Hi, everyone. This is Jørn here.
Okay, great. We seem ready to start. Hi, my name is Kristian Dollerup. I'm the newly appointed head of Trifork Investor Relations. I'll be moderating our meeting today, and I would like to welcome you to the presentation of Trifork's second quarter and half year results. Today, our CEO, Jørn Larsen, and Kristian Wulf-Andersen, will start by providing you a 20-minute presentation, and thereafter offer you a Q&A session. Before we start, I have a few housekeeping points that I would like to run through with you. First and foremost, I would like to inform you that this presentation is being recorded and will be made available on our investor web after the session.
Second, I would also like to inform you that, if you want to download the presentation we're having now, it has just been released on our investor web under the tab Events. Third, and not least, we of course invite you to ask questions and engage with management after the presentation. Here just a very quick run through of how that works.
First and foremost, you raise your hand, if you have a question. You find a control to do so on your Zoom screen. The way we take the questions is that we will announce you, and thereafter, you will be allowed to unmute your microphone and ask the question. Before we really get started, I also quickly have to present a disclaimer. Just have a few seconds to look at this. Okay. With that done, I think we are set to go. I hereby would like to hand over to Jørn.
Thank you, Kristian. Thank you for the introduction. My name is Jørn Larsen. I'm the co-founder and CEO of Trifork. Welcome, everyone. I'm really grateful you take the time to listen to us here today, where we will talk about our Q2 results and some highlights in our business, but also touch a little bit on where we are on the year, so the first six months, and how that tracks according to our guidance for the whole year of 2022. First of all, we have had a high organic growth in challenging times, as we have stated on our former slide here. Here we put it in perspective of the whole track from 2007 to present day. At Trifork, we always look long-term. We have long-term strategies.
When we invest in our business development, we do it for the long run. We want to be here in many years into the future. Here you can see how we are guiding. The 180-185, and we are ballpark halfway there with the DKK 91.7 million realized in the first six months. Let's move to the next screen. What characterizes this quarter is that the whole growth has been, or almost all of the growth has been organic, and we should see it in this light. Here are some of the main events. First of all, Inspire. You know, we have been through a long period of COVID lockdown, and we have not been able to do in-person conferences.
That was good in a way, because then we could do digital events, and we could start digital channels such as our online community on our YouTube channel, and I'll get back to that in a moment. Now in Q2, we actually started doing a number of in-person events. They are slightly smaller than before, but they are very popular. We have had some sold-out events, and the biggest one was GOTO Amsterdam. That was actually postponed three times, and you can imagine what a frustration that has been for everyone, but also what a relief when it was finally done and with success. In Build we have seen a satisfying organic revenue growth, and so for the revenue, we are very happy. We are satisfied.
If we talk about the profit in Q2, we have, we are not quite happy. We could have wished for a slightly higher EBITDA, and we have some, we believe, one-time reasons for this to have happened. Let's look a little bit into them. It's important you understand them, or we have a chance to communicate the reasons behind that. First of all, one driver for actually having high organic growth in some business areas is that we invested in business development. In the beginning of the year, we invested in hiring new business developers, and it takes some time before that actually kicks in and generates revenue. It did that in Q2, but also it is a cost.
Revenue and cost—I mean, cost comes first, which hurt the EBITDA, and revenue comes a bit later, and then comes profit. That is one explanation, but we believe that is a good one. Unfortunately also having had a situation where people have been mostly at home, you all know that once you get out in society after a lockdown period, your immune system might not be as robust as it was before. We have quantified this in numbers as you see here. On a normal year, that means per pre-COVID, we had around 2% sick leave, and in Q2 it was 2.9%. This quantified in hours, Kristian can talk about it, is around 12,000 hours for our company.
It is a considerable loss of actually revenue we could have had, but of course also EBITDA. It is troubled times, and one area that is really troubled is all the startups around the world. They have a very hard time raising money from new investors, so they have to rely on current investors to keep financing growth for these companies. Trifork, we in some cases work for startups, and we had to write off EUR 0.5 million in working on a big unicorn startup that unfortunately defaulted as a result of the war in Ukraine. That is very unfortunate. It was actually a company that made good for the world and made education for kids in Asia especially.
