eEducation Albert AB (publ) (ALBERT) Earnings Call Transcript & Summary

[Audio Gap] webcast with Albert, where CEO, Jonas Martensson; and CFO, Katarina Strivall, will present the report for the second quarter of 2024. [Operator Instructions] And with that said, I hand over the word to you guys.

Thank you, [ Martin ], for that introduction, and hello, everyone, and a warm welcome to this webcast from Albert where we will talk about the second quarter report of 2024. And my name is Jonas Martensson, and I'm the CEO of the Albert Group. And with me today, I have Katarina Strivall, who is the CFO. And before kicking off the agenda, I would just like to sum up and talk a little bit about Albert and the conclusions from the second quarter. And Albert is a leading Nordic EdTech group, who has a plethora of different education products, which are aligned with a curriculum. We are a global player. We have 6 product brands and several sub-brands who are together sold on more than 10 different markets across the world. We sell our products both to schools, what we call B2B, and to consumers, that we call B2C. And this gives us dual revenue streams, which makes the revenues much more predictable and scalable. If we look at the second quarter in more specific, we're very happy that we're now back to organic growth after a few quarters where it's been a declining growth. And this is very much due to a very strong momentum in the B2B sales in the U.S. We also said before that we have a very clear path to profitability. And therefore, we're very happy that this quarter, we now land on minus SEK 1 million in EBITDA, which is a strong proof point that we are on track. We're also well funded and with the cash at hand, we should be able to get to positive cash flow. So that are the conclusions. And during this presentation, we will now start by talking a little bit about the Albert Group and our strategy going forward. Then we'll spend most of the time talking about the second quarter, both from an operational perspective with some highlights and then definitely the financials. And then we'll conclude talking a little bit about the future and where we're headed before we open up for all of you to ask questions to us, which we're really looking forward to. So with that said, let's get started. I think we have talked about this before. I mean the reason for us existing is really that we want to face the form of challenging -- challenges that we see in education. There are many kids out there who struggle in school and especially in the mathematics subject. And one reason why they are struggling is that there isn't equal access to qualified teachers. And the second thing is -- or the third thing is that if you can't get the support you need from schools, you maybe not even can get the support you need from your parents at home. And therefore, these differences that typically are related to socioeconomic inequalities, so if you're in a socioeconomic weak area, you probably don't have the same opportunities as in a strong area. And what we want to achieve then is to really help every child out there to reach their full potential by making learning fun and personalized. And to do that, we want to really put the learner or the children in the center and then work with them in their learning journey, both at school together with their teachers and at home together with their parents. And in order to achieve this, we want to build an ecosystem of different learning products. But we started, as you probably know, if you've followed us for a long time, back in 2015, when we just had the product, Albert, which was a math product sold to consumers, mainly in Sweden and later on in the Nordic markets. And over the -- since 2022, we have expanded a lot. We have added new products, both in B2B and in B2C. We have added new markets. So now really start to build this ecosystem of different products. But it also means that we have gone from being the math app Albert to really being the education ecosystem of Albert Group. So now our portfolio of learning products consists mainly of digital learning apps. That is definitely the main products we're working on. We have a few books and physical prints and then we have the Strawbees construction kits, which are -- the purpose is to really learn about science in a fun way by both doing like physical construction. We can do programming on the computer and so on. And then lastly, we have educational films, which is a very appreciated way for children to learn new things. And these products, they are sold under 8 different product brands, which you can see here on the slide, and they're all under the Albert Group umbrella. Our focus markets are the Nordics, the U.K. and the U.S.A., but we're also present on many other markets. We have our headquarters in Gothenburg, Sweden, but offices also in Stockholm and in England and Scotland. And we know that our products are really loved by teachers, parents and children out there. So to give a few examples here, I mean, one is from Albert Junior, a very recent quote that was sent to us from a parent to Diddi, who is 4 years old, and she said that, "My son has autism and ADHD. And your app is so far the only thing that makes him sit still and focus. He's 4 years old, but has already learned 20 to 22 letters of the alphabet after just 4 days. So really, thank you so much." And another example is from our construction product, Strawbees, and a science teacher in California, the U.S., and he says, "One of the things that I think is forgotten with coding and why I like Strawbees so much is the physical computing side, the designing side of the computing." And this is really the thing where you can build something physically and you work with the computer and programming at the same time so you can get instant feedback on what you're building. And the last quote here is from the math app, Sumdog, which we mainly sell to the schools. And here's a quote from a head teacher, principal in [ Western ] Scotland, and she says that, "Using Sumdog as part of our multipronged approach to teaching maths has been effective in raising maths attainment at Juniper Green. It has brought the fun back to maths and children are motivated and excited to learn." I think this quote is sort of spot on because it really talks about the multipronged approach to teaching, which is so much what we believe in, believing you should have the normal textbook and teacher-led teaching, but then work with other methods as well like apps, like films, like construction kits because it's a better way to learn