Strongpoint ASA
OSE:STRO
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Strongpoint ASA
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Welcome, everybody, and welcome to this fourth quarter presentation of StrongPoint. The figures itself will be followed by a longer strategy update session by myself and our CFO, Hilde Horn Gilen.So today's agenda for the Q4 results is going to be straight into the figures and highlights, and then we'll talk more about StrongPoint and its strategic ambitions for 2025 and the journey ahead.So highlights. First of all, we are now delivering very strong financial figures in Q4. We also had a number of customer success cases that we'll talk a little bit about. And then lastly, we believe also that we have been and are on the path to achieving the 2025 strategic ambitions.Looking at the overall revenue. The revenue growth is massive, 56%. Of course, I'd say impacted to a large extent by the compensation for the move of our labels production in Norway. However, and nevertheless, even without this compensation, we are looking at a 34%, so 34% revenue growth, which I believe is unprecedented in the history of StrongPoint.When we dig into the segments, the Retail Technology business continues to grow strong, growing also by 34% revenue or achieving a 34% revenue growth. That is, to a large extent, driven by big projects of Pricer electronic shelf labels that we've had in the latter part of the year. But also label is doing very strong, even also without the compensation for the move.When we look at the revenue split throughout the year, you would see that fourth quarter, of course, is highly influenced positively by the Pricer rollout, in particular in Norway then. What we also do have, which becomes a bit difficult to see exactly from the figures, is that we are rolling out -- continuing to roll out our Click & Collect lockers. So for a year as a whole when we're looking at the e-commerce business, it's going from a 6% revenue share to 9%. However, there is actually almost doubling of the revenue in the e-commerce division.Going then into the EBITDA figures, we are, again, because of -- to a large extent because of the compensation achieving a record high EBITDA. But I would like to stress again, even without that EBITDA we are growing our EBITDA margin. We're growing from a 7.6% same quarter last year to 8.4% without the compensation from labels re-move -- or labels move in Norway.And then, again, going into the segments, we're seeing that we are achieving a growth in the Retail Technology EBITDA. But if anything, that is a bit disappointing that it's not going even further up. And really the only reason for why that is happening is that the operations in Spain have continued in Q4 to be weak. If we had adjusted and put the Spanish operations to at least a breakeven, the Retail Technology EBITDA margin would have been 13%. So instead of being 8-plus percent, it would have been 13%. And that gives us confidence that we are on the right track and path to achieving the financial ambitions that we have set forth for 2025. We'll talk more about that.Should also be mentioned, I mean, labels here achieving close to 40% or more than 40% growth in its EBITDA margin, which is very strong for a relatively stable business such as the labels business.We touched upon some of the customer cases already. It's difficult not to mention the large rollout of ESLs, which have been going on both in Q3 and being concluded in Q4. We have also continued, I'd say, rolling out our self-checkout solution in the Baltics with Palink. And we are also continuing to grow and roll out the Click & Collect lockers, which are in increasingly high demand both in Sweden but also throughout.So a final point from me before passing on the words to Hilde. I mean, we are a retail technology company and for those of you that have followed StrongPoint, you would have recognized that we did divest our cash security business in Q4. So all the figures that we've just seen, all those figures are excluding the cash security business. We're, as for now, only reporting on the continued operations.Furthermore, we have invested heavily for quite some time now into the e-commerce picking solution that we have. We are very, very proud of both the work that has been done and not least with the last week's announcement of the Glovo deal on our picking solution. And we will be talking more about both the e-commerce business and the Glovo deal in the strategy update session.So I believe this was the very quick review of the Q4 figures. So Hilde, why don't you take us through some of the changes in this quarter, because there's been quite some big changes that have picked the market up and out. So please.
I will try to do that, Jacob. Thank you, and good morning, everybody. It's really a pleasure to stand here with presenting these types of figures for this period.First of all, as Jacob has been saying, there are 2 major incidents happening now in Q4. First of all, we signed the agreement in November with BaneNor regarding the labels business in Norway, where we have to relocate from our Tangen facility. The revenue from that is booked as other income, and this will, of course, influence both the EBITDA and the net profit of our Q4 business with figures that you see on the slide now.The organization is working on the relocation, where we will go and all that. And we will inform, of course, the market when the decision is ready. We have time. The relocation will be done by the end of 2022.The next incident is the cash security. We announced in December that we have sold our cash security business, and the transaction was also closed just days after the announcement. The purchase price of EUR 7.3 million is -- will be based on a -- both a cash that we have already received at closing and an earn-out. The earn-out will be dependent on the sale of cash security products in the year 2021 through 2023. That's a quite long time ahead, so we have not accrued the full earn-out as gain now in Q4. We have put some aside on as risk. But of course, we believe that the cash security business will attain these profit margins. For all our figures, the cash securities now removed from the operational statements and are reported as discontinued operations on the profit level that -- further down on the profit and loss statement.The net gain of NOK 39.2 million -- sorry about the currency here, but it's important to have the figures correct -- is somewhat lower than the stock notice said. This is due to a higher equity as we have results of cash security also in Q4 included here and an additional sales cost.So these 2 incidents do make it a little bit different for us to present and for you to understand all the figures. So I have included here a slide that shows the comparison figures from 2018 to 2020 from an operational perspective. And you see we have a good growth from 2019 to 2020 from NOK 988 million -- that's the new revenue figure for the group -- to NOK 1,127 million, excluding all the onetime items.Now the continued operations do include the compensation of NOK 56 million on the revenue side and NOK 53 million on the EBITDA. So we are in a position here to say a total revenue from continued operations of NOK 1,183 million and an EBITDA of NOK 152 million.I have also then included the profit after tax to try to explain even further. A good growth from 2019 to 2020 operationally from NOK 27 million to NOK 35 million, that clawed all the way down. Then we have the compensation for the relocation, and we have the discontinued operation and the net gain from the transaction. And we end up there with a net profit after tax of NOK 98 million.Now how will this influence our earnings per share? That's what we