A big company. We have a hope that they will be reconstructed, and they will become a customer again. A little optimism there. We have also seen that the logistics challenges following the war in Ukraine had the consequence that some of our customers have had troubles in manufacturing and had to reduce capacity or cost. In a handful of cases, that has had an impact on our revenue and of course also EBITDA. Finally, we have also accelerated investment in the organization with having more social event after also the lockdown. We could of course have anticipated that, but that has been more loaded in Q2.
Normally these social events and gatherings in the teams are distributed all over the year, but there was a high concentration in Q2. Of course, we understand that, but it's also something we expect to normalize. That was some time talking about the consequence of our EBITDA. Anyway, let's go to Run. In Run, we have continued to invest in our facilities, and we are really ready to scale up in both Switzerland and in Denmark. We have also in Run seen a high revenue growth in cyber protection, but at the same time as we have also invested in sales and business development. In our Trifork Labs, we have done four of our lab companies have had events where they received capital.
We will return to that in a moment. Let's move to the next page. Okay, this is also a little heavy page. I said it most of it already. If we look at Q2, our organic growth have been 17.8%, and for the half year 17.8% as well. Is that correct, Kristian? It's the same number?
Yeah, that's correct.
Okay. I just saw that now. That was exactly the same. As you can see here in the middle, as I stated on the first page, revenue DKK 45.9 million for the quarter and with including Q1, we believe that, it's achievable to be within our guided target for revenue. The same can be said about EBITDA. Here you can see the number, the EBITDA of DKK 6.4 million that we are not totally happy about, but we believe that, with the explanations, it will normalize, and we can get back on track in Q3 and in Q4. If you look at the right, you will see that, we are continuing to develop our business units in quality, in quantity, and in performance. We have 25 active lab startups.
We just passed the mark of 1,000 colleagues and employees. You can see that despite we have started in-person events in Inspire, we still grow our online YouTube channel quite a bit. This is our biggest channel. We actually have other channels as well, and maybe we can talk about them another day. If you look at the strategic priorities, then it's really it's of course to be opportunistic where we have good opportunities. The main part of our short-term strategy for Trifork is more defensive. It is to grow and deepen the relationship with our good and loyal customer base. For the Labs strategy, it is really to invest in Labs companies that can provide business for the Trifork Group on more short term rather than long term, and more about this later.
We can move on to the next. Here you see, you probably all know this, that the Trifork Group is divided into two segments, Trifork segment and Trifork Labs segment. Let's move on to the next. Kristian, here I leave the word to you.
Yeah. Here we show the ratios in between Inspire, Build, Run. As you see here compared to previous reports, the Inspire business is now growing with a 2.9% , and the ratio in between Build and Run is more or less the same as it's been in the past. We see here that we have a 13.7% organic growth in the Build-based sub-segment when adjusting for the deconsolidation of Dawn Health. I will get back to that a little later. Also here in Build report, an adjusted EBITDA margin of 16.9%. If we adjust for the one-off debtor write-off that Jørn just mentioned before, then it would have been 18.4%.
In the run-based business, we see all organic growth, 11.8%, and an adjusted EBITDA margin of 16.2%. This is for Q2 here. In Q2, we invested EUR 400 thousand in the operation centers. Adjusting for that, we would see a margin of 20.3%. Back to you, Jørn.
Sorry, I was on mute. Sorry for that. I was talking about our case story when you couldn't hear me. Here we are talking about one of our cases. In these meetings, we also want to take one case story every time that we can explain, so you get an understanding of what we're doing. Turning back the clock 22 years, and that's just to referring back to that we are long-term. I actually lost a bid on this very system we're talking about here. It is so that in Denmark, there is an extensive system that monitors the safety and the quality of how patients are treated and cared for, and doctors and the healthcare personnel have to report any abnormality, but also track the success of different treatments.
