Huddlestock Fintech AS (HUDL) Q4 FY2025 Earnings Call Transcript & Summary

Welcome to Huddlestock's Q4 '25 Quarterly Presentation. My name is Leif Arnold Thomas, and I am the Group CEO of Huddlestock Fintech. I have with me our Group CFO, Sabine Merky; and also our Chairman, Oyvind Hovland, that will be available at the Q&A session at the last of this presentation. The presentation will in total be about 30 minutes. The plan is to use the first 25 minutes with a presentation and then spend the last 5 minutes with Q&A. There is Q&A button where you can type in the questions, that we will go through at the end of the presentation. And as always if you have questions during the year between quarterly presentations, please just call me, call Sabine, send e-mail if you have questions that you would like us to answer. So with that as a start, let the show begin. As always, I think it is a good idea to wrap up a little bit about what are the main deliveries, milestones, or highlights that has been delivered in the last quarter. And since this Investment-as-a-Service, IaaS area is important for us. It is very -- I'm happy to announce that we have been able to have a soft launch of the cryptocurrency trades on the GIGA Broker platform in December. That was definitely a milestone on our way to a full launch. And also the LOI with MFN in last quarter that was signed in February was also another significant milestone for us, meaning that we are now on our road to more and more customers in this exciting part of Europe. We have -- as part of our plan and development going forward, it is important for us to have more and more products and services available on our platform. And also to have a solution that is as relevant and good as many potential customers as possible. During Q4, we received the MiCAR license, which makes it possible for us to offer crypto trades, which definitely is important these days, and we expect that also going forward. We signed a distribution agreement with a company called FMN (sic) [ MFN ]. I will come back to that, meaning that their product is then available for our customers through our platform. And when it comes to the GIGA Broker project, which is, of course, a very strategic importance, it is also an important part of that journey that I will come back to with us being able to offer also a white label solution to other customers. We have a consultancy business, Visigon, where we at the last quarter announced a target for 2028 of NOK 100 million. We stand by that objective also after this quarter and are very happy to see that we both have been able to secure a contract with a large customer in Sweden, which is not based on time and material, but on delivery of capability and knowledge. Also, as part of the growth strategy in Visigon, to attract customers outside the Nordics is important. And I'm also very happy to announce that during Q4 and also into this quarter, of course, where we see a lot of promising sales processes. And last but not least, following the big restructuring we did last year, we find ourselves now in a place with a much slimmer organization, a lower cost base, and we also see that these costs we have are still expected to go further down into 2026. Short repetition about Huddlestock. We are a Norwegian company. We are listed on the Euronext Growth in Oslo. We have 2 main business areas. That's the consulting business area, which is Visigon, which is the company name. And we have this other area that is Investment-as-a-Service IaaS area. When it comes to the consulting business, the revenues are coming from 2 main parts from historical perspective, it has been very much about time and material and project-based revenues. But what we are now turning it into and an important part of our strategy is to turn it more into more managed services, meaning that revenues will be more steady. They will be more recurring, and we will do not see that many shift during the year based on seasons in the same way as you have when you just have the project deliveries. So that is a good and steady business, and we are working very hard on that, and I will come back to that later on as well. And of course, the Investment-as-a-Service, trading license and solutions, that is where we really see the scaling potential. And we also see now that we have big opportunities in the European landscape with already 2 customers signed and a lot of also interesting and very exciting and promising processes on new prospects going forward. On the Investment-as-a-Service area, where our value proposition is to offer a combination of licenses to do trading in combination with technology. We are an enabler for our customers here called B2B partners to offer products and services to their customers in a very cost-efficient and easy way. So we have -- last year, we signed GIGA Broker as the first customer in the European market and in Germany. And we signed up the second customer, Modern Finance Nation in February this year. And we see that this is an attractive model because then our customers, our B2B partners are not required to do heavy investments in their own technology. They are not been forced to have their own licenses, they can come to Huddlestock, and we will fix it all to say it's a little bit easy. So our ambition now is, of course, to grow the system on both parts. We have more and more partners on the left-hand side, which is the ingredients together with the license that we are able to offer and of course, to grow the customer base on the right side. Customer # 2, Modern Finance Nation. This is a very important and interesting customer for us. Of course, number one, it's always good to get a proof that our value proposition is interesting and exciting for more than only one customer, that's for sure. But also, this is an interesting customer because it also demonstrates that our value proposition is relevant not only for players that would like to offer a trading platform, but also players that are thinking in the modern way of how to offer modern trading saving solutions to their audience. Modern Finance Nation is a new established German provider, and their focus is on the next-generation investors in Germany. And why that is important is, if you look at -- and if you look at the statistics on how the German saving market is developing, it's very clear that the growth of new investors are coming from the young ones. So having a product targeting to the young investors is definitely the place you should be in order to grow your business. We also see that the strategy of how they are going to sell these products is much more about communities and social channels than traditional sales. And their business model is much more about also to have recurring long-term investments than short-term trading. The product, DreamBooster, that's a brand-new name in the German market, and it is delivered under our own in Huddlestock regulatory infrastructure. So now we can see the combination of our licenses with their product and together makes it possible for Modern Finance Nation to go into market very quickly, which we not have been able to do if they should do everything alone. We -- and they expect and they have planned a launch in the second half of 2026. Revenues, is driven by the number of customers on the platform. And we cannot, of course, disclose the revenue potential, but they should hit quite well on a trend now in the European market where investors are very much shifting from traditional savings on bank account towards more simplified investment solutions. And for us, of course, this is important to see how we can also capitalize and get more recurring revenues on our infrastructure base. I have mentioned it before, but I think it is worth to spend a few minutes on this. When you look at Huddlestock and our strategy in the European market is to offer a white label solution to as many customers as possible. To come to customer -- to come to Huddlestock, it shall be possible to get a solution, technical solution, a trading platform license what you need within short time and with reasonable cost. That means that it is extremely important for us and has been always been the strategy to have a so called white label solution that we can offer to the market. If someone thinks that our white label standard solution is good enough, well, the time is quite short from a signature until you are up and running. But we also see that probably the most will have some requirements for adjustments that they will need, and they will go through before they are live. So the process we have with GIGA Broker is the first customer -- real customer that we are now working on the basic functionalities in the white label solution. And of course, they have some -- also some needs that will need to be taken care of before they go live. But from our perspective, from Huddlestock's perspective, now to say that we from April have a white label solution trading solution live is very, very important for us because then we can start marketing and go out to a much larger audience as well. We also have confirmed that we have partners that would like also to contribute with the marketing and PR of that solution. So this is, from a strategic point of view, a very important delivery. With the soft launch of the crypto platform in December as a start, the very important launch of our own white label trading solution in April. And then the next thing that is important for us is, of course, the GIGA Broker that is being launched in June. And we will already from April, start our big presence, as you can see on the right-hand side, being available also on one of the biggest European Fintech festivals in Berlin. So now this is when it will start happening. So this is very, very exciting, if you ask me. Okay. I've received and we have some questions and okay -- about this GIGA Broker, how -- what could it be of potential? So we know that GIGA Broker has expressed that they have an objective of reaching a #3 position within 3 years. We know they have a customer base in AVL with 65,000 customers that, of course, will be offered this new solution. But if we then look at the statistics and who are #3 in Germany then? Well, we have found -- or it is Smartbroker+. Smartbroker+, last official statistics said that they have 222,000 end customers on their platform, okay, and we know that. Then we know the revenues and we know the number of customers of these 3 largest and easy calculation would mean that then a typical end customer would generate between EUR 40 and EUR 65 per year in revenues. And then that would mean that some estimate of a total annual income of that base would be between NOK 100 million and NOK 160 million. So that is to just use figures that is out there and to combine together, it gives some idea of where this could go. And the revenues generated from this is -- or the profit is split between GIGA and Huddlestock. So this is a large potential. You can also see it's a big potential if we look at the #2 and of course, #1. Visigon had a strong Q4. The revenues was up 32% compared to Q3. They have successfully managed to move some of the existing contracts over to the new managed services contract, which will give more predictable revenues, more recurring revenues and not the same seasonal adjustments as before. And that strategy will continue. I'm also happy to see that we have many very promising and good sales processes outside the Nordic region, which is, of course, very important in order to grow and reach our ambitions for 2028. So when it comes to Visigon, good speed going out of '25, and I am confident that we will have a good way into -- we have a good way into 2026 as well. Then Sabine?

