Fully agnostic. Independent of the hardware, and working with any existing IP camera setup. Available. The software adds deep learning analytics that can be recognized: human behavior, motion, or specific objects, whether the system runs on the cloud or in the cloud, on-premise, or at the edge. Through a secure and scalable infrastructure, we can connect all analytics, data, and integrations into one cohesive system. The open API approach ensures that Irisity connects seamlessly with industry partners such as VMS providers, alarm systems, and creating a complete ecosystem rather than a standalone product. All insights and alerts are when surfaced through a unified interface, allowing customers to act faster, improve accuracy, and scale operations easily. To enable this vision, Irisity continues to develop generative AI capabilities in collaboration with our technology partners, making video intelligence more adaptive, personalized, and efficient for users worldwide.
A bit then on the share and market as a snapshot. I mean, current and current, I mean, the share price in October this year was at SEK 0.18. Providing a market cap at around SEK 30 million. Analyst group's base case has been at SEK 0.40, at 40, which is approximately 120% upside. Their bull case is at 70, SEK 0.70, which is an upside of 290%. Irisity trades approximately at 0.4 x the actual revenue in 2024. AI SaaS peers trade more on two times the actual revenue. If we were to look on evaluation in terms of the recurring revenue, we have today, we have about SEK 50 million or SEK 48 million in annual recurring revenue. Times four, that would be a valuation about SEK 190 million, SEK 192 million. That would be approximately SEK 1.50 a share.
The share, as we see it today, is a bit undervalued. What we are doing at the moment, or what our strategy is, is to reduce the OpEx to take it down by 30%. That is on track in terms of execution. We will generate a SEK 40 million saving on an annualized basis. We are also further transitioning into more focus on recurring revenue. Currently, as I said, we are trending on SEK 48 million as an annual level. To take that to SEK 60 million around 2026 is the expectation. We are in negotiations with other parties on seeing this through. With this rights issue, we relieve risk on liquidity, and we can also put more focus on the operations and sales rather than to sort of focus on the short-term cash need.
We are on a growing market, and as we see it, we are well positioned on grabbing this growing market going forward. A little bit on the market overview. Björn, if you could take us through these couple of slides.
Thank you, Gustav. A brief introduction, also a member of the board since 2024. Been in the industry for about a decade with video management players and obviously playing a role in the board as to knowing the market and the segments and technology. Many of you probably know the surveillance market, but in a simple overview, it is a significant market valued at SEK 24 billion in 2023 and growing at a compound annual growth rate of 8.5%. Important to understand the stand-alone video analytics is around 4% of the total market, but expected to grow 13.6%. 14.2% excluding China. By itself, a market by SEK 1.6 billion by 2028. It is important to reflect on this because video analytics is a part of the bigger video surveillance or video management market.
Some of the key trends we wanted to highlight is the fact, maybe news to some, that hybrid solutions dominate. Hybrid in this case means that it is not all cloud-based. It is not all on-premise server-based. It is very much a variety. That is why the product portfolio also needs to be addressing both cloud-operated, cloud-deployed, but also deployments that are on-site and on your own data centers. This is obviously important for privacy-sensitive companies, for people who do not want to leverage the cloud. Likewise, cloud solutions are an important part of the scale options. Of course, subscription-based in the cloud. It is important to mention the way that Irisity business is operated, the on-premise systems also have a subscription component for our business model.
In the positioning part, the rise of both hybrid and on-prem and the cloud needs, Irisity is uniquely positioned to meet these markets with an enterprise solution that is a cloud-first solution where we deployed. Also on-prem, but mostly from a cloud starting point, very much designed to leverage the large-scale deployment and the ability for remote monitoring. In addition to this, there is the professional product series. It is very much tailored for on-premise first need, addressing privacy and cybersecurity in industries requiring air-gapped systems or simply leveraging existing hardware or hardware. On-premises. Last but not least, technology for central monitoring. This is the case where you've outsourced the monitoring, outsourced the analytics or the video surveillance of your business, your productivity, whatever you are looking to drive surveillance with customers. This category for us would be G4S, Securitas, companies like this.