will see here in the next slide. If we look in the blue columns, we see that the Q4 earnings per share ended on the same level as Q4 2019 of NOK 0.25. Also for the year -- that is on the right side -- you see that the figures are almost the same for the 2 years, the full year.Now we have to add the compensation with 0.53 points per share, and we end up for the year of NOK 1.64 (sic) [ 1.54 ]. That's the earnings per share for the whole year as total for the continued operations.Now what this slide does not include is the divestment, and if we added the net profit of the divestment of 0.88, we would end up with an earnings per share of NOK 2.42. And I think that is a record for StrongPoint. So it's important to keep all these different onetime items aside when you look at StrongPoint from an operational perspective.Of course, the received compensation that was paid in December and also the received cash from the divestment is part of our cash flow and net interest-bearing debt.If you look at the cash flow effects, first, we started the year at NOK 39 million. Adding the EBITDA, and then we see just a slight change of working capital and CapEx, that's from ordinary activities. We have used the positive cash flow of the operations to pay the earn-out for our previous acquisitions in Cub and PYD. We have paid dividend for the year 2019 and we have reduced the use of credit facilities.The divestment increased, of course, our cash flow by NOK 17 million, that's the net figure. And the receivables of the earn-out, you will find in the column says change in overdraft other. That's the part of the receivables that we have accrued for. So we ended up in a very positive cash position of NOK 75 million at the end of 2020.Looking at the debt situation. We are happy to announce that we don't have a financial interest-bearing debt as of the old way of looking at it. The only interest-bearing debt we have is attached to the IFRS, that is the lease obligations we have for rent and cars. So beyond that, we have a positive cash position and a net leverage multiple ended at 0.28, which gives us a lot of headroom ahead on the debt side.Of course, this will lead to a question related to the dividend. And the Board emphasized that StrongPoint is a company with high-growth ambitions. During the next years, we will need to invest in technology, in sales and marketing and resources, and we will need a solid and flexible balance sheet. Yet, the Board has an ambition to pay and increase dividend year-on-year. Therefore, the Board has proposed a dividend of NOK 0.7 per share to the General Meeting in April. So that's the message from the Board.The financial calendar is, of course, out there. We are happy to join in one-to-one meetings with investors and we really hope that we can see you all in a short while in meetings, physical meeting that is.So that ended, actually, this quarter presentation part of the presentation. We will take 1 minute just to the shift on the stage, and then Jacob will start off with a presentation of the strategy update session. Thank you.
Welcome back. Thank you, Hilde, for the Q4 explanations, as you did so well.So now to today's longer session, I'd say, the strategy update session, the annual strategy update session. We do also for this session would like to encourage you to ask questions. There should be a possibility on the down right-hand side to post questions that we will in the end try to answer.As you have all experienced, there is a pandemic going on, and that has had some pretty severe changes to us as a society, but also on the retail landscape. And for a company like StrongPoint, the retail shift has really pushed our customers into thinking about how to improve their operations, whether online or in-store. There is a mega trend that I think will continue for -- be even stronger going forward for as long as the pandemic lasts and not least also change customer behaviors over time and significantly over time, sustained over time.If you look at StrongPoint as a company, we have a focus. We have a focus on retail technology and a focus on the resilient grocery retail sector. This is not just something we're saying now. This is exactly the same message we had last year on February 12, 2020. So we are and will be continuing to focus on the resilient grocery retail sector.On this page, you will see a number of logos. These are customers of StrongPoint. We serve the -- all the major grocery retail companies in Norway, in Sweden, in the Baltics and emerging so in Spain. And as we'll talk about later, we have a pretty international -- or exciting international plan and also achievements just recently.We do recognize that we also have the ability to have spillover effects to other verticals, but the resilient grocery retail sector is the focus for StrongPoint. I also -- in light of having a 2020 where we have actually changed our visual identity and also tried to hone in on what our StrongPoint really about, we are here to put retail technology in every shopping experience for smarter and better life. And it's not just putting in retail technology for the sake of putting in retail technology. It is for the sake of improving the customer efficiency of retail customers' efficiency and the end customers' shopping experience. And that is both in the store and it's online. This is the reason why we get up in the morning. I believe I speak on behalf of all the 450 employees at StrongPoint that this is something we feel really proud about, in particular in these times with the pandemic.In the past -- and we will continue to talk about StrongPoint's double opportunity. So e-commerce in grocery is and has been driving and will be driving 2 opportunities for StrongPoint. The first being, when you look at the in-store operations, they will be influenced by the fact that you're moving large parts of the revenue and operations and sales from the store and online.Today, actually, you might argue in a bit of a special situation where canteens, restaurants, et cetera are closed and shop sets -- or grocery shops are experiencing a surge in demand in general, but as we do get back to some sort of normality at some point in time, the sustained e-commerce penetration will be influencing the stores. And this influence on the stores means that you will have a margin squeeze in the stores. And one of the very few ways of actually being able to withstand this margin squeeze is by applying technology in the stores.The second opportunity for StrongPoint is the e-commerce opportunity itself, whether the companies that we are dealing with are into grocery e-commerce and want to scale it up or, as you've seen in many instances throughout the year, a number of companies that have been hesitant to move into groceries are doing so now and they need the appropriate systems and infrastructure to do so. And we are there for them.So this is the double opportunity for StrongPoint. And to make it a bit more tangible, in particular, for our new investors, I want to explain a little bit more about what are these solutions under the in-store efficiency solutions and productivity solutions we are talking about and what are the e-commerce solutions.So taking the roof off the grocery retail store. You will have -- in particular, if you live in Norway, Sweden, Baltics or Spain have seen the solutions that StrongPoint offer. As number one here, we have our self-checkout solutions, self-checkout solutions which have been in high demand, are in high demand with the pandemic. And of course, as customers get accustomed to using self-service, this is also an area in which we'll be experiencing further growth.We'll talk more about StrongPoint's self-checkout solutions. So if you live in Norway and Sweden and are unhappy