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Good morning, and welcome to SmartCraft's Q2 reporting. My name is Gustav Line and I am the CEO. We have a very exciting agenda for you today. It's divided into 2 parts. The first part is about the Q2 reporting. And after that, it will last about 30 minutes, we'll have a Q&A at the end. So the total session will be about 30 minutes. And you are welcome to post questions as -- throughout the presentation.
The second part, I'll be joined by some of my colleagues and on request from you, we will take you to a deeper level. We'll talk a bit about marketing and sales and how we go to market, and we'll also show you some demos about what our solutions do and how they create value for our customers. Again, you're welcome to post questions during that session, and we will have several opportunities to answer those. That session is supposed to last about 1 hour. So our 1.5 hours in total, of which 30 minutes will be the first and 1 hour will be the second.
So we are pleased to see that we grow our revenue in total by 28% and that our annual recurring revenue has a growth in Q2, of 20% organic growth. We aim to be a true SaaS company. And I think that a great SaaS company should have a combination of good ARR growth, a high level of recurring revenue and low customer churn. Everything we do is about growing repetitive revenue. And in Q2, we report a record of 96%, which is among the highest compared to similar companies in Europe, and we keep our churn at 5%. We continue to invest in growth and to invest in initiatives to scale the organization and our products. In Q2, like in Q4 2021, we decided to invest in sales and marketing to build strong pipeline. Additionally, we have invested in one-off personnel costs to better align synergize and scale the organization.
Without these costs, our adjusted EBITDA margin is above Q1 2022 level. We've also invested in several new partner initiatives, which we believe will be important for future sales. So when you read the news, you sort of get the impression that the world is ending. However, we think we are in a good position. We are in a large underpenetrated market that is growing. Our customers follow -- focus on smaller projects, services, maintenance and upgrades, where demand is much greater than supply. It is really hard these days to get electrician, painters and plumbers to do these jobs and the queues are really long.
You can also see that there is a positive activity level on our transactional revenue, which grows by 18% in Q2. And this is a measure of customer activity like electronic invoices to the customers -- to their customers and incoming invoices for goods and material.
And we have a good pipeline going into second half of 2022. So we are positive about the future. I think it's also good to have a resilient business model with 96% recurring revenue, and our solutions have a very low cost for our customers. And also, I'm happy to see that we're not too dependent on some large customers.
There are 4 strong drivers for digitalization in an underpenetrated market. First of all, there is a global lack of skilled workers. And secondly, like I mentioned a minute ago, there's a long tail of new projects and maintenance needs in both the public and private sector. And there is also an increasing demand for digital documentation, both from public sector but also from consumers starting to demand more insight into the projects.
And also, the workforce that is now, the young people that are joining this sector, also expect and demand, to a certain extent, to use digital tools. So simply construction companies need to be in control of 3 things: people, cost of materials and documentation.
And in challenging times, cost control is in focus. They need to be in control of people and material. And in good times, when our customers lack people, it's challenging to have an old review and control of processes and people. So our customers need our digital solutions, both in good and in challenging times. So our main focus is the Nordics where we see great opportunities for growth in upsales, new customers, cross sells and add-on acquisitions. And we are in a good position with high profitable growth, a healthy cash position and no debt. And this gives us an opportunity to invest in organic growth like we do in Q2, and it also gives us an opportunity to do acquisitions.
And we are in dialogue with several potential acquisition targets, both in new geographies and existing geographies. The acquisition market has been inflated, but we are patient because we think that capital discipline is priority #1, and we will only pursue the right targets at the right price.
And I think, Elverdi that we acquired in June is a great example of a strategic add-on acquisition. It's a pretty small company, but it has a very great solution which is a sales tool for electricians. So when they are out in the field, they are able to upsell to existing -- or to their customers quite easily, which is a great thing.
So suddenly, the electrician can become the salesperson. And we think that we can use this solution to grow in existing market with existing solutions, but also to grow with other solutions in the group. We have also engaged in several partner initiatives, which open up for potential new revenue.
These are some examples. Sikringen, it's an electricity chain with 160 members and 2,500 electricians. And they will use our calculation tool as their preferred solution. Lujatalo, which is a big finish construction company, have agreed to use our quality and safety tool at their building sites, potentially reaching 100 sites. We also made an integration to Norkart, which enables our customer to do digital building applications. It's a great example of how we can digitalize into public sector. And then we have Lux Fide, another electricity chain with about 50 members and 700 electricians. The cool thing is that they have agreed to use Elverdi as their safest tool, that is the company we acquired in June. And finally, we have secured the SmartCraft domain, which enables us to better scale on social media and also to do more marketing in the group.
So with this, I would like to give the word to Kjartan.
Thank you, Gustav, and good morning to you all. So my name is Kjartan Bø. I'm the CFO of SmartCraft. So I will go through our financial highlights before we move on to the Q&A and then to the SmartCraft on a deeper level.
As before, we start off with ARR and revenue. We continue our high growth in Q2 with a total ARR growth of 32%. And we have an organic ARR growth of 20%. ARR is ending Q2 at NOK 296 million, an increase of more than NOK 11 million, of which more than NOK 8 million is organic. We have communicated earlier that a part of our strategy is to focus on recurring revenue and transition nonrecurring revenue into the sales price model. In Q2, we have reduced nonrecurring revenue by almost 26% and thus lowering the threshold to subscribe to a SmartCraft solution.