This is very key to improve quality of treatments. I just said we lost this 22 years ago, but we actually won it back this year, and hopefully we will keep it for many years. This was a public tender. We had a fierce competition with some of the usual competitors that we have in this space in Denmark. We won it. We won it with Trifork IP, so we won it with a product that can be used in more markets and in more disease areas. It is so that this system is already being rolled out into production for one disease area, but there are many disease areas. These next disease areas will also have to be tested in a public competition.
Having won the first one, we at least stand a good chance of winning some of the others that needs to go out in public tender. We can follow that as it develops. Here we have our six business areas. I don't wanna talk much about this slide. Let's move to the verticals. When we look at the verticals, I wanna highlight digital health because on the face of it is now providing 8.8% of the total revenue. If you remember that it was exactly here where we deconsolidated Dawn out of the business. If we take that into account, it has actually grown almost 40% organically. This is a very active business area.
I know the people in our company who are responsible for the business development here, they have ambitions to go double digits again in share. If we go to the horizontals, let's go to the horizontals, please. Then I have two remarks. One being that, as you can see, we have a slight underperformance in Smart Enterprise. Smart Enterprise for us is digital solutions for the public and also business solutions and productivity tools for the private sector based on SAP installations with typical Apple and iOS on top. These two areas has been affected in two different ways.
For the public sector, we have been in Q1 and Q2 struggling to find enough people because it's a very specific people they need to have working in a specific demographic. It's something we are working on because we are not the only one having this challenge in the Copenhagen area specifically. The second one being the smart enterprise for the private sector. It is affected a lot by the war and logistics challenges around the world, but we have still some good wins, and we believe there is still a lot of potential for the future here. We believe we make good progress also outside the Nordics. If you look at cyber protection, that is clearly the winner with a growth in Q2 of 28%, and for the half year, 53.3%.
We are overly happy about this growth, and there is a large appetite for companies to finally take cyber protection as a serious thing. It's still very much in the beginning as we see it. We have currently three business units that are focused on cyber protection. Let's move on to the next. Here is an overview of other case stories. I don't have time to talk about them here in this meeting, but you're very welcome to look them up on our website and call us for more information. If you look at the next page, the Labs overview. Here we, as you know, have mapped all our Labs companies in how they support the business areas and how they support Inspire, Build, Run. I just wanna highlight one here in the light of time.
Arkyn Studios is a quite young company, and it was founded less than three years ago. It was actually Trifork IP that was used as a base, and also Trifork team members who were among the co-founders of Arkyn Studios together with Trifork, and it has been a very successful, intense journey so far. Already now, Arkyn Studios have products in production at customers, at enterprises. Companies as Banedanmark and Arla Foods are using these tools. The implementation partner and system integrator for these tools are of course Trifork, so it has generated revenue to Trifork as well. It has made Trifork more competitive because now we can offer products and implementation of products rather than custom and development from scratch. Let's move on to the ESG update. There is a lot to say here. I wanna just highlight two things.
One thing is that in July we completed a purchase of a forest. It is so that Trifork is concerned about our environment. We wanna make sure we do our part of capturing CO2 in this world. Of course, if by buying a forest we are not solving the world's problems and you can say, "Well, it doesn't really change who owns a forest, one or the other." Actually it does. This forest can be developed. We can work on biodiversity. We can optimize the production and the CO2 capture on this land. As you can see, this is an actual picture from the forest. There are also trees ready to be used in our future smart buildings.
As you can see on the next screen, if you can go there, then here is actually a rendering of our first Trifork smart building. That is, how many tons of wood are we using in this house, Kristian?
We're using just about 500 cubic meters of wood, equal to 500 tons of CO2 that will be stored in the building.
The users of this house, and that is ourselves and our partners, will take care of not emitting the CO2 captured in this building. This building is a story of its own, of a lot of new innovations, but also from a material point of view, from a technological point of view. I will invite you when we open it to come and have a look. We are quite proud of the progress. We have had some really challenging times to build in, but we are approaching the finish line here. Very happy about that. Okay, K ristian, the word over to you.
