Trifork Group AG ($TRIFOR)

Dear audience, welcome to the presentation of Trifork's first quarter results for 2026. My name is Frederik Svanholm, Group Investment Director at Trifork. Today, our CEO, Jorn Larsen, CFO, Kristian Wulf-Andersen; and COO, Charmaine Carmichael, will be providing a presentation of approximately 30 minutes, followed by Q&A. We have one hour in total. Before we start, we have a bit of practical information. First, I would like to inform you that this presentation is recorded and will be made available in its full length on our Investor web page later today. Second, if you want to download the slides for today's call, you can find them on the front page of our investor website. Third, we invite you to ask questions and engage with management after the presentation. Before we get started, we have to present this disclaimer. Okay. Let's jump to the presentation. I hand it over to Jorn Larsen, Group CEO.

Thank you so much, Frederik, and thank you all for participating in this call. And I'm actually very thrilled to sit here today having started the year '26 on a good foot, is a relief because in this world that is very insecure and full of turbulence, it is always good when you have a good quarter and also the beginning of the year, where we can see things have started in the right direction with the right trends. And also, we will talk about how we see some growth drivers for Trifork growing going forward. And first, what you should take away from this page is that we have an organic growth of 8%. Kristian will tell you exactly how we get to this number. We see a considerable growth in profit, a 27% growth in EBITDA compared to last year Q1. And now I will talk about 4 main topics that have been driving this quarter. So first of all, 2 years ago, we decided to double down on our product business. Since the very inception of the company 30 years ago, we did have product in our strategy. We made products from day 1. I was sitting in coding products from day 1. We were selling products. So it was always in our DNA to do products. But as you know, the main part of our acquisitions has been service companies. And therefore, we have -- we saw for many years that our product business was around 25%. We have now broken that mark of having it at 25%. We have always seen better organic growth in our product business than in our service business. And after we kind of doubled down on this, we see that growth accelerating, so we have seen a 28% growth in revenue for products compared to H1 last year. And so that's a very positive indication for where I'm sitting. And also, we see some really positive market drivers and one is sovereign data solutions and managed service. And I'll talk in a moment about our partnership agreement -- and with OB cloud, but also products like Corax, Data and AI that we launched not many quarters ago. We see good traction for that product. And this is a product we are growing as it was a product start-up, but in the Trifork organization, this could have been something we would have spun out 5 years ago and were seeking venture capital too. So it is a product that requires constant attention, investment focus, product management, but all of this is now happening inside Trifork. And this is not the only product we are growing, but I'll just mention this as an example. We're also looking for products to acquire, and we will talk about that later. We actually announced a product acquisition the last few days. With public customers, we can also see that we have a good traction for public sector business, not only in Denmark but also in other countries, and we announced new business in Germany and Canada within the public sector. But I also see a large growth potential for Trifork in Denmark. And there are many reasons for that. And if we compare Q1 this year to Q1 last year, we can see that now it's 45% of total revenue. Last year was 40%. And we are constantly winning good contracts. We have a high win rate as well. So if we should do anything, then it would be to bid on more public tenders. We see significant earnings improvements from products, and we are constantly monitoring our cost. I think everyone can do more cost control, we can also. And by the use of AI, it is a remarkable tool at our hands and we can use it to optimize processes and internal work and ultimate stuff for us. So I expect more cost control, more cost cutting from use of AI. And we want to be the first to show our customers how to do this in all processes of the company. Then we were allocating capital in various ways. So we did do in period until now and small M&A, we did share buyback program. We will continue that. We are around a quarter through that, which is also following the plan. We have a EUR 10 million buyback plan, and now we're 1 quarter in, and we spent EUR 2.4 million. So that's going accordingly to plan. Let's move on to the next page. So here, you see the overall picture. It's not like it used to be from 2007, but we now started 2017, and we start to see a curve that looks good to me. We would like to see an increased growth in revenue, so we can go into solid double-digit numbers. But at least it's good to see that we expect to be ending the year with organic growth of 7% to 11%, and we are tracking towards that as we see it. Also for profit, finally now, we expect to break the record of profit for Trifork again. And there is more to harvest. There are more optimizations in Trifork and also when we see the Products business taking a larger portion of the revenue, we also see better margins as we will see later. Let's move on. So here are just 4 things I want to mention. So I already mentioned