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

Good morning, and welcome to today's presentation where we have Albert Group presenting the year-end report for 2024. With us presenting, we have the CEO, Jonas Martensson; and CFO, Katarina Strivall. [Operator Instructions] And with that said, please go ahead with your presentation.

Thank you, Martin, for that introduction, and a warm welcome, everyone, to this morning's conference call and we're going to talk about the 2024 and Q4 for the Albert Group. What we will talk about today is first start with a quick summary, then go through some general things about Albert Group, then we talk about the full year 2024 and the Q4 results, both some operational key points and the financial key points. Then we will elaborate a little bit on what does things look like going forward before we look forward to a Q&A session. So as Martin said, please ask any questions you have in the forum. But before getting started, just a refresher and summary of who we are and the quarter in general. So the Albert Group, we are a leading Nordic EdTech group with focus on the Nordics, U.K. and U.S. We develop, market and sell different type of learning tools for schools and private persons. These products, they are curriculum based and especially focused on the core subjects of mathematics, literacy and science. And there are many products out there, but our USP is really engagement, which I will come back to later. Financially, we are on a journey to profitability, where we have set the financial target to reach positive EBITDA this year in 2025 and a positive cash flow in 2026. And that's something we should be able to manage with the cash we have at hand today. So we are well funded. Looking at full year 2024 and Q4 in short, 2024 was very much for us a year with focus on profitability, and we have taken many actions to set us up for achieving this in 2025. I think the biggest thing is probably the big restructuring we did in the first quarter and then continued in the fall where we reduced the staff cost and something that we now start to see the effects of that we will bring with us into 2025. We have also spent a lot of focus in commercial readiness in terms of marketing and the people to really drive sales growth in 2025. So we enter now 2025 with good preparedness and a strong business plan for achieving our goals. Looking at 2024 -- sorry, at the fourth quarter in particular, we have continued to see a good momentum in invoice sales, which is up 15% compared to the fourth quarter last year. And some of it also start to materialize in the recognized revenues, it's also up. We have continued to see good momentum in customer acquisitions. We have spent more money on marketing to build a pipeline, which has been our biggest change in cost and therefore, also resulted in a dip in profitability in the fourth quarter being minus SEK 8 million. But now we'll go forward and talk much more about these things. But let's start with a recap of Albert for those of you who are new to us. I mean we are here because the formal education in the world has a problem. There are many children out there who are struggling with school, especially mathematics. Some of the reasons for that is that there is a lack of equal access to qualified teachers. Typically, if you grow up in socioeconomic strong areas, there's a good access to good teachers or if you are in a poorer area, it might be worse access to good teachers. And depending on the support you can get from school, the support you can get from home is much more important. But not all the kids can get the support they need from school -- from home, either because the parents may not have the competence, they don't have the time or the money to support. So therefore, school results are in general declining and the socioeconomic inequalities are increasing. And this is not something we like. So I mean, as both parents and entrepreneurs, we want to go to work every day with a mission to really help every child reach their full potential through engaging and personalized learning. And what do we then really mean with this? And we think especially the word engaging is so important because for many kids out there in schools, I mean, they do have a negative attitude to school, either because they might be struggling or there's a group pressure that school might be boring or nerdy and so on. And that's something we want to turn around. But then you also have the talented students, which might be ahead of the rest of the class, and they maybe not get challenged enough by school. And then not forget as well, there are a lot of kids out there who have special needs. It can be due to ADHD, autism or other learning disabilities. And for them, traditional teaching can be difficult. But having an engaging learning tools really can sort of get all these groups of kids interested in learning so they actually get into it. So what we really focus on is to create, take the position of being -- having engaging learning