Welcome to the Q2 Formpipe Live Q. In addition to the quarter, we will, of course, also talk about the intended divestment of the public division. There's an opportunity to ask questions below the stream. I will be back later to moderate the Q&A session. Today, I'm joined by CEO Magnus Svenningson and CFO Sophie Reinius. Now it's time for you, Magnus, to present. You're welcome.
Thank you very much, Fredrik. Hi everyone. Really good to be here to present our second quarter 2025, which we have named Divestment and Margin Improvement. We will, of course, talk about the divestment. First, a little bit of a highlight from the second quarter. Net sales came in at SEK 140 million compared to SEK 132 million last quarter, last year. We continue with our high level of recurring revenues. The ACV is on a stable, I would say, SEK 6 million level. We had very good momentum in our bank and finance business last year. This quarter has been weaker in the bank and finance sector. EBIT increasing up to SEK 12 million, which is good progress towards our margin improvement, which we have been talking about during spring. That is excluding about SEK 10 million for our divestment costs that we have taken in the quarter.
A little bit on the highlights. As I mentioned, margins are improving despite the currency headwinds we have had during the quarter. That has a large impact. Sophie will mention that a little bit more in her presentation. The stable ACV. There we have the Lasernet business performing well with Dynamics. Bank and finance a bit weak. We hope to see improvements there going forward. Sweden came in good on the ACV numbers as well, while Denmark was a bit weaker. I want to mention Landbruksstyrelsen, a contract where we have worked quite a lot several years with that contract, but not been really, really content with the growth or the margin. They have chosen to retender. We have submitted a bid that we deem attractive and competitive. However, they have chosen to proceed with another supplier.
We will then continue to deliver up to contract end and through the contract transition. We will take those resources and invest in the exciting things we do around OnePublic and the Pursue Potential program that has now moved forward and been a crucial part in the divestment. If we talk a little bit about the transaction, this has been a theme around Formpipe for quite some time. Now we see, and of course, the board sees that it is a good time. We have a good momentum in the OnePublic business as well as the Lasernet business. It is a good timing. When we have also worked with this transaction, we have seen a very, very good, solid interest from very competent takers. It has been a really good interest and a good timing.
We see now for us as a group that historically we have had to work with two business areas, and now we can focus on one business area, and we can put all of our investments in that business area. It is a very exciting time going forward now with this divestment. It was announced yesterday, and it is SEK 775 million at closing, and then SEK 50 million as a loan. There is an additional SEK 25 million being paid out when STG and the takers see that this has been developed in line with their expectations. We move in a phase where we will start this process of a carve-out, which is a new word for me. That means that we split up the joint resources. There are a few around IT, finance, the brand, for example. There are some areas that need splitting up.
There are personnel that need to be moved and some contracts that need to be moved, which is also conditional for closing the deal somewhere in Q4. That was in short some details around the transaction. If we then look at what is remaining, this is the Lasernet business. You who listen in, you are, of course, very familiar with the Lasernet business. I just want to say that in short, what we do is that I tend to say that we create documents that machines and humans can read. Those documents are crucial in basically all companies' customer journey. When you have a supply chain and you need to deliver something to a customer, there is a number of documents like invoices, like statements, like picking orders, like delivery notes. All of that needs to be created. It needs to be managed. It needs to be delivered.
In the end, it needs to be archived so that it can be retrieved. That is a need all companies have. We have a niche in sort of mid to large-sized companies where we are very, very right. We have shown that with our partnership in the Dynamics ecosystem, where we've been active for quite some time. We have something like 1,000 customers, and we are active in 60 countries. We have the bank and finance business where we work closely with Temenos, which is very, very compliance-driven. In short, all companies need this technology, and it's driven by complicated, sophisticated supply chains or compliance. We have a large partner network, mainly in the Dynamics and bank and finance, in the Dynamics networks, but also in bank and finance. We have a network of partners that deliver this solution.
