Hello everyone, and really, really sorry for the disruption earlier. We had some sound issues, and it seems to be fixed. Let's dig into the presentation again. We start from the beginning, of course, and make this a really strong presentation. Welcome everyone to our Q2 update. My name is Nils Olsson. I've been joining Lime since 2006 and been CEO since 2021.
My name is Anders , and I'm CFO at Lime since September 2024.
Perfect. Feel free to write any questions in the chat, and of course, we will answer them at the end of the session. Before we dig into the numbers here and a little bit more in depth of the Q2 presentation, let's give a brief overview, as always, about Lime. As you know, we've always been running Lime with a very long-term perspective, and that has left us with a fantastic footprint. Over now, in more than 20 years, we've been growing in average 19% per year with an EBITDA margin of 25% in average per year, and that's something that I'm really, really proud about.
No matter how big we've been, how many markets we entered, more or less our goal has always been the same, and it keeps being, and that is to help our customers to become really strong in sales, in customer care, so they can help their customers in a good way, meaning that we are focusing on our customer's customer. As a supplier, we are at strongest, I would say, when we combine on-point expertise and really strong software to solve mission-critical problems, and we also become a natural part of our customers' core processes. Over the years, we've been scaling Lime and we are into seven markets, and the last couple of years, we've been entering the Netherlands in 2020, Germany in 2021, and we also welcomed a couple of other companies into the group, Youse Alike, today known as Lime Connect in 2021.
We had also Sport Admin and PlanPlan in 2024. Now we are present in seven markets, 12 offices, and almost 500 employees. Looking at some of our key success factors, long-term profitable growth, that's in our DNA and something that is really important for us. We also have a good business model. Today, 67% of our revenue is recurring, so it's a stable base. We are not depending on one or two or five big customers, so we have a low customer concentration, and something I would say has built Lime to what it is today is a strong corporate culture, and that's something that we continue to invest in with our big onboarding programs normally twice a year.
Let's get into a sum up of Q2, and starting with some numbers here, you can see that the revenue growth amounts 5%, EBITDA margin 25%, and the ARR growth was 13%. I will say that we continue to face a bit of a challenging macroeconomic climate. We see longer sales cycles and a bit of reduced willingness to invest, especially if we look into existing customer base. The good thing is that we are remaining a strong momentum in new sales, particularly in Lime CRM. Despite the challenging period, I would say that we are making steady progress towards a greater focus on recurring software revenue. As I said, 67% of our software revenue is now recurring, and in the quarter, I'm really glad that we passed a key milestone with over SEK 500 million in ARR.
Looking into our different business units and starting with Lime CRM, in CRM, we continue to demonstrate, I would say, a really competitive strength, especially within our verticals, and this is driving a strong new sales momentum. I am happy to see the progress in the German utility sector, where our long-term investments now are starting to pay off with several new deals. With our historical track record, I think that we are well positioned to continue that growth in a big market as the German market is for us. The strength also we can see in the platform. It enables a faster delivery of business-critical workflows. We also see that on integrations and in customizations.
Over time, I see this as a natural shift of revenue mix towards a higher recurring software revenue, and also, if we look at it in a little bit longer perspective, I would say also an improved profitability. As a result of that, of course, expect services will gradually decrease. New news about that, and as a share of the total revenue. In short term then, what kind of impact has this? This shift, of course, combined with a little bit macroeconomic situation and the cautiousness and willingness to invest among existing clients, of course, impacts the growth. Expect services still accounts for over 30% of the total revenue, and as you know, a big part of that comes directly from existing customer base.
If we jump back into LimeGo, I would say that we continue the progress and we close deals within more deals within our ideal customer profile, and that's a focus of a little bit higher deal value and a little bit focused on larger companies. This allows us and gives us the possibility actually to deliver more value in the product, but also we can see that the customer churn is decreasing, which is in line with our plan. From a new sales perspective, I would say that we are on an okay level, but like CRM, the upselling towards existing customers remains a bit challenging.
I think that we can do better in LimeGo, and during the quarter, as a result of that, I think that we put a lot of emphasis on the new sales, and we have increased the pace in the sales activities, but we are also seeing, since we have a nice bet on new sales, that we are expanding the sales team, hiring more sales reps, and I hope that this will improve the momentum going forward. In Lime Connect, which we primarily focus on the German market, we see more or less the same kind of behavior, a little bit cautiousness in investments, and that holds back sales, especially on the existing client base. To meet that kind of challenge, we are significantly increasing our sales activities, and that's something that I think is really strong.
