Kinnevik AB (IV62.F) Q3 FY2025 Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Kinnevik Q3 Report 2025 Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Georgi Ganev, CEO. Please go ahead.

Thank you, and good morning, everyone, and welcome to the presentation of Kinnevik's results for the third quarter 2025. I am Georgi Ganev, Kinnevik's CEO; and with me today is our CFO, Samuel Sjostrom; and our Director of Corporate Communications, Torun Litzen. We will begin today's call by walking you through the key events of the quarter, including our core company's performance. Samuel will cover our capital allocation, financial position and net asset value development. I will then give you an overview of how our portfolio has evolved and matured over the last 3 years and what that means for us going forward. Finally, I will reiterate our priorities for 2025. And as usual, we will end with a Q&A. So let's start on Page 4. Q3 marked another quarter of stable operational performance in our core companies of today with selected investments in the core companies of tomorrow. Our portfolio continues to mature and our companies are successfully balancing growth with margin control. Our net asset value was up 2% and amounted to SEK 37.5 billion or SEK 136 per share at the end of the third quarter. The fair value of our private portfolio was up 3% in SEK and 4% in constant currencies. We ended the quarter with a net cash position of SEK 8.6 billion after investing SEK 1 billion mainly in our existing companies. During the quarter, we invested additional capital into our core company, Mews, on the back of proof points in its go-to-market strategy and product development. We also participated in funding rounds in Enveda and Aira. Drawing on our successful partnership with Mews, we also welcome Nory to the portfolio, an AI native vertical SaaS company targeting the restaurant industry. Let's move to Page 5 for an update on the performance of our core companies. As a group, Spring Health, TravelPerk, Pleo, Cityblock and Mews continued to demonstrate strong growth during the quarter while improving profitability. In the first 9 months of 2025, they grew revenues by 35% on average and improved EBITDA margins by 2 percentage points year-on-year. This solid performance has been fueled by the rapid integration of artificial intelligence, which is fundamentally changing how our companies operate and how they deliver value to their customers. We have seen firsthand how AI has been transformative across our portfolio, driving automation, personalization, smarter decision-making while unlocking new levels of efficiency. With meaningful scale and deep customer engagements already established, our core companies are uniquely positioned to leverage AI. For example, Spring Health is using AI to reduce the admin burden on clinicians while delivering personalized care with a speed and precision that was previously out of reach. During the quarter, the company secured several major contracts, and as a result, we slightly raised their outlook for future growth. TravelPerk continues to invest in AI-driven innovation to remove friction from the travel experience. The company has embedded AI across its platform from automated customer support to internal AI-powered assistance, driving significant growth and profitability improvements. Gross margins now exceed 70%, up from 40% at the end of 2022, with revenue growth of 50% year-to-date. Mews revenue management solution, Atomize, has doubled its customer base over the last 6 months. Since being acquired by Mews late last year, Atomize has evolved into a next-generation generative AI-powered engine, combining insights with real-time pricing and customer segmentation tools. I will expand further on Mews on the next slide. As our portfolio continues to mature and strengthen its profitability, we are seeing greater predictability and more stable operational performance. Our core companies are delivering on key lead indicators, signaling continued positive progress into 2026. We are confident that this solid performance will continue to be reflected in our net asset value growth with a very limited need of additional capital. Let's now move to Page 6. In the quarter, we made a EUR 15 million secondary investment in Mews. The company continues to execute on their multiproduct strategy to capture a larger share of hotel economics and to create a more attractive, stickier and higher-value customer relationships. On this note, Mews announced the acquisition of housekeeping platform, Flexkeeping in late September. This adds another key product to Mews platform, increasing the addressable share of wallet of hoteliers by more than 15% and draws on an already strong customer overlap with Mews. Meanwhile, the company has improved their onboarding of new customers throughout 2025 and signed new customers above our initial expectations. In August, they passed EUR 330 million in run-rate revenues. As you can see on the right-hand side of this page, Kinnevik first invested in Mews at the end of 2022 and have invested more capital on 3 occasions since then, including the most recent investment. Consistent with our capital allocation strategy, we have continued to deploy capital as the company has continued to deliver on its plan and hit key milestones. Mews have grown run rate revenues by more than 3x over our 3 years as shareholders. And we're very happy to have found a way to invest more capital behind Mews and their CEO and Founder, Matt Welle and Richard Valtr, and we look forward to updating you on the company's progress in the coming quarters. Let's now move to Page 7. In just 5 years, Enveda has scaled to become one of the fastest-growing tech bio companies globally. In the quarter, we invested $20 million in Enveda's $150 million funding round alongside strong and well-known partners, both new and existing. It was also announced that Mikael Dolsten, former Chief Scientific Officer at Pfizer and current Novo Nordisk Board member, joined Enveda's Board. This successful capital raise comes on the back of clinical validation of the company's AI-powered drug discovery platform, which is advancing candidates 4x faster and at 1/10 of the cost compared to the industry average. This is demonstrated by its leading drug candidate targeting eczema, which recently successfully completed Phase 1a clinical trials. The new capital will advance multiple more programs into clinical trials. The company's promising pipeline of therapies target eczema, asthma, inflammatory diseases, obesity and more. These are conditions that affect more than 100 million adults in the U.S. alone. As in the case of Mews, we have made 3 follow-on investments in Enveda as the company continues to deliver on its strategy. The most recent round values Enveda 55% above our book value from the second quarter in USD terms. I will now hand over to our CFO, Samuel Sjostrom.

