Mapspeople A/S

CSE:MAPS

Earnings Call Transcript

[Michael Gram, executive]

Welcome to today's event where we have the pleasure to present the Mapspeople today, the Q1 update and of course, a little bit details about the delisting. As always, we are joined by CEO, Morten Brogger and CFO, Christian Laeso, to take us through the presentation and answer questions. So as always, in the box down below, you're very welcome to ask question in Danish and I will try and translate to the best of my abilities.

But for now, I will hand the call over to you, Morten.

[Jens Brøgger, executive]

Perfect. Thank you, Michael. Yes, it's a little bit of a special quarterly earnings call because it will be the last one for Mapspeople as we expect to be delisted by the time that the Q2 results are done. So yes, just managing expectations a little bit on that one. But welcome to everyone who's listening into this one.

Let me try and walk you through the results for Q1 and some of the overall activities that we've been going through. As normal, we have this Q1 overall slide here. And you will see that we've continued growing the company. It's a little bit less growth than we used to and also that we honestly had anticipated in this one. But yet we managed to grow our EBITDA -- the overall EBITDA around 12% year-over-year and around 3% on a quarter-over-quarter basis. If we look at our main growth product maps and doors, you can see that, that is growing faster, just as we used to. It's been growing 19% year-over-year and it's been growing also similar around 3% quarter-over-quarter. Revenue is up 4% over the year, and it has continued to grow as we've seen throughout the last many quarters, I would say. And our EBITDA has grown 19% year-over-year, and we're now at minus 7% for the quarter. I think the similar quarter last year was minus 8.5%. So we continue to make strides in the right direction towards the notorious breakeven 0 that we're going in here.

I would say there's a couple of reasons that I want to highlight. We tried to capture them as much as we could also in our Q1 report. Why have we seen a little bit slower growth in Q1 than we would have liked to see, right? And I think one of the things that we clearly suspect and we have some internal evidence on this one is that we've seen some companies are actually delaying decisions. And the rationale we get that is a general uncertainty about the future. I think we've all been like glue to newspapers and newscast about trade wars and share prices. And it's the recession, it's another recession, how are things actually go. And a lot of that uncertainty has actually also impacted our customers and their willingness to make decisions. We haven't really lost any of the deals that we have participated, we have been working on, but the decision has been delayed. Some of them 1 quarter, some of them 2 quarters, and it's clearly subscribed to that. I would say it's hard to predict exactly when this is over. But we -- it's a little bit of a gut feeling from my side that it's getting a little bit more normal. But I guess that's just until someone wakes up and shakes the world one more time, we cannot really avoid that scenario.

I would say -- another point on this one is, clearly, as some of you who's been following us, I think back in December, we announced that we would need to raise additional capital during the year. And clearly, when we announced that, we also bootstrap ourselves and we make sure that we spend as little money as we can. And some of that bootstrapping has likely hard to prove, but likely impacted our building of pipeline and our capacity to close deals that we are currently solving by a lot of initiatives. We've been working on that. So I think we will see that being solved in the quarter or 2.

And then clearly, I would say, both Christian on the call and myself, we would not be representing a reality. We said that we have not been a little bit distracted by making the deal progress with the Apex and Round13 who acquired the majority of Mapspeople and is leading the delisting, which we'll speak about later. It takes a little bit of an effort and some of that will distract you from running the business. Clearly, that is done. And clearly, the management team, it is like a super energized about what's ahead of us and that is helping us solve some of the other things.

I think that fundamentally outlined some of the selected highlights that we put on this slide, right? And I think we will speak a little bit about the end, Christian will do this about the process from where we are today with the delisting from NASDAQ First North, everything is running on track. I think the transaction close was at Wednesday last week. The funding that went to the company, the money is in our accounts. And the secondary trades that was part of that one has also changed hand. But Christian will go through the process as of here, which -- the next key step is the extraordinary general assembly meeting, which will be on the 27th of May, so in next week, which will kick off the rest of the process.

Just a few other highlights on this one. Net revenue retention, we are back up again. So we had 105%, going up from 103% last quarter, so it's going in the right direction again. and it's something that we're working very hard on to get it up even further. We have been accustomed to something around 110%, and that is clearly the target to reach that again. And you can see where it's coming from in this bridge. And you can see that we are -- some customers who are selling less to, some has left us, that is predominantly still some of these old framework agreement customers that we knew was churning last week. Some customers has buying less, some customers are buying more. And you can see that there's a net positive on that one. And then we added a lot of new customers and new logos to the ARR over the past year.

