Good morning, everyone, and welcome to this Vertiseit Earnings Call for the Third Quarter of 2026. My name is Jonas Lagerqvist, and I am Deputy CEO and CFO of the group. And with me, I have.
Johan Lind. I am the CEO of Vertiseit.
This morning we disclosed the group's financial results for the third quarter of 2026, and the report can be found on vertiseit.com. We will move through it during this call. If you would like to ask questions, please use the Q&A function. You can always also use the raise hand function if you would like to join the call and talk to us directly. We will move through the financials in the report. We have one topic that is Dise becomes Scala, where Johan will elaborate on this. We will give you a brief strategy update on the ongoing strategy changes that we are performing. We will disclose some highlights, and we will finish off with a Q&A session, so please bear with us.
Yeah. For those of you who are new to Vertiseit, we support brands and retailers to create better customer experience in store. We provide a SaaS platform for in-store experience management that gives retailers the ability to orchestrate all digital touch points in store, whether it is for branding, whether it is for campaign tactical communication, retail media, or sales support. To be able to orchestrate all those displays or devices in store is what in-store experience management is all about. If we look at the numbers now, we have reached SEK 464 million in ARR. We are more than 300 full-time employees. We support more than 2,000 brands now. We reached a new mark there since the Scala acquisition, and we operate more than 450,000 touchpoints.
Okay. Let's move into the financials and to summarize the key findings in the Q3 report. This quarter, we performed an ARR growth of 44% compared to last year, which is exceeding our financial targets. Isolated in the quarter, we have organic growth of 3.5%, which means that on an annualized basis, we grow by a growth pace of 15% organically which is also aligned with our long-term target of growing ARR to SEK 1 billion until 2032. What we can clearly see in the report is also that with an increased share of SaaS revenue, we also improve our profitability. On our most important profitability measure, which is the cash EBITDA, we improved that by 91% compared to the same period last year on a per-share basis which is also in line or exceeding our financial target.
We have a negative cash flow effect that is very much affected by the Scala acquisition, which consists of one-offs and temporaries. The integration project was closed and performed according to the time plan and also in line with our own budgets for the activities. We also conclude that we have a strong international pipeline and have even improved market traction. Johan will talk more about this later. In the quarter, we have a strong revenue increasing by 45%. Despite having quite a lot of systems revenue during the quarter, we still perform increasing the SaaS share of revenue to 54%, which then leads to an increased profitability where the adjusted EBITDA margin is 25%. Also the cash EBITDA margin is significantly strengthened to 22%.
For us, this is the clear evidence that our strategy of increasing SaaS as share of revenue is actually paying off and will, in time, lead to the long-term profitability target of 35% cash EBITDA. In the cash flow, we have some seasonal buildup, which is due to a decreased holiday liability because our staff is on holiday during the period. There is also a seasonal working capital buildup due to picked-up activity after people returning from holiday. Related to Scala, we have some one-off payments of the costs that were provisioned for in Q2 related to the integration project. There is also a temporary working capital increase since we have invoiced a lot of the Scala customers late in the quarter. All in all, this will have a positive cash flow effect in Q4, which will then likely be stronger than a normalized Q4 quarter.
For comparability causes, I can also say that we have done some minor changes in the P&L and in the segments. That is very much driven by the ongoing project of relisting Vertiseit from First North to Nasdaq main market. In practice, it means that some segment-related costs that were related to the segment SaaS and consulting, they are now in the P&L moved to cost of goods sold. It is solely accounting change. If you want to follow the gross margin as in the same way that we have reported it historically, please look in the segment note for this. ARR-wise, we have a net organic growth within the quarter of 3.5%, meaning a growth rate organically of 15%. Year over year, when taking into accounts fixed foreign exchange rates, we grow by 44%.
We also managed to increase the net revenue retention slightly to 108%. We also have a churn that remains on low levels, which is very comforting. Another quarter of ARR growth in the books. We are very happy financially and business development-wise with the quarter and have the ambition to just keep on moving along in this direction. Ambition stays intact. We are moving towards our ambition to become the global number one platform company within our space. Our long-term targets are to reach SEK 1 billion in ARR by 2032, which the current organic growth rate actually enable us to reach without acquisitions. But those will happen as well. So hopefully, we will arrive at this target earlier than 2032.