tools, which are strong educationally and really based on the curriculums. And that's something we think is very important because looking at traditional textbooks and other teaching methods, they are typically very high educational value, but perceived as quite dry and not so engaging. And then there are a number of different edtech companies out there who try to provide different solutions. And either they are typically in the lower right corner where they have just digitalized textbooks or they're more in the upper left corner where it's more games, which are educational. What we see that the very important spot to be in is in the upper right corner where we combine education and engagement. And to do that, some of our -- I mean, lead words are strong pedagogy as the foundation to ensure they are educational, but then add gamification and creativity and storytelling and other things to really make it engaging learning tools. And we're working with learning, obviously, we really believe in placing the learner in the center and both work with the learner in school together with the teacher and at home, together with the parents or guardians because children typically learn in everyday life, so we need to work with them in both places. And to do that, I mean, we are and have been, during the last couple of years, built a portfolio of different learning tools because we really believe in blended learning, which is using books, using apps, using construction kits, films and different type of learning methods. Although I mean, our definite core is digital learning apps. We also have construction kits and educational films to really cater to different interest and learning styles for the kids. And these different learning tools, we sell under 8 different brands, Sumdog, Strawbees, Holy Owly, Albert Junior and Teen, Swedish Film, Film och Skola and Jaramba. And each brand has their unique identity and positioning for the different tools, but they're all collected under the Albert Group name, which stands for trust and Quality and high educational standards. We are mainly focused in the Nordics, the U.K. and the U.S., and we have headquarters in Gothenburg, Sweden with another office in the U.K. But then we're also present in a number of markets, especially across Europe and new market on the map here today is Czechia, where we just launched a couple of weeks ago. I will come back more to that later. But that's it about sort of Albert and who we are. And now we want to go more into depth and talk about 2024 and Q4. And I'll start with some operational key points before handing over to Katarina to take us through the financials. But trying to sum up 2024 in general. Obviously, a lot of things have happened. So -- but I think it can be grouped in 4 different areas, like we have spent a lot of time in restructuring the organization. We have refocused the company on really our high-performing areas. We have started to grow sales again and improve user engagement. But to go a bit more in depth and starting with and restructuring the organization. After a couple of years now with rapid growth, both organically and having acquired a number of different companies, we were in a state where we were a group of different companies who were operating quite independently without many synergies. So during the year now, we focused a lot on getting this group together into a united organization, but also making that organization more functional. So we have like a head of B2B sales selling all products or a product development organization working with all different products. And that has made it much easier both to sort of identify and extract synergies and also reallocate resources much more quicker. But this organization is also flatter and required less people to work efficiently. So that made it possible for us to lower staff cost and reduce the size. And we have also rightsized the B2C organization. It was designed initially for very rapid growth. But as we switch to profitability, we also redesigned the B2C organization to match with the ambitions and the revenues that we had. Then we have spent a lot of time on focus on high performers. We quite early in the year set up the model. We want to identify the high performers and double down on them and reallocate resources there. So we have conducted a number of strategic reviews and so on and really set now focus on Albert Junior, Strawbees, Sumdog and Swedish Film and also decided to really focus on the Nordics, U.K. and the U.S. and then reallocate resources there. And by doing this, we get more resources in the areas where we have a good return on those resource investments, but it also gives them a better condition to really succeed with those brands. And also for those brands, there is a very clear road to profitability. So now we have a laser focus on achieving those ones. Moving on to growth and grow sales, which during 2023 and 2024 hasn't really been our focus since we're mainly focused on the cost side. But as we were preparing