Good morning. Good morning, everyone, and warm welcome to our Q4 result. I'm Magnus Lönn, and I'm CEO of Proact, and I'm here today with Åsa Regen, an old colleague that is coming back, which is really good to have you back, Åsa. Well, welcome. So I will do the short presentation of Proact for you that hasn't maybe follow us, so you get a good overview of what we're doing. This Q4 also ends my first year as a CEO of Proact, so therefore, I will give you all some sort of initial reflection of the year that has been exciting. And then we will, of course, look into our quarterly highlights, and Åsa will guide us through the financial result, and then we will end up with a summary at the end, main questions.
So for you that haven't really followed us, Proact is a Swedish tech company that are really, really experts in helping our customers securing and managing their data. This is something that we have been doing for +3 0 years, and I would say are best in class when it comes to that. As society have developed, you can imagine that handling and making sure that data is secured in a secure way is essential for basically every company. This is what we are really, really good at. If you can see in the graph here, we are represented in Northern Europe, and over the years to the right, you see in the slides how we have also been on a growth journey. We are having a turnover around SEK 5 billion, and have been stock listed since 1999.
All in all, we are 1,100 employees that are working across Europe to take care of our customers. So if we move into our revenue streams and what we are sort of, how we are generating our result here, is that we have four distinct revenue streams, and I will walk them through so you get an understanding and more insights to what we do. First of all, we have system, and this is our sort of core business. In basic, we are helping our customers provide them with designing and also acquiring and installing infrastructure, which is crucial. It could either be data storage, it could be service, it can be GPU around AI infrastructure. So this is a large part of our competence and what we're doing on a daily basis.
Our system business is quite positive one because we do the deals and then we get the money upfront, so we as a company doesn't possess any risk and things like that. If you're following us, you also may have noticed that this our income from our system business can vary between the quarters, because we are working on large and medium-sized customer, and the size of a system deal can be quite large. So then it can depend if it comes on the right side on the quarter or if it's the next. So if you're evaluating us, then you should look into our system business over a longer time period. I usually say that the system business is actually a recurring revenue because we have very high customer satisfaction.
So even if the customer buy a hardware from us, often they do that in the coming year, and we have very long customer relationships. And when it comes to our support, that means that everything that we are selling, most often, we also provide our own support, meaning that we have technicians that are helping our customer to fix if there is any problem or so forth. The support is a good example of our recurring revenue. Often, we contract the customer on a three-year to five-year basis, meaning that we create really long customer connections. And then, as a complement, we also have our managed cloud service, and that is that we are actually selling and providing our customer with services. So instead of them buying a system from us, we can provide them that as a service.
This is an very an area that has been growing for us the last couple of years and then that we are sort of focusing in, because this is also an example of good recurring revenues that we have as a company. And then, of course, nothing can be done if you don't have really, really skilled experts and so forth. And we also have consultants that are out working and advising our customers. So all of these four revenue stream is what compose Proact and that we are working on a daily basis, and they also are quite interconnected. So it's very often that you start with a customer on system, and then we add on additional services and so forth. Of course, as you all know, there are some key drivers in the market.
First of all, it's all about the digitalization. Data amount is growing. On top of that, you have cybersecurity. I can't come up with a company that don't have this high up on the agenda and also on the board level when it comes to their own business. And of course, in the latest, AI and creating leverage of that, that is a key driver and something that we are working daily with our customer. Moving over to our Q4 highlights, and I will also will help me walk through the financial details here. But, as you all know, I've been communicating throughout the year, we have made a cost-e fficiency program across the year to improve that.
During Q4 here, we actually conclude that, and I expect that we will see the outcome of that, second half of this year with a yearly cost saving of around SEK 80 million. Also, in December, I was really, really glad that we welcomed in Consular, a Danish, tech company that we acquired, and this will of course strengthen our really good position that we have in the Nordics. So I'm really glad to welcome them on board. Also, during the quarter, I have appointed a lot of new, senior leadership within the company. First of all, I'm glad to welcome Åsa back as a CFO, and, in my old role as Business Unit Director from Nordic and Baltics, I'm glad to welcome, Niklas Jakobsson, who, was previous CEO of Dell Sweden.
He will be a great addition to the team and also to the management team. Also in Central, I have appointed Jacob Kronborg as an interim BUD for our Central business units, since Maria left the organization. Also during the quarter, we were appointed a global innovation partner by NetApp, and this was a good example of the competence that we have been doing together with NetApp around security. Worth mentioning is that after a quarter, we also were awarded by Broadcom, that we are one of the few selected VMware cloud service provider, and I think that is also a great testimony to our competence that we have within the company.