Yes. Thank you. I am going to switch on my camera. Well, to the figures, the financial part here of the presentation. 2025 has been a transitional year for Huddlestock, so with a lot of impacts on the reported figures. That means if we look -- if we compare the fourth quarter of last year to Q4 in '25 now, we are looking at a very different company. So after the reshaping that has been executed in the second and the third quarter, the fourth quarter in '25 was actually the first quarter without any divested units included. So the revenue here that we look at is mainly driven by Visigon. But on the cost side, we still had a couple of extraordinary expenses related to the transactions, of course. That's why we have the adjusted figures on the left-hand side here for the Q4. And if we look at them, then we see that we have decreased both personnel and other operating costs by around NOK 8 million, and we end up with an EBITDA that has improved by around 8%. And now in 2026, we will, in addition, gain effect from further cost reductions that we've been working on in the last months. And so that means that going forward now into '26, we will find ourselves at a more sustainable cost level and absolutely in line with our asset-light strategy. So with a positive top line development throughout 2026, we are now also moving finally into the direction we were aiming for. So moving on to the cash flow development in the fourth quarter in '25. We started with the quarter with NOK 2 million in cash. And then we had a cash burn from operations that was mainly driven by the new Huddlestock, so group functions and Germany. But also, of course, as I already said, included extraordinary costs following the divestments made in '25. In investments and financing, we see the net effect actually of sold Done.ai shares and the repayment of loans together and in addition with also to financial costs. This altogether left us with a cash of NOK 5 million by the end of December. And if we then add on the remaining Done.ai shares and an available overdraft facility of NOK 11 million, we are now sitting with a cash position of [ NOK 16 million ] in total. And what is important to say here as well is the Board of Directors is confident with the capital situation we are in now, and we have also access to bridge financing when needed.

