Upsales Technology AB (publ) ($UPSALE)

[Audio Gap] Johan Kallblad, the future CEO of Upsales. So today's agenda, we will talk about the transition. Since you all know, I sold a significant amount of shares, and I'm leaving as CEO and Johan will step in after the summer, and I will remain on the Board. So the agenda today is -- I'm going to give a little bit of background to the decision and then Johan will share his view on Upsales and where we are going. And then we have plenty of time for Q&A. So if you wish to ask a question, just to use the Q&A feature in the Zoom toolbar and we will answer all questions at the end of the introduction. All right. So the background to this decision. So Upsales recently spun off. It's AI start-up, Aira, which started as an innovation project 18 months ago inside of Upsales. And as we continue the development of the project, it was more and more clear that we wanted to commercialize this product and launch it as a separate product with a separate brand and a separate go-to-market. And more and more, as we continue on this journey, it was more clear that Upsales and Aira are two fundamentally different companies with different target groups, different product and different -- more importantly, a different stage in the company life cycle. So we made a decision or the Board made the proposition to the AGM to spin off Aira. And this was completed a few weeks ago. So Aira is now a stand-alone company. And the reason why we wanted to do this was to show the underlying profitability of Upsales. So even when Upsales was funding Aira, it was showing decent profits, but the underlying profitability was far, far higher. So that was the main driver why we wanted to have Aira as a separate company. And another part of this spin-off was to list Aira, which will actually happen tomorrow. So tomorrow is first day for Aira at the Nasdaq First North. And in the process of the listing application and while executing the spin-off, we had an increasing amount of discussions about the -- if it was a good idea or not for me to be CEO of both companies. And the initial idea was to continue as is. So the idea was for me to continue running Upsales and Aira, which I've done for the last 18 months. But then as luck had it, I started a conversation with Johan, who expressed an interest in stopping his early retirement and return to corporate life. And as these discussions progressed, me, myself and the Board, we increasingly got more confident that this is a very good idea for me to step down and for Johan to assume the role as CEO. And I also want to specifically mention that it's not sure that we would have done a change in leadership if it was not specifically for the discussions we had with Johan. I think when you have been running a company like Upsales for -- I mean, I've been running the company for 23 years, I think it's typically very hard to just call a headhunter and then find someone else to step in. But I've known Johan for 15 years, and I think we share the same view on leadership and how to run an effective business, how to run a business with profitable growth. So I'm very happy to share the news with everyone that Johan will be stepping in. Yes. I think I'll stop there, and I'll hand over to Johan, who will share his view on what's next.

