Bimobject AB

STO:BIM

Earnings Call Transcript

[Lisa Norlander, executive]

Hello, everyone. Good afternoon, and welcome to the call. We are just about to start, and we're letting the final people into the call. So I want to start by saying if you have questions during the call, you can send them to this e-mail address that you see on your screen, [e-mail]. But I think we will kick it off. So we are gathered today to talk about the Q1 presentation, and I will start off by presenting our host of panelists that you're going to hear from on the call today.

So with me today, we have Sofia Hylen, who is the Interim CEO of BIMobject. We are also joined by Pia Engholm, who is the Chair of the Board. Today on the call, we will also be hearing from Daniel Olausson, who's the Chief Product Officer. We are going to have Per Goransson with us, who's the CFO. My name is Lisa Norlander, and I'll be hosting the call for you today.

So diving into the agenda, we have for you today a short business update where we're going to talk through some of the recent events that we have communicated around. After that, we'll dive into the financials with a quarterly update for you, the numbers that you've also seen in the report released earlier today. And as always, on these calls, we end with a series of questions. So again, [e-mail] is your e-mail address to send those questions to you -- to us, and we will pick up as many of them as we can at the end of the call. You can also reach us at this e-mail at other times. So if we don't answer all of your questions today, please reach us there.

But without further ado, I will leave over the word to Sofia and Pia.

[Pia Engholm, executive]

Thank you, Lisa. I will start out by welcoming everyone to this quarterly investor call. I'm very glad to be here today. We have a fantastic team that will present information to you. And I just wanted to take a few minutes in the beginning to comment on the fact that during the quarter, we made a CEO transition, as I'm sure you've all seen. I'd like to thank Martin for his contribution during a very important phase of the company's development. And we're now entering a new chapter, we are on the path to both validating, implementing and growing a new strategy. We've demonstrated a strong model. We feel that we are on a very solid ground, and we know what we need to do to reach growth.

And the recruitment of a new CEO is underway. We are in the middle of that process, and this recruitment will be aligned with this next phase of our growth journey. Meanwhile, the Board has full confidence in our great management team. I'm very proud of the enormously positive impact that the whole team is showing. And when they're actively working with our new strategy, I'm sure you've also noticed some of these things already last month. And they are being governed or run by a fantastic interim CEO, Sofia, who's at the helm of this team, and we are very confident in this -- both Sofia and her group, and we are really, really happy with what we've seen and that they are running this company while we're in the process of recruiting the next CEO.

And with that said, I'd like to hand over the word to you, Sofia.

[Sofia Sundbom, executive]

Thank you, Pia, and hello, everyone. My name is Sofia, and this is, as you know, my first quarterly report. If you would ask my team about my most annoying trait, they would say that I'm alerted to buzzwords and that I always want to find the actual message in everything. This makes me sometimes a bit too direct and transparent.

Right. Let's go. This quarter, we have delivered a steady ARR growth of 7% and turnover grew by 10% with an additional 1% uplift from currency effects. We have an EBITDA of minus SEK 18 million, which is compared to last year's minus SEK 7.7 million, a significantly lower operating result. However, this is a cost of 2 things: our investments in strategic product development and some extraordinary costs affecting comparability. We have decided to take the full costs of the CEO transition in Q1 and also reserved for the social security costs for the upcoming LTIP program. And we have also seen that the positive currency effects that we have seen previously from a strong U.S. dollar is not around any longer due to a strengthened Swedish crown and also weakened USD.

We remain in a solid cash position with almost SEK 200 million in liquid assets. With that said, we, of course, have huge respect for the funds invested in us and are working hard to use the funds wisely, which currently is to invest in growth. Looking at the BIM investment from the outside, I've said that a new market risk is the uncertainty that the tariffs have introduced in the market. Currently, it does not affect us directly, but we can see the effect it generates in the market, both in the U.S. and beyond. Something, however, that does not slow down is artificial intelligence. And we are also thrilled to talk more later in this presentation about the acquisition of GreenMetrica and Lumea AI Plattform, and I myself continuously impressed and grateful of the AI features already introduced in our products as well actually as the usage of it in my own daily work.

