Hello, everyone, and welcome to this presentation of Carasent's third quarter presentation. My name is Dennis Höijer, and I am the CEO of Carasent. With me today, I have Svein-Martin Bjørnstad, our CFO, who will go over some figures. I just want to inform you that if you have any questions throughout the presentation, type them down, and we will try to answer them in the end. Next slide, please. A summary of the third quarter, we had the revenue growth of 109%, and we had an organic growth of 26%, pro forma, including Metodika, and we had an organic growth of 29%, for Evimeria and Avans Soma.
Unfortunately, we have to do a small adjustment of our guidance to 30%-35% organic growth instead of 35%, which we have been saying throughout the year for Evimeria and Avans Soma combined. This is mainly due to delayed revenues from new customers. We have a few larger customers which have choose to postpone their implementation, which also have affected our revenues. We have been implementing some of them now, but we still have some more to do, so we think that this will affect us even in the fourth quarter and maybe over to the first quarter next year. We still see a strong ordering flow, and we have a backlog to implement.
In the long term, we still see that our strategy is intact, and we did a private placement early this quarter, which gave us NOK 420 million. We have an active pipeline of new M&A opportunities, which we will be able to execute on. Next slide, please. Carasent at a glance, how we look now. Basically what we do, we provide mainly cloud-based proprietary medical record software solution for the private healthcare segment throughout the Nordics mainly. We're also offering a broad ecosystem of integrated third-party services. Our goal is to provide a such holistic solution to our customers as possible, so we want to be the one-stop shop for our customers. The last year, we may...
We did two acquisitions, and that leaves us with three entities within the group, which are Evimeria, Avans Soma, and Metodika. Our growth strategy is still intact in Q4, and we grow on three different dimensions, and it's through new products and services to offer our customers, and we want to move our different softwares to new geographies, and we also want to expand our solution to include new segments in the healthcare sector. Next slide, please. We've been able to keep up with a consistent growth rate. We had a 48% revenue growth throughout the years, and we showed a 31% revenue growth organically throughout the quarters.
Svein-Martin will go deeper into this, in those figures on Q4, and we are also able to keep up a good net retention rate year-over-year. Next slide, please. The market is still in need of the kind of services that Carasent provide. We are getting older and older, and we're getting more and more citizens within the society, and with this comes the demand for more healthcare, and we have to change the way we provide the healthcare in order to be able to keep up the development of lowering the costs for the society. One of those things are digitalization, where Carasent is well-positioned. Next slide, please. We are and have been broadening our offering through acquisitions.
This is an overview of where we are and what segments we are providing solutions for today. We're getting great traction in line with our acquisitions since we are able to provide a more holistic offering to our customers. Next slide. As we said the last quarter, one of our strategies number four is to becoming One Carasent. With that, we want to use as few platforms as possible and also to use our different market presence to cross-sell our different solutions. Next slide, please. Just some quick investment highlights before we go over to next slide, and I leave it over to you, Svein-Martin .
Thank you, Dennis. Now we will look a bit more closely on the figures for the third quarter. In the third quarter, we delivered revenues of NOK 37 million, and that's compared to NOK 18 million for the third quarter of 2020, which corresponds to a growth of 109%. That's driven by a combination of acquisitions and a strong underlying organic growth. If we look at the margins, the EBIT margins was relatively flat year-over-year. However, we continue to see scalability in the operating cost base. The margins are somewhat diluted by the recent acquisition, but that is expected to improve also going forward.
If we look a bit more closely at the organic growth, that came in at 26% for the group in Q3. Year to date, we have delivered organic growth of 32%. This is driven by a combination of new customers and the existing customer base, where upsell of new functionality and integrated services is a major growth driver. Avans Soma in particular continues its very strong performance with a 44% growth year to date. However, the organic growth rates were a bit below our expectations for the quarter, and that's mainly related to slower growth for Evimeria from new customers. That's mainly consulting and license revenue.
That has caused us, as Dennis mentioned, to revise our full year guidance to 30%-35% from 35% growth for Evimeria and Avans Soma combined. However, this slower growth represents a delay in revenues rather than a loss, and the long-term prospects remain intact. This slide shows a breakdown of why we have revised our guidance. The top graph shows the total contracted license revenue we have signed from new clinics during the year compared to the same figure for 2020. This graph shows that we have had a very strong momentum in new sales within 2021, and far beyond 2020. However, the bottom graph shows the reported revenue from the same new clinics in the period.
