eEducation Albert AB

STO:ALBERT

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Martin Dahlgren, executive]

Good morning, and welcome to this webcast presentation where we have Albert Group presenting its Q3 report for 2023.

With us presenting, we have the Co-CEO and Head of Business to Consumer, Jonas Martensson; and CFO, Katarina Strivall. [Operator Instructions] And with that said, please go ahead with your presentation.

[Jonas Mårtensson, executive]

Thank you, Martin, so much for that introduction, and a warm welcome to all of you joined today for this conference call to talk about our quarter 3 report. And today, you will meet me, Jonas Martensson and Katarina Strivall, who is our CFO. Now we'll start the presentation by summarizing the quarter, and then I'll talk through the agenda and then we get going.

And for those of you who are new to Albert, we are a leading ad tech company with an ecosystem of learning products for children [ 2 to 6 years old ]. We are today present in more than 10 markets and helped more than 10 million students with their education, both in schools and at home. We are a dedicated team of approximately 140 people who really wants to help children bringing out their full potential by making learning fun and personalized.

If we shift to the numbers and summarize them for the third quarter. Our annual recurring revenue was SEK 204 million. And at the end of the quarter, we had SEK 94 million in cash. Looking at the year-over-year changes, ARR has grown with 34%, where all the growth comes from the acquisitions. And also the net sales has grown by 46% and also then are driven by the acquisitions that we announced earlier this year. But for this quarter, our focus has been on profitability. And therefore, we are very happy to announce that our year-over-year EBITA has improved by 68% or SEK 4 million and is now down to minus SEK 7 million. But more about all those numbers soon.

But now first, let's talk about the agenda. And today, this is the first time you meet the new management with me and Katarina, as we will start by talking a little bit about us and the new management, then we'll have a section where we will tell a little bit more about Albert, who we are, why we exist and where we're aiming going forward. Then we'll spend most of the time zooming in on the third quarter. First, talking a little bit what happens around us, then talking about some of the highlights from the business and operations before of course, dig more into the numbers. And then we really look forward to hearing your questions. And therefore, as Martin said, please send any questions to him, so we can take them in the Q&A session in the end.

So starting with us in the group management team. As I said, I'm Jonas Martensson, Co-CEO and Head of the Consumer Business. I have a various spectrum both working with startups, scale-ups and big companies. I joined the Albert Group 1.5 years ago and has been the operating leader, both for BC and the group until now. Before this, I'm a long-term experience leader. The recent years before coming to Albert, I was at Volvo Cars, whereas partly [ partner 2 management ] teams, two examples of [indiscernible] Volvo, which was Volvo Cars business unit really work with selling cars as a subscription service, digitalizing the car experience journey and so on. And I was also part of the management team for the Volvo Car Service business, which is SEK 30 billion global business unit, where we take care of the cars and the customers all across the globe. We have a lot of experience from leading organizations of both in scale up and mature modes.

But I also have my interest for working with start-ups. I've been an entrepreneur myself, founding a couple of different companies, been investing in a few different companies and also sitting on the boards of a few start-ups.

And then with us -- who is not with us today is Anne-Louise Wiren, who's also co-CEO and heading up the Business to Business unit. Similar to me, she is also an experienced business leader coming from the telco industry, where she's been with a high 3G group, also known as [indiscernible] in Swedish for most of us here, where she in the last position was Head of [ Hallo ], which was sort of the low-priced internal venture within -- after that, she went over to Strawbees and was the CEO for them for a few years before Albert Group acquired Strawbees last year, and then we saw talent and brought [indiscernible] Head of the business-to-business leg.

Then we have Katarina Strivall, but you can present yourself.

[Katarina Strivall, executive]

Hello. My name is Katarina, as Jonas, and I started at Albert in the end of this year. [ Equities ] come from Sweden Equity, where I worked as a senior financial adviser in M&A. And also before that, I also worked as a CFO at [indiscernible] in Sweden. And [indiscernible] construction group, a Norwegian construction group with approximately 1,200 employees in Sweden, and I worked for 10 years. And before that, I was in the IT business for 10 years also in a Norwegian [indiscernible] called [ Evry ].

