Karnov Group Aktie

Welcome to the Karnov Group Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to CEO, Pontus Bodelsson; and CFO, Magnus Hansson. Please go ahead.

Welcome, everyone, to Karnov Group's earnings conference where we will present the outcome of the first quarter of 2026. Please go to Slide 2. I am Pontus Bodelsson, President and CEO of the company. With me, I have our CFO, Magnus Hansson; and our Head of Investor Relations, Erik Berggren. Magnus and I will present the outcome of the quarter using a few slides, and then we'll open up for questions.

With that said, let's get started with the presentation. Please go to Slide 3. Digging into the numbers, the adjusted EBITA margin was 29% compared to 26% in Q1 last year. We convert that margin improvement to a strong free cash flow. The organic growth was 3%, driven by organic online sales growth in all markets. The legal businesses in Region North had 11% organic online sales growth, a small improvement compared to the previous quarter. The corresponding number in Region South was 3%, hopefully, the start of a continued online sales growth. Leverage was 1.8x, well below our financial target.

Please go to Slide 4. We have now completed the large renewal season in both Region North and Region South. Customer satisfaction is on a high level and the retention rates are on the same high level as previous years. Customers are upgrading to our AI-supported solutions and the number of users in all customer segments is growing and also the monthly usage, two good signs of appreciated products. In Q1, the organic online growth was 5%, driven by our legal businesses in Region North, which had 11% organic online sales growth and Region South, which had 3% organic online sales growth. Our market-leading Spanish business is accelerating growth, thanks to a stronger product portfolio and deep expert authored local contents. The French business had weak legal training sales. We are currently taking action in France. At the end of March, we launched new AI products in France and Spain. The new products are based on the group's AI platform and generate new customer value. While the launch was in late March, the initial customer feedback and sales results are promising.

The adjusted free cash flow improved by SEK 19 million to SEK 264 million. During the quarter, we have repurchased close to 10% of the shares. The Board has requested a mandate to continue repurchasing shares also after the 2026 Annual General Meeting. Next slide, please.

Karnov's market-leading position in European civil law market sits in our proprietary legal content authored by Karnov's 7,000 recognized legal experts. Without access to this interpretive layer, courts, law firms and corporate legal teams cannot trust the basis for decisions. This creates a system-wide reliance on Karnov. Karnov has on a recurring basis throughout its history, acquired and integrated content-based assets across Europe, creating stronger customer offerings, accelerating growth and improving margins.

In Region North, we acquired and merged 2 Swedish competitors and created a market leader in 2019. We later merged the Swedish market leader with our Danish business and created a Scandinavian business selling AI-based solutions. We have, thanks to this accelerated growth to double-digit numbers and raised the profitability from 40% to 50%. In Spain, we acquired and merged 2 Spanish competitors and created a market leader in 2023. After completing the integration, we now see accelerating growth and meaningful margin improvement. This is already before the launch of the new AI products in March 2026. Next slide, please.

In the civil law markets where Karnov operates, legal precedents are based on 4 different types of legal sources: legislation, preparatory works, case law and legal doctrine. Karnov's proprietary legal content is the doctrine shaping the legal interpretation. For example, in 2025, close to 50% of the decisions made by the Supreme Court in Sweden referred to Karnov's content. This is different from common law markets such as U.K. and the U.S., where case law is more important. So in the markets where Karnov operates, our content is considered mission-critical doctrine. Next slide, please.

Tying this with our value proposition, Karnov, as a market-leading provider of legal doctrine has a mission-critical role. To the left is our legal knowledge sources, both public sources and proprietary sources. Our authored content is written by our 7,000 local legal experts. The proprietary authored content is what makes Karnov a unique supplier of legal information solutions, helping our customers to make better decisions faster. This content is crucial also to develop and offer AI solutions. To the right is our customers. The largest customer segment is the public sector, courts, universities, authorities and local municipalities, among others. The second largest customer segment is practitioners, mainly law firms. The third largest customer segment is corporates, mainly legal counsels. Next slide, please.

These are some of our 7,000 legal experts across Europe. They are Supreme Court judges, advisers to the parliament, legal professors, partners at well-renowned law firms and former counselors of justice across our local markets. Next slide, please.

Our core value proposition is local legal knowledge authored by our experts, trusted by more than 400,000 legal professionals across Europe. Our competitive moat is the proprietary authored content itself, solely available via our solutions. AI serves as the interaction platform that delivers our content in increasingly valuable ways. By adding an AI workflow layer on top of that authoritative content, Karnov turns the value proposition from a trusted legal knowledge source into an embedded infrastructure layer seamlessly across the entire circle of legal work.

As legal workflow and legal research converge, customers will put a premium in products anchored in authoritative sources. Karnov is uniquely positioned to capture this inflection because we can embed our legal content directly into AI-enabled workflow services at scale. This summer, we will launch our content-driven workflow solutions and leverage our proprietary content in new valuable ways to create even greater customer offerings. Next slide, please.

With that said, we have reached the point where I hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial results. So Magnus, the floor is yours.

Thank you, Pontus. So let's start with an overview. Next slide, please. In Q1, the organic growth was 3.2% and net sales were SEK 628 million. Currency effects were minus 3.6% and the acquired growth was minus 6.2% due to the divestments of EHS and the Spanish training business. We have separated EHS from all numbers, and this slide presents the financial result for the current Karnov Group. The organic growth in Q1 is driven by increased online sales, including selling more licenses to existing customers, higher tier packages, AI uplifts and attracting new customers. The online sales growth was 5% in constant currency. Next slide, please.

Breaking down net sales on segment level, we see continued strong organic growth in Region North and modest growth in Region South in the quarter. Region North had organic growth of 6%, thanks to strong online sales performance, while Region South grew by 0.3%, thanks to organic online sales growth in both Spain and France. The Legal businesses in Region North, excluding the acquired carve-out Schultz business, had an organic online sales growth of 11% and the Region South Legal businesses had an organic online growth of 3%. Next slide, please.

The adjusted EBITA amounted to SEK 180 million in the first quarter. This corresponds to an adjusted EBITA margin of 29%, which is an improvement of 3 percentage points. The margin improvement is driven by operational leverage, product mix and lower cost base. Synergies are coming through as expected, meaning personnel expenses are decreasing. Next slide, please.

At the end of Q1, we have achieved synergies within the group of EUR 20 million on an annual run rate basis. The effect in the quarter compared to the baseline amounted to EUR 4.9 million. We are ahead of plan. The cost to achieve in the 2 initiatives are estimated to EUR 38 million. At the end of Q1, we have spent EUR 33 million in cost to achieve. The initiatives are planned to end in 2026. Next slide, please.

In Q1, net sales amounted to SEK 325 million in Region North. Organic growth was 6%. The growth is driven by online sales. We continue to strengthen our market position and attract new customers, especially in the public sector in Sweden and Denmark. The online LIS business grew by 11% organically. Adjusted EBITA was SEK 165 million. This is an increase of SEK 18 million compared to last year. The adjusted EBITA margin amounted to 51%. The improvement is due to operational leverage from higher net sales and lowered cost base. We completed the Schultz integration at the end of 2025. This lowers the cost base in Region North going forward. Next slide, please.

In Region North, the online sales accounted for 89% of the net sales in the quarter. Please note the divestment of EHS and fairly large FX effects. Subscription-based sales increased during Q1 and represent 90% of sales in the quarter. Next slide, please.

Karnov's LIS business continued to grow as customers buy our AI package. In Q1, the organic online sales growth was 11%. Our tax and accounting business, DIBkunnskap, had a stable performance in the quarter. The carved-out Schultz business case still holds true. As mentioned in Q4, a few carved-out customers outside Karnov's core area have chosen other suppliers. Next slide, please, which is the Region South segment.