Thank you very much. I will deep dive a little bit more into the financial performance, based on a lot of the explanations that Jørn told you before. I will give a little more details here. This is more or less the same as Jørn presented in the beginning. Only comment here is that we see our division or ratio in between private and public sector of 65% in the private sector and 35% in the public sector. As always, we have no revenue included from the Trifork Labs companies when we report the numbers of revenue in the Trifork Group. This is the Trifork Group and Trifork segment in relation to revenue. Moving on to the Trifork segment performance, we guide on the adjusted EBITDA.
For the year we guide, as you know, the same guidance, EUR 30.5 million-EUR 33 million. After the first half, you see we have EUR 14.4 million, so roughly, halfway to the lower end of the guidance. We do believe, based on what Jørn told you before, that our guidance is still fit and we are comfortable in meeting the guidance. For the second quarter, isolated, you see a decrease compared to the second quarter in 2021. This is all related to the explanations that Jørn talked about before. Looking into the Trifork Group, then we guide on EBIT, and our guidance on EBIT is EUR 16.5 million-EUR 19 million.
You see here, end of half year, we are at EUR 7.7 million. We're also still comfortable in meeting the guidance that we have and continue to guide in the same way. The margins in the second quarter was lower once again, but this is exactly the same explanations as related to EBITDA. Looking then deeper into the real numbers for the period first half year on the Trifork segment performance, then here you see the actual numbers and the division, and also the different profit margins in the different sub-segments.
We do believe that Inspire will be more or less breakeven this year, potentially a small profit in the end, and then we will see the growth in the Build and in Run. More detail into the revenue and adjusted EBITDA in Inspire, what I just told you here. As you see, it's a quite dramatic change based on those reopenings and the in-person conferences that we have had, and then also balancing out. Actually, in Q2, we had a profit isolated in the Inspire subsegment. On the Build subsegment, you see here that the Build was the only subsegment where the deconsolidation from Dawn Health is into play.
Here you see the differences between the organic growth of 14.8% in the half year and 13.2% in Q2 versus the ratios where it's not adjusted for the deconsolidation. In relation to adjusted EBITDA, you also still see the same margin. The Build subsegment was the segment primarily impacted by most of the factors that Jørn mentioned. All related to sick leave, et cetera, is mostly impacted here in the Build subsegment. Looking into the Run subsegment and the development here, you see it's all organic growth as usual. We don't have any acquisitional growth or any impact from the deconsolidation here. The 16.9% on half year is the total development here in growth.
What we also do see here is a decline in EBIT margin, adjusted EBITDA. This is to some extent related to the investments in the first half year, EUR 1 million and in the second half, EUR 0.4 million, in the operation centers. The rest is more fluctuations over the year. Looking one step deeper into the Run subsegment revenue split and comparing Q2 2022 to Q2 in 2021, then you see that, combined with the license and support and hardware, then we are a little higher and primarily related to the license and support, compared to the same quarter last year.
You see that hosting and security area is here a little more or less the same as it was in Q2 2021. Reason here is also that some of the services delivered in the Cyber protection area is not necessarily Run revenue, but is also in consultancy. Even if we have a very high increase in the subs in the business area Cyber protection, then you do not see all the impact directly here in the Run-based revenue. Looking into the labs segment performance for the first six months, we see a profit on EBT of DKK 1.6 million. That is due to the activities that Jørn mentioned with the lab companies shown before.
One example here is a realized gain that we had on the Programmable Infrastructure Solution, where a new investor came in and took a larger ownership share. Now we have 6.5% in the continuing company after restructuring. At the same time, we cashed in the same amount in cash as our balance sheet value, book value. Now we hold a 6.5% in the continuing company, which then will be all profit in the end. You see here on the right-hand side that we differentiate the investments that we have in the Labs and investments, so that we divide in cash invested and values coming from deconsolidation of companies.