Thank you, Georgi, and good morning, everyone. So I'll do the usual run-through of our financials, capital allocation and NAV, and then I'll hand it back to Georgi for his closing remarks and for a look at our portfolio's evolution over the last few years. But starting by covering the last few months on Page 9, we invested just north of SEK 1 billion in Q3, bringing year-to-date net investments to SEK 2.3 billion. As indicated in the previous quarter and as Georgi just laid out, our investments in Q3 were mainly directed into our existing portfolio with the SEK 169 million secondary acquisition in Mews and our participation in Enveda's and Aira's funding rounds with roughly SEK 0.5 billion in total. The fourth more meaningful investment in the quarter was our new investment in the smaller and younger "Mews" for restaurants, Nory that Georgi also covered earlier. That meant we ended Q3 with SEK 8.6 billion in net cash and with 73% of our portfolio being invested in companies that are profitable or deemed funded to breakeven. And that's a number that's coming down a bit in this quarter, mainly due to our investment activity and the large write-up of Enveda. Looking ahead, our investment pipeline is focused on opportunities and companies that are advancing the ongoing transformation of our portfolio towards a more stable balance of growth and margins rather than holding this transformation back. And this is after us having spent the last 12 months carefully making sure our portfolio has a strong bench of young future core company candidates within our focus sectors. And I know Georgi will get back to this ongoing shift in our portfolio when I'm gotten you through my usual updates. With these factors, our net cash position and the quality and growing maturity of our portfolio combined to ensure that we continue to plan and execute on our capital allocation from a robust platform. And looking into 2026 and '27, we see strong potential for our focus on creating optionality for monetization and liquidity beginning to bear fruit, driven both by the development in our companies and in the general market environment. With that, let's move on to this quarter's NAV on Page 10. NAV was up 2% in Q3 to SEK 37.5 billion or SEK 136 per share. In constant currency terms, NAV was up 3%, with underlying NAV growth again held back a bit by currencies, this quarter by some SEK 0.4 billion. Year-to-date, the negative impact from currencies amount to around SEK 3.4 billion or a double-digit percentage headwind faced by the underlying value growth in our portfolio. Our private investments were up 3% in the quarter or 4% in constant currencies, with overall stability across the portfolio. Multiple contraction in our private portfolio amounted to negative 3%, and that's a magnitude on par with public markets. Meanwhile, transaction activity within the existing portfolio continued to provide supportive valuation feedback. Looking back over the last 12 months, meaning Q4 last year and the first 3 quarters of this year, we've seen primary or secondary transactions in half of the private portfolio by value. And on average, these deals have been clearing at valuations 26% higher than our preceding marks. Outside of the portfolio, as you will have seen, IPO activity in pockets of public markets relevant to us and our portfolio have been picking up. Renewed market volatility in October aside, these are continued signs of the public markets' appetite for more growth-oriented equity stories like those of our core companies, driven by the fact that these types of growth businesses have become rare in public markets over the last years. With that, I'll move into the customary details and valuation movements in the quarter, starting with a quick summary of currencies and multiples on Page 11. Starting on the right-hand side of this page, the U.S. dollar and the euro both depreciated by a bit more than 1% in Q3, leading our private portfolio's value-weighted currency basket to be down by around as much. As I mentioned, these currency headwinds meant a negative impact of SEK 0.4 billion on our NAV. And again, year-to-date, these headwinds have carried a negative impact of around SEK 3.4 billion. Meanwhile, trading in the key valuation peer sets of our private portfolio on the left-hand side of this page was relatively tightly fanned out around the average negative 3% multiple contraction with the most pronounced negative movements in our software comps. As I mentioned earlier, our portfolio followed these movements 1:1 on an aggregate level, with valuation multiples in our portfolio coming down by an equally large 3% on average. So in summary, a pretty stable quarter for currencies and multiples by 2025 standards with some 4% aggregate headwind faced by our private portfolio by these external factors. If you excuse me and in case you haven't already, please make sure to have a look at the deep dive presentation that we posted on our website a few months ago that covers the process behind the valuations of our private businesses and the main considerations involved. In the back end of that presentation, you also find a hopefully helpful guide on the information that we provide in our interim reports valuation section. So with that, let's look at how our company stood up against this headwind, starting with our core companies on Page 12. On average, underlying constant currency valuations of our core companies were up 2% in the quarter despite multiples contracting by 5% and this translated into a 1% increase in Swedish krona fair value. Operational performance during the quarter and lead indicators on 2026 performance were overall reassuring and was what helped offset these external headwinds from multiples and FX. As Georgi mentioned, we upgraded the outlook on Spring slightly after some large contract wins and TravelPerk continued to invest the funds raised earlier this year, causing intentional pressure on margins in the short term. Pleo continued to carefully dial in their growth investments to ensure unit economics remains healthy, leading us to again revise down our growth expectations on the company by a few percent in the quarter in exchange for stronger margins. Cityblock meanwhile, has faced gross margin pressure during 2025, in line with the industry-wide increases in cost of care reported by the major health care payers in the U.S. Meanwhile, the demand for Cityblock services from these payers and thereby the company's growth pipeline remained very robust. Against the backdrop of this growing demand for their unique care model, the company is thoughtfully dialing in their growth rate to ensure they do not take on too much risk during a period of accelerating industry cost trends and regulatory uncertainty. Lastly, at Mews, as you heard Georgi go through, we saw continued strong developments on the product side, including through the acquisition of Flexkeeping, and the company was beating plan on new signings. The company also passed EUR 330 million in run rate revenues in August, and while SaaS revenue remained on plan, we adjusted down our near-term expected transaction revenue slightly in the quarter, mainly due to a shift in customer mix. As a group, positives and negatives were largely netted out and our expectations on the next 12 months remain at the growth profitability profile in line with expectations in the previous quarter, with our core companies as a group expected to grow by between 30% to 40% on average with an average EBITDA margin somewhere in between breakeven and negative 5%. So in summary, for our core companies as a group, it was another stable quarter from a performance and valuations perspective, albeit as always, with a mix within this group and another round of negative impact from public market multiples and currencies. Moving on then to the last page of this section, Page 13, and looking across the full private portfolio by categories and sectors. Starting with closed or ongoing funding rounds in 3 of our more novel businesses. Our fair value of Aira came up by 20% in the quarter as a result of the funding round that was completed. The rounds underlying valuation was just a few percent ahead of our Q2 assessment, but we saw a larger valuation effect from collapsing the convertible equity capital structure that has been used to fund the company during its incubation phase of the first 2 years of operations. With Aira now having reached that next phase and stage of maturity, the scale of the company with EUR 200 million in run rate sales and this normalized capital structure means that our valuation of the business can be more dynamic going forward. Meanwhile, at Enveda, we revised our valuation upwards by 55% on an underlying USD basis, also here to a level in line with the quarter's funding round. And earlier this week, Stegra announced it was also in fundraising mode after having secured commitments from its larger leading shareholders. This funding round remains ongoing, and at the end of Q3, our fair value remained unchanged in euro terms. We'll be able to reassess our valuation of the company in connection with our Q4 report when we should know the outcome of this funding round and how it may impact the business case and the value of the company and of our investments. Lastly, our more mature companies, meaning Betterment, Cedar, HungryPanda, Instabee and Omio have remained in EBITDA profitable territory during 2025 to date and have grown revenues by around 12% on average. This group's underlying valuations were up by 6% in the quarter, mainly driven by performance-driven write-ups of Betterment and Cedar, and you continue to find a dedicated page covering this group of our more mature companies in Note 4 of today's report. So to summarize the financial section of today's presentation, Q3 was another stable quarter with capital allocation and operational performance on plan and a private portfolio increasing in value by 3% with the continued stability in performance offsetting some 4% headwind from currencies and public market multiples. With that, I'd like to hand it back to Georgi to reflect on the development of our portfolio over the last couple of years and to give us closing remarks.