that we have data sovereignty as a main topic. So Europe are in a situation where we need to stand on our own legs. And Europe can only do that by working with European companies, and we are a European company. And therefore, we see a lot of inbound interest, and we talk to a lot of companies, organizations who want to secure data on European soil. And actually, now I am presenting a little bit later today at a conference. So I had to study this quite a lot. So -- and the study says that more than 70% of all the European data actually is located in U.S. territory. So over the past decades, we have sent all our data out of Europe. We have consumed technology from U.S., produced -- hardware produced in China, so there is a lot to do better in Europe with AI and with robotic production systems, et cetera, et cetera, and by making sure that data and data management and compute will be more and more in Europe. And therefore, we're very happy to announce a partnership with OVH Cloud. OVH Cloud is the biggest European cloud provider. They have the home base in France, and France is now a lighthouse to look to if you want to see how things can be sovereign and independent of other countries. So there's no country in Europe that can show us better than what has happened in France over the past decades. And so with OVH Cloud, we have some technologies that they are very interested in, such as contain and some of our other cloud products, but also they have a lot of experience in really scaling up the building of server centers. So together with them, we expect to be able to grow in the coming years and help Europe with data sovereignty. Also, I'm very happy that we adopted the XR product from Apple, the Vision Pro, very early on. And we have a special partnership with Apple. And we see that the products we are building for our customers are getting deeper and deeper into the core business, and it has a lot to do with training and simulating to make sure that when people act in the real world, it will happen with bigger security, less accidents and less stress. And if you can reduce stress on people's life, that's a good thing for the world, and it's in our mission. We also see the adoption of AI in enterprises growing. It's still at a low base, but it's accelerating at a quite high pace. And we are in a lot of this work with many customers, and it's just the beginning. So when we are talking about our very advanced AI assistance in meetings, advisory, AI, et cetera, et cetera. there is so much potential to optimize any business. And I already talked about the win rate in public tenders, 78%. I think we should bid on more. So we are ramping up on the bidding machine. Let's move on to the next page. So AI is a really big topic. So AI is like a gas almost that will penetrate everything in a company. And I feel this very deep in Trifork that there is not a corner of Trifork, not a process that are not being influenced by AI. It's still early days in many of these processes. But where it really has taken off for of course, with us is generating software. So developers at Trifork are having super powers now to generate code a lot faster. And this is something we have fully adopted and utilized already. There is still more to come. And it means that when we go to a customer, the first time, we can show a lot of the product we want to sell them upfront even if it's a new area for us. And so it's a really strong tool for us. And what protects it from being -- from -- for us to be, you can say, disrupted by AI is that Trifork is a company that takes responsibility. We are used to work in highly compliant environments where security and private data is a key. You have to remember that AI with all its capabilities hasn't really seen a lot of data. Most of the data in the world is private and many companies want to make sure that the data stays private. So what we help organizations with is to use the most advanced AI but not expose private data and know-how and IP. And I think this is what I want to say about AI today. Also, we are not changing our direction or markets or industries. We are doubling down on where we already are. So digital health, financial service, public aviation, energy are the industries and business areas. We want to do a lot more in. And we just hired a new manager for financial services. Burone started Friday and he's bringing all the different business units around the globe we have that are doing business in fintech. And we are uniting and doubling down on that. We're distilling our business, and we are focusing on financial services under the leadership of. And of course, we have other types -- other persons, other people like to run in some of the other areas. But this is a way forward for us to be able to scale faster. You can say to isolate these sectors a little bit from the other ones and to distill our business and doubling down on the markets we are already in and making sure we land more logos and help our customers further. And we use the technologies and the capabilities that are mentioned on the left side. And many of them are the same. I would say AI is a bigger and bigger tool by the day but also sovereign Cloud is now a big growth driver. And the good thing here is that there are not that many companies in Europe that can actually help Europe with this because we have internationalized the world over decades. And that means that all companies are a little bit blur with the ownership and we want to make sure that we become more and more European when we act in Europe because that gives us the right to acquire more business going forward. And with this, I'd like to hand over the word to Charmaine.