Our board have also proposed an increased dividend to the upcoming annual general meeting, and that's SEK 2.6 per shares. But as I said in the beginning, this is. Okay, I don't see the slide. Sorry. As I said in the beginning, this is also a conclusion of my first year as a CEO. So if I make some reflections, I think Proact as a company, I would say it's a fantastic company that is based upon solid competence and solid foundation and solid finance, and that's always a good start. We have an extreme deep expertise in the area that we are doing. And if you think about that when it comes to data protection, security, and AI, as I said in the beginning, every company is in need of that.
I think if you look into our portfolio, we have a really good mix of both recurring revenue, but also our system business, so I think, from a sort of revenue perspective, we have a really good balance there. And foremost, we have been doing this and develop our skills. I would say that we are really trustworthy when we speak about us as a company. And also everything that's happened now in the macroeconomics, I would say that, being an European service provider is a very good asset. But then also, if I look to us as a company, I also see some clear execution gap when it comes to our history and the performance here.
First of all, I think very few really have a good understanding of what we have, what we're doing, and maybe we have not been super good in that, telling the story and explain why, what we're doing and the add value that we add to our customer. So that's something I see that we can improve going forward. Then, when it comes to profitability, I also see that we have not been good in creating profitability outside our Nordic business. And if you can see the graph here, the red bar here is the profitability from our Nordic business. And as you can see, this has been actually growing, and prior I joined as CEO of Proact, I was responsible for that business units.
But our business outside Nordic over the past year has been going in the other direction. We have been doing some M & As, and if you look into the outcome, I think historically, we have been underperforming. Also, if you take aside the acquisition that has been done outside the Nordic region. And I also think that we have been overexposed to low margin and unrepeatable deals, also, when I look into the company as a whole, except maybe for our business unit outside the Nordic. So for me, this has been sort of a year of really getting a better understanding of our overall business and also setting the direction, and I see some clear actions that we can take to really address this. So if you take the next slide.
So during the year, I have implemented a new post M&A model, meaning that we're, we are not spending, internal time integrating, an acquired company. Instead, we are, investing all our effort and time in making sure that we focus on sales and what additional value that we can bring to our customer. And I think a clear, good example of that approach has been, BlakYaks that we acquired earlier this year. That has been a really good addition to our U.K. business. We have implemented a overall, group cost program, in order to really improve also and, and maybe enhance our execution capabilities. So that is, my expectation that we will see the impact of that in the coming, second half of this year.
I also made a lot of changes to the leadership and also simplify how we work internally. I truly believe that we, as a company, with the competence that we have, we should focus even more on high-margin services, and we have, during the year, launched our AI offering and also Kubernetes offering. And Kubernetes, for those of you that are not that familiar, that is the sort of operating system for all AI workloads out there. So I think, what we are seeing is a total increase demand for that service. And of course, continue to improve our focus in West and Central, and even if it's a little bit early, I'm sort of still positive around that. And of course, this work will continue. I will for.
Really looking forward to update you all around the progress later this year. Åsa, with that said, should we move over to all the finance?
Yes. Thank you, Magnus, and hello, everyone. Let's have a closer look at the financials, starting with total revenue. Total revenue in the quarter amounted to SEK 1.208 billion, which is a decline of 4.8% versus previous year on reported as well as like-for-like basis. System sales, which are volatile by nature, were down 6.8% to SEK 665.8 million. Sales declined across all markets except in West, and the development in Nordic and Baltics was also affected by a strong comparative quarter.
Service revenue amounted to SEK 541.3 million, a decline of 1.9%, where growth in support and cloud services in Nordics and Baltics, together with a positive contribution from BlakYaks in the U.K., were offset by weaker services, service sales in West and Central. For the full year, total revenue amounted to SEK 4.679 billion, a decline of 3.8% versus previous year on reported as well as like-for-like basis. Systems revenues were down 5.1% and 3.8% on an organic basis to SEK 2.550 billion. The decline was driven by West and Central, whereas Nordics and Baltics grew by 2.9%, and U.K. was close to flat on a reported basis.
