Trifork Holding AG

CSE:TRIFOR

Earnings Call Transcript

[Frederik Svanholm, executive]

Okay. Let's start. Welcome to the presentation of Trifork's' First Quarter Results for 2024. My name is Frederik Svanholm, Head of Investor Relations at Trifork. Today, our CEO, Jorn Larsen; and our CFO, Kristian Wulf-Andersen, will be providing a presentation of approximately 35 minutes, followed by Q&A. Before we start, I have a bit of practical information. First, I would like to inform you that this presentation is recorded and will be made available in its full length on our investor web page later today.Second, I would like to inform you that if you want to download the presentation for today's call, you will be able to find it on the front page of our investor website. Third, we invite you to ask questions and engage with management after the presentation. [Operator Instructions] We will do our best to ensure that everyone gets a chance to ask the question within the allocated time. But already now, I would like to ask you to start with 2 questions and then get back in the queue. So we ensure that everyone has the chance to ask a question. We have to present this disclaimer. Let's jump to the presentation. I now hand over to our Group CEO, Jorn Larsen.

[Jorn Larsen, executive]

Thank you for the introduction. Welcome, everyone. My name is Jorn Larsen, I'm the CEO and Founder of Trifork. So here, we see the front page, and we see 2 pictures. And so Trifork is on an expansion into more countries, and we are consolidating our presence in the countries where we are already established. And actually, the top picture you see here to the right is from us speaking to a health care -- digital health care audience in Switzerland, where 2 of our colleagues are presenting what we do in digital health.And so if we look back 5, 10 years, that would not really have been possible to be invited to these kind of events. And the lower right picture is a picture from San Jose earlier this year, where we attended in the NVIDIA conference and the guy to the right, Nicholai Stålung. He actually gave a presentation about how we help Copenhagen Airport with their luggage [indiscernible] system by means of artificial intelligence and what we call Vision AI. And that was very well received. So thank you, Nicholai, for that presentation.In the middle, we have Karan. He is our CEO in the U.S. And in the U.S., we see a lot of good traction and pipeline building. And so hopefully, in the next quarters, we can start presenting cases and storage from the U.S. Let's move into the presentation, Kristian. Okay. So Q1, compared to Q1 last year was not a great quarter to look at with a total growth of 1.4%, which is basically 0. We must say that we had a tough start to the year. We are preparing -- we have been preparing for a few months now, a few quarters, the organization from a tailwind environment to a headwind environment. So I also mentioned in the last quarter report and before, we are ramping up on business development.We want to target markets we have not been present in before. And of course, we are still hunting for new business in the markets we are already in. And the reason for that being that we really see our, you can say, loyal customer base, making budget cost, and that means that if we want to have a hope of -- if we want to have a hope of growing in the future, and we do have a decided to do that. For the moment, at least, we need to find a lot of new business.And this is -- so this is a result of being in the middle of such a transition where you increase your sales cost, you still have the negative effect on present and loyal customers reducing their business with us. And the new customers and the pipeline has not yet really taken into effect and shown in the profit and the revenue. So this is where we are right now. So let's move on to see how it is on earnings. And so also here, we see the effect that customers are pulling back work sometimes a little surprising to us. And then also with these increased business developer cost.And so we see that the margins are also somehow down. If we then also add that we see that this will improve, I mean, the results will improve over the next quarters. Leading to that, as far as we can see in our backlog and pipeline and outlook to the future. If everything stays more or less the same as it is now regarding the business climate, we still maintain our guidance for the full year with the profit as you see, and the revenue, as you see here. So maybe let's move on. So an update on the group. We still -- we still grow the number of people in the companies.We are still in 15 countries. So no new countries to be expected to be on boarded. We are happy with where we are. And only if there is an opportunity that we cannot say no to, we will enter a new country or area in our business. We see we have 24 minority investments in labs. And what you will also see a little bit later is that we actually had a good quarter for lapse. Again, you remember, Q4 was a really good quarter, where we adjusted upwards our fair value of our lab, and we did it again, because we do have a few of our lab companies that are doing extremely well.So they are kind of beating the -- what we experienced in the travel segment and negative business