Welcome to AcadeMedia Q1 2026 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Marcus Strömberg and CFO Petter Sylvan. Please go ahead.
Thank you very much, and welcome to this presentation of the first quarter of AcadeMedia for me and Petter. Of course, the school year is always a fantastic time for us when we start with new students, and we have also traveled around and opened up a lot of new schools in Sweden and made a lot of acquisitions that we will tell you more about. The first quarter is, as we always say, a small quarter, but it is important that you could see that the growth continues in a stable way, with around 14% growth in the quarter and the profit increase with 18%. So, the start of the school year is very stable and good and continue that development that we had had before. The driver this quarter is the preschool and the international development, but also the compulsory schools and the adult education.
If you look at the adult education, it is very interesting to see the increased demand in vocational training and the driver of change of the labor market that has also improved the volumes when it comes to adult education. We have also seen the PISA results in Sweden, and it is very important to make early efforts when it comes to literacy and also when it comes to maths. If we look at the numbers, we will comment on that a little bit longer in the presentation, but we have very good results when it comes to reading. We have continued with acquisition, both in Netherlands, that is an important market for us, both with preschools and also continue to develop new schools. We have also completed acquisition in Poland that we could continue and tell you a little bit more about further on in the presentation.
If you look at the next slide, to look at this number, and if you look at the PISA results all over Europe, you could see that one of the key question is that you should start with reading. The PISA questions is about reading in a good way, and we have really made a lot of efforts to improve the literacy outcomes in the early child grades. So in grade one, we now are at 93%. We always aim for 100%, but today it is 93%. So if you look at the quality results, we have better quality results, lower cost for the society. We have better, if you compare with the national test, we have a good grading, and also the exam results when they come from the students is also very good. So the quality is stable in AcadeMedia.
Then if we look at acquisition, we have made a lot of acquisition over the year, more focus on the international development. As you all know, we are targeted to have 50% of the revenue should be outside the Swedish school system, and we have completed acquisitions in Poland and also in Netherlands. We think that both Poland and U.K. will be very interesting market for us, and also we will continue to grow in Germany and also in Netherlands. This gives a good view of AcadeMedia's development. If you look at AcadeMedia over year, we think it's important to look at this slide.
You could meet a lot of companies that talk about the future, but we have also presented a very good historical development over year with 18% current EBITA development over time, and we think that is also promising when you look into the future. You can also see at the next slide how we perform when you look at our target that 50% should be outside the Swedish school voucher system, and that is development that we think should continue, and we have now opened up two great, good platforms in Poland and U.K.
Okay. Thank you, Marcus. I take over here, and this is Petter. Good morning, everyone. I will start to talk about an update of the regulatory landscape, which remains an important topic here for the sector, of course. The final part of the school voucher inquiry, covering upper secondary school, was presented last week. The proposed 6% deduction that was presented for the compulsory school remains, while upper secondary school would not be subject to a deduction of similar type. Both of these proposal, which are bullet number three there, and striking over in the slide, these are proposal that remain subject to political and legislative processes. Both timing, potential financial impact remains uncertain, as the first proposal was not taken forward by the former government. As of today, we don't have any real indication that this will be legislation.
The current focus for us are mainly now on the profit regulation, which we have talked about for a number of quarters, which will be enforced from July 2027, and the principle of publicity , which will be enforced from the beginning of January 2027. Most of the proposed restrictions from the former government are manageable for AcadeMedia. Both these two processes will increase administration to some extent, but the impact is considered manageable. As we have concluded, this may also accelerate consolidation and benefit larger operators with established systems. Please continue to next slide. Now we start to talk about the financials update, and as Marcus has mentioned, we have a solid start to the year, with student numbers increasing by 7.4%. This was slightly lower than initially expected due to the delayed consolidation of one of the acquisitions, KIDS&Co. in Poland.
Net sales increased by 14.1% to SEK 4.7 billion, and this is including organic growth of 4.8%. Adjusted EBITA increased by 18.1% to SEK 215 million, and the margin improved to 4.6%. Preschool and International was the main earning driver. Free cash flow also improved significantly, reaching SEK 195 million compared to last year's negative SEK 111 million. Next slide, please. The bridge here shows adjusted EBITA increased from last year's SEK 182 million to SEK 215 million, as I last mentioned, and Preschool and International provide the largest positive contributor. Compulsory school also improved, and also supported by one major acquisition, the Prolympia. Upper secondary school was weaker due to relocation costs and quality initiatives. Within adult education, it was the Yrkeshögskola and labor market services which has had a positive impact on operations. Next slide, please.