Service revenue were down 2.2% and 3.7% on a like-for-like basis to SEK 2.124 billion. The increase in Nordics, as well as in U.K., with positive contribution from BlakYaks, was offset by a decline in West and Central. All in all, the service business accounted for 45.4% of total revenue, revenue for the period, compared to 44.6% in 2024. Intake of new contracts for cloud services amounted to SEK 138 million in the quarter, compared to SEK 224 million in Q4 2024. The lower intake in Q4 can partly be explained by timing and a strong Q3.
For the full year, new contracts amounting to a value of SEK 650 million were signed, a slight increase of 1.1% compared to 2024. Total revenue from cloud services amounted to SEK 272 million, a decline of 4.3% and 3.4% on an organic basis, driven by lower sales and customer churn in West and Central, offsetting growth in Nordics and Baltics. Recurring revenue from support and cloud services declined by 2.3% in the quarter, which also is reflected in the annual recurring revenue measures, which is calculated as revenue in the quarter times four. Moving on to the results.
2025 and Q4 ended on a positive note with an adjusted EBITDA, excluding one-off cost related to the cost-efficiency program and cost related to the acquisition of Consular of SEK 84.9 million, which is an increase of 5.9% compared to Q4 last year. The lower revenue is compensated by lower sales and administration costs related to sales commission and positive effects from the cost-efficiency program. Full year adjusted EBITDA amounted to SEK 316 million, corresponding to a decrease of 9.9% compared to previous year. Profitable growth in business unit Nordics and Baltics and business units U.K. mitigate to some extent the weaker performance in West and Central.
The cost-efficiency program performed during the year, which Magnus talked about, is expected to deliver savings of around SEK 80 million on a yearly basis, with full effect from the second half of this year. In 2025, the cash was put into use, completing two acquisitions, BlakYaks in the U.K. and Consular in Denmark, and continuing the share buyback program in line with the mandate from the annual general meeting. Net cash flow in Q4 amounted to SEK 24 million, of which SEK 229 million from operating activities. Investment activities consumed SEK 96 million, of which SEK 93 million related to the acquisition of Consular. Cash flow from financing activities amounted to hundred and, excuse me, SEK 10 8.7 million , largely related to amortization of lease liabilities and share buyback.
A quick look or a brief comment to the performance in the different business units, starting with NOBA, or Nordic and Baltics. The total revenue amounted to SEK 711 million in the quarter, a decline of 0.9% versus Q4 2024. That, as mentioned, was a very strong quarter. Adjusted EBITDA in Q4 was also a bit behind last year, primarily from lower margins in system sales. Full year, the revenue grew by 4.4% to SEK 2.642 billion, driven by systems as well as service revenue. The adjusted EBITDA increased by 4.7% to SEK 272 million, corresponding to an adjusted EBITDA margin of 9.6%.
Traveling a bit west to the UK, total revenue amounted to SEK 187 million in Q4, which is an increase of 6.9%, largely driven by an increase in service revenue and BlakYaks. The increase on an organic basis was 0.9%. Adjusted EBITDA amounted to SEK 14 million, compared to SEK 3 million last year. The increase is partly from BlakYaks' contribution, but also from improved efficiencies in underlying businesses. Full year, revenue grew by 7.3% to SEK 761 million, driven by services and BlakYaks' contribution. Adjusted EBITDA amounted to SEK 43.4 million, and the EBITDA margin increased to 5.7%. West. A challenging year for Business Unit West ended, however, on an upward trend.
Total revenue amounted to SEK 186 million, a decline of 6.1% and 1.9% on a like-for-like basis, driven by lower system sales. Adjusted EBITDA amounted to SEK 4.3 million, which is a small increase from SEK 3.9 million last year. Full year, revenue amounted to SEK 718 million, a decrease of 15.4% and 12.6% on an organic basis. Adjusted EBITDA for the full year amounted to SEK -2.1 million, which is a result of lower revenue and a cost base not fully adapted. And lastly, then, Central. Total revenue amounted to SEK 153 million, a decrease of 27% and 23.5% organically.
Lower system sales are the main driver behind the decline, but, revenue from services decreased as well. Cost savings mitigated part of the shortfall in revenue, and adjusted EBITDA for the quarter amounted to SEK 1.5 million. The full year revenue amounted to SEK 672 million, a decline of 24.4% compared to last year, and 21.9% on an organic basis. Adjusted EBITDA amounted to -SEK 5.5 million, as a consequence of the decline in revenue and a not fully adjusted cost structure. I think that was it. Back to you, Magnus, for some closing remarks.