The construction industry is still increasing in demand and still faces serious productivity challenges. The total addressable market, the TAM is -- of the global construction industry is substantial and continues to grow. As of 2024, it estimates that the industry's value is between [ SEK 13.6 trillion and SEK 16.1 trillion ], depending on the source and market segmentation, of course, and projections indicate continued expansion. And we are here because we believe that, that can be improved and through the access of reliable product data -- that, that can be improved through the access of reliable product data. I feel confident that we can play a key role in the digitalization of the construction industry through our products and through our position in the market.

So as you can see and read in the press release that we launched yesterday, late in the evening, we have signed a letter of intent with GreenMetrica AB and Lumea AI Plattform AB. We have been working together with the team for several years and are thrilled to officially merge and welcome them on board to the group. The team consists of AI -- of skilled AI developers and software architects who have been instrumental in the development of EandoX. We have worked really closely with them and are therefore, confident of the collaboration. With the skills that they bring us, we will also increase the knowledge sharing in the organization, which is actually something that was done most recently at our annual product conference with an AI Hackathon.

The acquisition consists of 2 companies, as mentioned, GreenMetrica, which is a specialist consultancy firm and Lumea AI Plattform, which is the AI foundation and the platform used in product development. Their main offering has been to automate ESG workflows, leveraging agentic AI. And what is that, you may ask? There's a lot of buzzwords around AI currently. That is systems which autonomously can make decisions, pursue goals and take actions within complex tasks. That can, for example, mean to gather data, to question that data, make decisions and complete a task or more tasks without constant user input. This is an enabler of delivering a customized and adaptive product user experience.

So now we talk a little bit about the Q1 events, and we will go into a strategic update. The construction industry provides us all with places to live, places to work. And it's currently actually 1 -- approximately 1 New York being built every month. And as mentioned, the construction industry is facing challenges with only around 1% productivity growth, which is vastly lower than other industries. And it also contributes to around 39% of all energy-related CO2 emissions. So we have a huge potential here. In essence, projects need product information and products need to be specified in projects. And our platform can act as a bridge between projects and products. So the stakeholders in the construction industry and the manufacturers.

Let's take it from the beginning. A typical building project can consist of many stakeholders, and here, we have mentioned an example. So we have a property developer, mainly active in the construction and commissioning phase, but of course, also goes much wider than that usually. A general contractor, 5 -- around 5 consultancy companies. So that can be architects, engineers, often heavily involved in the design and planning phase. We also have subcontractors, which all of these previously mentioned stakeholders can leverage. We then have around 500 manufacturers, 6,000 products coming from those manufacturers. And that in the end, equals or results in about 1 million data points. And that is a lot.

Today, product data is fragmented, it's siloed and inconsistent. I would say that it is extremely difficult to retrieve product information at scale. That is because it's often scattered across manufacturers' websites, product sheets, multiple databases, and it's also presented in various formats that could be kilograms versus grams, different units of length, to name it. And it's also so that the collected data is unlikely to be reused across companies due to each of them using their own software, public, private libraries and systems since there is actually no solution of that as today, which is both providing product information and serving that in a user-friendly context. This also means that even though high-quality data is found, it also often loses reliability and the necessary details for stakeholders as it is shared along the process.

So how do we then want to solve that? We want to connect the products with the projects. At the heart of our strategy is our core. Our core is a centralized, structured and trusted dynamic data model, and that data model stores, refines and contextualizes product information and as well as the interactions around it. This core ensures that product data is reliable, enriched and usable across the entire building life cycle. Surrounding the core, we have 3 pillars: compile, consume and connect. We compile structured product data. This means that we are enabling manufacturers to create high-quality, standardized and ready-to-use product data, structured to meet the needs of real projects. Consume on the upper hand of that cycle ensures that this data is not only accessible but actionable. So we want to make sure that we can deliver the right data to the right stakeholder in the right format at the moment when it's needed, for example, to drive design decisions, compliance, sustainability reporting and procurement.