You see the value from deconsolidation of Dawn of just about EUR 20 million is part of the EUR 39.1, and our investment in cash is EUR 18.8 million. If you wanted to do calculations in relation to return on investment in cash investments, then you have this information to use. Our cash flow and financial position. We still have a positive cash flow from the operations, a little less than last year. We still expect a stable cash flow also during the rest of the year. We saw an increase in the working capital due to growth and seasonality. This is somewhat behind the decrease from Q1 in 2021.
Cash flow from investing activities is derived actually from exits, as I just mentioned before, dividends from Labs companies, and then also new investments. Investments in Visikon, for example, was a new investment in Q2. All in all, we were net positive from investing and divesting. Relating to our financing activities, you see a minus of DKK 21 million, and this is majority of that is related to dividend payments in April, and then also repayments of borrowings of almost DKK 8 million to acquisition loans primarily in the past. We also have a decrease in lease liabilities. Overall, it's the EUR 3.4 million in positive cash in net debt. We're still on the positive side of that.
Our guidance, as we talked about before, is still maintained. We are now in relation to organic growth in the upper end of the range we had before, so 12.5%-15% organic growth for the year and total revenue of DKK 180 million-DKK 185 million. In relation to adjusted.
EBITDA in the Trifork segment, then it's EUR 30.5 million-EUR 33 million. Trifork Group EBIT is EUR 16.5 million-EUR 19 million. This was all for us, and now we will then open for questions.
Yes, we're ready for questions from the audience. I see Poul has a question.
Thank you. Yep, can you hear me?
Yes, we can hear you.
Okay, thank you. Thank you for taking the question. First of all, I think it's correlated, both of them, the full year guidance. I was just thinking about high-low on the range that you're coming up with. I was seeing the biggest risk on revenue or on profitability or, of course, it's fit together. Putting that in relation to your clients, you say that there are some delays and so on. What feedback are you getting from the clients? Are they holding back because that they are focusing on their own cash flow? Or is it because that they are nervous about what the next coming months will bring? How is the process here?
I can talk to that. Actually, Poul, it's none of the ones, it's none of the reasons you mentioned. It's actually purely in the cases that really affected us in Q2, it was our customers' ability to produce their own order pipeline because they could not get the components for their manufacturing facilities, and therefore a slowdown in intake of components you cannot deliver, and then it hurts their business. It was not a fear of something, it was the actual disruption from the war.
Okay. If you look into the second half, is that the same main factor you're looking at if they are able to then get the components or?
No, you can say that this kind of business with these, you can say mid-term customers, that will be a positive effect when/if, I would say when they return as good customers. You should see that the Q2 has been a some shift between one and the other customer. If one says, "Okay, I have unfortunately to do this to you even though we have contracts and agreements," but if you help me today, I help you tomorrow, is our attitude always. The hit we have taken in profit is because you cannot just find a new customer from one day to the next or on very short term.
We have found, so today everyone are busy, but they are not busy with the same thing as we expected four months ago. You can say those kind of companies who primarily, as we see it, would be affected by what we have seen so far, we don't have them as customers anymore. Now we have other customers we believe will be less affected at the same thing. Yeah, I hope you understand. We have shifted some revenue from one set of customers to another set of customers that we hope will be more resilient in the coming six months.
Okay. About the sickness leave that you also have been impacted by in the second quarter-
Mm-hmm.
Are you seeing a normalization now you are in the third quarter of the year, or is it still an issue?
I don't have data on that, Poul. We will need to wait until we see the monthly numbers because also the months we have went through has been vacation, and if people are sick in the vacation, we don't know. It's really the months we have not yet been through that will show it and we don't have the numbers yet.
Okay. I have two more questions. One is on Switzerland and this health care project that you've been writing about.
Yes, sir.
Both earlier and today. I was just thinking, as I understand it's more a new entrance to the Swiss market and new kind of service. What kind of potential do you see in this?
