Konsolidator A/S (KONSOL) Earnings Call Transcript & Summary

We believe we are live now. This is Claus from Konsolidator, and this is Jack also on the side. We're supposed to sit together in our office. But because of the snowfall here in Denmark, then we are sitting at home. And we are also trying out some new technologies today. So it's going to be a little bit interesting how this will fall out. First of all, I cannot see whether everybody is in, but I believe that I will -- that we will start. Is that okay either that I start?

Yes. You can start.

So first, you should try to see the presentation that we are prepared today. I believe you can see that now.

Yes.

And what Jack and I will talk about today, that's, of course, about our annual report for '25, which we announced today. And we will also give you a little insight of our expectation of 2026 and including in that also a little bit about our strategy. So let me get started. So these are the 4 topics that we will cover today -- 3 topics we will cover today, a little bit on our strategy, the financial review by Jack, and then I will give a little introduction to our metrics and also the outlook for '26, which we guided on a couple of weeks ago, we sent out to the market a couple of weeks ago. First, I mean, a lot of things are happening in Konsolidator, which I'll also elaborate on, for example, that we have advanced our product offering. So now instead of only have a consolidation tool, we have 3 more. We have FP&A, we have data warehouse and we also have something we call The Hub, but what's extremely important for a company like ours is that whenever we launch new products that we still make that we stay put to our, you can say, our vision and to what our belief is in the world of large data volume today. That is that we also must deliver reliable data to our customers. So that is something which is extremely important to us, which sounds obvious, but it's actually not so easy, but that is something that we will care a lot about. So our customers can also rely on the data that we provide to them. So we have 4 pillars. We presented this new strategy a year ago, we call it Resilient Growth. And what we are looking at that is to expand our product through partners. That's the first pillar, the D365 partners as Microsoft partners and also other kinds of partners that we have done since 2023, and we are continuing on that. And for those of you who are a little bit deeper in our numbers, you can see that we continue to expand this network, and we're also getting a higher and higher volume -- higher and higher amount of our customers through the partner channel. That is good for 2 reasons. First, it's a faster and easier way to expand international and secondly, it's cheaper for us. Our customer acquisition cost with 4 than more customers we get through the partner channel. So that's obviously something that we are trying to achieve. Second thing that is we are a fairly small company, but still, customers, they need and want more and more and more. So whenever we see that there is something which fits our customers and that we could provide, we are looking into whether that is something we believe that we should build ourself or we should buy or we should partner up with some strong partners. And the first example of that, that is our FP&A tool, which we decided to have a year, 1.5 years ago, but the first spent like maybe 6 months to discuss and to analyze whether we should build it or we should buy some product out there or we should partner with someone. We decided to build it ourselves, and we started that journey in May last year and had the first version here in January, where we have the first version sent out. So that's an example of this second pillar, build, buy and partner. And now because the FP&A tool is on the market, and it's so important for us to get out to customers, we have decided that, that has to be a pillar in itself. So we have replaced the banking pillar with the predictive forecasting, the FP&A tool. The last pillar, that is resilience, and that is this strong operational foundation where we need to be stronger. I mean, you can say, adapting cost to the growth and also have a cash flow generation, which is a positive. That is for us what is a resilient growth. So these are the 4 pillars that we will continue to look into 2026. A little bit about the Konsolidator suite, which we have [ used ] before. A year ago, we had only, you can say, 1 component in this suite and that was the Konsolidator. And now a year after now, we have 3 more. We have an FP&A tool. We have a Data management tool, built a data warehouse in the Microsoft Fabrics. And we also have a reporting platform, we call it The Hub, which is the platform is the Power BI. So now we have a full suite that we can offer to our customers. The reason why, and you can see the upside for having this suite. That is first and foremost, we can target much larger customers, the much larger groups than we could before. And yes, as I said before, we have moved from having just 1 product to now to have a full component in the suite. It's out, it's live. The Konsolidator has, of course, been there for many years. The Hub is a Power BI platform. So that will continue to develop, but we have the first version out and presenting to customers. We also have the data warehouse ready for customers, and we also have the FP&A product out on the street. So with these products, we will, of course, continue to focus on resilient growth. And as I said shortly before for us resilient growth, that is to be profitable as we get into, I mean, we expect to be profitable in '26, and we will continue to grow profitable. We will also be cash generating. There will also be a mentor for us in the future that we are able to generate more cash than we spend. And then you will continue to have a strong SaaS metrics, continue to improve on our SaaS metrics. That is what resilient growth is to us. Yes. And with this, I will swap to Jack and now I'm a getting a little bit nervous because now I'm not 100% sure who will take over the screen, but let's see.