Net sales in Region South were SEK 303 million in the quarter. Organic growth was 0.3%, driven by the Spanish business, which had an organic growth of 5.3% in the quarter. The French business had solid growth in subscription-based online sales, while legal training sales were weak, leading to a negative organic growth of 4.8%. The LIS organic online growth was 3% in Region South. The adjusted EBITA margin was 13% in the first quarter. The Spanish business has meaningful margin improvement, thanks to growth and synergies, while the French business had margins decline due to the weak legal training sales. We are confident in our medium financial targets for Region South. At the end of March, we launched new AI products in France and Spain. This generates additional customer value. The initial customer feedback and sales results are promising. Next slide, please.

Due to currency effects, the reported online sales in Region South declined by 3% compared to Q1 of last year and accounted for approximately 84% of net sales in the quarter. Organic online sales and subscription-based sales grew by 3% in Region South constant currency. Next slide, please, which presents the segment group functions.

Expenses in Q1 were SEK 24 million. Next slide, please.

Q1 is typically a cash-generative quarter for Karnov, reflecting the timing of the group's online contract renewals and invoicing cycle. The renewal season has been in line with our expectations and the adjusted free cash flow was SEK 264 million. The leverage was 1.8x EBITDA last 12 months, well below our financial target. During the quarter, we have allocated SEK 665 million to repurchase close to 10% of the shares. Karnov Group is limited by Swedish law to hold a maximum of 10% of its own shares. The Board has proposed to the 2026 AGM on May 7 to cancel 8.4 million shares and that the AGM further resolves on mandating the Board to repurchase up to 10% of the outstanding shares after cancellation. Provided that the shareholders vote yes on these proposals at the AGM, the Board intends to initiate a new buyback program as soon as the shares are canceled. I'm now handing over to Pontus again, who will present our last slides.

Thank you, Magnus. Please switch to Slide 22. The market for legal solutions is growing. Our market-leading positions in local European civil law markets stem from our proprietary legal content authored by 7,000 legal experts and trusted by more than 400,000 legal professionals. Seamlessly embedding our content into legal work will generate great new customer value. This summer, we will launch our content-driven workflow tools, which have been co-developed with customers. These new workflow solutions, along with our recently launched AI products in France and Spain for an exciting future for Karnov Group. Next slide, please.

And by this, I'll end our presentation, and we are now ready to take questions. So I'll hand over the conference again to our host.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

I want to start first on the synergy bit in South specifically. So you take out a lot of synergies and costs and most of these are in Region South, yet the margin is -- it does improve on a year-over-year basis. But we and the market would have expected more given, in absolute terms, how much cost you take out? So if you can discuss a little bit more in terms of when they can be more clearly visible in the margin?

Yes. Hi Predrag, and thank you for your question. I think we agree. We would have hoped for more clarity on the margins in Region South in Q1. This quarter, we had a decline in the transactional side in France, which impacted the margins, unfortunately. So we're a bit disappointed with that. But we do believe that the synergies we have taken out is crucial for reaching the financial targets going forward. And as you know, we've talked about this before, we are also investing at the same time. So we try to keep one foot on the gas pedal and one foot on the brake. So we have invested quite a lot in the markets, meaning that we've, for example, invested in the commercial team in France. We have invested in the products in France. We've also invested in the market in Spain, which we now can see is bearing fruit. So overall, a bit disappointed with the margins, but we have also invested in the future.

And there is -- I think we should underline there is a big difference between Spain and France. Spain is really delivering this quarter, which is great to see. I mean the growth in Spain is definitely on another level. So let's be clear, it's France that's the challenging part here now. So what we have seen, especially when it comes to France is the off-line products, and we can even be more specific than that. It's, of course, books. As always, it's not a tailwind for books these days in any market, but specifically in France and even more so when it comes to the legal training business. It's not the -- let me [indiscernible] French, our French company problem. It stems from the market itself. There is a weak market for legal training for the time being. However, we see some trends pointing in the direction of more positive market development for training business in France, but we are not waiting for that. We have actually developed 12 new learning modules to be launched even earlier than that. So fingers crossed, we are doing everything we can, and we will address and take action in France going forward. So there is a big difference between Spain, where we are the market leader compared to us being #3 in France.

Thank you very much for a good answer. Based on those comments, given what you are doing, and fair enough, you do have some challenges, but is it reasonable to expect that the margin for South going forward will improve every quarter on a year-over-year basis given these actions you're taking?

Of course, we don't give forecast or prognosis. But of course, we're not satisfied with this level. We need to improve.

Okay. Good. Then on the North side, it's quite an exceptional margin this quarter. Is it true that you will operate at a permanently somewhat lower cost base going forward now that Schultz has been finally or fully integrated?

Yes, that's correct. So we ended the TSA for the carve-out of Schultz by Q4 '25. So the cost base going forward will be lower.

Very good. And then what are your customers focusing on mostly right now with regards to AI, would you say? Where are they getting most efficiency gains, where are they focusing their efforts? And I think this is interesting both in terms of the services that you provide and then also what others might be providing.

Yes. I would say it's a very good example. It's actually what we did in the very last week of March. We launched new services in Spain and France. And it's -- first of all, it's about quality. And of course, we measure all the time quality, our quality compared to our competitors. And we can see that as long as we are #1, we are also growing. So in terms of quality, I would say it's very much discussed with our customers. We are -- as I mentioned before during the presentation, we are co-developing. So that's a really important part. But quality, quality, quality is important. I mean you can become more efficient, but you can't really delegate any form of quality. And we are responsible as a lawyer or as a judge for the quality you deliver.

So I would say that the #1 factor is definitely the quality. And that is, of course, not only dependent on the AI solution, it's also all the time dependent on the data, meaning the content. So the fact that we are the market leader, having the strongest content definitely in 3 out of our 4 main markets is increasingly important. I would say that -- well, you could say that we have, as I mentioned in the presentation, those 3 sources of how you build the legal system. And as long as we are the doctrine, we represent the doctrine in those 3 markets. It's definitely an advantage, not only for the decision-making, but also how we sort of load the content into our AI system. And the better doctrine we have, the better content we have, the better the AI solution. So coming back to what we just launched in Spain and France, there's no doubt whatsoever that we are #1 in Spain in terms of quality. So that's, I would say, an easy answer to your question. It's about quality, quality, quality. And that's why we are seeing such a positive welcoming by the new AI solution, specifically in Spain, I would say.

That's very good. And just a final quick question on the AI products that you have launched and that's the usage. If you can give us some insight into if you see more user engagement and to what extent based on the sales and products you've sold so far?

Yes. We monitor that very closely, of course, in every geographical market, but also in every product. As you know, we have AI products, more general AI products, but we also have specifically, you could call it the vertical directed to the municipalities. So we measure all the time, and we can see that from month-to-month, the usage is growing. So that's a very positive side of looking at how our products are received by our customers. But also, of course, we measure the Net Promoter Scores on every product that we have. And I would say on a general level, the NPS is higher on our AI products compared to our traditional products that we do have. It's not saying that we have low NPS on the traditional products, but they are extremely high for the AI products. So it's well received, and we can see that it's definitely a driver of what we see in Denmark and Sweden and it's also the driver of what we see in Spain. As Magnus mentioned, we are growing 5% in Spain. And most of that is thanks to the sort of former AI products and now also accelerating with the new launch that we had in the last week of March.

[Operator Instructions] The next question comes from Thomas Nilsson from Nordea.