climate, but we have some lab companies that have found their niches and are really growing very fast and good profits. Let's move on. So also last time I showed this. And every time we present, we show some of our work and where we are playing on the field right now. And this time, I just want to focus on the middle lower image they are called Digital Twin. So at Trifork, we have one of our strategic focus areas to build our own IP, and we have done so.We do it in labs, but we also do it within the Trifork segment. And when we do it in the Trifork segment, it's because we can finance it with a few customers supporting our IP development. So it's still Trifork IP, but our customers supported through the work they buy from us. And the Digital Twin platform is a very interesting one. We have been working on this for a few years. And actually, it's able to keep track on a large amount of physical assets around the world, could be mobile or static assets and collect all the data that can be accessed on these assets and consolidate it on this Digital Twin platform.And that gives a number of advantages, such as predictive maintenance, tracking the assets, tracking when it's time to have a look at this and simply just know where your assets are. So that's a really good platform, and we are looking to grow the number of customers using this platform. So that was kind of what I wanted to highlight on this page, so we can move on. So when we look at our cockpit, it really reflects that revenue is not impressive. We are exactly at the same organic revenue as last year. We do have a little inorganic.So the result is +1.4%. But with a few less working days into the year, we have made a remark on that in the report. So if we have had the same number of working days, we would have been around 7% or so. And that would, of course, come back later in the year as a plus. We have still 72 business units. And if we look at our key statistics on our social media, that is actually growing faster and faster. We are 66 million views, almost 1 million subscribers combining GOTO and YouTube. And we have started some experiments on capitalizing on this presence on the social media platforms.But we are still quite relevant in what technologies we identified out there. And I also want to highlight that reducing, you can say, the loss we realized in '23, which was EUR 2.8 million. We also worked very hard to reduce this this year, and we expect it at least to be half of what it was last year and maybe a little bit better would be a positive result coming from where we are now. We can move on. And here we see that the distribution between Inspire-Build-Run. And so what I want to highlight your Build is still a reasonable margin, 15.7%, but it was 21% in the Q1 on '23.So it needs to improve, and we are working hard on that. If we look at Run, then we are hit by the negative effect on another strategic area we are focusing on to improve namely, as we will see in a moment, our cyber business. So what we have in our cyber business is that we have a platform that has been rather expensive to build. We have eyes on the glass 24/7, meaning that our customers can enjoy that we take care of monitoring our customers' systems 24/7. And it's not that you can just call us, we will proactively see if something is happening with our customer systems.And that is a rather expensive platform and system to maintain. So later this year, we will come up with a new strategy on how we believe we can grow the number of customers. So we will have a critical mass of customers comparing to the cost of maintaining this platform and this service to our customers. And that's actually the major part of the lower margin for Run in this quarter here. Let's move on. So the main events for the quarter is that the churn is still in the reasonable level around these +/-15%.Sick leave, more or less the same level as we have seen in the past quarters. Q4 was rather high. Now it came down a little bit, and we would like it to be more like 2%, which would be ideal, also for, you can say, profitability is not very profitable when people are home sick. So we'd like, yes, everyone to stay healthy and eat their vitamins. So in the partnerships, we had some really important events going on in Q1. So we participated in a number of partners.So First of all, I already mentioned, we were a part of NVIDIA, TTC, a huge conference focusing on AI. And there, we believe we get a really nice attention from in NVIDIA, attention from NVIDIA of the work we do in Vision AI. And we have a strong Vision AI team in our company, and it's something that our customers are very eager to explore. So we have a number of customer engagements going on at the moment. Then also Q1 was the release of the Apple Vision Pro, this device that you put on your head and then everything changes.So if you haven't tried such device, I urge you to do, and you can reach out to your local Trifork office, and they will take you through some of the work we have done, but also some of the demos that are available in the App Store. It's -- you're not the same person after you have tried this as before. So look forward to that. And we are building some really interesting applications that we look forward to or to showcase to you in the future here. We also