At the same time, we have an organic growth in our recurring revenue of 19%. And in sum, this is increasing our recurring revenue share to 96% for the quarter. In Q2, total revenue has a solid growth of almost 28% year-over-year, which include acquisition, 19% is organic growth. Adjusted EBITDA margin in Q2 is 36%. It is a reduction compared to the 47% in Q2 last year, but this is not in any way dramatic. First of all, we have changed the way we accrue holiday pay, and this reduces the margin in Q2. With similar principles in 2021, the margin in Q2 is less than 44%. The remaining difference is our strategic changes in personnel to better scale the organization, which temporarily increased personnel costs.
And additionally, our markets -- as our market open up, we made a decision of increasing our physical marketing events to be more visible and to meet customers. Without these initiatives and the 2.1% dilution relating to M&A, our margin is well over 40% and in line with previous year. As always, we are confident in our ability to increase the margin in acquired companies up to the group level. We have capitalized less than estimated in Q2. This is partly due to vacancies, but also a change in resource planning. Some of our companies has a long history and a part of that history is legacy solutions and services. In Q2, we finalized the project of closing down a legacy hosting service. These customers are now moved to our cloud-based SaaS solution. And from Q3, we will, as a result, see a reduction in COGS.
The Elverdi acquisition affected the balance sheet, primarily the effects are in goodwill and cash. Also changed in Q2 is the deferred revenue, as we invoiced the majority of 12-month subscriptions in Q1, deferred revenue is reduced in Q2. The invoicing in Q1 is clearly visible in the right chart. As a result of a high amount invoiced, the VAT is paid in Q2, which is one of the major reasons why operating cash flow is lower in Q2.
We are pleased with, however, that we are cash positive in operations in all quarters. We are very pleased with the first half of 2022, and we believe we are in a great position in an untapped market that is growing. Our targets from a year ago, stay firm. We guide at 15% to 20% organic growth in the medium term, and the adjusted EBITDA margin is expected to increase due to scalability and synergies in the medium term.
Now Gustav, let's move to the Q&A.
Thank you, Kjartan. But before we move to the Q&A, I would like to inform you about some of our information channels. Please go to smartcraft.com, our new web page and have a look to find the latest news. You can also follow us on LinkedIn and follow us on Facebook. That's where you get more of the posts that we send out frequently. Okay.
Okay. Thanks a lot Gustav. We have a few questions coming in from webcast viewers. It's still possible to submit more questions through the webcast player. So please take that opportunity. First question, could you please provide some more detail around the impact of holiday pay accruals across the 4 quarters of 2022? So meaning, when will the impact be positive and negative? And what is the magnitude of each?
Yes. As we now accrue holiday pay to be expensed in the -- at the same time the holiday leave is carried out, we see the major difference in moving costs from Q1 and Q4 to Q2 and Q3. So margin in Q1 and Q4 is increasing and margin in Q2 and Q3 is reducing. So we -- compared to -- if we move to the Q3 next quarter, we expect margin to be decreased similar as in Q2, but not at the same level, but then have a positive effect in Q4.
Thanks. And where in the P&L is this? Is this in personnel cost or also in other expenses?
Now this is in personnel cost.
Thanks. And further, could you quantify the one-off personnel costs that you mentioned?
Yes, in total figures we have increased personnel costs overlapping between employees leaving and employees being hired. And we have recruiting costs for a new hire. So in total, this affects the P&L with about NOK 1.5 million, NOK 1.6 million in Q2.
Thanks. You talked a little bit about the macro environment in your presentation. And you've seem surprisingly confident when you are stating about the resilience of your market given the incoming softening in the construction cycle. Why are you so confident? And do you see any geographical differences in the market situation in the Nordics?
Well, I'm happy that I'm perceived to be confident. But we are reiterating and restating what we said earlier on: we are a small to medium size enterprise, vendor. And the beauty of that is that we are in a market where there's a lot of service needs, a lot of maintenance tasks to do and that needs to be done regardless of whether the market is going up and down. That's the majority of the business of our customers.
Regarding sort of projects like smaller projects, these projects are still a long queue. And when we go out and speak to our customers like today, they say that they have far too much to do. Everyone is lacking people, and there's a big lineup of jobs, and that's just -- to do that, you can try to do that in all 3 countries we represented in, and you'll sort of get the same feeling.
We've just done that test now in August. So all 3 markets have more or less the same characteristics. In the SME sector for smaller jobs, there's still a lot of demand, and we think our customers are in a good position. And our solutions are also easy to buy and easy to use, which is very important. So it's not a big investment. It's actually quite a small cost, like NOK 7 per day.
Thank you. A short follow-up on that, have you seen increased attrition in this space? And how is your recruitment situation?
I think in sort of this last 9 months has been a bit of a challenging recruiting situation, especially in the beginning of 2022. There's quite a lot of people, quite a lot of -- quite difficult to get hold of people. And also, we saw some attrition among our people. But that has changed recently.
I think sort of Q2 going into Q3, we have a great team. It's been quite, I would say, a lot easy to recruit people. Maybe it's a combination of us being more visible in the market. But I think also there's a bit of a change in the market that employees want to work for solid companies with a good balance sheet and who have a strong strategy going forward. And I think that's been to our advantage.