I'd like to ask a bit about corporate in-housing. Are you seeing any evidence that corporations are increasingly bringing legal work in-house to reduce external counsel spend or to gain speed or control? And if so, what customer segments and what legal workflows are most affected? And how could this be changing demand for Karnov's tools?

Very interesting question and very general, of course, it's difficult to be extremely specific on that. But yes, there is beginning to see a small trend in Sweden in terms of legal counsels. Corporates seem to discover our AI product in Sweden to a new extent. It's early signs, let's be honest about that. But we can see that a growing interest from the corporate side.

However, that the other thing you're alluding to, I believe, is whether there is a risk of less licenses, thanks to the fact that we are making our customers more efficient. We have not seen any growing churn whatsoever. We have not seen our customers having less licenses. It's, of course, a question we follow closely. We are also looking out on a global scale to see. And normally, the U.S., not only in our industry, but in general, of course, is a couple of years ahead of what we see in Europe. And for example, one interesting thing is that there is a research being done yearly since 1975 of how long it will take for a newly graduated law student to get his or her first job. And as a matter of fact, during these 50 years, it has never been as short time as it is of today. So we can see that the law firms, the courts, the corporates are employing newly graduated lawyers at the speed that we have never seen before. So all in all, we haven't seen any tendency whatsoever here in Sweden. We haven't seen when we look out on a global scale either. So well, we are quite confident. So far, no changes at all. Okay. [Technical

Difficulty] Did we lose the sound or...

Okay. I think we were breaking up there. Could I ask a second question when it comes to the high level of start-up activity in the legal field that we see in the U.S. by workflow tools launched by Thomson Reuters, Nagarro, Harvey. What is your perspective on the development in the U.S. market? And how do your workflow tools compare to those launched in the U.S. by these well-known actors?

Yes. We haven't yet launched our workflow tools. That's the plan for this summer. And it is, of course, taking a step back, we can look what we did 1.5 years ago when we launched the AI services. The AI services 1.5 years ago, we launched was solely based on the expert authored content combined with AI. What we are doing now or have been doing for quite some time, we are not first on this market. So we have the opportunity to really look at what works globally. And what we see is that we have co-developed together with our customers to make sure that we address the most interesting challenges that our customers have.

I mean, as you know, we do serve both the public sector, the practitioners, the law firms and the municipalities. And we see certain segments -- subsegments in these that really needs this. So we're not striving to get one solution fits all. On the other hand, actually the opposite. We have zoomed into specific subsegments where we can really make a difference for them. And that's why we have co-developed really closely together with our customers.

So yes, there are very broad solutions coming from the U.S. when it comes to workflow tools, but all of those, more or less, are dependent only on the efficiency part of this. We are adding, of course, our core, and our core is the expert authored content. So what we are focusing on is workflows, the parts of workflow that really matters to our customers where the seamless integration of our expert authored content really makes a difference in the workflow parts. So instead of copy-pasting from different systems, we will make sure that it's a flow that will make our customers more efficient, both from a workflow perspective and from a content perspective. That's our take on that.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Okay. Thank you, everyone, for listening and for your questions. We will disclose our Q2 report on the 20th of August, and we hope to hear from you then, if not earlier. Thank you.

Thank you.

Welcome to the Karnov Group Q4 2025 Report Presentation. [Operator Instructions]

Now I will hand the conference over to CEO, Pontus Bodelsson; and CFO, Magnus Hansson. Please go ahead.

Welcome, everyone, to Karnov Group's earnings conference where we will present the outcome of the fourth quarter and full year 2025.

Please go to Slide 2. I'm Pontus Bodelsson, President and CEO of the company. With me, I have our CFO, Magnus Hansson; and our Head of Investor Relations, Erik Berggren.

Magnus and I will present the outcome of the quarter using a few slides, and then we'll open up for questions. With that said, let's get started with the presentation. Please go to Slide 3.

In Q4, the organic growth was 4%, driven by online sales growth, including AI uplifts. The legal businesses in Region North continues to have 10% organic online sales growth. The adjusted EBITA margin improved to 26%, which is an improvement of 2 percentage points compared to Q4 previous year. Leverage was 1.3x, well below our financial target.

In Q4, we achieved solid margins improvement with continued traction in AI sales. The number of AI users increased by 5x in 2025, and the number grew every quarter. We are advancing our positions, and we will, in 2026, launch our AI-powered workflow tools with seamless integration of proprietary contents.

Please go to Slide 4. We ended 2025 on a high note with pleased customers and a successful renewal season in Region North. In Q4, our Legal businesses in Region North had 10% organic online sales growth and 1,100 Danish prosecutors now use our AI assistant. Moreover, a majority of the judges in Sweden are now using our AI assistant.

In Region South, we progressed with rationalization of unprofitable products and the synergy execution. In Q4, we reached an adjusted EBITA margin of 17% in Region South. At the end of Q1, we will have a common AI platform across all local geographies, which will lower development expenses and generate more value for our customers. On December 1, we completed the divestment of EHS. The transaction generated proceeds of SEK 1.1 billion.

Next slide, please. Let me take a minute to describe our value proposition. There is a fundamental difference between content-driven legal knowledge platforms with authored content such as Karnov and legal software providers without authored content.

This is a slide which I believe is familiar to many, presenting our value to customers. To the left is our legal knowledge sources, both public sources and proprietary. Our authored content is written by our 7,000 local legal experts. The proprietary authored content is what makes Karnov a unique supplier of legal information solutions, helping our customers to make better decisions faster. This content is crucial also to develop and offer AI solutions.

Next slide, please. Our core value proposition is local legal knowledge authored by our experts, trusted by more than 400,000 legal professionals across Europe. Our competitive moat is the proprietary authored content itself, solidly available via our solutions and mission-critical for our customers.

AI serves as the interaction platform that delivers our proprietary authored content in increasingly valuable ways. Customers are adopting our AI solutions at an accelerating pace. Usage is increasing every month and customers report significant productivity gains.

In 2025, the number of AI users increased by 5x. 5x In 2025. Seamlessly integrating knowledge with workflow tools results in more precise and efficient work for legal professionals. Soon, we will launch our content-driven workflow tools. Our ambition is to serve customers in all phases from order intake to customer delivery with our trusted content as the anchor in all phases. This broadens the scope of legal work we support and generates more value for our customers while also creating new revenue streams on an expanding market.

Next slide, please. In this slide, you can see our two cost efficiency initiatives running until the end of 2026 with the ambition of harvesting efficiencies of EUR 20 million in total. At the end of Q4, we have achieved annual run rate synergies of approximately EUR 20 million. We progress ahead of plan.

Next slide, please. I will now present our segment performance, starting with Region North. Region North continues to perform exceptionally well, both in terms of organic growth and profitability. The organic growth of 6% is above our financial targets and driven by higher subscription-based online sales, including AI uplift.

The organic online sales growth in our legal businesses was 10% also in Q4. During the fourth quarter, the Danish Prosecutor Organization upgraded to our AI package. That means that 1,100 Danish prosecutors now have our AI assistant. At the end of September, we launched our AI solution for municipalities in both Denmark and Sweden. Since the launch, the sales momentum has been strong and the customer feedback is positive. Margins are continuing to improve, primarily due to operational leverage from higher net sales.

Next slide, please. We are pleased with the margin improvement in Region South in Q4, and we progress with rationalization of unprofitable products. In Q4, the adjusted EBITA margin was 17%. The margin improvement in the quarter is thanks to synergy execution as well as positive impact from the divested training business.

The organic growth was 2% in the quarter, mainly thanks to solid online sales growth in France. The Spanish business was stable in Q4. I am confident in our medium-term financial targets for Region South.

