Formpipe Software : Interim report Q1

Q1 2023.

First quarter 2023 results

Formpipe Software

	2023	2022	Δ
Net sales of SEK	128 m	(120 m)	6%
Recurring revenues of SEK	88m	(77 m)	15%
which corresponds to % of net sales	69 %	(64 %)
EBITDA SEK	23 m	(17 m)	37%
EBITDA margin	18 %	(14 %)
EBIT	7 m	(4 m)	100%
EBIT margin	6 %	(3 %)
Net profit SEK	5 m	(1 m)	331%
Net profit margin	4 %	(1 %)
EPS before dilution SEK	0,09	(0.02)	328%
Cash flow from operating activities SEK	15 m	(13 m)	15%
ACV SEK	11 m	(9 m)	22%
ARR SEK	383 m	(315 m)	22%

ACV	SEK 11 m (9 m)
ARR	SEK 383 m (315 m)

"Continued positive

profitability trend"

Christian Sundin,

CEO Formpipe

	Jan-Mar			Full year
(SEK Million)	2023	2022		R12	2022
Net sales	127,6	120,3	492,4	485,1
whereof recurring revenue	88,2	76,5	332,0	320,3
EBITDA	23,3	17,0	78,7	72,4
Margin, %	18,3%	14,2%	16,0%	14,9%
EBIT	7,1	3,5	19,3	15,7
Margin, %	5,5%	2,9%	3,9%	3,2%

This is a translation of the original Swedish version. In the event of any discrepancies between

the two versions, the original Swedish version shall take precedence. The information was submitted for publication, at 08.45 CET, 26 April 2023.

Comment from the Group´s CEO

A good first quarter with continued profitability improvement.

We start the year with a good quarter and we improve the operating profit from SEK 3.5 million to SEK 7.1 million. The profit improvement is mainly achieved through continued strong growth of the recurring revenue of 15%, while our costs only increase by 3%. Business area Private contributed positively to the group's operating profit in the first quarter and we now see that the recurring revenue has caught up with the investments in increased resources.

For the quarter, ACV amounts to SEK 11 million. We continue to generate strong growth in ARR. Compared to the previous year, ARR has increased by 22%, corresponding to SEK 68 million, from SEK 315 million to SEK 383 million. ARR is a good indicator of how recurring revenue will develop in the future. Thus, the higher growth in ARR compared to growth in recurring revenue (22% vs 15%) indicates that the growth rate in recurring revenue is also expected to increase.

We are experiencing a certain slowdown in the ERP market and ACV within the Private business area is somewhat lower than before. New sales generated an ACV of SEK 7 million, but at the same time the market situation has also created a higher churn among our existing customers than we are used to seeing. Net ACV amounts to SEK 4 million for the quarter. We are pleased that the quarter contains several new deals within the banking segment.

Within the public sector, we have an unusually strong ACV in Denmark of SEK 7 million. Our renewed and intensified cooperation with the Danish Board of Agriculture and a number of municipal affairs is the basis for this positive development. In Sweden, we continue to successfully transform the business model to a full service provider and increase delivery revenue compared to the previous year.

Overall, a quarter in line with our expectations and financial goals. As we previously stated, we are past the phase of major cost increases in our growth plan. Our strong growth in ARR therefore gives us confidence that we will continue the trend with a clear improvement in profitability going forward as well.

Christian Sundin,

CEO Formpipe

Quarterly Report Q1 2023

2

Financial Information

January - March 2023

Net sales for the period increased by 6 % compared to previous year and totalled to SEK 127.6 million (120.3 million). Software revenue increased by 14 % from the previous year and totalled to SEK 91.1 million (80.2 million).

Total recurring revenue for the period increased by

15 % from the previous year and totalled to SEK 88.2 million (76.5 million), which is equivalent to 69 % of net sales (64 %). Exchange rate effects have affected net sales favourably by SEK 4.4 million in comparison with the previous year.

Revenue split, Jan - Mar 2023

License 2% (3%)

SaaS 22% (17%)

Support & Maintenance 47% (46%)

Delivery 29% (33%)

Recurring revenue, rolling 12 m, mSEK

340

330

320

310

300

290

280

270

260

2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1

Annual recurring revenue (ARR), mSEK

January - March 2023

The operating costs for the period totalled to SEK

120.6 million (116.8 million). Personnel costs totalled to SEK 73.4 million (72.1 million). Selling expenses totalled to SEK 15.9 million (16.1 million). Other costs totalled to SEK 27.7 million (27.0 million). Exchange rate effects have increased expenses by SEK 5.0 million in comparison with the previous year.

Recurring revenues in relation to fixed operating costs, rolling 12 m, mSEK

450					90%
400
350					85%
300
250					80%
200
150
100					75%
50
0						70%
2022 Q1	2022 Q2	2022 Q3	2022 Q4
	2023 Q1

Fixed operating costs, R12 Recurring revenue, R12

Recurring revenue / fixed operating costs, R12 %

3

Financial Information

January - March 2023

Operating profit before depreciation and amortization and items affecting comparability (EBITDA) totalled to SEK 23.3 million (17.0 million) with an EBITDA margin of 18.3 % (14.2 %). Operating profit (EBIT) totalled to SEK 7.1 million (3.5 million) with an operating margin of 5.5 % (2.9 %). Net profit totalled to SEK 4.9 million (1.1 million). Exchange rate effects have affected EBIT unfavourably by SEK 0.6 million in comparison with the previous year.