The market really consists of these three different ways of taking advantage of the technology. Another important part of this is, of course, the partner ecosystem. We do not want to go into all the details about the market, but there are some major players in the video management market, namely Genetec and Milestone. Those two collectively draw a lot of the interest in the market. Irisity is positioned really well with both of those. Video management systems is about 7% and VSAS, respectively, 2.5%. The standalone analytics is 3.4%. The reason the numbers combine this way is because all of the hardware is also in these big numbers. This is excluding cameras, excluding servers. This is the software components.
This software-driven layer is expanding significantly faster than any of the hardware elements, very much driven by AI-enabled components and AI-enabled features, as well as cloud-connected video. Irisity very much is sitting at the convergence of these fast-growing layers from a software perspective with hybrid capabilities and driving the capability of AI. The reason it is so important to understand the rise of AI is the fact that we have had video management for, yeah, since the 1960s, basically, with analog systems. As we start collecting more and more video, the ability to look at all this video is simply undoable. That is how AI really becomes a key feature. Irisity is certifiably integrated in the Genetec partner program, in the Milestone partner program, and are collaborating with technology partners all over the world with an open platform proposition.
Really enabling the partner community to also scale the installations they make, whether they work with Genetec, whether they work with Milestone, or they work with a whole different supplier. If we think about the global standalone video market as a whole market, we talked about the growth, and this is a graph that's showing the compound annual growth rate of 13.6%. Yes, we have great business processes and business plans for the future of Irisity, but it's also in a significantly growing market, looking at compound rates of 13.6% coming up to SEK 1.6 billion by 2028. This, again, is the standalone market, just looking specifically at analytics, not the hardware, not any of the cameras, nothing of the servers, nothing of the VMS, but the standalone analytics part.
Thanks, Björn. Looking a bit into the business segments, and if you could take us through this slide, Lucas.
Yes, thank you. It's important to understand that video management or video surveillance is very diverse, very distributed into different business segments. Here we've identified the segments where Irisity is very engaged. You look at the different things that are growing, really like airports at 12.8%, things like city surveillance. We see a lot of growth there, but also looking at the 15.6% of the market. If you notice the growth from 2023 to 2028, I think we know this on our own personal basis that city surveillance and the security of cities is a big part of when we think about video surveillance. Also, things like retail and traffic are coming up to become significant market segments, as well as government.
Now, these key sectors where we have the highest growth is also where Irisity has seen the most trajectory or the most traction for the past 15 years. It is an important point that 50% of the revenues made with Irisity is indeed from the existing customers on an annual basis. A very solid footprint in the key markets that are already growing and are looking to grow even further.
Thank you. As Björn is saying, one of the competitive advantages of Irisity is the long customer journeys we have with the customers. We are sticky with the customers, and the customers stay with Irisity for a long time. Of course, this builds up a big installment base of customers, which now represent more than 50% of our revenues going into next year. As was illustrated on the last slide, there are some verticals or segments that we are more strong in than others. For instance, health and elderly care, we have a couple of customers where we are delivering anonymized patient monitoring and behavioral detection for healthcare providers. Also, as was illustrated before, we have big growth in the market, and also we are strong in rail and transportation, where the passenger safety and railroad track and detecting unattended objects and so forth are.
Things that we are delivering to the customers. Perhaps the biggest ones of these are the ones that are connected to the smart and safe cities and city surveillance, where cities and safety, vehicle track and trace with advanced analytics and generative AI search and queries are things that are being delivered. In these verticals, we are the strongest, and we have multiple customers in each. Also in the education sector, where we have improved school safety detection and detection on vandalism, also doing all these detections with a strong focus on protecting the privacy of it all, of course. To sum it up a bit on the market and the business segment, Irisity is well positioned to capture these market opportunities. We have a focused leadership driving a profitable transformation of the company.
We have a large installed customer base across several verticals and a strong partner network to reach the customers through. We have a competitive product and service portfolio across cloud, on-premise, and hybrid deployments, which is, as Björn mentioned, very important.
Thank you.
Sorry? Did I hear a question or?
No, I'm sorry. I unmuted for a second.
Yeah, no problem. And we also have a diversified business with multiple value streams and revenue models. Lucas, if you could take us through, as you see it, the key steps to achieve the profitability.