From March, we will have Karnov's common AI platform across all local geographies. This will increase customer value as well as improve scalability and shorten time to market for new features.

Next slide, please. With that said, we have reached the point where I hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial results. Magnus, the floor is yours.

Thank you, Pontus. So let's start with an overview, switching to Slide 11.

In Q4, we achieved net sales of SEK 665 million. The organic growth was 3.8%, offset by currency effects of 3.8% and acquired growth was negative 3.7% due to the divestment of EHS and the Spanish training business. We have separated EHS from all numbers and the slides present the financial result for the current Karnov Group.

Net sales, excluding EHS was SEK 648 million. The organic growth in Q4 is driven by increased online sales, including selling more licenses to existing customers, higher tier packages, AI uplift and attracting new customers. The online sales growth was 5% in local currencies.

Next slide, please. Breaking down net sales on segment level, we see continued strong organic growth in Region North and modest growth in Region South in the quarter. Region North had organic growth of 6%, thanks to strong online sales performance, while Region South grew by 2%, thanks to good sales performance in France. The legal businesses in Region North, excluding the acquired carve-out Schultz business had an organic online sales growth of 10%.

Revenues from AI sales are increasing quarter-by-quarter as the subscription revenues are recognized over the contract period.

Next slide, please. On Slide 13, you see the net sales development within online and offline split into segments. In Region North, the online sales increased by 4% compared to Q4 of last year and accounted for 94% of the net sales in the quarter. Please note the divestment of EHS and a fairly large FX effect.

In Region South, the online sales declined by 3% compared to Q4 of last year due to currency effects and accounted for approximately 79% of net sales in the quarter. Organic online sales grew by 1% in Region South.

Next slide, please. Subscription-based sales increased during Q4 and represent 88% of sales in the quarter. The negative development in subscription-based sales in Region South is related to negative currency effects. The online subscription sales in local currency grew by 1% in Region South.

Next slide, please. The adjusted EBITA amounted to SEK 172 million in the fourth quarter. This corresponds to an adjusted EBITA margin of 26%, which is an improvement of 2 percentage points. Excluding EHS, the adjusted EBITA amounted to SEK 167 million. The full year adjusted EBITA increased by SEK 119 million and reached 25%, excluding EHS.

Synergies are coming through as expected, meaning personnel expenses are decreasing. Items affecting comparability related to restructuring and integration amounted to SEK 25 million during Q4. At the end of Q4, we have achieved synergies within the group of EUR 19.6 million on an annual run rate basis. The effect in the quarter compared to the baseline amounted to EUR 4.5 million. We are ahead of plan to achieve synergies of EUR 20 million with full effect on an annual run rate basis by the end of 2026.

Next slide, please. In Q4, net sales amounted to SEK 318 million in Region North, excluding EHS. Organic growth was 6.2%. The growth is driven by online sales. We continue to strengthen our market position and attract new customers, especially in the public sector in Sweden.

Adjusted EBITA was SEK 135 million, excluding EHS. This is an increase of SEK 11 million compared to last year. The adjusted EBITA margin amounted to 43%. The improvement is due to operational leverage from higher net sales. We completed the Schultz integration 6 months early and have terminated the Transitional Service Agreement at the end of 2025. This will have a positive impact on margins from Q1 of 2026.

Next slide, please. During 2025, Karnov has achieved accelerating organic growth in Region North. This has been driven by the legal business uplifting customers to our AI package.

In Q4, the organic online sales growth was 10%. Our tax and accounting business, DIBkunnskap, has a stable performance along with the Schultz business. DIB has now launched their AI assistant with positive feedback. The Schultz business included customers not in Karnov's core area, and the portfolio value is SEK 9 million lower going into 2026. The business case presented in connection with the acquisition still holds true.

Next slide, please, which is the Region South segment. Net sales in Region South declined by SEK 28 million compared to Q4 of last year. Currency effects had a negative impact of SEK 17 million in the quarter and the divested Spanish training business, another SEK 17 million.

Our French businesses had solid growth in subscription-based online sales, while the Spanish business had a stable performance in the quarter. The adjusted EBITA margin was 17% in the fourth quarter. The margin expansion is thanks to synergies coming according to plan and positive impact from the divested training business. Compared to the baseline, the cost base has decreased by SEK 25 million in Q4.

Next slide, please, which presents the segment group functions. Expenses in Q4 were SEK 26 million.

Next slide, please. Q4 is typically a cash-generative quarter for Karnov, reflecting the timing of the group's online contract renewals and invoicing cycle. The renewal season has been in line with our expectations and the adjusted free cash flow was SEK 239 million. The leverage was 1.3x EBITDA in last 12 months at the end of the year, well below our financial target. The proceeds from the divested EHS division has strengthened our balance sheet.

The Board has resolved to allocate SEK 500 million to buy back shares. And the Board will propose a mandate to buy back up to 10% of the shares on May 7, 2026. To increase flexibility for the ongoing buyback program, the Board intends to summon an AGM in March to increase the current buyback program from 5% to 10%.

I'm now handing over to Pontus again, who will present our last slides.

Thank you, Magnus. Please switch to Slide 21. 2025 was a formative year for Karnov Group, marked by value creation and strong results. We accelerated organic growth, thanks to sales and adoption of our accurate and reliable AI solutions, captured synergies that strengthened our profitability and optimized our portfolio through value-accretive divestments.

Our strategic focus is to uplift customers to our AI solutions and continue to evolve customer value. At the end of Q1, all business units will operate on Karnov's common AI platform curated the trusted local content.

Thanks to the common platform. We improved the scalability and shortened time to market. Supported by long-standing customer relationships and reputable proprietary legal content, we are well positioned to expand into the market for AI-based legal workflows in 2026. This will expand the scope of legal work we support, increase customer value and open new scalable revenue streams.

Please go to Slide 22. And by this, I'll end our presentation, and we are now ready to take questions.

So I'll hand the conference again to our host.

[Operator Instructions] The next question comes from Predrag Savinovic from Carnegie.

I have a few. But let's start with the growth in the North. If you could discuss what the database growth would have been excluding Schultz, because you say 10%, but then Schultz didn't grow. So underlying, is it even higher than what you have written in the report?

Yes. No, excluding the Schultz, the underlying growth is 10%. So, same as last quarter and the quarter before that. So, excluding Schultz, the underlying organic growth is 10%.

Okay. And then Q4 is an important selling season, and we are in mid-February. You should have some good visibility for the renewal season. You mentioned it, Magnus, on the call that it's in line with your expectations. What does this mean for the start of '26? Is it above the closing rate for 2025?

Yes. As you know, we don't give those numbers, but we are pleased with the renewal season. It follows our expectations and the previous trends. We can see continued transition into AI packages. We follow the trends from last year in terms of renewals and churn and so on. So, follows trends that we've seen throughout the year.

All right. And then considering the sale you did of EHS, are there other non-core assets that are for sale to focus even more on the core? I'm thinking primarily, for example, DIBkunnskap and other smaller assets.

Yes. I mean, we continue to -- we continuously look at the portfolio we have. For now, we believe that we have a good core of businesses for the future. But we will continue, of course, to look at smaller assets, and we will continue to look at product rationalizations in both Spain and France, but they are typically of a smaller size and not as significant as, for example, the training business we divested in Spain.

Okay. And then you have been in the AI debate now for the last weeks. I mean, what's mostly debated is AI platforms launching their versions of workflow tools. If you can discuss a little bit about the strategy around yours a little bit in more depth pros and cons compared to what's been discussed in the media, your strategy to go in this market.