and therefore it's fun to hear that. The teachers out there really appreciate that as well. And that hopefully gave you an introduction to Albert and our products and where we are and so on. And now we'll move into the quarter 2 results. But before going to quarter 2, I will just start with a quick recap from quarter 1 and what we said when we met you all a quarter ago. And then we talked a lot about the profitability program that we launched in the end of January with a purpose to really accelerate the journey to profitability, and that profitability program had 4 focus areas, focused more on B2B because it was more stable and profitable. We wanted to maximize the current business, sort of double down on the areas that work well and reallocate resources there. And then thirdly, improve efficiency and capture synergies. And the main activity here was a big restructuring of the organization to go from like a group of stand-alone companies to more like one united organization who work together towards common goals, which will also reduce personnel costs. And lastly, just to have a more cost-conscious mindset and save costs in general, like co-locating offices and so on. And we also said back then that in quarter 1, we took many like the onetime costs for this program. And in quarter 2, we expect to have some minor onetime costs, but now we should start really to see the positive impact of the program from quarter 3 and onwards, just the positive ones. And now we'll talk more about the results of this profitability program, first, from a qualitative or operational perspective and then from a financial perspective. And some of the highlights then from the second quarter really start with this restructuring program because it did take a lot of focus for the management and for the organization to create and then start moving into this new organization where we start working, to some extent, in new teams with new leaders, with new ways of working and so on. Therefore, I'm really happy now when we concluded the second quarter to really see that we are done with the restructuring. All teams are operational. People see and really are understanding why we're doing it and are motivated going forward. We can also see in the financials when we concluded the second quarter that we achieved to reduce personnel cost by 10%, which we planned to do. And why is this then so important for us? Besides, obviously, the profit improvement and reducing cost, I mean, this really makes us stronger, bringing the competencies together, really make it easier to sort of share best practices and support each other. This is also a much simpler structure to manage. Of course, it was on paper before we did it. But now when we have been operational for 4 months in this structure, it's -- we can really see that -- I mean, one united management team can operate everything in a successful way. And it's also a very scalable structure that we can use when we acquire new businesses in the future. The second achievement is the breakthrough of the Strawbees product in the U.S.A. And you can see on the picture is what a typical Strawbees product looks like. You build something physical with these colorful straws and then you can either do just the straws or you can add like the programming unit and the robotics, as you see on the picture here. And what has happened now in the second quarter or if I take May here specifically is that we had 90% more sales this year in May than we had last year. I mean strong overall, but we also saw a real nice thing with 3 sales records during the quarter, where we landed orders of over USD 100,000 to be customers like the Los Angeles United School District, Virginia Beach and other big players. And just to give a perspective, like the LAUSD, the size of just the district is sort of half the size of all the elementary schools in Sweden. So we have a great opportunity just to grow within those customers. And this is so important because we have been on the U.S. market for 10 years now with the Strawbees product. And I mean we have been trying out different sales models and we have spent a lot of time in really building relationships with schools, decision-makers and so on. And now it seems to work. And we have typically started with smaller projects together with the customers. They appreciated the Strawbees product. Now they come back and they place much bigger orders. So we see that we can, in a very efficient way, utilize the existing customers to sell more to them. And we've also seen that the brand awareness and reputation have grown so much for Strawbees in the U.S. People know of us when we go to fairs, we speak to customers and so on. But also the word-of-mouth, one teacher telling another teacher, for instance, one school telling the overall district to use Strawbees has also made sales much simpler. And of course, this is what helps us to grow sales in the U.S. And the last example is a very interesting one from England, and that is that we have entered into a distribution partnership with YPO. YPO for those of you who don't know it, it's sort of the biggest distributor to schools in the U.K. And they started with selling everything from supplies to computer and hardware and electricity and so on. But now they have been around for 50 years. And as part of their 50 years anniversary, so we wanted to do something new. And they have really seen a need out there for a bundle of EdTech products because there are so many EdTech products on the market, and it's hard for the schools to really find high-quality EdTech products. So YPO scanned the British market for the best EdTech products and they selected 3 EdTech products to be as part of their core offering, where our Sumdog is one of them. So they will now be offered as part of the Learning Box EdTech bundle, which will be started to be sold to all schools in England from September this year. And for us, we see this as a great opportunity to really complement our own direct sales in England because with YPO, we are already selling into all schools in England, we will very quickly build brand awareness, we get the visibility to educators. We can do marketing together. We can do sales together, which really both can drive sales for us and grow our market share in a very quick and cost-effective way. So really looking forward to see the results of this later this autumn and especially in the next years. Those were 3 operational key points. We will now move into the financial section here. But before going into the financial results, I would like to stop here for a minute