Thank you, Samuel. Let's now move to Page 15. As mentioned, our portfolio continues to mature, and we are seeing increased stability and predictability and more stable operational performance. On this page, we have outlined the progress made across our portfolio in the last 3 years. Our core companies are balancing growth investments with disciplined margin control. Growth rates have come down from over 175% to around 30% to 40% expected over the next 12 months. But in return, margins have improved significantly, and we expect our core companies to approach breakeven as a group over the next 12 months. Combined gross profits have increased by 5x in actual numbers. Meanwhile, multiples have come down by more than half. We have worked hard to increase exposure to our high conviction businesses and our core companies today constitute 51% of our portfolio compared to 22% at the end of 2022. This has been driven by active capital allocation and strong value creation in our companies. Today, we are operating from a position of strength. We have a portfolio of companies with increasingly stable performance and limited capital needs, which contributes to clear path to liquidity and monetization. This enables focused capital allocation, which brings me to the final page of today's presentation, Page 16. Looking ahead, we expect this trend of maturity and increased profitability to persist across the portfolio. The funding need continues to come down, and we have the financial capacity to support our high conviction businesses with new capital as they deliver on key proof points. Examples during the last year include follow-on investments in TravelPerk, Mews and Enveda, which have all delivered according to plan and hit key milestones, demonstrating stellar operational performance. In parallel, as Samuel also mentioned, our investment pipeline is focused on carefully identifying opportunities and companies that would reinforce the increasing maturity of our portfolio. Going forward, we remain relentlessly focused on executing our priorities, disciplined capital allocation, stability in performance and delivering proof points and increased transparency. We look forward to keeping you updated on this progress. We're now ready to answer your questions. So operator, please open up for Q&A.