Yes. Thank you for the question. It's definitely an interesting topic. And it gives me an opportunity to really point out what we are doing versus the others, so to say. I mean, the discussions we said heard around Anthropic is very much about creating workflow tools to make judges, lawyers more efficient in their ways of working. So that's clearly workflow tools. That's one part.

The other part is what we are adding to this industry, and that is the knowledge. I mean, we use those partners of ours. There's 7,000 legal experts all around Europe to create knowledge that we deliver in order for judges, the lawyers, legal counsels, et cetera, et cetera, to make better decisions.

On top of that, we use AI to really make it smart to deliver conclusions instead of, sort of, just knowledge. That's something totally different from what has been discussed in the recent week, because that is workflow tools. That is a way to make people more efficient in terms of how they handle a specific matter. Whereas again, we are adding knowledge.

So it's local proprietary content, meaning that the national legislation, for example, in Spain, is something far from creating a workflow tool in California. That's an easy thing for me to say, working at Karnov, seeing this every day. But I guess we'll have to come back to this, because people seem to have a difficult time to see the difference.

So I can promise you, we will come back to this over and over again, because it's so important that we see this industry from different angles. So we are not a software company. We are a knowledge company. That's the major difference.

And just one final, if you have any view on partnerships, for example, with someone like Kluwer or Harvey, where you offer the data, the research, the knowledge and they offer their workflow tools. Is that something you have considered?

On a very general level, we will, of course, be open to partnerships. But when it comes to the local proprietary content, there is -- we have no plans to license that to anyone else. That is our gold mine. And it goes back to your other question. I mean, this is where we create value for our customers. This is where we create value for our shareholders, and we will hold on to that gold mine. We will utilize that and build on that gold mine. Partnerships in other circumstances, we will, of course, open to discuss. But when it comes to the gold mine, well, it's something we share within the company and with our shareholders.

The next question comes from Simon Jonsson from Berenberg.

I would like to follow up on the organic growth in Region North. But could you explain in more detail why the growth declined compared to Q3?

Yes. So the organic growth was 6% in the quarter. And in that number, we also have, of course, the offline business. But if you look at the online business and if we exclude the Schultz business and we exclude DIB, then we are at the same level, those 10%, I mentioned, as we've seen in Q2 and Q3. So the growth level in the, sort of, core legal business is stable.

Then we've had a stable performance by DIB, not reaching those 10%. And of course, we've talked about Schultz. We've been focusing on bringing the Schultz customers into Karnov and not focused on growth in the short term. Now we've moved them into Karnov. We've ended the transition agreement, and we can start working to get those customers onto a growth journey as well.

All right. And talking about DIB, I mean, it's a business that's been growing really well for a number of years, but now slowed down. Why is that? And what do you expect from DIB going into '26?

Yes. It's been growing really nice and growing in parts in 2025 as well. We've expanded into Denmark and Sweden, and that has dampened the growth a bit. We have launched the AI services in DIB during 2025. And we now have a sort of a brighter outlook for 2026 than we've had for the last couple of quarters.

Okay. Very good. And then finally from my end, would it be a little bit more -- would it be possible to be a bit more precise when you will launch the workflow layer in Region North?

Yes, I can expand a bit on that. It's important to describe the service, I would say, as a starting point because then you see the logic and why we have timed the different launches the way we have. At the end of March, there will be a launch in Spain and France of the common AI platform, meaning that for the first time, in the market in Spain and France, they will have the same level of customer benefits as we've had in Denmark and Sweden.

So from last week of March, there is a great opportunity. That is a stepping stone in itself to be able to launch the next part, and that is content-driven workflow tools. And by saying that, it's important that it's content driven. because we help people become more efficient, but we add in, of course, our gold mine, the parts that we call the knowledge because then there is a seamless way of working, for example, for a lawyer, not switching between different systems, but having the way they work and having the content in one place. So that is the main thing.

And the plan for that is to do that in late June. That is the plan. But it depends on, of course, that we launched the platform according to the plan, and that is the last week of March and then adding on in late June with content-driven workflow parts. So that is the logic. So now we get on the same AI platform, and that makes it possible for us to really expand, build it once and launch on all our markets within a short period of time. So that's the logic behind it.

The next question comes from Thomas Nilsson from Nordea.

I also have an AI-related question. How do you at Karnov view the risk for seat compression going forward? That is if legal professionals were to become more efficient, then perhaps there will be fewer hires. And since you, to a large extent, charged by the seat, do you envision a future where you would raise prices per seat more to account for this possible scenario?

Thanks for the question. I think it's an interesting one. We can make it into a sort of a historic story around this. Because, the same discussion was brought up 20 years ago when Internet then should make our industry much more efficient. Looking in hindsight, we can see that, for example, in France, there are twice as many lawyers today as 20 years ago. It's exact same number in Sweden, twice as many lawyers today compared to 20 years ago and 4x as many paralegals. So, we haven't discussed that 20 years ago, but it turned out that Internet, as a matter of fact, instead demanded even more lawyers, even more employees in this industry.

Why? Well, the discussion goes, of course, around the fact that we also created new legal fields by starting to work with Internet. Will it be the same with AI? Well, no one knows, of course. But you could say that we will definitely also create new legal fields, thanks, well because of -- thanks all, because of AI. So it's difficult to predict.

Coming back more specifically to your question, if we are able to make our customers more efficient and thereby, as you said, alluded to less licenses, well, as long as we are making our customers more efficient, there will definitely be an opportunity for us also to have a fair share of that efficiency gain. That is the plan. So, the short answer from us is yes.

[Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Okay. So a question from the audience to Pontus. Can you comment a bit on the monetization plan for the workplace tools that are to be launched in 2026? Is it seat-based with subscription?

Thank you for that question as well. I mean, this is a deeply interesting opportunity for us. We can see that, that part of the industry is growing faster than the traditional legal information solution part of our business. We are currently working with leading international experts how to price and package this. It wouldn't be a surprise to me if we were ending up with proceeds, but let me come back to that because we are currently analyzing that with the best of experts. So, I think, it's a deeply interesting question, and we see such a great opportunity in that.

Thank you, Pontus. And then a question to Magnus from the audience, and that is you mentioned that you have completed the integration of Schultz 6 months ahead of plan. How will this affect your quarterly costs and regional going forward?

Yes. So we've seen -- we ended the TSA by the end of 2025. And the business case that we presented at the time of the acquisition still holds true. And then, we talked about SEK 80 million in revenues and about SEK 50 million in EBITDA. And that business plan now can, sort of, materialize in 2026.

Thank you. No more questions from the audience.

Okay. Thank you, Erik. So thank you, everyone, for listening and for your questions. We will disclose our Q1 report on the 6th of May, and we hope to hear from you then, of course, if not earlier. Thank you, and have a nice day.

Welcome to the Karnov Group Q3 2025 Report Presentation.

[Operator Instructions] Now I will hand the conference over to CEO, Pontus Bodelsson and CFO, Magnus Hansson.

Welcome, everyone, to Karnov Group's earnings conference where we will present the outcome of the third quarter of 2025.

Please go to Slide 2. I'm Pontus Bodelsson, President and CEO of the company. With me, I have our CFO, Magnus Hansson; and our Head of Investor Relations, Erik Berggren. Magnus and I will present the outcome of the quarter using a few slides, and then we'll open up for questions. With that said, let's get started with the presentation.

Please go to Slide 3. In Q3, we achieved strong margins improvement with continued traction in sales of AI-supported services. Customers are confirming productivity gains and our AI assistant is becoming a daily collaborator. We are advancing our positions and are now accelerating development of our AI-powered workflow tools. Net sales grew to SEK 654 million in the quarter. The organic growth was 4%, driven by online sales growth, including AI uplifts. The adjusted EBITA margin improved to 26%, which is an improvement of 4 percentage points compared to Q3 previous year. Leverage was 2.5x, well below our financial target. Last week, we divested our EHS business for approximately SEK 1 billion. I will comment more on that transaction later in this presentation.