Thank you, Claus. I don't see a slide. I just see a black screen now and my own picture. And I'm not sure if I should see -- be able to see a slide at all, but I'm not.

I think you should share, right? You shouldn't.

Should I share? I will share then.

Just a second.

Just a second, I will try again. How about now?

Yes, but not in presentation mode.

It will be there. Does it work?

Yes.

Wow. Great. Well, I'm going to present 2 slides, 1 where we will -- I will focus on our 6 months, the second half of 2025 and then also for the second slide, a full year slide. On the left-hand side, you can see the numbers from -- split into the first 6 months and the second part -- 6 months of 2025 and 2024. And if you look at the third line, revenue. It has been increasing all through for each 6-month period from since H1 2024, as you can see, going up to DKK 13 million for the last 6 months of 2025. That is an increase of 26% compared to 2024. And we both saw increases in subscription fees and also in on-boarding consultancy fees, which was fairly high, 138% increase which came from -- as Claus also said, we have larger customers, meaning the on-boarding is getting bigger. And we need to involve more competencies from our part, meaning more hours. And also as Konsolidator is growing functionality-wise, we also need to include that in the on-boarding. So those are the -- some of the reasons. We also -- if you go further down, there is an EBITDA, earnings before interest, taxes, depreciation and amortization, which shows DKK 500,000 profit for the last part of 2025. And as you can see how it's been increasing since H1 2024 of by more than DKK 5 million, DKK 6 million. Of course, this will also have impact on our cash flow and looking at the cash flow highlights, the operating activities, which Claus also mentioned in the strategy, it's positive for the last 6 months of 133,000 for that 6 months compared to a negative of DKK 3.6 million in 2024, primarily done by the improved EBIT loss, but also the changing in our subscription and upfront payments from on-boarding fees has also done -- yes, improving the working capital a lot. The second part of 2025, we also had a capital increase of DKK 2.7 million. Going to the full year, on the right-hand side, you have '25 and also '24. And if we look at the revenue again, you could say that the revenue has increased by 25%, but we have also reduced our cost, which is obviously a good -- which is good. We saw back in '24, we restructured the whole marketing department and now we see the full effects of that as the restructure came in the late parts of 2024. The income is also impacted by some other income of DKK 2 million, so our loss ended at DKK 6.6 million for the year, improving by DKK 8.2 million compared to 2024. Looking at the balance sheet, I will -- we have our equity for the group, it's negative by DKK 3.6 million, but if you look at Konsolidator alone, we have a positive equity of DKK 0.7 million, DKK 700,000. Part of our balance sheet is our 2 loans, one to EIFO and one to 2L Kapital. During 2025, we started to repay the loans, and this has impacted the cash with DKK 1.5 million, which we repaid the loan this year. Going forward, we will have annual installments of almost DKK 5 million a year, which is dividing to around DKK 3 million in repayment and DKK 1.9 million in interests. It is possible this year to renegotiate the terms of this loan and with the improved numbers that we have that we see. We are trying to -- or we will try to negotiate different terms, and we are pretty -- and we expect to do so by the middle of the year around. If you look at cash flow again, it has also improved by DKK 8 million, the operating cash flow to just minus of DKK 1 million for the entire year. Again, it's the same effects. The improved EBIT and the subscriptions that will -- that are paid annually now compared to a quarterly payment. And during the year, the total capital increase we had during the year came to DKK 4.8 million. We had one in February and one in November of last year. But all in all, improvements on many things with the numbers, which we expect to continue. And that will -- we will switch back to Claus' presenting. I think it was SaaS metrics.