about the self-checkout experience, fear not we have the solution.The second thing that's worth mentioning here is ESL or electronic shelf labels. These are price tags that you will see on the shelves in the grocery store. We are a proud partner of Pricer, Pricer, the Swedish technology company, and we are one of their biggest partners globally. We have ensured that Norway, in particular, is one of the highest, if not the highest, country in the world with the highest penetration of ESLs. So this enables rapid changes of prices, but it also, not least, reduces the need for manning to change the prices manually.Number three on this page is Vensafe. This is an efficient and safe way of storing the tobacco, typically snus or cigarettes that you will see in multiple stores. We'll get a bit more back to that as well when we talk about the self-checkout solution.And number four here, task and workforce management system. Again, we are a very proud partner of Reflexis, Reflexis that was through the year acquired by Zebra. Reflexis have one of the, if not the best solution to ensure that you have control of the -- both the activities and tasks, but also the manning in store. So if you really want to reduce the cost burden, if you're going to use like that, of a store. After the cost of goods sold, anywhere in the world you go and in particular in the Nordics, staff levels or staff cost will be the biggest cost item. So ensuring you have the appropriate people in place at the right time is very crucial for the customer experience and to get down the cost.Number five on this picture is CashGuard, a known site here in Norway and Sweden still, I'd say. But looking at the Mediterranean markets, that's really where we're still expecting there to be a significant market for the cash management solutions.In this picture, we've also added 2 e-commerce solutions. But that's really to illustrate that part of the way that we want to -- or our customers are doing fulfillment and delivery of groceries is also by using and leveraging the stores and the store network they already have. So we have a number of customers doing picking in the store and delivering through Click & Collect lockers.So moving from the store, what's happening on the e-commerce side? And as you can see, there is a connection between the 2, right? So if you look at, first of all, how do our customers, our grocery retail customers do picking of groceries for online fulfillment. They are in principle 2 ways of doing it. Either you do it by using the labor force you have in a store or in a dark store to pick the groceries needed. StrongPoint has an outstanding solution for that, and we'll talk much more about that later today.In addition to that, there's lots of hype about the automation. That is really a friend of StrongPoint as well and we'll dwell into why that is.So that's on the fulfillment side. Then when it comes to the delivery of grocery. So end consumer puts in an order at a certain web store, that order is being sent to our customers' systems, which hopefully are StrongPoint systems. We'll do the picking or ensure the picking is done, the fulfillment is done correctly. Then how do you get the groceries out to customers.And there's a number of ways of doing that and we see grocery retailers in general and our customers applying one or many of these delivery methods. So number one is the Click & Collect lockers. So the Click & Collect lockers you just saw on the previous page, a very efficient way and a very smooth way for customers of receiving the groceries purchased.The second one is drive-through. So basically, you're going through the store and you're achieving -- or you're getting the groceries, where the employees of the store will typically come out with the groceries too.The third way is pick up in store. That's maybe the most common way of starting for many companies. However, that's not a very good experience for the customer. But it happens still that there is a delivery of goods in the store without the use of drive-through or Click & Collect lockers.And then lastly is home delivery. So we have our own platform and system to do that, but we have also now partnered with Gordon Delivery to ensure we have the best route optimization tool, but also ensuring that the customers get the appropriate communication and are able to give the feedback to a delivery when needed.We'll talk a lot more about e-commerce throughout today, so fear not. But this is a very brief overview of what StrongPoint has to offer within the e-commerce logistics area.So then to the agenda. We will be looking at StrongPoint at a glance, again, for -- in particular, those of you that have not that much encountered with StrongPoint. We'll spend the majority and the bulk of today's session on the 2025 strategic ambitions and the strategy update. And then we'll end up with a wrap-up of what are we doing immediately now and what's out there.So StrongPoint at a glance. So StrongPoint. We are 450 employees divided across Norway, Sweden, the 3 Baltic countries and Spain. That's where we have our offices. We have offices in most of the major cities in these geographies. And in addition to that, we do have labels production in Norway and Sweden. We are listed on the Oslo Stock Exchange, and we have a history of being in the market for more than 30 years.The company has its headquarter just outside Oslo. And for those that live in Norway, you would maybe know about Raelingen. That's where the headquarters are located today. Currently, we have a market cap of NOK 1.4 billion, and we don't have any shareholders with a stake of more than 10%. So every shareholder has a stake of less than 10%.I think it's important just to sort of see this visually where we are located with own offices. And that is not to say that other countries are not important. They are hugely important. But there are 2 things that we will talk about later today. One being how do we manage to take some of the world-class solutions we have throughout Europe and the world; and number two, how do we achieve operational leverage in the countries we are at. So in these countries that we're at and any future countries we go to, we want to be really, really strong.And parts of why we want to be strong is because when we are strong in Norway, in Sweden, in the Baltics and Spain, we're achieving operational leverage on the multiple levels, not just in sales but also in service, operations, support and installations. And that is vital for the profitability levels that we are able to achieve when we take on new assignments. So for me, it's very important to strengthen or push for that geographies as such are very, very strong.We're also fortunate to have strong partners and those partners are, in particular, and I'd say, of course, related to the solutions where we believe there is the biggest potential outside of our core countries. So that is the e-commerce solutions, the self-checkout solutions and the cash management solutions.So in addition to having strong geographic focus, having a strong set of partners. We have also very strong solution communities. We have a community and our R&D department in around the in-store efficiency and we have a community in and around our e-commerce solutions. And in addition, we have our partners -- our partner solutions that we're able to effectively leverage in the core countries simply because we are with all the major retailers and doing all the work from sales, service, support and installation.So we'll come more into our solutions and we'll come a little bit more into how we are achieving operational leverage. But then I'll leave the word to you, Hilde, again for -- that's the way it is when figures are to be spoken about. You are on, please.