because on the line of sort of continuously improve our financial reporting, create better transparency and make it easier for you as shareholders or analysts and investors to really follow Albert, we have decided to do some changes and updates to the financial reporting. And we have done [ 3 ones ] now for this quarter. And the first one here is about that we're going to provide more detailed reporting of sales. And the reason for why we do this is that, as I mentioned in the beginning of this presentation, we have gone from being the math app Albert, which was only sold B2C in subscriptions to now having multiple business models, we're selling to target groups, being both families and schools and into many different markets. And therefore, we -- the purpose is really to increase the transparency and facilitate understanding of our business. And therefore, we will start reporting and we already, now with this quarter, the revenue is really split by target group, B2B, B2C business model, which is then, is the product sold through a subscription or a non-subscription? Is it a physical product or a digital product? Is it B2B or B2C? We will also segment the sales on -- based on the country or market and then go for Nordics, U.S. and U.K., which are the 3 main markets and also rest of the world. And of course, as before, talking about organic and acquired sales. The second update is to make it clearer with annual revenues and a little bit similar to what I talked about before is that our business model has expanded from B2C SaaS or subscription revenues to now both being subscriptions and non-subscriptions. And I mean, ARR was originally designed to really work for subscription businesses and not really suitable for non-subscription businesses. Although I mean our non-subscription business is very much repeat sales to existing customers with high predictability and so on, why we think that it could fit us in ARR metric as well, but to make it even clearer to follow us, we're now going to divide these 2. So we will report ARR, but that will only be for the pure subscriptions from B2C and B2B. And for the non-subscriptions, they will not be included in the ARR. Instead, we will sort of do -- like show what is the revenue that we generated from that non-subscription in the last 4 quarters, which then become an annual value. And if someone who follows us would like to get an estimate, what is our annual revenues, you can then sum up that ARR from the subscription business and the revenues from the last 4 quarters from the non-subscription business. And the last area and update here is more accurate measure for operational profit. As you probably know, if you followed us for over time -- for some time, I mean, our core focus right now is to make our operations profitable. The profit metrics that we have been mainly reporting before is EBITA, but the issue with that metric is that it also includes the depreciation on capitalized R&D and therefore, not fully reflect operations. And in our case, we do have quite a lot of capitalized R&D so that those depreciations make it hard to understand, is the operations going towards profitability? And therefore, we think EBITDA is a better measure to really track how that is going. So in the reporting, we're now much more clearer, add EBITDA as a reported metric in addition to EBITA. So we still have EBITA there, so you can follow that. But we will mainly talk about EBITDA because it's more related then to the operational profit. So with that said, let's now move into the actual numbers. And as I mentioned before, we've now -- to just keep in mind when we look at the numbers is that we should now start seeing the effects of the profitability program. And let's start with sales. And as I mentioned in the introduction, we're very happy now that sales is back to organic growth. We had net sales of SEK 49.5 million in this quarter, which is then a 3% organic growth compared to the same quarter last year. And all this growth is then organic. I mean, still, like, all the subscription revenues are very stable and recurring. And so the main difference really driving the growth in this quarter is this breakthrough sales in the U.S. of the Strawbees product that I talked about before. And then looking at how this sales is split by the different segments and so on. Looking first on the target group segmentation here, we can now see that sales to schools, school groups and the education sector, B2B, has grown from 57% to 62%. And the driver of this is really the growth in Strawbees, which is B2B sales in the U.S., but to some extent, also that B2C has declined due to slower customer acquisition. If we go to the mid one here, which is the business model, we can see that the biggest business model is still B2C digital subscriptions, which stands for 38%. Second is B2B digital products subscriptions, which stands for 33%. And here, we, for instance, have the Sumdog product. We have the Film & Skola, educational film subscriptions and so on, which is the second biggest one with 33%. And then we have a very small segment, which is B2B digital products that are on non-subscriptions. And I guess the easiest way to really explain this is that if you are like a Viaplay or a Netflix customer privately, you typically get access to a lot of films and series on your subscription. But sometimes you want to watch a film, typically a recently released film, but that one is not included in your subscription. So then you need to pay like a onetime rental fee to get access to that film. This is a little bit similar like some of our rental films are provided on a pay per usage business model instead of a subscription, and that amounts to roughly 5%. And the last category is B2B physical products non-subscription. Here, the Strawbees sales is the vast majority, but we also have some B2B sales of physical and rentals or physical movies that are sold in places which don't have Internet access. And the last segmentation here is by market. As you can see here, the Nordics is our biggest region with 54% of sales. U.S. is #2 with 24%, and then U.K. comes third with 14%. The rest of the world stands for 8%. Our 3 core focus markets make up 93% of sales. U.S. is the one that has grown the most lately, which is then much thanks to the Strawbees breakthrough in the U.S. market. The Nordics has declined a bit, which is due to the lower Albert sales. And now that was it about the revenues, and now we'll talk a little bit more about the profitability and the cash flow. So I would hand over to Katarina to talk more about this.