Also, the increased share of SaaS revenue pushes us towards an increased profitability. Measured as cash EBITDA, we are to have 35% by 2032, and we are moving in that direction. The financial targets, which we all exceed during the quarter, is that we should always have an ARR growth exceeding 20%. We should always grow our profitability per share by at least 25% and have more than 100% net revenue retention. So all checks and balances are green for this quarter.
Thanks a lot, Jonas. As we have communicated in a separate press release, we have decided to rename the Dise business to Scala. As you all are aware, we brought the Scala acquisition, the product into the Dise organization. We armed around the Dise strategy, the Dise way of working, the Dise organization. But when we look at the asset in the Scala brand, it is obvious. Scala was the company who actually invented the digital signage space already in the 80s, and they are the most well-recognized brands globally. As Jonas mentioned, we can see that already that the deal flow and the opportunities on both end customers turning to us and also partners turning in to Scala is by far exceed what we have experienced before. So from now on, we will not mention Dise. Dise has become Scala.
The integration project is completed. It is completed on time, so within three months, we managed to transform the business from very scattered business, working with partner sales, with direct sales, working with also components of consulting and hardware into pure software play with sell-through partner. It is really impressive that this has been performed in such a short period of time. Closed down warehouses and decreased organization to around 35 people from more than 100 and aligned it into the Dise group. We have also moved all direct brands to the partners. Of course, there are more to do in converting all perpetual customers to pure SaaS. But all in all, we managed to perform everything on time, close the project, and we also managed to do that on budget. It is a fantastic achievement from everyone involved.
We also, as previously communicated, we are gradually expanding into the APAC region. We have sent in all the documents established now in Tokyo, in Japan, which is the market where we have most traction. We will do it region by region. We start off with Japan and make sure that we can capture new business there and also employ resources on site. Then, if that goes according to plan, we will continue in a sequence with Singapore and Mumbai in India. During the quarter, we also had the yearly strategy update. We have working both with our Board of Directors in workshop format, in the management team, and in different parts of the organization, to really look through our strategies in relation to Scala, Grassfish, Visual Art, to simplify the strategy and also reduce overlap.
We think this update is something that will drive both. It will make our offering more clear, and it will also give us the opportunity to realize more synergies going forward. So the strategy simplified is that Scala is the partner-first IXM platform. It's partner first, partner only. We sell the platform through partners only. That's of course, super scalable since the partner do all of the heavy lifting, and we provide them with the platform and supports to be successful in their market. With Grassfish, we sell the IXM platforms to large international enterprises that want to build their IXM platform and solutions into an in-house operations. So basically, they want to do it themselves and take responsibility themselves. Typically, Grassfish work with customers like Lidl, with Porsche, where they have large in-house teams.
Then we sell the platform directly, we sell consulting expertise directly, but work side by side with their internal teams and also their internal partners for system integration, et cetera. With Visual Art, it's the opposite. It takes the stand in how do we create the best in-store experience concept, and also how do we run that. We call it digital in-store concepts designed for impact. So that's retailers that want to outsource the whole, not only concept creation, but also the actual management of that solution. But what we also change in the strategy is that Visual Art will work much more through integration partners to do more of the heavy lifting when it comes to the infrastructure.
B oth Grassfish and Visual Art will work with shared global AV integrators to get global scalability in this business, because that's needed to improve scalability and become a real global player. This also means that Grassfish will now be from the 1st of January, when this goes into effect, we will move all general contractor assignment to Visual Art. There will be no hardware at all in the Grassfish part of the business. Previously, there was an overlap since Grassfish in the Nordics had that business model as well. Now Scala will be software only, Grassfish will be software and consulting, and Visual Art will focus on the concept creation, working with hardware integrators.
Going into highlights. It's not mentioned, but I think the biggest highlight, I think this is the strongest report that we have delivered so far as a company. It is really nice to see. Also that we pick up in profitability as expected, of course, after the Scala acquisition. But when we changed the mix, as Jonas said, it really fell through. We also communicated separately that we signed a global framework agreement with Circle K. It is a huge opportunity since Circle K is one of the largest convenience store chains in the world.
We have expanded in the Nordics into the North American market. We go now also into Germany, into Poland. So it is really progressing nicely, and it is part of the organic growth that you see in the numbers. We had this increase in inbound activity supported by the Scala brand. The relisting process that we communicated a bit early in the year, it is progressing according to plan.