organize, maybe there's one more thing, Kristian. So we also organized an Observability Event where we had Splunk data, dark Dynatrace in New Relic and us being able to pull those people to Copenhagen in our meeting facility there in Copenhagen, Porten. We're quite proud that we were able to do that, and it was a full house that day. And so we see that one change from '23 is that the product companies in the world have started spending on marketing and sales, which was really hard for them to do in '23. So that's the change from '23 to '24 as we see. And that would help our Inspire business going forward. Then also, we did participate in the conference with SAP, and we will be active on conferences in Q2. And then also I mentioned our future health presence in Basel earlier this year.We can move on. So the little case story, not a little one. It's something that affects a lot of things people is that we upgraded the DSB application together with the team of DSB. When we work, it's always in a tight collaboration between us and the customers team. And this has already some remarkable numbers, but a lot of users where you can ease your travel experience by swiping a ticket and making it a lot easier to do your morning or afternoon commute with a train. And this was also featured on LinkedIn, so please check out there, and you can read much more about it.But really good work and the collaboration with DSB, started many years ago, and it has been a loyal customer for many years now. Let's move on. So when we dive into the business areas. We see FinTech actually performing quite well for the quarter. So had anyone just done that, we've been just fine. Digital Health. Last year, we saw rapid growth and it can be hard to continue these growth rates. So here we see a modest growth of 3%. So here, we need to land a lot of feet and get engaged in landing new business again, for sure.Smart building as well were -- had a minus growth of 40%, so from 1.7 to 1, which we need to fix as well. So let's move on to the next 3 business areas. So here we see again the same trend, modest growth in smart enterprise, just short of 5%, which is half of our business. So that's something we really need to focus on Cyber Protection being at a very low level and even declining. So that's the big attention point for us, cloud operation. We are landing some new business at the moment. And later this year, this will take effect.So here, I am confident that we can show better numbers as we progress with the quarters. Let's move on. So in Q4, we introduced these 4 priorities for improving our business, and I already touched on some of them. So the U.S. and Swiss market is really strategic to us that we succeed because it's a new market, and it's where we can win new business easier than in the markets where we are more established, where we see more contraction of the market. And then we need to sharpen the business model of Inspire, and we need to reduce the loss we saw in '23, and we are on a good track to that.But there are some things that is very hard to change, and it will take some years to get some of those things out of our business. And then in Cyber Protection, as I also mentioned already, we do see a huge potential going forward, but we need to change probably from a more organic growth model to an inorganic and rapid growth model. So to scale up the platform we have now and multiply the number of customers we have by access, not just a few percentages. So we're looking into how that might look like. And then I also already mentioned that we are focusing more and more our business on these platforms that is Trifork IP and of course, that's also something we need to be a little patient with before it actually materialize in revenue and profits, but we did see a good growth year-over-year on the business of these platforms. So that's a good trend. Let's move on. So the really good story about Trifork right now is our lab business. We see strong performance from the best lab companies. That's also why we increased the fair value a little bit. And I don't want to mention any of these today.There might be a question from some of you on specific ones, I see if I can answer. But we see really a good performance from our lab, and we like to update you later as the year goes on potential events in this area here. For the ESG, we already talked about that we are working very hard to expand our ESG reporting. We did submit a full ESG report. I don't know how many of you had a chance to study it. And in particular, as you also see on the pictures here, we can mention that our first developed building, Trifork Smart Building One is taken into use.We have people there, and it's a wonderful building to sit in, and I have the pleasure of executing some of our workshops there already. And as you see on the picture there, we have a concept called [indiscernible], which is a dashboard for the energy consumption and EST numbers like water usage for the building. And this is a building that also produces its own energy and it's very effective with the insulation, but also we have installed heat pumps and a lot of smart systems to make it environmental friendly, but also less costly to run. I think that's what I have on the ESG side. And I guess, Kristian, the word is over to you now.

