Hi, everyone, and welcome to Market Focus at Västra Hamnen Corporate Finance. Today's webcast will be all about Crunchfish and its Q1 report and latest events. I'm standing here with the CEO, Joachim Samuelsson. Very much welcome, Joachim.
Thank you, Martin. Thank you.
Nice to have you here.
Thank you.
Between all the travels.
Yes, it's in the middle of travels. I'm in between London and Mumbai right now.
Great to have you here in Malmö for once. I just want to remind everyone who's watching to send in your questions, and we will address them as we go along. Let me just start with the financials for Q1. Another quiet quarter sales-wise. Any comments?
Well, we are a product company. What we are supposed to do is to get revenue from our products. Essentially, what our revenues is from what we do is what's called a non-recurring engineering. It is that you charge fees for developing, in a way, integrating the product, which is non-recurrent, meaning that we do it once, and then when it's done, yeah.
It delivers.
It delivers something. That's like a consultancy company, and that's not what we are. Our revenues this quarter, most of the revenues is from NPCI. More than half of that revenue is actually from the project we're doing with NPCI. That's what we have recognized in the Q1 numbers.
Okay.
Yeah.
Yeah. Looking at cost, they were very close to our expectations.
Yeah.
No surprises. Is this the level we can expect going forward?
Well, it depends. I think as we move on, this quarter has a lot of marketing cost because we are at a lot of conferences, and they are not free to attend. Yeah, I think it is about this level. We don't have major plans to do anything crazy or all of a sudden spend too much money. I would say roughly yes. Yeah.
We noted interest payment of SEK 263,000. What is that related to?
It's actually not an interest. This is something we have already paid. It is when we did our financing round last year. One component of that was that we were getting an opportunity to borrow SEK 10 million, and that project had a 5% sort of upfront cost, whether we use it or not. We've already paid it. We did that last year when we got the SEK 14 million last year. It's all paid, but we put it as a prepaid expense on the balance sheet.
Okay.
Now what we do in Q1, we took half of it too, sort of, and we're going to take the other half in Q2.
All right.
It's not interest. It's actually
Cost
it's an upfront cost for the financing of this loan that we have a choice to use it or not, SEK 10 million. We have to draw on that in Q2. If we don't draw on it's basically we have paid that SEK 500,000 last year.
Just for the possibility to use it, yeah.
Yeah, we took that. I don't know. Likely, we will probably not. We'll actually have a board meeting after this today, and that will be one of the topics if we should do that. We have just done a rights issue, and we also are pursuing potentially direct investments from strategic.
Exactly
chances are that we will not use it.
Yeah. Speaking of the rights issue, which was carried out in the beginning of Q2, not included in the report, but quite close to the end of the
Yeah, the numbers for our cash situation, everything is before that.
On Q1.
We've added about, I think, SEK 14.5 million in cash. I think we now have all the invoices from our lawyers and Nordic Issuing here in Malmo who is doing emitting of all the shares, and it came in very close to expectations. I think we are actually. It's not above SEK 500,000 that we expected. It's good.
Yeah. Could you just explain the motive behind the issue?
Well, we needed money.
Yeah.
Well, yes, look at the cash situation. I think it's SEK 4.7 million. That wouldn't carry us through for the whole year before revenues will start kicking in. Yeah, we need to do it. We did it in a quite an unusual way, in the way that myself and the Chairman, we subscribed for the whole shares. At the get-go, it was already 100%-
Secured
secured, yeah. Without any cost. Sometimes we use Västra Hamnen, but we actually cut you out as well, no money to you, but also no money to any guarantees. We sign up for everything, but obviously, we cannot just assign shares as a directed issue to ourselves in the board. We have to open up, and we did a rights issue and asked shareholders. We got another 1 million of those 5 million shares was subscribed to by other shareholders. We got sort of about 4 million shares was between the chairman and this new company that is not a shareholder but are now coming in, is Granito r Growth.
Yeah.
They are coming in now as the, I think, fourth largest shareholder, where Göran is our Chairman. He is the CEO of that company.
Yeah.
I'm actually also personally now on the top 10 list.
Okay.
Not just with my holding company. Göran and I, we are eating into the shareholding of this company.
You're committed to the company.
Yeah, we are.
Yes. Speaking of this, you mentioned you're looking for additional funding or at least to attract new investors.
Well-
through this-
Yeah
TriMas Corporate Finance.
Yeah.
Who are they?
