Q3 2023 report

November 1st 2023

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Agenda

o Financial highlights
o Our strategically low-risk business model
o Summary and Q&A

Our solutions provide competitive edge for our construction customers

o Ensure digital flow of information between people
o Store and process all data in one place accessible for all
o Data in the field is captured with mobile Apps
o Total overview of documentation
o Revenue and cost control on each project
o Supporting sales processes in a competitive environment

Documentation

People

Material

Leading position in the Nordics

o Consistent and solid growth before and after the IPO in June 2021
o Constantly gaining market share
o 15 offices in Sweden, Norway and Finland
o 200 employees

Q3 2023 highlights

Continued strong growth, record high margins, strong cash flow and low churn

Increased momentum in Sweden

o Successful restructuring of new sales processes in Bygglet
o Sales time decreased by 5 days to 22 days
o 57% increase in booked meetings in Q3 YoY
o Sales conversions consistently high
o Adjusted EBITDA increased 4% in Q3 YoY

Booked Meetings Bygglet

Challenging new build market in Finland

o New build construction market expected to decrease by 38% in 2023*
o SmartCraft has increased focus on renovation in 2023, growing 14% YTD September in this area, compared to an expected decrease of 4% for 2023*
o Growth in Finland is reduced by lower activity in new construction projects from existing customers
o Churn is at a low level

ARR development Jan-Sep 2023

Continued strong market situation in Norway

o Strong organic recurring revenue growth of 17% in Q3 YoY
o Solid sales closing in September
o Cordel revenue order backlog is up 113% last 4 months
o Shortened sales time from first meeting to invoice for Kvalitetskontroll
- o 78% of new customers won in September were both started and signed within the month
o Potential revenue pipeline is strong and at same level as at the end of Q2

Conservative ARR recognition

Solid growth in all segments

o Organic recurring revenue +17%
o Inprog acquired in 2022
o Record sales in September
o Maintained strong pipeline for Q4'23
o Organic recurring revenue +12%
o Good sales performance in Q3, and positive trend
o Strong pipeline for Q4'23
o Organic recurring revenue +4%
o Exposure to large customers in "new build" construction
o Good sales in renovation, but offset by downgrades relating to new build-projects
o Low churn of 4%
o Strong pipeline for Q4'23

Continued growth in revenue and increasingly strong profitability

o Maintaining high recurring revenue share
o 14% organic growth in annual recurring revenue

Consistently high profitability

o Agile business model to scale costs in a more demanding business climate
o Ability to increase margin both short-term and long-term
o Increasing EBITDA-R&D capex margin by 1pp

R&D capex

mNOK

o Development of SmartCraft Core and integrations for cross sale and upsales
o Expecting ~10-11% FY'23

Solid financial position and strong cash flow

- to support growth strategy and M&A activity

o Cash positive all quarters (seasonally strong Q1)
o YoY Cash increase in all quarters
o Cash generated from operations enables strategic investments and M&A
o Net cash positive
o Negative net working capital driven by customer prepayments
o Holds 1,6% (~2,8m) shares , per mid-october

High growth in recurring revenue as basis for success

o 21% growth in ARR
o Additionally, acquisition of ELinn (October 2022), Coredination (July 2023) and FX changes
o Q3 seasonally slow ARR sales due to holidays in July and August
o Record sales in September
o Not all included in ARR due to order backlog
o Maintained strong pipeline

Quarterly ARR growth history, mNOK

Quarterly currency adjustments not displayed in chart

Key focus to ensure continued profitable growth Medium-term financial targets remain unchanged

o Capitalize on solid new customer pipeline
o Customer centric business model
o Improved coordination of marketing and sales teams
o Sales automation & self service
o Use our flexible business model to be prudent on costs
o Further scale our cloud environments
o Value accretive M&A

Margin expected to increase due to scalability of the business

Short-term considerations:

Impact from acquired companies last 12 months

Coredination AB

Our 10th acquisition – acquired July 2023

o Adding functionality to SmartCraft family
o Great cross-sell and up-sell opportunities
o Good pipeline of potential M&A targets
o Valuation expectations for good companies are still high
o 200+ customers
o 3000+ users
o 10 employees
o Located in Stockholm

2022:

o SEK 10m revenue

YTD June:

o 18% growth
o 12% cash EBITDA
o 90% ARR
o 6% churn

Purchase price SEK 25m

A clear customer strategy secures a lowrisk business model

Focused customer acquisition strategy

Segment / Focus	SME concentration of customer base	Electro / HWS* concentration of customer base	New build as main business for customer base
Sweden	High	High	Low
Norway	High	High	Low
Finland	Medium	Low	High

Marketing and sales efficiency

o Continue to capitalize on strong solutions in a under-penetrated market
o 232% increased brand exposure*1 in Q3 YoY
o 44% increase in inbound leads Q3 Y/Y
o 59% increase in direct online sales in Q3 YoY
o Meeting to sales conversion LTM is steady at 55% (70% including online sales*2)

*1 Response to SmartCraft communication in different media channels *2 Online sales was previously included in meetings

Brand exposure for the SmartCraft Group

Online Sales and Leads in the SmartCraft Group

Selective revenue approach to maximize recurring revenue and financial visibility

Revenue sources we avoid	Actions to secure high recurring revenue	Short- term financial effects		Strategic benefit
Setup/installation fees	Including one-time revenue in subscription fee	Reduced revenue Lower margin
Consulting fees	Make easy to use solutions		o	Low threshold to
				become a customer
Training fees	Make user-friendly and intuitive solutions		o	Increased recurring
				revenue
Support fees	Provide solutions requiring minimum of support	Reduced revenue Higher margin	o	Higher margin
			o	High financial visibility
Hardware	Customers buy directly from hardware vendor		o	High quality of earnings
			o	Low-risk business model
3rd party software	Customers buy directly from 3rd party software vendor

Strategy secures a highly scalable, low risk business model

o Offsetting non-recurring revenue motivates us to make good software that is easy to use
o The beauty of software is the ability to achieve economies of scale
o SmartCraft's "Rule of 90"
o 97% recurring revenue
o 92% gross profit margin

Initiatives to reduce COGS and increase revenue

Corporate Branding

Building awareness of "SmartCraft family"

o All solution logos have been updated with "Part of SmartCraft"
o SmartCraft solutions gathered together at events
o Offices rebranded to SmartCraft

Make sure to follow us for the latest news!

We continue to deliver on our profitable growth journey

o Continue to deliver on strategy
o Reduced operational risk
o Consistent strong operational cash flow

AI Terminal

SmartCraft ASA

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