Please go to Slide 4. We are pleased with the achieved margins improvement in Q3. Our efforts in Region South are giving the expected returns. The legal landscape is changing as AI is providing new opportunities to serve legal professionals in their tasks. Our AI Assistant is a leading AI solution for research, and we continue to capture AI uplifts with high customer satisfaction. In the quarter, we launched a new AI-based solution, specifically targeting municipal case workers in Denmark and Sweden.

The new solution integrates local regulations and Karnov's expert authored content in a unified solution, making it an efficient and reliable tool for local case workers without legal training. It is a good example of how AI expands the addressable user markets for content plus workflow. The margin improvement in Q3 is achieved by decisive actions in Region South. We progress with rationalization of unprofitable products and the synergy execution. In the quarter, we divested the Spanish training business, which was unprofitable. We are preparing to launch our common AI platform in Region South in the first half of 2026, which will lower development expenses and generate more value for our customers.

Next slide, please. We are close to our customers in the development of our AI solutions. We have launched the next generation of our AI assistant in Denmark and Sweden, and the same AI assistant is prepared to be launched in France and Spain in the first half of 2026, as I mentioned previously. Customers can now upload their own legal documents for analysis, reviews, risk identification and mitigations. That is our first step towards serving our customers with AI and content-powered workflow tools. Seamlessly integrating knowledge with workflow tools results in more precise and efficient work for legal professionals.

Our ambition is to serve customers in all phases from order intake to customer delivery with our workflow tools and with our trusted content as the anchor in all phases. This broadens the scope of legal work we support and generates more value for our customers while also creating new revenue streams on an expanding market. The target is to launch our content and AI-powered workflow tools in 2026.

Next slide, please. Karnov is ongoing a transformation to an AI-supported legal knowledge and workflow solution provider. And we are concentrating our investments in the businesses where we have the best prospects for long-term profitable growth. We have recently signed an agreement to divest our EHS division, comprising Notisum, Echoline and QSE Conseil to Infopro Digital Group for EUR 92 million, which corresponds to approximately SEK 1 billion. Closing of the transaction is expected during 2025. The transaction generates a high multiple on invested capital. The allocation of the net proceeds will be determined using our capital allocation framework.

Next slide, please. In this slide, you can see our 2 cost efficiency initiatives running until the end of 2026 with the ambition of harvesting efficiencies of EUR 20 million in total. At the end of Q3, we have achieved annual run rate synergies of almost EUR 20 million. So we progress ahead of plan.

Next slide, please. I will now present our segment performance, starting with Region North. Region North continues to perform exceptionally well, both in terms of organic growth and profitability. The organic growth of 8% is well above our financial target and driven by higher subscription-based online sales, including AI uplift. The carved-out Schultz business is now part of organic growth. As our focus has been on onboarding the municipal customers, the financial performance of Schultz is in line with previous year and hence, has a dilutive effect on the organic growth in Region North.

Excluding Schultz, the organic performance was similar to the second quarter. By the end of the third quarter, we launched our AI solution for municipalities in Denmark and Sweden. We've already sold it to several municipalities and onboarded them. Margins are continuing to improve, primarily due to operational leverage from higher net sales, but also thanks to positive synergies effects from our acceleration initiative.

Next slide, please. We are pleased with the margin improvement in Region South in Q3, and we progress with rationalization of unprofitable products. Both our French and Spanish businesses generated organic online growth in the quarter, while books and training sales were weak also in the third quarter. We have divested the Spanish training business and are progressing with adjustments to the product portfolio, both in Spain and France with a constant focus on improving profitability. The margin improvement in the quarter is thanks to synergy execution as well as positive impact from the divested training business. We are preparing to launch our North AI platform in France and Spain in the first half of 2026.

Next slide, please. With that said, I will now hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial results. Magnus, the floor is yours.

Thank you, Pontus. So let's start with an overview, switching to Slide 11. In Q3, we achieved net sales of SEK 654 million, which is SEK 6 million higher than Q3 of last year. The growth is driven by increased online sales, including selling more licenses to existing customers, higher tier packages, AI uplifts and attracting new customers. Currency effects had a negative impact on net sales of 2.4%. The online sales grew by 5% in local currency. Last 12 months, group net sales grew by 5%.

Next slide, please. Breaking down net sales on segment level, we see continued strong organic growth in Region North and flat growth in Region South in the quarter. Region North had organic growth of 8.1%, thanks to strong online sales performance, while Region South declined 0.3% due to weak transactional offline sales, in particular, book sales in Spain and training courses in France. Negative FX effects are further contributing to the decline in Region South. Revenues from AI sales is increasing quarter-by-quarter as the subscription revenues are recognized over the contract period.

Next slide, please. On Slide 13, you see the net sales development within online and off-line split into segments. In Region North, the online sales increased by 7% compared to Q3 of last year and accounted for 91% of net sales in the quarter. In Region South, the online sales declined by 1% compared to Q3 of last year and accounted for approximately 84% of net sales in the quarter. Organic online sales grew by 2% in Region South.

Next slide, please. Subscription-based sales increased during Q3 and represent 90% of sales in the quarter. The negative development in subscription-based sales in Region South is relating to negative FX effects. The online subscription sales in local currency grew by 2% in Region South.

Next slide, please. The adjusted EBITA amounted to SEK 172 million in the third quarter. This corresponds to an adjusted EBITA margin of 26%, which is an improvement of 4 percentage points. Last 12 months, adjusted EBITA increased by SEK 117 million and reached 25%. Synergies are coming through as expected, meaning personnel expenses are decreasing.

Items affecting comparability amounted to SEK 28 million during Q3 and our restructuring costs in Region South. At the end of Q3, we have achieved synergies within the group of EUR 19.6 million on an annual run rate basis. The effect in the quarter compared to baseline amounted to EUR 4.3 million. We're ahead of plan to achieve synergies of EUR 20 million with full effect on an annual run rate basis by the end of 2026.

Next slide. In Q3, net sales amounted to SEK 342 million in Region North. Organic growth was 8.1%. The growth is driven by online sales. We continue to strengthen our market position and attract new customers. In the third quarter, we have seasonally higher book sales due to school starts. Also in the third quarter, Schultz became part of the organic growth. Schultz is currently being integrated into Karnov Denmark and the financial performance is in line with previous years.

Organic online sales, excluding Schultz, was 12% like in Q2. Adjusted EBITA reached SEK 158 million in Q3. This is an increase of SEK 17 million compared to last year. The adjusted EBITA margin amounted to 46.1%. The improvement is due to operational leverage from higher net sales and efficiencies from the acceleration initiative.

Next slide, please, which is the Region South segment. Net sales in Region South declined by SEK 40 million compared to Q3 of last year. Currency effect had a negative impact of SEK 9 million in the quarter. Both our French and Spanish businesses had growth in subscription-based online sales, while the transactional off-line sales declined in both France and Spain. In France, the decline is driven by training courses, while the decline in Spain is driven by lower book sales.

The adjusted EBITA margin was 12% in the third quarter, which is an improvement of more than 4 percentage points. The margin expansion is thanks to synergies coming according to plan and positive impact from the divested training business. Compared to baseline, the cost base has decreased by SEK 25 million in Q3.

Next slide, please, which presents the segment group functions. Expenses in Q3 was SEK 23 million.