[Operator Instructions] And our first question comes from the line of Derek Laliberte from ABG Sundal Collier.

Sorry, I was on mute. I was wondering on TravelPerk, given the news lately about its peer, Navan IPOing, et cetera. I mean from your perspective, how does TravelPerk differentiate itself versus its key competitors like Navan and [ Konga ], I suppose.

Thank you, Derek, for your question. Georgi here. So I think, first of all, we think it's positive that the market opens up for these type of businesses. And we have now with Hinge, with Navan and so forth, seen that there is an appetite for companies that we have in our portfolio. And concurrently, they are also then maturing as we've said, and they're getting ready for the public market. Looking at TravelPerk in comparison, I think the main difference is that they're extremely strong in the SMB market. So the unmanaged travel space where people are actually moving in to use one of these solutions. We think that is a better positioning than Navan. Then obviously, we also know from the S-1 filings when we compare the notes that Navan is a great company, probably twice the size. But since TravelPerk already demonstrated that they can be profitable around EUR 200 million in ARR, it seems like their scalability is coming faster. That in itself, I think, is a very strong position of TravelPerk as we see it.

And our next questions come from the line of Linus Sigurdson from DNB Carnegie.

So looking at the margin improvements year-over-year and this Q2 figure was lower -- sorry, 2% figure was lower than in Q2. Is this driven by these investments that you talked about in Mews and TravelPerk in the growth? Or is there something else to factor in when you compare these 2 numbers?