Thank you, Jorn. We completed the acquisition of VION AI this quarter. And this is a focused bolt-on acquisition within Aviation, which remains a core product area within Trifork. VION AI captures real-time operational data around aircraft turnaround and this, we will integrate into our existing IFly4 platform. The focus here is integration and product alignment. And given that, we believe there will be no material P&L impact expected in 2026. The rationale is really straightforward. It strengthens our product capabilities and our position in aviation. The team from VION AI also brings deep sector expertise, and that will support both product development, customer engagements, and we believe relevance in this area. We are building a product-led position in aviation, centered on operational software, real-time data and with solutions already deployed, and we are expanding those across our customers. We also see the same in how we are delivering with our other customers. Next slide, please. At Jyske Bank, the focus here has been on building a scalable AI foundation rather than just isolated proofs of concepts or test use cases as we see elsewhere. We partnered with them to establish a center of excellence around -- across AI, cloud and data combining both road map and implementation of the technology. Operationally, this enables customers to move from experimentation, which is important, to production with clear governance and structure in place. And Trifork really are seeing a shift from experimentation to structured deployments. Customers are increasingly focused on governance, integration and scaling, and that plays directly to our strengths in regulated industries. We also see this reflected in our partner work. For example, we have continued to develop and expand our work with partners, strategic partners such as Apple, particularly in spatial computing. They joined us in a visit to our data centers in Ahlberg recently, and we also joined them in a keynote presentation focused on our expertise in spatial computing. We already have solutions deployed in production across customers, and we are increasingly seeing traction across this exciting technology space. And this you'll also see reflected in the development of the business. Next slide, please. Here, we continue to make products -- progress in the transition towards a more product-led business. Products represents 31% of revenue in Q1 and 46% of adjusted EBITDA. The mix reflects both software licensing and the increasing use of our own platforms across customer engagements. The shift here is how these services are delivered. We are increasingly attaching services to our own platforms rather than just stand-alone bespoke engagements. This supports scalability, improves margin quality and will strengthen our customer retention. The transition remains disciplined across Trifork, with a clear direction as we move towards 50% product revenue. Over to you, Kristian.