[Kristian Wulf-Andersen, executive]

Thank you. So you know already talked into the overall revenue numbers here. Just a little addition into this is that we also, as Jorn talked about, on board new customers and cloud operation. This part is a low margin and low revenue when onboarding, but will contribute to more revenue later on. As usual, we have not included any of the revenue from the traffic lapse companies, but that's more or less as usual. In relation to the traffic segment performance and adjusted EBITDA also here see the more detailed numbers.The decrease in the EBITDA is also explained by the, you could say, the low or the slow performance in the revenue, but also impacted by some one-off costs in relation to the organization adjustments that we did in the bio organization and the Cyber Protection of EUR 0.5 million. And then we, in relation to the container cloud platform, we also invested additional EUR 300,000, which has not been capitalized here. The Trifork Group performance on EBIT is a direct result of the EBITDA. So also showing them a lower EBIT than in the year before in the second quarter.That said, the depreciation and amortization that is shown for Q1 is the level that we're expecting for the remaining part of the year. So now we have included all the new amortizations from the latest acquisitions and also the effect from moving into new facilities in different -- many different offices. So what you see here is about also to be expected for the future course. Overall amortizations accounted for 29% of total depreciation and amortizations. Going a little bit more into the segment performance. Then as Jorn mentioned, we did see a loss in the Inspire business, as you see here in the margins to the right-hand side.This is the all distribution only to mention here that other was actually decreased from EUR1 million in loss last year to EUR700,000 this year in the first quarter. So that was a positive impact on the overhead cost. I will deep dive a little more into each segment. Inspired performance here, as you see a small increase in the revenue, but that is primarily related to Inspire workshops. And since we haven't got any major conferences in the first quarter, this is a seasonal as expected. So we're also expecting a loss. But as I said, we had an additional EUR 300,000 in impact from the one-off costs in the quarter.So that's why you see a little increase in the minus from Q1 '23. Going to the Build performance, then we see that the increase in revenue in Build was 1.7%, which was primarily inorganic in this quarter. The impact of the fewer working days in the quarter compared to last year is primarily related to the [indiscernible]-based revenue, which is then within the bill-based build segment here. So this is where you have the highest impact of that part. And this is also where we would expect to see the normalization later on in the year.The margins, as Jorn talked into was impacted by the still the increased investments in the business development. And we saw here a 15.7% margin. In relation to Run, then we see that Run is more or less the same level as in 2023. We did see a positive development in self-owned IP, a 28% increase year-over-year. And in relation -- in relation to the EBITDA, adjusted EBITDA, we saw a decrease, a decrease related to the investment, not capitalized in Cyber Protection, but also in the cloud operations and also in these one-off costs that we had in relation to reorganize the teams in our Cyber Protection units.Overall, if you look into the details and the run revenue split, then if you compare the Q1 '24 to Q1 '23, then you see the -- there was a small decline in relation to third-party license and hardware -- and you see the increase in the license and support, which is then the license support related to Trifork owned products, and this is the positive development here. As I said, we expect that the hosting security part will increase more over the remaining part of the year.Looking into the labs performance, then Jorn just talked briefly into this. All we saw on EBT of EUR 1.3 million. That was combined by a fair value adjustment of EUR1.9 million and exits from our investments, dividends of 200,000. So that's why you see here to the right, you see that accumulated net profit from exits and dividends is the EUR 69.2 million. And you see the book value of EUR71.2 million. And the book value is then combined by investment, the EUR 7.8 million, which is cash investments, the deconsolidation effects and then the fair value adjustments of unrealized gains of EUR 29.4 million all, we saw cash flow -- positive cash flow from [indiscernible] financial position here.We saw that we had investing activities a little lower than the quarter last year. And we saw that the financing activities was more or less the same. In that part, we did acquire some NCIs during the quarter of about EUR 5 million. So that's included in the financing activities. In the period in the first quarter, we also bought back additional shares. All, as you see here, we bought back a total amount of roughly EUR 2 million in shares, which we now have as treasury shares in the company. And now I will hand over the word to Frederik to talk a little bit into our capital markets stadium.

[Frederik Svanholm, executive]

Thank you, Kristian. Yes, so we are going to have this Capital Markets Day on the 29th of May, and it's something we really look forward to. We are going to dive into our growth journey, our capabilities, our strategies, financial development and talk about the future. And as Jorn said, if you've tried the Apple Vision Pro, you're not the same person after and I agree with that.So I really hope to see a lot of you there and you get the chance to try on the Apple Vision Pro and see why we talk so much about it and what we think they can do for the enterprises out there. And just sign up with me on the e-mail, you see at the bottom of the screen, if you want to come. The event will be recorded on video and the slides will be made available on the website, too, for those that cannot attend physically. Okay. Let's go to the Q&A. [Operator Instructions] Let's start with [indiscernible].

[Unknown Analyst]

Perfect. [indiscernible] First question is on the cloud operation. Could you put a bit more flavor on the new customer pipeline? The quarter looks very weak. And I think Jorn has mentioned a little bit on the -- you're quite confident about second half, it be nice to get a little bit quantified effect here.

[Jorn Larsen, executive]

I don't know, Kristian, if you can talk a little bit about how we measure up the business in operation because I think that would be a good introduction.