Yes. Thank you, Gustav. All what we have seen until now, it's about the opportunity, the market, where we are positioning, and so on. My own experience alongside Björn since we joined the board in 2024. We realized that there is a mismatch in how we are facing the business in terms of level of cost base that we are running in the company and the real sales that we are getting. There was an expectation of getting a certain value of sales. Sales are there, opportunities are there, and we are capturing. But the mismatch on this level of cost and this level of potential revenue has made the company go under huge liquidity pressure over the last couple of quarters, which makes the situation be worse and worse. We started with the first streamlining plan in 2024 after the Ultimus joining the group. And.
We did not get into that level of sales. Later this year, we realized that we need to stabilize the company, get into a position of break-even, not eating cash, and being able to go to the market and grow the business and capture the opportunity, having 100% of management focus on the business, not on how to get the next round and these kinds of things. We have made from the board high, heavy lifting on the organization, talking about the leadership team, putting cost control, having Gustav as CFO, taking the position as Interim CEO. The other business-focused management team members will be focused on business, and they will deliver business. It is the role that we ask Gustav to help us. Operational streamlining is something that we have looked carefully about. We have streamlined and refocused our R&D efforts.
All the R&D resources now are under one single head reporting to Victor in Gothenburg and having a heavy cut in Israel and deploying that type of services into Gothenburg and Budapest, which are much more efficient cost level. In the business side, the partner-first market approach for different reasons. One, how the partners and the OEMs are closest to the business and how we can get advantage on that. We are really focused on getting this level of recurrent revenue and not willing to these big deals to land into getting the finance of the next quarter. Last but not least, all our platform and all our R&D resources are continuously focused on. This streamlining is not about getting less innovation in our product.
AI, it's growing at a super fast pace, and we have to be there in order to capture all the innovations because it's what our existing customers expect and the new customers are needing us to offer. I think that this is the overview on how or what we are doing nowadays. I think that Gustav can explain furthermore a little bit more detail in each of these five steps.
Thank you, Lucas. Yes, starting off on the leadership piece. First, presenting the full management team as it stands now. It's myself as the CFO and also stepping in as the Interim CEO. I have more than about 20 years of finance experience, mostly in leadership roles. I've been having many different focus areas or focus projects on restoring cost control and operational efficiency and financial transparency. These things will come well in hand for the transformation we have now in Irisity. We have Raziel, which has been with the company since 2023. He has more than 20 years of experience on video surveillance industry, and he leads the global sales. He drives the partner strategy and delivers the execution also on the operational simplification. He's the Chief Operating Officer and also the Chief Revenue Officer. We have Victor. He's been with the company since 2008.
He's the technology officer, now being Head of all platforms in the group, which has now been centralized under Victor's leadership. He has more than 15 years of industry experience, and he's leading the group's product roadmap. In terms of all products now, which is an efficiency going from three to one heading this. We also have Marianne, been with Irisity since 2023 and part of the management team since 2025. She has industry experience as well and has a master's in business administration and commercial law. She's strengthening the corporate and legal governance partnerships and also heading investor communications. Focused on strategic alignment and the ecosystem of the partnerships. As we said, I mean, this management team is driving discipline on cost, and it's going to turn this around into.
A business where we have a cost level that is more in line with the revenue that the company is taking in. We are targeting a cost reduction program up to SEK 40 million annualized savings. This is already executed, but will be fully executed during the end of the year, perhaps beginning of 2026, and will be fully visible in the numbers in exiting Q1 in 2026. As I said before, I mean, we are consolidating the R&D operations into Gothenburg and Budapest and are seeing that this will have a great impact in efficiency, both operationally and in terms of cost. Yes, I think we covered this a bit already, but the cost saving as such is to a large degree driven by cost savings. Out of the SEK 40 million, we see that SEK 33 million is going to come from personnel cost.
I mean, we are driving now a leaner company. It's a smaller but faster organization. We have fewer management layers. We are centralizing things to be more as one company rather than to have this spread out as perhaps three companies under one roof. We are sharing IP across the segments. Björn.
Sorry, if I can jump in. This slide, I think it's important for the audience to know that our capabilities regarding the knowledge of the HMBI platform that was founded in Israel. It's a platform that has been used, developed, and managed in our Gothenburg office by our Gothenburg R&D team members for the last few years in one of our business lines. It's the central monitoring. The central monitoring business has been driven from Gothenburg with that platform that allows us to make this reorganization of R&D without taking any major risk regarding losing the deep knowledge on the tech side on the platform, which is important to know because we were working with many platforms, but it's important to keep the knowledge in order to maintain and grow those platforms.