Let's take a step back and look at a few easy examples. In the beginning of the building process, in the design phase, you often -- you need an often generic but can also be specific object with geometrical data. So something to use in your digital design, while at the end of the project, either during the building process or when the house or project is being built during the reporting phase, you instead need the circularity data and other type of life cycle data. And then finally, the largest circle around, we connect data with stakeholders across the value chain. This is our Platform-as-a-Service solution. So we believe that we cannot ourselves deliver all the compile and consume services needed, but we can also provide the -- but we can provide the platform for other companies to leverage and connect to.

So our goal is to be an open source, reliable database, which is at the core of the ecosystem, where we integrate partners, systems and tools to create this network ecosystem where data flows freely and we can also actually scale the value. We know that there are several great local offerings and products in the market, and we want to collaborate with them. And this is to get for us a larger market share, higher customer loyalty and also strengthen our long-term offering. And if you want to get deeper into these pillars of ours, you can also read more about them in the annual report, and we will also deep dive in this in the Annual General Meeting in a couple of weeks.

So speaking of then the compile pillar. We have a -- we will today get a demo of one product within that pillar. So within compile, we enable manufacturers to get access to their product information and to provide it in a dynamic form. So we make sure that it can be used for different purposes based on the stakeholder. So today, we will hear from Daniel, our Chief Product Officer, who will give us a flying of why the EandoX product is needed and also show us how it can look like. And we have decided to bring this up today also in the light of the recent press release about GreenMetrica and Lumea AI Plattform.

So let's hear it from Daniel. I'll play a prerecorded demo here for you.

[Daniel Olausson, executive]

Hello, and welcome to this presentation. My name is Daniel Olausson, and I'm the CPO of BIMobject Group. Manufacturing businesses today is up for a challenge. As the world is changing, the demand for data is also. The EandoX that we will speak about in this presentation is how we can help them regarding the carbon accounting. If we start with some numbers, we can see that we have more than 500,000 building product manufacturers around the globe. In the next coming years, they will be affected by creating product-specific information like, for example, EPD.

A conservative approach will show that they will create at least 4 EPDs per company. We would end up then around 2 million EPDs created in the next coming years. Utilizing the way of working as for today, this will end up around roughly 160 million hours spend. Accounting according to Swedish normal taxes or Swedish normal rates, we will end up roughly on EUR 15.2 billion to do this. So what is the main challenge and why did they end up here? A lot of the manufacturers in the world today is facing quite strong legal demands coming in.

We have in the U.S., we have the EPA, for example, directive for EPDs and governmental buildings. In EU, we have CSRD. We have the upcoming CPR regulation and more to come. And due to that, the data complexity and track this carbon across your supply chain and actually make this data is quite hard to [ do ], and there is no software support to do so. So the result of this is what you saw in the previous screen. So actually, the cost will be quite tremendous if we're still reliant on consultants to do this and do this in a very low scalable way. So the cost will be very high. We also see a clear trend from the BPMs. They want to achieve a quite good data quality. Lately, there have been several cases where companies have been accused for greenwashing or you can't really follow up your green claims. And this can hurt the company substantially, especially now when we move into the reality when you almost connect your financial reporting together with the sustainability reporting.

So if we play with the thoughts that we will actually change, then we're moving into something we call software support for global accounting. And if we look at a little bit the market situation for these tools, we can see that in 2024, global carbon accounting software was approximately EUR 16.9 billion and forecasted to grow to around EUR 70 million -- EUR 70 billion in 2030. If we connect together to these LCA and EPD tools, we today that -- see that approximately 2023, I didn't find any figures for 2024, was roughly EUR 1.9 billion. And this is also forecasted to grow approximately around EUR 6 billion to EUR 7 billion. And I think this is a quite conservative approach, at least to me. So we see a movement in the industry when you're moving from using consultancy services to software. Looking back 2 to 3 years, the movement have been quite slow, but we really see an accelerating movement now.

And we mainly think this is due to the scalability. I think a lot of companies out there right now is realizing that scaling in the way they are using data today is not feasible. You also see that we're moving into Industry 4.0, where we can use AI and IoT to connect and gathering data in a much more efficient way. And this would also need to include in the way of thinking about carbon accounting. And least but maybe most important is that today, we have a very project-based approach, meaning that you're contacting a consultancy firm, you're asking for their support, they're starting a project, they meet your EPDs or LCAs or reporting, and then you see it, then you're done. And for the next thing you're doing it, you do exactly the same thing again.

