We will start. Welcome all to the Q2 report for 4C Group. I'm Magnus Bergqvist, and I'm the CEO since 11 years. I worked all my life in the software industry, and I'm really excited what we have achieved at 4C, and especially of the future that lies ahead.
My name is Anders Nordgren, Group CFO here at 4C, something I've been last three and a half years. I have, throughout my career, worked for different IT and consultancy firms, and I'm very excited to be part of this international growth journey we're on. I'm also very pleased to, for the first time to the public, present our financials later on in the presentation. I will come back later on.
Very good. Before we go deeper into our performance during Q2, I will give you a short background to 4C, as we are a new listed company. I'll present the overview and give you the Q2 highlights, and then Anders later on will take you through the detailed numbers. As you can see in this tool we're using, if you have questions, we will end clearly with a Q&A session, so please submit your questions in writing, so we will take those in the end. We move forward. If I give you a historic snapshot, 22 years ago, we started 4C with the idea to digitalize training together with the Swedish Armed Forces.
It was always with the purpose to collect data, analyze data, and reuse the information, and the main purpose is to achieve process improvements for our customers, increase efficiency, and to lower cost, always replacing manual routines and documentations. Since the start, we have always focused on growth, and we've grown organically. For the first 16 years, we grew 4C without any external capital. In 2016, we started a partnership with Priveq to support our international expansion. 11 years ago, we took a big decision to try to move 4C outside of Sweden. In 2011, we opened our operations in the U.K., and in 2016 in North America. When we look at the numbers today, 70% of our revenue comes from outside of the Nordic countries.
Over the years, the ambition has always been to grow the percentage of software revenue and to create long-term partnerships with customers. We've always been successful in having a low churn, always been below 2%, and we're very happy to see the long-term collaboration with key customers, and in some cases, these collaborations have lasted for more than 20 years. If I tell you a little bit more about what we actually do, over the years, we have developed our unique and integrated Exonaut software suite to support defense, public, and corporate organizations. We work in areas like crisis management and risk management. As I said previously with data, we do a lot of analytics and, of course, our background in training and exercising. We support today armed forces around the world.
We also work a lot with public organizations like, for example, EU institutions, and we support more and more corporate organizations like banks, telco operators, energy suppliers. We have always supported our customers as an end-to-end partner, where we combine our software suite with our Expert Services. Most of the work we do is in the prepare and prevent phase, making sure that we identify risks and weaknesses, that we exercise and train together with the customers, so we have the capability to act if and when we are exposed to any challenges or threats. As we all know, the world is dramatically changing as we speak and becoming more insecure. It is in these times critical for countries and organizations to be prepared and have full insight of the vulnerabilities and to be ready to act when necessary.
That's why the offering of 4C has never been more relevant and important than today. If we move into the highlights of Q2, first of all, we're very pleased with the Q2 and year-to-date growth. We're seeing growth in all geographies and are very pleased with that. Over 60% of our revenue comes from software. We have in Q2 signed some very significant new strategic software contracts, both in military and non-military organizations. In North America, our operations continue to develop according to expectations, and the progress with the U.S. Army should be mentioned, because it constitutes a very strong foundation for a long-term relationship with the U.S. Department of Defense. We're also pleased to see an accelerated growth in the other segments, Nordics and International.
We have had customers in Australia since 2015 and are now taking the next step in this journey. We have during Q2 started 4C Strategies Australia with the ambition to accelerate growth in the APAC region, and we're also continuing scaling our operations in North America. If I move over to Exonaut, our software. In Q2, we did the successful launch of Exonaut next generation. This is a very important milestone for us. The purpose of this new platform is to improve both the back-end technology to be able to manage larger global installations, combined with a new front end to increase usability for our customers.
We started this development and transition already back in 2019, and we're now very, very excited about the positive customer feedback we're getting, and we're really optimistic of what opportunities this will give us in the future. As an example, we have strengthened our software offering even more. We have created a cutting-edge solution for individual training. We call this myExonaut, and this has been developed, like we always do, together with two of our most important defense customers in Europe. During this year, as said during the IPO process, we have accelerated our investments for growth, especially in development of Exonaut. We have invested a lot around the world and especially in the North America region in our Orlando office.
We have invested in more branding and marketing activities to get the Exonaut brand more globally renowned, and as said previously, we've opened a sales office in Australia. We've also worked a lot to strengthen the sales force on a global basis. Truly exciting times at 4C. I'll hand over to you, Anders.
Yeah.
To go through the numbers in more detail.
Thank you, Magnus. If we dig into our figures and start with the net sales for the second quarter, we can see that we managed to deliver a net sales of SEK 83 million, a growth of SEK 18 million compared to Q2 last year, which equals an organic net sales growth of 22%. A solid and strong figure where we have seen all our segments delivering according to our expectations. What stands out for the quarter is the growth in our software sales, which is the dark blue part of the bar. As you can see, the software sales in Q2 amounted to SEK 51 million, which equals a growth of 30%, and the drivers behind this positive development are both new signed deals, but also steadily increasing annual recurring revenue supporting the underlying software sales figure.
SEK 51 million in software sales equals 62% of total net sales for the quarter, an increase compared to the comparable period, as you can see on the slide, and this is also in line with what we saw in Q1 this year. The share of software sales is a relation that we are monitoring closely, as we know it gives us good support in our profitability, and that is also why we have established a financial target where we want to see this relation reach 70% in a midterm perspective, and these targets we will get back to later on in the presentation.