On a rolling 12 months basis, net sales increased by 8.6% to SEK 20.9 billion, while adjusted EBITA increased by 16.4% to SEK 1.5 billion. The margin reached 7.4% and remains within the 7%-8% target range. Free cash flow increased to SEK 1.6 billion. Please continue. Now we move over to the segment reporting, and I will start to talk about the Preschool and International. Net sales increased by [73.9%] to SEK 2.0 billion, driven by acquisitions, international expansion, and M&A. Adjusted EBITA improved to SEK 32 million from last year's zero, and the improvement was supported by acquisitions, temporary lower personnel cost due to vacation timing, and improved efficiency in Swedish preschools. Two acquisitions added 43 units during the quarter. KIDS&Co. in Poland was completed after the period, and therefore not included in the quarterly result. Moving on to compulsory school segment.
Net sales increased by 17.8% to SEK 1.1 billion, while adjusted EBITA increased by 28.6% to SEK 63 million. The Prolympia acquisition supported volumes, sales, and earnings. Part of the earnings improvement reflects timing effects from vacation uptake and deferred material purchases, and should not be extrapolated. Continue to upper secondary school segment. Student numbers were broadly unchanged, slight uptick of 0.2%, while net sales increased by 1.6%. Adjusted EBITA decreased to SEK 50 million from SEK 75 million, and the margin declined to 4.1%. The decline was related to relocation costs, new campus openings, and quality initiatives introduced during the previous academic year. Continue to adult education. Net sales increased by 5.0% to SEK 442 million, and adjusted EBITA increased by 7.6% to SEK 85 million. The margin improved to 19.2%, and rolling 12 months adjusted EBITA has now improved for 13 consecutive quarters.
The improvement was driven by Yrkeshögskola and labor market services. It is also worth noting that Q1 is normally the seasonal peak for this segment. We now move on to the financial position, and we talk about cash flow investments and the financial position overall. Let us start with free cash flow and investment. On a rolling 12 months free cash flow, it amounted to SEK 1.6 billion, with the year-on-year movement mainly explained by working capital change. Maintenance CapEx was 1.6% of net sales, and the increase was linked to new openings and expansion units. Strong free cash flow can fund current operations and a substantial part of continued growth, while larger acquisitions may require external financing. Move on to financial position, and net debt excluding IFRS 16 increased to SEK 2.1 billion, mainly due to acquisitions.
Although we have had a significant increase of M&As, leverage increased to only 1.0x adjusted EBITA, which means that we are well below the maximum target of 3x . Continue to next, growth and profitability related to the financial targets. With 5.4% and the adjusted EBITA margin of 7.4%, we are well within both these two profitability measures. As mentioned, the leverage excluding IFRS 16, 1.0x, is well below 3x. We have just recently now proposed a dividend of SEK 2.8 per share to the annual general meeting. The group is currently delivering within all quantified financial targets, and this concludes the presentation. We now open up the floor for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Philip Ekengren from Nordea. Please go ahead.
Good morning, guys, and thank you, Operator. Just trying to understand the strong result in preschool and international. How much of the result is attributable to the international expansion, and does the international business follow a similar seasonal pattern as Swedish business? How should we think about the dynamics of the one-off effects in this quarter moving forward?
The improvement in earnings of this first quarter compared to previous year was, in the preschool international, was largely attributable to the acquisition that we completed during the last 12 months. Several of these operations we have acquired remains open in July, so they don't have a similar negative revenue effect as we have in the current operations. That is one of the main reasons. Even though we are also having an organic improvement in most of our operational business, and not the least in the Swedish operation, as mentioned, the main positive effect is through these contributed acquisitions, and mainly that they are more open in the quarter than the others.
As a consequence, we should not view this change in margin profitability in this quarter as a trend shift, but rather for full year, we consider margin in line with the previous year to be a reasonable expectation.
Perfect. Thanks for that clarification. On upper secondary, it is like the different dynamic there, down SEK 15 million year-on-year. Could you separate the temporary relocation costs from recurring premises and quality costs? Could you say something about that, and how should we think about the dynamics of earnings moving into the rest of the year?
