Omda AS (OMDA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the presentation of the Annual Report for CSAM for 2022. The report is live on our website and also on NewsWeb, and a copy of this presentation can also be downloaded on the web. This webcast will comprise a 30-minute presentation and followed by a live Q&A session. You can type in your questions at any time during the presentation, and we will attend to them later. A recording of this webcast will be found on the -- our web page shortly after the presentation ends and also a transcript of the presentation. But now I have the pleasure of turning over -- handing over the word to our CEO, Mr. Sverre Flatby. Let's get the show on the road.

Thank you very much, Einar, and good morning, everyone. It's a pleasure for me to present the highlights for 2022, but also a bit about things behind the numbers and the position of '22 as part of our value creation plan. So let's first start with our original strategy. It's important to remind everyone, 15 years ago, we developed an approach to develop this company as the leading provider of niche software in the Nordics. So we have stick -- we've been sticking to that strategy and successfully reached the position in the Nordics, but also now growing gradually in the parts of the world, the rest of the world also. And I think this is going to be our strategy going forward as well and it has been stronger through '22. So '22 is also a good starting point for what we're going to do in the next 5 years. And I think the most important thing for all of our employees is that we are doing things that are important for society, for health care providers, for health care workers, but in the end for patients and those users to services. And whether this couple here as somebody in the family having cancer or they're thinking about having a child or somebody just called 911 in any of those cases, obviously, some type of CSAM components will be at work. And I think this is probably also the most important thing for our customers that obviously these types of systems integrated into application architectures in different hospitals, different regions are actually doing very, very important work. So we will stick to this strategy. And I think '22 has also shown through the growth with our customers that this is the right strategy for us and for our customers. And then obviously, a business like this, the most important thing is the diversification. And we have reached a certain number now of customer contracts and also geographic areas that makes it possible for us to have a very stable recurring revenue stream over years and decades and also we've very, almost extremely low churn. And I think this is probably also why it's easy for us to plan further when it comes to organic growth, but also as a platform for our inorganic growth. So let's just briefly talk about our business areas. We have 8 business areas, whereas 7 of them are related to software. We have #8, which is a consulting entity, which also is important. But to focus on software, first, these 7 areas are niches, important niches and have different types of roles in different hospital areas around the Nordics and also in the rest of the world. And just to briefly go through some of them, just to explain, starting at the top left, Medication Management is a software, primarily the software Cytodose, which is, I would say, like a de facto standard in the Nordics when it comes to how to handle Medication Management for cancer patients. So this has a long history and it's related to different user groups, like a small value chain. You have the doctor that actually analyzes and creates a cure and you also have the pharmacy that actually produces a cure and then the administration of the cure at the hospital, which is normally a nurse. And this system supports all of those, in addition to also the patients at home where you can describe how you feel in an app and then have a value chain with the rest of the hospital and the health care workers. And this way of working is actually the principle we use in these different business areas is to create value chains that support different user groups. So -- and also the same as you see with #2 there, Women and Children's Health, the same principles. You have midwives, doctors, nurses, and you also have the patients, then the pregnant lady, obviously, that collaborates with important information to secure a better health for a baby. So this is how it works. We have the 2 next, Medical Imaging, Connected Healthcare. Those 2 are in a way related, maybe more related to each other than the others. They have huge common customers with imaging products that are very niche-oriented, helping health care processes, while Connected Healthcare is more integration and storage and infrastructures and security, a single sign-on, et cetera, to make sure that these systems -- all of our systems actually can be integrated into different types of application architectures. So we have not the time to go through all of these in detail, but I think also Health Analytics, as you will see, is our recent acquisition in the year 2022. And this is a integration project going on and means that our Health Analytics business area is now a combination of an earlier acquisition, MedSciNet, and the recent acquisition, Carmona. So there is still an integration projects going on, which is an growing business area for the future and also a lot of synergies with the others. Our biggest business area, obviously in '22 and also going to be in '23 is Public Safety. And Public Safety, I will recommend to read the article in our annual report, which describes examples of how we grow, how we have positioned ourselves in Public Safety through acquisitions and then further on also how we develop customers and how we sell the software. And I think if you read that article, you will get a very good feel of how we work in these niches with Public Safety as a very good example. We have the last one, Blood Management. And through '22, there has been a lot of things going on. We have mentioned earlier from the previous year that we have a contract -- a national contract in Denmark. And we also had a large number of customers waiting in line to have the same system there implemented. So in 2022, we managed to come further