[Jonas Mårtensson, executive]

So thank you, Katarina. And with that, let's move over to about Albert. And I would like to start a little bit about the big challenge that we are seeing out there. That is about the education system as such. I think you can all probably recognize the picture here on the very left-hand side either from your own childhood or your own kids around you that a lot of kids are struggling in school and especially with mathematics, I think it's the most common thing you hear in the media about self-confidence in math and especially for girls.

And another thing which sort of makes this worse is that there is a lack of equal access to qualified teachers out there. In general, there are too few students who want to educate themselves to teachers, meaning there are too few qualified teachers out there. And the teachers who are out there, [indiscernible] in sort of in good schools in advantaged areas whereas schools in more socioeconomic areas, they have a harder time to attract skilled and qualified teachers. And this means that not all kids out there getting equal access to qualified teachers.

And unfortunately, this even gets worse when the kids get home. So if you typically live in a socioeconomic strong area, your parents might be able to help you with, I mean, homework by themselves or they have the financial [ strings ] to pay for getting in a private future to help the children, whereas children living in more socioeconomic weak areas, they can typically not get the same type of help from their family -- from their families.

And therefore, I mean, a consequence of this is really that schools results are getting worse and especially the socioeconomic in qualities are increasing. And education is too important for entire societies. This is something we really want to do something about. And therefore, we have the vision of really helping every child to reach their full potential through fun and personalized learning.

And what do we mean with that then? And that is really that we would like to create a learning ecosystem, both for school and home because we think it's so important that learning takes part in all parts of child or adolescent life. So we need to work in the schools with the children together with a teacher and at home together with the parents and the children and create learning products that can really bridge this gap.

And talking about learning products. For those of you who have followed Albert for a few years. I mean, we started as a [ Maps ] app, but now we have grown into a broad portfolio of different type of learning products Still, our core is really the digital apps where you can learn mathematics, programming, physics, biology, geography, second language is cracking the reading coding, your mother tongue and so on. And those digital apps are available for mobile phones, tablets, laptops or the web. We also took during this fall and actually took the first step to go into the physical books in a collaboration with one of the leading publishers we released our first mathematics books, [indiscernible] . And we also have a few different activity books where kids can practice hands on as well.

And talking about hands on, it was something we saw a lot by interacting with schools and teachers that there are so many times you just learn things theoretically in books or in apps and so on, but really use all your senses. It can be good also [ experimented do things hands ] on. So we decided to go into the physical segment with construction or different type of science products where you can convert theoretical practice into practical things.

And last but not least, we have educational films. It's something we have learned so long time from our customers that they really love to learn through seeing films. And therefore, we now have this streaming platform called [indiscernible] , where we have thousands of educational films for school usage. And all these different products are sold under seven long product brands, Albert Junior, Albert [indiscernible] , [ Grampa ], Sumdog, Holy Owly, Strawbees and [indiscernible] . And what we do in all the brands are a little bit different. They can have one or multiple products being one or multiple markets and so on. But all together, they give us the opportunity to have the right product and with the right [indiscernible] for the right [indiscernible] group.

And we are today having really strong presence on three markets: Sweden, which has always been our headquarters, but also we have local teams in France and in the United Kingdom. In these three markets are really our focus. But then we are present in -- both in the U.S., other markets in Europe and in Asia as well.

Connecting back to what I started to say about our mission about really helping children to learn and democratizing education. And therefore, we are, of course, very keen to understand that we have any impact with our products. So we typically do studies every once in a while. And for instance, in a study we did with the Sumdog product in the U.K., we could conclude that this knowledge gap between the socioeconomic strong and weak students were really decreased by using Sumdog. So in a class who used it compared to other classes, you can see that this knowledge gap was closed by 20%. And also in a study this summer where we asked parents to children using the Albert Junior app in Sweden, what did their kids react to it and so on. We really tell that 96% of those parents perceive that their children's knowledge really developed by using the app. And of course, this is something that makes us really happy that we have true learning impact with our products.

So that was it about Albert, and now we will talk more about the third quarter. But before going into the details, I will start on a little bit more what's happening in the world around us. And if I start talking about education in general. I think the debate that is ongoing and the big questions for politicians, educators and so on are similar to what I said in the beginning of this call. It is about having equal access to qualified teachers. It is about sort of the difference between advantaged and disadvantaged students. So that is a big topic.

