Good morning, everyone, and welcome to our Q1 presentation today, followed by a Q&A session. It's a beautiful, sunny Friday morning, and we can feel the good vibes and heat building up here at Techstep today. Let's get started. I'm here with our CFO, Ellen, and we have been looking forward to sharing more insight with you about our progress, improvements, results, achievements last quarter, and the strong momentum we see across markets. It's already more than 15 months since I got the opportunity to lead Techstep, and it has been a great ride so far. As we reflect on the first quarter of 2025, which also marks the first full year for me as CEO, I'm pleased to report that Techstep has maintained and accelerated its positive commercial and financial momentum from 2024.
We continue to develop and optimize our organization, as well as tuning our strategic direction, including go-to-market model, key priorities, and positioning of our different business areas for growth and scalability. The key aspects we're looking at are increased profitability, potential going forward, and our own productivity. For the 10th consecutive quarter, we delivered positive EBITDA adjusted in what is the weakest seasonal quarter for Techstep. This development is driven by growth in our recurring revenue offerings, with our own software contributing the most with 11% year over year. Our consistent positive performance underscores the strength of our software offerings and the value they deliver to our clients. Strategic partnerships remain important to our growth strategy. The successful onboarding of customers through collaborations with partners like DeviceNow and ICE continues.
Furthermore, two new strategic partner letter of intents have been signed, one with a new IT vendor in Ireland and the U.K., and one with a new Nordic telecom operator. Also, we're happy to announce that we have recently started to deliver on our major agreement with Sykehuspartner under the exclusive agreement umbrella with Sykehusi nnkjøp, which also has been prolonged for two additional years. Among enterprise and public sector across the Nordics, we also see increased need for comprehensive managed mobility services spanning both office workers and field workers to increase their flexibility, productivity, and security, as well as sustainability. We have increased our share of wallet with several key customers by delivering more end-to-end services and managing their mobile estate more effectively. As we advance through 2025, we remain dedicated to our mission of becoming Europe's leading mobile and circular technology company.
Our team's dedication, combined with the trust of our customers and partners, positions us well to achieve our strategic objectives. As a mobile and circular tech provider, we are enabling organizations to achieve more with more flexible, innovative, and productive ways of working. We're highlighted by Gartner in their latest market guide as a recognized managed mobility service provider managing more than 3 million devices across Europe. We are serving private enterprises and public sector across the Nordics with our direct sales and delivery model, covering both office and field work use cases, and our strong partner community is handling the European and global market through our indirect partner model.
By combining our own software, our unique and world-class expertise, and delivering a broad range of certified devices, we help our customers create more value from their mobile estate and better equip all kinds of users with the best mobile tools to optimize their work. In the indirect partner model, we are empowering partners to deliver and integrate our highly scalable solutions and services into their core business models or as value-added services and new capabilities to serve their customers in a better and more efficient way. We continue our increased focus on transitioning our business model from transactional and point solutions to recurring and end-to-end services, becoming a strategic partner helping customers transform and drive innovation with secure and sustainable mobile technology solutions. Let me take you through some of the many highlights from the first quarter.
Recurring revenue is up 7% year over year, and our contracts are all-time high, NOK 21 million higher than 12 months ago. Again, our own software is growing the fastest, with double-digit growth at 11% in recurring revenue. We have improvements in EBITDA and margins, and we continued to generate positive cash flow from operations last quarter with NOK 2.2 million, strong improvement year over year. Another solid commercial quarter with several new signings and renewed contracts with key customers and partners. We see good traction with the Tradebroker agreement, now representing 84 large enterprises with more than 200,000 employees. We've had several new customer wins, as well as upsell and expansions to existing customers, as well as strong wins in Sweden with large enterprise clients with a lot of potential going forward.