in that project, and we expect that in '23 that we will install systems also in Denmark, making sure we have 100% market share in Denmark as we have in Sweden. So this is all good things. And I think in general, for 2022, all of these business areas have shown the stability, the recurring revenue growth and the lack of churn, which is a good thing. So all in all, it has been a very stable income and also very predictable. And no really big things are happening, but smaller things and a number of those has created the common organic growth for '22, which is also good, and I'm coming back to that. So let's go into some of the highlights for the annual report. And NOK370 million, which is a good number compared to NOK331 million in '21. So a 12% growth is fairly good, and it's also a strong type of income, high income quality. And so we're quite happy with the sales for 2022. And obviously, the organic growth, most of the 12% is organic growth, 8%, which is also good. We have always said and we'll continue to say between 5% and 10% is a normal growth over the last 10 years, and I think it will stay that way in the next years as well. So 8% is good. Obviously, there are some FX elements here, so that the growth in Norwegian kroner is 4%. And then the most important part of our income quality is obviously the recurring software revenues. And they stem from extremely important institutions in Nordics and also in the rest of the world. And there were -- the number NOK281 million as a recurring revenue with so little churn is, of course, a very, very, very strong situation to get when we get out of '22 and into '23. So we're quite happy with this, which is also a part of -- a major part of our value creation plan is obviously to secure further growth in recurring revenue. So a bit higher recurring revenue growth than we had growth in sales in total. So that's good. And income quality, we've been working hard to secure that we sell our own IP, that is what we are aiming for. And we have a plan to further get a better gross margin. But still, it's a very good gross margin and also an increased gross margin from 89% in '21 to 91% in '22. So all in all, the income quality, the stability is very, very good for '22 and into '23. So a not so good thing is obviously our EBITDA, a very small positive EBITDA and much lower than in '21. On the other hand, it's there for a reason. And I would also like to put that into perspective, looking at the previous years and the coming years to see what are we actually have been doing to, that has this impact on our numbers. So it's lot of deliberate actions taken business-wise that resulted in these numbers. So I will use some time to explain to you why the numbers are that way. So we are obviously not proud of 1% EBITDA. On the other hand, it's a reason for it. So also a growth story, we want to grow outside the Nordics, although we are careful and also managing risk when we do things like that, not only when we acquire companies outside Nordics, but also organic growth. We are careful, but on the other hand, growing systematically. And as you see, compared to '21, we have 13% outside the Nordics versus 9% in '21. So, in a way, I will say that our strong position in the Nordics are growing as expected, and we are growing outside also, which is a good part of our plan and diversification of recurring revenue. So acquisitions, there have been a few acquisitions compared to '21, and there are different reasons for that. As everyone knows, '22 has not been an easy year when it comes to the financials and disturbance in the financial markets, et cetera, and also discussions about valuations. So we have been careful and focused, and I would like to say for 2022 and into '23, we have never had higher activity within the area of acquisitions than we have now, although we haven't closed so many in '22 and '23, but there are a lot of interesting targets in our database, and there's a lot of interesting dialogues going on. But so far, in '22, there was the acquisition of Carmona, which has been successful and is now going on as an integration project. So we're quite happy with that one and obviously, working hard to continue the acquisition strategy as well. Now we have always talked about buy, integrate and build. And if you want to read our numbers, you have to think about these elements and the steps. And one thing is the buy part to acquire, as mentioned, a few acquisitions in '22, but high activity, so we're going to buy more companies. Then again, the integrate part is also important. And you've seen from our numbers, obviously, we did a lot of acquisitions, which affects our numbers, especially our EBITDA. And then again, you also have the build phase after these portfolio of companies are integrated. And again, I remind you of the article in the annual report about Public Safety, which will give you some interesting thoughts on the build phase, what are we actually doing when we have put together new products and new teams through acquisitions and to grow further in other countries also outside the Nordics. So I think that is important for you to understand this process properly, not only as a methodology, but also how it impacts our business in '22 and going forward. So currently, the portfolio of integration projects going on, which obviously affects our numbers in '22. These are important projects. And I think we have said before that it takes about 2 years on average to integrate these companies. And I think that's why I would like to look at the current business in a perspective of more than 1 year because if you see behind our numbers in 2022, what is actually going on here? And if you only focus on the EBITDA historically in CSAM, we had from 2018 to '19, our EBITDA went down from roughly our target margin around [ 30% ] and down. And then, again, in 2020, it went up again. And if you look at what has happened in '21, '22, you'll see it goes down. And this graph obviously doesn't look very good, and it would seem like it's a bad thing. On the other hand, in this perspective, it is not a bad thing. So it's also part of a plan, and it's also a reason why these -- why the EBITDA is actually coming to these numbers for '22. So if you look at what happened here, the acquisitions and integrations we did from the period of '19 to '20 is obviously hitting the EBITDA. And then again, we did a lot of new acquisitions in 2021 and also into '22, and obviously, these are the main part of why the EBITDA is going down. And you might say then we had a NOK200 million business in 2020 when we IPO-ed. Then you see here, we have about into '23, looking at our NOK370 million for '22 that we were roughly double the business. And then you might say, if you have a healthy business of NOK200 million and acquire a lot of companies, why are the EBITDA going so low? Well, the main reason is those acquisitions and the integrations, obviously. However, there are also another reason, which is important to understand when it comes to our business plan because we have a centralized -- we have had a centralized organization through the period '18 to 2021. And the change over there is highly important to secure further scalability and growth when it comes to our acquisitions and organic growth measurement. So as you would know, we are obviously working on our business areas to report those separately, and we have organized them separately now as business areas. And this process through '22 obviously also hits the margin. And if there's something we might say that we regret, maybe we should have started that project of a decentralization earlier. However, it has been done. It is finished. And now we have this organization up and running. And then we can do exactly what we have done before as we have done from '18 to '20, where we go down and up again. So our plan is, obviously, as you all have seen, to focus on the cost reduction program. And most of the costs published in our press release before Christmas, where we published this cost reduction program, most of these are already done. And that is probably the most important thing about 2022. One thing is the numbers themselves, but obviously, 2022 is an important year in the long-term plan and it's not an isolated thing when you look at our business plan for 7 years. So this is, I think, important for you to read when you look at our annual report that it is in the context of a management plan, and we are focusing hard now to get back to our target margin, which is 30%. And we have said before, we have aimed to reach that in the third quarter 2023. And that means that, on average, we'll probably around [ 20% ] for the year '23, and we should be back as a running speed of [ '24 ] and then further develop this slowly to increase the margin over time. So this has been the plan all the time and also a part of the description of the company when we IPO-ed in 2020. We stick to that plan, stick to the methodology, and we feel that in that context, 2022 is a good year, although the numbers are not good if you look at them isolated for '22. So what are we going to do now? The good thing is we have, as mentioned, a decentralized business, which is making it much easier for us internally and also much easier for us and for you externally to measure the business, which is important and because it's complex, highly complex. We have done it now, and we've also changed some of the management. If you look at this, Medical Imaging, Connected Healthcare has now one person, a new person, Svein-Harald, [ which ] has been with us for years, a senior manager going from a role in our common services, now leading those 2 entities. The others are there, have been there. And also, you see on the right-hand side, a very important part of our reorganization is also a consulting part, which also makes it easier for us to measure the common use of resources. So making sure that everyone can order consulting also from the internal perspective to measure that separately. So organic growth, EBITDA and capital discipline is going to be measured specifically on each business area. And then obviously, when integrations are ongoing, we will see that these separately are handled in one business area and not as a central portfolio of big projects. So this makes it clear that if we make new acquisitions, for instance, we will give that to one business area and then we will not disturb the other business areas. So I think this is more important than you might think that this process in '22 is probably the most important delivery in my head when it comes to our 7-year business plan from '18 to '25. So then if you look at this model, we will also, as we mentioned before, in the 12th of May when we publish our first quarter results, we will then transparently show you how these areas are performing. So that is an important delivery in 2022. So we stick to our ambitions. We've said we want to reach NOK1 billion. We have said we wanted to do it in '25. Maybe we won't reach '25. We don't know yet. But obviously, '22 as a year has been challenging when it comes to the financial market and how to approach this, especially when we have the numbers we have. So our primary focus at the moment is obviously to secure the 30% margin. On the other hand, we will stick to, as I mentioned, high activity within M&A to reach that NOK1 billion goal. So the ambition stays. And then to put ambitions also in the context, we have been working with this for many years, more than 15 years, and the company has shown that we are able to be a leading player in the Nordics. We have shown that we also now are growing outside the Nordics and further diversify the business. And we would like to be a notable player in the years to come. So when it comes to our next [ 10 ] years, we are aiming to be a notable player in the world since we think our strategy is special and the competition is there. But specifically, when it comes to these highly specialized areas, there are not that much competition. So we think we are able to stick to our ambitions here as well. And I think also, as you know, we have shown through '22 and also the years before gradually growing internationally. And I think the recurring revenue streams and the type of software we have and the growth possibilities, stability in recurring revenue gives us a very, very strong position now to grow further internationally as well. So in summary, I'm very happy with 2022 in the context of our business plan, although the numbers themselves might look not that good. So that is my final summary, Einar. And you will then give the people a bit more details about our numbers.