Also the whole topic of the COVID pandemic. We now have the few years behind us. But in many countries, the schools actually closed down. So the kids were sitting from doing school from home through remote learning. That was not the case in Sweden, but in many other countries that we are in, that was the case. And now you -- everyone is very curious to see what is the effect of that? Obviously, the digitalization question is up on the agenda as well. I don't know if you're familiar, but this is a global study of school results being done every third year and the [indiscernible]. And the most recent one was done last year in 2022. And now in the beginning of December this year, the results will be released, and we anticipate that sort of the debate will be about these type of topics that I just mentioned. And therefore, we are preparing, we feel very well positioned to show the educators and politicians and parents and students that we can really help [ them being a ] solution in addressing these problems that we think will be showcased in this study.

Moving over to the second topic here, which is technology and AI in education. I think the big overall macro trend right now is that digitalization of schools continue. This is really a global trend with more technology in education, both software and hardware. It can be products that the children use to improve their learning. But as much it can be other type of digital products for -- make teachers more efficient, work with progress tracking and other things like that.

And to take a few words about Sweden since anyway, most of us here are probably Swedish today. Sweden has, for a long time, really been a front-runner in digitalization of schools. We have a great sort of device density in the schools for typical most schools have like one mobile or tablet per student in the class, whereas in many other markets where we are, it's maybe one device per 10 people or one device for an entire class. So Sweden had already built a perfect infrastructure for working with digitalization.

Unfortunately now, we feel that the sort of political debate has become a little bit polarized. We start talking about that digitalization is bad. And instead, you should just have analogue or traditional learning. We think this is not correct. And I think there are a lot of researchers and being with us on this as well, that I mean, digital tools really have the opportunity to make learning better both for children, teachers and their parents. Through digitalization, you can easily make a diagnostics or a [ full class ] and see what they know, what they don't know, and then you can put in focus -- challenges on where to challenge [ different children ], sort of motivated children can be challenged on their level. The masses can be challenged on their level. And people who struggle can be challenged on their level. And also -- so I mean digital really have the opportunity to be a complement to traditional learning. It's not like either or.

And the final topic, which is obviously an education as well is AI. And I think in education, I mean, it's very much regarding [ you see -- ] we see a lot of opportunities, how this can be used, but there are, of course, some threats or risks as well. And especially, I think opportunities are like creating individualized learning experiences. You can have an AI tool, which can help you with chips and tricks to solve different school exercises and so on. And all those things are fantastic. But there are some issues as well, which you'll probably hear about the sort of students use AI tools at home to sort of cheat in homework or home exams and so on. It's also a little bit not reliant right now about the accuracy and responses and so on. So rightly used with the right quality and ethics and so on, AI can really help in education. And obviously, we, at Albert, I mean, we look a lot into this area as well.

We're already using a lot of AI as a production tool to develop our products more efficiently in designs and text and coding and so on and in marketing in other parts of our business. We are looking to how we can get it into the product as well. But as I said, here, we want to be 100% sure about the accuracy, privacy and ethics aspects of AI before really launching anything commercially.

Moving into the third topic, which is a macroeconomics. I think in education and for us, I mean, we see the same trends as everywhere right now that both schools and households are getting tighter budgets due to the macroeconomic situation. But for us, and I'm going to take a few minutes to talk about that is looking at the B2B segment or where we sell to schools, we haven't seen an impact here. I mean schools continue to be a very stable revenue source for us, and we've actually rather grown this segment. We're winning many new deals and ticket market shares despite the situation.

And looking at the Consumer business or B2C, as it says here. We can really see looking at our different customer segments that the loyal customers who have been with us for a long time, they haven't changed behavior at all. They continue staying and paying at the end being as loyal as they were. But the difference we can see is about sort of attracting and converting new customers from a free trial to paying subscription. That has been a little bit now, probably some 2 or 3 quarters, a little bit more difficult to do that. But of course, to mitigate that, we have also worked a lot with optimizing our marketing and lowering the customer acquisition cost to any way ensure what we have profitable marketing campaigns when we get the customers in.