I mean, super, and thanks, Åsa. So just to sum up then, over the year. First of all, as you can see, it's super glad that we have two business units that are actually growing, and that we are well on the way to sort of address the challenges that we have with the other two. So we are on good progress. Throughout the year, we have been really valued that we are a true European independent partner, and that is something that our customer are really coming to us and really appreciate when we work through them. So I think we have a super good position. As everything that is happening now with cloud data and AI, I think we have, throughout the year, really demonstrate that to our customers.
We have, during the year, made two great acquisitions, both BlakYaks and now the Danish Consular, and, and we have also improved and strengthened our leadership. So I think we have a really solid base. As we also mentioned, we have, throughout the year, also been doing a cost-efficiency program that I now expect that we will see the impact of during the second half of this year, with the savings of around SEK 80 million. And we have also seen that the work that we are carrying out slowly is getting the result, and I myself are very confident, especially since my, my history in the Nordic and Baltic region, that, that we as a company, we can do it, and we will do it, and so I think we are in a good trajectory.
So looking forward, I think for us, 2026 is what we are doing. So we will continue to focus on profitable growth and, improve what we're doing in West and Central. And as I also said in the beginning, we are doing a total review of our product portfolio and customer offering, and I'm really aiming to update you all around the progress and the key conclusion of that, in the coming quarters and later on this year. So with that said, I think we should open up for questions, and I actually spotted a question already in the chat here that I can address, because I think many of you already probably have it.
How do we treat the increased price of memory that is happening in the tech industry?" So the thing is that we as a company, we don't take any risk at all around this, because all the price increases, we don't buy before we have sold something, meaning that we inform our customer around the new price, and then we negotiate as good as we can. So we as a company don't take any risk around that. The impact of it is that I think, short term, we probably most likely see an uplift in our coming sales, because many customer would like to buy before the price increases fully hits the market. But of course, you can think about the long-term impact, because at the end of the day, somewhere our customer needs to find the money and pay for it.
But I think in the area that we are working with, you know, with critical infrastructure, it's very hard for customers not to prioritize that. So I think short term it will probably see a boost of it, and long term it will maybe be a little bit more savings. So with that said, maybe we can open up for questions. And Daniel, I saw you raised your hand.
Yes, thank you very much, Magnus. I had the first question on memory prices there, but you, you answered it already, so, so let's go on. I have a question on cloud orders here in Q4. They were down year-over-year. Is that a trend shift in the market or just quarterly lumpiness, given the strong Q3? And can you give some kind of outlook for 2026?
I don't think it's a general trend that it will go down year on year. I think the answer to it is, first of all, we have had execution issues during the year in our business unit, Central and West, and that is one of the impacts. Apart from that, I think the general trend is that companies are really sort of scrutinizing where they are locating their data. A general trend that we're seeing throughout the year is that many companies are revisiting their cloud-first strategy. Meaning that they are not sure anymore that they should place all the critical data in either Azure or Google or Amazon. So maybe that's a general trend. Mm-hmm.
Okay, I see. That's helpful. And then a question on customer demand: do you see any differences between public customer spending today versus enterprises? Are enterprises perhaps a bit more cautious today, and they invest more in experiencing AI, for example, and postponing data storage, or do you see any differences?
I mean, it's a good question. I think, all in all, if you look back, especially maybe in the Northern Europe, we have invested and basically all the public customer have invested a lot in securing their, their critical infrastructure, and that is most related to the, the macroeconomics with war in Ukraine, NATO and things like that. I predict that, that we will continue to see, more investment also in the public domain, because many of, of our authorities are trying to be more efficient, and they are doing more and more with AI. And if you should do anything around AI, you really need to have data and, and good data. So I, I see that. When it comes to enterprise customer, I see that they continue to invest.
Many of the enterprise customer also have the money to invest, so they might, you know, try to compensate price increases and things like that. When it comes to smaller customers, even if we do not have that many of them, they are a little bit more price conscious. So they are not having the possibility to invest in advance to compensate for future cost increases. So that's maybe the general trend I see.
Okay, I see. That's, that's good. And then another one on cost level. You mentioned the SEK 80 million cost savings into 2026. Should that be compared to roughly where we closed to 2024, i.e., before you started with all the actions during 2025?
I'm looking at Åsa because she has a good answer.