That's more or less comparable to the figure for 2020. This shows that although we have signed a lot of new customers, they have been delayed in the implementation process, which have affected revenues within the year. However, run rate will improve as we onboard this backlog of new clinics going forward. And this backlog is. The majority of the delays is mainly related to 3 larger customers that we now have. Some of them we have onboarded, and we have a plan for the other clinics. And also to these figures, it represents the entry point license of the customers. In addition to that, we will have revenues related to integrated services and volume growth.
The figures will grow as we onboard the clinics as well. We look positively ahead. The organic growth is mainly driven by both existing customers and new customers. We see that the existing customer base continues to grow quite rapidly due to new volume growth and the new digital services that is included into our ecosystem and that we offer our customers and that they demand new services as well. We had a net retention rate of 117% during the quarter, and still we have very low churn, below 1%. In addition to this, the profitability of our group is continuing to improving.
While year-over-year margins are relatively flat due to the recent acquisition, the group margin year-to-date is above the 2020 level. We see that our operating cost base is highly scalable and that our margins and profitability figures is tracking according to plan despite the delay in revenue. With that, I'll leave the word back to you, Dennis.
Thank you, Svein-Martin. To summarize this and to look forward, as we mentioned a few times, we have to do a revised guidance from the 35% for Evimeria and Avans Soma down to 30%-35%. The guidance of a 40% EBITDA margin maintained in Q4. While the organic growth rates within the quarter were lower than our expectations, we still think that the long-term prospects remain intact. That's what Svein-Martin were explaining. We haven't lost our opportunities, they are just postponed. We think that we will be able to get up on a good run rate as we have expected. In Q4, we still have a strong pipeline of M&A opportunities, which is increasing.
We do remain disciplined in our approach to that. We won't do any dumb initiatives on this. We will keep a cool head when we make our decisions to implement new M&As into our business within Carasent. If you look at our different growth angles, we have organic initiatives in all of them. We also have identified targets throughout all the angles as well. On all fronts, we have a strong position to execute on our growth strategy. With that, I think we open up for some Q&A.
Yes. We have gotten a few questions here. The first question, I can start and then you can add, Dennis. The question is, do you expect improved organic growth year-on-year in Evimeria in Q4 compared to Q3 2021? As we mentioned, we now have a backlog of clinics that we are currently onboarding. We have a strong focus on improving our run rate at the end of the year to give us a boost into next year. We hope to see improved figures going forward. Would you like to add, Dennis?
I think it summarized it well.
Good. Now next question is related to our balance sheet and our large cash position. The question is, when will you deploy the cash into M&A? We have a very high M&A activity currently. We have several ongoing processes that could conclude in the near term. However, we will, as Dennis mentioned, remain disciplined in our approach, and we will only execute on the right opportunities at the right price. We have a strong focus to keep disciplined in our M&A approach. However, we see that there are a lot of near-term opportunities. Next question, has anything changed your view on the market, or is the downgrade of the guidance 100% related to delayed customer projects?
Yes. I would say that.
I agree.
Yeah.
The customer projects also affects the consulting revenue within the quarter because a lot of the consulting revenue is driven by new implementations.
Yeah.
The long-term prospects remain intact. We see that the strongest momentum within new sales should help us going forward.
Yeah. Just to give a few more words into the market, we used to talk about different kind of generations of digitalization within the healthcare market, and we are walking into a new generation, where we see lots of different kind of digital tools popping up to provide better solutions to the healthcare sector. So I would say that it's still growing and we are well positioned to be able to take a big piece of that.
Agreed. The next question is similar. What would revenues be in the quarter if all these big clients were fully onboarded? Does this explain 100% of the guidance revision? Several of the big customers were signed early in the year. As you saw from the graph that we showed on the run rate of the clinics that we have signed, the run rate is approximately NOK 5.5 million annual recurring revenues. Out of that, these three customers represents the majority. The revenues within the quarter would have been quite higher in terms of new sales, maybe NOK 1 million.
In addition to that, we would have had higher consulting revenues and higher integrated services. That explains the whole difference. Moving on, a slowdown of vaccination-related add-ons affected the Webdoc to integrated services in the quarter. Do you see this as a one-time thing? Do you see the ratio continue to rise in the next quarters again? Dennis, you want to take that?