We have secured and prolonged the exclusive agreement with Sykehus innkjøp until July 27, and we've started to deliver, provision, manage, and support clinical devices based on the new agreement in place with Sykehuspartner, including own software, professional services, and delivery of thousands of devices. This agreement will continue to grow during the year and represents a significant potential in the years ahead, rolling out tens of thousands of clinical devices across Health Region Southeast. We continue to have strong momentum related to building a strong partner ecosystem, signing two new letters of intent, which both represent a potential market launch and some financial effects from Q4 this year. I'll come back to some more updates at the end of the presentation, but first, I will hand over to Ellen, who will take you through more details of our financial results for the quarter.
Thank you, Morten, and good morning. We are pleased to present the numbers for the first quarter, showing that we are continuing on the path towards profitability and delivering on our strategy of increasing recurring revenues and transforming our business model. The first quarter is typically seasonally weak, as our results still largely depend on transactional device sales, while we continue to build our base of recurring revenues. The total revenues in the first quarter decreased 3% to NOK 249 million. However, the net gross profit was stable at NOK 86 million, in line with last year. Although device revenues decreased 5% in the quarter compared to the first quarter last year, the margin increased. This is due to an expired public sector frame agreement for delivery of iPads.
This agreement represented very low margins, and we made the decision not to participate in the new tender for extension of the contract. This is in line with our strategy of focusing on higher margin contracts instead of chasing volume. The total margin on devices, including revenues from devices as a service, was 15.9% in this quarter compared to 15% last year. Revenues from our own software continued the positive growth from 2024 and is up 11% year over year. All the product portfolios performed well, but it is in particular the Essentials MDM software product delivered from our Polish office that is showing the highest growth. Revenues from advisory and services include both transactional and recurring revenues. In the first quarter, we see that the transactional revenues, including third-party software and consulting revenues, are coming in slightly lower than last year.
The previously announced partner agreements with DeviceNow and ICE, which are currently in full operation, are contributing insignificantly to revenue, and more significant financial effects are anticipated towards the end of the year and into 2026. EBITDA adjusted was NOK 2.3 million in Q1, representing a slight growth compared to last year's EBITDA adjusted of NOK 1.5 million. This is due to a 1% reduction in total operating costs, including personnel costs. Although we have reduced the total number of FTEs by 4% year over year, this is partly offset by salary increases and inflation effects on our other operating costs. We are also currently driving two major internal system and enterprise architecture implementation projects, adding temporary additional OpEx to our results. However, these projects are expected to contribute to considerable efficiency gains, in addition to reducing running IT expenses when finalized in 2026.
Net loss in the quarter was NOK 16.4 million after amortization of intangible assets of NOK 16.9 million. Out of the total amortization, NOK 7.2 million is amortization of purchased technology and customer contracts from previous M&As. These assets will be fully amortized in the first half of 2026, and total amortization in the income statement will be reduced with approximately this amount per quarter from thereon. Techstep works across three main markets, and the revenue mix is a bit different between these markets. In the Norwegian market, about 40% of the revenues are from devices, while the remaining 60% is from higher-margin services and software. The Swedish market is split about 25-27% from devices, while the remaining is services and software. The Polish market, which encompasses a significant volume of partner-driven sales across Europe, has historically centered around our Essentials MDM offering.
As such, the revenues from the Norwegian market are in much larger degree subject to seasonal variations in revenues and profits, the Swedish market to a lesser degree, while the Polish market consists almost entirely of recurring software contracts. In the first quarter, we observed varying development across the markets. In Norway, there was a 7% decline in total revenues. However, this was caused by the exit of the unprofitable iPad frame agreements. So the net gross profit from devices was stable year- over- year, with a 1% increase in margin. Revenues from own software grew 12% year- over- year, with a 1% increase in margins to 93%. However, the decline in total net gross profit of 9% was driven by declining margins on third-party software, as well as a reduction in consulting revenues in the period.
Sweden had a positive development with 2% growth year- over- year in total revenues in the quarter, but with a slight decline of 1% in net gross profit, driven by a 2 percentage point margin decline on the device revenues. Offsetting this effect is increased profitability in the advisory and services revenue, as the newly announced contract with LKAB that was implemented in March includes revenues for implementation, support, and services in the quarter. The Polish European market is continuing the growth from last year, with 17% growth both in revenues and in net gross profit. The net gross profit for the quarter was in line with last year at NOK 86 million, and the mix between low-margin device profits of NOK 26 million and higher-margin software and services of NOK 60 million is stable.
