Earnings call transcript: FormPipe Software Q3 2025 shows mixed signals

FormPipe Software AB reported its third-quarter earnings for 2025, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. Despite these shortfalls, the company’s stock surged by 12.39% following the announcement, reflecting investor optimism about strategic moves and future growth prospects.

Key Takeaways

• FormPipe Software’s EPS missed expectations by 100%.
• Revenue fell short of forecasts by 57.5%.
• The stock price increased by 12.39% despite earnings misses.
• Strong EBIT growth and improved margins were reported.
• Strategic focus on Dynamics ERP ecosystem highlighted.

Company Performance

FormPipe Software’s overall performance in Q3 2025 showed mixed results. While the company reported group revenues of SEK 143 million, up from SEK 130 million the previous year, it missed revenue forecasts significantly. EBIT improved to SEK 28 million from SEK 16 million, reflecting a stronger operational performance.

Financial Highlights

• Revenue: SEK 143 million, up from SEK 130 million last year.
• EBIT: SEK 28 million, up from SEK 16 million.
• EBIT margin: 19.6%, nearing the 20% target.
• Lasernet net sales: SEK 61 million, up from SEK 56 million.

Earnings vs. Forecast

FormPipe Software’s Q3 earnings were below expectations, with an EPS of 0 compared to a forecast of 0.4, marking a 100% miss. Revenue also fell short at SEK 58.4 million against an expected SEK 137.4 million, a 57.5% surprise.

Market Reaction

Despite the earnings miss, FormPipe Software’s stock rose by 12.39% to close at 23.4, moving closer to its 52-week high of 30.4. This positive market reaction suggests investor confidence in the company’s strategic direction and future growth potential, particularly in its focus on the Dynamics ERP ecosystem.

Outlook & Guidance

Looking forward, FormPipe Software plans to focus on expanding its presence within the Dynamics ERP ecosystem and exploring opportunities in generative AI. The company aims for profitable growth and is preparing for the divestment of its public sector business by December.

Executive Commentary

CEO Magnus Svenningsen emphasized the company’s strategic focus, stating, "Near term, absolutely double down on Dynamics and what we know." CFO Sophie Reinius highlighted the company’s growth ambitions, saying, "We want to grow with profitability."

Risks and Challenges

• The significant miss in earnings forecasts could raise concerns about financial stability.
• The divestment of the public sector business may impact short-term revenue.
• Uncertainty in the integration of generative AI technologies poses potential challenges.

Q&A

During the earnings call, analysts focused on the company’s strategic initiatives, particularly the integration of generative AI and the potential impact of the public sector divestment. Executives reiterated their commitment to growth and profitability, providing reassurance despite the earnings miss.

Full transcript - FormPipe Software AB (FPIP) Q3 2025:

Moderator, Formpipe: Welcome to this live Q with Formpipe. I’m joined today by CEO Magnus Svenningsen and later also CFO Sophie Reinius. I will be back later for the Q&A session, and you can already now post your questions below the stream. Now it’s time for you, Magnus.

Magnus Svenningsen, CEO, Formpipe/Lasernet Group: Thank you very much. As always, a great pleasure to be here. Today is the first time we present Lasernet Group. As you know, we are working with our divestment of public and are now coming closer to closing. We have named this quarter report Continued Margin Improvement and Divestment. Before going into the Lasernet numbers, which of course are very different from the Formpipe numbers, I just want to mention that Formpipe as a group came in on SEK 143 million in revenues and comparing that to the SEK 130 million we had last year. We had SEK 28 million in EBIT compared to SEK 16 million last year, which leaves us at margin at 19.6%, which is very close to our EBIT goal of 20%. This is to our team back home that you have worked very hard and good this quarter.

We are seeing the margin improvement we want to see. Now, coming to Lasernet, as I said, these are now Lasernet Group that we will call ourselves. We will change name by the annual general meeting in April formally, but from now on it’s Lasernet Group. Good news here is that the net sales came in on SEK 61 million compared to SEK 56 million last year. There we have a bit of a headwind from the currency effect. Organically we had a growth of approximately 13%, which is a good number. With Lasernet now, we also increase our recurring revenues to 91% of the net revenue, which we are very pleased with, of course, as well. Our ACV, we will talk a little bit more about that. It’s SEK 6 million. It’s good.