Thank you, Jonas. Well, here, we can see that in the quarter, compared to previous year, we had SEK 2 million better in EBITDA result. We almost made black figures this quarter with the EBITDA of minus SEK 1 million. And this improvement is due to higher net sales and lower personnel costs, and that is according to the restructuring program plan that we have talked about earlier, and it's according to plan. Accumulated in the June results, we have a slightly worse result than in 2023 in the same period. However, adjusted for items affecting comparability, it is more similar to last year's EBITDA. And we had a negative cash flow in Q2 of SEK 21 million, of which SEK 18 million came from operations changes in working capital, and this is mainly due to larger payments of royalty liabilities in Q2, and this had a negative impact on the cash flow compared to Q2 previous year. These payments also includes royalty payments that were invoiced and paid in 2024, but should have been invoiced and paid in the end of 2023. So the result in Q2 contributed to a positive cash flow, while the results accumulated in June had a negative impact on it. And as we can see here, it fluctuates between the period, and it's important to also look at the total half year. This is because Swedish Film invoiced its large volumes in January this year instead of February as they have used to do in previous years. And this means that the payments this year are in Q1 instead of Q2, and this is the main reason for these fluctuations as we can see here. Here, we can see the cash flow for the first half year compared to year-over-year. And the total cash flow from the first half of this year is minus SEK 15 million, and this is compared to SEK 1 million plus last year, and this is a difference of SEK 17 million worse than last year. And the difference between the years is because capital was injected during this period in 2023 in connection with the acquisitions we had then. And this affected cash flow last year by approximately plus SEK 21 million. And this means that the change compared with the previous year is rather positive when we compare the first half year without these acquisition effects. We can mention that a lower result in this period also contributed to a lower cash flow as we can see here. And here, we can see the second quarter year-over-year, and the cash flow in the second quarter was minus SEK 21 million compared to last year's SEK 10 million -- minus SEK 10 million, and this is a decrease from the previous year of SEK 10 million. However, the result is slightly better and contributed positively with SEK 3 million this period. The decrease compared to last year is mainly due to working capital, as we also mentioned before, and this gives a negative cash flow in this period of SEK 17 million. And this was mainly due to reduced current liabilities related to the payment of these royalties I mentioned before and payments for these and also from payments from the restructuring program. Increased current receivables -- account receivables in B2B have also resulted in a negative cash flow in the quarter as they have increased due to increased sales, as Jonas mentioned before, and this sales has not been paid for yet. It hasn't been -- it hasn't due yet. And then we can see the cash flow changes here during the second quarter. And it's the main reason for the negative cash flow changes during the second quarter this year, is then due to the changes in working capital of SEK 17 million. And this is, as I mentioned, also operating liabilities decreased by SEK 12.7 million, mainly due to these royalty-related liabilities within Swedish Film. And as we mentioned in Q2 this year, there have been more payment this year compared to last year, and some of this is invoiced this year and should have been invoiced in 2023 basically. And the reservations or reserved restructuring program costs had also a negative impact while they are been -- have been paid out during the second quarter and the increased accounts receivable in the B2B sector also increase the cash flow. Yes. And then I leave the word to you, Jonas.