Next slide, please. Q3 is typically a weaker cash flow quarter, reflecting the timing of the group's online contract renewals and invoicing cycle. The adjusted free cash flow was minus SEK 36 million. We are now entering renewal season in Q4 and Q4 and Q1 is typically high cash generative for Karnov Group. The leverage was 2.5x EBITA last 12 months at the end of September, well below our financial targets. Allocation of the proceeds from divesting EHS will be handled within the capital allocation framework.

I'm now handing over to Pontus again, who will present our last slides.

Thank you, Magnus. Please switch to Slide 20. In Q3, Karnov Group delivered strong margin expansion, thanks to margin expansions in both Region South and Region North. We have solid AI sales traction and customers are confirming productivity gains and upgrade to our AI packages. In Region South, we are reshaping the portfolio for profitable growth and the margin improvement in Q3 is a step in the right direction.

In the first half of 2026, we will operate with one common AI platform on all markets. We are also accelerating the development of our seamless AI-powered content and workflow tools, which also will be launched during 2026. After the end of Q3, we have entered an agreement to divest our EHS division to Infopro Digital Group for approximately SEK 1 billion. The divestment generates a high multiple on invested capital.

Please go to Slide 21. And by this, I'll end our presentation, and we are now ready to take questions. So I'll hand over the conference again to our host.

[Operator Instructions]

The next question comes from Thomas Nilsson from Nordea.

Now excluding Schultz, organic growth in Q3 would have been more similar to organic growth in Q2 in Region North. Can you explain the mechanics of this in a bit more detail? Do I understand it right that excluding Schultz, organic growth was 12% or 13% in Q3? And is this effect impacted by shifts between online and offline products to some extent in Region North?

Thomas, you're absolutely right. Excluding the Schultz acquisition, the online growth in Q3 would have been 12%, just like we did have in Q2. So we have been focused on integrating the Schultz customers into the Karnov databases and solutions and not so much focused on growth up until now. Yes. And by that, of course -- yes.

Yes. And also a final question from my part. Can you provide some more detail on your AI monetization strategy? Would you be ready to say what percentage of your customer base in Region North are now using AI solution and what the typical uplift in revenue per customer is like?

Thomas, yes, of course, we are growing, and it's not only a specific customer segment, but in fact, all customer segments and not only law firms thereby, but also courts, for example, and municipalities and so on. We can see that they are not only buying it, but also using it to a greater extent. Actually, we can see that it grows from month to month. And we often start out by selling to part of a corporation like law firm.

And then happily, we see that they buy more licenses when they have tested it for a couple of months. So yes, really positive figures. But as we don't disclose other services and the levels of those, we don't disclose this either. But I can guide you and say that we are seeing traction. It's material to our growth, but we are still early in the adoption curve. So now there's more to come.

[Operator Instructions]

There are no more phone questions. So I hand the conference back to the speakers for any written questions and closing comments.

Okay. Thank you very much then. Thank you for listening and for the questions. We will disclose our Q4 report on the 11th of February and of course, hope to hear from you then, if not earlier. Thank you, and have a good day.

Thank you.

Welcome to the Karnov Group Q2 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to CEO, Pontus Bodelsson; and CFO, Magnus Hansson. Please go ahead.

Welcome, everyone, to Karnov Group's earnings conference where we will present the outcome of the second quarter of 2025. Please go to Slide 2. I'm Pontus Bodelsson, President and CEO of the company. With me, I have our CFO, Magnus Hansson; and our Head of Investor Relations, Erik Berggren. Magnus and I will present the outcome of the quarter using a few slides, and then we'll open up for questions. With that said, let's get started with the presentation. Please go to Slide 3.

In Q2, we achieved solid growth with continued AI momentum and improved margins. Customers are adopting our AI solutions with high satisfaction and usage is increasing steadily. We continue to advance our positions and will enter the market for AI-powered workflow tools this autumn. I'll come back to that later in this presentation. Net sales grew to SEK 649 million in the quarter. The organic growth was 5%, driven by strong online sales in Region North, including customers adopting our AI solutions. The adjusted EBITA margin improved to 23%, which is an improvement of 2 percentage points compared to Q2 previous year. Leverage was 2.5x, well below our financial target.

Please go to Slide 4. We are pleased with the accelerated organic growth and margins improvement in Q2. The legal market is progressing in the shift to AI-supported solutions, and our AI Assistant is a leading AI solution for legal research in our markets. Our customers become significantly more efficient and customer satisfaction is high. We have a solid momentum and progress with AI sales. In Q2, AI sales was an important component of the accelerated growth in Region North. We are still early in the adoption curve.

The accelerated growth and margins improvement in Q2 is driven by Region North. We are decisive in the reshaping of Region South. The financial performance in Q2 is below our ambitions. Margins declined in the quarter as books and sales of training courses were weak, especially in Spain. As a first step, we have divested the Spanish training business. Excluding the training business, the margin would have been 1.5 percentage points higher in Q2 in Region South. I'll come back to our ambitions for Region South in a few slides.

Next slide, please. Karnov Group is well positioned for AI-powered legal workflow tools, thanks to our mission-critical local content and strong customer relationships. All our AI solutions are co-developed by Karnov's tech team, legal domain experts and customers ensuring trusted results, seamless adoption and measurable productivity gains. This autumn, customers will benefit from our AI-powered workflow tools that identify the risks and propose legal improvements.

By combining our customers' own documents and Karnov's proprietary content, we will not only broaden the scope of work we support, but also deepen the value we deliver to our customers. This is our entrance into the market for AI and content-powered workflow tools. If I were to explain Karnov's new step to someone who isn't a lawyer, I would probably use the following analogy. It's like moving from offering the best legal map to also providing a GPS for legal work.

Next slide, please. In this slide, you can see our 2 cost efficiency initiatives running until the end of 2026 with the ambition of harvesting efficiencies of EUR 20 million in total. At the end of Q2, we have achieved annual run rate synergies of EUR 18 million. We progress ahead of plan.

Next slide, please. I will now present our segment performance, starting with Region North. Region North continues to perform exceptionally well, both in terms of organic growth and profitability. The organic growth of 13% is driven by higher subscription-based online sales, including AI uplifts. However, we are still early in the adoption curve. In addition, our EHS businesses are expanding their customer bases and attracting new clients. Margins are continuing to improve, primarily due to operational leverage from higher net sales, but also thanks to positive synergy effects from our acceleration initiative.

Next slide, please. The financial performance in Region South in Q2 is below our ambitions. Our French business generated solid growth in the quarter, driven by online sales as we are attracting new customers. Our Spanish business generated online sales growth, while the sales of books and training courses were weak. We are not pleased with these results as they offset the effects of our cost efficiency efforts. At the end of July, we divested the Spanish training business, and we will do more product rationalizations of unprofitable products. Excluding the trading business, the margin would have been 1.5 percentage points higher in Q2 in Region South.

With the quarterly performance in Q2 is below our ambitions, I remain confident in our medium-term financial targets for Region South. The Spanish merger is completed, and we can reap the full benefits of our strong local proprietary content. In France, our flagship products generate strong interest from the market. We are now preparing to fully bring our AI experiences from Region North to Spain and France.

Next slide, please. With that said, I will now hand over the floor to our CFO, Magnus Hansson. He will tell us more about the financial results. Magnus, the floor is yours.

Thank you, Pontus. So let's start with an overview, switching to Slide 10. In Q2, we achieved net sales of SEK 649 million, a solid net sales growth of 4%. The growth is driven by increased online sales, including selling more licenses to existing customers, higher tier packages, AI uplifts and attracting new customers. Currency effects had a negative impact on net sales of 4%. Last 12 months, group net sales grew by 6%.