I mean, there is a big potential for us. If you imagine that what we have been doing in digital health the past 25 years, and as you might recall, Poul, we actually in the beginning of Trifork created a digital health company that we sold eventually to IBM. It was sold to Maersk first. That was a considerable business for us. It was actually 170 people. We have grown again, and now we see the same potential in other countries. Maybe not the U.S., maybe not Germany, but there are countries who have a decision model that cater for companies like Trifork. In Switzerland, you know, it's really run by the insurance companies. Insurance companies are, you know, commercial, it's private companies.
There are a number of those, a few of them. I would say some of the stronger ones and the ones in the German part are the ones we are working with, and it's around 30%-40% of the Swiss population, and the majority in the German part that is affected by the solutions that we have envisioned to build together with our customer. Our customer is also on a journey. If they will succeed the first time, you know, they really bet on this, we cannot tell you. Then it will happen eventually because, you know, it's unstoppable that digital health will come in every country.
There are also other markets we are looking into doing the same thing as with Switzerland, because there is a lot of interest in learning how things have been done in Nordics. It's not just Denmark, it's Norway, Sweden as well, who went through a similar journey.
My last question, Trifork Labs, I was thinking could you give, let's say, an update on if you take the five most important investments seen from your side that you are having here?
Yes.
Just run through these and then maybe give an update on how they are actually performing.
Yes. First I will say that in the future, we will share a little more light, so investors and you analysts can have more transparency because we believe that is possible. Here I will put a little color on it. You know that our deconsolidation of Dawn was a major one for us. It's also why we talk about it as deconsolidation. Since we did that, Dawn is actually a fast-growing company, and they grow a lot faster now than when they were consolidated. Some of the headlines might be a little visionary that comes from Dawn, but there are also some solid growth, and they are approaching 100 people, and that is, and I think that's well done.
They are, you know, also looking into expanding, and they are successfully expanding outside Denmark, which was the main reason for us to deconsolidate and also to bring in investment from Vækstfonden and Augustinus. Now there is some capital behind in that growth story. I'm very happy. You know, despite of everything you can say, I'm very happy with the development of Dawn. I would say that is one of the major ones. AxonIQ is an important one. AxonIQ has shown from the beginning a stable high revenue growth in yearly recurring revenue and they are approaching a round B and normal I mean normal investor terms or venture terms that would.
If round A is around EUR 1 million or $1 million yearly recurring revenue in euro or dollars, then a round B would more be like closer to EUR 10 million or $10 million. That is of course very promising. They are going on a good traction and on a good growth. We have Promon. We have 5% of Promon, but Promon has a big potential. It's in cyber protection. It's app shielding, so any mission-critical app, and there are more and more of these apps, needs to be protected from attacks through the phone itself, through the user. Promon has a product and Trifork is a reseller. Here we come with an offering to the Trifork customers. We resell the Promon product, and there are other resellers.
That is also something that would be past B round. Considerable revenue in this compared to other of the startups. We have
Okay.
We have some with a lot of potential but still young. We have Kashet. Kashet is a new bank, and we have agreements to be able to get 10% of the company. So it's a bank for international people in, you could say, upper middle class with like properties or assets in more than one country, and there are not really any bank offerings that cater for these people. So I believe it could be a success story. Yeah, I would say those are the major ones seen now. The growth stories if you want it that way.
Okay. Perfect. That gave a little more insight into what's going on in this space.
Mm.
Thank you, guys.
Okay. Next up is Mads Quistgaard. Mads, are you there?
Hey, can you hear me now?
Now we can hear you, yes. Perfect.
Okay, perfect. Sorry. Jørn, coming back to your questions, to your explanation around the public sector in Denmark and the Smart Enterprise business. What we sort of do to make Trifork, let's say, a more attractive employer in Denmark, so we can get the people? Because I guess that, you know, pipeline looks extremely strong in the Danish public sector today. That would be my first question.
Thank you. I appreciate that. I mean, now I'm just being as transparent as I can be. Trifork is not as strong a brand in the Copenhagen area as it could be. I don't see why Trifork in Copenhagen area could not be 10 times bigger eventually. There is a lot of work in branding our company, in telling that we do things differently. That's also why we moved our conference, or we created our conference in Copenhagen. Actually, we did our first conference in the Bella Center in 1997, many years ago. Now, again, for the past years, we have done GOTO Copenhagen as an attempt to become more attractive.