Thank you, Daniel. A bit nervous that you're overselling me here. But one thing I've learned about Daniel throughout these years, when I've had him, he's been a partner and a [ vendor exited ] that -- where I was the CEO and built for more than 15 years actually relied on Upsales for CRM for a long time. And we also actually built integrations between Upsales CRM and the Visma ecosystem. So we've come to know each other, both as in a vendor-customer relationship and in a partner setting. And one thing I know about Daniel is that he's very cost conscientious. And so he -- I can make everybody happy here that he has spent exactly $0 on headhunting firms in this process. So we did this through personal relationship and trust. So I was going to say -- so as I've said on some questions on some calls earlier, I first got to know Daniel about 15 years ago when I was looking for the right CRM system for my organization to grow our sales, both to grow our sales force, but also improve our sales efficiency and also getting higher trust in our sales pipeline. So we chose Upsales at that time, and I had a really good run with them. So I've known Daniel for a bit. And then I went into -- you call it retirement. I was thinking maybe more as a, let's say, hiatus or a vacation year or something I left my CEO, [ Joe Beteitec ] in March of 2025 partly because of personal reasons and partly also because I felt after 15 years that I was getting a little bit tired of myself doing the same story and the same sort of energy. I felt that I needed a break. So one of the things that I was exploring as I didn't have an operational role in the company. I do have some board assignments, but as I had more time, I wanted to do some more serious investing. And I do like the software space and the SaaS software space and also IT services space. So I did some investments. And one of the investments I chose to do was Upsales. And I did it on the backside of a napkin sort of assumption on cash flow. For me, cash flow is number one, revenue is number two. I know everybody here probably loves ARR. I like ARR as well, but there is a management metric. That's something that you calculate, cash flow is not. Cash flow is typically true. So my investment thesis typically starts with cash flow and trying to understand that. So I did the backside of a net gain analysis on Upsales and I felt it was trading pretty cheap for a company with 95% recurring revenue. So I bought a stake and then the stock went down a little bit more. I bought an additional stake, and this was late 2025. And then as I saw Daniel talking a lot about AI and Aira and launching that, I did go into some discussions with Daniel about where his focus was and what was the priority. And then he assured me that this is -- it's a lot of it is marketing. Upsales is doing business as usual. And I was pretty confident in that. So -- but when the news came on splitting out Aira and Upsales, as an investor, I was actually quite thrilled because I feel in a small company like Upsales, it's really hard to have multiple agendas and multiple target markets and multiple products in a small company like this. And I felt that the best time for Upsales CRM is still ahead. So I was actually quite happy about this. I even asked an analyst on a call where this happened who asked Daniel about leadership and how is that going to work and this was -- and then a few weeks later, I guess, Daniel called me and introduced this idea and I feel really blessed and honored that I got this call and I feel good about taking over the responsibility. So about my leadership, so you are all well aware of Daniel's leadership. I really share this vision of running with very high cash efficiency, high margins. For me, growth through organic sales is number one. But for me, historically, it's also been complemented by M&A, and I don't mind exploring that either. It's a little bit harder in a software business than in the services business, but I do think there could be some opportunities of allocating capital to M&A as well, and that's something I've been historically really comfortable in. Not a big [ transitional ] M&A things, but buying customer bases, buying additional functionality, relatively cheap, incorporating it, creating something better, that type of capital-efficient M&A is something that I've had really, really good experience within my career. So -- but the main thing that I want to promise every customer and I've talked to all the employees when Daniel introduced me is that our vision and mission is to be the best possible software solution for helping sales organizations in the Nordics be as efficient as they can. So an obsession with making our customers successful, it's #1, 2 and 3. Our greatest moat talking about SaaS and the AI and the SaaSpocalypse and those things. Funny enough, it seems like that all stopped in the U.S. So the companies that I'm watching in the U.S. are up 20%, 30%, 40% in the last month. But in Sweden, we still have a SaaSpocalypse apparently. Our biggest amount is not technology, it's not integrations, actually it's not locking in our customers with complex license agreements, it's actually making their sales force successful. So when our customers are successful in running efficient sales, when the sales force is efficient, when they think this is a tool that we can rely on and trust and we are efficient using it. It's -- that's the moat. So an obsession with customer success, it's going to be high up in the agenda. And I know that Daniel has had that obsession before because I was a customer of this. So I think transitioning over now. Daniel is still around. I have some time. So we're already advising one another in some like recruiting, for instance, some of the long-term things. But there will be maybe 6 weeks for me, understanding where we are when I come on board in August. So maybe 6 weeks understanding where we are and then together with the leadership, creating like 3 or 4 leading stars or goals that we are aiming for in the long term and decide how we're going to measure them and then probably 6 months, 9 months before we see some traction in my direction. So don't expect anything to happen in 3 months, maybe hopefully, in 3 to 6 months, we'll be able to communicate really clearly and understandably what the vision is and what the leading stars is and then we can communicate metrics around that. But like I've said to a couple of people running -- it's really a great thing to take over a profitable company with strong cash flows because if you have strong cash flows, time is actually on your side, you get the time to figure out all the things that you need to figure out if the cash is building over time rather than [ when ] you're doing the opposite, we have negative cash flow then time works against you. So I'm feeling really good about this. And yes, Daniel, I made Daniel -- to make no mistake about this. It was my fault that Daniel missed some of you came back with the Daniel missing and engage with [ Daniel's ] industry in Sweden. That was my fault for talking too long to the staff, I think, or he thinks it's my fault. I didn't know of his assignments or calendar, but I guess any more comments on this, Daniel, or should we hand over to Q&A?