Certainly will. All right. First, I want to show you the big picture and also it's one can be myopic of not only looking from quarter-to-quarter, but we're in this for the long run. And if we look at the revenue development from 2015, we see that we have been growing from approximately NOK50 million in sales. This is what you see sales and up to NOK370 million almost in 2022. So it's a strong and long history of growth. And you see that we have been growing primarily, there's been a growth in recurring revenues. And recurring revenues, they grew actually a tad stronger during 2022 than the rest of the revenue to 13%. It reached NOK280 million (sic) [ NOK281 million ]. This is what you see in the last 4 quarters, the rolling 4 quarters. And we're heading into 2023 with almost NOK300 million in recurring revenue. Surely a good foundation when you do M&A, and it's also really the backbone of security for the bondholders. And again, 95% of the sales coming from public customers or public-like customers in Nordic and elsewhere and very, very limited churn. If we look at the revenue mix in 2022, we see that a large part -- very large part is related either to recurring software revenue or to sale of new licenses reaching almost 80%. And then a large chunk of professional services, i.e., consultancy, installation and integration of CSAM software with a large number of hospitals and emergency services around the Nordics, Europe and more and more in the world. We see a strong growth in recurring revenue. What you see on the right there is the quarter-over-quarter development from the fourth quarter '21 to the fourth quarter '22. And you see that it's actually increasing the percentage of the part of recurring revenue, almost 80% of the revenue in the fourth quarter was recurring. That is strong by any standard. We had some one-off costs. I just want to remind you of this. So looking at the fourth quarter in 2022, there were some one-offs. We're not a company that presents one-offs all the time. So no recurring one-offs in CSAM. But there were some true one-offs for severance packages, primarily in the fourth quarter that impacts our annual results. In spite of the one-offs and in spite of that we did manage to improve the gross margin 2 percentage points through the year. And then more than NOK13 million in restructuring costs. And we have a cost savings program. We launched that in the mid of December last year. We launched a cost-saving program called [indiscernible], that aims to save us NOK60 million, and we are well underway with that. So we are indeed on track. In addition to focusing on costs and profitability, we are also focusing on cash and net working capital. Again, just very much the same picture as Sverre presented when it comes to profitability a bit of a roll across the right, you see that the same thing on the net working capital. Although we are still beyond our ambitions there, we aim to have a negative working capital -- negative net working capital of minus 10% or better, and we are there. And we were actually improving a little during 2022, and we think we can improve that even further in 2023. Again, we acquired a number of companies. We grew from -- we IPO-ed in 2020 to 2022 -- we -- into 2023, we almost doubled in sales. And the companies that we acquire, they don't have the same view on capital and net working capital discipline as we do in CSAM. Okay. Our investors, where are they and who are they? You see that this is from -- on the left there, you see that approximately 30% of the investors, they are the founding founders, like Sverre and myself. The free float of 70%, you see that approximately 25% Norwegian, 25% U.S. and 25% Swedish investors. And it's very unchanged really from the -- from 2 months ago from the end of the year. But it's worth noting that Anglo-American investors, they comprise almost 35% of all shareholders of free float, very international shareholder base and a number of them being buy and hold forever, so long-term investors. Okay. Just to conclude and to sum up, very much the same as we concluded after fourth quarter. In 2023, given the market as it is and results from 2022, we will continue to focus on organic growth and the top line sales. We experienced 8% last year. We hope to have at least that during 2023. But we'll focus on maintaining and growing the top line as much as we can organically. Then profitability in EBITDA terms and also in cash earnings terms. We are heading towards 30% in the third quarter. That is our ambition and CapEx of around 10%. So 20% cash earnings. That is our ambition in the third quarter. And no, we haven't given up on M&A. It's not forgotten. But again, first thing first, maintaining the top line organic growth and profitability. But again, we will continue to do M&As if it makes sense, a good investment is always a good investment and growing through M&A, that is what we do. So it's a part of the strategy. It's part of the foundational CSAM. So if it makes sense and we have something that is attractive and we can close it, we will. We have a decentralized and much empowered organization. We think that is a key to unleashing the inherent profitability and cash earnings potential in CSAM. And we are very much concluded reorganizing the business in the right way. And again, how will this look? You will be the first to know, because, of course, we will start reporting per business area, organic growth and EBITDA from the first quarter 2023, and it's less than a month until we will do that. So -- and so that will give you an even better insight and overview of what's -- how the business in CSAM is indeed going. Okay. We have a newsletter. We -- and if you want to be the first to know all the juicy news subscribe to the newsletter, take your -- find your iPhone or phone and scan the QR code, and it'll take you directly to the subscription page. Okay. That was the presentation, and now it's time for a Q&A session.