What we need to adapt is more a way that you work with economics that you have a data layer and you're adding data to this. So moving from a project-based approach to a system-based approach. Therefore, BIMobject today is very thrilled to announce the EandoX, the world's first EPP software, Environmental Product Performance calculating software. So what is the EandoX then? EandoX is a software that can, around one data layer, create the information for several different reports in an easy, fast and scalable way. EandoX is built around 4 main principles. We collect data. It can be connected to ERP and BIM systems, can also use in other sources of import for data collection. We have an advanced calculation engine that is empowered with a lot of different AI methodologies to measure and calculate the LCA by the book, so not any shortcuts.

And we can then make a report of these measured calculations to, for example, EPDs, CSRD or CBAM. What is very important for this is to keep the rigidity in the calculation. And this we have managed to do by combining over 100 years of LCA expertise within the company with a cutting-edge AI technology. This make also the data set perfect to do the video reduction journey for the future. So how do this connect into BIMobject then? The output from EandoX is always the product data. The same product data that goes into BIMobject or into Prodikt. But we also know that more than 90% of the carbon comes from the BPM supply chain. So what you can do in EandoX is that you actually can connect your supply chain to your account to digital contracts that make it very easy to keep track and scale your carbon accounting. But using this way of working, like, for example, with EandoX, then we are quite committed that you can save up to 90% of your time spent.

Now I want to show you a glimpse of the future. The main issue when you're dealing with LCAs or data in general is to get data in and keep it updated. We have, for some time now, work on the AI flow with AI agents that will actually support the use of [indiscernible]. And this is the first demo available for this. So what's happening here is that we upload Excel file straight out from Microsoft Dynamics that is an ERP system. This is a very unstructured file. The AI then ask for which product we want to create from this file. It also want us to enter some specific instruction if you want. In this case, we tell the AI which column that includes [ weight ] for this Excel file. The AI start analyzing the things. It starts to search to the files and it has actually created the first product here with the first step of components that should be included in this product to be imported.

We see now that we have done all the components that is used for this product and its subcomponents. Every product component can then be looked at its reasoning and see how that it can upload this data and where in the documentation being uploaded can this information be found. It creates packaging as well for this product. And then it could be entered into EandoX that we will look into more deeply now. So when you have managed to get your data into EandoX, be it for example, the use of AI that you have seen previously, then this is what you will see. This is one product in the data set of many products. The product consists of components, materials, packaging and factories to make it easy to maintain.

You can look at the different materials impact. We can select different impact categories, and we can do an analyze to see, okay, what is the hotspots coming from. We can navigate in [ to ] different components and see from their materials. We can also add packaging and packages in this level. We can work with transportation. We can work with different factories to be more granular. But the whole system is built up so it could be used by the nonexperts to actually go in, analyze their data and make decisions. After you have worked with your product data, then you want to make an EPD. Here you can work fully dynamically with different program operators, different products and create your EPDs within the tool. We are also gathering all the products that is publicly available and compare your results with the average product. This you can see this share would have been a little bit worse than the other products on the market. This is also to help you to find errors and eliminate those.

When we're satisfied with the information within the EPD, we can in the tool, go and edit the PDF. We can apply pictures, we can change everything, and we can, in the UI, make all the changes that's required into the EPD. When we are satisfied, we can publish the EPD to generate LCA report and the final EPD version. So what you have seen now is EandoX. So it's time to start your sustainability journey. What we're offering is a scalable data layer that is ready to take your data into the next step. We can both create a data quality where it needs to be. Nevertheless, if you have very high ambitions with your sustainability work or just about be compliant. The way we're building data make it not only compliant for today and the market and regulatory demands, but also for the demands for tomorrow. EandoX is basically the easiest way how to make EPDs, get compliant and get ready for the future.

Thank you very much.

[Sofia Sundbom, executive]

Thank you. So hopefully, that was valuable to all of you. So to summarize, we have started testing EandoX with select customers. And we have done this to validate the product market fit and also to make sure that we are meeting the customer needs. During the year, we will prepare the product for scale up and also set a blueprint for the go-to-market.