So for us, there hasn't been any big impact, I guess, that can be the summary. But we do see, looking outside of us that many small -- companies are struggling in this market climate, both with sales, with financing and so on, which becomes an issue for them. But for us, and other bigger companies, this could actually be an advantage then because they are pulling out from the market, making it possible for us to take market share or it can also be acquisition opportunities when they struggle.

So with this as a background, I'm happy now to -- and talk about some of the highlights of the third quarter. Now I would like to start with this one, and it's about that we have launched the Strawbees product in the U.K. And what is that? Yes, the Strawbees product is this [ hands on ] construction kit that has, for a long term, been successful for us in the U.S. market, but we haven't had it in Europe. So now we decided to launch it in the U.K. after I've done some pre studies during the spring and this market launch was very much supported by our local U.K. team. And why did we [indiscernible]? Because the U.K. market is one of the largest edtech markets in Europe. Having product adapted for the American market, it's also quite easy to take you to the U.K. market in terms of both being in English, you need some language adaptation, some curriculum adaptations and so on, but also that we have local presence and knowledge in the U.K. market, which gave us a lot of distribution synergies. So with this launch, we, of course, anticipate to really grow sales going forward.

Another interesting launch is Holy Owly in Sweden. And Holy Owly is the language product that we have been on the French market for a long time. You can learn French, Spanish and English as a second language. But now it was launched in Sweden by our Swedish team. And we did this because, I mean, Sweden has always been a big home market for consumer sales where we are really [ tactical ] for working with marketing and sales towards consumers and then adding another product that marketing and sales machinery is super efficient and we can get a lot of efficiencies. And also, we see potentially in the Swedish market for a good learning product that complement our existing more science and mass products in the market since in Sweden, it's very important to learn a second language like English, French, Spanish. And now we do have enough opportunity to bundle Holy Owly with Albert and [ run already ] being present here. And all in all, we also here anticipate that this will grow sales going forward.

And the third example is that we have taken one of our successful Swedish products, Albert Junior, and launched in France under the Holy Owly brand, and this market launch was driven by our French team. And Albert Junior, for those who have followed us for a long time, is our flagship B2C product accounting for the majority of sales. It's been around for a long time and proven to be really successful, but we haven't been in the French market. But we do see a lot of potential in the French market because both market size, it's much bigger than Sweden and the Nordics. The whole French market is also much more -- have a higher willingness to pay for education in general because it's so much more important with grades in school and many parents, they pay private tutors, they help their children. So the willingness to pay for edtech products is better there.

The whole math scene -- math market is also interesting in France. There are no strong players there today, and there is a great push from the government to really improve math in France and especially for girls. So now we have a great product in the French market, which we anticipate in the longer term to also grow sales here.

And concluding with three other more cost-oriented synergies are these ones that we're very proud of. The first one is regarding optimizing business to consumer marketing. Business to consumer marketing, it is quite tricky and fast moving. I mean cost for marketing varies a lot. It depends on like how much does it cost to advertise, how attractive is our offering? What are local events happening in the market? Like right now, we are in the middle of Black Week and it's very expensive to buy marketing online and so on. And if you just have one market and one brand, it's very tricky because then you have to market in that one. But now we have 5 consumer brands, and we're present in more than 10 markets. So we can really think about the optimized marketing to where we get the best return on investment.

So for instance, if [ Garamba ] in Sweden is struggling at the moment, maybe it's a much better opportunity to invest in Holy Owly in France, for instance, and then we deploy marketing money there, and that's an optimization we do many times per week, which has really proven then that we can optimize marketing investments. And one proof point is that we have sustained almost all of the B2C sales, but with just 1/3 of the marketing investments that we had a year ago.

The second topic is here in the middle. It's regarding the business-to-business sales synergies in U.K. Previously, all our B2B products have been sold by a separate marketing and sales force in each market, which, of course, takes a lot of time to build up, it's costly and also building all the relationships with schools. Now proven by taking Strawbees to the U.K., we saw that it worked very fine to use Sumdog's local expertise in the UK market regarding marketing, relationship with schools to also get Strawbees into that market. And that, of course, increased efficiency in sales.