I'm really glad that you say that. I'll remember that every time you want to use the money.And Retail Technology is by far the largest business area of StrongPoint, and after the divestment of cash security, it represents above 80% of the total business. So we saw in 2020 a need to break down the figures of the Retail Technology in different segments.When Jacob is presenting, you just heard him talk about the double opportunity. And e-commerce you will find as a separate segment. But we have also broken down the in-store operations offerings into in-store productivity, cash management and checkout efficiency.It's kind of important that you understand what -- where our products are included so that you can understand the development of the segment. The biggest part of each of the different segments -- the biggest product is the one that is named the first. Of course, when we have different volumes of the different products, this will influence both our revenue, our margins and our cash flow from the sale. And in the next slide, I will show you how the typical cash flow from the components that is part of the different segments, how they are reflecting.Now this is a complicated slide we know. So I'm not going to go through all this. But it's okay for you to go back and look at after this session. When we are selling hardware, we often sell it together with a service agreement, a license agreement and a support agreement. And of course, the revenue of StrongPoint will be influenced by the volume of the project and the share of hardware sales. That's just how it is.Our ambition to increase the EBITDA stems from this picture in 2 ways. First, we would like to move our business so that the software -- or the software and hardware combined projects are being -- have a higher relative share of total revenue. And secondly, we see that when the retailer has installed more than one of our solutions, we can have an efficiency of scale where we do the service and support operations. So this is an important part of how we are trying to work towards having improved profitability of StrongPoint.StrongPoint is also evaluating as a service offerings. We started off in Spain last year by renting out the CashGuard to hospitality segment and we look forward to see how this develops when the Spanish market is up and running again. We are also evaluating other areas where service offerings can be of interest to our customers.Often contracts are bundled. And when I say bundle, we see that we bundle the hardware, the installation, the license fee and support fee so that it's easy for the customer to have one price. This makes it a bit hard to report on recurring revenues, which we know you would like. So we will continue to work on finding alternative performance measures that would show how the recurring part of our business and revenue is developing further on. But we will use a bit of timing to find the right ones together with the Audit Committee.In 2020, the different segments looks like this. We already presented this as -- in Jacob's presentation earlier today. This is the way we have reported this in 2020. In 2021, we will report the segments also with numbers and comparison numbers for last year.The pie chart shows that the -- the in-store productivity, where the ESL is the most volume product, it's by far the largest, 1/3 of the revenue, and it was the same as last year. The second largest is cash management, 19%, down from 24% last year, and this is due to both that the other segments are growing, but also that the Spanish market has been suffered from the pandemic in 2021 -- in 2020.And repeating Jacob, what we are very proud of is that our e-commerce logistics has increased from a 6% relative share last year to 9% in 2020, and that means almost doubling the revenue in nominal figures. Our labels business continues to be between 15% and 20%. Now this year, it ended at 17%. This shows that we are not depending on one product, but the in-store is then the largest one.If we look at the growth of the geographies, we see the same picture as last year. Norway and Sweden are the biggest geographies that we have and the Baltics are climbing and Spain and partners is a relative share of 12%. And now Norway, of course, influenced by this large project of ESL to one big retail chain. But -- and it is important to continue to be relevant in Norway and Sweden. So this diversity is good for us.The Spanish market, of course, has been -- suffered during 2020. But we are very glad that we have good partners, and I must say especially in South Africa, that has managed to fill some of the gap that we have for reduced revenue in Spain.So all in all, the 2 slides that I have presented now show that we have a diverse operation and we don't have any dependencies to one product, one market or one client. So we are diversified.Yes, Jacob.
Thank you. So now you all hopefully would have a fairly good understanding of where StrongPoint has been and where we are. So let's talk about the 2025 strategy.So last year, we had the first strategy update session. We presented the strategic ambitions for 2025, NOK 2.5 billion turnover and 13% to 15% EBITDA margin organic. I'm pleased to continue to reaffirm that this ambition still stands. So when we're going through the strategic review today, we will be talking about what we have labeled the T-shaped strategy.The T-shaped strategy. We're in the stem of the T. We're going deep in some core markets, and I've mentioned those a few times. And we're going with some of the solutions we have, the solutions with real world-class potential, namely our e-commerce solution or solutions, our self-checkout solution and in some markets also cash management.If you did listen into StrongPoint last year, you would have seen and maybe remembered the bridge, how do we get from NOK 1.1 billion turnover in 2019, which we had or presented last year, to the NOK 2.5 billion. This was February 12, 2020. Little did we know that one month after there would be a pandemic. Nobody knew. So of course, and clearly, this influenced the bridge and how we're thinking about the strategy and the strategic ambitions.When we look at how the pandemic really has changed the way we think about achieving the 2025 ambitions, it's been in the following manner. Number one, self-checkout, as you might understand, are achieving or experiencing an acceleration in terms of its usage and as such the interest from our customers. E-commerce is experiencing a massive acceleration of demand from all our grocery retail clients and more.But it's also fair to say that with the pandemic, the cash management plans we had are at least postponed in time, right? So with the close down of many parts of the world, but in particular for us Spain, Italy, Greece, countries that we were planning to go to, that, of course, has been pushed out in time and potentially and probably also taken down somewhat. And throughout the year, we also -- as already stated, we divested our cash security business.So taking this bridge, taking the pandemic into account, what -- or how are we thinking about the growth going forward? Well, first of all, we have moved 1 year ahead, so 2020. And you will see 2 major items on this page: one, being the e-commerce growth that we're expecting and targeting; and two, the self-checkout solutions. And I'm going to double-click, so to speak, on both of these and will talk a lot more about both these 2 solutions.It is also worthwhile mentioning that it looks like the in-store solutions with ESL, in particular, are coming down. And the reason for that visual impression simply is that 2020 was a lot better than we expected.But I will now double-click on e-commerce first and then self-checkout. So bear with me and hang on. E-commerce, top of the T. We pulled a few newsprint articles and articles from some of the most renowned consulting companies out there, and you don't really have to be an expert to see the obvious. E-commerce is growing massively. There are talks about the push leading the e-commerce in grocery, which have been -- had a low penetration in general. But e-commerce in groceries have been pushed to, 3, 4 and even 5 years going forward. And we would totally second to that. We believe that is the case. We believe that as consumers are experiencing the comfort and convenience of shopping online and as grocery retailers are starting to offer online retailing, this is a mega shift, a systematic and significant and sustained shift in the customer and consumer behavior.We have conducted some analysis ourselves as well with the input of experts. And