Also, that we have startups in Copenhagen like FirmLab, like Feedz, like Arkyn and others that are in Copenhagen. We want to create this hype that Trifork is an entrepreneur-friendly company. We can take your dreams to any level you want. We are now building a new office in Copenhagen on the Nordhavn. We believe also that it helps to have an attractive location and attractive place to work. We will have first-class facilities. We will have air conditioning. We will have all the things that people need today, of which many companies don't have. It's a long-term game, but we definitely need to invest in our employer branding in the capital of Denmark.
That's just to be transparent with you.
Very clear. Thank you, Jørn. Maybe on churn, because I saw a slide around you had churn of 17% in the first half. I remember you have a group target which is, you know, as far as down as 7%. Should we be worried about, you know, high churn levels in Trifork going forward? Also maybe you can comment on churn developments across your countries.
Mm.
Where do you see the highest churn?
This will be more my flavor, and how we work with it. Okay? We don't have a specific. We don't report on these data points, therefore, I cannot talk to them. I can tell you, first of all, the churn is not even evenly distributed throughout our 61 business units. You can say that's a strength or it's a weakness. I believe it's a strength because then we can actually compare where we have very low churn, so below 7%. We have a number of business units with very low churn. We can study them and see what are they doing right to keep people around, and where are they, you know, because maybe we should do more there. Where do we have very high churn, and where are the reasons?
By having 61 study places, we can learn about it. Of course, some of the churn is also self-inflicted. For instance, when we acquired the company Invokers, we did decide that it was such an interesting opportunity to work with Apple and SAP. We still believe it is, but we actually decided to break up that business and plant the seeds in many places. That was a dramatic decision which led to a lot of people leaving because there was a lot of disruption and there was a lot of action going on. That's why we have Arkyn now. That's why we have Smart Enterprise in Switzerland. That's why we are doing things in Germany today.
Sometimes you have to, you can say, break some eggs and to get to the next level. There are different reasons. Of course, another factor has been that startups have been very successful raising a lot of money. For instance, in Aarhus, we have Google, we have Uber. Now we have CrowdStrike. Those companies, they can pay very high salaries, and that is also a reason for people to leave. We need to come up with other ways of providing our colleagues with value.
We believe being able to be an investor in the company, being able to, you know, potentially to do be involved in labs, et cetera, can give the same economic possibilities and but also the excitement that people are looking for. We constantly also need to be bold to use new technologies. It is not a simple solution, but we are working on this for sure.
Very clear, Jørn. I have two questions left. Then another new one here. Can you offset the potential cost and salary pressure in the second half of the year through price increases? As I guess, you know, most of Trifork's revenue is time and material. If we see, you know, this high inflation going forward, what would you then do to offset the impact on your margins?
Yeah. Now I'm not only talking to you, analysts, investors. I know I'm also talking to all our colleagues. I mean, the time we are in is a difficult time. There is inflation. The gas prices goes up and down, heating and all kind of things. It is difficult to find the right level of compensation. First of all, we do not have negotiations with all employees at the same time. A lot of them, we already did have and found a good level for this. There are also, you know, negotiations with employees and colleagues coming up in the fall. We constantly win new business, and when you win new business, you will need to address that things cost more now, and there is an understanding on this.
We also have contracts that are price index regulated, so it is a mix. For sure, it is one of the risk that margins will be under pressure. Also, here is where our business units will have to innovate by themselves, because in reality, it is the business unit leader who needs to find the budget for his colleagues, you know? If they together can say, "Okay, let's wait doing this, because then we can all have a little raise," which is necessary. We actually delegate, and we ask for innovation and creativity in how can we get through these times?
Okay. Great. My last question, what is the impact on the Trifork segment adjusted EBITDA from the higher sick leave in the quarter? I know you not have full utilization, but what is sort of the impact if you had, you know, let's say, the normal 2% sick leave in the first half?