However, as we move towards a recurring revenue business model, we will see a decline in the transactional revenue type of services in the short run. Our focus is shifting toward contracts that strengthen customer relationships and support recurring revenue growth. This strategic pivot may temporarily affect transactional sales, but positions us for stronger long-term performance. Net gross profits from advisory and services were NOK 34 million in the quarter versus NOK 36 million last year. However, last year, approximately 37% of the profits were from recurring contracts, while this has increased to about 42% in the first quarter this year. Looking back at the first quarter of 2023, the share of recurring contracts in advisory and services was about 34%. Profits from own software are growing steadily at 8% year over year and are primarily from recurring revenue contracts from new customers, as well as upsell on existing customers.
Our own software is primarily sold as recurring revenue license models, but over time, there are some variations between quarters, as there are some occasional perpetual license sales, in particular historically in the public sector in Poland. As you may have noticed, revenues from our own software increased with 11% year over year, while net gross profit increased 8% year- over -year. This is because a significant portion of the growth stems from the Essentials MDM product in Poland, which has a gross margin of about 80% compared to our other software products, where we have margins of about 90%+ . Net gross profits from sale of devices were in line with last year, and the mix between device as a service and transactional has been slightly increasing over time to about 35%.
We are currently enhancing our device as a service delivery model to streamline operations and provide an improved customer experience, as we firmly believe this represents a compelling business opportunity when combined with our broader service and software offering. Leaving the first quarter, we see a continued growth in the recurring revenue contracts, with a 7% increase year over year to NOK 331 million, driven by 11% growth in own software contracts, as well as an 8% increase in advisory and services contracts. The newly implemented contract with LKAB is driving the growth in the advisory and services since the fourth quarter last year. The slight decline in own software since Q4 is caused by normal variations in the number of users or devices. The same is the case for variations in the device as a service contracts.
At the expiry of contracts, the implementation of renewals may take a few months before reflected in the financial numbers. The new agreement with Sykehuspartner will be in effect from Q2 this year, and we add additional recurring revenues going forward. Additionally, we have strong faith in the European expansion of the Essentials MDM software, with exciting opportunities that Morten will talk more about shortly. Our LTM net gross profit has been declining since 2023, driven by a decline in device revenues, reflecting both challenging market conditions and our ongoing strategic transition towards a business model focused on recurring revenues. As part of this shift, we are prioritizing the bundling of services and software and ensuring that any pure device agreements contribute positively to profitability.
Since the third quarter last year, we believe we see a turning point in terms of net gross profit, and we should be poised to be building profits going forward as the recurring contracts grow. At the same time, we have been able to improve our profitability through managing our cost base and continuously improving efficiency in the organization. This is a long-term effort that will take time, but we are steadily building a stronger foundation, improving customer satisfaction and delivery capabilities step by step, while also driving cost efficiencies. A key KPI for this cost efficiency is our conversion of net gross profit to EBITDA adjusted. Going from - 3% two years ago to 12% in the current quarter proves we are moving in the right direction.
The first quarter is typically a weak quarter for working capital changes, but for the first time in several years, Techstep produced positive cash flow from operations before investments in device as a service in the first quarter of NOK 2.2 million. Cash flow after investments in device as a service was negative NOK 19 million, which is an improvement of NOK 17 million year over year. The change is driven by an improvement in working capital this year. For the last year since I joined Techstep, we have maintained a strong strategic focus on enhancing our liquidity and cash management and aligning the organization towards improving cash generation across our operations. Cash spent on investments of NOK 10 million consists primarily of development costs for adjusting our portfolio to the partner agreements, work that began in the last half of 2024 and will continue as long as we add on additional partner agreements.