So with that said, now let's go into financials and hear from our CFO, Per Goransson.

[Per Goransson, executive]

Thank you, Sofia. And first, a few very brief comments to the quarter. We are recognizing steady growth in revenue, but within the quarter, a bit of mixed development in our ARR portfolio. We see clearly increased investments in new products, but the cost increase also includes a couple of items affecting comparability. That is currency revaluation, CEO transition and provision of social security contributions related to the incentive programs as the share price increased in Q1.

If we go a little deeper into revenue development, within our platform subscription business, we recognize revenue by day, and hence, there's always a little bit of a minor date effect in Q1. Year-over-year, recurring revenue grew 8%, and that is close to our ARR growth. Within the ARR portfolio during the quarter, we do see good growth in all our key platforms. Bimobject.com showed generally good inflow of new customers and also relatively high churn, but BIMobject is overall growing at a steady but lower pace. Prodikt.com had an improved and good quarter with accelerated growth and EandoX showed early growth from a small base. What is holding back growth in the period is related to a larger downgrade in a contract linked to an early version of our distributor solution. A significant upgrade has been made to that product, and we're confident about the solution going forward.

Services revenue grew by 10% versus previous year. Cost development stands out a little bit more. It is first to SEK 5.8 million related to cost items affecting comparability. Cleared from this, we see an underlying cost increase of 18% versus previous year. This is in line with our strategic plan, primarily more external consultants and employees, and we have been operating in full force during the quarter. So in total, higher costs leads to increased losses short term, overall expected development cleared from the items affecting comparability. EBITDA at minus SEK 18.1 million and EBIT at minus SEK 20.2 million.

[Sofia Sundbom, executive]

Thank you so much, Per. So to summarize, we have heard today about some business updates, we have seen the EandoX demo and then quarterly financials. And we will soon move into the Q&A section.

So to wrap up before then, as an interim CEO here, I have 2 objectives. So one and most importantly, is to making sure that this company perform at its best, keeping the engine going. And the second one is to prepare for the new CEO, making sure that they get the best possible start and momentum as possible. In BIMobject, we're building a scalable ecosystem where product information is compiled, consumed and connected. We believe in building something larger than ourselves and being the leading provider of reliable product information for the construction industry. And I believe firmly that BIMobject is uniquely positioned to take on this position.

Thank you so much for listening, and let's move into questions and answers.

[Lisa Norlander, executive]

Thank you, Sofia. And we have had a couple of questions come in to the e-mail. And again, iterating here, you can e-mail us at [e-mail] if you have more questions. But let's start with the first one. So first question is related to the recent launch of the Design app that we did this month. So the question is, will the Design app include a subscription-based plan with paid features from the start? Or will the current version be free but function as a way to attract more project customers to use and pay for features inside the Prodikt platform?

[Sofia Sundbom, executive]

Really good question. So the Design app that we also had a demo of in the last quarterly report will be a free app to begin with, and that is because we have the aim to direct users into the Prodikt platform just as the question states. So the purpose of it is to monetize within projects.

[Lisa Norlander, executive]

Thank you. And another question related to features inside the BIMobject platform. So question is on the insight section on BIMobjects, BPMs or building product manufacturers can search for projects. How extensive is this list? And do you charge credits for unlocking locked projects?

[Sofia Sundbom, executive]

And there seems to be, from what I understand from the question, somewhat of a confusion here around what is available in the product right now. And I was glad to jump on a call to go a bit deeper in this, but BPMs today can get access to very detailed data around where and who or from whom the download is taking place for their digital objects on bimobject.com. So this is a feature that is currently monetized via our plan structure. So where this -- based on the tier you have, so the higher tier, you get access to more data. And on prodikt.com, we -- in a similar fashion, manufacturers can get access to aggregated information on where their products are used in projects.

So bridging this gap and allowing manufacturers to access to analytics around real project is something that we are working towards. And as we progress with our strategy around compiling, consuming and connecting the data, we will for sure come back to this.