[Kristian Wulf-Andersen, executive]

Yes. So in operations and what we comment here in relation to the first quarter is that when we onboard new customers, then the revenue from the new customers is quite low in the period of onboarding. And then it will be recurring revenue in the period afterwards. In relation to Q1 versus Q1 in operation here, then some parts is also activity-based of the revenue that we have in the operations.So based on that, the decline in activity where it was activities were turned to the onboarding instead of other activities, then we saw this lower revenue in Q1 this year. As we see the run based revenue and operations, historically, if you remember the graph for the overall development, then we track that revenue also ongoing throughout the year with the growth usually. And this is also what we expect to see in this year.

[Jorn Larsen, executive]

So maybe to explain it, and we'll be also talking about internally how we might be able to be more transparent on the nature of our operation because actually, when we see numbers like we see in Q1, it is a negative for the Q1, but it actually is a good sign because it means that we have -- we are onboarding new customers. And we have an unusual high amount of those.And why is it that a negative effect? Yes, it's negative because we make a deal with a customer of a multiyear agreement. And then we onboard them, meaning that we move applications, and that is a lot of work. And that work is not fully paid by the customer. It's an investment for us to take on that customer. And then it will be, you can say, be paid over multiyear -- but also when we ask -- and we are very busy on implementing these, then there are less focused on selling services to our customers that actually could maybe buy services because we simply don't have the manpower to do it.So that revenue will then drop. And so when we are onboarding new business for the future, we have this temporary negative effect. And in Q1, it's rather dramatic. But you can also see, over the years, if you look at the run distribution of profit and type of revenue that it does bump up and down. But I hope you appreciate the average trend that you see because it's not like we lose customers. And the customers we have remains and the margin of those customers remain. So -- so I hope that is an explanation about this unusual. So Q1 was, in fact, the quarter where a lot of these, you can say, for the Q1, it isolated had negative on both revenue and profit.

[Unknown Analyst]

Okay. And can we understand that the -- this year is a bit more back-end loaded in the cloud operations business than the previous year?

[Jorn Larsen, executive]

As a consequence of this, clear, yes, because we could also say now that, oh, we actually lost some Run base customers, but in operation, but we didn't -- we are onboarding new ones on top of the ones that we have. So there's no, you can say, totally negative things to say about the operation. It is still in a positive growth mode.

[Unknown Analyst]

Great. Very helpful. And then next question is on the Cybersecurity. You have talked about the restructuring for the last quarter and the year cost. When do you expect to see the benefit? And if you can also a little bit of flavor here.

[Jorn Larsen, executive]

Yes. So this is -- the way I would answer this, please see it as a speculation or thinking different scenarios. So we could do -- we could just invest in the business with a negative effect on our profit and probably look into a rather slow growth. Or we could see how we might be able to attract, you can say, funds to treat this activity not as a, you can say, a slow growth business, but a more like a start-up scale-up model, if that gives a clear picture of the 2 mode relating that's why we have travel segment and labs.So we are -- so with any business unit, whether it's a lab business unit or a traffic segment business unit, we're always thinking about could we change gear from one to the other, okay? I'm not saying we are going to do it, but I'm just saying we always have these 2 gears we can select from. And this has pros and cons. And so that's -- and since cyber has been a tough cookie for us to bite into because we did expect the market to pull more -- but -- and we do have a lab company that is also inside what that has strong growth. But there are different types of cyber.There are things that are important. It's important to protect your business with Cyberprotection. But is it urgent is the question. And I can conclude from the market and also from our competitors that it seems like customers are willing to take a risk so that they don't. They probably see this as important but not urgent. But the urgency, I think will materialize once test and those [indiscernible] regulations for the others for banking and other industries. And we estimate around plus 1,000 companies that will have to upgrade seriously their Cyberprotection to comply with these new regulations. And I'm not only talking about the Danish market here, so plus 1,000 companies. And so far, they have just been waiting.

[Frederik Svanholm, executive]

The next question will come from Poul Jessen from Danske Bank.

[Poul Jessen, analyst]

Yes. I have a question first about the full year guidance. As I heard you saying you expect that the market that you do not assume that the market should improve in your guidance, but it's more based on the current [indiscernible]. But could you also say a little more about what kind of clients is in general that they are scaling down or stopping some projects ahead of time?