With that, I welcome you all for Q&A questions.
I will take some questions that we have received in the Q&A, and it says that the Q3 shows a strong improvement in margins. How much of these improved margins can be attributed to Scala synergies, and how much potential remains?
I think it is a question for you, Jonas.
Of course, quite a lot is attributed to the Scala integration, but the whole integration is always, of course, made possible by the organization and the structure that has been built up over years in Vertiseit, where we have a strong group overhead, where we can actually take in acquisitions. We can realize the synergies. We can integrate the acquired companies into our IT backend, into our processes, into our management systems, and so on. More or less, increased profitability, increased margins is a result of increasing SaaS share of revenue. Of course, in this case, much of this comes via through Scala.
I think that is why we actually on day one decided, we designed the profitability first. So Scala was not profitable. It was very much the opposite. We actually, on paper, just saw that if we bring this into two Dise, and we require at least 35% profitability, what type of organization can we build? Can we manage to run that on those resources? Definitely we could. So buying that type of companies and be able to transform them in a three-month period, I think we have the most efficient machinery on the planet to do that in our industry.
Some business-related questions. You mentioned two QSR procurements in Q2. How are these progressing?
We have a few large tenders out there, and we mentioned a few in the U.S. Circle K, of course, was a win. That was one of those, but there are actually the two others are remaining. They are still open. There is actually long decision periods in many tenders right now. So the pipeline is a bit larger than usually, and also the decision period for those are a bit longer than what we have been used to. But it looks promising, and as we say, so pipeline good, but also a nice increase in inbound leads at our top of the funnel as well.
We have our three analysts in the call, and let us take them one by one. Fredrik from Redeye, would you like to join the call? Hi, Fredrik.
Hi, Jonas and Johan. Thank you very much. Regarding the clearer strategic direction of the three brands, will it have any near-term impact on systems and consulting sales on the group level?
No, the answer is no. We will move brands, especially in the Nordics from Grassfish to Visual Art, but on a group level, it's remained the same. It's just an internal balance between the business brands.
I see. Great. You had an uptick in the organic ARR growth this quarter. Is there anything specific driving that? Do you see any signs of an improving market?
Yeah. We see a small pickup and I'm happy if we can remain on this level near-term. That's what the best estimate as of now. As you say, it is a pickup and it's in line with, I think what we communicated last quarter, that we saw positive trends. I think the business climate is definitely going in the right direction when it comes to opportunities and weighted pipeline.
Okay, I see. The absolute quarter-over-quarter ARR increase is larger than what the organic number you report suggests. I guess there is an impact from FX and perhaps also from converting some licenses in Scala. Could you elaborate a bit on the mix between FX and impact from Scala?
Yeah. FX, I do not have the numbers in my head, but of course, FX is quite big in a quarter since it has been a weakening Swedish crown. That is why we always report in fixed. Then, as you say, what we also can see if you look at the source revenue per se, of course, we still have a bit to do and to make sure that all contracts from the Scala does not constitute any items that should not be defined as ARR. There might be some items that we need to put into consulting as an example.
Then, of course, there is an effort to be done to work with converting the shares of the Scala revenue that is more maintenance related than the billing model and the business model that we have in our other license business. That is an upside potential that will be conducted over years in the future.
Yeah. There is an upside potential, and I think if you compare reported ARR with SaaS revenue, of course, the truth is somewhere in between.
I see. That's all for me. Thank you very much.
Thanks, Fredrik. Could we please welcome Hjalmar from Carnegie?
Good day, guys. Can you hear me?
Now we can hear you.
Hi, Hjalmar.
Hi.
All right. Thank you so much. Going back to the organic ARR growth, I detected that you sound optimistic now on the pace going forward. I was wondering, is this reliant now on any ongoing tenders that you refer to? Or could we see this organic growth pace still if you look at Q4 and going forward?
I think best guess now is that we can keep this growth pace. The reason for that is that we also have recent wins, like the Circle K deal that is expanding. We also have some large automotive companies within the Volkswagen Group, et cetera, that are expanding. We are quite confident at least into the next quarter that we are on a pace that will remain on this level.