We have been saying the last quarter we had quite a boost in the net retention rate due to a higher activity of add-ons and also due to a less good quarter in 2020 since the pandemic hit us. We still think that we are going to be able to keep up with the pace between 115%-120% in Q4 and be able to grow that.
Another question, how long time do you think it will take to onboard the backlog, Dennis?
Yeah. It depends somehow on the customers as well, since we are not the ones deciding when they are going to start up. As Svein-Martin mentioned earlier, some of those are onboarded, but some of those are still planning to be onboarded. We think that the majority of the backlog will be implemented on this side of year, but we also think that some of the backlog will spill over to the next year.
Great. I think next question, also for you, Dennis. You write that the expansion of services in Norway is progressing according to plan, and that the goal remains to launch Evimeria's offering in Norway, end of 2021, beginning 2022. Any more flavor on this? How will you leverage Metodika's presence?
For the first question, we still believe that we're going to be able to launch parts of Evimeria's offering into the Norwegian market late this year or the next year. From there, we will continue to implement more parts of Evimeria's offering to the Norwegian market. As you know, we offer solutions to different kind of segments, and we also have different kind of solutions. We will not implement all at the same time. We will do it progressively. The question regarding Metodika, I'm not sure if you're meaning in Norway or if you're talking about other geographies.
We have a plan which we're executing on to implement some of the functions that Metodika has where it's unique into the Webdoc platform, to be able to move the customer from Metodika's offer to the Webdoc platform. We will do this also stage-wise geography. We will start probably in Sweden, which already has been started in some matters.
Great. Next question, what type of revenue decline should we expect as Metodika's business model is turned around to a SaaS model? That's a good question. The Metodika business has previously been a typical license sales model, which has typically boosted revenue in the second half of the year. Now we focus more on, as you say, selling recurring revenue within new sales, and that will of course affect the growth rates within 2021. However, we see that will give us a good effect going forward, and we can't be more specific related to that.
I can add a small flavor to that. It will take time to change that business model on the existing customer, so you won't see any great effects on the revenue. But as Svein-Martin said, in the short term, it will be more flavorful.
Next question. Average revenue per user from existing customers within integrated services was down quarter-over-quarter. What were the main applications within integrated services that caused the slowdown? You mentioned SMS, but anything else to highlight? Thanks. Dennis, you want to...
Yeah. It's mainly if you look at the second quarter 2020, it's mainly SMS. But if you look at the services this year, if you look at the second quarter to the third quarter, we had a very high usage of our service Vårdrummet, which is a digital tool to for the caregivers to be able to provide web booking, SMS, and callings to the customers to get the vaccine. That's one of our service that has been slowing down a little bit after the COVID, which also include video conference call.
Great. Next question. Investments in the quarter is up quite a lot it seems. Can you explain a bit more on the investments? That's. A big portion of that is related to Evimeria's expansion into Norway, and we see that the more mature segments and parts of our business, the investments are going down, and then new investments are invested into new growth areas such as our Norway expansion. Is the delay in onboarding new customers also affecting the process of approaching new customers, signing new clinics?
No. It ain't.
No. We also see that the customer pipeline is strong, and there's very high activity within new sales, also across the companies in our groups. How are you working to keep one culture within Carasent after the acquisitions?
A very good question. We are working very closely with our different entities, and we are trying to build the strategy One Carasent together with the different entities. As some of you who have been following us know, we started this Carasent journey from Evimeria, and then we became two entities within this group. Avans Soma joined us, and now as of latest, Metodika. Every entity is included into this strategy, so we are building the culture together. We are not trying to move a culture into the entities. We are doing this startup together, which gives us very, very high traction and engagement from the employees in all of the entities.
Great. Final question. How high is your employee turnover? How do you incentivize employees to stay in the group?
Yeah. I was just thinking about that question, and I wanted to add it to the recent statement. Actually, we had zero. I think we have one person that have quit this year. We also had some that has been coming back. Throughout the years, we had, I think it's four or five persons that have quit in our group since I started 2013. We have almost none employment-
Mm.
Turnover.
Okay. Very good. That was all the questions. Thanks a lot for sending them in, and please reach out if you have any additional questions.
Thank you.