It's a one-man shop. It's a very boutique sort of corporate finance company. Olov Rydsäter. Göran has worked with them a lot. Göran is sharing and involving with, as a CEO in many companies, and they've had very positive experience working with Olov. Göran suggested we should use him and our motivation why we are doing this is that it's not primarily for the money. It is actually to try to find, as we have announced, we want to find strategics.
That means that companies in our space that have a strategic reason for maybe advancing their own business, complementing with what we do, and that will help us to get more distribution strength into the market. We have something quite unique and if we can have some potential partnering company that have not just become a partner, but they've also invested into us, we believe that they will have a more vested interest to actually see us succeed.
We said we're looking for, yeah, $2 to 5 million. It could come from one, but it could also come to sort of maybe even up to five. Five companies putting in $1 million each. We have started this project with, TriMas here, with Olov, and we've sent out teasers, and we are now getting some responses back and following up with management presentations. That's where we are.
Oh, nice. You're not bounded to any specific geography or you're looking-
The bigger the better.
Yeah
We have global ambitions if we can have global companies getting our Governed Offline approach into global payments rails, that helps us to put Governed Offline everywhere.
Yeah. I see. Let's leave the financials for now and turn to the projects and ongoing discussions. Let's start with the pilot project with NPCI in India. Where are you now?
Well, it's an interesting project to say the least. We've started already sort of the work specifying what to do and everything sort of last year. I think it's a little bit our. We are a little bit annoyed because they're changing the goalpost a little bit. We have to sort of chew that in, and we just have to adjust. I'm actually traveling now to Mumbai, and I'm gonna meet with RBI, their CBDC team, as well as their Executive Director. RBI is also annoyed because they want this to be out.
This is their product. This is the digital rupee. NPCI is implementing it, but it's their product. They put the requirements, and they are above RBI, NPCI in terms of hierarchy. We have delivered, but last week they came with a new change, which was very unexpected to us. We can accommodate, the motivation was that they wanted to be aligned with UPI as well, which is a good thing because the digital rupee project is quite small in some sense. It's 15 banks and the total volume, it's sort of in the tens of millions of users. UPI is 500 million users, that's the big fish.
In a way, we're happy, but I know our tech team is not. They're just adding a little bit of technical steps, because to be more aligned with what they have done previously with what's called UPI Lite X. Not necessarily a bad thing. It means that, okay, we will have to adjust a little bit now again, to deliver. The spirits are good. It's friendly conversations, and I think we are moving forward, even if it's sometimes one step in another direction that we didn't plan for or we didn't. We had agreement on what it should be, and all of a sudden there's some other higher-up boss that comes in. That's a little bit what's actually taking some time. We are.
What about the banks that are participating, IDFC?
Well, they are also a bit annoyed because RBI is pushing them.
Okay.
They can't do anything because before the NPCI delivers the specs, what can the banks do?
Yeah.
The RBI has-
You need to do this.
RBI sold in the CEO of the banks. Think of that. This is the top of the bank, and this is a project somewhere four levels below and telling, "You better have this ready, you." It creates ripple effects. It's going forward a little bit slower, but again, I think as long as it's moving in the right direction. Right now with this last change, they're just indicating that it's not just for the digital rupee. This is potentially also now aligned with the big fish, which is the UPI rail. Yeah, I'm not unhappy about it.
No.
But-
Could you tell us anything about the timelines of the project?
According to RBI, it was April.
Okay.
Yeah. It was last month.
Yeah.
The demand to the CEO is this has to be out in April. This sort of came just a couple of weeks back, now this has to be adjusted for because someone said. I think it is a little bit uncoordinated by what RBI wants and what NPCI sort of all of a sudden changes their products rules. As soon as possible. I'm going to talk to RBI, as I said. I have a big meeting, actually. I think there's about 10 people coming. It's the whole team. I have a chance to align with them. Okay, what can we do, and what pressure could you put on?
Yeah.
I think they need to step in, not just to the banks, but also to NPCI.
Yeah.
Because the NPCI, that's the middleman who has to deliver. That's the system.
Yeah. NPCI need to finish this first before you can onboard the other banks.
Well, the banks, the system has to set up in a way the system rules.
Yeah
that the service provider applies to. Yes. That's why. I'm going to meet with IDFC First Bank. I'm going to meet with Axis Bank. I meet with them as well.
I think the key is not them. The key is NPCI. It needs to move, and the key to that is that the RBI tells them to do that.
Oh, I see.
Yeah.
The market and we are speculating about potential deals.
Yeah
deal structures. I just wanted to ask you about this. You've previously mentioned a structure based on number of users, and recently you have talking a lot of the bankable opportunity for this. Will it be a combination or how do you see it?