Yes. For the relocation and opening costs, both are costs that are one-off related costs for the campuses. We opened three of them, and also the actual cost to relocate to them. They are quite substantial. I would say at least half of this effect is related to them. On the other hand, you have a running rate of quality measures that we have taken during the last year, not the least for the cost regarding libraries and staffing of the libraries, and the change of program plan in Gy25. There is an underlying higher cost level, but not at all, as I mentioned, as the effect you see in the quarter standalone. But in a similar matter as I described it from the Preschool and International, if you view it from a full-year perspective, we expect that the margin should be in line with previous year.
That is as we expect as early in the beginning of the year now.
Perfect. Thank you, Petter. Very clear. If I may, just squeezing in one last question here. You highlight some strong organic growth in Germany. How much of this comes from filling existing capacity versus new openings, and what is the main constraint of sustaining that growth going forward?
We do not quantify that split, but we have a similar pattern of openings now in the quarters in Germany as we have had the recent years, and we have a similar utilization rate. We do not see any change in the utilization rate compared to previous year, the existing units. We do not see any major change in openings. It is a stable development.
Perfect. Thank you very much. I will get back into the queue.
The next question comes from Jonny Jin from SEB. Please go ahead.
Thank you, and good morning, Marcus and Petter. A couple of questions from me as well. I want to start a little bit on the cash flow. I mean, you mentioned that cash flow benefited from this, yeah, reversal effect from Q4, but even adjusted for that, if I recall you correctly, I think you mentioned some SEK 210 million in your last call. Even adjusted for that, it looks unusually strong for Q1. I mean, can you just shed some words here what is driving that, and yeah, what should we expect going forward?
But as it has been sometimes positively and sometimes negatively in the quarters. The main difference is calendar effects, and this time in Sweden for how we received, in this case, how we received state compensation for quality improvement programs in the quarter. They can easily fall just in the shift of the quarter positively or negatively, and that is what happened here. So, underlying, there isn't any positive or negative change of the working capital profile. Perhaps worth to mention, there isn't any negative effect from the profile for the acquisitions we have entered. They are adding a similar profile as the operations had.
Understood. Thank you. Can just follow up on the upper section there. I think maybe I missed it, but when can we expect the margin to normalize from this? Is it already later this year, or what did you say there?
We expect a step-by-step normalization of margin during the year. So I believe you gradually will see it during the year. One, as an effect of that we don't have the one-time relocation effects that we had this quarter, and two, that we gradually balance the cost to the current operational level.
Understood. Then one on adult education. I mean, it had a very strong start to the year with labor markets up 30%, and very strong EBITA margins here. Could you maybe elaborate how confident are you on the outlook, given the strong start of the year for the rest of the fiscal year? Can you say a little bit more elaborate comments there?
Yeah. As we have said, it's more volatility in the adult education in our other segments. But having said that, since a number of years, we have established that longer programs that has lost less volatility and a lot less related to the unemployment rates contribute to the majority of the revenues, and it's also our growing parts. As we continue in this quarter to have the momentum as we have, we closed our last year, and we don't see any change at the time being. I think that it's a good reason to believe that for the current year that we are in, we will most likely continue to have these volumes if nothing dramatic happens, even if it, for instance, would be step-by-step a decline of unemployment.
That's the general view, and I think if the volumes stay at the similar level that we have today, the actual profitability will be an effect of how efficient we are to fill the classes, the right classes, and how efficient we are to allocate the cost. Having said that, we can also see that, and you know that also, Jonny, that we have said in the past that our target range of profitability is 9%-11%. We are way higher than that. Last year, we were 13.8% or [7%], and we think it will be difficult to increase the profitability this year from that rate. If we can keep it or perhaps slightly decline, I think that is realistic given that we take quality measures.
Understood. Sounds fair. Then I just have one final from my end. Do you have any early indications for the 2027 school voucher uplift across the upper secondary and compulsory school units? Do you think it's likely that this will cover the expected wage and cost inflation you see, or can you have any comments there?
No, we don't have any indications yet. What we can conclude based on facts is you can also see what the current inflation rate level is, and at least it's not significantly high. Most likely, we expect that school vouchers, if nothing else, will reflect the inflation rate more or less in all our countries. But then, plus/minus, no, it's too early to say.
Understood. Thank you. That was all for me, and have a great day.