[Jorn Larsen, executive]

Yes. Good question. And of course, I cannot mention exact brands or customers, but I can tell you why we are also sometimes a little surprised. So the 2 customers -- I mean, there are 3 customers that negatively impacted Q1 in a material way, and it's 3 companies that are huge. I mean they are multibillion-dollar companies. And for -- and their explanation to us is that the global economy and the geopolitic situation affects them in a material way so that they have to do serious budget cuts.And for those 3 accounts, but there were rather big customers for Trifork, there are still customers, 2 of the 3. The third one might come back, but the 2 are still a customer, but they just reduced scope dramatically. And so it's not because they don't make money. That's big customers, but they are living in the world that we all live in and they have to adjust their business as well. And sometimes that has a negative effect on companies like Trifork.

[Poul Jessen, analyst]

But you are not expecting that there should be a market improvement to meet the full year guidance?

[Jorn Larsen, executive]

No. No. We don't -- because whatever happens to the market is out of our control. So we actually only guide based on how we see the market at present time. That has -- so we don't try to tick when there is an incident in the world that negatively impacts us and we don't try to predict if there's something positive. So we guide on the premise that things are as the way they are now. And then you can see if you think things are better or worse, but that's how we do it.

[Poul Jessen, analyst]

But maybe to say there that, I mean, we do have all the positive signs that we see in relation to Vision AI and Vision Pro and all the dialogues that we have. But that's more based on specific type of solutions that we address in the market and not because we see a market improvement overall.

[Jorn Larsen, executive]

Yes, exactly. So Trifork being Trifork, I mean probably also one thing I didn't mention. We have never innovated on so many fronts that we have done in Q4 and Q1. And so it's like you can say a perfect storm. But when you do that, it does also has a cost before you see the benefit and the revenue from it. So when you combine the Vision AI, the Vision Pro, our IP and the platforms that we see already has some effect. That is something that we don't regret that we have done, but we -- but it's an investment, you can say.

[Poul Jessen, analyst]

Okay. And then a clarification on the [indiscernible] impact, you mentioned it's EUR 2.8 million estimated on the quarter. But you mentioned it both when you discussed the group level and when you discussed the Build business. So is it Build only?

[Kristian Wulf-Andersen, executive]

No, it's primarily related to Build. So you could say Inspire is not really impacted. And Run is only to a minor extent impacted. So it's primarily related to Build. Yes.

[Poul Jessen, analyst]

So when you end up saying, it's about 5.6% on group revenue then it's more than 7 million on the Build.

[Kristian Wulf-Andersen, executive]

Yes, it's around that area.

[Jorn Larsen, executive]

It's more, Poul is right.

[Poul Jessen, analyst]

It's because you mentioned the 5.6 million also on the Build adjustment [indiscernible].

[Jorn Larsen, executive]

So that's the biggest -- when we compare yes, then it's the biggest impact on the reduced margins for Build.

[Poul Jessen, analyst]

And then the question is, are there any differences in your business or whatever, then you are about more than 7% on the solutions business because when we look at other companies, they talk about a smaller number, let's say, 4%, 5%.

[Kristian Wulf-Andersen, executive]

No, I don't think so. You could say the majority of the revenue is still in the Danish market and the Danish market, then the effect was highest, you could say, compared to other markets. But I don't think you could say there would be any major differences.

[Frederik Svanholm, executive]

Thank you, Poul. The next question comes from [indiscernible].

[Unknown Analyst]

Thank you for the opportunity to have some questions here, [indiscernible] here. In relation to what Poul already asked about concerning these customers who have terminated the contracts, would you be able to quantify that in more details just as you were able to quantify the working day impact?

[Jorn Larsen, executive]

We don't have those numbers to be disclosed. And -- but as you can see in our numbers, I mean, they are probably the main -- I mean, there is this easy thing. But the main thing is those customers stopping work on short notice. That is -- I mean, we cannot adjust our company that fast. So that is a dramatic negative effect, and it's a major part of the -- or you can say, of our disappointing results of Q1.

[Unknown Analyst]

Okay, sure. And the second question related to these extraordinary costs in Q1. Is there any chance that they would ripple into Q2 as well? Or do you feel that you've got control within there?

[Kristian Wulf-Andersen, executive]

I would say that the one-off cost that we report for Q1 is isolated to Q1. As Jorn mentioned, we have plans for how we want to go about the cyber protection business area. And if that would have any additional one-off costs still to be seen. But in relation to the bio business area, we expect it to be done in the way that it is right now and no additional one-off costs in the remaining part of the year.