for '25 and '26, it was about getting growth again. And back in last summer, we started to see a nice trend shift, especially on the B2C side, where it became much cheaper to acquire customers again and the acquisition volumes that we got were back to sort of pre-recession levels. So we decided to increase more marketing during the fall, especially in B2C, but also in B2B to really build the pipeline. But we've also grown the RevOps or commercial organizations. So we have more people can work with marketing, with sales and customer success to really convert those leads to sales and then ensure they stay and they see the full value of the product. This has resulted in increased marketing costs during the second half year and increased staff costs, but that's just a little fraction compared to the savings we had on the big restructurings. But we have, of course, which is the and the goal increased the number of leads, invoice sales and ARR, which was really what we look for. But then once the customers are there, it's really about keeping those customers and engaging them in the products, so they stay as paying subscribers for as long as possible. And this we have addressed by both restructuring our customer success team, so we can provide better customer service and really focus on the customers that matter. But we've also worked a lot in the interface between the user experience, the product and the communication to ensure that all new customers to get a much better onboarding, and we can help them in building a habit of using the products in their everyday life in schools or at home. This has resulted in better product usage and lower churn. And these things that we did historically obviously remain important going forward as well. So that summarizes 2024 as a whole. Zooming in now on the fourth quarter, it has been a lot about sort of picking up for more sales in 2025, but we have actually seen, I would say, surprisingly good sales in the fourth quarter as well because normally, this is quite a slow quarter for us where parents are getting ready for Christmas and schools are also getting ready for the Christmas break. It's not much activity. But this year, it has been -- so we had 14% more invoice sales than in the fourth quarter the year before. So the strong momentum in B2C continued from the summer. The quarter 4 campaign that we were running during October, November and December also continued to perform very strong with high volumes, good CAC and initial low churn. Now we have just monitored those customers for 2 months after year-end, but it looks promising so far. As a result of the good momentum, we continue to increase marketing, which added costs during the fourth quarter, but will pay off during '23 and '25 as we ended the year with more paying subscribers than we had really planned for initially. On the B2B side, as I said before, it's typically a slow quarter. But this year, we had surprisingly good work in especially Sweden in selling educational films on a title-by-title basis. But it was also a very good quarter because that was the quarter where both Strawbees and the Swedish Film brands, they hit their all-time high sales on an annual level. So it felt like we really ended the year in a strong momentum. On the product development side, we have also really spent a lot of time in focusing on what are the key areas to develop the products in to really drive business in the future. We haven't made any big launches in quarter 4, but we were in the final stages of finalizing product development that is or has already been launched now in the first quarter or will be launched. So for instance, for Albert Junior, it was another localization to a new market, the Czech Republic, which was launched a few weeks ago. It's Albert Teen for children between in the mid stage and higher stages in Sweden, really turning it into the national exam preparation tool. In Swedish Film, we have invested a lot of work in developing a new streaming site, which makes it possible to sell films on a title-by-title basis. We have released the first beta version of that already to existing customers, and we'll release it to all customers here during the spring. In Strawbees, which we -- where we especially focus on the U.S., we have had a laser focus on Texas. We decided to do a tight curriculum alignment to the new curriculum TEKS in Texas, which was also launched a few weeks ago in connection to a trade show in Texas and showed that it really helped sort of selling it into the Texas customers. And Sumdog is our Fluency math practice tool. And to really like emphasize and strengthen this position, we have now worked for a long time in developing something we call the Fluency Booster, which is a feature to really, in an adaptive way, make fluency practicing both fun and engaging. And that was something we have also launched here this quarter. So that was it on the operational side where a lot of exciting things have happened. And Katarina, please take us through the numbers.