And we have 3 questions so far. But again, just keep typing them in, and we will attend to them. But first thing first, and that is to you, Sverre. And that is about -- you touched upon it and the ambitions for the NOK1 billion. And the question is the math in terms of financing and number of deals to get to the NOK1 billion ARR by 2025. I guess it wasn't a [ ARR ], but NOK1 billion in total seems very far fetched now. Should we revise the target down to prevent disappointing the market?

I think, as I mentioned specifically that the target of NOK1 billion is obviously there. And as you can see from '22, we have a lower growth than we wish to have. We should have had, on average, 40% growth, if we wish to reach NOK1 billion in 2025, specifically, at least 2025 with these acquisitions that we have and the new ones, we have NOK400 million now, and we have to have NOK600 million more in '25. To reach that, obviously, it's harder now. On the other hand, it depends on the size of the targets and when you close them. So I think it's still possible. It's much harder but still possible. So in my head, we stick to the plan. We would like to reach it within the time frame. But obviously, I see that we are in a situation where there's a risk that we are coming to that number a bit later than 2025. So that's -- and also you're asking about financing it. Obviously, as Einar mentioned in his summary to focus on the EBITDA and the cash earnings to secure the funding because we have cash at hand to continue acquisitions this year, but obviously, we need to fund the next acquisitions in addition. So to do that, we also need to secure -- first secure the cash earnings. So in my head, the answer is very specific, we stick to the plan. We would like to be able to also acquire bigger entities and secure NOK1 billion in '25, but we see the risk based on '22 that we will be a bit later. That's a specific answer and what we think as of today.

Okay. Thank you, Sverre. There are a few questions here more related to financing and bond. Let me attend to the first one -- first one first. And that is, do you expect to refinance at lower rates when your bond matures? The financing cost is very onerous and significant. And yes, financing cost is high currently. Okay. Financing and the actual price we have to pay very hard to forecast the future, but it is, of course, a combination of the base rate very much up to the central bank. So I guess there's very little CSAM can do about that. And then we have the margin, and the margin is really a combination of 2 things. And one is the market itself, the iTraxx and the VIX. And again, it's hard to impact those. The second part is the company-specific part, and that is something we can focus on. So we will do whatever we can to run a profitable and lean and well-oiled organization where we see decent earnings, both in the form of EBITDA and cash. And we'll take it from there and see when there is a good opportunity in the market, we want to be ready after the third quarter this year. And when there is an opportunity in the market and the window is open, we will indeed try to exercise that opportunity. Okay. Another question related to the bond, and that is how much of the outstanding bond do you plan to refinance? And when do you expect to refinance the bond? Again, at the moment, we would need -- we have NOK200 million left in the bank. So that means that out of the NOK500 million outstanding, we would currently need to refinance technically at least NOK300 million of the NOK500 million. But I guess, we will -- the starting point is to refinance the total amount of the bonds at least. And we will need to do that before it matures, matures in the third quarter 2024. And we would like to be ready after the third quarter results this year. So somewhere sometime after third quarter this year and when it matures next year. Okay. There's one more question outstanding. But again, while we addressed the very last one, if you have any more questions, type them in, and we will attend to them. If not, we will embark on the journey answering the last question, and that is also a financial question. So I guess it will -- I should answer that one, Sverre. And that is, would you consider issuing new shares to pay for acquisitions at this point? And I guess the starting point would be no, not really. We have NOK200 million in cash in the bank account. I can't really see that we will do an acquisition right now that would demand more capital than possible. There could also be other ways apart from paying in cash that would enable us to do an acquisition. But again, coming back to my 5 concluding remarks. First and foremost, we will focus on organic growth, we'll focus on earnings and cash earnings and then M&A, but probably nothing exceptionally big at this point in time. But again, that would be the starting point. And we will make acquisitions, but I can't see that it's attractive for us now to raise additional cash through an equity issue. Okay. There has been another question, Sverre, while I was addressing the last one. And that is, could you elaborate a little bit about your guidance for 2025 in terms of revenues and EBITDA margin? What will you say, Sverre, revenue in 2025 and EBITDA margin?