Thank you, Katarina. So happy to leave the second quarter with being back to organic growth, almost reaching a positive EBITDA and so on. But now let's look forward. And I've been talking about our strategic road map a few times before, but I think it's worthwhile to repeat because that's really what guides us. I mean we see that we are on a long 4-step journey, which started, I mean, many years ago when the first step of that journey was to build a strong market position for Albert by growing, by investing in own product development, in marketing to build a big portfolio of paying subscribers, but also to acquire businesses to build this ecosystem on learning products for B2B and B2C. And once that was in place and we had a strong market position, the second step was really lay the solid foundation, which was the focus last year when we started to really shift the focus from the growth to profitability and start to really bring the group of acquired companies together and the typical scale-up phase of the company. Now we are in the yellow stage here, which is then the focus to reach profitability. And that's by what we're doing by sustaining or slightly growing sales and adapt a cost structure. And so we bring that down and become more efficient to really optimize the current business and double down on what's working well and reallocate resources there and really start consolidating the group to a united company. And that should take us to profitable EBITDA. And with that in place, it's really about the longer-term growth towards the vision of becoming a leading EdTech player in Europe. And both then grow the current business by going to new markets with new products and so on, and we do see a lot of opportunities out there already now, it's also to be able to continue the M&A agenda because there is still a need for consolidating the European EdTech market out there. And now with the new structure we have, it's also so much easier to leverage that one to integrate new acquisitions. And to really make it even clearer what the focus is on this strategy journey, we, this morning, sent out an update of our financial objectives. The previous objectives have been around for many years now and was done when the company was looking totally different, it was a B2C SaaS company only, presence in some markets and so on. And now we have the financial objectives to really fit the current situation to align with the strategy we have with a focus on profitability and cash flow in the short term and with profitable growth in the longer term and also to align it with the type of company we are today, that we both have subscription business, non-subscription, we have digital products, physical products, we have B2C, which can grow fast, complemented with B2B, which is more stable and so on. And with these new objectives, we really think that we are much more tailored to both the strategy and the current situation. So these new, maybe I shouldn't really say new, because they've been focus areas for some time, but we haven't really had them so clear. And that is the first objective is really to achieve positive EBITDA in 2025. And that we want to do to really prove that the business model we have is profitable and scalable. The second objective is to achieve positive cash flow in 2026 with existing cash. And this is really to show that we are financially self-sufficient and we don't require external capital injections to cover the operating losses so the operations should really fund itself. And with these 2 more short-term objectives, we have a more longer-term ambition, which is to strive for double-digit profitable growth. And this is really truly additive because, I mean, at heart, we are a growth company who wants to grow and have big ambitions. And this is what we think that really guide us for profitable growth and also to create long-term shareholder value in the company. If we then connect these financial objectives to the strategic journey we are on, I mean, #1 here very clearly comes into this yellow phase we are in right now to achieve positive EBITDA and also then to achieve positive cash flow in 2026. Those are really the 2 big proof points we see before moving into the more growth-oriented phase, where we're striving for double-digit profitable growth. And to show the progress towards these ones already now, I think we can focus on the lower line here, which shows EBITDA. I mean we have gone from back in the blue phase when it was very big losses. We did, during 2023, I mean, really start to focus on profitability, which had a good impact around the year-end here in quarter 4 last year, in quarter 1 this year, we did a lot of restructurings and had several onetime effects that impacted the results. And I will say that now all those things are cleaned out now in the quarter 2 results. It's -- I mean, no onetime effects or anything, it's like pure EBITDA in here. And we were at minus 1. So we're really on a good track towards the target of positive EBITDA. And to bring some transparency on the actions we're planning to take to really take the next step both in growing the top line and improving profitability of the measures here, we do see great momentum in B2B sales right now. And [ Sumdog 4 ] focus areas here really are to, I mean, harvest more from the strong position we have in Scotland. And here, the focus is, since we have a really strong market position, is to reduce churn, that is both by improving the product, but also to work better in customer success with customer onboarding, training and support as long as the customers are customers of us. And then secondly, it's about winning England. It's a bigger market than Scotland. We have a smaller market share, so it's a great opportunity here. And here, we think this partnership with YPO that I talked about before is one good opportunity to really speed up this journey. We also have the good sales in -- for Strawbees in the U.S. where we now have cracked the way how to sell there. So now we're going to capitalize and ride that strong momentum in a better way. We're also going to explore the revenues between, especially Sumdog and Strawbees, which is something we have now started in the last weeks and months, especially in the U.K. and Scotland to sort of introduce Strawbees to the Sumdog customers, which we have really long and good relationships with, and this seems to be very positive, so I'm excited to see how this will fall out during the fall. On the B2C side, I mean, the big flagship product is really Albert Junior. It's about capturing the full potential of it in the existing markets. We're also now scaling to new markets, because as I mentioned, I mean, one of the reasons for why B2C was slower this quarter was that it's been tough with customer acquisition during the spring. And by opening up new markets, we can easily acquire more customers without increasing the customer acquisition cost. And also, we're seeing good effects in bundling different B2C products like Albert Junior and Albert Teen or Albert and Jaramba and so on and that creates a more attractive package, which we can charge a higher price for, and which in turn leads to better LTV. And more some general principles for improving revenues and profit is our mantra now, double down on what's working well and reallocate resources there. So we're currently conducting a strategic review of all our different products and brands and markets to see which are the ones having strong momentum and proof points and really allocate more resources there from the areas that are not performing as well and also to start seeing cost synergies in the new organization, which we can already now see after a few months in it. We do have some upsides, which we don't build into the base plan, and that is that the KPIs in sort of like customer acquisition cost, the churn, conversion from trials to paying and so on, that they return to the levels they were at like 2 years ago before the recession started. And also that we could acquire profitable companies at good valuation. It's not something we count on in the base plan, but those could be upsides. So to go in for the conclusion, and I think the big takeaways of today's presentation is that now we have articulated very clear financial objectives to achieve positive EBITDA and cash flow or the cash at hand. And with the recent proof points from this report with almost reaching breakeven on EBITDA, we are on track here. We're also very happy that sales has returned to organic growth and a big contributor is the Strawbees sales in the U.S. And thirdly, that we are now seeing the good synergies in the group. With the new organization, operations is smooth. It's very easy to find and capture synergies. So with that, we conclude the second quarter and as a strong one. But now, we are interested in hearing questions from all of you. So let's open up for questions. So Martin, do you have any questions for us?