Thanks. A couple of more and more financially-oriented questions. How much will the lower service costs affect your cost of goods sold approximately?
We have moved a couple of hundred customers from local hosting to cloud-based. So we're not talking millions, but a couple of hundred thousand or -- yes, between NOK 100,000 and NOK 200,000 less costs from July as a drop, but, of course, an increase in actual costs as we have new customers.
Was that per month or quarter?
Per month.
Yes.
Thank you. When it comes to the marketing activity, do you expect higher marketing activity than the normal run rate in the coming months or quarters as well?
Yes. We -- in Q2, we have made some increased marketing because the society has opened up. It's not at the same level of marketing we expect to be at. So marketing costs are estimated to go down, although not down to the same level as in during the COVID.
Thanks. You have significantly higher growth in the general contractors segment and specialized contractors. Can you explain why we can see this?
Yes. In the specialized contractor segment, we have our most, what should I say, our most...
Advanced.
Advanced systems, yes. This has a longer sales cycle. It also was in the contract -- the specialized contractor segment that we made -- did the road show in Q2, which took up more of our sales resources to the marketing event. So we have made the strategic investment of spending resources on marketing. But at the same time, we see the sales pipeline very positive for second half of the year.
Thanks. The final question we have received. So still a chance to submit questions, but the final 1 for now. Could you provide some more color on development on different geographies during the quarter? Any major variations in the operating environments across the countries?
No. I would say, no. I think you should look at the Nordic countries where we are as pretty similar in characteristics when it comes to people, when it comes to customers, when it comes to competition, it's pretty much the same. So I would say that the development is also quite the same, yes.
Perfect. Thanks a lot, Gustav and Kjartan. There are no more questions at this point from the webcast viewers.
Okay. Thank you. Thank you very much, Kjartan, and thank you very much for listening in on the first part of the presentation. We will now move to the second part. And like I said earlier on, this part, you will have the opportunity to see a little bit more about what SmartCraft delivers of value to our customers. We will have a chance to see some demos, and we will have an opportunity to meet some people that you haven't met before.
So hopefully, you'll enjoy this. At least this is what you've asked for. So hopefully, this will keep you happy. But first, again, we are a software vendor and our sweet spot is to provide software for SME companies in the building phase. This is where we're quite good. This is where we want to provide value when it comes to mission-critical tasks that these companies need. And that, again, would be to be in control of people, to be in control of cost of materials and also to be in control of documentation. And we think we are in a good position as an SME vendor.
And today, I have with me Hanna from Bygglet. Please Hanna join me. And Hanna is in the leadership team, and she's also responsible for the biggest team we have in Sweden. So thank you very much for joining us, Hanna. And I would really like you to -- if you could maybe talk a little bit about how you go to market in the Swedish market?
I'm happy to, and thanks for having me. As Gustav mentioned, my name is Hanna Konyi and on a daily basis, I'm the General Manager of Bygglet, which is the largest company in the SmartCraft group. I'm here to tell you marketing sales at SmartCraft. But some of the comps will come directly from Bygglet.
On this slide, you can see a typical customer journey. We claim that it shouldn't be a project to run projects. Our solutions support quotation, project and resource planning, calculation, time reporting, quality management, invoicing and a lot more. We have more than 115,000 users of our apps and web applications. Today, within the construction industry, there are many misunderstandings and mistakes due to the simple fact that paper is still highly used throughout these processes. We strongly believe that the construction industry will benefit from digital work processes.
In a survey that we did recently, we ask the industry what benefits they see by using digital tools. The answer show that the main areas are better overview of operations, higher efficiency, time savings, higher quality and better communication and communication that is between the people work in their office and people work in the fields and but also the end customer. SmartCraft has the solutions to support all these areas.
Here, we see 2 quotes from customers showing how important our solutions are to them and their business. All documentation is 1 single solution: save time, money and paper. You easily have a great overview of your employees and how their hours are distributed among the projects. With time report materials and change requests directly reported digitally on the correct project. You don't miss to invoice your customers, which in turn enhances of course, your profits. Our customer gain control over the whole business and its processes, which you will learn more about in the demo later on.
In this slide, you can see which part of the work, we keep this strong growth of us. Everything we do aims to drive annual recurring revenues. We have reached a high number of customers, so we have a very low customer dependency. Why can we do this? Why can we keep this strong growth?
One, the market drivers are strong. It is a market that needs to be made more efficient and digital solutions have a proven record of this. Number two, we have invested in getting all business processes in the solutions in place, and that is what we are seeing the result of now.
SmartCraft is acting in a business where organizational success is more or less enabled by tech innovation. Therefore, we always aim to make working methods more efficient in order to create the right business culture, approach and speed to support rapid value creation to remain that competitive that we are.
We can see here that what sort of levers that we are working with. Scalable acquisition rate. One example is scalability in the onboarding process. We have implemented e-learning tools that guide our customers in a very pedagogic way, allowing us to support customers without employing more people to our customers' success departments.
But sometimes, we do work with customers who need extra support from our own winning teams in order to get them up running in the system. We know the importance of as low entry barriers as possible. Therefore, it is important to work with customer experience already in the onboarding process.
Looking at customer lifetime value. We have a low churn of 5%. We have processes in place to see how much and which part of the system our customers use and continuously get alerts that we can act upon. For example, if the user changes to the worst. This is very important since we know that low usage could end up in termination of contract.