Linus, I'll address that. It's what you say really. On margins, it's driven by TravelPerk investing the funds that they raised earlier this year. That's both just weighing a lot on the company's margins in absolute terms as well as on the core companies as a group, but also perhaps more in particular on the year-over-year change in margins considering, as I think Georgi just said and we stated a few quarters ago, TravelPerk were actually profitable during late 2025, and they're now deliberately investing a lot through OpEx. So that's driving that on margins. While I'm added on growth, it's really Spring that's coming down a bit in 2025 relative to what we expected. But also as we tried to make clear in the prepared remarks, they've been converting a number of large contracts during the year, which will convert into revenue next year. So we feel we have a good visibility on an acceleration in growth at Spring next year. And considering Spring and TravelPerk are -- have the highest weights in that core company group, it's really those 2 businesses that are driving these changes.

Understood. That's very helpful. And then secondly, how should we think about your near-term pipeline for investments in capital allocation? I'm thinking specifically about Q4 in terms of what opportunities you have, both in and outside of the portfolio.

I think that we have reached this inflection point when we have a number of core companies that are having -- they have reached scale and also kind of proven their business model. So that will continue. And as I said, in -- on the call earlier, we expect value creation to come from these companies delivering rather than allocating necessarily more capital into these businesses. Having said that, as we demonstrated this quarter, we will look for opportunities to accrete more in companies we really like Mews. That's more of a secondary opportunity, right? I think on the new company side, we have also a very strong bench of up-and-coming companies that can become the core companies of tomorrow. So we don't see a reason per se to add more businesses to our portfolio. We will be very selective, and we will also address opportunities both in terms of our existing companies, how they can continue to accelerate their journey towards profitability or new investments that also would kind of rather accelerate this transformation of portfolio maturity rather than holding it back. So very highly selective, more focused on addressing these opportunities that would further accelerate this matured portfolio.

And the questions come from the line of Joren Van Aken from Degroof Petercam.

Just coming back to Spring Health because you mentioned in the print that future growth improved after a big contract. I see peer multiples went down 2%. So I was a bit surprised to see that Spring's multiple went down by 7%, especially as Hinge is up double digits, its share price over Q3. So could you talk a bit more about the reasoning here for the multiple moving?

It's Samuel. Look, Hinge, as we've said, is a super relevant comp to Spring. Having said that, it's just one business. So when we look at where we were end of the quarter, I think Spring was at a revenue multiple around 20% below Hinge and around as much above on a gross profit basis. But just a week before quarter end, Hinge was at a premium to our valuation of Spring. So these individual stocks will sort of bounce around, which is why we're triangulating against a larger peer set of both health care technology companies like Hinge and like Spring, but also SaaS businesses with structurally lower gross margins as is the case with Spring. So there's a lot of nuances going into it. And where we come out net-net is that the multiple on Spring should be coming down by around 7% in this quarter.

[Operator Instructions] And our next question come from the line of Ramil Koria from Danske Bank.

I have a bunch actually. Maybe if we start on capital allocation and exit opportunities, you sound quite upbeat on the ability to exit or create liquidation opportunities for '26 and '27. Could you -- maybe against the backdrop of SEK 5 billion to SEK 10 billion into 2030 exit framework, could you size what one should expect in the coming 2 years? And what kind of assets would you be looking to potentially exit?

Cool. We'll start there, Ramil. It's Samuel. Firstly, on exits, I think what we've talked less about is that we've invested a lot of work into that during a quite subdued period in the market the last couple of years. And with this improvement in our companies and the portfolio's overall financial profile, meaning improvements in terms of stability and maturity and also this general market environment becoming a bit more constructive, that's sort of what's underpinning the fact that we feel very confident about our ability to generate both monetization opportunities, but also just liquidity in the portfolio over the next 12 to 24 months. I think in terms of what companies, clearly, Spring and TravelPerk are arguably the companies closest to IPO considering their progress, potential exit candidates, we'll get back to those once those exits have actually happened rather than to try to guess it today. On the capital allocation framework, just want to make clear one thing, again, and that's at the Capital Markets Day last year, the slide you're referring to was a set of expectations. It's not necessarily a framework that we're looking to execute on. And as Georgi laid out, and as I think I covered as well in the prepared remarks, there is no longer that capital need from the existing portfolio. And that gives us a lot of discretion and a lot of degrees of freedom. But that level of discretion and the degrees of freedom should not be interpreted as, okay, now we're going to lose our discipline. On the contrary, the bar is super high, and we're going to be extremely disciplined. And in terms of new investments, as Georgi laid out, those will be focused over the near term on opportunities that are accelerating this trend towards stability and towards maturity rather than to reintroduce risk into the portfolio with the achievements that we have behind us. So I think that's probably what we can say today, but I hear you in terms of coming back perhaps early next year with a bit more details on the plans ahead.