We have tripled the outbound activities and then done more fairs and events, which is in line with working more together with sales and marketing. Also there, I think that we can do better going forward, but once again, I'm proud of how the team is more stepping up, and I really believe that this is going to pay off in the long run. From a Sport Admin perspective, the past quarter, of course, has marked a gradual return to the normal operations following the cyber attack in January. To start with, I would really like to express a warm thanks to all of our customers whose support and continued trust has made us stronger and even more determined, I would say, to really continue to make a difference in kids' and youth's sports.
With now the experience that we have gained and a better product than ever, I think that we are definitely ready to help more clubs to digitalize their operations, both on the Swedish market and, of course, across Europe. The acquisition of the Dutch company PlanPlan that we did in December 2024 marks our first step into the international expansion. As for now, we are actively exploring further acquisition in that business area. Looking into the agenda then, we will, as always, look a little bit more in depth into the order intake. We will talk about the revenue. Anders will talk about the profit, and then we do the sum up and the Q&A in the end. Let's start with the order intake. As we have communicated for many quarters, our customer concentration continues to be on a low level.
Today, our top 10 customers stand for 6.3% of the revenue, and the biggest one stands for 0.8% of the revenue. It is good that we have this dynamic because we're not depending on one or two or a few big customers. We do deals with many customers in different geographies and also in different verticals. Looking into the deals then, we are welcoming a number of important customers in Lime CRM, both in our home market and also on the international markets. I'm really, really glad to see that our long-term efforts have started to pay off when it comes to the utility customers in Germany. Stadtwerke Stralsund and Bitten, we welcome in the quarter. Looking into the real estate segment, I think also that we have good momentum there and welcoming Bonnier Fastigheter and Stenvalvet as new customers.
In the wholesale vertical, we are deepening our collaboration with a customer since 2012, New Wave in Norway. Other important customers that we are welcoming in the quarter are an expansion of the Porsche account, which is important for us in Lime Connect, but also if we take LimeGo in spots, for example, a perfect Go customer in the right segment and size. For Sport Admin, as I said, we have had great support from our existing customers during the spring, and we don't see any higher customer churn during the first half year. Looking into new sales, it's been tougher, of course, for obvious reasons, but we are happy to welcome several new clubs. Among these, two new football clubs, Råslet and Karlstad. Looking in a bit on the revenue side instead, we're looking into the ARR.
As you know, as a product company, it's, of course, very important to look at the ARR growth, and this is something that we will follow even more closely as one of our core KPIs going forward. This is, of course, in line with our strategy shift to even more recurring software revenue that I mentioned earlier. Looking at our subscription alone, it's growing by 16% compared to Q2 2024. Looking at the service agreements, we can see that decrease of 36%, and that's in line with our strategy. We are converting customers from old upfront agreements into the new subscription agreements. In total, it builds up to 13% growth in the ARR. Looking at our different revenue streams and a little bit on development there, as I said, subscription growing steadily, 16% in Q2 and 23% last 12 months.
Service agreement stands for 3%, and we continue the transformation of old customer and service agreements into subscription. In total, that's added up to 67% recurring revenue of the total revenue, so a good development there. Upfront is the same amount as the quarter before, so less than 1%. Looking at expect services, we had a negative growth in Q2, and today it stands for 32% of the revenue, and it will continue to grow. That's an important part, so we can improve there in the long run, as I've already mentioned, but in the long run, decrease as a part of the total net sales going forward. If we look at revenue then, looking at the growth, we reached 5% in Q2, and the last 12 months, we have 13% growth. Looking at the split, Sweden grows by 6% and the rest of Europe 3%.
The deviation between outcome and expectation is primarily due to expect services, where we have a negative growth, as I said, in the quarter, mainly driven by that our platform makes it easier to do implementations, integrations, customizations, but also an effect of the macroclimate, where we are having a harder time doing sales towards existing customers. In expect services, 60% of the expect services revenue more or less come from existing client base. Looking at the last 12 months, we grow 15% in Sweden and 9% in the rest of Europe. Profit, Anders?
Yes. All right, so the adjusted EBITDA in the second quarter amounted to SEK 45 million, corresponding to an EBITDA margin of 24.6% compared to 24.0% last year. Looking at the last 12 months' figures, EBITDA amounted to SEK 179 million compared to SEK 159.4 million. The last 12 months' adjusted EBITDA margin amounted to 25.1% compared to 25.2% last year. Despite sales not fully meeting our targets in a tough market climate, the last 12 months' EBITDA margin remains at good levels, reflecting solid cost and operational efficiency. All right, go over to the OPEX development. Personal expenses in the quarter amounted to SEK 108.6 million, an increase of 7%. The increase is due to a higher number of employees compared to last year. The last 12 months' personal expenses amounted to SEK 415.4 million, an increase of 15%.