this is a pretty crowded page. So I'll help you understand how we have been thinking about getting to what is really the appropriate addressable market for StrongPoint to consider when you ask -- in particular, investors are thinking about StrongPoint.So number one. On the left-hand side of this page, you will see the growth of online groceries. So you see the big shift going from 2019 to 2020 in the countries that StrongPoint either are in or are targeting. And you see a doubling, on average, of the online penetration from a low 3% to a higher 6%. So more of a doubling. This growth is expected to continue. And what we're looking at here is the sales going through the online grocery channel. And those are pretty massive figures when you're looking at this. This is from NOK 1 trillion -- NOK 1,000 billion -- to NOK 2.1 trillion. That's, of course, a huge market.But what's relevant for StrongPoint is how are these orders equated or translated into orders that need to be either -- or need to be fulfilled and delivered. So we have converted them into orders, number of orders. And if you look at the picking technology on top and the delivery technology on bottom, you will see that the growth in number of orders are going from about NOK 1 billion to NOK 2.2 billion. So there is a slight higher increase per year than the growth of online groceries itself.Why is that? Well, because we expect and the market expects a number of -- the number of transactions to be more or grow more than the market itself. And that is driven to a large extent by delivery platforms. So delivery on demand platforms are driving the need or the desire from customers to purchase fewer items than the typical week's basket.So what we've done then is we've taken the technologies that we as StrongPoint have and labeled them into either a software opportunity -- software license opportunity for StrongPoint or a hardware CapEx opportunity. So we'll take the picking in store, the picking in dark store together with the home delivery drive-through and the in-store delivery, all those where we have solutions being offered to the markets, premier solutions, as I'll show, where we are basically charging a per order fee. So that is what's going to be labeled as the software license market.In addition to that, you will also see that we have the Click & Collect lockers, predominantly being a hardware investment that retailers do. That's the investment or hardware market for StrongPoint.So when we go into the next page, this has been the way we have been getting to an addressable market. And it is a big addressable market today and it's a growing addressable market. So looking at, firstly, the software licenses, we're expecting that to get to a -- more than doubling. So there's more of a doubling. And this is from NOK 5.7 billion software licenses every year to NOK 12.5 billion software licenses every year.At StrongPoint, we merely have -- we don't even have a percent of that market today. The biggest competitor, you might argue, are our grocery customers themselves, a lot of them having moved into online groceries in the early 2000s with old legacy systems. But nevertheless, they are still and that's in a way the competitor for StrongPoint as well today.As for the hardware investments, we're expecting a massive growth in the use of Click & Collect, 4 to 5x the market you see today. And as an example, you'll see that the market is relatively big in Sweden. It's contrary to that in the U.S. It's barely getting there. It's just starting now. And we're expecting a 4 to 5x growth in that market. Today's StrongPoint as a Click & Collect supplier are experiencing or seeing a market share in somewhat excess of 10% today. So growing with the market. We're expecting this to be a nice journey and hopefully being able to grow our market share in these segments will be an even nicer journey.I'm going to spend a little bit of time now on helping you understand what are really the USPs there, unique selling points of the Strongpoint solution with its competitors. So starting with picking and then moving on to the deliveries and Click & Collect in particular.So here, you see an illustration of how a picking is done in a store or in a dark store. And I'd like to put some flavor to this page when we say that we are efficient, flexible and scalable. We are super efficient. We have customers today -- not just one customer, 2 customers, but the top quarter customers over time across segments achieving picking rates of more than 240 items per hour -- more than 240 items per hour sustained over time across categories.If you want to compare that figure with something, look to the Bains of the world and McKinseys of the world, and the benchmark they would pull up is 60 to 80 items per hour. The difference is just massive and mind blowing. It's to the extent that when we are meeting with so-called experts or customers, we would need to prove this by showing videos as the travel restrictions are still in place. So we're providing videos of customers that we have today that are achieving more than 240 items per hour. It's almost difficult for some of our customers and these experts to understand.But I think it's very important that we understand where we are coming from. We are -- have Nordic roots, which means that when we are developing solutions to be efficient, they have to be super efficient. We don't have low-cost labor in Norway, which means where we have store associates doing this work, it has to be super efficient, it has to be super efficient. So the speed and efficiency of the solution we have today is unprecedented.Number two, this is also very fast to deploy. You saw during the beginning of the pandemic that the massive online orders were not possible for providers to really fulfill and we have just in weeks doubled capacity with our customers or some of our customers. How do we do that? Well, we have a very scalable platform that's becoming even more scalable now with our third-generation picking solution that we're putting through with the Glovo deal.But the thing is that it's -- really what you need is store associates, and we have a flexible, scalable technology solutions. In addition to that, you have a few hardware components that's needed to get scaled up. And lastly, it's the low CapEx. It's -- this is the lowest CapEx kind of fulfillment you can get if you did compare with an automated solution.So we're super proud about the solution that we have out in the market. We're super proud about the next-generation picking solution that is getting out in the market with the Glovo deal that I'll also touch upon later.As we are talking about picking, I also just want to get into the topic of MFCs and CFCs. So micro fulfillment centers and customer fulfillment centers. And on this page, you will see some examples of these players out there. They're getting a lot of attention. But I think it's important to recognize that today's market is not being delivered by these players. They might be growing fast, but it's from the solutions that are already in stores and in dark stores predominantly.We at StrongPoint, we do think of these as friends. We are a complement to the automated solutions. So number one, we are the natural partner for these players. We have -- in many instances, in particular, in the core markets, we are already in dialogues with customers -- grocery retail customers that are into online grocery retail. And I'd say all, if not most, but all grocery retailers, the natural first step is starting by picking in stores in the network that you own yourself or in dark stores with these flexible augmented picking solutions that Strongpoint offers. So having been with StrongPoint and starting with StrongPoint, this is a natural next step. We are the natural partner for both these companies as well as the grocery retailers.The second thing to say about this is even though automated and robotics sounds very cool, it is also such that they cannot deliver on all the items that needs to be picked. And to -- that might be because a grocery item is maybe too big for the totes, it might be because it's frozen and the solution doesn't allow for that to be picked in the store or because you simply have a too long tail of other SKUs. That's when you need the most efficient picking solution in any case. That's a strong point.So we believe that with these players absolutely growing and being important for the on-demand delivery market, StrongPoint is their best friend also going forward. So I think there's a great opportunity for partnerships in many ways there.Okay. Then we talked about picking. I'll start off the delivery piece here by showing a small video.[Presentation]