Of course, everyone is thinking what will happen in the next step. We will have the Capital Markets Day in the end of November, where we will talk more about how we will grow the Lasernet business going forward. I want you to have a look at this graph, the recurring revenue graph from the last, what is it, five, six years. It's a very steady development of growing ARR, and there is also good margin growth. This is a trend, of course, that we aim to continue and to accelerate going forward when we are allowed to focus, but also to invest a bit more in the areas, in the business area. Now, Sophie, now we are coming closer to your part, which is around what is it we are selling and what is remaining, but also going into the Q2 numbers.
Thank you, Magnus. Exactly. Hello, everyone. My name is Sophie Reinius. I'm the CFO for those of you who haven't seen me before. We shared a similar slide to this one in the presentation yesterday, but now it is updated, showing June 30th, last 12 months' results. It's an illustrative financial showing on the left-hand side what's included in the transaction parameter as part of the public divestment. On the right-hand side, we have what will be remaining in our listed environment. If we start on the left-hand side with the public business that constitutes our Danish legal entity in Denmark, it includes the operational business of public in Sweden, which is to be carved out and put into the newly established Formpipe Sverige AB entity.
We also have the business related to BG Link, which used to be in our other business area on the right-hand side, but in this illustration, it's now included in the public business as it is included in the actual divestment. We have an ARR from a rolling 12 months as per June of SEK 241 million in public. We have net sales of SEK 313 million. We have an adjusted EBITDA of SEK 103 million. We have a capitalized development of SEK 39 million. We have adjusted cash EBITDA of SEK 56 million, with a margin of 18%. That is the public as part of the divestment. Shifting focus to the right-hand side in our remaining business, which will still be called Formpipe for some more time, which is still the name of the listed company, but will be renamed in due course.
There we have a yearly ARR, a rolling 12 months of SEK 217 million. We have net sales of SEK 236 million. A very high percentage of our net sales are coming from the recurring revenue. We have an adjusted EBITDA of SEK 42 million and capitalized development of SEK 13 million, which gives us an adjusted cash EBITDA of SEK 29 million and a margin of 12%. On the right-hand side, we have our supporting functions as part of the group, which are costing SEK 27 million as per June, the last 12 months. With that, I am moving more towards our kind of normalized quarterly updates and this very busy slide, which I know hopefully everyone loves. I will try to digest you through all these numbers.
I just also want to highlight, we mentioned in the previous call last quarter that we now have a separation between net sales and total income as we have separated out other income. There is a difference between net sales and then total income. Starting on the positive note with SaaS revenue increasing 17% compared to Q2 last year, that is derived by 18% coming from our Lasernet business and 13% coming from the public business. We've also had higher deliveries compared to Q2 last year. This is a combination of deliveries coming from the public business area as well as the Lasernet business area. If you recall, in terms of the Lasernet business area, we do have some additional costs in terms of delivery of those resources. We use subcontractors for deliveries, and that is also why our sales expenses are a little bit higher.
That's directly related to that. We have had one-off costs of SEK 10 million, as Magnus mentioned, related to the divestment. There will be additional costs in Q3 for the completion of the transaction. This leaves us with an EBIT adjusted for the SEK 10 million of the one-off cost of SEK 12 million compared to SEK 8 million that we had in Q2 last year. With that, moving over to our growth in recurring revenue, we have SEK 443 million in recurring revenue on a rolling 12-month basis, continuing with our positive note. This is roughly 80% of our net sales, so a very high percentage of our overall net sales, still combining public and Lasernet, of course. We have an 8% year-over-year growth.
We have a compounded annual growth rate of over 10% since 2014, so more than 10 years, and a 13% CAGR in the last two years. With this recurring revenue, we are covering more than 105% of our fixed operating costs, which gives us a lot of stability in our business overall. I'm shifting over to ACV. We actually had a slight positive effect of ACV in this quarter of SEK 3 million compared to last quarter when we had a very large negative effect of - SEK 19 million. That leaves us with a net ACV of SEK 6 million coming from purely SaaS. Overall, it was a stable ACV, as Magnus mentioned, mostly related to the Dynamics business in Lasernet and also in the public business in Sweden. Lasernet with SEK 4.5 million and public with SEK 1.5 million.