We also implemented some tools to be able to have support 24/7. One example is a chatbot. In 1 year, we saved up to 2 full-time employees since so many errands were sold through this channel. And we also work to gain partner networks effect. We have certain programs in every solution to enable efficiency in this sale process.
Yes. Okay. We have a scalable business model. But let's look at how we go to market in more detail and how we work on a daily basis with sales and marketing. Four years ago, we converted half the amount of customers compared to today. This is not a coincidence. We have a very strong focus on marketing and sales. We follow the Google strategy see, think, do care.
We have a marketing team that work with brand awareness and campaigns in every channel with the main objective to generate leads to the sales team on both long and short term. Telemarketing teams have the mission to book meetings for the personal sales team, although we today also have hybrid roles.
This means that our telemarketing team also has the ability to convert leads to customer online if that possibility or need occurs. This is something we implemented during the pandemic when every meeting changed to be online. But in general, the sales team is responsible for conversion from lead to customer.
Today, the conversion rate is 55% from completed meetings to new customers. And just to mention, at Bygglet, 78% of all new customers come from inbound marketing. You have asked to learn more about the solutions. So now we're going to show the Bygglet solutions. We will guide you through the process and show you have customer benefits from the solution as well as how important parts of their daily business is supported.
If you have any questions, please send them in. We're happy to answer them after the demo. The demo is going to be run by Magnus Buregård, who is a customer success manager at Bygglet. So the stage is yours Magnus.
Really glad to be speaking to you all and to give you a presentation of this solution, Bygglet, that I'm working with every day. And as Hanna said, I work with the Customer Success department at Bygglet. And we do our best every day to really get our customers on board this solution and help them all the way until they are like totally settled and can get the full value out of our solution.
So I hope that you can hear me good. And I'm now going to show you a demonstration of our system. So let me just share my screen with you. Before I go into the demonstration, I want to get you in the right state of mind. So can you please imagine that you are a painter, you run your own business and you have about like 10 employees in your business. They're all painters, really good craftsmen. But yourself, you also started as a painter. So this with paperwork and the administration part of running a business, that's not your favorite.
So -- and when you get up to like having 10 employees, it's starting to get a lot of administration and paperwork. And you are really staying awake at night thinking about how am I going to handle this? I work almost 24/7 with doing the projects, but I also have to run a business. If you try to keep that state of mind, while I'm showing you the system, I hope you will see the great value that this solution, Bygglet, is actually adding to your company. So let's go deep -- dive deep into the system. What you see in front of you is the web solution, Bygglet is totally cloud-based.
So this is the view that the project leaders, project managers are working from. We also have a mobile app for the field workers. I'm going to show you that later on. The first thing you do probably before starting a project is that you need to often send a quote to a potential customer and that you can do directly from the system, you can add -- easily add your templates, so you can have nice looking, really professional quote templates.
So if you go back to the painter, I talked to you about, they often send just simple e-mails. Sometimes they just text message a quote to their customers because they don't have any nice looking templates. So if you have these nice looking templates, they also look professionals, which will make you look professionals towards your customers and hopefully, in the future, also give you more jobs.
And the templates are so easy to set up. We help our customers with that. And of course, you can reuse the templates. So just copy your template and then change the customer name, the -- of course, the amount of the quote and so on. So it's really easy to reuse.
And after you have created your quote, you could also easily just send us by e-mail to your customer, to the end customer. And the great thing about that is that the end customer, your end customer is a painter, they can also -- they can be directed to a web page, where they can see the quote and they can also accept the quote or deny the quote directly from that web page.
This gives you, as a painter, a great way of following up. So you can see which quotes have not yet been answered, which have been accepted and which has been declined. You get a great way of just following up on your quotes because you can send a lot of quotes, you don't get them all, but you can directly see who have been answered and so on.
If your quote is being accepted, the Bygglet solution will automatically create a project for you. So it takes all the information from the quote and just put it in the project list. So what you can see in front of you at the moment is the project list, my ongoing project list. So here, I have all the projects that I'm working on at the moment. If you dive deeper into a project, I used to call this the project card. But when I talk to my customers, I say, just see it as a folder. I mean everyone knows a folder. Everyone has a folder in their offices.
So just look at this. This is the folder for this project. And in this folder, you have some submenus, different sheets of the folder. And here, our customers have all their information about the project gathered in 1 place. So in the first page, you can see a dashboard of some numbers. And these numbers will automatically update everything something happens in a project.
You can see how many hours you have worked so far. You can add expected hours. You can -- and then you can, of course, see how many hours do I have left without working too much on this project. I can keep track on how much money do I still have left to invoice, so I don't miss out on invoicing anything. And I can, of course, also see the project results live all time.
And we can present this because we can -- of course, we see how much they have invoiced. But you can also add your costs in Bygglet. You can add your employee costs. You can also get your supplier invoices directly into the system. And by that, we can keep track on all the costs, and we can compare them with how much are they invoicing and of course, then present them a project result during the whole project.
If you're a painter and you don't have a solution for this, most of our customers before they use Bygglet, they had very little or even noncontrol over these numbers. So they only knew how the business was going when they get to report from their accountant or something.