And the third example we are really proud about is in-sourcing of [ tech ] development. Swedish field, having a streaming platform, [ Fileca ] has been 100% dependent on external software consultants to develop their products. Joining the Albert Group, we have a lot of software engineering skills in-house. So now we can reduce the dependence on external consultants and instead do a lot of the tech development in-house. And besides reducing R&D costs for consultants, we also get full control over the product and the technology in-house. And all in all, like the things we see on this slide in front of us now, I think we can start seeing in the numbers already now, which Katarina and we'll go into in a minute, whereas the new markets that we have opened up and the new launches will probably be seeing in the upcoming quarters and years since it takes some more time to really build market position.

But now Katarina, please tell us a little bit more about the numbers for -- in the third quarter.

[Katarina Strivall, executive]

Okay. Earlier, we have had a clear focus on growth. And during the later period during 2023, we have changed direction to profitability, also concerning the macroeconomic situation. As we can see here, profitability has increased every quarter during this year. EBITA in Q3 has improved by 68% compared to the same period last year from minus SEK 21 million to minus SEK 7 million in sales. Growth, as we see, is at 46% compared to the previous year. The growth is primarily driven by our acquisitions, which have also contributed to [ B2B's ] share of turnover in the quarter, which has increased from 27% the previous year to 57% in Q3. And year-over-year, that is 52% compared to 25% in business to business.

We continue moving forward with focus on profitability, and we also continuously review costs to ensure we have the [indiscernible] focus and work cost efficiently, of course. The increased growth in revenue, as we see here consists of 57% from acquired companies, while organic revenue is down with 11% -- minus 11% during the third quarter. On an annualized basis, organic revenue has increased by 3% compared to organic, which increased by 62%.

As we also have annual subscriptions, a large part of the turnover for the year has been secured within B2B where we have mainly yearly contracts. And the proportion of annual subscription is also increasing within B2C. EBITA has also improved significantly compared to the same quarter last year, and this is due to our increased focus on profitability, which means, among other things, that we, through our acquisitions, have focused on improving the share of sales within B2B. We continuously also review our costs, for example, by using our resources more efficiently within the group. We have also worked on optimizing marketing across our various brands and markets and working even more with synergies within the group, as Jonas just mentioned.

And cash flow from operating activities improves over time, while compared to the same quarter last year, it was slightly lower, as we can see here. There are also seasonal variations from our acquired businesses with some invoice a larger part of the turnover at the beginning of the year, which is paid at the beginning of the year, while the income is paradised over the whole year. For example, we can see that in Q1 in the slide. The lower cash flow in Q3 is also due to increased operating receivables from our newly acquired companies and their operations. With the acquisition of Strawbees, we have, among other things, received stock of physical products, which we did not have before, and the stock has also increased further during the third quarter.

And accounts receivables and other short-term receivables have increased some compared to Q3 2022 mainly related to Swedish film and Strawbees operations.

And if we continue, if we summarize this, we have improved profitability during the third quarter mainly due to less spend in marketing while we are optimizing our marketing costs at work. And we can also see here the decreased working capital as of September is mainly due to increased accrued costs and prepaid income. For example, accrued royalties and prepaid income have increased due to Swedish Film. Increased accrual debts also connect some to more employees, which have grown in numbers. And we have business in the acquired companies that invoice a large part of their turnover at the beginning of the year, which is also paid, as I mentioned before in the beginning of the year.

And we can also see that EBITA becomes an important measure of probability for the Albert Group as we have acquired companies where we have planned appreciations of goodwill as we follow the K3 regulation is the Swedish accounting standard, which is different to IFRS and where you don't have planned depreciation of goodwill in the same way.

[Jonas Mårtensson, executive]

All right. Thank you, Katarina, for taking us through the numbers as well. And with that, I would like to sum up this quarter 3 report. And the main things are really that our focus on EBITA and cash flow, they do remain. And going forward, our journey towards profitability will be in focus and something we will have a lot of focus on.

We have also, as we talked about before, wanted to grow the B2B segment to really achieve this nice balance between B2B and B2C. And we think it's sound to have it roughly 50-50, which we are now and that will give us a very nice financial profile of the group, both in terms of having multiple revenue sources from different target groups, but also a nice risk profile.

And thirdly, that we have launched multiple synergy projects, which really proved to both reduce costs as we can see in the numbers so far in the short term, but also have opened up new market segments, which we hope will help us going forward. So all in all, we are very happy with the quarter 3 report and on our journey towards profitability.