Okay. Thank you, Sabine. Okay. Then we have been through Q4 and the highlights. And as always, it's time to look forward. And we have 2 business areas that we now are going to work focused extremely on. We are finished with the divestments. We have done cleanups going forward from Q4 and Q1 this year. This is the new Huddlestock, where we are only focusing on scaling the European Investment-as-a-Service platform and of course, to reach the objectives for Visigon in 2028. Going into 2026, it is a very good start for us to be able to launch and market our own white label solution already from April. That is a big milestone for us, and we will do a lot out of that. Then, of course, our first [indiscernible] customer on the solution, GIGA Broker will be launched in June. That is definitely important also from a revenue perspective because that is the time when the revenue is expected to start. To have strong focus still on sales is definitely important. We are really happy that we have been able to sign up the customer #2, but we would like to have the customer #2, #3 and #4 and #5, et cetera, et cetera, et cetera. We know that some of these sales processes or many sales process take some time because this is a part of a regulatory industry. So it's not just to sign the day -- the first day you meet a prospect. But that is why to have an ongoing process working very good with the prospects and many in parallel is important so that we can see that we are also expanding the universe of customers during 2026. And as you have seen, we have extremely focused on cost and on sales. And we have still -- we have an ambition to turn the business in IaaS cash positive within 2026. So Investment-as-a-Service, very good start, good potential, good speed and now only focus on that. All divested companies and the history is now gone. Then the Visigon business, we see that the end of '25 was a good start for '26 when it comes to Visigon. We have good processes, sales processes outside the Nordics. And we confirm once more that we are targeting an objective of NOK 100 million in '28 with an EBITDA margin of at least 20%. And this growth is planned to be financed by their own operational cash flow. So I think this is perhaps some of the most exciting starting points from new year that we could have. So this is, in my view, a very good start for 2026 and going forward.

Okay. Then we are at the Q&A session and I have...

We have one question here that I would like to ask Oyvind Hovland to comment on. The majority of the Done.ai shares appear to have been realized. Can you clarify when these shares were sold and at what average price?

Yes. Hello, everybody. I just want to first say that it's really exciting times we are going into. And we are really looking forward to the launch of our platform in Germany. When it comes to the Done.ai shares, we have always looked at the Done shares as an asset that we will use to fund our operations in Germany. And so the Board of Directors decided that instead of trying to speculate in the Done shares, we have been selling the shares steadily over a long period of time. So the share price is like an average of that time period. When it comes to the average price, I don't know yet. We still have some shares left. So that we will need to come back to.

We have another question. Can you give an update on the third LOI, which was expected early '26, Leif Arnold?

No. And the reason is because we have different processes in parallel. And as I mentioned when it came to all such contracts, some of them are more dependent on legal requirements and others and so on. So I cannot say something specifically about the third contract, but I can confirm that we have several processes in parallel. That is what I can say.

Yes. That was all the questions I can see for the time being. Please come forward if you had another one. Otherwise, I think we are closing -- we're getting close to the end.

Okay. Then as a concluding remark, I always say thank you very much for being shareholders in Huddlestock to support us. And as I said, and that's important for me to say that this is a very interesting time to say so, where we see a lot of exciting opportunities going forward. So now it's about to deliver, and I'm very happy to see that we are now the Huddlestock 2.0 slim, effective organization that are able to deliver on the very clear goals that we have set. So with that, I would say thank you very much for participating, and please reach out if you have any questions to us during the year. Okay.

Thank you.

Thank you.

Thank you.