Good morning, everyone, and welcome to Lime Technologies' Q3 update. My name is Nils, and I've been with the company since 2006 and been running as CEO since 2021. We also have Anders here.
Yeah, my name is Anders. I've been at Lime since September of last year.
Perfect. Thanks for that, Anders. If you have any questions, just feel free to write them in the chat at the end, and we will answer them at the end of this call. Before we jump into the more details of Q3, let's always start with this fantastic overview. As you know, we've always been running Lime Technologies with a very long-term perspective, and that has left us with a fantastic footprint. In more than 20 years now, we've been growing at an average of 19% per year with an EBITDA margin of 25% in average per year. That's something that I'm really, really proud about.
No matter how more or less big we've been, how many markets we had, how many customers we had, we more or less always have had the same goal, and that is to help our customers to become really strong in sales and marketing and in customer care so they can help their customers in a good way. We do it at our best, I would say, when we combine really strong software and our expertise within specific verticals so we can really help our customers within their core processes. We've been doing this for many years now, and we've been scaling our business more or less internationally from 2010. We opened up Norway and Finland. We opened up Denmark in 2014 and also went a little bit more south into Europe in 2020, starting up Netherlands and then in 2021 in Germany.
In the latest years here with acquisitions, we have welcomed Lime Connect in 2021, Sport Admin, and Plan Plan in 2024 as a part of the Lime Group. Looking at this today, we have over 1 million users of our software. We have a long tail of customers, over 7,500 customers. Today, we are present in seven countries, 12 offices with more than 500 employees. Looking at some of our key success factors, I think that more or less starting from the bottom, what makes Lime Technologies really unique is the strong corporate culture. That's something that we fuel with the onboarding programs every year and something that is really key for our growth going forward. As I said, we have a big customer base, but also a sticky customer base. The top 10 customers stand for less than 7%. We are also increasing the share of recurring revenue.
Today, it's 76% of the total revenue of recurring revenue. It's a stable foundation in the bottom. Something that we believe in is long-term profitable growth, combining growth and profit over time. That has left us with this footprint. Let's dig in then to the Q3 report. Starting with the numbers, of course, we have a revenue growth in the quarter that amounts to 11%. We have an EBITDA margin of 25% and an ARR growth of 13%. Putting some color on the quarter, I would say in general, I'm happy to see good progress in Q3. The market climate in general is a little bit challenging given the global situation.
If we more or less focus on what we can control, what we can affect, we are ramping up our sales activities in a really good way direct after the holiday period and also ending the quarter with winning, I would say, several key customers, both on the domestic market and also on the international markets. Over the last quarters, we've been having good momentum in new sales, and that's something that I've been talking about more or less in all these calls. We see a little bit different this quarter where we also see a little bit better activity among our existing clients. This combination leads to improved overall growth, which of course, I would say, is really positive.
Going in a little bit to our products and looking into our flagship product, Lime CRM, I think we continue to demonstrate a really competitive strength in the product and that we also can see that we are validating our verticalization strategy, which is focused, as you know, on utility, real estate, wholesale, and membership organizations. Looking at our offerings too, and if going in a little bit on the utility market, we've been doing the Nordic offering for many years, and the offering towards Nordic utility companies remains highly competitive. We will come back to show you a couple of deals later on. This is also true on the German market where we both have the individual deal sizes that are bigger, and also if we look at the overall market size, are sustainably larger than the Nordic region.
In Q2, we had great success with winning two utility companies on the German market. Now we are very happy to welcome another one, you said Mainfranken, an all-time high deal when it comes to actually scope. That's something that I'm really happy about in the quarter. Something that I said also makes, I would say, more and more clarity is the verticalization. That truly is a successful combination of when you combine software and deep industry expertise. This enables us to address mission-critical processes for our customers. It's also there we create real value, strengthening both, I would say, our own but also our customers' competitiveness. At the same time, the approach directly supports when it comes to AI, and it's been a lot of talk and discussion about that the last couple of months.
When we understand the specific processes, the decision points that are defined in each vertical, we know exactly where AI can help out and make the biggest difference for our customers. That allows us to more or less embed AI as a natural part of our platform rather than just adding one or two or three features in the software. The increased software efficiency that we've had and what we can offer our customers also opens up, I would say, and that's another discussion for new pricing models. We are talking about, OK, the way that the software industry has been working for many years with a seat-based pricing model where we are elaborating and looking into, OK, how can we do the pricing going forward in different verticals? Should it be based on property portfolio? Should it be based on the number of members in the membership organization?