We also had a small increase in BG Link, which in this slide is still under other, of SEK 300,000. That gives us an outgoing ARR at the end of Q2 of SEK 458 million, which is a 6% increase compared to last year. With that, I hand it back over to you, Magnus. Thank you.
Thank you very much, Sophie. This is a slide that we've been talking about quite a bit over the last 18 months, which is our Pursue Potential program where we have made an overhaul of the customer journey and introduced a freemium business model in the Lasernet Dynamics area. We have also merged our two companies in the public space, Sweden and Denmark, and also looked in and improved the technical platforms in the public business area, improved the go-to-market, established a new leadership team. I just want to highlight now because I've spoken about these improvements repeatedly in these presentations. Last quarter, we introduced an Outlook add-in. Now this quarter, the team are introducing our first AI module.
This is pretty cool because in the platforms we are delivering through our install base since many, many years, we are now able to add on new modern functionality with modern technologies. This particular little module is pretty cool because when you have a large group of people, like 10,000, using a software, then you have a lot of what I call seldom users, people that use the software rarely. When they want to do something, it's hard for them to do it. We now introduce an AI assistant helping them to move on with their task instead of going to a super user or other users and thereby taking down the efficiency in the team. This is a first example on AI.
As you know, AI is a sensitive topic, but this is a very good first move because we don't have to bother about the sensitive personal data that the public sector are working with and are also very concerned about. This has been a project that our public team has worked extensively with this transition. The team has worked extensively with the last 18 months. It's been very, very scrutinized during the DD process that we passed here during spring when we have had very, very competent bidders looking into our operations. With saying this, I just want to hand out a big thank you to you, all of you in the public team that has made this transition possible, but also made sure that you have been a very, very attractive target on this market, in this transaction. Thank you very much for the work you have put in.
When it comes to the Lasernet business, we have now worked with the new sort of packaging for a while. As I mentioned in the report, we made our largest deal up year to date or historically with Dynamics with the company Michael Devernitz. It is sort of, if we start with Essentials, which is a free-of-charge product, this is the other end with an enterprise solution. This was exactly the purpose of doing this repackaging, that you should be able to really grow with a product. It is really nice to see this installation with several hundred Dynamics and with several hundred seats, 400 or 500 users in our application being sold and delivered through our partner network. That is one example of how this new packaging has worked out well. With this said, the Pursue Potential program is now over. We divest OnePublic.
With Lasernet, we move into new targets and new ways of growing that we will talk about in our Capital Markets Day in November. We have our financial targets. As you see and as you know, we tick three out of four boxes. We can also see that we are improving margins, but we are not improving or despite the currency headwind, we are improving the margins, not in the pace that we're hoping for because we have had a weak first half year, particularly in the bank and finance business. Now, as we divest the OnePublic business area, we will also move in and find new financial targets that we will return to in our Capital Markets Day. With this, the key takeaways, the divestment of public, focus on Lasernet, positive margin development that we see continuing the coming quarters.
From now on, we focus on Lasernet with the strong market and ARR position we have. Again, Capital Markets Day in November. Thank you very much for listening in. Now, Fredrik, maybe it's time for some questions.
Thank you, Magnus and Sophie. We have some questions about Lasernet from the audience, but let's start with just one question about the divestment of public. You have been wanting to do some kind of deal like this for several years, as far as I know. Why now? Why, in general, just remind us.
No, but it is, as I said in the presentation, that we have followed these two business areas closely. We have developed them, and now we have seen that they are in a size where they can sort of live standalone. It is also a matter of when you start this kind of process, you also want to see that there is an interest in the market. We very quickly saw that there was a large interest in the market for public, and that gave us more confidence, of course, to continue that journey. Now focusing our resources to allocate our capital better, allowing us to also invest focused in one business area rather than splitting our focus on two business areas, but of course, also the investment momentum in two. Now we can focus on one.
Those are the main criteria for making the divestment now: the maturity, the timing, and then also the need for focus on Lasernet.
I see. Makes sense. Let us focus about Lasernet then. We have a few questions from the audience. Do you foresee any material changes to the Lasernet strategy going forward?