[Frederik Svanholm, executive]

And we currently do not have any one with a raised hand. So I'll just give the opportunity [indiscernible], you are back online. [Operator Instructions]

[Unknown Analyst]

Last question is related to the demand outlook because I think it's kind of different what you are seeing compared to what net company, for instance, is saying. So would it be possible for you to explain whether net company is simply too optimistic if you're low boiling or is it because you have sort of different end market exposures, for instance, the size of projects?

[Jorn Larsen, executive]

So what, yes, what I say about outlook is that we don't say anything about outlook. We think about the business climate as is. And what we can say about our perspective of the outlook is that we are investing heavily in business development. And I mentioned this, we have from 2021, '22, and we saw like a tailwind environment and you ask all the time, are you able to find the talent. Now you don't ask that anymore because it's the different climate we have in the world.And there are, you can say, plenty of tech talent available. But then, of course, it's -- there is never a perfect world, then the problem is, are there enough, you can say, customer challenges available now that you have access to talent. And to make that happen, we need to invest in business development. That has a short-term cost before we see the effect on pipeline, backlog and revenue and profit. So that's what we say. So we don't disclose anything about market outlook. I just -- we can just explain how we act on the current environment. If there is a returning back to, say, '21, '22, then we will, of course, benefit from that as well, but that's not what we -- we don't guide on that.

[Frederik Svanholm, executive]

Thank you, [indiscernible]. We have [indiscernible] back on the line. [Operator Instructions]

[Unknown Analyst]

Here, I have a question regarding the [indiscernible] contract, which was canceled, and I record that you also won the contract. Should we expect any change or have you seen any change or impact to you? Sorry.

[Jorn Larsen, executive]

Kristian, do you have a comment there?

[Kristian Wulf-Andersen, executive]

No, I don't think any change to what we say here. We still believe that we are in a good position in relation to this work. So that's something that we will change anything here.

[Unknown Analyst]

I'm a little bit confused. So the contract was canceled. And I was wondering, is there any sort of work you have not delivered but have been contracted, which is also being canceled? Or it's just a -- how should we understand this?

[Jorn Larsen, executive]

Okay. Okay. I understand what you mean now. Or maybe I do. So when we have a contract with a customer, they don't breach our contracts. I mean that's only if they go bankrupt, but big companies normally don't do that. So we're not talking about those kind of engagement. So this is according to contract. So -- but short term for us can still be a rolling 3 months contract. That's not unusual.So if the customer maybe delay that response a little bit and then say, oh, by the way, we need to dramatically reduce the work for the next row. That may be for 3, 4 years, they have had like a steady engagement with us, and all of a sudden, it changes. Of course, it's dangerous for us to rely on that the next quarter will be like the previous quarter because we don't really know before they commit the new work. And so that's how you should see it. There's no breach of contracts. All our customers are very -- they honor all the contracts we have with them. So it's simply just that they work accordingly to the contract we have with but just don't follow the pattern they have had for years.

[Unknown Analyst]

But are you talking about the general contract pattern? Or is relating to [indiscernible].

[Jorn Larsen, executive]

Exceptions. I'm only talking about these few exceptions.

[Unknown Analyst]

And so that's also the case with the [indiscernible] contract, which is being canceled.

[Jorn Larsen, executive]

Say one more time.

[Kristian Wulf-Andersen, executive]

Asking about [indiscernible], there was a tender there that was rolled back.

[Jorn Larsen, executive]

Okay. No, those kind of things, we never -- so we never guide or expect any work really coming from tenders, tenders we treat as positive news when they come. And so it's not like we are leaning very much into a tender process by allocating manpower, et cetera. So no, they don't. That's just business as usual that we have x percent win rate, which is actually rather high for us in the tenders we bid on because we are quite selective on what we bid on. And so that was not an unusual thing for us.

[Unknown Analyst]

Add some color on this one. So yes, it was rolled back. We -- publicly, we -- there's still decisions ongoing. And since we obviously are involved in this, we cannot publicly talk about this to any further detail.

[Jorn Larsen, executive]

No, no. I mean -- no, but no drama there as I see it.

[Frederik Svanholm, executive]

Thank you, [indiscernible]. There is time for one last question if anyone wants. Let's just see if anyone has their hand up. Okay. That does not seem to be the case. Then we will conclude the session here. Thank you so much for your questions and your interest in Trifork, and we hope to see you again on the 29th of May in Copenhagen at our Capital Markets Day. Thank you, and have a great day.