That's something that we will continue to elaborate with going forward. Let's then look into the agenda. As you know, we are always looking into the order intake. We are looking into the revenue. Anders will talk about the profit, and then we will do a sum up in the end before we hand over for Q&A. Looking into the order intake then, and as I've communicated, our customer concentration is still low. Today, our top 10 customers stand for around 6.2%, and our biggest customer stands for 0.8% of the total revenue. I continue to say this, that in this kind of tougher market climate, I think it's very good because we're not depending on one or five or ten big customers. Instead, we are doing deals with many customers each month, each quarter, every year in different regions in different verticals.
As I mentioned, the market climate more or less remains the same as before. In general, we have seen good development in new sales in some quarters, especially on the Lime CRM side. This quarter, we see a little bit more business activities towards existing clients. Of course, that's something that has that kind of positive effect on the growth side. We are welcoming several important new customers in Lime CRM, both in the home market and internationally. I'm really, really glad to see that the long-term strategy and efforts are paying off when it comes to verticalization. This quarter, as I said, we are welcoming the big utility company in Germany, you said Mainfranken. Also, if we look at the other regions where we're focusing on utility, we have in Norway, Aranet A/S, a really nice utility deal.
Also here in Sweden, where we have a really good market share, Sörmland Vatten and Avfall, also a very nice customer. If we look also more on the Danish market, where we have a different focus on verticalization, we're more focusing on membership organizations. I'm pleased to see that in Q3, we are welcoming two strong brands in the membership organization. From a Connect perspective, where we see that we are mostly in Germany, we are welcoming important customers, TUI Cruises, and also, I would say, something that I think is quite interesting going forward, where we also in Lime Connect are winning Stadsverk Gestalt. That's also something, OK, how will we then elaborate this going forward with Lime CRM and Lime Connect? If we focus a little bit on Lime Connect, I think that we have a big and important launch of our new AI service coming up here.
That's something that will be important going forward this fall and also, of course, in the beginning of next year too, that we have a good rollout of that new services. We will help the customers with faster response times. We will have smarter assistants and a more intuitive, I would say, user experience. Looking into the feedback, of course, we tried it with several customers, and so far, the feedback is good. From a Sport Admin perspective, you'll see some nice logos at the bottom of the slide. We see that we have started the Q3 with a better new sales compared to the spring. I think that's very positive to get back in that kind of momentum.
I'm also pleased to see that we are closing deals both on the Swedish market, of course, where we have a very strong position, but that we also started the fall with closing a couple of new customers in the Netherlands. From a more feature perspective and functionality, we have that kind of combination that we would like to both serve the grassroots clubs, which is the majority of all, but also, of course, the elite clubs. Therefore, it feels really good from a product perspective that we can now support the leisure activity card, maybe from a Swedish perspective, you're known as ett fritidsskottet if you have kids, to make more kids be able to do sports. Also, from more like, OK, a little bit more focusing on the elite side, improved scheduling and match booking functionalities in the software.
Moving on over to revenue and starting with the ARR. As a product company, of course, as you know, it's very important to look at the ARR growth. This is something that we will follow even more closely as one of our core KPIs going forward. We are continuing a long-term transition, more or less, where we are constantly improving our platform. Because of this, we can deliver customizations, integrations, and workflows much faster to our customers. This gradually reduces the proportion of expert services and strengthens our recurring revenue. As a part of this strategic shift, we are welcoming 35 new employees in August. The big difference here is it's a little bit more emphasized on the sales side compared to the previous year where we have had a lot of focus on the expert services side.
This investment in general is aimed to more or less fuel the future growth and also where we hope to improve margins going forward. Looking into our subscription alone, we are growing that by 16% compared to Q3 2024. For you who have been following us for a while, you see that we have a decline there of 39% when it comes to service agreements, and that's according to plan. We are still transferring customers from the old service agreement into subscriptions, and that is something that we will continue going forward as well. In total, this builds up to a growth of ARR of 13%. Looking at the recurring revenue, and this more or less shows the development of our different revenue streams since 2018. As I said, subscription is growing 16% in Q3. Last 12 months, 20%. Service agreement stands for 2%.
As I said, continue that kind of transformation. In total, that adds up to 67% recurring revenue. Upfront, more or less same as previous quarters, less than 1%. In expert services, we see an improvement in relation to Q2 2025. In Q2, we deliver more or less flat growth. I think it's a little bit positive, which is nice, of course, of 1% compared to the drop there in Q2. Today, expert services stands for around 32% of the total revenue. We want expert services to continue to grow, but in the long run, decrease as a part of the total net sales. Looking into the revenue, and to give a little bit of flavor on that as well, as I mentioned, we have 11% in Q3, and the last 12 months is also 11%.