Yes. So now, yes, let me see whether -- yes, that we just need to get by Jack's slides. So let me go through the SaaS metrics. And the next slide or the first slide -- yes, contain a lot of numbers. I know that. This is also, I think, Page 27 or something like that in annual report, so they can go in after this session to look for itself, and there's also some explanation in there. But in general, if you just look at the bold, you can see that we improved on all the SaaS metrics actually fairly positive, except for the churn. I will get into that because the 12.6% on churn is, of course, not acceptable, that's too high, but -- and I will elaborate a little bit more on that later. But you can say, first on the positive numbers that, first and foremost, you can see the EBITDA losses has gone from DKK 9.3 million loss in '24 to DKK 2 million loss in '25. That's a huge improvement. And now we're getting very, very close to breakeven. And as you know from our guidance, we would also expect a positive EBITDA in '26. Same -- and as Jack also short mentioned, we have restructured the sales and marketing department and reduce the cost in marketing a lot. So obviously, we are satisfied with the growth, both the 15% in ARR, contracted ARR, but also in a total revenue of 25%. It's not easy to reduce cost a lot and at the same time, make your top line to grow. So we are very satisfied with that. The Rule of 40, I'm not sure how many of you are familiar with the Rule of 40, but Rule of 40, that's a KPI, which is used in SaaS companies and is the sum of the growth and the EBITDA margin. So you take the revenue growth of 25%, and then you take the EBITDA loss of DKK 2 million and divide by the revenue of 25%, and then you add those 2 numbers together. And then we are now at a positive Rule of 40. It's called Rule of 40 because you are supposed to be at 40. But as you can see, last year, it was minus 40. And now we are plus 70. And again, we expect to continue that journey. So our Rule of 40 will -- getting closer and closer to 40 as we progress. Somewhere on the bottom line is a little bit more advanced, you can say. So I will not go deep into those, but just to mention that the CAC payback is important. That is how expensive is it to get a customer. And obviously, the lower the cost is, the faster the cost of acquiring the customer will be paid back and again, as you can see, a year ago, it took 43 months before the customer had paid back the cost of getting it, and this year, it's at 23. Our customer lifetime, which is to the right, the customer lifetime value divided by CAC. That is how much is the value of the customer compared to the cost of getting it. And as you can see that 4 is -- that is high. The general thumb of rule is that, that number has been between 3 and 5. So even last year, where we had this very high CAC payback period, we had a number of customer lifetime value above CAC, which was higher than 3. But obviously, you like that number to increase even further at this 4.1, this year is definitely satisfactory. So in general, after restructuring the sales and marketing and also after getting Spain in, we believe that there is a fairly good balance between the sales and marketing costs and what the amount of customers that they are acquiring. So that ratio is actually satisfaction and is at a level that we are happy with. Net retention to the right is that, on the other hand, not satisfactory and that is because of the churn. Until now, we haven't had that many products to upsell. So it's difficult to have a net retention above 100%. And then with that churn, then you will have a net retention, which is below 100%. We believe that with the lower churn rate and then upsell of FP&A, Data warehouse and The Hub that we will be able to get to a net retention closer to 100% fairly soon. Okay. I promise that I will say a little bit about churn, and I will do that on the next slide. So it's not forgotten. But I will now move into looking a little bit into '26 starting with the ARR, we have guided that we will be in the area of DKK 27 million to DKK 29 