Yes. Thank you so much for the presentation here. We go right ahead there. Can you tell more about the breakthrough of Strawbees sales in the U.S.? What should we expect here going forward?

Yes. I mean, to some extent, I think I can repeat on what I said before. I mean it's been long and hard work to really build a strong brand and relationships in the U.S. market and also really to adapt the product for the needs over there because the curriculum is different and learn and teaching methods and so on. And now we've been on the U.S. market with the Strawbees product for roughly 10 years. So we have the relationships we have with the schools, with the teachers and the decision makers. But I think it's also a little bit of -- you could probably call it a catch-up effect because in many a times, we have to start with like smaller -- like almost pilot projects or smaller orders to an individual class or a school and so on. But then when they have sort of seen the beauty of the Strawbees product, they typically wanted to expand it to more classes and more schools. So they are rebuilding, because to some extent, it's like consumables where you build stuff and the kids bring it to home or you have to replenish stock as well. So they are buying more. But also now that -- I mean, the brand has become strongest, we see teachers, they talk to each other or maybe a single school, which belongs to maybe school district, I mean, that head teacher or principal, they talk to the purchaser on a district level and say, hey, we should use this in the other schools in the district and so on. And for instance, these are what happened in the Virginia Beach deal, which one of the -- was one of these USD 100,000 plus deals that I mean, we've started to sell into a few individual schools, which were focused on science and STEM, but they were spreading the words to a district level, so they made this big order. So looking forward, I think -- I mean, of course, sales take a long time in B2B in general in Strawbees and so on, but as we now see, I mean, we're having very many big interesting customers on board. And given the size of them, we think we're just seeing the start. So we are very hopeful about continuing to have strong Strawbees sales in the U.S.