Yes, I think I could just add that I mean I think Upsales is in a very good place now. So if you've been following up, since we had an extremely long track record of growth, like 17 or 18 years. And then we had some growth problems in 2023 and early 2024. And then working from the learnings, I mean that slowing growth was a combination of the market slowing down and us doing a big reorg in the sales organization. But in the last two years, we've just seen growth increase every quarter. And I think, I mean, Upsales reported 13% year-on-year growth in Q1 with pro forma, excluding Aira, almost 30% margins. So I mean, I think if you look around in the Nordics, you find very, very few SaaS companies with those numbers. And I feel to do this transition now could not have been a better timing because in the last 3 years, when we were having growth issues and the stock was coming down, I was getting calls almost every week from buyout funds and investors looking to buy my share. So I sold my shares at SEK 25. I had offers of SEK 50, I had offers on SEK 40, I have offers of SEK 35 and SEK 30 and so on. But I could never do that because the transition, the timing was not right for me to leave the company. But now I feel the team has been doing an incredible job. The positioning with the product is amazing. And I think the company is really in a good shape. And I think that's just a perfect time for someone like you want to come in and just continue. So I'm very happy with where the company is and I'm also excited about where the company is going since I'm still one of the, if not the largest shareholder.

I'll add one more also -- one more comment on this is because I've been getting some questions as well. So what happens when Daniel leaves. Of course, Daniel is an inspiration and a great entrepreneur. So that's really important. But I was pretty delighted when I was meeting the team that -- it's a bunch of other people actually. The key product guy has been on board for 15, 16 years. Main sales guy has been along for 10 years, I think. And there's actually a bunch of people that have been along for -- the key DevOps guy, I think, 16, 15 years. I don't know exactly, but this is a bunch of people. So the team has been a long -- a lot of the team members. Of course, a lot of new team members as well. But -- and that's an important first thing for me. I need to learn to get to know the team and make sure because, obviously, for me, I'm new so I don't know that perspective at all. So, yes.

All right. So I think we'll open up for some questions. So feel free to use the Q&A button. Okay. So we have a question from Linus. Can you see the question, Johan? Or is it just me?

Yes. Now, I see a question.

Okay. I think the first one is for you, are about M&A.

I don't know. I don't know if that's for me, the M&A question. I could elaborate a little bit on M&A. If you -- is it the one from Linus or the one from Fredrik you were looking at?

Linus.

Yes. In terms of us doing M&A, I would say -- and it's not really the question, I notice here. But in terms of us doing M&A as far as I see it, it's about -- I mean given that sales efficiency and go-to-market is usually top of mind for every CEO of every scaling company, every growing company. It's really a top of mind thing. That's really important. And we have trust in that area. So I mean, using that trust as a basis for doing a little bit more, assisting the customers with a little bit larger portion of their sales processes and their business processes. That's where I would look probably. So it could be -- I'm not sure what it would be. But there are software -- the softwares that we typically integrate to or softwares where customers have multiple choices that are adjacent to what we're doing. I don't expect us to do anything completely different, but things that are adjacent to what we do and maybe softwares that we have integrated and we've seen creating value for the customers, especially if we can -- if we were to be able to do some M&A on reasonable multiples and see clear improvements that could be an interesting way of allocating capital. In the other way, any interest from a bigger player buying Upsales historically, that's a Daniel question, and I think that we would not -- that's not something we typically can answer. Obviously, it hasn't happened because the company kept [indiscernible] like it is. In terms of the future and going future going forward, it is what it is when you're a publicly traded company, and you're trading at a low multiple. It is -- you are an attractive takeover candidate of course. But that's not the strategy, but we'll deal with it at that time if that happens, right?

Yes. And again, I think there has been interest throughout -- especially the last few years when the stock has been coming down. But I mean, for me, that has not been an option. And I mean, I think when I look at Upsales, if I step out from my role as CEO and just from a shareholder perspective, with the guidance we have going forward, I think from Q2, we have a run rate EBITDA annually of almost SEK 60 million. So I mean, when I talk to our largest investors and the investors who bought shares from me in the placing, I think they see a very attractively priced stock compared to the cash flow and the future potential.