And one thing that is also like, again, very, very important to us is fundamentally how do we manage our spend into growth. And this is this notorious customer acquisition cost payback period, where we are aiming at keeping that somewhere between 12 months and 18 months. And I think we are -- it says 16 in the headline, but it says 17 in the graph. I think that's a rounding. It's somewhere between those 2 numbers. But it's still within the target range that we have here, right, and we'll keep monitoring that as we move forward as well.

So I think that was a little bit about the business, a very eventful Q1 from us. Some of the events basically transpire towards the end of April for the public. I am aware of that. And an eventful world that we are working in. I would say right now, if we should say something about geographies and growth. We have actually seen Europe pick up. And right now, we actually have a stronger pipeline in Europe than we have in North America, and that is a change compared to how it has been in earlier quarters where we have seen more growth in North America and a stronger pipeline. We're not sure completely whether this is something general that is out there, whether it's just something that is Mapspeople related, but we're definitely working very much in strengthening our pipeline in the North American market as well. And we do see that as a good opportunity.

But that being said, trying to cover as much as I could at this element, I'll hand over to you, Christian.

[Christian Laeso, executive]

Thank you, Morten. So let's go into the financials in a few slides here. So first of all, our profit and loss statement here. We ended up with DKK 15 million in revenue as Morten stated earlier, this is up from DKK 14.5 million in same quarter last year of our 4% higher. The Q1 '24 number was influenced by a few one-off deals. So the underlying growth rate is a little bit higher when you compare apples to apples. But still 4% is the net total. Costs, both cost of sales and other external costs are combined on the same level as last year. the fixed cost base in the other external expenses is a little bit lower, while the cost of sales is a little higher with the investment we've talked into a number of times in investing in better and more visually attractive maps through 3D maps, et cetera, but in line with expectations.

And so its staff cost, it's on same level as last year. In this quarter, we've had a few changes where we've taken the cost of employees being sent on garden leave as a full expense this quarter. So again, the underlying number of going-forward number is lower than last year at the same time. And then we've started our capitalization again of our investments of our development work where last year, Q1 was used on fixing and cleaning up. We've now accelerated the share of our cost that we use on investing in the future. So that's what the DKK 1 million increase to DKK 2 million represents.

Netting it out, it's a loss of DKK 7 million on EBITDA compared to DKK 8.5 million the year before or 19% improvement of our EBITDA. That can be translated into this, my favorite slide. As those of you who have been watching these quarterly updates, our rolling graph, as we call it. The green line represents our revenue growth on a recurring basis. So this is kind of an ARR number, but backwards looking. So the last 4 quarters for 12 months, we've booked DKK 63 million in revenue, just a little bit higher than last quarter. And we've booked an EBITDA loss of DKK 28 million, also a little bit better than last quarter. But what's more interesting is the improvement we've seen over a 12-month period. So revenue has increased from DKK 46 million to DKK 63 million, and the losses have gone from DKK 51 million to DKK 28 million. So pretty much all of the revenue increase trickles down on the bottom line showing that we have been able to do this without expanding our cost base. So there was a few highlights about our Q1 reporting.

And then zooming into the transaction, where, as Morten mentioned, we have closed an agreement with Apex Group technologies who signed on, I think it was April 28. And then it was -- the deal was closed Monday, the 12th and money was transferred on Wednesday, the 14th of May. So everything is done and dusted now and Apex Group Technologies is now the majority shareholder of Mapspeople. The transaction was divided in 2. So Apex injected DKK 39 million to -- into Mapspeople as new capital and these funds are to be used to -- for the operation of our business going forward. And to get that, gave Apex 31% of the shares and to get to 51%, which was essential for them, they then have bought secondaries or existing shares from some of the big shareholders which -- so EIFO and BankInvest and founder company, Mapspeople DK [ Hold ]. And all of that since the last one so to get them to 51%.

And the big shareholders insisted on including in the deal that all the smaller shareholders should get the same offer as they have accepted. So therefore, as soon as the extraordinary general meeting is done, as Morten mentioned, on the 27th of May, an offer will be prepared by Apex to buy up to DKK 13.7 million worth of shares at this same price of EUR 73 per share as an offer that will be available in the market until a delisting happens or the DKK 13.7 million share -- worth of shares are actually traded. It's a fairly large portion of the outstanding shares that is covered by the DKK 13.7 million. So we hope that there is enough for everyone. That's the intention, at least -- so Apex Group Technologies is a new part of Round13. So round13.com, you can find this Canadian-based growth fund or private equity fund. It's CAD 800 million fund that has a number of focus areas, one of them being vertical software players, where Apex Group Technologies is a new section of that or they are funded by Round13 to invest in similar businesses as Mapspeople. So we're looking forward to teaming up with Round13 and Apex Group Technologies on the path forward.