So this is a great thing to give them control and make them be efficient with the money spent and the money invoiced in their projects. But when it comes to like communicating, you can write a work order for your field workers, so you don't have to call them every day or you don't have to text message them every day, you can just put in what's supposed to be done on this project and this description here.
And as soon as you save this, this will automatically be displayed in the mobile app for the field workers. I'll show you later. You can, of course, also add documents. So if you have some pictures or some calculations and so on that you want to share with your field workers, just drag and drop them here, and they will be displayed automatically in the mobile app.
During a project, there can be corrections or extra work that has to be handled. And maybe you want to be able to separate them. It's still the same project, but you want to separate them from the original project. Then you can add them here. So just add your extra work here. You can set a price on them, if you like, or you can just have them like on nonfixed work, like running billing.
And this will give you a good structure so that you don't miss out on any of the extras that you're doing, which is pretty common actually. You do a lot of extra work, but it's hard for you to get paid because you don't have the correct documentation, so the customers won't pay you for the extra work that has been done.
You can also set different permissions, of course. You can direct this project to different members of your team. So for example, if just 2 other persons should get access to this project, just add them to the employee list and only them will see the project from their mobile phones.
I actually forgot, I just want to say something about questions as well. You can also add questions, which means that you can communicate with all the people that are involved in the project, both your employees, but also, for example, your customers or some suppliers that are involved with the project.
Just send a question, add who is supposed to be reading this question and they can answer by mail, but the cool thing is it's not only going to be saved in your mailbox, it will also automatically be displayed here. So you gather all the communication throughout the projects within this project folder.
You don't have to search your inbox to like find some e-mails that has been lost or something. So you have all the communication saved here. You can also easily create your own forums, digital forums. So for example, if you want to do some control of your own work, which is pretty common. Yes, you do some work and then you want to control that you didn't miss out on anything when you did this work. You can build an easy, say, for example, a checklist.
Have I done this, this, this? And these checklists can be filled out in the mobile application as well. So when the employees have done working, they just check out the checklist and the checklist will be displayed as a really professional document directly into the system. And of course, you can send this to whoever want to have this documentation.
So this is some parts that you can do and document during your project. But the next step in this project chain, you would probably like to do some kind of planning, some resource planning. Then you go to the planning phase. Here, you have your employees. And then you can easily get a great overview on which employee is supposed to be on which project at which day. Gives you a good overview so that you don't have employees that are not knowing what to do or you don't know what where they are and so on. So here you can directly get a good overview of that.
Now I have prepared the project. So the next thing is that we are going to get out in the field and do some work here. So then I'm going to jump over to the mobile application. So this is the view that the field workers are seeing like every day in Bygglet. So this is the start page of the mobile application. And as an employee, when I login, in the morning, I probably would like to see what projects am I going to be at this day? So here, I can see the project list that I am added to. I only see my own projects or the ones that I have permission to see. If I go deeper into the projects, I can directly see the information that my product manager has written to me. I can see the address of the project, of course.
And this one is also connected to Google Maps, so I can get it plotted out on a map. I can see the different documents that my manager has added to the project. I can also add my own. I can take a picture from my mobile phone. This is directly connected to the camera in the mobile phone. And those pictures will be directly added as well.
If we want to take a picture of something that doesn't look like it's supposed to be or work done or something? But maybe the key feature for the mobile app is the possibility to write my time to register worked hours. So as I push here, I'm still at this project. It's Thursday, the 25th of August. And the only thing I need to do is to click here and add how many hours I have been working today for this project, let's say, I worked 9 hours today. And I can also write a comment, of course. So I can tell my manager what I have done during the day, for example. I'm done with this, I can just push save. I will get back to the start page, and the information will be summarized on the start page.
If I go to another project, I just do the same thing with that product and add some more hours on the same thing. So this takes about -- when you get a hang of this, it takes about some seconds to do this every day. So if you go back to the state of mind, you're a painter, you don't have a digital solution, you do get -- if you need, of course, to get the information from the employees, they have been working.
So -- but you get text messages, maybe they fill out an Excel form or you even get it on paper and pen and the papers are delayed. They don't come in as they're supposed to. There's a lot of administration that is connected to this moments of a construction of a project -- construction project. So when the employees are done, we can go back to the project managers view of the solution. And if we move on to this menu, the time registration, me, as a project leader, can directly see that Tommy has now added 9 hours on Thursday. As you can see, there are some red numbers, which means that these are newly added hours.
My job as the manager, the project manager, is to certify these hours. So if I just click Tommy, I will get his weekly report up here, and I can directly see how many hours he has worked, what he has written. And if I'm fine with this, of course, I can change it, if there's something wrong, but if I'm fine with this, I just push this one. And I have certified that day. I can also certify the whole week for an employee.
So by doing this, if you have 10 employees, this will take you about 10 seconds to certify their days. Instead of gathering all the information from different channels if you don't have a solution and to summarize them by yourself. And hopefully, the next step in this project journey is to send an invoice to your customer. Then you just go to the next menu here, customer invoices.
You add a new customer invoice. And then you just tell Bygglet, which project am I about to invoice at this moment. When I choose my project now, I want you to look down below here in this empty spot of the screen at the moment. But when I choose a project, the solution will directly tell me what is it left to invoice? So if the button turns green, I have something that I have not invoiced yet.