million, which is a growth equivalent to something between almost 10% to 20%. As you all know, it's difficult to predict, and the world is unknown. It's always difficult to foresee what is happening in a year ahead. We have been listed now for 6 years, and every year has had some kind of a surprise. So of course, it's difficult to estimate. But we believe that we have a fairly good strong go-to-market model. So we believe that we continue to grow. We can definitely see that some of our competitors do have a little bit more difficulties in securing double-digit growth, but we believe that we can continue with that because we believe we have a very strong go-to-market machine. And again, as I said before, the cost of acquiring customer is also at a satisfactory level, and our partner is also performing. So we are comfortable with guiding a growth of above 10% in '26. Revenue, as you can see, we have the same level of guidance, DKK 27 million to DKK 29 million. In general, our -- as you can also see on the graph, our revenue tend to equal fairly close to the ARR. So that is the reason why we have the same guidance on the revenue. As you can see, the '25 numbers for revenue was DKK 1 million higher than the ARR. So that is the reason why the growth rate for revenue is a bit lower than the ARR growth, but again, fairly close to each other. And the EBITDA, you can see over the years, we had a huge negative EBITDA. But now we are moving into an area where -- to a time period where we expect positive EBITDA. And we believe, again, coming back to our go-to-market model and the way we operate, we believe that now we can -- we have reached a level where all parts of the organization development, sales marketing, on-boarding, customer success, et cetera, are at a level where we can actually scale from here. So we believe that we continue to grow with more or less the same cost. So that's the reason why we believe we can grow with -- you can say, with steady numbers and still be profitable. Of course, we are proud to reach the level. Of course, we have to get to that first. I know that is only a guidance, but we believe that we are in a place where we can continue to show a profit. And now to the churn. As you can see, and as I said, it's 12.6% we had last year, that is definitely not satisfactory. We have worked with churn for a number of years. And you can see on the graph that we used to be at a low churn until '21 and then suddenly '22, '23, '24 and almost also '25, we have been forced at an unnatural high level. That's all kind of different reasons for that, but some of them are something you cannot do anything about, I mean bankruptcies and merchant acquisition, which has been higher at a higher level for the past couple of years than previously. That is something you cannot do something about. But of course, there's also been other things, other areas where we could do something about it. And we have worked very hard on improving churn so far, we haven't managed to be able to. But as you can see now, that -- I mean we know the churn for 9 months ahead. So we, more or less, know the churn for this year. We have a couple of months left where there can be some churn. And again, there can be bankruptcies, which we cannot prevent, but in general, we can see and we are fairly comfortable that the churn finally will get down to a more reasonable level this year. If it ends at 9%. That's, of course, a huge improvement. That's an improvement of 30%, but that's not where we want to be. But if you end down closer to 6%, 7%, then we definitely believe that we have come a long way. We do want to be at 5% to 6%, but we will probably not reach that level this year, but we will definitely make a huge step towards that direction. So hopefully, we can end up Q1, Q2, say what the churn would be for this year and hopefully will be much, much lower than last year. Yes, that was the presentation, it almost take -- almost half an hour, so -- but we had tend to do this within half an hour. So -- but we have a couple of minutes for some questions. If there are some questions.

