Yes, hi, and welcome for the next presentation, the last for this day. My name is Daniel Thorsson , analyst at ABG, covering IT and technology companies. For the last presentation, we have BTS with us and the CEO, Jessica Skon. I usually say good morning to you, Jessica, but I heard that you are in London today, so it's good afternoon this time.
Yes, yes, thank you.
Yeah, feel free to present BTS for us for about 20 minutes, and then I will have a couple of questions in the end, as usual.
Okay, sounds great. And you're going to present the slides, is that correct?
Yeah, absolutely. Let us know when we flip the page.
Okay, sounds good, thank you. I can't see anything, so...
We will try to fix that. We have your slides, and we have you on the screen in the room, so that works at least. But we'll try to fix so that you can see the screen as well, of course.
Okay, then why don't you just give me 30 seconds to pull up my own slides so that I know what you're looking at?
Sure.
Okay, sorry. I'll be very fast. Just give me one sec.
Yeah, if that works, that would be great. We have everything on our screen. We are on page two now, the overview.
Okay, perfect. All right, thanks everybody. Appreciate the time. Nice to be with you. Jessica Skon, I run BTS Group. I've spent my entire career here. I ran North America before this. Anyways, we're super proud of our success. It'll be 40 years next June. As you can see here, about 250 million SEK in annual revenue. We've got about 1,200 full-time people, but even over 600 part-time coaches, facilitators, and so forth, which gives us a really nice flexible business model to be able to ramp up in times of faster growth and ramp down when it slows down. We started as an enterprise-first firm, so we continue to go after some of the world's best and biggest clients, both in North America as our biggest market. So if you look at the next slide, you'll see our global footprint.
While we're founded in Sweden, we have 37 offices around the world. 50% of the business is in North America, about 30% in the other markets, which is 16 countries, and then the remaining 20% in Europe. The next slide will just kind of give you a sense of some of the world's most well-known brands are our clients. Our clients tend to grow their spend with us every year, and we brought the world the idea of the power of simulations and simulation culture. Over time, the portfolio has grown, so our average ticket price, for example, continues to grow as well. Slide five probably will not surprise you, right? BTS has been on the people side of change.
So when it comes to process technology and people, we've been focused on the people side of change for 40 years, and these are all of the different trends that we typically help our clients with. Obviously, right now, AI being the number one, I would say, opportunity on the mind of all of our clients. We have built up over time on slide six a breadth of different practices. So we started off after you do strategy creation and scenario planning, helping our clients implement the strategy. That's what we mean by strategy execution. We help our clients establish business acumen. So does everybody in the organization understand how the company makes money, their operating model, and the shifts?
We are a client's end-to-end leadership development partner from executive down to frontline, and we've built that brand promise over time because we're so strategy-centric, business acumen-centric, practical in our partnership versus kind of the theoretical history of the leadership development space. We have an assessment practice, so we help clients pick the right people for the jobs. What we're most well-known for there is our view that, okay, psychometrics are good and interesting, but the highest validity way to assess if somebody is ready is to put them in a simulation of the job. We have a change and transformation practice, which puts us head-to-head sometimes between BCG and McKinsey and others for larger transformation work. We have built up a reputation for CEO coaching and CEO and team high-performance work.
We also have scaled coaching all the way down to the masses, and we have amazing technology and platform to support that now. We have an AI and innovation offering. I can tell you on that point, what's trending hot right now is most of the companies in the world have done a top-down approach to AI. They've given everybody a license. They still haven't seen much value creation. We're focused on bottoms-up AI innovation and helping our clients get their teams to actually reinvent how they work. Sales and marketing practice and a nonprofit arm as well. So if you go to slide seven, you'll see our most differentiated capability, which is very unique in the professional services space because from day one, it meant we had unique IP.
Not only would our clients pay us day rates and fixed price and typical consulting fees, but we would get license for our simulation and our simulation platforms. We've just reinvented our simulation platforms with AI in the last four months, and it's pretty breakthrough in terms of what we're able to do now. If you go to slide eight, in addition to our simulation breadth and capability, which means we simulate entire businesses all the way down to AI conversational practice, we have also, in the last couple of years, added multiple different platforms, which allow us to have different AI products to support our client initiatives. In black is the AI simulation platform. There's an AI conversational practice bot product. Some of our clients use our coaching platform for their own internal coaching needs, so they subscribe to that as well.
We have an AI coaching platform right now through different partnerships, and we're building our own. We have a partnership where we're building a genetic simulation practice into our client's CRM, so Salesforce. And then we have our core platform that serves up most of our training. So just a quick deep dive on financials, and then I can open it up for questions. If you go to slide 11, we can talk about the Q3. BTS, and you can see the data here, we have had a long-standing history of both top-line revenue growth and average EBITDA growth over time. Since we went public in 2001, Q3 was a tough quarter for us, especially because of our biggest unit, BTS North America. You can see profit dropped significantly, mainly due to a one-time license drop in one client compared to Q3 the year before.