Yeah. Absolutely a combination. I think the last year we understood this was the big announcement when we stood here actually a year ago. We said the system is one thing. The system, they receive payments. They don't make them. They receive them and they process them. When we're working with NPCI, they are the system operator. They're going to receive offline payments and they're going to process them.
At that point last year, we didn't really have figured out what is the business model for this split, that there is the system on one side and the other side is the service level. The service level is where we go to a bank who enable their users and they can pay per user. What do we do for the system? You have followed us and we worked with a long time with the system.
Aren't we getting anything from the system? Yes, we are. The way we have figured out to do that, and that's something is new for this, that we've really, I think, thought it through, is that in order to use our system, we don't move money. If you're going to pay offline, I don't move it to your device. Instead, the money is reserved in the banking sector, that is good for the banks.
Banks do not like to take out retail deposits. They need that. That's their baseline. In order to lend out money, they have to have things on their balance sheet. What we do, we keep the money in the bank with our offline model. The banks are happy with this. They don't pay interest for what you have reserved because you, Martin, you have now accessed it offline.
You don't have the money offline. The money is with the bank, safe and secure, but you have access to it. You don't really asking for interest. It's very similar that in a way that you go to an ATM, except that there you actually take out money. The money is reserved. It creates what's in banking term is called a free float.
They don't pay interest and they're getting funding from their user base without paying interest. That is an economic incentive or economic sort of value for the bank. What our business model is now, we want the system to set up rules that every single reservation done with our technology, that economic value of that should be shared with us. That has nothing to do with number of users. That's on the service side.
This is regardless of who's going to deliver the offline wallet. The offline wallets, I think most people will actually charge per user, something like that. That's what we had with IDFC two years ago. The reservation is our system. We want to share the economic upside that the bank are getting from having interest-free-
Yeah
deposits. This is something that the system will set up and also administrate to sort of take out money from the banks and give to us because that's what we require. That's the model. We are having two components. System level, which is reservation based, sort of a portion of that, and then there is per user.
Per user.
The good thing here, if you think back to NPCI again, I don't mind if they take UPI Lite X because they're not going to charge for it. They typically just work for free for the banks. They will just push it out everywhere. That will go quickly. The system puts it out. I'm very happy with that. It's going to be maybe harder for me to sell in offline wallets and charge per user, but all these wallets will make reservations.
Yeah.
I get a tick from that. That's the biggest part of our model.
Have you presented this to the infrastructure or the bank?
No. Well, the banks don't really care. They are getting resilience, and they're going to make money out of this. They just have to share a little bit of that upside. I have to sell the model to the system operator that needs to put this part of the rules. I did present it in London yesterday, and the Executive Director of RBI was there, and he said, "Come and see me on Monday, and we sort it out.
When I was in Philippines, I met the central bank there. What they like about our model is that we don't add any transaction fees. There's no additional transactions fee, even if you pay offline. They asked us when I met with the Philippines here in February, "So where do you make money?" I told them, "This is how we make it." They said, "That's brilliant." They liked it. We're getting positive reactions for that model, and this reservation is uniquely tied to our way of doing it. If you move money out, you haven't reserved anything. If you think the card rail, the way they do it, there's no reservations. You can pay offline.
Yeah
There's a credit risk.
Credit risk, yes.
Yeah.
Just before we move on, talk a little bit about the Philippines. I remind everyone who's watching to send in your questions if you have them, and we will address them as we go along. The Philippines. Last we stood and talked about the Q4 report.
You've just been in.
Yeah, that was-
Manila.
Yeah. We put it in.
Yeah
this was Q1 stuff.
Yeah.
Because I was there in, that was early February, and we stood here-
Yeah
that was mid-February.
Yes.
We decided, because we thought it was exciting. In the Philippines, I met with the central bank. I met with the major wallet, GCash. I met with the people who are doing the BancNet, connecting all the banks with payments infrastructure, and I also met with the equivalent of Swish called InstaPay. I met with the most leading bank as well, in terms of innovation, RCBC.
All are interested, every single one, and they're still interested. Now it's up for a decision from, I think where we're closest is that GCash, this is now up for a management decision. For them, it is to build or buy. They are thinking, "Should we build it ourselves?" I don't think they should, but that's what they're thinking.
Can they build themselves?