Thank you, Jonas. During the year, we have focused on setting the stage for enabling future profitability. And as a part of this work, we have reviewed our cost structure to ensure that we have the right cost base to drive profitability. This has involved a restructuring in Q1 affecting personnel costs followed by an additional restructuring in the autumn, which was communicated in October and concerned our French subsidiary, Kids MBA. Also, this affected personnel costs as well as revenue and as a result, we have significantly reduced our personnel costs, as Jonas mentioned, and the restructuring of the French subsidiary also expects to contribute with a positive impact on EBITDA with approximately SEK 8 million. And personnel costs are now about SEK 1 million lower month, year-on-year as we enter 2025. In parallel, we have significantly increased our focus on sales and sales processes, as we mentioned, and as well as refining and developing our customer success strategy and work. And this has already yielded results during second half of 2024 with increased invoice sales, which have exceeded last year's figures for the same period, as mentioned. And marketing costs have increased due to the strategic efforts that we have made, capitalizing on strong market momentum. And these efforts have delivered strong revenue in B2C and are expected to continue having a positive impact as we move forward. And if we look at the graph to the right, last year's adjusted result, excluding one-off effects, was minus SEK 16.1 million, and this is compared to minus SEK 30 million this year. And this development is primarily driven by our increased marketing efforts, as we have mentioned, and as well as a lower proportion of capitalized costs this year. And net revenue has improved by 2% quarter-over-quarter, and this is in line with our plan to maintain stable revenue levels in line with the previous year. And as we mentioned, there is a strong focus on sale and sales process to increase revenue and sales. And we have increased invoice sales by 13%, as Jonas mentioned, compared to the previous years. And this will have a positive impact on the future net revenue since a significant portion of our invoice sales is recognized over time, and this is due to our subscription-based business model. And we did have a strong Q4 with B2B sales reaching an all-time high for the quarter and B2B also had a strong quarter towards the end of the year as school sales resulted in full year all-time high revenue for the Swedish team. Looking at the composition of our revenue, we see a continued increase focus on B2B with a larger volume compared to B2C. This aligns with our strategic plan. And as mentioned, B2B sales to Swedish Film were particularly strong in Q4, driven by the digital non-subscription sales where Swedish schools purchased educational films on a title-by-title basis and which also conclude that we continue to follow our expected seasonal patterns. And EBITDA for the quarter was minus SEK 8 million, which is SEK 2 million lower compared to last year's adjusted EBITDA. Last year's adjusted EBITDA is due to adjustments connected to the earn-out reversal from acquisition that was not materialized. The change is driven by slightly higher net revenue, increased marketing costs due to our B2C efforts and lower personnel costs following the restructurings. However, we also had a lower proportion of capitalized costs. And the effects of our cost reduction initiatives have started to materialize in the second half of 2024 and are expected to contribute to profitability as we end 2025. And then cash flow for the quarter was minus SEK 15 million, and this is primarily due to the lower result. And at the year-end, our cash balance stood at SEK 44 million. And this is as a proportion of late year's sales will be paid in the coming period. And our plan remains to become cash flow positive in 2026 with cash at hand. And then Jonas will -- go on.