The positive development within our software, together with a solid performance within Expert Services, enabled us to reach SEK 12 million in Adjusted EBIT, which equals a margin of 15%, and the difference between EBIT and Adjusted EBIT are the IPO-related cost, basically. The EBIT of SEK 12 million is an improvement compared to Q1 this year, where the margin was 11%. However, below Q2 last year, as you can see. This decrease relates to the fact that we had a significant license deal in the comparable period, but also that we're moving forward, as Magnus also mentioned, and that we promised during the listing process with the expansion investments within sales, the brand awareness, tech organization, and the geographical expansion, something that impacted the EBIT margin in Q2 and will continue to impact the profitability in the short-term perspective.
Investments are, of course, expected to support our financial targets. If we zoom out a bit and look at the rolling 12, we are growing more rapidly compared to the CAGR, currently at a growth rate of 53%. The software share has a positive development where we are at 65%, and the EBIT margin is actually on our financial target, 20%, as we speak. Recurring revenues are also showing a positive trend. Now we're in the bottom of the slide. On the rolling 12-month perspective, the recurring revenue amounts to SEK 111 million.
Maybe worth highlighting is that the recurring revenues are not growing as rapidly as our top line or net sales, which is due to the ongoing high-volume software sales project in North America, a project that we expect to become recurring once the contract moves over to a service and support phase. Breaking down our sales figures into segments and customer groups, we can see that if we start by looking to the left of the slide and our segments that our international and Nordic segment had strong performances in Q2. In the international segment, the global humanitarian organization was the main contributor to the positive development. In the Nordic segment, both the software business and Expert Services showed solid and strong performances, contributing to the strong figures in Q2.
Zooming out again, looking at the rolling 12-month perspective, we're satisfied to see that all our segments are growing, North America more rapidly than the other two, but we're pleased with the growth that we currently are seeing in the other two segments as well. Moving over to the right side of the slide, looking at the customer groups, we saw growth in all verticals except our defense segment in Q2, and that was due to the large license deal that was realized in the comparable period. In the other two verticals, we see significant growth, but where corporate stands out with a number of new software customers realized in the specific quarter. Zooming out again, looking at the 12-month perspective, we see positive development for all customer groups, but where corporate are the one with the most aggressive growth, something that is according to our expectations and plan.
If we take a glance at some KPIs and some figures from the balance sheet, I just want to highlight the net debt, which is negative, which is positive, as this indicates that our cash is larger than our debts, a KPI that was strong even before the listing, but is even stronger now considering the share issue and gives us good opportunities to execute on our future plans. As you can see, the cash position is also SEK 144 million. We're also pleased with our annual recurring revenue. At the end of the second quarter, it amounts to SEK 100 million, an increase of SEK 6 million compared to the same period last year, but also a positive development compared to the end of Q1 earlier this year, something that indicates that there is a continued stable share of revenue, recurring revenue in the pipeline.
Important to know or notice is that U.S. Army project is currently not yet included in the figure.
Very good.
By that, I'm handing back to you, Magnus.
Thank you, Anders. To summarize, we have seen continued growth and high activities in our key markets. We're very pleased with that. We have invested in further growth into our Exonaut software and, as mentioned, into new markets. Anders has already referred to our financial targets. To reach our financial targets of plus 20% growth, very important, 70% of the revenue being software, and a 20% adjusted EBIT medium term, we will now continue investing in launching new software solution. We will focus especially on expanding further into the corporate sector with more active sales and marketing and getting brand awareness and, of course, strengthening our role as the leading military training provider in new geographies. By that, we conclude our presentation. We thank you all for attending.
We hope that you are as excited as we are of the development of 4C. Now we move over into Q&A session.
Bear with me. I will have a look.
Yeah.
To see if we have any questions.
That we can read them.
Yeah. That as well. I found one. That is. Where do you see the greatest potential in the short term in terms of geography and segment?
Wow. Where do we see the greatest potential in the short term, geography and segment? Well, I think we see the largest short-term growth potential within the corporate customers that are improving their internal control and also when you mention post-COVID, and as I mentioned in my introduction, in a more insecure world, customers that need to monitor and safeguard their critical assets like banks, like telco operators and energy suppliers and so on. Secondly, I would also like to mention the defense sector. We all know about the current situation in Ukraine, and that has also led to increased defense spending, and that enables faster new contracts than normally would be the case. Then the question was also on geographies.
When it comes to geographies, I would clearly say that the U.S. market is big and important, as we all know, and we're very happy about the steps we have taken in there with the growing customer base, both in U.S. Defense and on the corporate side. That's my answer.
All right. Yeah, we have received another question. Software in Nordics and international grew well in Q2. Could you elaborate on this development? Let's start with that one.
Those are two different questions there are.
No, it's the same question.
Oh, it looks like corporate might be the key. Yeah. Okay. Yes, as we said, we're very happy with the software development in Nordic and international. As the question alludes to, it mainly came out of the corporate sector. I think one of the big reasons for that, and it already started last year, it is that Exonaut is becoming more and more recognized around the world. As said during the IPO process, we were picked up by Gartner as a leading supplier in these areas, and we're very happy to see over the last 18 months more incoming business. I would say that that's the main reason of the growing corporate, and that's also, like I said, where I see the biggest short-term expansion potential. Thank you.
Great.
Or do we have any more? Okay. Thank you for those questions. Very relevant additions, and no more questions so far. In that case, I think we conclude. Okay. Thank you all once again for attending.
Yep. Thanks.