Technically, yeah. Well, we have built it, so I guess they can. We don't have a patent protecting here in the Philippines. I don't think it makes commercial sense for them to do that. I think it's better to use our system. We also have had meetings with RCBC, this innovative bank. They could be an on-us banking solution. They can start, just them as well. Then we are continuing talking to InstaPay, which is their equivalent to the Swish. That's the open Swish system.
Yeah.
Yeah.
The Philippine system is not dependent on the system operator in the same way as in India or.
Well, the system operator, the name of the company is called PPMI, and the system they have is InstaPay.
Yes.
Yeah.
InstaPay is like.
That's the Swish system.
Yeah.
InstaPay Swish. What we could start with, and we talked about that I think last quarterly report. We can start in a closed loop system. GCash is a closed loop system. They are closed in the sense that they have the whole ecosystem themselves, but they're also connected to the open system of InstaPay. They have both. It's a good place to start with a company like GCash. There's also actually others. It's called Pawnshop, not P-O-R-M. I think it's P-A-W-N.
This is actually a pawn handle. It's huge in the Philippines, and there are 2 major chains. We met them both. They could potentially also set up a wallet that actually could facilitate. They have 30 million customers each. We met with them as well. There's a lot of points of entry into the Filipino market.
Interesting. Other regions. When we talked in April.
Yeah
you mentioned-
In February.
No, I mean, before you.
Oh, when we released the annual report.
The annual report.
Yeah, you're right. I see you too often.
Yeah. Yeah, I tried to catch you when you were home.
Yeah
in Sweden. You mentioned interest from the Middle East-
Yes
as a consequence from the things that are going on with Iran and the U.S. and its allies. Now you're partners with Mercury.
Yeah. We have written about that quite a lot in the CEO world and as sort of in the chapter for system operators.
Yeah.
Because they are a system operator.
Yeah.
They are like NPCI, equivalent of NPCI in India. Mercury is that. It's a joint venture between a private company, actually, and the central bank. The NPCI is started by RBI, but with all the major banks.
Yes.
That's NPCI set up. This is similarly. They are on top of everything, and they will do all sort of rails. They have a card rail. They have an instant payment rail. They are experimenting with CBDC, and they have a stable coin implementation as well, all in UAE, the United Arab Emirates. This is Abu Dhabi, is the capital, and Dubai. What happened here early in the Iranian war here is that the Iranians, they put a missile into the AWS. This is the Amazon cloud center. A lot of the banks had all their banking operations in that cloud center. These banks, that was a wake-up call for them.
Yeah.
The central banks said to Mercury, which they are a joint venture with, "This needs to be solved now." It was a very quick deal, we did very quickly. It's interesting with Mercury is that they do all rails. This is a first opportunity, actually, to do resilience in our governed way on the card rails. I think that will echo into Mastercard and Visa, because I think if we show for their customers, for the banks, you can actually do resilience, but you have no credit risk all of a sudden. That's interesting for them. We're going to do it now with Mercury is a white label solution from Discover.
Discover is one of, on EMVCo, this is technical, but EMVCo is the organization that is a collaboration of the card networks, Visa, Mastercard, JCB from Japan, UnionPay from China. Discover is one, Amex. Discover, what they do is to allow other sort of brands to make their own brand out of the Discover platform. Discover is already approved to work on with card terminals and everything, but you can put your own brand on it.
That's what they have done in India. RuPay in India, which NPCI runs, underneath, it's Discover. Mercury, which is sort of their rail in the Gulf States, that is also Discover, and they have plans to do a Pan-African card network, Mercury. It's going to be under, again, it's Discover, but they just put a brand name of it. That's a good thing to get into.
Yeah. This partnership, has it resulted in any actual project discussions?
Yeah.
Discussions?
It's still early days, and it's a war going on.
Yeah.
I think this puts pressure on, I think, some of the conversation. The war is pushing that they need it sooner rather than later, but the war also means that there are sometimes delays in communications.
Oh, I see. You told me you've just been in London.
In?
In London.
In London, yeah.
Yes.
At the Digital Money Summit.
Yeah. You're participating in this called the Digital Pound Lab.
Yes.
What do you expect from this project?
Well, we've delivered and shown how Governed Offline can work with a digital pound. Very similar to how we've shown that Governed Offline can work with a digital euro.
Very similar. We've shown that. They call it phase II in the Digital Pound Project, and we have delivered, and we're actually going to have a closing meeting with them, I think it's early June. We have discussions with them of how they will actually now officially put this on their website, and write something about it from the Bank's perspective, not our perspective. This will probably come out.