Yes. Thank you, Katarina. So looking at the future, I just first wanted to start by zooming out and talking about our 4-step plan, which I mentioned before. You know that back up until 2022, Albert Group's strategy was all about taking and building a strong market positioning by organic investment, but also buying new companies. In 2023, we sort of started to stop for a bit and lay a solid foundation sort of restructuring and structuring everything that we have done, so we can then do what where we are right now, which is about reaching profitability before returning to profitable growth in the future. But we'll now zoom in on the yellow stage here reaching profitability. And these things, they match very well with the financial objectives we have set and the 2 first ones are related to this yellow stage of first, achieving positive EBITDA in 2025, really prove that the business model is profitable and scalable. And then in 2026, reach positive cash flow to really show that we are self-funded with the business model we have. And with that in place, we can go for profitable growth and strive for that double-digit profitable growth to really drive long-term value in the company. And then talking and zooming in a little bit more on this and how we're going to approach it. And obviously, the equation is simple profitability is a combination of increasing revenues and reducing costs. And on the revenue side, I mean, for the future, our ambition is to continue to grow sales and recognize revenue from 2024 to 2025. We started to see that good growth momentum during the second half of 2024 with the invoice sales being 11% up in the third quarter and 14% up in the fourth quarter. And now going into 2025, we're going to continue to focus on sales. So I mean, sales will be the primary focus instead of just cost reductions and also to drive new sales, but some of the invoice sales, which Katarina mentioned before, it will also financially be recognized during the year. We do believe that, I mean, the normal seasonality will apply in 2025 again, which typically means that the start of the year in Q1 is about marketing and building pipeline for the more important sales periods in the second and third quarter where the actual sales will come. Moving over to direct cost and gross margin. That was something we had also had a lot of focus on during last year, and we managed to keep the gross margins on stable levels around 77%. I think it's just gone up and down like 1 percentage unit. So we have started to grow invoiced sales and the gross margin levels have remained intact, which is a good sign if we continue to grow going forward as well that we can keep it stable. Marketing, it's an area where we really need to keep laser focus on to ensure we have profitable return on investment on every SEK, dollar, pound or euro we spend on marketing. Marketing is super important to drive sales, especially in B2C, but also in B2B, to be honest, although it's a little bit more sales incentive there. Marketing costs are paid upfront in order to drive the customers, and then we sort of will get the revenues over time as the customers remain a subscriber, which means that the cost will come first, and then we will get revenues over time. So therefore, in order to really ensure over time that we get profitable, we are looking into every campaign and sort of look at how much do we invest in it to spend on it and how much money do we make from it to ensure that we get positive return on it. And that focus and principles will continue into 2025 as well. And then fixed running cost, which was really in the spotlight during 2024, will continue to be an area where we need to have strong focus in 2025 to ensure we keep control of that because we did a lot of improvements, thanks to the profitability program. Now we want to ensure that we can preserve those improvements. And as Katarina mentioned before, the running cost, especially in terms of staff is now a bit more than SEK 1 million lower per month. And those are areas where we continue to focus on to keep that. So in combination now, we hope that -- I mean, improved revenues in combination with a focus on cost will take us to profitability. And some actions really achieving this are summarized like this. On the B2B side to grow that business, it's about really doubling down on some of the areas. We have a super strong position in Scotland. So there, it's about reducing churn by improving product and customer success. We, for instance, centralizing many of the contracts on the local authority level, which has proven very effective in reducing churn. We're also growing down in England. And here, we're going to try to win new business, which we have started to take market share already this year. I think I mentioned it when I wrote the report that we thought early on that, I mean, the partnership with YPO would be a very important driver of this in combination with the direct sales efforts we're doing in both marketing and sales. It has been slower than expected to drive growth through YPO. So we will now, in 2025, shift more focus towards our direct sales and direct marketing efforts. We have seen during 2024 that U.S. is going very well, especially in the sales model we have for selling the Strawbees product. We have doubled down on that area in terms of increases, resources on it, both the people working with it, but also the money spent on marketing and going to events. So really doing more on what has worked well. In Sweden, we are focusing on growing and taking market share in the film market. We have a lot of upside there. We actually today have sent customers to other streaming sites. But now we have with the new streaming site that I talked about before, we can offer this ourselves, which should enable us to take more market share. And really to make this happen, we are now seeing how we can improve the Swedish B2B RevOps commercial function to work more efficiently, effectively by learning best practices from other parts of the group. On the consumer business -- consumer side, it's really about doubling down Albert Junior, as we said before. We have a good position in many markets already. So there, we're going to focus on really capturing the full potential, which typically is about ensuring new customers get into the product, they get engaged to the stay-and-pay over a long time. But also scaling into new markets because that is a good opportunity for us to add more customers while keeping the customer acquisition costs low. Looking internally on operations. Last year was very much about restructurings, cost savings and so on. This year it's going to be more about working in a more efficient and effective way. So for instance, automation of a lot of internal processes, seeking cost synergies and between different brands with the people we have, we can get more output from that. So it feels like we have a strong plan for 2025 to achieve our goal. So going for landing and try to summarize the entire presentation now. I mean, we, in general, we now stand strong for turning to profitability in 2025. We spent a lot of time in '25 -- in '24 on the profitability program. It has now been executed. So we now have focused on the high-performing areas. We have restructured the organization. We have now lower running costs and a strengthened commercial organization. We have a lot of strategic product launches in the pipeline. Some have already been launched now early in Q1, some will come during the spring year. And we have seen and hope for a continued good momentum in sales. So with that, let's get back to you, Martin, and here if I got any questions to talk more about.