Thank you all for listening so far, and now we're very eager to hear all your questions and over to you, Martin, see what you have for us.

[Martin Dahlgren, executive]

Thank you very much, Jonas and Katarina for presentation. And like you said, we'll jump into the Q&A section now. And we'll start with the first question. All growth comes from the acquisitions, while your organic sales have declined. Why is that?

[Jonas Mårtensson, executive]

Yes. It's something that you can easily note reading the report. Yes. And very much, I would say it's in line with the strategy and the focus on profitability that we went from going from growth to profitability. And with that, I mean, we had to do a lot about optimizing B2B, B2C sales and reducing the marketing investments to really ensure that, I mean, all the customers that we acquire, they should be profitable. And since most of our sales, the organic sales is B2C, obviously, organic sales is therefore also decreasing when we decrease B2C sales.

I would like to stress, though, is that I mean we are still preserving most of the B2C sales, but we have reduced the marketing cost with 2/3. So it really shows that we can improve efficiency in B2C sales a lot.

[Martin Dahlgren, executive]

There is a significant difference between the EBITA and the cash flow for the period. Can you please explain more about this and what we can expect going forward?

[Katarina Strivall, executive]

The difference is mainly because we have a large part of the business in Swedish Film that is invoiced and paid at the beginning of the year, while the income is paradise over the whole year. But it's also due to the fact that we acquisition -- the acquisition of Strawbees and that we now have a stock, which we haven't had before. And the stock has also increased in the last periods.

[Martin Dahlgren, executive]

Thank you. And how are the integrations of the acquired companies going?

[Jonas Mårtensson, executive]

Yes. To summarize, I would say they're going very well. I think many of the projects that I talked about today are proof points of that, both on like the revenue side, where we really see now that we can cross-pollinate in the group and take one successful product in one market into another market where we have a strong local team. We've now been doing -- been able to do that both in B2C and B2B during the quarter. But also some of these things on the more cost sides that we talked about, being able to optimize marketing, thanks to having a much bigger portfolio of brands, really now having more shared resources in the group in tech development, HR, finance and so on. So more and more processes, people, collaborations and synergies are ongoing very well. So we are very happy how the integrations are going.

[Martin Dahlgren, executive]

And what does the GTM model look like within the business-to-business segment? Is it direct sales to teachers or schools through RFPs? And could you give some color to what the agreements look like?

[Jonas Mårtensson, executive]

I think we can -- so the question was regarding the go-to-market model there. And in essence, it's like we sell in a few different ways. And it depends a little bit by country in country as well. Sometimes it's directly to the teachers. Sometimes, it may be at the principal at a school or an acquiring unit at the school or [indiscernible] bigger like municipalities or school districts.

But take, for example, I mean, one of the strategic shifts we're doing in the U.K. right now is that we used to focus more on selling to the individual teachers, which were typically smaller deal sizes whereas in England right now, a lot of schools start to collaborate in what they call mutual academy trust. That is when a number of schools go together and procure services like ours together. And here, we have really now focused on that at least for 1 year, think about how can really nail sales to Mats or Mutual Academy Trust. And during the fall, we have been able to land a number of significant deals there. So if you crack the code to get into the MATS segment. And of course, those deal sizes are much bigger, so they help us.

[Martin Dahlgren, executive]

And are you willing to elaborate on your timing expectations regarding positive EBITA and positive net cash flow and what actions you will take to reach these positive numbers?

[Jonas Mårtensson, executive]

We will not comment on the actual time line for it. But like I say, I mean, the focus on the journey towards profitability is very much in front of us. And we are working both on the revenue side with some of the examples that we talked about today, how we can go into new markets, open up new market segments with very small investment through synergies, but also on the cost side, how we can really -- like when we go into new markets instead of hiring a new sales force, we can utilize people are already existing, what we did in B2C marketing, where we start marketing a new brand with the people we already have, where we use -- resources across the group and so on.

So I mean, those things we have just think started to scratch on the tip of the iceberg for and in the upcoming quarters and years where of course, continue to -- optimize on the cost resource organization side, but also on the revenue side.

[Martin Dahlgren, executive]

And what are the primary market trends or shifts in the education sector that you are capitalizing on, how do these trends align with your strategies?