If we look at the split between the segments, Sweden is growing by 8% and the rest of Europe 18%. We are still a little bit behind our target here. Deviation between outcome and expectations is mainly in expert services where we see that, yeah, the little bit growth of 1% or so in the quarter. The main reason for that is still the same as before, mainly affected by the technical development that I mentioned, that our platform makes it easier to do implementation, integration, customization, which is very positive from our customers' point of view. Of course, it's also that we are affected by the macro climate where we are having a harder time. Still, that's true making sales towards existing customers, even if Q3 was slightly better compared to previous quarters.
Looking at the last 12 months, we grow 11% in Sweden and 12% in the rest of Europe. Anders, let's talk a little bit about profit.
Thank you. Going over to the profit slide, we have the adjusted EBITDA in the quarter. Third quarter reached 25% compared to 24.8% for the same quarter the year before. The increase in EBITDA margin in the quarter is mainly driven by a higher share of recurring revenue in relation to total revenue. Looking at the last 12 months' figures, EBITDA amounted to SEK 183.5 million compared to SEK 164.5 million. Last 12 months, adjusted EBITDA margin amounted to 25.1%. Thus, we continue to deliver an EBITDA margin in line with our financial targets. Going over to the OPEX development, personnel expenses in the quarter amounted to SEK 90.1 million, an increase of 8%. The increase is explained by a higher number of employees compared to last year. Last 12 months, personnel expenses amounted to SEK 422.5 million, an increase of 11%.
Adjusted for the acquisitions of Sport Admin and Plan Plan, the last 12 months, personnel expenses increased by 8%, which is again explained by a higher number of employees. The increase in personnel expenses both in the quarter as well as last 12 months reflects our continued investment in staff and employee activities that enable us to further grow our business both in the short and long term. On the right-hand side, you can see our operating expenses. Operating expenses in the quarter amounted to SEK 34 million compared to SEK 26.5 million last year. The cost is higher compared to last year, but it's in line with previous quarters this year. Operating expenses last 12 months amounted to SEK 131.2 million, which is an increase of 15%. Adjusted for the acquisitions of Sport Admin and Plan Plan, the last 12 months' increase amounts to 13%.
The remaining cost increase primarily reflects investments in marketing and sales activities to support our international expansion journey. Furthermore, expenses related to growth, such as cloud and hosting services, product-related licenses, and IT systems, and the larger workforce also contributed to the increase.
Perfect. Thanks a lot for that, Anders. Last slide before we jump into the Q&A. As you can see, we have the last 12 months a growth of 11%. That could be compared then to the medium target of 18%. We reached an EBITDA margin of 25% over the last 12 months, more or less in line with the target. Net debt in relation to EBITDA is 0.6x compared to the goal there of 2.5x. As for 2024, we have a dividend corresponding to 60% out of net profit compared to the goal of at least 50%. More or less to sum it up then, and starting with zooming out a bit, I would say our goal going forward is clear. We, of course, want to strengthen growth. I'm happy to see that we are moving in the right direction here and making improvements in Q3.
Two, I think that we would like to increase the recurring revenues over time. Three, that we would like to continue to deliver mission-critical value to our customers across Europe, especially focusing on specific verticals. That's the long term. Zooming in a bit on the third quarter, we see, which I'm really happy about, that good levels of activities towards our customers direct after the vacation period, several nice deals and strategic important deals, both domestic and international, a modest increase to willingness to invest among existing customers, and that we are seeing that we continue already this quarter to do the shift towards increased recurring revenue. I would say that all of these are things that I feel that, yes, let's continue doing them and bring with us that into the last quarter. That will help us to close the year in a good way.
Thank you, everyone, for listening in. Let's go over to some questions.
Yes. We have one question. First question coming in, how large is the German deal on average compared to Lime in Germany?
Could you take that again?
How large is a German deal on average compared to Lime?
No, but I think that we more or less in some areas, of course, it depends on the segment. I think we are referring to this utility deal. I think that we see more or less that it's double size compared to many of the deals that we do on the domestic market, which is, of course, very positive for us. We see that in the German market, it reminds a lot of the Swedish market or maybe also the Norwegian in one way or another. We see a little bit like shorter sales cycles, which is really strong. We see that, as the question was about, the deals are bigger. We also see that we have a very big market on the German market. I think all these three are positive.