And I know absolutely nothing on your forecast going forward. I just hope it's correct, Daniel, but I have no insight into that, I would say. And another thing I could maybe I've gotten another question because as maybe some of you on this call also know I run this company called Exsitec for a long time, and I'm still on there as I'm on the Board, and I'm a big shareholder. But I'm a lot smaller shareholder than I was when I had my peak ownership there. But as an entrepreneur and as I'm speaking for Daniel and speaking for him -- I'm really speaking for myself, but -- and Daniel speaks for himself. But -- but when you pull your heart and soul into a company for a long, long time, and it's really the work of your life and the work of your career, it's not -- my feelings were excited and I think Daniel's [ feeling ] for Upsales. It's not like a [ cap ] table, you sure, you have your money in there and that's important, but it's also -- it's the people, it's the customers, it's the commitment. It's the pride of what you spent 20 years doing. And also for me, personally, when I see my, what's it called, predecessor, the guy coming after me at Exsitec doing a big deal that I wanted to do for years, but I was unable to and they closed on that deal last week or two weeks ago at Exsitec. I only feel pride. You could think that I would feel envy, but I feel nothing of that. I only feel proud that I've been a part of creating an environment that moves on and moves forward and doing things that I wasn't able to do. So I'm thinking Daniel feels the same way about Upsales. This is your [indiscernible] answering for you but yes.

No. But I agree. And I think your point on the team. I think that's what I'm most proud of, like the team running the business, and especially in the last 3 years, going from high growth to 0 growth and then fighting your way back to double-digit growth. I'm just very proud to see that and to see the fighting spirit.

All right. So we have some other questions. [indiscernible], can you share any initial thoughts? I think I already did on strategy going forward. So customer obsession, of course, number one, as a leadership strategy, like making sure that everybody knows the 3, 4 leading stars that these are -- this is what we're driving towards, but it's too early for me to say what those leading stars are. But it's going to have something to do, obviously, with customers and with customer success. But that's where I want to lean on the 20 years experience of the team members and the leadership team and create something that we can work with. So okay, yes. So Upsales has been cautious about working with external system integrators, given your ambitions going forward, do you see a larger role for partners such as Exsitec? What would be the key benefits and risks of expanding that route from an [ out investor ]? Yes, do I see that -- I think that's one of the things that, as a leader of Exsitec for a long time, I felt that sometimes the product owners, the guys like Daniel and the guys that hadn't worked with partners or resellers, they were cautious because they felt that the system integrator only wants to build consulting hours and they were a bit cautious and entrusting that system integrators are -- and they maybe had a bad experience and so on. But for me, coming from a system integrator space, it's a very big difference between different system integrators. And I think the key thing of working with partners, you always have to ask, it's not so much about how do I incentivize them? That's part of it. Of course, it's always important, but that's never been a problem, I think, for Daniel either. We had an agreement where I built integrations. This was a long time ago, and we get some share of the revenue. That was never the problem. It's how do we make our product important to the customer, to the partner? And how is the partner able to benefit from this being -- how can the partner build something outside of our product to benefit his or her's core business. So how do we support the core business of the partner? That's the key question to answer and how do we not get in conflict here? How do we support one another's core business. So finding someone where our CRM system is a great complement to the core business of the partner. That as a foundation for a partnership should work really well. So am I open to exploring having working with system integrators, yes, obviously I am, but not every system integrator. We need to find the ones -- and open. I mean, we're open for business. So if they want to contact us to find the [indiscernible] where we can augment their core business, then we can have a working relationship that works both ways. So yes. All right. See a lot of questions from me. I think I got another one here, Daniel.

And we have a question from Rasmus [indiscernible]. I'll -- I'm new to Rasmus. So you have to unmute yourself too. Rasmus, are you still there with us? Okay. Let's take the question from [indiscernible].

So a question from [indiscernible], you described that your share several similarities in the leadership styles. You [indiscernible] any measures or initiatives that you would like to implement relatively quickly once you assume the role? I think I answered that. I don't really -- my first initiative is to spend maybe 4 to 6 weeks working with the leadership team, understanding where we are and defining what the leading stars are. I don't necessarily know anything already that's a quick winner or anything. I will take my time there to understand before I make any decisions like that. So no, unfortunately.

All right. Do we have any more questions?

Maybe Rasmus, maybe you can type -- if you're still on the call, maybe you can type the question because we had some problems with the sound here.

All right. So I think that concludes today's call. Thank you, everyone, for joining, and we are looking forward to see what's ahead.

Take care.