All right. Thank you so much. Second one is on the conversion. You referred to that, the conversion within Scala that we have spoken about this before. My question is basically, is there any update on the anticipated conversion going forward on top of what you already have said earlier?
Yeah, I think conversion is a long play. So in theory, there is a potential when converting from perpetual with maintenance as a big portion of the revenues from Scala to real SaaS. The upside is almost 50%. But that conversion is something that will be part of the organic work for at least three years to come.
All right. Perfect. Very clear. Thank you. That is all on my end for now.
Perfect. Thanks.
Thank you, Hjalmar. Could we please welcome Martin from SB1?
Can you hear me now?
Yes.
Yes.
I only really have one more question, and that is related to the lease payments now. They seem to be up quite a bit, both against the previous quarter and also against last year. Should we expect this level here going forward now post-Scala, or is there some non-recurring components there?
I think, as you point out, they are very much related to office premises, and that is, of course, something that we evaluate constantly and especially within an integration project. Although the actual integration project is closed, there is, of course, more synergies to be evaluated and realized going forward without disclosing exactly what we see in the future. But I would say that they are a bit elevated during the quarter, and they are in the scope of our evaluation going forward.
Okay, great. That was actually all I had, so thank you.
Thank you very much. There are questions about Scala conversion, like on-prem to cloud and the maintenance to SaaS. Maybe we could just give some color on that and what to expect and when.
Yeah. Just to give you the full picture first, in the digital signage industry, roughly 66%-75% of all installed systems in the world are based on an on-prem solution. It is just in recent years where large enterprises with high security standard had trusted to build upon real cloud-based solutions. We have been ahead of the market in this transformation. The old business model of many companies was to sell lifetime licenses per media player. That's perpetual. Then they sold security update, software update, that's maintenance, as a maintenance component. When you transform everything to a cloud-native solution that are future-proof, more secure, then it comes with a business model where it's no upfront payment at all, it's only a month-by-month subscription.
In our ARR, we only cater for the real SaaS and also the maintenance components for perpetual licenses in companies that we have acquired. Going forward, it has always been like this, we do not sell new perpetual licenses at all. The same goes now for Scala. It is only a SaaS offering that is available for the partners and the brands. What takes time is, of course, the conversion of existing. What we do is from a technology perspective, we make sure that Scala gets narrowed to the Dise platform. We do that by implementing the Dise player technology that are shared within the group through the IXM Grid. We also will actually convert the platform as such into a position where we then can convert it into the next Scala product that is pure cloud.
Great. Questions on the consulting revenue that is still rather low in the quarter, although the historical acquisitions of Scala, MDT, and Muse. What is your view on this?
Yeah. We can see this trend that actually in the quarter, we are still a bit behind on consulting, even though we see a little bit of a positive trend. Systems revenue is a bit stronger than expected. I think we have seen that we are a bit behind our expectations that we had ourselves. Whether it is just a coincidence or whether it is a long-term trend, we will see. For us, it does not really matter, to be honest. We can see that we are more efficient now in all projects with use of AI and so on. It is easier to achieve more per hour. The good thing is that we just right-size the consulting all the time.
The use, if we can deliver more to the customers with less hours, it means that it is cheaper for them, it is better return on investments, and that will drive the demand for our platform. If we look at near term, I think we will see the same pattern, at least into next quarter. Then, of course, we will follow this closely into the next year.
Yes. Then there are some questions in relation to the increased accounts payable. Just to understand the process, we integrate over three months, which is a substantial short period. But of course, during this time, going into ERPs, going into the new IT infrastructure, going into new processes, there is a standstill period that is required before everything gets put into the right places. So that's the main reason for quite substantial invoicing by the end of the quarter.
Sure. Most of it was invoiced the last quarter.
Yes.
So reestablish many thousands of contracts into the shared licensing system and bring all of this in together to our ERP. I think it's really impressive that we were able to achieve that in three months. But it also meant that in the end of those three months, we actually pushed play on the automated invoicing.
Yeah. I think this is what we have time with today. There were really a lot of questions that we received today, and we do not have time to answer them all. I encourage everyone that wants to know more or have specific questions that you can always reach out to me or to Johan, or to drop by and visit us in our office in Varberg. Until next time, thank you very much. Have a great week, and we will see each other soon again. Thank you.
Thank you.