Please go to Slide 11. Breaking down net sales on segment level, we see continued strong organic growth in Region North and negative growth in Region South in the quarter. Region North had an organic growth of 12.6%, thanks to strong online sales performance, while Region South declined 1.7% due to weak offline sales, in particular, books and training course sales in Spain. Negative currency effects are further contributing to the decline in Region South. Revenue from AI sales is increasing quarter-by-quarter as the subscription revenues are recognized over the contract period.

Next slide, please. On Slide 12, you see the net sales development within online and offline split into segments. In Region North, the online sales increased by 17% compared to Q2 last year and accounted for 96% of the net sales in the quarter. In Region South, the online sales grew by 3% compared to Q2 last year and accounted for approximately 81% of net sales in the quarter. Organic online sales grew by 4% in Region South.

Please change to Slide 13. Subscription-based sales increased during Q2 and represent 89% of sales in the quarter. The flat development in subscription sales-based sales in Region South is related to negative currency effects and the negative offline sales in Spain. The online subscription sales constant currency grew by 3% in Region South.

Please change to Slide 14. The adjusted EBITA amounted to SEK 148 million in the second quarter. This corresponds to an adjusted EBITA margin of 23%, which is an improvement of 2 percentage points. Last 12 months, adjusted EBITA increased by SEK 116 million and reached 24%. Synergies are coming through as expected, meaning personnel expenses are decreasing. Items affecting comparability amounted to SEK 46 million during Q2 and our restructuring and post-merger costs in Region South. At the end of Q2, we have achieved synergies within the group of EUR 18.1 million on an annual run rate basis. The effect in the quarter compared to baseline amounted to EUR 4.1 million. We are progressing according to plan to achieve synergies of EUR 20 million with full effect on an annual run rate basis by the end of 2026.

Let's move on to Slide 15, please. In Q2, net sales amounted to SEK 320 million in Region North. Organic growth was 12.6%. The growth is driven by online sales. We continue to strengthen our market position and attract new customers. Adjusted EBITA reached SEK 165 million in Q2. This is an increase of SEK 45 million compared to last year. The adjusted EBITA margin amounted to 44.2%. The improvement is due to operational leverage from increased net sales and efficiencies from the acceleration initiative.

Please move on to Slide 16, which is the Region South segment. Net sales in Region South declined by SEK 19 million compared to Q2 of last year. Currency effects had a negative impact of SEK 16 million in the quarter. Our French business grew by 2%, while the Spanish business declined by 3%. Growth in France is driven by online sales, while the decline in Spain is driven by weak book and training course sales. The adjusted EBITA margin was 8% in the second quarter, which is well below our ambitions. The decline is driven by weak book and print -- sorry, book and training sales as well as higher depreciations due to completed development projects.

We continue to invest in the French business and allocate AI resources for future growth. Synergies are coming through according to plan, but are offset by the weak offline sales. Compared to baseline, the cost base has decreased by SEK 23 million in Q2. Excluding the divested training business, the adjusted EBITA margin would be 1.5 percentage points higher in Q2.

Moving to Slide 17, which presents the segment group functions. Expenses in Q2 was SEK 20 million.

Please go to Slide 18. Q2 is typically a cash-neutral quarter. The adjusted free cash flow was negative SEK 3 million, which is slightly lower than Q2 last year. Leverage was 2.5x EBITA last 12 months by the end of June, well below our financial targets. I'm now handing over to Pontus again, who will present our last slides.

Thank you, Magnus. Please switch to Slide 19. In Q2, Karnov Group delivered accelerated growth and solid margin improvements, thanks to strong performance in Region North. AI adoption is gaining momentum with our AI solution driving measurable customer efficiency. In Region South, we are reshaping the portfolio for profitable growth, while the financial performance in Q2 was below our ambitions. The Spanish training business was divested at the end of July. This autumn, customers will benefit from our AI-powered workflow tools that identify risks and propose legal improvements. By combining our customers' own documents and Karnov's proprietary content, we will not only broaden the scope of work we support, but also deepen the value we deliver to our customers.

Please go to Slide 20. And by this, I'll end our presentation, and we are now ready to take questions. So I'll hand over the conference again to our host.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

Let me start by unpacking North a little bit. So on the accelerated sales here between Q1 and Q2, this seems to be mainly AI upselling on existing customers as you phrased it. What is the contract longevity here typically? Is it like 3 months? Is it more trial based? Or is it annual contracts?

Thank you for the question. It's -- we sell AI the same way we sell all our online products. So it's typically annual contracts.

Okay. So this basically then means that given this is quite a big jump in organic growth between Q1 and Q2, that this should probably be consistent then for Q3 and Q4 as well, all else equal, right? We should be able to extrapolate this organic trend for H2, right?

Yes. We, of course, don't answer questions regarding forecast and so on. But what we can see in Q2 is a strong development within the AI revenues. And that's, of course, based on the subscription base. There's also, of course, other areas which are performing quite strong in the quarter. For example, the public sector is performing really well in Region North. EHS is performing really well. So there's a number of different components to it. But yes, AI is performing well.

All right. And most of this kind of between the quarter performance is still -- it's the typical annual contract structure, even if it's the public or EHS?

Yes.

Good. And then on the South margin, I see the 1.5 percentage point remark that you did. But shouldn't the margin still be expanding year-over-year considering the synergies you have been realizing and the run rate, et cetera?

Yes. We are, as Pontus mentioned, not at all pleased with the result in Region South in this quarter. The one explanation is, of course, the training course business in Spain. But we're also investing in future growth in Region South. We are, as you know, investing in the sales team in France. We are investing in AI features and so on. So it's a combination of making sure that we achieve our synergies and the training courses and also, of course, investing in the future.

And then, I mean, a follow-up on that. Shouldn't the margin also be helped if offline sales become a smaller share of sales, which seems to be the case now in the second quarter and online growth, shouldn't that help you?

Yes, it should. So typically, online sales have a higher gross margin, of course, than offline.

Okay. So I still think it's a little bit difficult to understand kind of the margin drop. But then I guess, if you're investing more than you're raising the cost at the same time while you're taking cost out. Is that the right way to see it, okay?

Absolutely. That's one of the factors, absolutely.

The next question comes from Thomas Nilsson from Nordea.

In Q2, we saw a negative adjusted free cash flow despite stronger EBIT. Can you explain the main drivers of the working capital swing?

Yes. So there's a quite strong seasonality to our cash flow. So typically, the cash flow is in Region North, really strong in Q4, beginning of Q1 and in Region South in Q1. And then typically, then Q2 and Q3 are quite neutral as we, of course, invoice annually in advance, we get that seasonality. And also, you could also argue that as the off-line sales in Region South is decreasing and the offline sales has a higher degree of transactional sales that will also impact the cash flow in Q2. But seasonality is the main driver. It's typically neutral cash flow quarters in Q2 and Q3.

Okay. And free cash flow generation was strong in the first half of the year overall with SEK 276 million in cash flow from operating activities. What confidence do you have in converting adjusted EBITA into cash at the targeted 90% to 100% level for the full year?

Yes. So we -- again, with the seasonality, the Q1 is really strong as we invoice annually in advance. And also -- and we will have, of course, the same effect in Q4 this year as we usually do with strong invoicing. The second thing I would argue is that as we decrease our IACs going forward as we are closing down -- or not closing down, but we're closer to the end of the cost initiatives in both the PMI and the acceleration initiative, we will see a better cash flow going forward.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Okay. Thank you, everyone, for listening, and thank you for your questions. We will disclose our Q3 report on the 12th of November, and we hope to hear from you then, of course, if not earlier. Thank you.