Thank you, Charmaine. So now I'll go a little bit more into the details of the first quarter. In order to understand the growth numbers and the growth in the underlying business, it's important to understand the details in relation to deconsolidations and operational phasing of our hardware revenue. Overall, we saw a small decline of 2%, as you all saw in the numbers that Jorn showed earlier, accounting the Trifork Security the organic growth was 0. But then in relation to the phasing of the hardware sales, we did not see -- only saw EUR 0.5 million in hardware sales in the first quarter, where we had EUR 4.5 million in the comparative quarter. So all in all, it was 8% organic growth, which is in the range of the expectations to the overall growth for the year. So all a good baseline in the operational business. We also overall improved the profit margins to 15.5%, which was 3.6 percent point increase year-over-year. That was distributed in between Products and Services. I'll come back to that. But still LTM had a strong cash generation. That said, in Q1, we saw a little slower operation cash conversion as we had one large deal where payment was delayed. We received that in April. And then we also have in the buildup of some of those sovereign data center solutions. We build up also CapEx, which later is converted into lease agreements. But in Q1, we saw this buildup of just about EUR 3.5 million, which then also impacting the cash generation in the core isolated. Overall, we still have a robust balance sheet and are still keen on doing more bolt-on acquisitions as the one Charmaine about. So we have a good position in net debt to EBITDA. Looking into then the operational subsegments, Products and Services, then we see the same development here. So once again, in revenue, taking the deconsolidation and the operational phasing of the hardware into account, then we saw an underlying growth in Products of 28%. In relation to Services, we saw a 1% year-over-year all organic growth, which was also satisfying. That said, when looking into Services, you see a small decline in the margins. That is really related to that we are still delivering more and more also using AI, but we haven't yet converted the full say, pricing model to customers to also account for the cost of AI, but this is underway. So we expect that to move margins up again later in the year. Margins on Products, we saw a nice 27% margin for the quarter. This is also something that we see being in the higher end and also be on the long run higher. That said, we are also investing, as Jorn mentioned, into product development, so over a period of time, then we will also see margins potentially decline when new products are launched until they have -- until the product cycle is matured in the market, but overall a 27% increase for the quarter to EUR 8.7 million and a 15.5% margin. The margin trend lines you see here and the comparative figures in all the cores in relation to where our profit is generated. And we see we have right now 25% for Corax margin in the trend line. But as I said before, this could be impacted also by new products development until we have a higher scale of all the new products. The Services margin, I just talked into that. So it's now stabilized, and we expect it to further growth from here. All this leads to having a quite solid Q1 aligned with the plans and where we want to go. So we maintained all the guidance for 2026, as already published here. Looking into the Labs portfolio, then as we have communicated, we are in the middle of a strategic review, and we have -- are now in concrete dialogues, but nothing completed yet. Overall for the quarter, you see a flat development in the net realized gains. So it's a combination of a small decline and small increases, but overall a net 0. We did see a new finance around in one of our bigger lab companies. So that was very positive, and they now have a good run rate for future development. This is all for now, so now we go to the questions.

Thank you, Kristian. [Operator Instructions] Let's start with Mads Quistgaard from DNB Carnegie. Mads, we cannot hear you.

Can you hear me now?

Now we can hear you, yes.

Sorry about that. So first question is on the timing on the hardware sales this year and also on timing on the potential outcome in Trifork Labs, whether you can put some more color on these 2 aspects?

Yes, we can -- can or cannot, you could say. Hardware is always, you could say, as we have talked about before, the starting point for the new operation engagements. So it's always hard for us to predict exactly when hardware is coming in. But overall, it's always a good story when hardware revenue is coming in. So it will be balanced throughout the year. And we cannot say exactly when how large portions will come in. So it's not a clear answer, but it's still -- you could say we see a trend line in the market. We see sovereign data is picking up and very high interest. So this is how it's well developed. And then your second question was...

It was on Labs.

Yes. So Labs, we are in concrete dialogues. So we cannot say exactly how it completes. And if those dialogues will be, you could say, completed as we expect them to be or if we will move on to new opportunities. But overall, we expect to see the conclusion within the first half year.

Okay. Fair enough. Then my second question is on whether you can elaborate on how much cost reduction you expect from the use of AI internally and also whether this is reflected in your full year guidance?

You could say, cost reduction or increased cost. Initially, when you start using AI, you also add an additional cost. And looking into, you could say, U.S., where we see the -- maybe the highest use of AI or most part, then suddenly, the use of AI actually becomes a very significant cost element in the total delivery model. That said, of course, we do see, as Jorn said, very high productivity gain. So we can see that we can save or we can produce a lot more with the same people. So right now, it's hard to say because we need to have, you could say, the pricing model that tapped into in place. So there is a good balance in between also the cost of AI and deliveries that we can actually make. So for now, I think it's a combination of those parameters right now in relation to when it will kick in. But definitely already right now in our product development, then we save I mean, maybe we can develop 3, 4, 5x now in relation to what we could have a year ago.