It is also the foundation of why we can do this streamlining and execute it so fast that we are actually doing.
Absolutely.
Björn, if you could just give us a little bit on the partner-first market approach.
Yes, thank you. It is a very diverse market. We are sort of global by nature, and surveillance projects are not easy, which means that we need to have a partner approach where a collaboration partner would be able to run with the customer, run with the project, and we would supplement and supply the technology. It has been an objective for a long time, but we would like to even further strengthen that to go for the scalability. One of the challenges that Irisity have had over time is not enough focus on working with partners and have ended up driving a lot of the projects single-handedly or directly. That has caused a too high burn rate of cost versus the intake of money. Not a surprise if you've been following the company, but that is why this partner-first approach is absolutely key.
To leverage this, we have, over the past 6, 12 months, been implementing a lot better collaboration with the key VMS players, Genetec. Most importantly, the number one video surveillance company in the world are now a very, very close partner of Irisity. A lot of leads are coming this way, a lot of partners that would like to work with us in this way. We are looking to integrate IRIS+ even further into the ecosystems to increase the adoption across enterprise and mid-market customers. A very important growth area is the mid-market companies. Irisity has, for a long time, been strong in the enterprise and government space and needs to be even further.
We'd like to also focus on indirect sales and closing, landing, growing OEM contracts where partners can take technology in their name, in their brand, and bring it to their customers, especially for verticals or areas that are hard to get to for Irisity. That is another part of the partner reach with Irisity. We expect to have more coverage, and we would like to reduce our direct sales costs. This is moving fast and sort of on point, but it still needs to be developed further through 2026 and 2027. We'd like to strengthen our mid-market penetration with the video management players, working closely with them, and to integrate in the channels very directly. Of course, that would lead us to increase customer satisfaction through localized support through the partners. A key part of the global reach and scalability.
Good. The fourth piece that Lucas was mentioning was on the increase of sales portfolio of the recurring revenue products and services. This slide illustrates a bit the major three buckets of recurring revenue streams that Irisity has. On the left side, we have the IRIS+ central monitoring software as a service offering. The typical customer here is Securitas and G4S that has been mentioned. We have more than 20 central monitoring providers work with Irisity on the monthly SaaS license agreement, where it basically works that each active camera has a cost, and on a monthly basis, we are billing these customers for their usage of the software. We are using the IRIS+ platform for this, and this is something that fits for the CM customer who needs an advanced AI remote monitoring.
For these, I mean, the benefit, of course, of using AI in this field is where there is a lot of manual work that could be shortened on false alarms and stuff like this when monitoring on a big scale, a lot of different sites. If there is a cat that runs over and triggers the alarm, of course, this is a false alarm. This is things that could be filtered out using an AI software. On this piece, we also have the security as a service, which is to these enterprise customers, which is quite like the other offering. However, now with where we offer the whole service, where we have the security as a service, we offer all things. We offer the monitoring, we offer the hardware, and we offer the software. Here, we have been using the Iris platform, and we have about.
Almost 70 customers with almost 600 sites, which has had a rather modest growth in the last couple of years. However, with the changes in the surveillance camera permit application, we see that this has opportunity to enhance some growth going forward. The last bucket here is the software upgrade plans. We call it SUPs, which is the software part of the project where we install big projects around the globe. A premium support plan adds on to the license or, I mean, interesting for clients with high availability needs. Upgrade and maintenance plans are attractive for customers on legacy products. The full-service project in Sweden provided a good basis for selling and add-on services. I mean, these system upgrade plans, they run on a one-year plan or a three-year plan or even further, and are often paid upfront and provide sort of a steady revenue.
Recognition over multiple years. Anything to add on this one, Lucas?
Maybe I can add in compliment of your point that goes down. These are recurring revenue, but they're very different. I can talk to the software upgrade plan a little further. It is well known when you have a software installation that you would like to keep it up to date, keep it maintained, and be able to provide upgrades and updates. This is a key component. Closing a project, you would have a part of the license to use the software, and then the customer would then buy a software upgrade plan. That does not come with any cost on Irisity, but of course, comes with an obligation to be able to supply the software over time.