So -- but a part of this being a private equity player, and also, well, the Round13 has requested or as part of the transaction, that maps people be delisted from NASDAQ First North. So now that we are the only premium player on First North. So there will be none left when we the stock exchange. Formally, this will be approved on the general -- Extraordinary General Meeting, Tuesday next week on the 27th. All of the votes are already secured as part of the transaction. And then the application goes into NASDAQ. And it's expected that the delisting will happen on August 5. So approximately 10 weeks after the that the general meeting is held. On that day, the shares will no longer be listed and valued on a daily basis, but will simply be transferred to being a privately held share or unlisted share or in Danish [Foreign Language]

And therefore, the opportunity to buy and sell will be limited compared to now, but it will be linked to when the majority shareholder has an event, a sale, so either when they sell the company to someone else or at some point of time, maybe list the shares again on another or the same stock exchange. So yes, so that's being an unlisted or privately held company is the most normal thing for a company to be. And it's very -- yes, there's nothing special about it like all of the [indiscernible] all the companies around on the streets, they are all like that. So nothing special about that. That was the words I had written down, I wanted to share with you now.

[Michael Gram, executive]

Terrific. But then let's jump to some questions. And it might be a little bit unfair to you, 2, as you haven't been with from the start, but as a shareholder here who says, I've been with from the start, supported you anything to say about that you now want to delist.

[Christian Laeso, executive]

Maybe just 1 comment actually, thank you for that question. So just to make it clear, everybody is invited to stay along. You don't have to sell your shares. But Apex and Round13 have given this offer in the market that you can sell the shares if you want to, at this price that the large shareholders have sold their shares, too. So nobody is being kicked out or forced out. That's important for us, that's understood.

[Jens Brøgger, executive]

No, I just want to elaborate that from Christian's side, right? I think this was a very strong agreement between not just the new shareholders' Apex and Round13. Also like the largest shareholders in Mapspeople and clearly also from management that all smaller investors are giving the chance both to sell their shares, but actually also to keep them if they want to stay on the next chapter with Mapspeople under this new ownership. So there is a choice. I don't know if that really answers the question. I can say we...

[Michael Gram, executive]

As we have talked about, you were needing money. And I guess the stock market was very tough at this point of time. So you might say that it's another -- I guess you've got the best deal. You were able to get or how should -- I don't know...

[Jens Brøgger, executive]

No, yes. The reality is that raising money on Nasdaq First North to be a global growth company to make sure that we maximize the output of the technology the company we had. Just didn't seem feasible going forward. It's just getting like virtually impossible, which means that you needed to look into a different kind of ownership structure, which then became like growth equity, private equity to this extent. And we're obviously very excited about that. We have the capital on our balance sheet to continue the growth.

We have a very financially strong shareholder who has also expressed a clear interest and intent with this acquisition, which is to deploy even more capital to grow the company, not just organic but also inorganically, which has also been something that Christian and myself has been speaking on earlier because we think -- we fundamentally think that makes sense. And the reason why it was hard to find the capital available was hard to get and the price that you could kind of get for it was also strongly limited, right? I'm still like perplexed that over the last 2, 2.5 years, we have doubled our ARR. We have doubled our revenue, and we have halved our deficit and the share price has dropped 90%. The logic is hard to see from a management point of view, and it's definitely making it very hard to finance a growth company international in a context like that, which is why this step is a really good, solid step to basically make sure that Mapspeople are successful and become a global leader using our technology and our customer base and our employees to do this.

And then the only point I will add to Christian's comments, which is right that smaller shareholders that have a choice to sell or roll over. There are 2 smaller shareholders and both of them are on this call who cannot sell, who will absolutely keep the investment in the company was actually the part of the transaction that Christian and myself are not allowed to sell our shares. We have to be part of this journey. And we are actually very pleased to be part of this journey. I hope that answers that question to the best capabilities that we have, Michael.

[Michael Gram, executive]

Yes. Yes, that's perfect. And I'm glad you told you it was because I could also be the holder but I'm not allowed as you are of course. Then there's a little bit about your expectations from the start of the year. So you keep those expectations. I know we won't see it as it's not my company. But as we are offered going on, are still possible to reach those. And I think Morten, you already answered it. I still -- when do we expect this holding back my customers to end or are you still seeing some of that. So a little bit about the expectations and a little bit about customer hesitations you're seeing out there.