They will have one meeting in September, because this phase II, we were very early in that phase, so we're already done. There are companies entering now, and they will close it up in September. Also, likely, I don't think we will wait from hearing from the Bank until September about what we've done. Commercially, I think they are experimenting with having CBDC in U.K. I think they've taken a decision that they are favorable of doing it, but timelines are not set, and it's a little bit just to position ourselves.
Okay.
It's good because Bank of England is Bank of England. This is not any small institution. We're aligned. They put out a white paper or a design note in October last year saying that the immediate model, where you move money out to you, they think that's a premature model, and they don't like that model. They've said, "We're not going to start with that." That's very much in line with our thinking, that it should be something which needs settlement as well, and that's what we have. I think they're quite happy with what we've done. Yeah.
Yeah. Sounds promising. I myself am running out of questions.
No.
I have a final one, and you will hopefully be back in August here.
From my travels.
Yeah, from my travels.
From vacation.
Yes. Vacation, perhaps, to talk about the Q2 report.
Yes.
What should investors be on the lookout until then?
I hope we have product revenue. What I mean is that we have set up not just NRE, non-recurring engineering, but sort of that we have announced project that this is now going live. There is quite a few conversations going on, before London, last week, I had three presentations, which was a lot, at the CBDC conference in Kuala Lumpur. The story we have that we have, in a way, really put together in Q1. I don't know, I brought this.
This is a good white paper. It came out in March 2026. It's on our website under Resources. Go to, if you haven't seen it. This resonates because we don't talk technology. We've just understood. Five years we've talked technology, and no one has really understood what we're saying, so let's stop talking technology.
What we talk instead is about what is the impact of our technology, not technology itself, but what does it do for you? What we're having here, this is the traffic light model, that it needs to be banking-friendly. It needs to be implementable. This is for all the applications who are going to have it, and it needs to be what's called governed. This is why we're calling it even the Governed Offline model. Governance of money is done by the central banks and the system operator.
Any system would need to report back to the central bank. Unless you have all three green, I don't think offline would work in a really good, serious way. We score on all. This is the sort of the other model where you take out money from the banking system. They don't like that. You have to have hardware. It's very complicated, and there's no ecosystem to support it, and you create a parallel universe of digital money where you don't really have too much control. In London, in KL, and I did this at the Digital Euro Conference, this narrative that we have resonates.
People are coming up to me. "We want to drive on green. We have a driver license. We understand you don't drive on red." We are getting a lot of people now that understand the implications. This is why I said, I think last time we talked, I think maybe we have up to sort of 10 opportunities. Now, I would probably say that it's probably 20. It's increasing, which we have. We have the big fish, NPCI, that we are still plodding along, even if they big organization, and they do changes.
I'm happy where we are, even if no one would've been happy with me if we had revenues. Which one? What did you say? Quiet quarter sales-wise. It is quiet because there's no product revenues. It's only sort of fees for integration.
Yeah.
It won't be happy numbers until we really start to kicking that in.
We're looking forward to looking at those.
Yeah, believe me.
coming up.
Are we.
You need to keep traveling to create more opportunities.
Well, I don't know. I'm actually heading tomorrow. It's a great big conference. It's the Indian Tech and Innovation Festival, in Mumbai at the Jio World Centre. This is where NPCI has their Global Fintech Fest. 100,000 people are coming. It's a huge place. This is not just payments, it's anything to do with tech and innovation. I present on Saturday there. Most importantly, I meet with RBI, which is sort of one of the most important central banks worldwide.
Yeah
to talk to them. It's actually something which I hope will happen because the executive director who came to the event in London as well, and I had a good time too. I sat next to him during dinner. He offered that RBI should do a roundtable, and he said, "I want to bring our Swedish partner to the roundtable." That's going to happen probably June 10th to 11th. The OMFIF, this is the organization that organized the Digital Money Summit . They were very happy because RBI, as he said, "We don't talk much." We do.
They move fast, but very seldom you hear them presenting at conferences. The executive director himself, which is the top dog of the whole organization, he said, "Yeah, we want to do something. We want to talk about it." He said, "I think we have a message to tell the world." I'm very happy when he said, "And I want my Swedish partner to be part of it." I may have to go to London again, June 10th, 11th. Yeah.
Yeah.
For that. I think it will be a closed-door session, but still, it's good.
Looking forward to talk to you about that.
Yeah. We can do that.
Other things and the vertices. Thank you for this session.
Thank you.
Thank you for watching. Don't forget to subscribe to our YouTube channel to not miss any of our coverage of Crunchfish. Until next time, see you later.
Thank you.