Good morning, and welcome to the second day of ABG Investor Days. My name is Daniel Thorsson, an analyst at ABG covering IT and technology companies. The first presentation is with BTS Group and CEO Jessica Skon. Very welcome, and please present BTS.
My pleasure. Good morning, everybody. Very excited to talk to you about BTS. For those of you who do not know who we are, we have been a professional services firm for 40 years. We're in 24 countries, 38 offices, but we're a very unique form of consulting. We do top to bottom leadership development. We're the people side of change. Companies love us, especially for our simulation capabilities. The portfolio has grown over the years as the average deal size has grown as well, and I'll give you up to date now on the first quarter. Good news for us. We operate in three operating units, North America, 50% of the business, Europe, and other markets. North America was our problem child, should we say, for the last couple of years with flat growth.
We are back to profitable growth, which has been the history of the company. Our revenues for the first quarter globally was 5%. We had a 19% improvement in profit, our North America turnaround is now complete. BTS Europe continues with very strong growth in the first quarter, 17% all organic. BTS Other Markets had a rougher start to the year because of a few of our countries in Asia, but they are set to have a full recovery in the second half. I would say AI is a big friend to our firm at the moment, both in terms of the amount of innovation we've had internally, which is driving a lot of productivity gains. It's keeping our portfolio on the leading edge of competitiveness, and we've won some very important AI clients in the last 12 months.
If we look at BTS North America, which is 50% of the business and back to profitable growth, some of the actions we took a year ago when we took the leader out of that unit out and did an organizational structure change. We decided at that moment that we would put AI into every single proposal. Either our experiments that were making our simulations better and our services better would be in there, or we would be helping our clients with their AI adoption and activation approaches. The reason for that is because we wanted to learn. There's no better way than learning and innovating together with our clients. As we did that, our win rates went up from an average of 30 to over 70%. We also decided to focus on the core. Back to what makes BTS great.
Best training in the world, strategy made personal, simulations, leadership development, sales enablement, and spend less time on more traditional consulting. The third one is obvious. We just increased and bolstered our commercial activity, time spent with customers, customer meetings, and sales rigor. That worked. We had 8% growth in revenue in the first quarter and a 50% growth in the bottom line. The 50% growth in the bottom line is due to the major AI innovations that happened in the four quarters prior. Each one of those big AI disruptions led to role simplification and organizational change and cost-cutting. BTS Europe continues to be our growth leader, as I mentioned, with 17% growth. Our win rates in Europe have been very strong for the last six quarters, especially when we compete for global, multinational, big deals. We tend to take share from the competition.
We are seeing a lot of growth in our operations in France and Germany, which could be our very large markets, obviously. We're excited about the continued momentum in those countries. BTS Other Markets, their profit dropped in the first quarter due to problems with our Thailand operations, Japan, and Korea. We have many actions underway to address this. We're doing cost optimization, of course. Our business in the Middle East is growing well, and Spain is doing well. Italy is doing fine. South America is doing well. Mexico is doing well. We're taking some of the team that's slower and reallocating on different global projects. We have a revenue growth plan. We've moved one of the partners from our Middle East location over to Asia so that they could focus more on different countries. We're sharpening basically the value proposition by industry there.
We're very proud of our Middle East team. Despite the war, they had double-digit growth in the first quarter, and they're performing very well in the second quarter. Right now, in terms of our view of the market, I think we're in the sweet spot in terms of supporting our clients for their AI evolution. It's helping us be more differentiated and driving a lot of breakthrough organizational efficiencies inside our firm. If you look at our direct AI bookings, so this is the revenue helping our clients with their AI implementations and adoptions. It's up 35% compared to Q1 last year. Our AI product bookings, this is the best proxy I have for us keeping our portfolio competitive and at the leading edge of what's possible with AI, is up 3x from Q1 last year. I would say, given all the research, you've seen it as well.
Only somewhere between 90% and 95% of global companies actually have P&L value from AI so far. We've done it twice, we're in the middle of another one right now, and I can see a lot more coming. What's wonderful about that is not just that it gives us a more efficient operations, but we can learn from it. What we're doing right now is we're just taking our story and our learnings to our clients and helping them see the best ways for them to create the AI innovation across their teams. Then when they get a breakthrough, how do you change the ways of working around that and get to P&L value creation?
We've had SEK 74 million taken out of the business due to our AI innovation and productivity gains, which will impact the P&L obviously this year. Given all of this, at the same time, the core of BTS is still in strong demand. The number of our clients who are investing in bringing people together, top 500 meetings, sales kick-offs, the C-suite, their team going for an offsite, is going up. There seems to be a counterbalance between AI tech and bringing people together. BTS does amazing work when we bring people together. We build experiences, simulations about strategies, and P&Ls, and so forth, and they're great. That's up. At the same time, clients are looking to move with high scale and speed. 22,000 people are going to use Claude. What's the best way to get them hands-on-keyboard so they can start to reinvent how they work?