No. I really like this graph that I showed, the long series of ARR growth. Doing more of the same is what we want to do. There are obvious things that I, of course, want to focus more on. One is the platform, making sure that the technical platform stays relevant. The second one is the go-to-market, being more proactive in our go-to-market. That is supporting our partners to do more business, making sure that this end user who's working with the customer journey somewhere is aware of our clever and very, very proven solution. How you do this is, of course, yes, you can do this organically, a little bit day by day. There, of course, are also areas when it comes to adjacent technologies, new technologies that can be acquired as well.
That goes also, of course, for the go-to-market that we might be able to get closer into some ecosystem or some geographical areas by some acquisition. This is exactly what we are working to elaborate now as we prepare for the Capital Markets Day. More of the same and in a careful but also focused manner continue to develop, continue the fine development of Lasernet.
I see. I'm sure we will get additional information in conjunction with the Capital Markets Day. Could you give us some indications on any geographical areas or industries where you have a quite limited reach today, but where you see potential?
Yes, I can. We are doing, I mean, we are present in the U.S., but the U.S. is a massive market. Of course, the U.S. is interesting. Also, the DACH area. DACH is a large Dynamics user. It is a large Dynamics market. The DACH area is also an option when it comes to geographical expansion. You can look at, technically, yes, now we do produce a lot of documents, but there are adjacent areas when it comes to how you design this, for example, in the insurance industry. I think it's called call, discuss, quote, or something. How you build, how you distribute that. There are a number of adjacent areas that are interesting to look into, as well as new ecosystems. For example, IFS. I've talked about that before. That could potentially be something.
That is how our brains are working right now to see what is the easiest to do so we can do that first. Of course, always be able to be opportunistic if there is some sort of M&A opportunity coming by.
Great. We'll get back to M&A, but let's continue with another question from the audience. Is there a forecast on the remaining one-off costs for the divestment?
No. We don't have a forecast, but there will, of course, be some costs in Q3 related to the divestment. As you know, we're announcing it now in mid-August. We've had costs up until this time, and we'll continue to have some additional costs up until closing. We don't have a number on that. Of course, it will be less than the SEK 10 million we've had up until Q2. I don't want to elaborate more on that yet.
Okay. I see. Here's another question from the audience. Lasernet grew 7%. Are you happy with that?
We should absolutely do more. As we said here in the call, Dynamics has this the last two quarters developed well. Bank and finance has been slow. A year ago, we had very good ACV numbers from bank and finance. Yes, there is a need for some patience when it comes to the bank and finance. Of course, we also need to improve and push our resources where we see the market growing. No, we are not happy with that growth number.
To follow up, where do you see the market is growing? Where do you want to put that resource? Any examples? I mean, you touched upon it recently.
The no-brainer answer is, of course, within the Dynamics area because we are well-established. We have a large customer partner network. We have a product that is well proven, and it is an area that is growing. That is a very concrete example, which is sort of what we in Swedish tend to say is we dig where we stand. Doing more of the same, again, coming back to this low-risk expansion, that is absolutely an area where we must make sure that we have emptied out all the options to be successful.
Okay. Additional questions from the audience. A question on the divestment. The purchasing price will be adjusted for working capital adjustment. Could you please share some light on the impact?
Oh, yeah.
I think that's a bit too early to say. Let's come back to that when we are at closing.
Okay. Let's see. Which profit margin number is your key metric? EBITDA or cash EBITDA?
I guess it will depend also on going forward for the Lasernet business. I think we've had lots of different KPIs that have been relevant for both public and the Lasernet business combined. Of course, going forward and as part of Capital Markets Day, I think we need to redefine which KPIs would be most relevant for the remaining business. I think we will come back to what we deem as the right KPIs and also the right financial targets going forward and how to measure those.
Okay. I see. In terms of M&A, is it the intention to continue to focus as a software provider, or do you expect to broaden your exposure and strategic profile in the coming years?