[Jens Brøgger, executive]

We are cautiously optimistic that this is ending very soon, right? I think it's a little bit more like normal now and a little bit less like changing on a daily basis. and that gives us a little bit of faith that this will solve. At this moment, we absolutely see that the guidance that we have given is what we will reach throughout the year. And clearly, some of the plans that we have might change as any -- it has nothing to do with the new shareholding anything else. Maybe we say, hey, this is -- there's a little bit of reluctance here, but there's a little bit of more willingness to buy here and then we kind of like shift it. And we'll continue to work on optimizing the efficiency and productivities on everything we do, including generating enough sales pipeline and new sales opportunities and including being more efficient in closing deals faster with the higher hit rates. These are just normal stuff that we'll continue to do. So yes, we will stick to our guidance.

[Michael Gram, executive]

Perfect. And then as a question, I don't know whether you can talk on their behalf, can you provide some information about Apex and Round13 plans regarding growth activities, M&A, investment horizon and more.

[Jens Brøgger, executive]

No. I think everything that we can share has been shared in this company announcement, right? It is a growth company. We need to grow this organically. I just confirm our guidance, which had decent organic growth rates in that as well. They have clearly stated as part of this transaction that they see a good opportunity to add inorganic growth. There are currently no time horizons on that, and they have clearly no time horizons, at least I'm not aware of them on when they intend to exit the company. I think that probably also has something to do with the performance of the company.

[Michael Gram, executive]

And then any thoughts about the market development, maybe not this hesitation, but the market development in general and the competitive situation in general.

[Jens Brøgger, executive]

I think the competitive situation is kind of like it's unchanged. I think we both enjoy the same tailwinds and the same headwinds. Some of -- not necessarily at the same time because like things and opportunities and bigger deals doesn't really close on the same quarters across the competitive landscape. I am still very optimistic about these, all smart building solutions. We see more and more of that. We see a clear interest utilizing the square meters more efficiently or increasing the output of the square meters that the organization have. We see that within everything. We start -- we've been focused a lot on the corporate office vertical, and we are still there, and it's like -- it's been something that's been generated in the majority of our growth historically. But we see other use cases and verticals, fundamentally stepping up and getting closer to what I would call like a whole like product market fit, where you see this. So from that point of view, I am like from a macro perspective, within our industry, I am still equally optimistic as I've been from a market point of view. And I think we will now be in a better position to pursue some of these opportunities and potentially accelerate some of these opportunities we see in the market.

[Michael Gram, executive]

Perfect. And then as a final question, whether you will help guide -- help people what it means to be a private investor instead of a public investor, I guess you can't help people with -- but I know, Christian, you answered that. Can you share some thoughts you have about...

[Christian Laeso, executive]

I think my comment earlier, this is the most normal ownership from -- in Denmark and all the companies existing. It's only a few companies that are actually listed. So there's nothing to be afraid of. The way it works is there is a shareholder register. It's just not public like you can list like you can trade company. It's up to the company to keep track of it. and register changes and keep you updated as a shareholder. So it's fairly normal, can't help you with taxes or anything, but we will look into if we can communicate something based on -- we're not the first company to leave First North. So there is actually quite a lot of information out if you Google it on what happens and what to do. So -- but let's see if we can help pull that together somewhere and then give a few information about that.

[Michael Gram, executive]

And there's a lot of rule changes. You can read a little bit about it. And 1 pager protection falls a little bit and so on and information-wise. But I think you also alluded to me that you actually don't need a depot, which is -- could be the cost, you are in a share register, it's a book, and it's exactly the same as the public market as you just don't see it in your bank depot. So might not actually be necessarily a large cost to grow.

[Christian Laeso, executive]

I'm sure Nordnet and the others would like to charge your fee for keeping track of your unlisted share. But unless you're in a pension scheme, you've invested through that, it's not needed. You simply do not need that service. It's enough that you are registered in the share register that we, as Mapspeople have a legal obligation to keep updated.

[Michael Gram, executive]

Perfect. That was the last question on this earnings call and accordingly the last earnings call. So thank you for taking us to the questions being honest, answering the question, maybe the hardest one as it always is, why this delisting when it happens. So thank you to you, Morten and Christian for taking us through your results and this final presentation.

[Jens Brøgger, executive]

Perfect. Thank you.