Thank you very much, Jonas and Katarina, for that presentation. And yes, we got plenty of questions that we got from the audience here. We'll start with the first one. You mentioned positive sales momentum in this report and in the Q3. What do you exactly mean by that?

Yes, good question. I think we can probably break it down in 2 parts. I mean, for a subscription business, sales and growth is very much about both customer acquisition and keeping them for a long time. And we really then made positive sales momentum, it's partly about, I mean, acquiring customers at scale while keeping the cost of customer acquisition cost at a good level. So we get the desired LTV to CAC ratio that we want. And secondly, it's about keeping the churn low to customers stay and generate value. And that's the sort of definition wise and why we think we have good momentum now is that, for instance, in B2C, I think we have since June last summer, seen that we've been able to attract higher volumes and at the desired CAC level that we have been able to do during the -- actually since the economic downturn started a few years ago. Another example is on the B2B side, we've been able to have good retention with the customers, so they choose to stay in their subscriptions and pay, but also in terms of the repurchases in both like Strawbees and what Katarina mentioned before, the title-by-title purchase of educational films that even though it's not a subscription, the loyalty is super high with those customers, and they tend to come back more and more. So the combination of those is what I mean the positive sales momentum.

Thank you, Jonas, for clarifying that. And are you done now with all the restructurings now? Or do you expect more to come?

What I would say, I mean, the big things that we had identified as part of the profitability program when we enter 2024, we are done with them. So I mean, the big changes to the organization is done, and we have identified the strongest performing areas like the 4 main brands and the 3 key regions where we are selling. So I mean we have put focus on them. We have reallocated the resources there and we have downsized in other areas. So those things are done. Having that said, though, I mean, I think the benefit of being like a portfolio business, which we are with multiple brands and multiple markets in 2 business models, B2B and B2C is that we can continuously optimize the business and double down on the areas that are performing well in terms of the brands, the products, all the markets. I mean just one good example, I think, is if we go back a few years, we had absolute focus on B2C. We got headwind as the economy turned down a few years ago, and then we started to shift the focus to B2B, which was the right decision back then. But now since last summer when the wind turned to tailwind for B2C, we could very quickly shift back some resources to B2C and utilize the positive momentum and conditions. So with that, I mean, we're never satisfied. We'll continue to optimize the business every time, but all the major restrictions should be done.

Thank you. Let's move on to the next question here. You said that the focus in 2024 was on profitability, but your EBITDA in 2024 is actually worse than in 2023. Can you explain why and also your plan for reaching your 2025 goal of positive EBITDA?

Thank you for the question. I understand that you need to really understand the numbers to see the logic. If I start with explaining the change between 2023 and 2024, the reported EBITDA in 2023 was minus SEK 6 million. But in that one of a number, one effects were included. And we had a positive effect from a reversal of a provision from an earn-out related to the acquisition of Sumdog that didn't materialize. And 2023's EBITDA was also affected negatively by SEK 3 million in transaction costs related to the acquisitions of Strawbees, Swedish Film and Holy Owly in the beginning of last year. So adjusted for those things, the EBITDA was minus SEK 16 million. And in 2024, the EBITDA was minus SEK 31 million, which is SEK 13 million lower than that. And those SEK 13 million are mainly explained by 3 things, first 2 things, we have made the short-term EBITDA in [indiscernible]. And as Jonas mentioned before, the customer acquisition momentum has been good. So we decided to increase marketing spend to drive this momentum and build a bigger portfolio of paying subscribers. But those marketing costs hit the result now, whereas the subscriptions revenues will come later. And secondly, we have capitalized less R&D in 2024. Our products have become more mature, and we therefore, allocated more resources to selling and maintaining them. And as a result, the proportion of R&D that we capitalize has decreased. And we still carry out a lot of new product development though. And we have also seen positive effects. We have managed to lower our personnel costs and the financial effects of the Swedish restructuring in Q1 started to show up in the numbers in the second half of the year. And during the autumn, we also did the restructuring in France, but don't yet see the result of that. So if we compare the running rate for the personnel before and after the restructuring, it's more than SEK 1 million lower per month. And although these effects together make the EBITDA worse this year, we think they are all signs of a more long-term and healthy business. And that brings me to the second part of the question and what's the plan for raising profitability in 2025. And in short, that's about leveraging what I just talked about. The increased focus on marketing and sales combined with a more favorable market conditions should have a positive effect on the revenues. And the restructuring that we have done make the fixed running costs lower. And combined, the revenues will be higher than the cost, and we will get profitable. However, as it both takes time to see the restructuring costs and the cost savings and the new sales and subscriptions revenue, this will be a gradual shift during the year.

Thank you, Katarina, for clarifying that answer. We'll move on to the next question here. Can you describe the decision to enter the Czech Republic and Romania? And how has the product been received by the market?