I hope you enjoyed that short video of our Click & Collect lockers. The Click & Collect lockers are today achieving a lot of attention. In Sweden and just recently with Willys, one of the grocery retailers there, picking -- I'm sorry, Click & Collect lockers is actually the preferred way for customers to get their groceries. So the Click & Collect locker market for Willys is actually bigger than any of the other delivery methods together. That's an inspiration there.As for the picking solution, I want to highlight some of the USPs, the unique selling points for our Click & Collect locker. Number one, it's fast and efficient. It's fast for the end customer. It's fast for the grocery retailer. You're saving lots and lots of time by putting in the grocery orders into these types of lockers. And we're seeing -- if done appropriately, you're getting down to a cost level which is very, very attractive.Number two, which could tend to be sort of a little bit boring, purpose-built, reliable; we've been there. This is just hugely important for grocery retailers that we are talking with. The last thing you want when you are starting a new offering as a grocery retailer is to be experimenting at large scale. StrongPoint has its Click & Collect lockers in the north of Sweden to the south of Spain. We have experienced all the -- say, the faults that can happen in very, very different climates and very, very different environments.So being able to show to our grocery retail customers and customer prospects, this is one of the points that is very, very important. We have a large network of proven track record with some of the largest retailers in Europe.And lastly, it is also flexible and scalable. Have you expanded or achieved maximum capacity on the lockers that you have purchased from StrongPoint? No problem, add on another locker, either a stationary locker or a mobile locker in the cases where you are experiencing changing demand patterns throughout the year. So we believe we have a very, very strong unique selling points for our Click & Collect lockers.I will be showing you a bit more about what type of interest there is in the market and actual sales there is in the market of our solutions. But before getting there, let me just help you all understand how we are thinking about our customers. So you can divide the kind of potential customers for StrongPoint in 4. Number one are the grocery retailers that have an existing offering within e-commerce. And there's quite a lot of them, although maybe not seen as much in Norway as other countries, but a lot of them throughout the world.The Click & Collect locker, as I mentioned earlier, is relatively new. StrongPoint has a more than 10% market share in the target markets we're looking at and the Click & Collect lockers is a very, very high demand type of solution for these customers.I put the -- our picking solution, however great, into brackets. And that's to be somewhat, how should I put it, realistic. Not made -- a lot of these mammoths, big, big companies have put in many, many hours and kroners or dollars into own picking systems. And however good our systems are, it is a bit of a hurdle that needs to be overcome to scrap an old picking system in favor of a modern system however greater it is. I must say, though, I'm still very positive about the opportunities that we have in that space.The second type of grocery -- or the type of customer is the grocery retailers that prior to the pandemic didn't want to move into e-commerce for whatever reason. They are now all coming down. It's not a question of if you should be going into e-commerce. It's a question of when. And of course, as a full provider of the e-commerce logistics solutions you do need, StrongPoint is in a very strong position both in the picking solution, the Click & Collect lockers and all the other delivery methods out there.The third type of player is the pure online player. And most, if not all of these pure online players started from a very low scale, typically built their own picking system. So let's just be honest, picking systems that are -- pure online players have, it's not a priority area for StrongPoint. We do see, however, that in certain areas, our Click & Collect lockers might make sense. So hence, the tick mark with a bracket.And then lastly, which has become very exciting during the pandemic, is the delivery or on-demand delivery players. It's not one company in the delivery -- retail and delivery space that have not moved into grocery retail. And as we'll talk about in a second, they need picking solutions exactly for that. There is a huge difference between picking a pizza among 20 pizzas or going into a grocery store with 10,000 or 20,000 SKUs and getting that correctly and efficiently done.So I'll talk more about the platform and online delivery player with the Glovo deal shortly. But first, how are we doing with sales? And on this map and chart, there are 3 things I would like to highlight. Number one is when you do compare the white pieces of the bar chart where you have the Click & Collect lockers or number of Click & Collect locker installations across geographies, you'll see that the white represents everything that was installed and sold up until 2019 and before, and the yellow piece being what's been delivered and sold in -- or sorry, delivered in 2020 and up till to date. As you'll just visually see there, the growth of the Click & Collect lockers have been massive. That's number one.Number two. As we have not been going out publicly earlier with this is some very exciting pilots or, if I'm perfectly correct, proof-of-concepts that we have in 2 new target geographies. One of them being in the U.K., with a major grocery retail player in the U.K. We're not alone to be having this pilot or proof-of-concept. That is a very, very strong testimony of the solution we have.The other is, if you move across the bar chart and across the Atlantic into the U.S., we do have 2 installations that are currently being tested out. Two installations of very few Click & Collect locker installations in the U.S. And you could label that as sort of a breakthrough for the Click & Collect solutions, at least having a pilot and proof-of-concept. And by all means, there is a long way for proof-of-concept and pilots to roll out, but that's very, very encouraging in these times.The third thing that I would like to address on this page is the picking solution, and you'll see that our picking solution currently is not very much out there. It's in Sweden, the Baltics, in Denmark. But honestly, it hasn't -- has yet to capture the world. This is changing, and the first place that, that is changing is with the Glovo deal we announced earlier last week.And I want to tell you a little bit more about Glovo -- the Glovo deal and what it entails practically and the market opportunity out there. So today, for Norwegians, Glovo -- industries, for that matter, Glovo might not be that known. But Glovo is a Spanish-based unicorn, one of the very few unicorns out of Spain, based in Barcelona, but with operations in over 20 countries. They have been pretty early on with delivering groceries into -- to customers, not just everything else, but also groceries.But I think maybe that's exactly why this is so interesting, that even a player like Glovo that started more than a year ago, so pre the pandemic, to offer groceries, they're realizing that picking groceries and getting the right groceries in an efficient and safe manner is a different ballgame than delivering pizzas and pastas.So what StrongPoint is offering to Glovo as a partner is the picking solution. So let me help you understand how this goes about. As an example, you as an end consumer would go online, you do go to the Glovo platform and you purchase your groceries. That order is sent to one of Glovo's grocery partners. That could be Carrefour, it could be Walmart, any of the major customers or partners that they have.The orders that are being fulfilled in that store is being fulfilled with a StrongPoint solution and predominantly that is going to be done by associates, store associates of that grocery chain itself. It could be the Glovo drivers doing that, but most likely and more sort of efficiently it is to use the store associates already. And then Glovo -- the Glovo driver is dispatched to pick up the groceries and deliver them to the end customer.We have an arrangement where Glovo is a partner of ours. Glovo's intention is to take our solution to its