No, Kristian-
Maybe I can answer that.
Answer that. Yeah.
If you take the difference, the delta between a normal year and where we are right now, then it's 0.9%, and that equals between 10,000 and 12,000 hours. Then, of course, you could always argue, okay, but what is the price of that, and could we actually have been delivering that? On the first half, it's around EUR 1 million- EUR 1.5 million as an estimate.
Okay. Thank you.
Okay. Great. We have a question from Serge from Credit Suisse.
Yes. Good morning, gentlemen. Sound check.
Good morning. Yes, we hear you great.
Okay. Cool. Thank you. Probably also going to Smart Enterprise. This is basically the backbone of the company with almost 50% of total sales. Can you give me a flavor how much is public and how much is private sales you recognize there, and how does it change over the last two years?
This is not something we have reported currently, but it is.
Then let's-
Yeah
Let's change probably on the group level. Can you give us the split? How does the split-
Yeah
Change from public to private?
Split is more or less the same. It is around 65%-70% in private and 30%-35% in public.
Okay.
The split in Smart Enterprise.
You mentioned.
... is a little higher on public than it is on private.
You mentioned at the beginning that you had problems or that people or companies are not ready to invest in the business development. I understood that this is in regard to companies that stop investing. Is this correct? Are we talking about postponements of projects or already cancellations approach?
No, I think I'd like to clear up because I probably didn't make myself very clear. The disruption we saw in Q2 resulting in lower EBITDA was a few customers. We're talking about a handful of customers that were directly affected by the war in Ukraine and the logistics challenges following that. You've probably all heard about all these manufacturers who have production facilities in Ukraine. If your vendor, if your subcontractor has a factory that is bombed, you cannot produce what you need to produce, so that has a ripple effect throughout the whole world. Some of these customers are also our customers and they simply stopped because we are many times directly involved in also optimizing their production facilities, and if there is no production going on, then they also stop that work.
It is, you know, a limited number of customers out of the hundreds of customers we have, but still it had this effect. In general, I will not say I see any cooling down of the ambition to innovate because many companies know that if you don't innovate, you probably don't survive long term. I don't see any big change in the ambition or the appetite to innovate at our potential customers because innovation is, you know, it's a requirement to survive in the future.
Okay. Got it. Very, very helpful. In total, you make most of your revenue with, I would say, mature companies, you know, and as you mentioned also, public companies. You mentioned also that you have good deals with unicorns, with startups. How much of your total sales is from startup companies?
I know Kristian will say we don't specifically monitor this. We could. I can give you some examples. For instance, for many, many years, we have been working with Klarna. Klarna is a Swedish company, a big fintech.
It's a terrible company, by the way.
Yeah. It took a big down round recently. Something I heard was they asked for DKK 90 million valuation, they got DKK 6 million, but they did get money. We have been working, you know, more or less for their entire life. But we never had any issues getting payment from them. When they decide something needs to happen right now, they call us, and we have a team for a specific time, three, six months, and then there will be another thing. That has been one of our major ones. But it's not a lot of other startups. It does not take a lot of our revenue. I would say less than 10%.
Okay. Still, do we have to fear still some write-offs in the second half, you know, given the situation we are in today?
Yeah. What are the biggest risk in the remaining six months? I would say we are happy with how it looks for work for the remaining part of the year. We believe that we will still continue to do business with our largest customers. Now, of course, all the new business you win or you are trying to win, will that be affected by uncertainty? Maybe. That's also why we have invested in more business development because we think there will be a lower win rate or there could be. That's why we need to double down to continue our growth journey.
Okay. Fair.
Yeah, unfortunately time is up now. We are happy to follow up with any additional questions individually. I think we have to conclude now this session. We hope to see all of you again soon, and maybe in some of the investor roadshows or in meetings coming weeks. As mentioned, you will find this presentation under our Events tab on the investor site. Just practical information. Our Q2 results will be released on 2nd of November. Please reserve the slot, and there'll be more information there soon about the web link and so on. Thank you for your participation.
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