Our portfolio is partner-ready, and there are a large extent of reuse of developed functionality, but each new agreement will, to some extent, drive a minimum of adaption development. Net cash flow from financing activities was NOK 11 million in the quarter and includes NOK 21 million in drawdown of short-term credit facilities, offset by a payment of debt of NOK 4 million and interest and leasing payments of NOK 6 million. Net cash flow in the quarter was negative NOK 18 million, resulting in a cash position at the end of the quarter of NOK 12 million. In addition, we have undrawn credit facilities available in the amount of NOK 25 million. Looking at our balance sheet, we had at the end of the quarter total non-current assets of NOK 970 million, of which NOK 636 million is goodwill.
We have a total of NOK 117 million in capitalized investments in technology and customer relations, of which NOK 21 million is related to M&As, which I mentioned will be fully amortized next year. Total borrowings was NOK 156 million, which includes both long-term loans of NOK 127 million and NOK 30 million drawn on the RCF. Over the last five quarters, we have repaid NOK 23 million of our long-term loans, even though we have been in a demanding turnaround phase challenging our cash flows. Net interest-bearing debt was NOK 145 million at the end of the first quarter versus NOK 109 million at the end of last year, as we are utilizing short-term credits in the first quarter. Liabilities related to device as-a-service were NOK 160 million and consist of prepaid revenues and buyback obligations of NOK 38 million.
These future cash effects of the buyback obligations will be offset by future cash inflows when the assets are sold at the end of the lease term. I'll hand the word back to Morten.
Thanks a lot, Ellen. First, let's have a quick look at the market we operate. Managing large amounts of devices across multiple locations while ensuring security and user experience is no easy task. It requires expertise, processes, solutions, and significant resource investments. The managed mobility services market is projected to grow at a double-digit CAGR the coming years. The growth can be attributed to the increasing adoption of mobile devices in enterprises and the rising need for efficient mobile device management solutions. As organizations continue to embrace digital transformation, the need for managing managed services to handle mobile assets effectively has skyrocketed.
Companies are increasingly recognizing the importance of securing and managing these devices to ensure seamless business operations, data security, and compliance with regulatory standards. This demand for efficient and secure management solutions is expected to spur the growth of the MMS market significantly over the coming years. We have built comprehensive services and solutions based on our expertise, best practices, and combined with the software and hardware we represent, so we can fully manage and operate our customers' mobile estate or complement our customers' own capabilities. These solutions allow IT to shift their focus from device management to actively driving business innovation and digital transformation.
With the great foundation we have in place with our market-leading solutions and services, we are focusing on the ability to scale our business into new segments, new geographical markets with existing and new customers of our partners, as well as increasing our share of wallet with the customers we currently serve and when attracting new logos to increase value for our customers, but also increase stickiness and margins for us. We have two main categories of partners: product partners, tightly integrating our software and capabilities into their core offerings, and sales partners who resell our software and services to their customer base. We see very good traction in both channels, getting access to new market segments regionally and globally, and I will get back to some exciting partnerships and opportunities we're currently working.
Cross-and-upsell to existing and new customers, as well as serving all their different user groups from office workers to field workers, will also increase our penetration across software, hardware, and services that will create stickiness of our offerings long-term. The result of these priorities will be strong growth in recurring revenue year over year through our as-a-service approach. A great example and strong proof point to this focus is the LKAB case we announced last month, where we have moved into a strategic position managing their entire mobile estate, currently 6,250 devices, with comprehensive managed mobility services consisting of software, consultancy, proactive services, and support, with the majority delivered through our as-a-service model. We're currently in several positions to expand and onboard other similar opportunities to our managed mobility services in Sweden and Norway.
As Ellen mentioned, our fastest-growing software category in Q1, but also with significant growth during 2024, is our Techstep Essentials mobile device management solutions. This software enables organizations to monitor, manage, and secure their employees' devices in an efficient way. This emerging trend is caused by several reasons, like the geopolitical situation around us, increased need to access and process company data while on the move, inclusion of more field and frontline users with mobile devices, as well as regulatory requirements we need to adhere to. Our solution meets all these requirements and much more. Essentials MDM has had a strong market position for many years, and we have large enterprises and public sector customers across Europe. We serve our customers through a strong and fast-growing ecosystem of resellers and distributors, many of these resellers being well-known telecom operators.