customers that they have. And we are just very, very enthusiastic about the growth of Glovo and the growth of this opportunity going forward.There's a couple of things that should be said. Number one, money are not going to start pouring in Q1. We will during Q1 implement this with one or more of Glovo's grocery retail partners. And there's no automation in all the current grocery orders going on to our platform. That is, however, the intention.So -- but I still will say, looking at the potential for this deal, I think of 3 value buckets: one, the value for StrongPoint and Glovo, of course, but the value for StrongPoint in the Glovo deal itself. Glovo has a stated growth ambition in general, but in particular on grocery they're in 20-plus countries now and are expanding. I know their offering throughout Europe and the world. That's number one.Number two is the fact that we are working with a technology company like Glovo, of course, gives lots of credibility to their customers. So there is nothing preventing us from going to the Carrefours or Walmarts of the world stating, "You are being" -- "you're doing the picking in your stores through the Glovo partnership that is StrongPoint's picking solution. Why don't we offer that to the entire chain that you have, because you've seen how good, efficient and safe that is?" That's the second value bucket.And then there's the third value bucket, which is, of course, with Glovo as maybe the most advanced delivery player out there. There are similar companies that are looking to go into groceries or have been doing so very recently. And here is a couple of them to mention. And if you're sitting in Norway and Sweden and wondering, "Where is Foodora?" Foodora is part of a much larger company called Delivery Hero, which has a number of delivery platforms.But these are the major delivery platforms. I don't think anybody of these are not moving into grocery deliveries. They have done that already during the pandemic or they are recently or just about to do so. So I believe the market is definitely there. We're getting the attention with Glovo. And I think there's nothing more to say about that. It's very exciting.Okay. I hope you are as excited about the e-commerce market, the e-commerce opportunities that are out there. That is a priority for StrongPoint also going forward, obviously. I will now double-click on the second biggest bucket in the growth bridge to 2025, checkout efficiency.So when we talk about checkout efficiency, we should think about an evolvement. Today, the most mature and widely accepted way of doing checkout efficiently or more efficiently than the manned stores or manned tills is by having self-checkout. And I'll get back to why StrongPoint solution has the USPs needed.We are also in some geographies delivering self-scan. So the customer scans the items as he or her walks through the grocery store and conducts the checkout when you do get to the self-checkout stands. We're doing that with the items.We are also with our checkout efficiency community exploring partnership opportunities both in smart trolleys and just walk out technology type of companies. That is not something that we currently would like to invest lots of money into. There is a number of very interesting players out there, where I believe that we can jointly be working with them on some of the very interesting prospects that we have in the core markets.What should be said across all these types of checkout efficiency technologies, you have our Vensafe solution. Our Vensafe solution to ensure that tobacco, in particular, but age-restricted items can be purchased without the need for any manned attendance.So what I'll do now is I'll double-click on the self-checkout, which is really where we are today seeing the biggest commercial potential. And then you should know as an investor that we are also, of course, looking at what's happening out there in the future on this more early-stage or experimental type of checkouts.So I mentioned to you our self-checkout solution is already in place in the Baltics and we have a very big base of our self-checkout solution there. We provide the hardware and we provide the software. And if you really boil it down to sort of the U.S. piece, we see that we, first and foremost, are up to 3x faster than competitors. That's not because the scanner is faster as such, but because you don't have all the unnecessary push buttons on the screen type of exercise and you don't have interventions when there is something wrong with a barcode, scale or what have you. That's number one. We wanted to be efficient and our solution is efficient.Number two is we have what we call low touch. So we minimize the number of touches that you need by having integrated an artificial intelligence and machine learning algorithm into smart cameras that is able to detect the groceries, that is the fruits and vegetables that you have on the scale.I think most, if not all of you, have experienced as I have that when you put the onion on the scale, you'll have to start looking frantically on the screen where is that onion. Our solution integrated into our self-checkout solution with very high accuracy tells you what is that grocery -- sorry, the vegetable or fruit on the scale and it does so also through the semi-transparent bags. So very, very exciting feature there that I think everybody can relate to.And lastly, we also have an automated way of doing deliveries of age-restricted items, and we're doing that by combining our Vensafe solution with a Yoti age verification system. So the Yoti age verification system works in that it scans your face and recognizes your age, plus/minus X number of years, and as such are able to validate that you're more than 18 years old. This sounds like science fiction, but this is actually already in place with one of our customers in Estonia.So you're going to the self-checkout, purchasing the -- or scanning the -- or pressing the button to get the cigarettes or snus and the age verification system for Yoti recognizes that's you. You get your ticket to the Vensafe machine and you get the tobacco or other age restricted item at the Vensafe with another scan of your face with the Yoti facial or age verification system. So very, very exciting things there that we believe is highly appreciated by both end customers and grocery retail customers.So how are we doing with sales? Well, I think this is where we still have a lot to prove. We have, as I said, a big base in the Baltics. We have during the year with the very good partnership with Partner Tech moved into the Baltics. We had a larger deal with the grocery retailers Stokrotka in Poland and also actually in Malta. But there's still lots of wide space. And I'm very excited to continue working with Partner Tech both in Germany and alongside our own organization in Spain to unfold and achieve the opportunities that are in the self-checkout space.As for Norway and Sweden, it's just to say we've been late, okay. I think the good news is, if you are cursing when you're standing in front of the self-checkout machine in Norway and Sweden, it's not ours. We have a system, a solution that works a lot better, and that is what we're trying to convince our grocery retail customers about. And I'm very confident that our sales and support team are able to do exactly that. So exciting times ahead also in the self-checkout space.So those were the 2 solutions that I wanted to deep dive on in this session. Just one page on the core of the stem, if you recall back our T-shaped strategy to achieving the 2025 NOK 2.5 billion organic growth. And what we have said about it is that it's -- with the solution we have set up now, we have a proven operational leverage. As stated earlier in the Q4 presentation, even with lots of third-party installations being done in the quarter, if you had only adjusted for the massive losses that we had in Spain and getting that to sort of a 0 for the group as a whole, we would have been achieving in Retail Technology 13% EBITDA margin.So we have a proven operational leverage. We're very efficient in taking on new solutions into these core markets. And that's important, because we are a hub, a platform for global technology providers. We've proven that before with Pricer, with Digi and earlier -- now with both Reflexis and Gordon. And I'm also confident that when you have massive or big retail technology players with technologies that are interesting for our core markets, then StrongPoint is the go-to-market player.Then Hilde, we will be talking about how we're doing this, M&A, dividends. Please.