Well, well, I hope so. It's of course a little bit of a mixture. We are comparing to 2024. We also have some inflation in cost base in 2025, that is not per se then affected. But in large, I would say that it is the cost base running 12 from half year 2025 maybe, that it should be compared to. And then, well-
Yeah
Of course, we do foresee to invest also in growth, but within the underlying cost base, I would say that the more relevant comparable would probably be running 12 per half year 2025.
Mm-hmm.
If that makes sense.
Yeah, absolutely. That's helpful. And, and then, like, all in all, given SEK 80 million cost savings from that level, you have also acquired BlakYaks and Consular. And if we just take the company standalone today, do you expect 2026 OpEx in total to be higher or lower than 2025?
Hmm.
Because the SEK 80 million will be-
Yeah
on the underlying business, and then you have added two acquisitions.
Yeah.
It was just interesting about the net effect there, if it's gonna help.
Yeah. No, it should. We do expect it to increase somewhat, but then on the back of investments, and not the least then in Consular and BlakYaks-
Mm
-full year.
Okay.
I also want to just re-stress what Åsa said here, because we also are doing investments in our business to grow. And that, of course, could impact, you know, our cost levels. But yeah, so that's just to set some more flavor on that answer.
Yeah. Okay, that's helpful. And then a final one on the cash flow here from leasing. You showed it in the slide as well, but in Q4, the level was twice as high as previous quarters. Were there any one-offs in there, or should we expect, like, the SEK 64 million per quarter ahead? It looks, it looks high.
Yes, and I think here we actually have a little bit of accounting or not an accounting, but a classification. I would say, if not errors, or something we have to look into. Because as you say, it is twice as high, and that is not a one-off, but it refers to we have part of the amortization there for the earn-out, which we are overlooking how to handle. So,
Okay
nothing specific when it comes to the leasing.
Okay, so the first three quarters of the year is a better proxy for quarter level in 2026.
They are more representative. Yes, that's right.
I see. Okay. Thank you very much.
Super. I'm looking into the chat here. We also got some question. I think we answered around the storage prices, and you explained around the lease there, Åsa. Do you intend to make an acquisition in Central West units to expand your product portfolio and customer offering? So I have been repeatedly saying this throughout the year, and I'm really standing firm on this, that we will only do acquisitions when we feel that we have a good execution in place, and we are well underway in both Germany and Holland on that. I see that we have a strong leadership team both in Holland and also in now with the new leadership team in Germany. But we need to improve a little bit more.
But once we have done that, I will for sure look into further acquisition in, in that area. But we are not there yet. So short term, we are really looking forward to do additional acquisition when we find a suitable target in the Nordics and the U.K. area. And then there was a question around cost savings. I think that has been answered. Capital allocation, M&A versus buybacks on current valuations. I think we as a company are in a really good shape, so we can actually handle all three. We can buy, and we can invest in, in our company. We are providing dividend, and we are doing buybacks, when it comes to our own shares. So that's a luxury, for us as a company being in that position.
Then there is a question: Is AI driving up demand for hardware that net affects you negatively when hardware becomes a large part of system build deals? How do you see AI affecting you over the coming 10 years? Yeah, what will happen in 10 years is a million-dollar question. The only thing, and I've been working in the tech industry for 25 years, is that it will continue to develop. I am also certain that with a sort of solid foundation that Proact has, and that is based upon knowledge, we will play a critical part in this development the coming 10 years, as well. When it comes to AI, we are experts in handling and building the infrastructure needed for AI, and that is an area where I still think that we should be in and should invest even more in.
Looking ahead, I think we, as a company, we will probably be most likely release new services related to AI. We will add additional value add to our customer related to AI and things like that. But we will remain in our sort of position where we are expert in the sort of handling and taking care of the critical infrastructure for our customers. Then there was a question around COGS. Or I think we have answered that. Yeah. So open up for some other questions to the group. Yeah. Let's see. So then, oh, there were some question here also on the chat. Can you please clarify the timing of the cost-cutting benefits you suggested from mid-2026?
Does that mean that you get just SEK 40 million benefits in 2026, or do you mean that you get the full benefits? I mean that we get the full benefits out of the SEK 80 million half of this year. We are already now well on the way executing, but in order to see the full impact of it, we need to have an additional time to sort of finalize our execution around it. Good. So with that, I will thank you all for great questions and that you are following us. And as I said, me, Åsa, and the whole team at Proact are really looking forward to continue and update you the coming quarters, and foremost, also on the work that we're doing in revisiting our business to get back to even more profitable growth going forward.
All thanks for today, and talk to you soon again.