Sales and EBITDA margin, mSEK

140				6%
120				5%
100				4%
80
				3%
60
40				2%
20				1%
0	2022 Q2	2022 Q3	2022 Q4	0%
2022 Q1	2023 Q1
Support & Maintenance	SaaS
License			Delivery
EBIT margin

Cash equivalents

Cash and cash equivalents at the end of the period amounted to SEK 5.7 million (35.4 million). The company's total bank overdraft facility amounts to SEK 50.0 million. At the end of the period it was utilized with SEK 0.0 million (0.0 million). The total accessible funds therefore amounts to SEK 55.7 million (85.4 million).

The company had interest-bearing debt at the end of the period totalling to SEK 39.1 million (52.9 million), whereof SEK 9.1 million (12.9 million) refers to lease debts according to IFRS 16.

The company's net debt position thereby totalled to SEK 33.4 million (17.6 million), which corresponds to a net debt position of SEK 24.3 million (4.6 million) excluding IFRS 16-related debt.

Deferred tax asset

By the end of the period the company's deferred tax assets attributable to accumulated losses amounted to SEK 3.9 million (SEK 5.1 million).

Equity

Equity at the end of the period amounted to SEK

453.0 million (442.8 million), which was equivalent to SEK 8.36 (8.21) per outstanding share at the end of the period. Changes in the value of the Swedish krona compared to other currencies have changed the value of the group's net assets in foreign currencies by SEK 6.2 million (2.0 million) from the end of the year.

Equity ratio

The equity ratio at the end of the period was 58 % (60 %).

Cash flow from operating activities

Cash flow from operating activities for the period January - March totalled to SEK 15.0 million (13.1 million).

Investments and acquisitions

Total investments for the period January - March amounted to SEK 13.2 million (45.6 million).

• Investments in intangible assets totalled to SEK 13.1 million (12.4 million) and refer to capitalized product development costs.
• Investments in tangible and financial assets totalled to SEK 0.1 million (0.3 million).
• Acquisitions of subsidiaries amounted to SEK 0.0 million (32.9 million).

Financing

During the period January - March the company amortized SEK 2.5 million (1.1 million).

The existing bank overdraft facility totalling to SEK

1. million was not utilized at the end of the period (- million). Leasing related liabilities amounted to SEK
2. million (12.9 million) at the end of the period. The company's interest-bearing debt at the end of the period was thereby SEK 39.1 million (52.9 million).

Quarterly Report Q1 2023

4

Market

Data and information become more and more important for the financial development: it is the foundation for many new products and services, which leads to productivity and resource efficiency gains in all sectors of the economy. Being able to take advantage of the possibilities of digitalization has become one of the most important issues of our time. The benefits of being able to collect, process and present data are extensive.

Formpipe's products are used to create, store, distribute, automate, relocate, archive and manage information, data and metadata regarding e.g. scanned documents, e-mail, reports, records, business documents or information from other source systems. The goal is to be able to refine and analyze content from one or more sources, to thereby provide the right insights by the right people receiving relevant information when they need it. It is in the Content Services (previously Enterprise Content Management) market that Formpipe has grown to become a market leader in the public sector and a strong challenger in the private sector where we digitalize and streamline customer communication in sectors such as retail, finance and manufacturing.

The growth in the market is fuelled in large part by the organizational and corporate-wide need to streamline operations and meet legal requirements and regulations. To be able to get the value out of the collective amount of information at companies and organizations, applications and services are needed

• in order to securely - collaborate, search, analyze, process and distribute data and content. Growth drivers tend to gain strength as the amount of data and information increases.

Gartner's forecast for the global market is an average annual growth (CAGR) of 10 percent in 2020-2024. The Content Services market is estimated to be USD1 11 billion in system revenue.

An important part of the change of the Content Services market is also that the development is moving increasingly towards cloud-based solutions, where the customers pay for what is used and where costs for development, operations, maintenance, upgrade and support are included in the running agreement. The transition to SaaS is taking place very quickly now and Gartner estimates that the SaaS revenues will reach up to 60 percent of the total sales of software in 20242.

This development is well in line with Formpipe's reality where growing numbers of the Company's customers choose to shift to Formpipe's cloud services for the standard products and with the Company's development of service modules that can process information both from Formpipe's existing systems and other systems.

Private sector

In the private sector, the business revolves around the product Lasernet. Through a certified partner network, Formpipe addresses the global market for ERP and banking systems. The most common purchase of Lasernet and Formpipe's complementary offering Autoform DM takes place when implementing, or upgrading to, Microsoft Dynamics 365 in industries such as manufacturing, retail and utilities and Temenos Transact and Infinity in banking and finance. The partner network thus primarily consists of implementation partners of these systems and constitutes a sales and delivery channel for Formpipe's offering.

The cloud-based ERP system Microsoft Dynamics 365 grew by 21 percent in the second quarter (Oct- Dec) of Microsoft's fiscal year 2023.3 Temenos grew its SaaS business by 37 percent in the full year of 2022. 4

1	Enterprise Application Software Forecast Q420, Gartner, Inc. 2020
2	Market Trends: Cloud Shift - 2020 Through 2024, Gartner, Inc. 2020	4 https:// www.temenos.com/wp-content/uploads/2023/02/Temenos-Q4-

3 https://www.microsoft.com/en-us/investor/earnings/fy-2023-q2/press-2022-Results-Press-Release-2h9e96fri.pdf release-webcast

5