Simon has a question. "When do you expect to be cash flow neutral?" And if I should answer that, if you recall, I talked a little bit about renegotiating our loans. And we definitely believe that we can renegotiate those and with installment of DKK 4.9 million, where DKK 1.5 million is interest. Then if we -- or we believe that we can get new loans where we don't pay installments and that will fix the -- that will get us to the cash flow neutral part. So we believe we get a refinancing of our 2 loans in July -- June, July, hopefully, and then that will carry us on to the neutrality because we want to maybe postpone the repayments for another year or 2. And then there is a question for Daniel. I think it's more your ballpark, Claus. Can you read it, can you see it?

No.

Okay. Daniel says, "The share of partner sales is currently increasing. What is the value proposition for -- for Konsolidator to go with you? Is it because they can build more consulting hours? Or is there a revenue split? Or are there other reasons behind the partners?"

Yes. I mean that's a very good question because what it is for them. Our partner model is, you can say, fairly transparent. And I think similar to other SaaS companies. So [Audio Gap] those partners, they are both getting a cut of the ARR, and they are also getting the on-boarding fee. For many of these partners, they are fairly large companies. So the ARR cut is a fairly small amount, which would probably only cover their sales costs eventually. So as you're saying, I mean, many of them are doing it because of the consultants hours, but also because they have other products. So this tied them closer to their customer. So for example, if an ERP partner also as a Konsolidator partner, then they both have the relationship to the customers on-boarding and building apps to the ERP system, but then they also have Konsolidator on top, so they get the -- you can say, a tighter connection with their customers. So for them, higher income and a higher stickiness, I think that's the reason for the majority of the partners. Some also just love our product, so they just like to play around with it. So -- but in general, of course, they are in there to make money, obviously.

Simon has a question. "Do you expect to dilute the stockholders more in 2026?" And to that, no, we do not. Again, it's -- the cash will be improved by the renegotiation of our loans. And when that happens, we do not expect to dilute any of our stockholders in '26. And Daniel has another question. "Iberia is now the third largest market. Do you utilize a different pricing strategy for Spain in line with the local purchasing power?" Question one. And question two, "Is the office in Iberia profitable as a stand-alone?"

Yes, I can -- starting with the price. I mean, generally, we only have 1 price, but -- and that is offered to all customers. But obviously, I mean, we do know that I mean, Scandinavia prices can be seen as high in other part of the world. We have customers in 20-plus countries and on 5 continents. So it's not only in Spain, but when we have a lead in Africa or in Far East, sometimes there are some pushback on the prices. And we do listen to that. I mean, if there is a good reason why they should have a, you can say, a regional dependent rebate, we are open to that. So I know it's a little bit, you can say, answer for it. So it's not by default, but sometimes we do listen to whether it's reasonable to give a rebate. So -- but then it's a rebate. So I mean, we only have 1 prices. I think that was -- if that was good enough, then there was an answer to number one. The other that was whether Spain is profitable?

Yes.

Yes. Not now, but they expect to be at least cash flow positive this year on whether the P&L level is positive this year, then I can't -- I don't think so, Jack, maybe...

We don't expect that. However, again, because of the SaaS business, the cash will come before because we can invoice the subscription annually. So cash will come at a faster rate than the profits. One other thing that you could look into is because of we had a consolidated negative equity of DKK 3.6 million. And that includes some of the losses from the Iberian office as we have a positive in A/S, but cash flow-wise, it's -- that's the first part we get and then comes the profits. Mark has a question. "What are the plans for Iberia in 2026 to grow number of customers there? What are the plans for Iberian [ 20 ] to grow a number of customers there. Are you growing more with the partners or direct sales there?"

Direct sales. I mean, yes, the purpose of Spain, I mean, that is -- that's actually 2 purposes. I don't think I have been so loud about the second reason. I mean the one reason that is, of course, to grow our product in the Spanish speaking part of the world. So it's not only Spain, it's also South America and also Portugal, that's Portuguese. But -- so yes, I mean the main focus for Spain directly that is grow the numbers and be cash flow positive. I mean that is the goal for 2026, and we believe that we can achieve that. But the second thing is that, I mean, we are definitely looking at Spain and seeing -- I mean, to look into whether that's a model that we can copy to other countries. I mean, Spain started in April '24, and will as planned, at least be cash flow positive this year. So within 2 years and a fairly, you can say, limited investment, we can go into a new geography. So it's definitely an interesting model, which we will look into to see whether we can copy that to other countries. But as I said in the beginning, I mean, we are a company that now want to have resilient growth. So it has to be within the cash that we can generate ourselves. So it will not be in '26 that we're looking into that. But it's definitely an interesting experiment that we have in Spain that so far has been very positive.

That was the last question. And if you have any more questions, we'll sit tight for the next 10, 15 seconds. And then to see if there are otherwise, we will conclude today, let me just give me it a more. Yes. I don't think there are any more questions. So I will say thank you very much for joining this webinar. Here there is, one question. Thank you, Daniel and Mark also. Daniel, "Maybe a word on the banking."