That's what BTS is used to doing that. We will run 45,000 people through a sales simulation to get all their reps ready to talk to customers, for example. AI companies are our clients. We have an amazing partnership with Anthropic. They're our client. They've been our client for the last nine months. As far as we can tell, we're the only firm inside. Google is a client, and we'll continue to focus, obviously, on that hyper-growth sector. I'll just make one more point and then we'll go to Q&A. Why invest in BTS? There's three points. We are back to sustained profitable growth. For those of you who have known us for a long time or have studied us, we are very proud of this. It's something you've come to expect, and it makes opportunities for our people.
As I've mentioned, AI is creating more opportunities for growth for us, both in terms of helping our clients, but also keeping our portfolio differentiated. Our growth has always been and will continue to be capital light. I think we've grown 12x since we IPO'd in 2001. About 2/3 of that growth has been organic. The rest has been through acquisition. We've paid for over 20 different acquisitions. About 50% on average of our profit is returned as dividends. We have not asked our shareholders for any additional capital. We have positive cash on the balance sheet, healthy balance sheet, and it will continue to stay that way. Our growth is capital light.
Excellent.
Yeah.
Thank you very much, Jessica. A couple of questions from me then. You mentioned Anthropic and Google as clients. I think everybody are quite curious what you practically do with them.
Sure.
What your tasks and project with them over the last nine months or so.
Sure.
As you mentioned.
Yeah. We're doing three different things for Anthropic. The first deal was the Chief Revenue Officer brought us in. One of the reasons we have them as a client is because Salesforce.com and Stripe have been very big happy clients of ours, and they are hiring a lot of people from those two companies. Chief Revenue Officer brought us in. He said the following: "Number one, I'm forming my leadership team. They're coming in from other companies, other cultures. I need your help to form them as a team and to make sure that the Anthropic culture is thriving amongst my leadership team. Number two, we're going to define our go-to-market methodology, how our sellers sell, what the value proposition is, how the brand should be expressed to the enterprise market." We work with them to define their go-to-market approach.
Number three is we need to enable all their sellers, right? Let's say they go from 500- 2,000 sellers. How do you constantly keep their salespeople at their best? We do all of those three things for them. Second thing that we're doing is we're working with their Chief Learning Officer. We are designing their onboarding programs, frontline manager, mid-level executive, all leadership development inside of Anthropic. The third thing that we're doing is we are in charge of their global partner enablement. We are right now training all of the ecosystem, Infosys, Accenture, Deloitte, BCG, McKinsey, small mom and pops, on Claude and the Claude suite of products. Those are the three things we're doing for Anthropic.
We've also started to co-sell with them, and we won our first deal in Europe with their account manager and one of our partners. What that client wanted, just to give you a sense of the market, is they wanted three things. They're launching 22,000 people on Claude. What's the best way to activate it? Number two, we have 22 workflows that we have a hypothesis that AI might help drive productivity gains or help us reimagine. Could you work with the teams across those 20 workflows and get them going? The third one is, we want to rethink our annual strategic planning process. First, we want to see what AI can do in terms of automating the 9,000 different data points that we use in our planning process. Google, we do a lot of simulation work for Google, in different parts across the company.
The latest ask, which is really interesting and probably very relevant, is we want to build a simulation to teach people how to manage agents. How should you budget for agents, budget for tokens? How do you train up agents? How do you have the discipline to constantly give your agent feedback and treat it as a contractor? What's your org structure going to look like with humans and agents? That's one of the examples there.
Cool. That's very helpful and practical use cases. I guess all of these are concentrated to the North American region, or most of it. How large share is it of that region, if you call it either AI companies or AI projects for other sectors? Is that something you could have an assumption on?
Yeah. The first half revenue for North America for these clients is probably 3.5% of North America's revenue in the first half, so still pretty small.
Growing quickly. It's a mix. The revenue for Anthropic right now is between North America and Europe.
Okay.
Just this week, the team in Europe did a whole bunch of partner enablement workshops.
I see. Another question on future growth. You are a consulting company. Historically, your growth have been decided by number of employees times sales per employee. How do you think about net recruitment ahead, given AI and internal efficiencies as well?
Yeah. we absolutely are recruiting sellers, revenue generators-
Okay
client relationship builders. We're bringing in both people from our competition who we think are great. The key to BTS over time has been growing our talent internally. We have a culture where as early as possible, we want you to have your own client relationships, listen for opportunities, and learn how to generate your own revenue. We're not the culture that only the partners hold the relationships. On the other hand, we started last year with 41% of the employees in operational roles, and we don't need that. We needed it when the tech was suboptimal or in the yesteryear. With what's possible now, we've already reinvented all of our simulation platforms with AI. When we did that, we took out three different functions we just don't need anymore. I will not be recruiting on the operational side of the firm.