[Lisa Norlander, executive]

Thank you, Sofia. The next questions that we got here center around the product road map and specifically around Bim.com and what our plans are for that platform. So there's a couple of different questions in this question. So I will read it out, and then I will let you answer all at once here. So the question goes, under the umbrella brand, Bim.com, do you have any plans on developing products for other areas of the building industry, such as design tools for nonprofessionals, project tools for craftsmen, et cetera?

And following up on that, is there -- how about having a project section on Bim.com open for craftsmen as well and let them bid on projects via Bim.com? And lastly, the question would be, is there a demand for a procurement solution with an integrated order and payment system so that BPMs can get deals done directly on Bim.com? So a lot of questions on what we are planning and what the future potential is around Bim.com.

[Sofia Sundbom, executive]

And I mean, we indeed see a lot of interesting potential across the broad building life cycle. Our strategy right now is not to build a solution for every use case ourselves, but under the connect pillar of the strategy, as we mentioned, our plan is to open up the Bim.com platform so that third-party developers and industry partners of ours can integrate their solutions into the ecosystem. So this way, we believe that we faster can enable a broader range of services on Bim.com without diluting our focus or duplicate efforts. So create something that already exists and works really well. So we see ourselves rather as a Platform-as-a-Service provider, not a product company for every segment, even though we want to have our core products as well, of course. But thankful for all the suggestions and ideas.

[Lisa Norlander, executive]

Great. So another question here. We have in these calls in the past been talking a lot about user services. When are they expected to be launched?

[Sofia Sundbom, executive]

So as outlined in the strategic framework we discussed, the consume pillar is focused on delivering value to users. So historically, that has mainly been architects, engineers and other professionals within that segment. But now especially with the -- now -- a long time ago, acquisition of Carbonzero, also other professionals and an increasingly broader group. So while many of these services may not carry a direct fee for the user, they play a critical role in driving platform adoption and engagement. And the more users rely on these features in their workflow, the more value we create across the ecosystem, which then in turn supports our revenue model through platform-based monetization.

[Lisa Norlander, executive]

Another more general question. When do we expect the company to be profitable?

[Sofia Sundbom, executive]

I mean this is, of course, something that is included in our plan, but nothing that we currently provide guidance on. So as you have seen in this quarter, we invest quite heavily in new products as we believe that this is critical for both long-term growth and profitability, but nothing that we provide guidance on as of now.

[Lisa Norlander, executive]

Thank you for that, Sofia. And I'm trying to pick up the last questions here that's coming into the e-mail. So bear with me while I translate to English here. So we have a question around the acquisition of these new companies that were announced yesterday. And the question here is, what is the rationality behind acquiring these companies when we already have a collaboration with them today?

[Sofia Sundbom, executive]

That is a very good question. And there is, of course, always great with cooperation, but having the right skills in-house and the full control of the -- our own product development is better. So we believe that the possibility now to acquire and integrate both the team and the technology is better for us going forward. So both a risk minimizing effort and also actually a value creation in the sense that we also get a broader knowledge sharing by having these resources internally.

[Lisa Norlander, executive]

Thank you for that. And I'm doing a little bit of final check, but I do believe those are the questions that we had coming into us. So with that, we are going to wrap up the call. I want to thank everyone for spending the time with us today. Like we said, we are open for questions, as usual, with the [e-mail] e-mail. And I believe the next time you will see or hear for us will be around -- sorry, sorry, I have missed one of the final questions here.

Okay. So -- sorry, there was a part 2 to that final question we had around the acquisitions that I slightly missed here. So the question goes, as we mentioned on the call, we have collaborated with these companies for a while, but the companies themselves are registered from the 1st of January 2024. So how is this -- yes, how does this work?

[Sofia Sundbom, executive]

And that is true. And we have collaborated with the team through different entities. So it has been same people, same platform, different entities.

[Lisa Norlander, executive]

Okay. Thank you. And now I do hope I've covered all the questions. But again, please reach us via the e-mail if you have any more questions. Okay. So we will wrap up the call for today. Thank you for joining us. And the next time you will hear from us will be on our annual meeting, I believe.

[Sofia Sundbom, executive]

Yes. 22nd of May in Malmo.

[Lisa Norlander, executive]

22nd of May in Malmo. So thank you to our panelists, and thank you for listening to us. Have a great rest of your day.