Techstep ASA (TECH) Earnings Call Transcript & Summary

Again, it's the mixed picture. The ARR in absolute figures is down about 2%, 3%, and most of that relates to the white label service, which is noncore for us. As far as users, we have 16% growth in users, on the Origo users so far this year, and that's an important component of the MMS offering. We have some growth in the non-payable users due to the current framework agreements. And as soon as they are renegotiated over the next period, they will be payable users. So I think to summarize, we have said that we will increase the number of Origo users from 40,000 to 80,000, and we still remain firm on that target.

And then a follow-up question on the framework agreements. When can we expect financial effect and how long does it usually take from a framework agreement is signed until it eventually materializes in paid users?

When we sign the contracts, it usually takes -- on our own software, it usually takes around 2 months to 3 months to onboard these users and to activate the users. As far as the framework agreements are concerned, they will be up for renegotiation within the next 1 or 2 years, especially within the health sector and of the current 50,000 users, we're talking about 10% to 20% of those users.

Marius, can you elaborate on the negative operating profit in Optidev, given the NOK 21 million budgeted last year. And if the answer is investing, should we expect the same development in Famoc, if we invest -- plan to invest there as well?

Yes. When it comes to Optidev, we are not concerned at all. Optidev has pretty much been performing on plan. We made the plan that there were some reinvestments needed in order to have more scalability. We also acquired a company at the end of last year, eConnectivity, which has now been fully merged into the company. So there are some short-term extra costs. Everything is according to plan. Optidev has delivered on their sales budget so far. As far as the integration costs for Famoc, it will be -- there will definitely be software development also as planned. And that's part of the reason we're increasing some of the CapEx outlook. As far as that, we do not expect any significant extra costs, but there will always be some short-term costs when you purchase a company, and we will integrate and prepare the value chain.

Should we expect consulting revenues to rebound when lockdown eases? I guess this is a question about how we see the post-pandemic effects. I don't know, Marius, do you want to take the question, but perhaps Borge, would like to elaborate?

I can start and Borge can fill in. I think as I said initially, there are definitely projects that have been put on hold, not necessarily by Techstep, but by the customers, because they haven't had the capabilities and the required resources to implement our projects. I think that will have some kind of effect going forward as soon as this eases. So that's what we expect to a certain extent.

Yes. And also that customers, they and potential customers as well, they need guiding. They need to learn more about the field, about mobility. It's a different field to work in than they have been used to before. And we have a lot of knowledge for it. We have probably the most knowledge in the market in the Nordics. So we are a knowledge house in how to do this in the best way. So -- and I expect that that will continue. But again, we need to simplify, we need to ensure towards the market and our customers what we can deliver, what we can help them win and how effective that could be.

One other question. I'll take the liberty of perhaps answering this myself. What is the company's addressable market and how big is it and what is the core market? We'd like to say that the addressable market consists of everyone who can benefit from mobile technology at work, whether you sit at the desk intermittently or whether you never sit at a desk. To now, we have concentrated on the Nordic region first. But further, as Famoc is now unlocking our European market opportunity, this is going to be exciting times. It is somewhat early to say exact the size of this addressable market that Famoc unlocks. But however, we know that the global growth for managed mobility services or MMS, for short, as we like to say, is 31%. And we believe that this market is really only in the beginning. I have no further questions either submitted by e-mail or in the chat. I'll give everyone a couple of seconds to gather some last thoughts if there are any more questions. There seem not to be. If you do come up with questions later, do feel free to submit them to ir@techstep.no. And with that, we thank you for listening, and we will close this Q&A session on behalf of us in Techstep. Thank you for listening, and we wish you a great day.