And if I want to create an invoice of this, I just push the green button. I see what is about to be invoiced. I see the 9 hours that Tommy has added, and I just check this box and push save. And everything will be moved directly up to the rows of the invoice.
And by just 1 more click, I have a professional, nice-looking customer invoice that I can directly send to the customers. And we will, of course, not -- they will, of course, not have Bygglet's logo on them. They will, of course, have their own logo. So by just some few clicks, they have gathered the information, they have sent their invoices. I have actually met customers that are so afraid of doing their invoices because it takes so much time. They can sit for hours and hours and hours, gathering information, different paper notes, different text messages from e-mails and just calculating and gathering all this invoicing information, takes them hours.
When using the solution, Bygglet, it will take them just a couple of seconds or minutes to do a lot of invoices. So this saves them a lot of time, of course. And you know, of course, while running a business, making invoices is maybe the most important thing of the invoice of running a business. So that is actually what I was about to show you. Of course, we have a lot of more features, and I'd be happy to show them to you in a different time if you're interested.
And I hope you got like the essence of Bygglet and the time saving and the professional ways our customer look, especially against their customers. So by that saying, I want to then go back to you, Hanna and thank you all for listening to this short introduction of our solution, Bygglet.
Thank you, Magnus.
Great, Magnus. I hope that gave everyone a good introduction to what we do. And now we open up for Q&A. I've got some questions for you two, that maybe you should be able to answer.
First of all, Magnus are you able to show the project planning in a beta version or something or is that something we're going to do later?
I can actually show it if you like to. Yes. I actually -- I can show it quickly. Let me do like this. I haven't prepared for any information in it, but do that, of course. So if you go back to the planning, we also have the project planning view. So this is the resource planning. So here's where I plan my resources.
But I can also play -- I can also plan, of course, my projects for like a bigger view. So if I want to know which projects are upcoming through like week 32, week 33 and so on, I can just add a planning, choose a project. And then I tell the system for how long it's going to be, yes, the project timeframe.
I can also set a color on it so that I can easily see different colors to make it easy for the eye to look at. And the projects will be added to my project list. So this gives me a good, a bigger overview. The resource planning is like for used by week weekly, and this is maybe for the bigger picture, the longer time frames, yes.
Thank you, Magnus. Thank you for taking that on the spot.
Yes, no worries.
Also, Hanna, maybe you or Magnus could tell -- maybe Hanna could tell us something about the competitive landscape in Sweden or in your market for your solution?
The market is still very under digitalized, I think, yes. And we have very strong solutions. And I would say that many companies don't even have near to have a digital process. So there is still a great need for this in the market. And I would say that we have a very strong solution. So actually, we don't feel the pressure that much from any competitors or what do you say Magnus, you are meeting customers every day, yes.
Yes. As you say, and you actually be surprised when you speak to customers, and they say that I have a digital solution. But then they mean Excel, Word or like a Google Calendar or something like that. And they call that a digital solution. But when they see what a true digital solution, a web-based solution can do for their work, most of them get amazed, yes.
So as a follow-up question from that could anyone in construction use this solution?
Yes, I would say that we focus on SME construction companies, but everyone, I think that Bygglet is applicable to all companies that is in need of a project management tool, for example, even painters or scaffolding companies or something like that. So, yes.
Okay. Also, are you sort of using the end customers in any way to drive demand for your solutions like, wow, if you choose Bygglet then you choose proper digital solution? Do you think that could drive demand?
We talked a lot about that, and we actually think that is very exciting for the future. So we're definitely looking into it. And we also have -- I actually have an example of a friend called me and said that he had constructions at home, doing a job. And he saw that they were using Bygglet and he said, to the contractor that's good that you use Bygglet because then you know that everything is in order. And so actually, yes, we think there is a huge possibility in the future for this.
Also, there are some questions regarding opportunities for growth. What do you think about -- I mean, about upselling to existing customers? Do you have any comments on that?
Yes, of course. We have a very large customer base, I think. And every company that we have in our customer base is growing and developing, of course, and therefore, it's very important for us to look at solutions all the time that we can keep on supporting our company and our customers. But Magnus is the head of this existing customer base. So do you have anything to add to this?
No, as you said, Hanna, we are always -- when we are like -- when we are making the system better with more solutions, we support our customers. And of course, they for small -- for really small fees, they can get some great value out of the add-on solutions as well. So it's -- I wouldn't say easy, but it's -- the customers often see the value of adding some more features to their solution definitely.
So my final question would be, okay, so there is an opportunity for upsell, but what about price sensitivity? How sensitive are the customers to price changes or paying more for a solution?
Yes. Maybe this is a cliche, but I actually think and very proud of that we really live with our customer at Bygglet and maybe that's why they are loyal. And we don't want to put too much pressure on our customer because we're living with them, and we feel with them and definitely not in this time that is now. So -- but we can definitely do it if we want to. Yes, so not that price-sensitive, I would say.
No. Especially if you show, what Hanna, just said before, the value of the solution, they can compare that to like the subscription fee that they are paying, and they can definitely, at least after a while, see that the value way over -- yes, is way much higher than the subscription fee.
So it's actually a final question. So coming in, which is good. Thank you for sending in questions. How easy is it to adapt Bygglet solution to other markets outside Sweden?
Yes, that's a question we talk about every day. And of course, it will be -- we're working on the scalability in the system. So yes, it would be easy to applicable in other countries in the future.