I think we can do more there going forward, but it is really a good number. We have some churns that Sophie also will talk about a little bit going forward. The really good thing here is the EBIT improvement that we have been talking about the last quarters that we are going to improve the EBIT. Now you can see that for yourself in the report. Very pleased with how we and the team have looked after our costs. Very, very good. A little bit highlighting then the ACV. We have done 70 new deals in Dynamics. As you know, Dynamics has been delivering very well all through the years. All the three last quarters have been very good and continue to be good. That is very, very good news.

Really, really good is also that Tim and us and the bank and finance side of our business have started to generate business. Those are a little bit bigger in terms of order value. They make an impact to the ACV immediately as they get going. Very, very pleased to see that that part of our business is now starting to move again. Also, the margin improvement that we are able to get the revenues in yet keeping track of our costs. We meet one of the most important closing criteria, and that is moving 90% of our customers over to the new entity that will be transferred to SDG at closing. That is a lot of hard work behind that to get there. Just shortly about the transaction now. At closing, we will receive SEK 775 million.

There is a low note on SEK 50 million running on two years. There is an additional SEK 25 million after a few years when SDG has got the development of their investment that they want. That is sort of in short the transaction. A little repetition from previous presentations. I was thinking that I should explain a little bit today for some of you who have not followed Lasernet in that much detail. I plan to talk a little bit about the Lasernet business in itself. We are around 100 employees today. We have a revenue of approximately EUR 25 million. We were founded in 1989. We have been around for quite some time with our softwares. That is very important because this is a mission-critical software we are doing.

That is, if our software doesn’t work, the supply chain stops and the invoices don’t go out. This really has to be a well-proven and trustworthy software which we have and have had the chance to develop over these years and build competence around. We are vertical agnostic or horizontal. That means we serve basically all verticals. A few examples. We have a partner in the US called Exapt that serves Caterpillar. They do the excavators. I’ve been talking about those in some of the previous reports. When Caterpillar supplies their field service, for example, with spare parts, etc., that is a very complicated value chain or logistic operation.

You need to have very accurate and dynamic documents to control what kind of spare part they have, millions, where does it go, where do you send the invoice, where do you send the manual. Exapt has built around Dynamics an ERP system that supports that flow. In that flow, we are a very important component to support the document handling. Another example that I like to talk about is Anaxco. It is a German partner. They serve small, mid-sized logistics companies in Germany. You can just imagine how many documents you need to prepare in order to carry goods over Europe with dangerous goods, etc. Again, Anaxco has done a Dynamics tweak that supports that flow, and we are a vital part of that. That was two very different examples of verticals we have active.

In the CEO letter, I mentioned also Dallas Cowboys, which is the American football, which is the third vertical. Of course, also the bank and finance business of our side, which is sort of similar, very similar product, yet another application where we serve the need to distribute, for example, account statements and other types of documents that need to go out for regulatory purposes. Complicated value chain or regulated markets, that’s where our application is right. We are active. We have offices in a number of countries: Sweden, Denmark, U.K., Americas, Germany, and France. Something like 1,300 paying customers out in the world. Around 50 partners, which then, as I just explained, are very important to take us to certain geographies, but also to truly understand the verticals where we are active.

This is also very important for us to have a scalable business model because as soon as you have trained the partners, part of the sales are sort of happening. They are driving parts of our sales. Very scalable business model going forward. If we look at this a little bit more technically, you can say that we have an application which is very, very API-driven. That means it integrates with other sources of information, be it Salesforce, be it some sort of engineering tool, be it whatever you have in your enterprise architecture. Bringing that data so that a human being or a machine can read it, which is, of course, very important to support the supply chains out there. Distributing these documents in various forms makes our applications very agnostic to ERP systems and other systems.

However, the ERP systems are very important for our business model because that’s how we enter the enterprise. We get into the enterprise through the ERP system. That is a key thing because that is a large investment, as I said. We build up partners, we train them, and of course, we see sales coming in. The ERP system is a way in. However, we are agnostic in terms of how our application works. Just looking a little bit at our customer list, which is, again, underpinning the fact that we are very, very horizontal. We have IKEA there. We have Caterpillar, as I mentioned. We have Fila, which is fashion goods. We have Continental, which is in the automotive sector. Then Santander Bank and DNB, so various banks that are using us as well.