Adjusted for the acquisition of Sport Admin and PlanPlan, the personal expenses increased by 9%, which is then explained by a higher number of employees. The increase of personal expenses, both in the quarter as well as the last 12 months, reflects our continued investments in staff and employee-related activities. These investments support the sustainable growth of our business, both in short and long term. On the right-hand side, we have our operating expenses. Operating expenses in the quarter amounted to SEK 32.1 million, which is in line with last year and previous quarters. Operating expenses last 12 months amounted to SEK 123.7 million, an increase of 11%. Adjusted for the acquisition of Sport Admin and PlanPlan, the LTM increase amounted to 7%. As mentioned in previous quarters, we continue to invest in initiatives across marketing, sales, and our product offering to support further growth in our markets and verticals.
Perfect. Thanks a lot for that, Anders. Let's do a look into our financial targets, and we have a growth target to be above 18%, and last 12 months, we are at 13%. We have a profitability target to have an EBITDA margin that should be above 25%, and we are in line with that target of 25%. Looking at the capital structure, we should have a net debt in relation to EBITDA that should be less than 2.5x, and today we are at 0.7x. The dividend policy is that we should have a dividend that corresponds to at least 50% of net profit, and we had 60% there. To sum it up a bit then, as a growth company, there is, of course, always room for improvement.
We can do better, but I think it's important here to continue to be bold, to continue to be proactive, and there are some really good things in the quarter that we bring with us, and I would say regardless of the market conditions. In our DNA, we always have that in our organization, and I think that's something that is something to really bring with us going forward. Looking forward then, our goal is very clear. We should strengthen our growth, increase recurring software revenue, and continue to deliver business-critical value to customers across Europe, especially focusing within our verticals. Let's see if we have any questions here. Anders, maybe you can look into it.
Yes. First question here, can you give some thoughts on the second half of the year?
Yes, I can do that. As I said, maybe we should not even look back only one quarter. I think that we can look back two or three quarters. We have had a strong momentum in new sales the last three quarters, especially in Lime CRM, and there is always a certain delay from order intake to revenue. I still see that we have a good pipeline in CRM, and the majority of those deals in the pipeline are within our verticals and also in the right size. Looking ahead, I have a more positive view on the growth side. If we look at Go and Connect, I also think that we are doing the right activities, and that's my expectation to see a better result going forward. In Sport Admin, we have a very stable customer base, and I think that's been shown now in the first half year.
What has been impacted in the short-term perspective is mainly new sales, and there, of course, I hope to see an improvement in the second half of the year.
Okay. Going over to question number two, how is the acquisition pipeline for the fall?
Looking into the acquisitions, we have increased our acquisition team, so we are actively working and looking and focusing on that area. There are mainly two areas where we are focusing. It's in Lime CRM and in Sport Admin that we are looking for new acquisitions. In general, if we look at the acquisition market, I think that's on an okay level. The valuations are on an okay level. At the moment, we don't have anything very nearby. Of course, that's something that we are working on all the time, and let's see what the second half of the year has to give. I've said it many times before, I think it's so important that we don't stress the acquisition topic.
It's so important for us since we are a very culture-driven organization that it feels really good and becomes a good match also on the cultural side of the organizations.
Okay, what about the development in organic growth?
I mean, the organic growth, yeah, landed on 4% this quarter. I mean, looking maybe a little bit in perspective, when we entered the year, of course, we had higher expectations. We have had the unstable market environment. Of course, that affects us negatively, especially towards the existing customers in expect services. Looking into that kind of revenue, that's upfront money more or less, and of course, that hits a little bit harder on the growth numbers if we don't really have that kind of momentum towards existing clients. At the same time, I think that we have a good feeling in new sales, and that will help us to, over time at least, increase the growth, and therefore, it will be more important going forward to follow our ARR development.
Looking into the coming quarters, I see signs of improvement since there is always, as I said before, there is a delay from order intake to revenue.
All right. Next question then. Could you update us on your outlook for the German utility market following the recent deals?
We've been doing it in a very structured way. I think that's maybe the main difference and the lessons learned from previous market entries, both when I myself did the Norway one, when we started really in the beginning to shoot quite broad. Then we went more on the real estate and the utility side, and that paid off. From the start on the expansion with Lime CRM into the German market, the focus has been on the utility side. We know that it takes a long time, and I've been talking about this for a while that we are waiting for the first deals. It is important because a lot of the vertical deals that we are doing, it's a lot about reference selling.
When you get the first customers in, now for us, it's so important that we get happy customers, that we do the implementation in a good way, and that we are really showing the German utility markets that yes, it's a good alternative to choose Lime as a supplier. I think the market in general looks good. There are many companies out there that are in the same segment if we look at the Stadsverken segment. I have quite an optimistic feeling. We know that it's fluctuating a little bit when it comes to how many deals you can close in a very short time period, but I definitely see that we have a pipeline. We are doing the right activities. Doing the first ones here is an important step, and that will hopefully lead to more growth in that segment going forward.