The reason you do this as a customer is to not have to repurchase the license once you need to upgrade, whether it is one, two, or three years down the line. This is what provides the annual recurring revenue component. It is not only the month-by-month or the monthly recurring revenue of the SaaS model. Here, we actually have both a recurring element on the SaaS model and on the basic software model. That is how we can come up with such a strong part of the revenue already known before the year starts. Just complementing your point there on the software upgrade plans.
All right. It's perfect. Björn, if you could just take us through this slide.
It's an example of what's happening in the industry on AI and all the changes and challenges we've had on analytics. It's important to understand that, let's take example of Stockholm Subway. It has very, very good surveillance, has very good AI. Yes, that AI is delivered by Irisity. We also have to be fair to say that what took nine months to create in terms of the algorithms, the objectives to be identified, how to manage that software, those algorithms took nine months to create earlier on. With the software we have now, it's an example for Black Mountain Sands, something like that would take four weeks to do. The reason here is because we are, of course, being much better at what we do, but it's also about the generative AI elements that are common.
Really, this use of fundamental generative AI technologies to expand the classifier, you might know that there's been some significant changes in the AI space, and Irisity is at the forefront of that. Both on classic analytics, deterministic AI, but also on the generative AI side of the future. This, of course, lowers the partner end-user training requirements and expands the use of language models or video language models, VLMs, into enterprise as well as professional. It really allows us to do a lot more, a lot stronger customer fit, longer, even better satisfaction, using few shots of almost no shots of frames to get the technology to learn what to look for. Really coming down to maybe one to four to ten weeks of work versus what would have been sort of nine months to do in the past.
Great. I think to allow ourselves to have some time for questions, I think we will not spend too much time on this, rather for information. And this has also been rather public information already. On the left-hand side, we have the ownership structure of the biggest shareholder of the group. On the right-hand side, we have the group legal structure. I mean, what could be said on that one is that we are a group with the acquisitions, as Lucas was mentioning in the beginning. We took on Agent Vi in 2021, and we took on Altenes in 2024. Visionist was a lot earlier than that. I do not have that exactly in my head. We have the UAE company established some time back as well. Yeah. Also, just as a glance here, this is the last 12 quarters illustrated.
We have the net sales, which has been. What we also want to do with this slide, this is not any formal information, and it's not audited, and it's not sort of. It's not to be treated as formal numbers. What we have done in 2024, end of the year, was that we changed the revenue recognition method of booking up, accruing for revenue before actually, perhaps, the dealer took them out and installed them at the end customer level. If we were to try to adjust for that historically back, we do see that we have a stronger 2024 versus what has been reported, a weaker 2023. Of course, as a big impact here in Q4 2024. What we do see from 2025 and onwards is that we have now a more conservative approach of realizing the revenue.
It's much more close to if we are actually sort of invoicing and actually delivering the software out to the end customer. We have had a tough, challenging beginning of the year with too low invoicing, where we have had big enterprise projects being deferred, being affected a bit by trade wars and government shutdown in the US and so forth. We have also been negatively impacted by a weakened U.S. dollar and so forth. What we do see now is that the revenue has come up, driven by good third-quarter invoicing. What we can see going forward as well is that we have been invoicing more than what we are revenue recognizing and also what we have been collecting. Both in terms of revenue, the invoicing is to a larger degree deferred revenue, so it will come in the upcoming quarters.
As we have been billing more than we have been collecting, we are also sort of creating a good foundation for good collections going forward as well. In terms of a brief summary before we come into the details of the transaction, I mean, there is a strong market potential, which has been confirmed by leading analysts. We see that, I mean, it is a strong growth projected for the video analytics software market. We see that Irisity is well positioned to capture the potential. We have a global footprint. We have a proven technology. We have a strong partner network, and we have a large customer installed base. We have set a somewhat new leadership team to run this company. We have a strong focus on financials and cost discipline to.