Yes. I think, first of all, if you look at our target for this year to reach 30% margin in the third quarter, that should be when we continue to grow, it should be -- continue to be our target margin. On the other hand, if you look at the current business, we have IPO-ed with NOK200 million, entering into '23 with roughly NOK400 million, if you look at the 5% to 10% growth on our current numbers presented today. So with NOK200 million to NOK400 million, then obviously, if we don't do any acquisitions now, then the organic growth should continue to be between 5% and 10%. So meaning that in '24, which is at 10% of those NOK400 million, NOK440 million or 5% to 10%, the same the year after. So that is the organic growth should reach NOK0.5 billion through organic growth without any acquisitions. And then we should continue to have 30% or maybe 30% plus if we didn't do any more acquisitions. However, I think that answer is theoretically because we obviously are working hard on these acquisitions. And the acquisitions we do, obviously, is also connected to the question of funding, how fast we can do them and how big ones we can do. But -- so in my head, if you isolate the current business, we still think that a 30% margin should be the target going forward. Obviously, if we look at this as -- put this in a sunset mode to put it that way, our current business, it wouldn't be that way, it would be a much higher margin, but this in my head is theoretically. So we will stick to what we presented in the -- also the documentation before we IPO-ed that we will stick to a 30% target margin, and we will do that with the current business and with a 5% to 10% growth in '23, '24, that is the plan. And obviously, with some new acquisitions and hopefully, many enough and big enough to reach NOK1 billion as soon as possible in '25 or hopefully not later, but we stick to the plan. That's what we're going to do.

Okay. There are 2 more questions. And I'll take the first one, and that is related to the bond refinancing again. And the question is, do you need to maintain a large cash balance to reach a net debt level to secure the refinancing of the outstanding bonds? I would say, no, not really. I think the most critical part to refinance the bond loan on attractive terms is to make sure that we are indeed EBITDA positive around 30%, and cash earnings, EBITDA, EBITDA of around 20%. I think profitability and cash earnings is more important in order to refinance the bond on attractive terms, that is our view. Okay. The very last question, at least up till now. And that's from [ Victor ], and this last question goes to you, Sverre. And where do you see the most significant risks in terms of reaching a 30% EBITDA margin in Q3? And I guess that is Q3, 2023 this year. So where are the risks? What can go wrong?

Well, it's -- this is not surgery, so it's obviously not easy to say exactly what's going on and exactly what could go wrong. On the other hand, let's take the other way around and say the recurring revenue will not change. So that part is obviously quite clear. So that means that if [ 78% ] of the income is there, that is a very good thing in the first place. Secondly, when you have all these customers in 27 countries, they always have activities going on. That means that we don't only have this, the recurring revenue streams that are in our contracts. We also have constantly, obviously, the help we have to give customers and all of them. That gives me the other side of it that the view of '23 is more than 90% actually of things that we know going on. So the risk on the top line, maybe 5% to 10% on other things than recurring revenue. So that is what I see could affect the third quarter. And then on the cost side, obviously, we see that we have done what we needed to do, and we also published what we were supposed to do before Christmas. And these activities has already been done. That means that we -- when we enter the third quarter, the costs when it comes to current employees should be under control. So I don't see so much risk there. There are other cost elements. COGS might be difficult to do in the short term. There might be -- we wish to have a 95% gross margin. Maybe it's going to be a risk that is slightly lower. And the same thing on other costs, obviously, with 20%, maybe or 15% plus the 5% would be risk as well. On the other hand, we have a cost discipline approach in the company now. And also after we have decentralized, it's quite easier to measure and focus on business areas rather than the centralized process we were into before. So I'm quite positive to the risks there, but this is as I see it, maybe around 5% on the income side, and we will see the risk probably on other costs and slightly 1 percentage points or 2 percentage points on COGS. If you agree, Einar, to my financial analysis?

I think you're doing great, Sverre. All right. There seems to be no more questions. Time is up. We hope you have enjoyed this presentation. And join us again and tune in on the 12th of May when we will present the results from the first quarter this year. And until the next time we meet, enjoy spring, days are getting longer and lights are getting brighter. Take care and stay safe.