Maybe I can talk a little bit more. So what I meant before was, of course, most of what we do is to work either on a product or we work directly for a customer. And of course, there, we use AI, but you can say those 2 places do not really have any positive consequence of, you can say, cost cutting. What I meant then was all the other processes in any company and also within ourselves, we're looking very hard on how we can either clearly save cost. I mean, because some things we just need to do. And if we can do it more effectively with AI and we can, we will be able to cut direct cost. But when we use it, for instance, in marketing and sales, we might want to not cut cost. We might want to just get more marketing and more sales for the same money. So you always have this -- do you want to do less of something with less cost or you want to do more for the same cost. But we are, of course, already a rather lean company but I'm challenging all the teams that for any internal process and it can be generating offers, tenders, contract review, source code review, all these things where we could not pass it on to a customer that we should do -- we should automate with AI or optimize with AI. So please ask next quarter again. And then I'll do my best to give you some concrete data on the cases where we have used AI to optimize also direct cost.

Great. I will ask again next quarter.

Next question from Yiwei Zhou from SEB.

Can you hear me?

Yes, we can hear you.

Firstly, on the Service segment, I realize this is the first quarter, you delivered a part of organic growth and after sort of 7 quarters decline, if I count correctly. How should we read into this? What is sort of underlying driver here? Do you think this is still sort of your product-led strategy works out, so generate more implementation service for you? Or are you also seeing -- are you also seeing that of market somehow rebounded because of the AI interest?

Yes. I can start and then maybe Charmaine. So I think for the change of business because Charmaine talked about it before that we have redirected the Services to be more in conjunction with our Products. But I also see new type of services appear. So when we can help our customers optimize their business by the use of AI, that is service. And it's a service business that I'd like to go into. And that service business did not really exist, I don't think anywhere 12 months ago. So Trifork has always been a company that really acts on opportunities fairly quickly. So I would like to see that we have and you can say, a department or a focused area for just helping anyone adopting AI to optimize their processes and businesses. And you can say, why do you want to do that? Yes. So the obvious answer is we want to learn together with our customers, as we have seen with Jyske Bank case. So if we can join forces with our customers and learn together, because then we can take that knowledge also in-house and more effectively use AI to optimize ourselves because it's not straightforward how you optimize in a compliant way always. So we need to work together with the market and with our customers to become very good at that. And since the inception of the company, that has always been how we have learned. So when you teach something you learn a lot faster as well because you have to learn what you need to teat in 3, 6 months. So that's a new type of service. So I think we have hit the bottom of what kind of services we want to cut away from a business way if you can follow that. So the decline was, of course, cannibalizing a little bit into Products. And -- but somewhat similarly also that Services business, we didn't want to have more or we couldn't have more or the market didn't want it any longer. So I think we have seen the bottom of that. And then we will see product-related services, but we will also see this new type of services. And so for instance, the more advisory type of services that actually is behind our public wins in Germany and in Canada, it actually starts with we advising a path forward and building strategies for our customers. So when you are -- so in Digital Health, for instance, we are being asked more and more to come and help with strategies and tactics on how to digitalize the health market. So I hope that answers the question.

Yes. And then second question here also regarding the agentic AI. I mean you already talked about the benefits and the potential, but the recent development of the agentic AI also raised concern on the software company's long-term value. How do you view this? I mean you are pushing the cloud-led strategy. But I understand this is also more towards software and platforms. What makes you confident that your product would be long term competitive and what is sort of long-term value proposition?