Thanks for that question. And just to clarify for you, I mean, we entered both Czech Republic and Romania with the Albert Junior product. And really, there are 2 reasons for it. I mean, one is obviously to grow Albert Junior here in the sort of short to midterm. But second, it's also a bigger purpose of, let's call it, being a scout for testing new markets for the group in general because although we have focused on the 3 main regions right now, I mean, we, over time, will enter new markets, and then it's good to sort of test them out with a product, which is easy to do it. And Albert Junior is one of those, which is quite cheap and easy to localize the new market. But focusing on sort of growing Albert junior, I mean, in essence, we can either grow Albert Junior by acquiring more customers at a lower cost, as I mentioned before, or increase the lifetime value. And expansion is about increasing volumes while keeping the CAC low. And why then Romania and Czech Republic in particular, I think the answer goes the same for both of them actually. I mean we started out doing market research about a year ago, looking at which should be the next market to enter. And on the likely paper and based on desktop research and so on, and both of those ones looked very promising. So we then ran different experiments on those markets in terms of testing marketing and interest for these type of products and so on. And both those markets came out as high scores in that test. Thirdly, I think we can mention that, I mean, we're sort of interested and believe in Eastern Europe because looking at Eastern Europe in general, it's attractive. It's not as crowded as Western Europe or the U.S., but the interest in education is high. Often you have to take a lot more responsibility for education at home if you want to be successful and also the purchasing power in those countries are increasing. And we have also seen and learned from others that sort of there are a lot of similarities and interest in Eastern Europe. So if you sort of manage to crack how to sell into them in terms of product and marketing and things and so on, it's a good opportunity for growing across the different Eastern European countries in general. Then another thing, which I think has been very useful for us when we did the first international expansions was that we had people on the team who came from those countries. And by coming from such a country, I mean you understand how people they work, you know families and friends in the school system, you can see what they are interested in, ways of marketing, local competition, you understand the language and many of those things. And that proved very important for us in the early launches. And now where we have also chosen the later launches if two markets have been equally promising, we have chosen to go with the one where we have people on the team that come from those countries and can really help out with all those local understandings. And then if I recall correctly, I think you also asked how the product have been received so far. And when we had our last call here, I think I talked a bit about Romania, and then we were very early on there. Now we're similarly early with Czechia. I think in general, you can say it's gone as expected. I mean we are definitely strongest in the Nordics, Sweden, followed by Norway and Denmark, where we have been present for some 10 years, spent a lot of money on marketing and so on. But then both those new markets, Romania and Czechia has sort of come in, in our second or third tier, like on the levels with Poland and the U.K., where we have been selling Albert Junior for a few years now to show that, I mean, initial interest seems to be good in terms of volumes. Then for these markets, at least for now, I mean, we have positioned those as a little bit of a lower price point. So the LTV is a little bit lower than the other markets. That also means that the customer acquisition cost needs to be lower to get a positive LTV or a desirable LTV CAC ratio. And that we have managed to achieve as well, which is good. So I mean, they are really nice additions to the B2C business. However, right now, the bread and butter comes from the Nordics. But as we get stronger and stronger in these new markets, they can definitely contribute in the future. I would love to update you all when we know more. Now we've just been live for a few weeks in these markets.

And how has the return on marketing been in the quarter? And how is the spend on marketing compared to Q4 last year?

Yes. Of course, I can probably separate this question in B2C and B2B. In B2C, we see the effects much quicker than we see in B2B. Without, I mean, saying any specific numbers, I mean, the return has been good in marketing. We were running out a Q4 campaign, which ended on the -- in the end of December. So we have just seen the results, so the churn behavior for those customers now for 1.5, almost 2 months, but the volumes were good and the customer acquisition cost was attractive. Now the initial churn behavior and the ARPU we get from those customers give us sort of in our simulation models that we can simulate the lifetime value of them. And by combining them, it really looks like the return on investment will be attractive with a lot of margin as well there, which is good for the quarter. And then I think you asked spend versus last year in Q4. Yes, as we mentioned throughout this presentation, we have increased spend a lot. During 2023, I mean we reduced marketing spend a lot because the conditions in B2C was not favorable, and we didn't see it as a good business decision to spend more. But as it has been more favorable now, we have increased marketing quite a lot actually. And then talking quickly about B2B. I mean, marketing there in terms of -- it's more -- I mean, we use more channels in B2B marketing, both like the digital channels, but also physical channels and trade shows and so on. And where we have spent money there as well, it has shown we have got a good number of leads and so on. Then it typically takes longer time to convert those leads to business. But in terms of the cost for attracting leads and so on, it's been good in B2B as well. I think that's my answer on that one, Martin.