Get the joint with industry experience and the network to bring expertise into the company and fix the stability phase of this company. We have a solid and highly scalable platform with most attractive total cost of ownership in the industry and flexible deployment options on cloud or on-prem or what the customer needs to adapt to almost any customer environment out there. We have unique generative AI, which allows personal detection, with an already shown to generate traction and interest in the market, provides a selling edge going forward. In context of the partner-first go-to-market approach, key partnerships have been rekindled, and we have new alliances forged and also a renewed partner program to be released or being released. I mean, we are focusing on the recurring revenue growth.
We showed the three buckets of those streams, and we can see that this is improving, this is growing, and we expect this to be bigger during next year as well. A bit on the transaction summary, I think the guys from [Pareto Fondkommission] will take this slide. Am I right?
Yes. Thank you, Gustav. I will just briefly go through the transaction summary. It is a rights issue of approximately SEK 26.1 million, which is secured by subscription commitments of approximately 49.6%, and the rest is guaranteed at no cost from the company's largest shareholder, Stockholm Capital, up to 100% of the rights issue. For each existing share held in Irisity, one subscription right is received, and then you have 10 subscription rights entitling the holder to subscribe for 13 new shares at a subscription price of SEK 0.12 per share.
The subscription period started yesterday and runs up until the 19th of November. Trading in subscription rights also started yesterday on November 5th and runs up until the 14th of November. Trading in the BTA, Betald Tecknad Aktie, runs from November 5th until approximately December 5th. The use of proceeds, as the company has mentioned before, is market expansion and working capital. The larger shareholders, Stockholm Capital, have subscribed for its Pareto share, approximately 36.6%. As I said, they are also acting as a bottom guarantor for the remaining portion of the rights issue. They have an outstanding loan of approximately SEK 23 million, and approximately SEK 10 million will be offset against the Pareto subscription. If the rights issue is subscribed by others, the remaining SEK 13 million will remain as a loan until the end of 2026.
The company will receive full cash proceeds. If Stockholm, as a guarantor, is allotted additional shares more than Pareto, then up to SEK 23 million will be set off against the loan. I hand over to you again, Gustav.
Yes. I think we reached the end of the set presentation, which allows us to have a couple of minutes of questions. I think if there are any questions, we could, yeah, please take them now.
Yes, we have definitely one question. I'm just trying to get back to the slide here. There we are. Yes, let's do, of course, we can just raise hands and ask questions. We've had one from Mickey that I would be glad to answer. As you know, Mickey, or we've just been gone through by Jonathan, Stockholm is backing the trust of the rights issue. In addition to that, I can tell you that there will be a press release in half an hour that Stockholm has actually acquired a little bit of stocks today. We must, and I have no more information at this point, but as part of the board, I would expect to see an offer come through in due process. Bear in mind, those two processes are not necessarily connected.
The rights issue will be fulfilled and will be executed in full, and then there will be a mandatory bid, I imagine, from Stockholm. Did that answer your question, Mickey? Any follow-up to that? Yes, it did. Thank you. Any other questions? Yes, please, Eric.
That communication, that has not been communicated to the market, right?
It is. We've just heard back from the lawyers. I can limit you a little bit more. The transaction was done around midday today. What we know currently is that it's not related information. However, we will send out a press release in about 30 minutes when the market closes. Not because the market closed, just because that was convenient. That will instruct or will just be a PR on that Stockholm has acquired 1,000 shares at midday.
I can see now that it has been a press release at half past two. Okay.
Yeah. It has been a press release from Stockholm that they have the obligation of making the press release. As Irisity, we are going to make a press release as well. Yes. Acknowledging that transaction. Yeah.
You don't do anything stupid here, I mean.
No.
Good. There is a press release. It is known to the market. Okay. Thank you.
Good. Good clarity. Not apology, but a little it was considered to discuss this in the end of the call and not in the previous of the call. I recently see the board management stand behind everything we are doing here. We believe for a bright future for the company. There will be a separate process, of course, around the bid and the recommendation for that. Good. Leaving it. We have a couple of minutes. Any further questions on market, past, present, or future of technology or economics? If you guys feel fully enlightened. Yes. I think that was what we had of questions. One, two, three. Yes.
All right. Thanks, everyone, for taking the time to call in and listen to the presentation. Hope this gave some clarity in terms of making a decision on the upcoming rights issue and in Irisity in general. Thanks for calling in and have a nice day.
Thank you very much.
Thank you.
Thank you very much.
Thank you.