14-04-2025
Carasent AB (publ) (OSTO:CARA) Q1 2025 Earnings Call Highlights: Strong ARR Growth and ...
Release Date: April 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Carasent AB (publ) (OSTO:CARA) reported a 26% growth in Annual Recurring Revenue (ARR) to 321 million, indicating strong financial performance.
The company achieved a 14% organic recurring revenue growth, showcasing its ability to grow its existing customer base.
Carasent AB (publ) (OSTO:CARA) is making significant investments in AI, particularly in administrative support, which is expected to enhance efficiency and customer satisfaction.
The company is experiencing strong sales momentum, with improvements in both new customer acquisitions and add-on sales.
Carasent AB (publ) (OSTO:CARA) has a strategic focus on targeted acquisitions to create value and strengthen its market position, rather than pursuing a high volume of acquisitions.
The company faced slightly higher costs than planned, partly due to increased investments in AI and write-downs of receivables from bankrupt customers.
There was a slight decrease in the sign not invent the Ear metric, attributed to the implementation of Madrid for VDR and lack of new major contracts.
The company experienced churn due to bankruptcies, which affected its growth pace and will continue to impact the second quarter.
Margins improved but not as much as expected due to additional costs, indicating room for better cost management.
Carasent AB (publ) (OSTO:CARA) is still far from reaching its potential margins, highlighting the need for continued focus on converting revenue growth into profitability.
Warning! GuruFocus has detected 5 Warning Sign with OSTO:CARA.
Q: Could you elaborate on the new AI functionality and its potential interest among customers compared to third-party solutions? Also, what can you say about the pricing? A: Daniel Lehman, CEO: Over time, we expect a large portion of our customers to adopt our AI solutions due to their potential to save time by automating documentation tasks. Our solution is integrated into the system, offering a seamless experience. Although healthcare is slow to adopt new technologies, we believe the potential is strong, and our pricing will be competitive. We use open-source products, allowing us to keep costs low and scale efficiently.
Q: What is the opportunity for Webdoc outside the three largest regions in Sweden, and what is the timeline for expansion? A: Daniel Lehman, CEO: Private healthcare is largest in the three major regions, especially Stockholm. We have customers in all regions, but primary care is limited. We are working on projects to open up more regions, but the focus remains on existing markets with significant growth potential. New regulations may facilitate expansion by 2030.
Q: Regarding the churn mentioned last quarter, is it fully accounted for in Q1, or should we expect more in Q2? A: Saint Martin, CFO: The full effect of the churn was reflected in the March figures, so it is fully accounted for in Q1.
Q: Can you provide details on the extra costs related to AI investments and write-downs of receivables? A: Saint Martin, CFO: The extra costs totaled 1 to 2 million, with the majority being write-offs of receivables. The AI investments were offset by cost reductions elsewhere.
Q: Is there any hardware adaptation needed for AI investments, or is it plug-and-play? A: Daniel Lehman, CEO: We use private clouds and configure them ourselves, but we do not own the hardware. AI solutions require more hardware, leading to higher COGS, estimated at 25-30%. We focus on quality and outcomes before optimizing costs.
Q: Can you comment on the initial feedback from Germany with WebdocX and the timeline for full-scale sales? A: Daniel Lehman, CEO: Initial feedback is positive, but WebdocX is not yet fully functional to replace existing systems. We aim to replace all DataCure users with WebdocX by the end of the year, targeting around 80 paying customers in Germany.
Q: Are you able to charge extra for the AI transcription feature? A: Daniel Lehman, CEO: Yes, the cost for the AI transcription feature will be roughly 70-80% of the license cost.
Q: What improvements have led to strong new sales in Webdoc? A: Daniel Lehman, CEO: Both product improvements and enhanced sales and marketing efforts have contributed. We are getting better at add-on sales and have been selling both new customers and add-ons at a higher pace than planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