Makes sense, Samuel. And maybe on the 2 potential IPO assets. First off, on Spring, given growth decelerating this year and accelerating into next year, and the new sizable contract, does that mean that perhaps an IPO is not on the cards in the sort of -- in the near term until you ramp up on that contract and actually see growth rates reaccelerate? And on TravelPerk, could you just shed some light on the benefits, the pros and cons basically of going public now versus waiting, given that the company raised funding a mere a year ago roughly?

Ramil, I will take that, and I start with your second part, which is TravelPerk then. I think looking at the market today, your award, of course, for being profitable and then maintaining a higher growth. That's, I think, something that you're slightly more limited in the public market versus staying in the private where you can invest more aggressively into growth levers, right? So that's kind of the overarching assessment, whether you should go public or not. Given the fact that TravelPerk has a very, I would say, proven stable platform, we think it can definitely go public in the near term and still demonstrate its ability to grow with improving margins over a long period of time. That gives us the flexibility then to own a liquid asset. But on the other hand, we are long term with our investments. We want to create as much value for shareholders as possible. So I think it's too early to tell whether we are looking for a kind of near-term IPO or whether it's better to wait a while for TravelPerk. But what we have said before is that we want our core companies to mature, so we have the ability to go for these events. On Spring, yes, of course, you're absolutely correct in a way where you see that you are rather investing for future growth, that's not at a deal timing. We think, however, that with the kind of lead indicators being contracts signed for 2026, that will show a very positive momentum. But on top of that, as I also mentioned in my remarks that Spring is investing as TravelPerk and Mews heavily into new functionality also based on AI, meaning that they can reduce further costs not only for themselves, but for therapists, clinicians and create even more value. And of course, that is something we would like to see and to be able to demonstrate before you go to the public market. So it's a combination of both growth, but also product development and kind of proof points in that product road map, if you will, that will be important to kind of follow throughout 2026 and then take a decision. But also there, the company said they are preparing themselves, so they are ready when the time is right.

Okay. That makes sense. And then on Betterment, I mean, we've seen Wealthfront file S-1, and you did refer to it in the report. But could you -- knowing that Wealthfront's sort of revenue model seems a bit different from Betterment, could you shed some light as to differences between the companies from your vantage point?

Sure, Ramil. I'll give it a shot. I'd probably summarize it the following way. Wealthfront has a higher share of cash products in its AUM. They also have a higher share of what's called float revenue, i.e., interest on clients' idle cash. Whereas Betterment, they have a higher share of more investment advisory products, both in its AUM and in its revenue. And that's up to anyone to sort of have a preference for we like Betterment profile more, and we also like the differentiating progress that Betterment is showing in terms of building out their B2B capabilities and offering rather than just a B2C product. So Wealthfront, it's not a perfect comp, as you say, but it's a very good one. They seem to be around 50% larger in terms of revenue scale. We seem to be growing at around the same pace, but they are making a lot higher margins, which -- and I don't want to sound like this guy who thinks everything is positive, but the fact that Wealthfront are doing the margins they're doing at the scale that they have to me, that feels like a very strong indicator on the profitability of Betterment's model when they gain a bit more scale. But let's see how public markets feel about Wealthfront. But that's sort of how I would compare the 2.

Okay. Okay. For what it's worth, I agree on that, Samuel. But just before I wrap it up on my end, just a brief follow-up on that. Would it be possible for Betterment to also sort of drive revenues stemming from interest and idle cash on their platform? Is that -- is there something technically that does not enable Betterment to do so?

No. And they are -- and clearly, during the last couple of years' worth of interest rate hikes, they have been making a lot of money off of cash products as well, but the mix is different.

Okay. That's very clear. And then finally for me, if I may, on Aira, just trying to sort of understand. Okay. So it's fully equitized now. You've cleaned up the sort of the financing structure of the company. But just trying to understand the reason for the value uplift and then also why you've decided to increase your equity stake, your equity ownership of the company?