This was a short introduction to this very interesting company. There are some other aspects of this, which is around our business model, how we grow our ARR year after year. That is why I hand over to you, Sophie, to talk a little bit more about our new set of figures, but with the same quality as they have always been with ARR, etc. Thank you, Magnus. Hello, everyone. My name is Sophie Reinius, and I am the CFO for Formpipe. I just want to highlight a little bit that now you are, of course, looking at numbers that you might not recognize before. We have restated our interim reporting to comply with IFRS 5. That means that public, including the product BGLink, are treated as business under divestment.

We have excluded public and BGLink for most of the numbers presented in the interim report. As the numbers you are seeing here, that means these numbers are only constituting Lasernet together with our supporting functions or group functions. This is the new remaining business that we will rename to Lasernet Group. Hopefully this will make sense to you all. If we start on the top 10 side, good. I am seeing some of these are not okay. I will click through all of these. If we start on the top 10 side, great to see the SaaS revenue growing year over year with 19%. If we look at delivery, which used to be an important factor when we had Formpipe and the public business included, in Lasernet, we still have delivery.

It’s done mainly through subcontractors. We do see some variation quarter by quarter. On the other hand, we’re also then having higher costs for this as part of this. That’s included in sales expenses. Even though a delivery number is important to make sure that we can deliver and cater to our customers, it’s not an important factor for us in terms of the P&L because if we do have an increase in delivery revenue, we will also have an increase in our sales expenses. I just want to highlight that so that it’s clear for everyone going forward. If we look at net sales, not the total income, but net sales, we are up 9%.

As we mentioned also in the report, excluding FX, that actually is then 13% for that organic growth, which is, of course, also nice to see. Moving a little bit on the cost perspective, as I mentioned, sales expenses naturally then increase as we both have higher delivery revenue, but also, of course, related to the fact that we are selling more. We also have our partner margins included in our sales expenses. We have other costs as well. As Magnus mentioned, it is great to see that the margin improvements are having an effect. The work that we have been doing throughout the year is becoming more and more visible. We also want to highlight that we have a great EBITDA of 21% compared to 8% last year.

That actually shows both a continuous growth in top line, but also then the margin improvements that we have worked on throughout the years or throughout the year. We do have one-offs of approximately SEK 4 million, which is related to the upcoming divestment of public. That means we have then an adjusted EBITDA of roughly SEK 8 million compared to minus SEK 0.5 million last year. Moving to the next slide, I want to just talk a little bit then about the Lasernet recurring revenue. We are now at SEK 215 million on a rolling 12-month basis. We have roughly 89% of net sales, so not total income, but of net sales. Also 12% year-over-year growth from a rolling 12-month perspective. I also want to highlight that the CAGR for the past 10 years in Lasernet has been over 21%.

It really shows the strong and stable growth journey we have been on in terms of recurring revenue for the Lasernet business. In the past two years, it has been 13%. I also want to highlight then that Lasernet Group, as a standalone business, including then supporting functions, that we are now covering more than 109% of our fixed operating costs. That means we have a good basis for our continuous growth journey going forward. I am sure there will be lots of questions maybe going forward about our numbers, and I will be happy to present those going forward. With that, I hand it over to me again because I have another slide, which is then the ACV for Lasernet.

We have a negative FX effect of SEK 3 million, similar to last year, but it’s also been strong headwinds that Magnus mentioned all throughout the year. Again, also then in Q3. We had a net ACV of plus 6, similar to last year, with an increase in SaaS of SEK 8 million and a reduction of SEK 2 million in support and maintenance. This reduction in support and maintenance, one of the main churns there is actually a customer called Skellefteå Kraft. It’s not our own product. We were actually reselling eDocs by OpenText to Skellefteå Kraft and acting as an intermediary there. We had an agreement of SEK 1.2 million that churned, but we also had selling costs of about SEK 900,000. That means we were losing a margin, which was roughly 26%.