Yes. So I think AI is very powerful, and it will become more powerful. And -- but you can say I've -- I don't fear it. And I don't -- I'm not that concerned for our business. I would be more concerned if we had a product that we sold to thousands and thousands because then that has more at risk to be, you can say, that a lot of other companies come and just generate that. And Trifork, you can see when they do an announcement then, for instance, Figma is taking a hit because they say, "Oh, we do Anthropic design and we do Anthropic. Today, it was something about finding fraud in fintech". And -- but there will be coming a time where I think that some of these companies, they don't want to do everything. We have seen it be cool over the years. Just because you can enter a market, it doesn't mean that you will because if you can do 10,000 different things as a big company because then they will end bad. So I think there will be these setbacks where these big companies are able to do showcases and then it will impact. But the way we see it is that there is so much potential in helping real enterprises, these 2 companies, Dora and all these regulations. And now we have AI Act. We have a lot of things coming from EU to defend Europe against the world and privacy protection. And there is so much work in that. And then you have to remember that there is so much digitalization that hasn't happened. And I'm just very happy that now the speed at which we can actually do digitalization is higher. It's still not rocket speed. It's just higher speed before it was really, really slow to my patience or to my temper. So now I'm happy to see if we can create more results, more impact quicker, not very quick, but quicker. So I see a lot of market opening and also, as we learn to grasp what is AI actually good at? And where is it not that good?

I'm waiting to see if anyone else wants to jump back in or jump in. Mads from Carnegie.

Maybe just a follow-up question. So pretty fantastic win ratio you have in the public sector. So you want to bid on more tenders, Jorn, but I think now the consensus that there has been a slowdown due to general election here in Denmark. So what is your take here?

Yes, I'm glad you bring it up. Of course, there is a lot of business continuing even when you don't have a new government. But as you've seen, in Oman, in Canada, in Germany, in Switzerland, we are also winning these things. So -- and it is, of course, always a concern when there is a pause in leadership in the country. But it's not -- I mean, I don't think it's going to be a big issue because there will be a government and there's a lot of things that is obvious that needs to happen. And so the mega trends are still happening. And I think also that they are already budget allocated to these major agendas that we have to invest in, in different countries. And then there will be new budgets for new things going forward, of course, when the Danish government is back. So I'm not very concerned. But of course, it cannot stay like this for many more months.

Makes sense. And then just my -- maybe my final question is on acquisitions. So in a world with AI, what is your strategic road map for doing acquisitions today? So what KPIs are you looking for?

So I think VION AI is a very good example. And I hope that our M&A team will really take full power of AI to find more of those because we want to do M&As with less risk and more impact and buying things we do understand the things maybe we could have done ourselves, but it would take more time. And when you do an M&A, you also want to get access to market and customers. So it's a combination of product and access to market. And so I think we can probably find more M&A targets quicker, but that's still a little bit early days with that. But as you know, we have -- we always have a pipeline of potential M&A candidates, not all of them will become part of Trifork.

We return to Yiwei from SEB.

One question from my side and it is a follow-up on the AI tools. You already talked about that you're looking to sort of productivity gain and AI adoption. I was wondering that you are a bit different from some of the international large peers, where they have a centralized business model organization structure. And then we have seen them -- some of them have actually adopted AI in the back office support and have achieved a lot of cost cutting. But your organization is rather decentralized. Do you see this as a constraint going forward when comes to sort of AI adoptions?

Okay. So maybe I will start, and Kristian, you will take over. So I mean I think the functions we have centralized are not unlike what functions are centralized in other companies. So for instance, sales, marketing, you can say, HR tools, anything about salary, financial reporting, ERP and IT, all those functions are fairly centralized at Trifork as well. And with that, I will leave the word to Kristian, so he can explain how we will halve the cost in no time.

Yes, sure. No, I mean exactly what Jorn is saying, that you could say, all the back office part is fairly centralized. And this is also where we're looking into and in the process of implementing AI internally. So of course, it's a larger process. So we go system by system in that relationship. And then also, you could say, centralize maybe more systems than we did in the past. And this should also be a path to save cost in the long run.

Okay. Clear. Then I'm just looking forward to get an update from you about your AI benefits. If Mads doesn't ask the question, I will ask in the future.

We don't have any other hands up right now, so let's just give everyone time. Okay, then I think we can conclude the Q&A and the presentation for now. Thank you very much for your interest in Trifork. Today at 2:00 p.m. European Time, we will be participating in a Danish presentation with Hose Andersen Capital. So you can also join there, if you want. Otherwise, we will see you somewhere soon, I'm sure. Thank you so much.

Thank you.