[Jonas Mårtensson, executive]

Yes. Obviously, I mean, the big trend that we are capitalizing on is digitalization and technologies in school because that's really what edtech is about and so on. So I mean, we are tracking what is happening in there, and that's pretty much what all our products is about as well.

And could you please repeat the second part of that question?

[Martin Dahlgren, executive]

Yes. So I'll take the question from the beginning. What are the primary market trends or shifts in the education sector that you are capitalizing on? And how do these trends align with your strategies?

[Jonas Mårtensson, executive]

Yes. So then I mean I continue saying digitalization is definitely the key trend. And our strategy is, I mean, to be a front rather in digitalization. But then, as I mentioned as well, the whole debate of should it just be digitalized or should you work with like [ physical ] products as well is important. Thanks, I mean, our strategy to also, as I talked about in the product portfolio, for instance, through the Strawbees product enter that segment. And then the whole AI trend is ongoing as well. So to ensure that we are on that train monitoring what's happening [ ensuring ] we are well positioned when the products are good enough and secure, safe and correct, we should be on that train as well.

[Martin Dahlgren, executive]

And how does the macroeconomic situation impact Albert Group?

[Jonas Mårtensson, executive]

I think I talked a little bit about this in the presentation, but I can come back to that. I mean, of course, in general, we do see and hear signs both from schools and households that their budgets are getting tighter. But looking on how we actually experience it, I mean, in the school sector, we continue to both -- I mean, renew customers we already have on board, talking about churn, and that is on stable levels. We continue to win new deals at higher speed than we did before. So we see that we can also do this, both like the go-to-market question more individual schools and in bigger school districts.

So that the scholar business-to-business sales doesn't really seem to affect us. Looking on the consumer side of it, it also as I mentioned, we don't see any changed behavior in the loyal customers. They seem to stay and pay in the same extent that they've done before. When we do surveys and so on, I mean, it seems to be like a little bit like when you have your personal gym card, even though you have a strain budget and you would like to invest in your own health. And if you use your gym card, it's easy to continue to go to the gym and many households seem to reason in the same way when it comes to education products, that if the children use their products, they are more than happy to have it as a prioritized cost.

But the thing we have seen, which is more difficult, though, is to, I mean, convert customers who are on a free trial campaign and get them into paying customers. But that trend in those numbers have been quite similar for the last 2 to 3 quarters and hasn't gotten worse since then. So I think we should already see it in the numbers.

[Martin Dahlgren, executive]

Okay. And we'll take one final question here. Looking forward, what future strategies or initiatives is Albert Group considering to sustain its profitability and expand its market presence in the ever-evolving ed tech landscape?

[Jonas Mårtensson, executive]

I think they've already been touching on this one. But if I start with the expansion question. Obviously, I mean, the way we are looking at the edtech market as such sort of you can segment it in different target groups like consumers or schools, you can segment it in different types of subjects -- languages, math, science and so on, can be in different age categories from 2 to 16 years old or even older and different countries. You can see that we are always like looking at this landscape and seeing where are the opportunities, where are the competitors and in which of these segments do we want to play? And then, of course, the next question for us is, should we go there organically by sort of developing our own products, taking them to new markets, little bit like the examples I talked about earlier in this presentation or should we acquire companies already have a good position in those segments.

So that continues to be very much on sort of the growth and expansion side of things. Looking at the cost side of the journey towards profitability, it is very much in line with what we already talked about, trying to optimize all the different cost categories we have. Sales and marketing expenses have been some of the B2C marketing really optimizing those ones to the market and the product where we get the best return on investment. B2B sales and marketing, like we said, in the U.K. examples, one sales force and one marketing team work on multiple products internally instead of having to work -- having dual sales forces. It's also going then into all other type of costs we have, like external costs we have for consultants can we in-source them to existing teams and looking at other expenditures. I think working on both the revenue and the cost side, I can probably summarize that question.

[Martin Dahlgren, executive]

Okay. Thank you very much, Jonas and Katarina for presenting today and answering all our questions and also a big thanks to everyone who follow along Albert Group's Q3 report today and presentation. Thank you very much and until next time.

[Jonas Mårtensson, executive]

Thank you, everyone, so much from our side as well.