It sounds like a Samuel question. I'll try to answer it because I don't want this to sound esoteric, and I tried to be clear in the remarks, but let me give it another shot. So the financing that Aira has raised to date has been through convertible equity effectively, and that's now being converted and collapsed into a more normal capital structure. So our underlying valuation of the business is up in the quarter in low mid-single percentages. The remaining effect on our fair value is a consequence of that change in capital structure. And that's also why you see us owning a larger chunk of the business despite the fact that we're taking pro rata in this last round. So it's a bit technical, but I think this quarter's 20% write-up should really be seen in the light of us holding this investment at invested capital in euro terms for around 2 years now during the company's incubation phase. So we've effectively made like a 10% IRR while the company has gone from 0 to EUR 200 million in run rate sales. So it's a bit of a bump this quarter. But that, again, sort of if you draw it out over 2 years and you consider the fact that we're now entering this next phase, of a simple capital structure allowing for more dynamic valuation reassessments and also the company sort of reaching that level of scale, I hope it sort of at least contextualizes that write-up a bit more.

And the next questions come from the line of Andreas Lundberg from SEB.

You mentioned a few things about the growth assumptions for the core companies in the next 12 months, including some contract wins. But are there any other indicators or lead indicators you refer to when you say it point to a strong 2026?

Thanks, Andreas. It's Samuel. I'd probably single out 3 of the best examples. Georgi mentioned Mews beating on sales. As I think we've touched on in the past, they call it, post-sales process at Mews is quite lengthy. It takes a long time and a lot of effort to onboard with these clients after you've actually sold the deal. So that gives us a very good visibility on revenue next year provided that Mews can actually onboard these clients on time. And on the onboarding side of things, there, we've also seen a lot of improvements at Mews because that has been an issue in the past where they -- during the first half of this year has basically cleared out their entire backlog. So that's one good indicator. Spring, similarly, the way that model looks is that they basically sell now. And as we said, they've landed a couple of large contracts. Those contracts typically kick off in January next year. That's typically the case. At times, we have contracts starting sort of end of June. But typically on 1st of Jan, that's when you see the contracts actually launching and converting to revenue. So again, a fair amount of visibility because we see how much annual contract value that they've actually sold and contracted. Last and third example is Cityblock, where it's sort of similar to Spring in that we see them signing contracts and that the actual launch of those contracts and Cityblock taking on board the care of those patients is timed into the future, again, typically 1st of Jan. And for Cityblock, we've seen them by August having sold around 85% of expected revenue next year. So again, a business model that gives us a fair amount of visibility on top line, I should say, because having said all of that, while top line expectations may feel very well underbuilt on margins, it's a lot more dynamic. But those, I'd say, are the 3 best examples of these types of lead indicators.

I can maybe add actually a fourth one coming from the product dimension, Andreas, and that would be, we have seen in these businesses their ability to both develop organically new products or with these bolt-on acquisitions, enhance the value proposition to the customer. So in Mews, for instance, the rollout of dynamic currency conversion has shown very strong traction. We see the acquisition of Yokoy on the TravelPerk side. And that also gives us more confidence on the gross margin development and the kind of share of wallet, if you will, from the customer, which is also not only contracts being signed, but actually a larger part of that customer's share of wallet, if you will.

Okay. Cool. And lastly, a few ones on Stegra. What is the total size of the financing round? And what are your assessment so far on the company's progress? And what are your sort of key rationales for when you decide or considering to take part of the next round?

So I will refer to what the company has communicated. It's a funding round around SEK 10 billion, but that will be based on equity, new equity, debt, but also partnerships around outsourcing of one or several components in the value chain. So today, I think it's too early to say exactly what that equity component would be. We also know that the lead investors have already committed capital as well as the founder. And as a kind of relatively small shareholder, we have, I would call it, the flexibility to actually wait and see how this shakes out and then take a decision based on what's best for Kinnevik in our investment. I can say that so far, we have not committed in this round. And we also feel going back to our remarks on capital allocation that our exposure is already relatively high to this type of investment. So that's where we stand today. But it's too early to give you a definitive answer.

We have no further questions at this time. So I'm now going to hand back to CEO, Georgi Ganev, for closing remarks.

Thank you very much, everybody, for listening and for your questions. And as a last reminder, we will report our results for the fourth quarter and full year on the 3rd of February 2026. Thank you. Bye.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.