not only add cash due to the sold assets, but we also removed a loss of SEK 1 million to SEK 1.5 million per month from our books. And looking at our cash balance at the end of the quarter, we were at SEK 55 million. The risk of us being insolvent or needing to raise new cash at a low valuation have now been reduced. The decisions we have taken in the last 6 months have been tough, but imperative to secure going concern for Albert Group. It feels very good not only bring value to our customers, but hopefully soon also our shareholders as well as creating trust among our employees that we have a healthy business. Thank you. Fredrik?

To summarize, we have stabilized the group. We have delivered profitability, and we have positioned Albert as a financially sound learning technology company with a proven operating model. Our focus now is to grow profitably, intelligently and sustainably, attracting staff who wants to make a positive difference, partner up with teachers and schools to help even more learners, be inspired and succeed whilst creating a long-term value for our shareholders. Thank you. And Martin, we will now open up for questions.

Yes. Thank you very much both for that presentation. And we'll start with the first one. Is your adjusted EBITDA adjusted for losses in Strawbees before you divested it, roughly SEK 1 million to SEK 1.5 million per month.

I can take that one. No, it's not adjusted for that. We have adjusted it for the sale of the Strawbees and all the salaries that are connected to Strawbees. We are roughly SEK 9 million negative EBITDA on Strawbees year-to-date.

What does it mean to be a supplementary brand in Albert compared to a core brand?

Core brands are the brands we intend to invest in going forward. Looking at our history and our presence, well, both Albert Junior and Sumdog derived from mathematics, and we have a strong traction there. That is, of course, a core for us. Looking at Film & Skola, it's educational movies, and that's very relevant for schools today. I mean, video is an essential part of a modern school. And they also bring profitability to the group. They have a sound business model. So that's also considered part of our core. Our lesser brands are brands that have -- that really depend on those 3 core brands for their operations. So primarily looking at like Jaramba, Holy Owly, those are brands that we run or operate with very little resources and no P&L of their own. So they are integrated into our 3 core areas.

Now when Albert, Sumdog and Swedish Film are decentralized with a separate P&L, is the ambition that all 3 should deliver positive EBITDA in independence of each other in the future?

Our objective is that every brand or business area in our group should contribute with a positive outcome. Looking at future investments that might change things, but then they will have a separate budget of their own. Looking at the operational qualities of our brands, they should be profitable. That is the goal for us.

Thank you, Fredrik. You've highlighted math and adaptive learning as your core focus areas. What concrete initiatives or product development are you prioritizing here over the next 6 to 12 months?

Out of competitive reasons, I don't really want to go into what's being done today within our group. But I can just set it in context, Albert started as a math tutoring guide or help. And Sumdog, we have out of almost 3,000 schools, only 7 have -- do not have mathematics or that service within their offer. So mathematics is a strong core within our group.