We are actively recruiting new partners in several new and strategically interesting markets across Europe to strengthen our reach and local presence. Our solution offers a lot of flexibility to our customers, combined with market-leading capabilities, ease of use, automation, security, and powerful integrations. The next step for many existing customers is to enhance the security of the devices to detect and prevent all kinds of threats, and we are now expanding the offer to span both device management and device security, everything delivered as a managed concept operated by Techstep. Techstep's managed service offering for MDM and MTD delivers secure, scalable, and compliant mobile operations for enterprise customers, a critical need in today's hybrid and mobile-first workplace. We see great momentum across several countries with strong support from different partners and distributors.
Currently, the largest opportunities lie in Spain, Hungary, and Poland, with increased momentum in other countries as well. We have also seen growing interest and won large agreements in our Nordic direct market. Our current pipeline represents more devices than we currently operate. Only in Spain, the addressable market we are now targeting represents more than 500,000 devices, and the first larger public customer is now being deployed and onboarded together with our distributor MS4B and Vodafone Spain as the partner. To sum up, the first quarter showed strong development with improving profitability, and we have built a solid pipeline of opportunities for the coming quarters. Our recurring revenue is record high, and market momentum is strong. We have signed new customers, extensions, upsell to existing customers, and the strategic agreements are progressing well. We also signed two new letters of intent.
We have high expectations for later this year. All in all, we see great momentum across both indirect channels and our direct channels. The project with Sykehuspartner and HealthRead in Southeast is now live and moved from pilot to production, and we are scaling up in terms of deliveries and resources and preparing for large rollouts in coming quarters. We are rigged and ready for scaling both our indirect business across Europe and our direct business by acquiring new customers and penetrating existing ones with our comprehensive end-to-end services across software services and devices. The expectation is a continued acceleration throughout 2025, with further acceleration and continuation into 2026 and beyond. These types of partnership and long-term managed services contracts will grow and drive exponential profitability in years to come.
Looking at our guidance for 2025, we expect continued growth in both recurring revenue and profitability, both growing double-digit and with an acceleration through the year. As we're still in a transition, moving from transactional to as-a-service and with large transformational deals like product partnerships and complete mobile outsourcing, the impact to our guiding could be quite significant, as you can read in the ranges we have provided. We stand by our ambition to become the leading mobile and circular tech company in Europe, with steady execution and continued focus on our profitability. We aim to provide you with further guidance and an outlook into 2026 in our Q2 presentation in August. That concludes today's presentation. Thank you for listening. We'll now move directly over to a Q&A session, so please stand by if you have any questions. We'll see if there are any questions posted so far.
Okay, there's one question coming in here. I think you can answer that, Morten. Your success with the Essentials product is very exciting, but could you elaborate on the potential here?
Yeah, it's very exciting to start there. We have seen great momentum for several consecutive quarters with our Essentials business growing double-digit, and going back to 2024, we had high growth quarter over quarter, up to 57% second half of last year. We see the momentum building up across several countries in Europe, as I said, based on the geopolitical situation around us, but also our capabilities and strong partner ecosystem that we have been building for many, many years. We are working close with large telecom operators across Europe, both in Eastern Europe, but also now more in the southern part of Europe.
I have mentioned Hungary, Poland, and Spain as areas that we particularly see huge interest. One of the reasons is that many of these public sector organizations are now moving from a fully cloud-operated MDM solution to a more private cloud and on-prem solution, which we also still support. We have both on-prem and cloud, and we see huge interest in both ways of delivering our mobile device management solution. It is very exciting and a lot of potential going forward. There seems to be no further question at the moment. Again, thank you for attending and listening, and wish you a very nice.