We still need to get BTS North America back to its comfort zone of low double-digit growth. BTS Other Markets made some extraordinary marketing investments in the Q3, which hurt their margin, and adverse foreign exchange rates dropped that down as well. BTS Europe grew their profit. In general, BTS Europe had a strong year this year, and profit performed as well. If we talk about our biggest unit, that's BTS North America, I did a reorganization in early June this year. My focus has been primarily on turning BTS North America back around to double-digit growth. Our plan back in June was we thought it would take us probably three quarters. That's what it typically does or historically has done before. We feel like we're on track with that plan.
In addition, there's been a lot of internal innovation with AI, which, in the Q2 of this year, we had our first phase of AI efficiency moves. We took out about $5 million in operating costs throughout the company. We're looking right now at phase two due to the breakthroughs on the AI simulation platforms I mentioned before. Other than that, we're focusing on basically more feet on the street, more client conversations. Our project win rates are way back up. In the Q1 of this year, there were as low as 20-25% win rates. In the Q3, they jumped to 63% and 74% across our deals over 500,000. So we're in the middle of the turnaround. It's going to take a little bit, but we are on track to turn it around in the first half of 2026.
The next slide, slide 13, our AI services continue to grow very, very rapidly. There's two different categories of this. The first bullet is the AI-related adoption services, so this goes to the consulting work to help open up bottoms-up AI innovation. We have a bunch of services there that grew 482% versus the same period, 2024, and then our AI platform, this comes from a Wonderway acquisition that we did about 18 months ago. In the first 12 months, it has SEK 4 million in bookings. That's a 15x growth over the same period in 2024 and up from 33% in Q2, so we have a couple of competitors who are kind of tech startups on the second bullet. We think we are super competitive there, and we're really proud of those results. Slide 14, I think I mentioned this already around our internal AI and automation productivity improvements.
I'm actually really proud of BTS. I spoke to 20 British companies two nights ago, and we went around the room, and everybody shared where they were in terms of their AI maturity, and BTS was the only firm in the room who has had enough AI breakthroughs through seven teams. We're actually changing the size and structure of those seven teams as a result, and so we've moved a little bit on this already. We're going to do another big value creation gain from that shortly, and I think it'll continue to roll in the coming quarters. I think the BTS business model, like other professional services firms, is ripe to take advantage of vibe coding of large language models, and it's a really innovative time given that, so we lowered our outlook for 2025. That is because of BTS North America.
Our performance in BTS Europe and BTS Other Markets shows that the value proposition is strong. It's competitive. The BTS North America issue, yes, of course, clients are more conservative there. It was tough in the Q2 with the tariffs, but we see it as an internal issue, and the turnaround is progressing as planned. So next slide, please. You may go to slide 17, the slide after the black one. But if you look at our history, we're super proud of this, that our revenue and operating profit has grown. The revenue has grown on average 12% per year, that average EBITDA growth for 15% per year. Our founder did a great job of establishing our presence across 24 countries, which creates a really nice portfolio to manage the highs and lows. We have a very unique culture that our global clients comment on frequently.
I think it's probably Swedish in its nature. It's very pragmatic. It's very warm. It's very human. There's like smart people that help our clients feel proud about the change that they're driving and not only improve the client's performance, but do it in a way where their culture is strengthened through the process. So I will stop there and open it up for questions.
Wonderful. Thank you very much, Jessica. You ended with some North American comments there that was focused on Q3. You did some changes post-summer in the region. Can you share some of the early signs you have seen in terms of improvement? You mentioned on the Q3 call, increased win rates, more sales meetings, customer activities. Has that continued in like October, November as well over Q4, or what's the latest you see in the North American region?
Yeah, yeah. In North America, there's four data points for you. Number one is our win rates went from 20-something% in the Q1 to 63% and 74% across all deals in the Q3. The number of meetings in North America grew by 80% in the Q3 compared to Q3 2024. I would say that deal cycles are moving more quickly than they were in the first half in North America as well, which is helpful. One data point that's just flat, it's not good, it's not bad, is the bookings value in Q3 was essentially flat. However, the bookings value for the Q4 is well above what it was in the Q4 last year, which is a very good sign. But the bookings will start to play out over the next three quarters.
Excellent. That's very interesting. Can you also just share with us what's your exposure to the public sector in North America and the US governmental shutdowns that we can read about here in Sweden and Europe? What's the latest in there? What do you see?
Zero.
Zero.
We don't have any public company clients in North America, so we were grateful for that decision.
You don't see any negative spillover effects or anything indirectly through other end markets or?
No, we've seen we've won some work in defense contractor work this year. Our healthcare business is growing, biopharma is growing, but no, we no.