Yes, banking has been taking out as one of the pillars, but it's not that it has been forgotten, not at all. But I mean, we have focused on the Danish bank sector. And -- but I mean -- and we have talked to a lot of banks. Very few, if any, has said no, thank you, but all have said postponed. And a lot of things are happening in the Danish banking industry that we have some mergers and also that these banks centrals are behind the banks. There are also a lot of things happening there. So right now, nothing is happy. We are still in dialogue with the banks. We still have the product, we are still ready. I don't think they're looking at other solutions, and we still believe that we can add value, but nothing has happened. So it's something that is kind of just lying there. And whenever someone is, of course, we need contact, talk to them once in a while. So when if they are ready, then we will also be ready, but there's nothing banking in our budget for '26. Maybe I shouldn't say that loud if the bank's here. But we have -- we don't have anything, but we are still hoping and trying and expecting at a certain time that you get a bank as a customer.

Mark also has a question. "What's the plan for LatAm expansion?"

That's a good question, and we should maybe have the Spanish director to answer that. But I mean, I do know we have one customer in Chile, and we do have a couple of partners there. everything is run from Spain. So I don't know whether they have, you can say, a proactive strategy for South America. They are close, natural connection between Spain and the Spanish part of the South America. So I know they do talk and they do present our product and they do have leads. But whether they have a more proactive strategy, I don't know, sorry.

Mark has an additional question. "Any customers piloting FP&A? And if so, what is the feedback?"

Good question. We on-board our first customer on Monday. That was Jack. That was Konsolidator A/S. So he was -- he was our first customer. And that's, of course, not our coincidence. We want to take our own medicine before we kind of give it to customers -- a percentage of customers. We have presented it for customers where we have presented our product, and we have a number of customers of our current customers that had voluntarily -- volunteer to start off. So we have a handful of more that we will start up here in February and March, whenever they have time right after their annual report. So -- but the impression from our presentation where they haven't tried themselves, I think we have something which resonates to their needs and to what they want. So we're optimistic, we're also realistic. It does take time to -- I mean to send a new product on the market, but that's been a very good response. But -- when we have our Q1 webinar, we will, of course, have a little bit more knowledge on this because we do expect to have a number of customers that will try out here later in February, March to test it.

Yes. Any more questions? Yes, Daniel, has a question. "Do you expect an impact from AI?"

Yes. Yes, we do. AI is a topic that we would definitely spend a lot of time on, but what is important to us, that is actually what I started -- and that's actually also the reason why I started with that is reliable data. And I mean our numbers has to be trustworthy when we send them to customers. So -- and as I said, 2 plus 2 is 4 always in our system, not maybe 4 or sometimes 4 or possible 4 or it could be 4, it's always 4. And AI is not always extremely good in delivering trustworthy numbers. So I don't believe that you will see AI in our consolidation module. I don't think you will see it soon, at least in our FP&A model because our customers like to what we call deterministic. They like that they'd be able to calculate back the numbers that we calculate for them in our FP&A too. So I don't see AI in that region. But I definitely see AI strong in areas like analyzing the numbers and the AI agent on top of the numbers to create reports, analyzes and stuff like that. So AI is definitely something that we are, with our fairly limited resources, are looking into, as I said, also our data management system is built on Fabrics, which is Microsoft, and of course, I mean, they invest heavily in AI. So with the data warehouse, we are, we would say, ready to build an AI agent on top of our data warehouse. We haven't started that yet, at least not seriously. We have made some small tests, but we have not started this seriously, but it will definitely be an area that we will look to in those areas.

Another question for Mark. "Any industries who you will focus FP&A on, for example, financial services?"

It's interesting. There's no doubt we will present FP&A to the bank we just discussed before because I think they can also do something for them. But otherwise, I mean, first, we will focus on our 280-something customers and kind of present it to them and try to get the feedback and interest from them. That's where we will start. So that we will focus on the first half of the year, half of the annual report season, then we have Q2, and we have a big push on our product to our current customers. That's where we start.

Yes. Well, thank you very much for all your great questions. It's been good. Also thank you for joining the presentation. And everyone, have a nice weekend and look forward to our next webinar in April. Take care. Bye.

Thank you, everyone. Stay warm out there.