Yes. Thank you. And yet adding on that, how has the feedback on the campaign has been during Q1?

Yes. So I mean, we launched the Q1 campaign in the mid-January approximately. So now we've just been live for some 5 to 6 weeks. I could say that, I mean, it started well. Now it's a little bit too early to say because it will keep on until Easter. So that's when we really will see how many of the free trial customers that convert to paying and how does that influence the paying subscriber portfolio in the end. But early on in terms of free trial sign-ups and customer acquisition costs, it has continued to be -- to look promising. So we hope for that to continue.

And can you please discuss the YPO partnership? And what are the main reasons for it underperforming?

Yes. So to provide some context, YPO, we talked about it during the autumn. It's a big distributor to schools in the U.K., and they're pretty much selling to all schools, and they have been selling computers, papers and pencils and all the stuff for decades. And then they decided now as they had an anniversary, the launch sort of get into EdTech as well and launched something they call the Learning Box, which is a combination of different EdTech tools where they sort of -- they have scanned the market and to make it easier for customers, they bundle it in the Learning Box to sell. And our Sumdog product was chosen as one of the core products in there. So that was the quick background and why I think it has underperformed. I guess, I mean, in our early discussions with them, it was very, very promising. Of course, we were a little bit not skeptical, but we didn't manage to fully believe that we'll be able to achieve that. But now since the launch was delayed, actually a couple of months, which was a little bit first initial disappointment. But then also after the launch, a lot of like, let's call it, start-up mistakes have been made because it's run a little bit like an internal startup. It takes a bit of time to learn how to sell EdTech products in general. And they have now tried a few different setups for making that work. They've also now lately done a little bit of reboot, got new people on board, changed approaches and so on. So now we are much more positive towards YPO than we were maybe some weeks or months ago when we were a bit disappointing. However, we also realize that it's a little bit risky to just sit and rely on a reseller to drive the growth there. So before we sort of said we have the direct sales and YPO is the combination of it to drive sales. Now we are shifting more of the resources to direct marketing and direct sales and rather see YPO as a nice icing on the cake or bonus.

Yes. And do you expect a continued strong performance from Strawbees in the U.S.?

I guess short answer is yes. I mean we have -- Strawbees had a very good growth history during the last years, where it's been many years where we just with the existing team have been able to grow quite a lot. And that was the same from 2023 to 2024, where we hit all-time high in 2024. Again, I think it was already back in September sometime where we beat 2023. And I mean, we hope that, that will continue in the upcoming year as well. But we don't just hope as well, I mean, we are increasing more resources to it. We have grown the teams. We have hired people in marketing and in sales. But we have also, for the first time ever introduced the customer success team in Strawbees, learning a lot from how successful that has been in Sumdog to really ensure once we have sold the product to really work with the teachers to get it used. And especially in Strawbees, we see there's a lot of the salespeople, they are focused on selling on a like decision-making level on the districts or school leadership. We now also really need to work with the teachers. And I mean, on top of that, we have also added more money to marketing. So the combination of more people and more money on marketing. And as an example, we're going to go to the double amount of trade shows this year than we did last year. We really hope that this will be able to pay off in more leads and sales throughout the year. And as I mentioned before in the call as well, I mean, we -- for instance, have realized the importance of really focusing on some of the states in the U.S., like a state like Texas, it's almost like a country of its own and adapting the product to their and aligning it to their specific curriculum like TEKS in Texas also makes it more attractive for them to buy it. So that's my answer.

Yes. Thank you. And we'll take one final question here before we wrap up the Q&A section. Is it correct that you have a forecast for positive cash flow in 2026?

Yes, that's correct.

Okay. Thank you for that quick and good answer. Thank you very much, Jonas and Katarina for presenting today. And thank you everyone who followed this presentation with Albert Group, and I wish you all a great rest of the day. Thank you.

Thank you.

Thank you.