Could you explain why the EBITDA is strong, but the cash flow is very negative in the quarter?

I can take. This is due to the working capital mainly, as I mentioned, and it's mainly linked to the royalty payments that are bigger compared to last Q2 and also a substantial proportion of older royalty debts has been cleared this quarter. This means that we have paid more royalties in Q2 compared to the previous year. And also, there's restructuring costs that were paid out in Q2, has also reduced cash flow connected to working capital, and of course, also increased accounts receivables in the B2B companies, mainly Strawbees, where we have increased sales and where the invoices has been invoiced but the invoice are not due until after Q2.

You mentioned that the new organizational structure has made it easier to capture synergies. Can you explain more about this?

Yes. I can take that one. And I think I can start with internal synergies. And I mean, one example, I think, we can say from the product development organization. Like, before, we just had a lot of more stand-alone teams where maybe we just had 1 teacher or [ pedagogue ] the team, they didn't have anyone to bounce ideas off with and so on. And now when we bring these people together, I mean, we can so much easier share best practices and use each other as a sounding board. And this, for instance, has made it much easier to work with pedagogue across the group where we can start initiatives in AI to see how we can develop that by collaborating. But it can also be like our design team, which has become more like an in-house resource that instead of going, by design, resources from external consultants, the internal design team can now support all the different products. On the commercial side, I think I can take the example of what I mentioned before, where we see, for instance, B2B sales and distribution. And now we have, I mean, 1 Vice President of B2B sales, Tom, and he's responsible for the different sales. So now it's been very easy for him, for instance, on the Scottish market where we have good relationships with a lot of the local authorities for the Sumdog product to sort of introduce the Strawbees product as well to them. And then it can just -- through a few phone calls, it would be easy to get like a webinar or a sales meeting with 40 schools, which will take a lot of time and effort for someone who doesn't have those contacts to get in front of so many schools. So I think those are some examples. Over to you, Martin.