Yes, perfect. Next question then. Do you think that there is a pent-up demand for upselling and expert services that could materialize once the market conditions improve? In that question, will you continue recruiting in line with previous years in August?
No, but of course, there will be, I mean, now many companies, they only more or less, that's the feeling at least, that if there is a must-have and a need, then of course they are investing in that. It's more or less that if it's more on a nice-to-have, then maybe they put that on hold. I think over time, yes, we will come back to an improved demand situation in the market. It's not realistic to think that maybe not only from our perspective, but the general expect services industry should be on these kinds of levels. I think that there will be a higher demand going forward. It's more or less the question, when will this happen? Is it going to be the next quarter, half a year, or whenever?
I think that everyone has been having this kind of outlook for a long time, and it's always postponed all the time. I think that this is the situation that we're dealing with now. We need to address it. We need to be proactive, and we really need to face the truth and try to do our best. On the second half of the question, I think we have the recruitment side, and of course, we are looking into that and see, okay, how many should we recruit? I also think that it's important to not be too defensive on that kind of strategy because we know that the churn on the employee churn will increase, and we can already see that a little bit compared to last year.
If we are too defensive on recruiting new stars, then we will end up in a tougher situation to gain the growth that we actually want to have in 2026. The ones that we are recruiting in, and we'll start in August, those are mainly there to actually help us to gain growth in 2026. We need to balance it all the time. I still meet all the candidates coming in, so I think that we have a quite good control in how many we are recruiting and also depending a little bit on our different markets. Take the German market. I mean, there are definitely room for more recruits, both in sales, but also on the expect services side since, yeah, we can expand that team due to the pipeline and the order intake situation.
Okay. Next question. Was it any particular country that performed weaker or stronger than expectations in the quarter?
If we look at from a revenue perspective, I think it's quite a similar situation on the expect services market. There we see a general feeling that the sales towards existing clients are having a tough situation at the moment, and of course, that also reflects the revenue in more or less all countries on the expect services side. From an order intake perspective, I think that we have a good combination. Of course, still Sweden stands for the majority of the order intake that we are doing, but we are topping that with really nice deals, both, as I mentioned, New Wave in Norway, an important account for us. We have the German utilities, but also in the Finnish market where we actually have some wholesale companies that are important for us.
Okay. Regarding the decline in expert services, how much is related to cyclical factors relative to faster implementation customization?
Of course, I wish that I had a very definitive answer on that, but maybe I go back to a little bit what I said before. I don't think it's realistic to look, even if you look at us or other companies that have expect services as a part of their business model, that it will continue to be on this kind of low levels. I think that from a market situation, yes, of course, it has an impact. We also have the situation where we have a very strong, and then, yeah, I would say a stronger offering today in our platform than we are talking about Lime CRM since that's where the expect services is connected to, where we can do the implementations faster, integration, and so on.
We see that that development is increasing when it comes to the pace that we are actually being able to deliver these kinds of projects faster. It's hard to give an exact split, but for now, yeah, I think I leave it with that.
Okay. Next question then. There is a similar trend with cautious current customers in several software companies. Could there be a structural change in current customers' willingness to invest as they are getting increasingly digitalized on average, or do you see it as a pure cyclical?
I think it's more or less the same, maybe the same answer as the previous question. I think it's a combination. I mean, all softwares are, and now maybe I should talk from my own perspective and our own software, it's getting more competent, and you can do things better and faster, so we can be more efficient and also then become more competitive. I think that, and maybe if we talk from an industry perspective, that goes for all softwares that are modern and up to date. Of course, then the behavior from a customer perspective, they maybe are more used to actually buying software than actually buying expect services hour per hour. The most important thing, I mean, that's where we see that we have a strong momentum, and that's in our verticals where we're actually not only delivering, you know, building features and functions.
It's actually that we know the industry, so we provide them with expertise within the vertical. That's actually what they are buying from us. I think that's a type of expert services that is still very valuable for our customers and also will continue to be going forward.
Perfect. Next question. How do you expect the margins will be affected from investment in new sales capacity?
I think that we've been balancing the recruits, but at the same time, when we see this kind of shift and also when we have a good momentum in new sales, both in LimeGo, we also see that we are stronger now in Connect. We are focusing more on outbound, but also in CRM. It's important for us to do this kind of investment in sales reps, and we put maybe a little more push on the sales and marketing side compared to other departments at the moment.
Yeah, perfect. That seems to sum up everything.
I would like to say once again, apologize for the disruption earlier this morning, but thanks a lot for listening in. It's really, really nice to have everyone on this call. We would like to wish everyone in here a really nice summer. If you have any questions or thoughts, don't hesitate, just reach out to us. Thank you.
Thank you.
Bye-bye.