I would say we are a product company. We are an output management company. It's part of the customer communication segment. I foresee that we should be a player in that space. We should expand to have a strong and SaaS-based product offering in that space, which is sort of where we are, but maybe a little bit bigger in terms of functionality and maybe a bit bigger in terms of ecosystems. Of course, there is a need for implementing our products. I see that we need that capabilities. I also see that our partner network is crucial because there are so many verticals in terms of different industries, but also different use cases. That really is where you need a partner network to master that. You also come to the geographical differences that France is France, Germany is Germany. This is sort of a very language-intense implementation.
I foresee that very much doing more of the same around a SaaS-based output management product, but also, of course, adding on functionality and, where needed, key services to be able to make that product easy to consume and adapt to the use cases. Continue as a SaaS and product company.
Okay. Once again, I want to highlight the opportunity to ask questions. Let's continue with M&A. You intend to save at least some of the funds you will get from the divestment for investments in Lasernet. I assume M&A is one big part there. Could you elaborate a bit? What kind of targets are you looking for? What's out there to acquire?
That is a really good question. If you really indulge the customer communication segment, which is very large, and then the output management segment, there are a lot of sort of adjacent spaces like accounts payable, accounts receivable, which is sort of around invoice handling. As I said, there is this sort of sell and interact and quote area where you do, for example, insurance companies do those quotes and send out. These are things that need to be standardized. There are some technical adjacent spaces. Of course, the market presence. I mentioned the U.S., and I mentioned the DACH region. I have previous experience from entering the U.S. by acquiring a services company, which was then very useful when building up the sales organization because you have competent people that can explain why your product fits into a certain use case, for example.
That could be ways that we are looking at. How do we become more easy to consume in a certain market area, a certain geographical area, or in a certain industry segment? I mean, we are in bank and finance. Maybe the insurance industry is sort of related because we understand the demands of compliance for some. This is how we are forming a shortlist of interesting companies. Yes, there are, this is a market that has been, I mean, it's existed for a long time. There is a lot of technology out there. There is quite a lot of old technology with this fairly large install basis that is also interesting to look at. There are a lot of options to look into. We must not forget the actually very well good position we have within Dynamics and in the bank and finance industry.
Okay. There's basically two, three kinds of acquisitions then if the price is not.
Let's see how you summarize this.
It is some kind of market and geography expanding kind of partner support acquisitions. It could be a product expanding acquisition or perhaps end-of-life like product that you can buy and then migrate customers perhaps instead.
Yes, that's actually very well summarized, Fredrik.
Great. We got another question from the audience. In terms of strategic direction, you have previously highlighted new ERP platforms as a key growth driver. What ERP platforms are must-wins for you? What is the current status in breaking into them?
That is a question we will come back to later. It's a very good question. It's good because of several reasons. One is that if you look at the new ecosystem, it always looks very attractive from outside. When you start to dig into it, there is usually a solution in there that does something similar to what we do. You really have to understand the value you add before putting a lot of resources into breaking into that new ecosystem. To that question, there are absolutely ecosystems we could work with, but it's too early to answer that question right now. That one we have to push forward a few quarters.
I see. I see. We got another question. What will happen with the already decided and communicated dividend from the AGM?
The ordinary dividend will be paid out in November as planned.
Okay. That's clear. We've touched upon this question a bit, but in addition to M&A, what kind of investments in Lasernet is it that we're talking about? Any concrete example?
As always in a tech company, you have your product platform, and that always has to live with new technologies. That is absolutely an area where we will invest going forward, making sure that our platform that is today very well working, but that it stays relevant in terms of use case support, but of course, also to all the underlying technologies so that it is easy to consume. That is absolutely one investment area to make sure that we have a relevant product from a use case and from a technical consumption perspective. I also see that we need to be more proactive in our go-to-market motion, which is then making sure that all customers out there see how fantastic we are, thereby then facilitating the lives for our partner network so that we create and accelerate the win-win situation we have with our partner network today.
I see. We got one more question from the audience. Will Formpipe continue to be a listed company?
Yes.
Absolutely.
You will change name, right?
Yes. We will change name, and this is part of the so-called carve-out process. How do we share and then, of course, leave certain assets to each other as we split up here? In the coming quarters, we will find ourselves a new name.
I see. Thank you very much, Magnus and Sophie.
Thank you.
Thank you.
Thank you very much. Thanks for listening in, everyone.