I think we'll continue to get a lot of breakthroughs there. In terms of client-facing billable people, we have open recs in all three units.
I see. Do you see any increased competition from EdTech players, given that there is a new market opportunity within AI that doesn't require that many people maybe?
I keep thinking i f I were to start BTS today, how would I do it? How would I take advantage of this? I imagine that there are competitors out there trying to do the same thing.
Not really, not yet. I will say that because we do so much training and learning and so forth, that a huge part of that market is content and content creation. Although BTS has never really done the content side of the work because we're more in simulations and we use our clients' content. However, about SEK 5 million of our total revenue out of SEK 240 million has been related to content services, and that has been completely disrupted. There's a cool company here called Sana, for example, that a lot of our American clients are turning to because it's better than Degreed or their other LMSs, and the buyers then can just build their own content right in there, and it's elegant and easy. That one, I think, has been totally disrupted.
Yeah. Okay, interesting. If we look at Europe for a little while here, you grew 17% organically in Q1, very strong. You mentioned France and Germany as good countries. In terms of end markets, you mentioned yesterday defense was a strong market. How do you see the rest of 2026? Is Q1 an exceptional strong quarter, or how do you look at the pipeline in Europe?
I think we're already halfway through Q2 right now.
Yeah.
All three of our markets feel very similar to the first quarter and the second quarter. There hasn't been a very big dramatic shift. Yeah, the pipeline is healthy in Europe. The deal pipeline is healthy. Our win rates haven't really changed. Obviously, we worry and wonder about the price of oil and when that's going to lead to conservativism, but we haven't experienced it yet.
I see. Then you mentioned M&A. You have historically done one or two smaller acquisitions per year.
Yeah.
How do you look at that today?
Yeah.
I guess that you have to evaluate every single target in another way today, given AI effects.
Yeah.
How's the M&A pipeline?
I would say it's good. It's not the strongest it's been but it's alive.
I would say we slowed down in M&A a little bit last year because we were focusing so much on partnerships with AI startup firms to just get a sense of what's happening and trialing them with some of our clients so we could learn for ourselves, and that took a disproportionate amount of time. The M&A deal flow is back up and growing. We remain very interested in bolstering some geographical areas. Germany would make a lot of sense, Japan would make sense, France, Indonesia perhaps. We look at it for that, and then we're also just open in terms of getting great talent and services.
I see. Coming back to North America a bit, you said that the turnaround is completed, but you also said that there are some more cost actions to do, perhaps. Now you're at least back to growth. Has that been helped by market growth or purely internal changes since last summer, basically?
I think it's internal.
Okay.
I think it was our fault to begin with.
Yeah.
It would've been easy in the U.S. market the last couple of years to point to all of the Trump administration things and the conservativism of our clients, which is all true. The Europe market has not been easy, and the team in Europe has done a great job. Right? It was one market out of three that was struggling, and in hindsight, basically we'd had a lot of success going after the traditional consulting market.
That kind of slowed down, right, and is radically changing. Our team at the time, they didn't pivot fast enough, and they were more nervous about AI versus embracing it and just going after it and being perceived as a leader. I think those two things is what drove our lack of growth.
Yeah.
At the same time, I would say, historically, our BTS North America had a high percentage of revenue from software. Software's doing not so great right now.
The market in the U.S. is definitely stronger, but it's still pretty volatile.
Yeah. I was a bit curious about the software companies in the U.S. Are they cautious in new projects? Are they delaying anything, or are they just doing smaller sized things with you, or nothing at all? What's the state?
Some have continued.
Yeah.
All of them are quite nervous and panicked, I would say after the recent Claude releases. Some of ours have completely stopped everything. I'm pretty proud of the West Coast team to have been able to balance getting Anthropic and Google going while these ones are panicking and slowing down.
It's a big moment. I can tell just from our own internal team who manages our software decisions and our ERP decisions and how fast our thinking has pivoted just in the last six weeks, it's to be historical right now.
I see.
Yeah.
The final question on other markets and the Southeast Asia region, which you highlight as a weakness in this quarter. Everything else looked quite strong.
Yeah.
You mentioned a plan for recovery, but when should we see improvements? When is it realistically possible to see growth again in that region? Is it second half of this year already, or?
Given the pipelines that we're looking at and the win rates and so forth, we're already seeing good movement in the second quarter, so that makes us feel like second half recovery is possible.
Historically at BTS, when a unit starts to suffer, it takes three quarters to get a turnaround.
Historic would tell me.
Yeah.
Go three quarters, given pipeline data and what we're seeing and the energy and the movement in those spaces right now, we think it's second half.
Excellent. Time is up.
Yes.
Thank you very much for the presentation and good-