The next question comes from Dafina Shehu from ABG Sundal Collier. Please go ahead.
Yes, good morning. Thank you for the presentation. Further on the question about upper secondary, you have just opened the campuses. Can you say anything about the occupancy rate today and how long until they reach its target?
Sorry?
They are full.
Yes, they are full. We have good utilization from the beginning, actually. A couple of them, we also transfer existing programs that we have and gather them together. It is not like we need to fill up from the first grade.
Okay. Thank you for that. Second and finally, you mentioned temporarily lower personnel costs from higher vacation utilization. Can you quantify the effect in the quarter, and maybe which quarters does it reverse?
Which segment did you relate to now? To upper secondary?
Yes.
Can you repeat the question? I did not hear it.
You mentioned in the report temporarily lower personnel costs from higher vacation utilization. If you can quantify the effect.
We do not quantify it, but as I think I guided generally, as Marcus has said before, overall, this is a quarter that is limited in size for our revenue and profitability generation. You have these kind of effects of vacation that can have an unproportionally high positive or negative effect. I do not think you should derivate too much of the potential outcome from the year based on these variances, but rather listen to what is our view for the full year.
Okay, thank you. That was all for me. Thank you.
As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Karl- Johan Bonnevier from DNB Carnegie. Please go ahead.
Yes, good morning, Marcus and Petter. Two, three more from me as well, please. Looking at your commentary on adult education, Petter, how do you see the stability in the plateau or in the portfolio of contract you have for the moment? There is a lot of transitions going on, or is it a largely stable platform?
There is a similar pattern to that as it has been the previous year. There are continuous transitions of programs or municipality-based tenders that we win or lose, but we do not see any major profile change as expected this year.
When it comes to
Marcus-
If I just comment on one thing, because what I think is interesting is that we see a little increase when it comes to vocational programs. We see that that is very positive because a lot of municipalities now asks us for tenders when it comes to vocational training. They also are looking for quality tender processes. So, it is not so much about just lowest price that we do not like. They ask us for quality tenders. So, hopefully, we have the right position. In the fantastic town of Borås, we just won the tender. You could say that Borås is a small town, but I think that is a good sign that we really could win these sort of tenders. We have one brand that is called Movant that is focusing on just vocational training. So far, they have developed very well.
In that segment, it is where you also benefit from slightly longer programs, if I understand it right, or?
Yes, we also have longer program. One very interesting area is also to train people that works as nurses in elderly care. We both have a lot of schools that train the teenagers to go into this area, but we also have very good brands that retrain people also. So, hopefully, this segment will have good development this year.
When you look at the component that is, say, driving a lot for the moment, the labor market services, is that normally, historically, I remember that coming out of election periods, the labor market, that part of it seems to be going away after an election, but being inflated ahead of an election. Is that a part of the compensation, what is happening here as well, or?
Exactly. That was what used to happen, but it doesn't happen like that anymore. I can't tell you that. You could see that the part that is the labor market program is quite small from our revenue, and it's also small if you compare it with what we call this Yrkeshögskola. That is much bigger. It's almost 10 times the number of students that the labor market is buying. What we have seen, if you go back maybe six months or something like that, the number of students has increased a lot. The tenders that is coming out is also increasing. It's a sort of when you look at these highly priced specialized programs, they have increased with the labor market. I think that is the right thing to do, because if you have a very expensive vocational program, you shouldn't use Yrkeshögskola.
You should use the labor market. Maybe the education system is dividing in a very positive way for us, because then we could get the right prices when we go to the labor market, and they have focus on quality. If you have the little broader vocational program, you could use Yrkeshögskola. So far, it's very positive. We also have this online program to retrain people, and we have contracts with the bigger cities for many, many years. The mix of different programs in adult education is good for the moment.
Excellent. When we widen the scope of the adult education also to outside Sweden, what are your first experience with the platforms you now have in Norway, Holland, or Netherlands, and Germany?
If you go to Norway, very positive. It's a great team. They have focused on to make more acquisitions, and so the same development you could say that in Sweden, and we really think it's a good team. When it comes to IVA, it's a little bit more like Barry's. They apply. It's like an ordinary sort of vocational school. So far, I think they follow the plan in a good way. Now we're looking into the small part in Poland and in U.K. I think it's a little bit early to say so much about it, but you could say that the market is very, very big. The market is very big, but so far, we are very small. We work a lot with that to understand the market, see if we could do more acquisitions, if we could start greenfield.