Another question. How is that, that interest income only amounted to SEK 9,000 in the quarter?

Can you repeat that question, Martin?

Yes, of course. How is that, that interest income only amounted to SEK 9,000 in the quarter?

I think you can take, Katarina, interest income. Yes.

Yes. It mainly depends on that we had a higher interest last year and that was the more the unusual cost last year.

You mentioned that a strategic review is being carried out to redistribute resources to the best performing assets -- areas. Can you give any indication of which products or markets may be prioritized or possibly de-prioritized, so to speak?

I mean, given where we are right now, I mean, we do see strong performance a little bit like I showed in the revenue split before that the U.S. market is performing very well. So that's one of the areas and where we also have the proof point from how sales is going with the Strawbees product. So it's a typical one. It feels like -- I mean, we have sales and operating models, now we can really invest more in it and scale it. So that's in terms of product and the sales market, that works well. Another example is the Albert Junior product, which has performed very good now from a customer acquisition perspective in the Nordics and Poland and U.K. during the summer. And therefore, we said now it's time to really scale it to new markets, which we did a few years ago, but we paused it during the last year due to the profitability focus. I think that's an example of a product where we are focusing more on that.

Moving on to the last question here. You talked a little bit about U.S. earlier, but besides the breakthrough in the U.S., are you exploring other international markets you want to expand to? And how do you see opportunities and challenges of further global expansion?

Yes, I would say, I mean, a little bit like I just mentioned, for some of the products, I mean, we do look into further International expansion. But if I will put this on a probably like a 3-step journey, we think, given that we are, especially in the U.S.A. and in the U.K., which are 2 big markets for EdTech products, we still have much more room to grow in those markets with existing products. So first and foremost, it's more about growing each product where they're already today. Second focus is really, if I call it like cross-selling, so like we're now doing with -- we have a strong position with Sumdog in the U.K. Let's introduce Strawbees there, which is then really a market expansion for the Strawbees products since it hasn't been present there before. But that makes it possible to utilize the sales and distribution muscles and the network we already have without investing in building up new ones. It's more about the market localization of a product. So right now, I'd say that's more of the strategic focus to cross-sell and localize our existing products for the markets that already perform well. And then we talked about the U.K., the U.S.A. and the Nordics. To go into totally new grounds, I mean, right now, I mean, our strategy is to explore this in two ways. You can say one is to use our B2C products like Albert Junior. It's very, you can say, easy to localize it to a new market in comparison to some of the B2B products. So getting into new market sort of with a small investment, so we can try out to see what's the interest in our products, or our brand on the specific market before starting any big one. As I mentioned in the quarter 2 report in the CEO word, I mean we are -- have done some experiments during the second quarter, and we launched Albert Junior in some new markets, starting this fall and onward, and we will come back to which markets that are later on. Another way for us to explore new markets more for some of the B2B products is through resellers. So especially like over in Asia right now, we're working with some resellers that we had long-term relationships with, they've started to sell small quantities. So for instance, Strawbees, and over time, they have come back and purchased more and more and more and seeing where the resellers have good traction also gives a good indication for us if we should move into such a market with more direct sales going forward. So hopefully, that sheds some light on the expansion question.

Thank you so much. And thank you, Jonas and Katarina, for presenting here today and answering all the questions. Thank you all for tuning in. I wish you a pleasant weekend.

Thank you so much from us as well.

Thank you.