Excellent. In terms of end sectors and different industries, where do you see the strongest demand throughout 2025? Where do you see potentially more hesitant customers? We all knew that tech industry was very strong in 2020, 2021, and then it was cooler. What about the situation today?
The tech and software industry for us is a mixed bag. We have some of the older software companies who are nervous about being able to put up the top-line growth that they have in the past. And so in those cases, in some of those companies, they're spending on revenue-generating capabilities. So we train their sellers and do their sales kickoffs and so forth. In other ones, they're pulling back on any extra costs and potentially doing another layoff and so forth. On the other hand, you've got newer tech, like we just signed a deal with Anthropic and those that are growing super fast. And when you can get a software company that's in hyperscale, it's wonderful for us because they don't have the bureaucracy. They tend to move fast. They need help everywhere.
So for us, especially our San Francisco office, it's a mix right now of trying to help the companies that are strong brands, but maybe aren't the next generation, while also getting referrals and getting into the hyper-growth companies.
I see. That's perfect. And for us located here in Europe, what's the picture here in the second half of 2025 and what do you expect for 2026 as well? The European economy has somewhat lagged the US, but now we see the US is slowing down a little bit. Do you have more positive feelings about Europe in 2026, or what do you see? You are a global firm, so you can actually compare. So that's why it's interesting to ask you.
I totally understand that. And what's interesting about our experience in Europe is that our win rates have been so high now for about eight quarters that it's protecting us a bit from the difficult economy, which is really interesting because Europe was a much harder place to be successful in, yet our European team did a really good job than North America. So I'm a little biased around the strength of the value proposition here in Europe. But I mean, our performance in the first half was super fast growth, right? 30-something% from the year before, but the year before was not great. It's slowing down a little bit in the second half. The industries that we're winning here are quite mixed.
I'm sorry, I don't have like a super clear watch out for you in terms of where we're seeing any sort of deals cancel or slow down versus other industries that are growing more quickly.
I see. No problem. In terms of M&A, you have a history of trying to conduct one a year or something like that. How's the pipeline looking right now, and what type of companies do you look for? Is it more technology-driven businesses with AI tools, or is it people's businesses?
Yeah, so I think we've acquired four companies in the last, I think, 18 months or two years now, so we've been pretty busy on the integration side, and if we look at the ones we just bought, two were tech startups, but in our space, and two were more traditional consulting firms that give us a stronger geographical footprint. In one case, it was in Thailand. That was strengthening Southeast Asia. The other one is in São Paulo, strengthening our operations in Brazil, and moving forward, I think we'll continue to see a mix of both, to be honest, and at the same time, we are partnering with really cool AI startups as well and doing a license share with them, so we're kind of trying to partner first to just get a handle on how fast things are evolving in our market.
And if we find great people and great tech and they're running out of cash, then we'd be more than happy to probably bring them in. At the same time, given that we're in 24 markets and so many of those would really benefit from a decent-sized acquisition, we could say maybe adding another 20, 30, 40, 50, 60, 70 people in one of the world's biggest markets would be really helpful to us. So probably if I had to guess, we would look more for geographical strengthening in the Middle East, maybe some more in Southeast Asia. That's probably the first priority with the tech side being a second, just because we can also partner and test and market first.
Sounds good, and then you are a consulting business, or traditionally you were a consulting business. That's dependent on employees and consultants. How should we think about net recruitment next year? You are talking about AI driving productivity and revenue per employees. You don't need to be that much more employees next year to drive revenues anyway, but how should we think about your recruitment plans for 2026?
So every unit is going to recruit revenue-generating consultants, consultants who come from competitors who will have relationships with clients, who know how to build relationships with clients, can bring the full value proposition. We will continue to hire those. At the same time, we're going to be improving the shape of our pyramid because the benefits of the new platforms that we're working on and how we're working is going to simplify how we work. We'll need a lot less digital enablement, a lot less operational support. So we started the year with 41% of the employees were in operational roles. And I was thinking it'd be wonderful if we could go from 40% to 30% to 20% to 10%. This was in Q1. I couldn't have imagined the breakthroughs that our team figured out in August or September this year.
We're right now working through streamlining the operations as a result. It's pretty exciting. We'll be able to do revenue per employee improvement for quite a while as we take out the operational staff and then continue to recruit client-facing revenue-generating people.
Sounds very reasonable. Interesting to see next year. A final question from my end, which I know is not only your mandate, but capital allocation in the firm. The stock has been quite weak this year. You're looking for M&A. You have a net cash position. Have you discussed internally about share buybacks or what's the discussion with the board there? Anything to communicate to the market in terms of that?
No, nothing to communicate on that now. We have a healthy balance sheet, which is why it's allowed us to make so many acquisitions over the years. We'll continue to do that. We have a healthy dividend policy. So no change.
That's very clear, Jessica. Thank you very much for the presentation. The time is up, and happy to see you next time.
Okay.
Thank you very much.
Bye-bye.