The adult part of AcadeMedia International, I think it will grow.
Excellent. Pitch your brain a little on the preschool side as well. Your U.S. peer, Bright Horizons, had quite a hiccup on Friday looking at their share price, and one of the things they talked about was the enrollment trends. I am not sure how does it look for you when you are looking at You are obviously not printing too many markets with Bright Horizons, but when you look at your own footprint, how do you see the international enrollment?
When it comes to Bright Horizons, if you asked about that, I think you have to look into the U.S. market, and it is a lot of the payment in U.S. is private, and you pay maybe $25,000, $30,000, in New York, $50,000 a year. Of course, if you could work at home, it is better to have your children at home because it costs you so much money. This has affected Bright Horizons and KinderCare a lot in U.S. Bright Horizons in U.K., they have quality issues. It is a big operator, but they have a lot of quality issues in U.K., and that has affected them a lot, and maybe they have focused too much on profit. I do not know that.
I think we have a very good position in Cambridge and London, and I think the team that we have just acquired is very focused on quality, build taking step by step. So, I think we have a good position. The overall picture when it come to utilization is much bigger. I got a question this morning in the television, and if you look at the capacity utilization in Norway and in Sweden, it is fantastic. I think we have the best numbers when it comes to children in Norway that they have ever had. In Sweden, even if it is tough with the demographic development, the numbers looks great. That is because we have worked with this for many, many years. We have closed the right units. We have increased units where the municipality has closed down units. So, you have to be on top of things.
But so far, the biggest market is okay. What will happen in Germany? We have to look into that, but the need is still very big. The need is still very big of new places, but you have to look into Berlin in a good way because the number of children, the number of places has increased a lot in Berlin. But in North Rhine-Westphalia and also in Bayern, I think it is a big need of new places. The same situation in Holland, also big need of new places.
Excellent. Maybe a follow-up on that. When I looked in your annual report, you give the utilization numbers for the preschools in the different countries, and I saw Finland sliding from 88% to 80% during the last fiscal year. Also maybe if you could comment a little about how you manage an operation in Netherlands if you have a capacity utilization of 54%, to understand the business model and the changes between the markets.
Thank you. That is good questions. Good questions. If you look in Netherlands, we are not so concerned when it comes to less capacity utilization when you look at these numbers because you are paid per hour. That is the system. So, it could be a Friday when you do not have children, but then you have to have temporary employees, so you match the need of children with the number that you pay to the staff. If you look at the acquisitions that we have made with MAM's Kinderopvang and Kinderopvang Kindernet, I think we have good management that could handle this sort of more volatile capacity. When it comes to Finland, I think there is the country where we struggle most with the capacity utilization, and they could learn a lot from Norway and from Sweden, and we are working a lot with that for the moment.
That is something that we have to work harder with.
Excellent. Well, thank you very much for all the extra color and all the best out there.
There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you very much. Do you want to comment on the question?
Yeah, we had a couple of questions in the chat. The first question is the slightly low integration process in Poland. I think you mentioned this is now resolved and on track. I am a bit uncertain there. It might be a misunderstanding. What we described is that it took a little bit longer time to make the actual closing from the signing. We are talking about weeks, so the fallout of this quarter, and the closing was October 1st, and we haven't started to integrate it yet. So, as you probably understand, it is on track from closing date, but it just has happened. In the upper secondary additional cost on premises and [colleague], can you develop on this somewhat and what do you estimate this to be fully implemented and fully costed? I think we have already comment that from the analyst questions.
When would it make sense from Karl here to separate the Swedish business and the international business? Perhaps you would like to comment that, Marcus.
You mean in the international segment?
Yeah. Would it make any sense to separate the Swedish business from the international business?
We are working with that, so that could be. If you look at the history of AcadeMedia, we have taken these sort of steps where we have separated and take it in the natural way. When we will do it, I cannot answer that, but we are moving to that position where we maybe have to report this in another way. But the most important is that we have the focus, the management have the right focus, and we have the right focus, both on the international development and also the Swedish part. How we report it is a secondary question. I understand that you want transparency, but we do not want to change things just to change things. We want to take it step by step. Looking ahead, maybe a year, I think we will report those in another way.
Was that all the questions? We say thank you very much for your time. We wish you all a good day. Thank you very much. Bye-bye.