I think I'll just add a comment to that as well. We had a very strong focus on Bygglet to really see how far we can go in the Swedish market, both by getting a lot of customers, but also being able to upsell and to add new features and functionality. So we're sort of taking it to the next level and then we will see how we expand.
Okay. Here's the final question. So I think just answer a bit sort of how you feel like it. But Bygglet has done really well. It's established itself as a major player in the Swedish market. How far can -- and how far -- or how big can Bygglet become?
Bigger.
How big is the fish. Okay.
No end of opportunities, I would say.
Okay. I think the final question here, okay, what are the key reasons why Bygglet's customers are churning? That's the final question.
Should I take that Hanna.
If you want to.
Yes. As you probably know in this industry, there are a lot of businesses that has to like shut down. So that is actually the main reason why they're leaving, okay. But 1 thing that my team struggles with -- not struggles, but we work hard to really get and to use all the features.
So 1 reason that they sometimes leave us is that they only use a small part of the system. So my team are working hard every day to like get them to use the total solution because then they get the biggest value out of it. So I would say that is probably 1 of the reasons they -- the few that leaves us, leaves us because of that.
Thank you, Magnus. And now thank you from me as well. And now I'm handing over to my colleague, Christian.
All right. Thank you, Hanna, and hello, everyone. My name is Christian Saleki, and I am the CTO of SmartCraft. I'm going to follow the same reasoning that we just saw with Magnus and Hanna and move over to the focus that we have on usage simplicity.
As you all know, we are on a mission to digitalize the construction industry. And a great way to achieve that is by continuously lowering the entry bar for our customers who want to start using our digital tools. Magnus mentioned, for example, that some of our churn comes from users that don't really use the entire system.
Now a part of that could have to do with improving the UX. So this is why we keep focusing on this area throughout the year. So one of the ways we can solve this problem is, of course, to systematically work with the user experience in all of our solutions. And to strengthen this work additionally, we have added several UX resources to our various product teams.
As mentioned before, the aim is to, of course, continuously do this work as times change and the different type of users that enter for example, youth -- younger people that start using our tools, they expect a different level of user experience. So we have to match that by continuously improving in this area.
So one part is, of course, to make sure that the users actually use most part of the application. And the other one, which is often much more important, is that it's very easy to onboard them. So both of these areas can be managed by smart UX teams that can experiment and find great ways to solve this problem.
And I'm happy to say that the efforts that we have set in place have already shown some promising results. And for example, one of our mobile apps where we have seen a 20% increase in its rating as well as much higher level of user engagement from our users. So following these best practices, we know that they work. We don't need to invent new things in this area. We just need to do what is right and continue to do so and wait for the gains to come.
And moving forward, we intend to keep this focus in this area because we are not even getting started. We are reaching for much higher experiences for our customers. The construction sector, as we have mentioned throughout this presentation, has been quite slow to adopt technology innovations. And our goal is, again, to help speed up this transformations through smart and aligned products that keep lowering the bar for our construction companies to go from manual to digital processes.
So following this ambition, we acquired Elverdi during June, which Gustav also mentioned, which is a SaaS solution that digitalizes the sales process for electricians. We believe that Elverdi offers a great user experience, and it's a great complement to our existing product portfolio with good alignment to our overall strategy.
Also, Elverdi has a great potential to scale well with our other solutions in SmartCraft, thus strengthening our footprint with electricians. We constantly search for areas where we can connect the dots between our solutions and also through acquisitions to provide more value to our customers and users. One such area is a highly sought after need that involves enhancing the service level between tenants and construction professionals to manage defects and faults, for example, in apartment buildings and office buildings.
Now by linking our property management solution to our quality assurance solution, we managed to create a seamless and digital issue tracking system, which quite frankly, significantly improves the communication between residents and production office. The process is simple, quick and transparent, which has brought high value for both tenants, contractors and other stakeholders involved. So today, we have prepared a short demo of this integration for you. And in the demo, we're going to see a tenant reporting a defect to the property owner.
And in the example, we both have English-speaking and Finnish-speaking people working, and you will see several of SmartCraft solution involved in the process, although everything will flow seamlessly. And that's part of the beauty, of course. We're also going to see how the information flows to the contractor who fixes the problem and how information flows back to the tenant who reported the problem in a smooth and simplified way.
Now before we go into the demo, I would like you to think about maybe you have moved into a new office, you're the tenant of a new office building and you're excited to move into this area. And you see that there is a defect in the roof in one of the offices. There is a ceiling tile missing.
So what do you do? Who do you call? What are the steps? Should I call the property manager or who should I call? No. You just log into our solution and you start just reporting what the issue is. Here, we see the user logging in and entering some information, which room, which floor and so on, and they can, of course, also add free text.
But most important of all, they can actually take a picture of the defect. Now it becomes quite clear what is wrong. On the other side, a contractor receives a notification and starts working on solving the problem. They too can, of course, take a picture but this time of the fixed problem confirming that the issue has been solved.
And here, we see an overview of all reported defects and a dashboard of their progress, which is a great way for the supervisor to have proper control. The process is now done and the tenant who reported the defect gets informed that the problem is solved.
So -- and here is also the confirmation with an image that the tenants that who reported the problem can see. If you think about it, there are almost 5 different stakeholders involved to solving a very small problem and imagine scaling this into a large apartment building or a large office building, the sheer numbers and the varieties will become quite messy very easily if you don't have control over the entire flow.