The enablers. Thinking when you talked, Jacob, if we could have Yoti to try to reduce the age for at least the female part so that -- it's too accurate, I must say.Okay. We'll talk about the enablers of how we're going to achieve the profitable growth. This picture shows 4 boxes: profitable growth, of course, and cost control, balance sheet and ESG.During the pandemic, we saw how important it is to have a good and strong balance sheet, cost control and control of our projects. And I think more than me as the CFO, we see the necessity of keeping our internal house in good shape, and that is what we are trying to explain by this slide.From a balance sheet perspective, we expect investments in new software, new functionality, new products. And we hope that there will be some scale -- large-scale projects which sometimes require purchase of hardware. And we are going to invest in resources. So a good and flexible balance sheet is very important for StrongPoint financing this growth, of course, profitable growth. We have installed a new CRM system during 2020, which we have started to use now, which gives us a good overview of the potentials and also how things are progressing within the different segments.When it comes to cost control, a lot of our listeners might look at that and say that is low cost. That is not true. Investments in new software, new functionality and resources are all booked directly as a cost. We do not accrue this into the balance sheet. So it is important that we show that we will monitor, of course, the profitability of the projects and the sales when we are deciding investments that will hit our cost.When it comes to the ESG, we have increased the focus on this, not necessarily because we are not following the recommendations within the ES&G, but because we need to improve on the documentation as such.The company is undertaking external stakeholder dialogue as we speak and we will complete a materiality assessment now in 2021 that you can read more about in our annual report that comes in March. The ongoing activities and the ambitions set by the management and the Board of Directors will be shown in the sustainability part of that report.Another enabler that can contribute to additional growth is, of course, the M&A. I must confess, standing here a year ago, I really thought that we had reached some of our internal ambitions on M&A. As this comes in addition to organic growth, we are not delayed in any way, but we are impatient and we are, of course, monitoring the market. We have during the past year evaluated several companies, but we have not performed any transactions yet.We are, therefore, changing the focus a bit into the 3 columns that you see on the screen. To your left, we see the geographic expansion as an opportunity and a path to identify good targets. And we limit that by saying "to the markets with good product market fits". Now what does that mean? Well, we would like to go into new geographies where we see that our solutions, the StrongPoint solutions that Jacob just presented, can be a good add-on or a combination to the existing offering of the targets. So that is the first part. And it goes where we can broaden our own solutions. So it's the top of the T strategy.To your right, more on the core business. We see that we continue to strengthen where we are, both within sales and service. In the middle, that is the technology additions. We do monitor all the way the technology development out in the world, and we will continue to evaluate this. This can also be partnerships as we see that there might be some disagreement on price when we're evaluating the technology's life cycle and potential for the future.When it comes to financing M&A activities, we always start a dialogue with a combination of the 3: some part in cash, some part in earn-out as we would like the company to continue to collaborate and contribute to the success, and thirdly, with shares.So maybe we shouldn't pay dividends then. Well, as I have shown also on the Q4 presentation, StrongPoint is a company with ambitions in growth. We will need a flexible and good balance sheet and working capital. If you look at the more long-term part, the Board expects or believes that the capital market will be available for StrongPoint when we are in need of increased capital. Yet, the Board still emphasizes that we would like to continue to pay the dividend. And we have for 20 -- the year 2020, to be paid in 2021, we have -- the Board has proposed a dividend of NOK 0.7 per share.So Jacob, would you like to summarize all the slides and the outlook for the future?
Just stand there in close proximity, but yet far away enough. Yes, thank you. If you look at the outlooks and priorities of StrongPoint, to summarize it all, firstly, what are -- it's pretty -- I think it's pretty evident for everybody. We are really working on capitalizing on the e-commerce logistics opportunity that is out there. That is number one priority.Number two, we are also seeing that the in-store productivity and in-store efficiency solutions are in high demand. More and more grocery retailers are realizing that there is a normality of the world also after the pandemic and the need to be efficient in stores is absolutely critical to be competitive going forward.And then third, as Hilde was talking about, M&A. We have a very strong ambition to also step up the M&A activity, not just due diligence activities, but also actual transactions where that makes sense and is valuable for our shareholders. So those are really the key priorities.Looking or summarizing it all, we still are planning to go to NOK 2.5 billion organically. We have, we believe, seen evidence that the operational leverage and the demand for our e-commerce solution absolutely makes the profitability target of 13% to 15% achievable. And we are expecting to grow our e-commerce solution as a combination of both investments into Click & Collect lockers but also into annual recurring income with order paid -- or paid by order type of arrangement such as we have with Glovo.And I guess that's what there is to be said about StrongPoint and 2025. So with that, we do our secret handshake, the StrongPoint handshake and open for questions.
Yes, we have a few questions. Firstly, we are showing a couple of questions on Spain regarding the figures you've given out. When do you expect Spain to return to breakeven or even better operations?
So if I can start out by -- so we don't guide, so -- and we particularly wouldn't guide on any particular country. As you would all, of course, expect, to some extent, it depends on the duration of the pandemic. On the other hand, it should be said we have -- we are and have restructured our Spanish operations. We have a very new MD for Spain coming in just February 1. I have great expectations for what she can achieve in the grocery retail space.And as for cash, the cash management bit, we are pivoting the efforts that we have -- earlier had towards the hospitality segment that Hilde mentioned into the more natural pharmacy and tobacco verticals just for that reason. But of course, it also depends on the duration and strength of the pandemic.
More questions. Regarding M&A, have you currently initiated any dialogues with potential targets?
Of course, we are evaluating different targets. We keep contact with targets. And some of them are -- it ends up to be good partners. Some of them we just agree that we will not continue and some of them we are moving forward in the pipeline. So yes, of course, we are talking to candidates and targets in this room.
Next question, a little bit about Glovo. Could you say what is the likely revenue structure from the partnership and would it include a fee per transaction?
So to answer the latter part of the question first, yes, there's a -- it's a fee per order being conducted. So it's a pay per order. For competitive reasons, I cannot go into exactly what that figure is, but it's true that it is a cost per order transaction type of arrangement. Correct. And that is also just what I said, that is the default -- not just default. That is the rate that we're getting paid for our third-generation picking solution that is paid by a pay per order.
Next question. Do you have any progress or any new information around the Russian Click & Collect client Utkonos?
Okay. So the Russian Utkonos prospect, I would say, that was announced some 3 or 4 years ago shows for me the importance of being sober when it comes to what a pilot can do. So there was a massive announcement -- this is pre hour time -- about the opportunity to sell 2,000 lockers in Russia.This is all Russia you should remember. And to date, we have 25 lockers out in Russia. I don't have any expectations for any of those 2,000 lockers to be coming out there and it's not part of the target market for StrongPoint either.
And one final question that just came in, in the last seconds. On -- just back on the merger and acquisitions, which new markets are you most likely to enter?
Well, as we viewed in the slide, you will see -- you will find U.K., U.S., Finland, Denmark. But there are also 3 dots. So we will not be more precise than that. So these are the areas. U.S. and U.K. already been mentioned by Jacob earlier today. Finland and Denmark are close to us, to our home markets, so it's natural to look in that way. But of course, we are looking beyond these areas as well. So we'll not say any more about that as such.
That's it for the questions.
Thank you so much. I think on behalf of StrongPoint, Hilde and I would like to say thank you for listening, and have a great [ continued ] day.