OK. Next question. Shouldn't you increase your investment into Germany considering the momentum there?
Good question. Yes, we should. That's something that we are working on. We would like to increase both on sales and on consultancy when it comes to implementation because it's really important now in the beginning to really, of course, it's always important, to really help our customers holding the hand throughout the process and be close to the customers. We need to both increase capacity on the sales side and in expert services. We have also more or less hired more now, a local marketeer that can help us to build on this going forward. I think that I totally agree. Investment should be focused on that area. That's something that we are working on. Looking into the recruitment, of course, we have a stronger brand on the Swedish or Nordic market from a recruitment perspective. Therefore, we are actively looking all the time.
It's more like more outbound in that area. Still, I think it's really important not only to look for resources, but continue to build a really strong foundation when it comes to culture. Even if we would like resources now, don't stress it. We need also to build a great company over time.
Perfect. Next question then. Do you think the better activity among existing clients that you saw in Q3 could be specific to this quarter or a sign of better times ahead?
I mean, of course, you are always optimistic in that sense that you always hope that this is something that will continue. I think that we've been hoping that for a very long time period now. If you go back like six months or even 12 or 18 months back, that yes, now we see something changing. What I feel is that yes, we had a better momentum, but I think that we just need to focus on the things that we can impact. That's better based in expert services, staying close to our customers all the time. That's when we help our customers at our best. On the sales side, we focus on activities, customer meetings. One thing that we've done a little bit different now in Q3 was more fairs in all our business units.
It's hard to say if the market will stay in this shape or even get better or worse.
All right. Next question then. There was a good growth in expert services outside Sweden during the quarter. What would you attribute this to? Is it related to any specific markets?
No, but it's more or less that when we do good deals, we've been doing that both on the Norwegian market, we've been doing it in Germany, we've been doing it in Finland. I think, of course, that helps out to gain growth on the expert services side, which is very positive. Something that we see in that kind of area where I'm happy to see the progress in these three markets that I said, I still think that we can do better both on the Danish market. Now we had good progress with the deals that we closed, the two membership organizations. That's a market where we can have more pace in. Also, if we look at the market in the Netherlands, that's also one market where I think that we can improve going forward.
Norway, Finland, and Germany from a Lime CRM perspective, I think we see better progress.
OK. Next question then. Can you elaborate on the cash flow from operating activities in the quarter? Yes. The difference is primarily explained by the changes in working capital, where the corresponding quarter last year was positively impacted by calendar effects. Specifically, as June 30 last year fell on a weekend, some customer payments were received in early July, which benefited cash flow in Q3 last year. In addition, cash flow in the quarter was negatively impacted by approximately SEK 5 million related to paid Social Security costs following the completion of the shared savings program this year. Let's see. Next question. You are quite optimistic regarding both new sales activity and demand from current customers. Is this mainly due to a general improvement in the market or rather a result of things Lime Technologies has done?
It reminds a little bit of the last question. I think that we should be proud of actually how we act because I think that's the difference in how you restart the organization. It's very much up to yourself after you come back from vacation in August. I would really like to praise the organization for having that kind of starting with competition, starting with a high level of activity already more or less from the first week back. That's something that I think I'm really proud of. As I said, we saw a little bit of signs that, yes, the market is a little bit better towards existing clients. I also think that we should be humble to that and say, OK, let's see if that's one quarter or if that's something that will continue going forward. I leave that for now.
Let's see if we have maybe a final question here.
Yes. This one here. Sweden grew 8% year on year, while the rest of Europe grew 18% year on year. Do you feel like these are normalized growth numbers for each region that should be expected going forward as well?
I think in some markets, Sweden stands for still the majority of all revenues. I think, of course, that's the big part. If some deals are done and also big implementation projects are done in the rest of Europe, that will, of course, affect the growth numbers going forward on these markets as well. Normally, we should have a higher growth. That's what I expect, that we should have a higher growth in the rest of Europe compared to the Swedish markets. That's the fuel that we put in. That's the market that should serve us for a very long time when it comes from a growth perspective. Still, I think that the Swedish market has a lot of growth potential as well. Since the other one comes from smaller numbers, I think that, of course, we should have a high growth. Good. Thanks a lot for listening in.
If there are more questions that you feel that you would like to have answered, never hesitate. You can just give me or Anders a call or send an email. We will get back to you as soon as possible. Thanks again for listening in. See you soon. Bye-bye.
Thank you.