So by connecting the dots, we have managed to create a seamless flow and a simple solution to a otherwise quite messy problem using multiple solutions in SmartCraft, although it is, again, seamless from a user perspective. So in our second demo for today, we're going to take a look at our -- 1 of our specialized tools for electricians. This is quite exciting for me because the information here is quite unknown for the general public. So I'm hoping that I'm also educating everyone by sharing this information with you today.
In the tool, we have a feature that helps electricians to do cable dimensioning. There are multiple reasons for an electrician to do cable calculations or cable dimension calculations. But the main purpose is, of course, to reduce the risk of electrical fires as well as finding a cost-efficient solution for the electrician and the customer.
So in sum, this is a simple way to maximize the performance and safety of the electrical grid. But the exciting part is that we -- in addition to this cable dimensioning tool, during Q2, we added another smart feature on top of the cable dimensioning which now automatically calculates the energy efficiency of the installation, the entire installation in real-time.
So in our next demo, we're going to showcase a typical setup where this feature brings a lot of value. Now again, I would like you to imagine that maybe you are a garage owner and you have suddenly decided that you want to install, let's say, 16 chargers for electric cars and you want to increase your service level for your customers.
This is quite a technical view. What you see here is the installation drawn up by electrician of the entire solution. There is different parts and loads and cables and all of that technical part. And the fun thing is that now the user has clicked on a cable and can immediately see an alternative cable to that and what the savings would be in terms of energy efficiency, return on investment and actually savings in carbon emissions.
This is a bit magical basically, because we collect data from many sources and present it in a very simple way. So within a few minutes, the electrician can find a solution that is more profitable for the garage owner. In this example, approximately a return on investment of 1 year and then continued savings of NOK 9,000 in upcoming year.
Just to put this in a different light, the garage owner will get approximately 23,000 kilometers of free driving each year by just choosing our -- another smarter cable. And this was enabled because the electrician could very easily explain to their customers what the benefits are. So we feel that this is a great add-on to our existing cable dimensioning solution.
So in sum, the cable dimensioning solution, with the energy efficiency calculation, helps our customers to build a sustainable network while reducing carbon footprint and saving money, so the full trifecta. The tool also helps our customers to provide their customers with simple-to-understand informations that they can help their customers to make better decisions.
And finally, as a fun fact, and this is the educational part, choosing better cables often result in faster returns, for example, than changing to lead lights or -- and actually switching to more efficient heating system. The reason is that there is basically a fee, which is heat that -- where the most significant part of the energy gets lost. And this is a great way to visualize this and cope with it by choosing better suited cables for any installation.
So now this concludes my part of the presentation. Let's move over to some Q&A.
I'm not sure if we mentioned it, but you are, of course, welcome to post questions if you have any questions to Christian's presentation or demos. Maybe, Christian, we have several solutions that focus on the electricity sector. Maybe you could say something, are we connecting any dots or how are we thinking about that opportunity?
Yes. I mean, it's a very exciting area for us right now. We have a strong presence in Norway and Sweden as well. We had Elverdi as an add-on acquisition, and we are now looking into how we can synergize this to expand it even further. So this is actually a really exciting area for us at the moment.
Good. Okay. All right. I think this is also an opportunity if you have any other questions to the presentation earlier on or now you have a few minutes. We have some spare time before we close off.
Okay. So before I close off, again, follow us for the latest news, smartcraft.com and LinkedIn and Facebook, that's where you find sort of happy stories and different things happening every day in our group. And to sum it up for the -- especially for the second part, we are a market leader in a large and untapped market. We see great opportunities, and we also think we have a great position even when if times turn more difficult.
We have a very strong and efficient sales and marketing engine that Hanna talked about, and we have a very strong and high conversion rate. And like Christian mentioned, we have some best-of-breed SaaS solutions. And we think that these specialized solutions, that's the best way we can help our customers start using the tool that you definitely need and then it's very easy to digitalize that process and then we can connect the dots so you can become highly digitalized as in the years to come.
And again, like Christian mentioned, we are doing several things to connect the solutions where it makes sense, and we're really looking forward to presenting that in the next quarters to come. So thank you very much for joining in. And maybe I can ask some questions in the end there, which I'm very happy that you asked. How are you educating the cable topic on scale across markets?
So I'm not a specialist on this, but I know for 1 thing that we are in the Swedish market and the Finnish market with this solution. And in the Swedish market, we actually -- the solution is actually available in the schools. So we actually use our solution to teach electricians how they should use digital tools. So I think that's a good way of scaling. And of course, we have quite a strong presence also on social media, but there's a job to do there as well.
There's another more detailed questions. If we have some future development projects that would require significantly higher CapEx level than you currently have or do you think that you can keep the CapEx at the current level?
And I think Kjartan, you, answered that earlier on. So I think we sort of say that we're going to keep it at the current level, and we are at about 8% for the year. That's what we -- sort of 7%, 8% CapEx level. So correct me if I'm wrong. He's nodding. So that means that, that should be okay.
So with that, I would like to thank you all for joining in. I hope it was useful, especially the last hour where we gave you an opportunity to give you a deep dive, and we would love to do it again. So thank you very much, and hope to see you soon.