From an ACV perspective, the 1.2 million is, of course, large, but from an overall P&L perspective, it does not have that much of an effect. We will come back to more information about these other revenue streams that we have. I mean, most of our ACV is coming from our core businesses and our core products. I mentioned before, last year, we had the churn of Plot in our Life Science. There are some products that are not key for us, that we still have a little bit of ACV and revenue, but it is a very small portion of our total ACV. That means then ending Q3, we had an outgoing ARR of SEK 220 million for the Lasernet Group, which is then a 7% increase compared to last year. That is despite the negative headwinds of FX that we are having.

With that, I’m handing it over back to you, Magnus. Thank you very much, Sophie. I’m just about to sum up this because I spoke quite a bit about Lasernet and the platform we have and the role it plays in any company’s information ecosystem. Key takeaways are it’s a very interesting platform that has room in all enterprises. It’s also very interesting financial characteristics with the scalable business model and the ARR that we have been building for quite some time. If anyone wants to look at where we’re going, it’s looking at the ARR. We are aiming to continue this profitable growth journey going forward. Highlighting the divestment of public as well that we aim to close 1st of December. Also the continued margin improvement that we have done a very good job there and will continue to do so.

Now going forward, very strong focus on Lasernet and building from this very good foundation that we talked about today, financially as well as technically and commercially with the business model. That is where we will focus now. With this little summary, I want to say thank you to you who have listened in, of course, but also to our team in Sweden, Denmark, U.K., U.S., France, Denmark, Germany for really good work in this last quarter. To all our colleagues in public, I also wish you the best of luck. It has been great working with you, and you will have a great time with SDG. Thank you very much. Let’s start with some questions. We have quite a lot of questions from the audience, actually.

The first one is about the capital markets day, which was planned for November, but that did not happen apparently. I mean, why was that? Do you have any new date for us to announce? Yes. We need to close the transaction first. We are a little bit limited in terms of our silent periods. Given that we now aim to have our Q4, 20th of February, and shortly thereafter, most likely beginning of March, we plan for the capital markets day. That is sort of. We will come back when we have the date. Great. What can we expect from the capital markets day? An extension of the ARR growth. Jokes aside, of course, talking about the payment we have received from public, what we will do with that. Also our plan for future expansion. Where will we grow?

How will we grow? Of course, we have touched on this. We are very good and established in the Dynamics ecosystem. It’s the fastest growing ERP system. That is a very qualified guess that we will do more of the things we are good at, but we will talk more about that. We will also talk a bit more about the longer perspective. There are areas, as I explained today, where our platform is sort of useful for any corporation. Now, figuring out how you get into any corporation and where we have the blue oceans where our offering is competitive compared to, for example, OpenText and these large dragons, that will require some more time. We will elaborate those kind of questions. Of course, financial targets for the near and a little bit longer future, of course, as well. I see.

Something to look forward to. Also a question about generative AI. How do you see generative AI interacting with output management? Can AI fully replicate Lasernet templates and workflow precision in regulated markets such as banking? Why or why not? That is a very good question. We see generative AI as a very good complement to the Lasernet product. That is making the Lasernet product easier to use and to create these templates. We see that it will make our software easier to consume in the organization where it lands. Okay. You think it is an opportunity rather than a threat? We see it as an opportunity. Absolutely. Okay. I mean, no new players so far like AI native coming and taking some market share. You do not see any signs of that? No, we do not see any signs of that yet.

Of course, one should always be on the look for that. Absolutely. I mean, it’s really amazing to see what these tools can do. One must not forget also that the experience that is being built up over a long period of time. I see a complement where a solid platform is being easier to consume with generative AI as a good offering that we have. Okay. I see. What’s the income split between the different ERP systems like Temenos, Dynamics, Infor, etc.? I think we said that in the sort of 60-40 to Dynamics. Then we have also a little bit in other ecosystems, but that is more there we are opportunistic. We put our primary focus on Dynamics, and then we also focus on Temenos. Still, we are opportunistic in the other areas. Very small levels there. That’s clear.

What has the conversion rate been like for the premium concept in Lasernet? How many customers convert from the freemium model to a payment model? That is a very good question. I can’t answer it properly because I’m very curious on. What we hear, especially when we talk to our partners, is that it is especially our partners that find it useful. When they do an implementation, they say, "Try this as well." They see it as a good leverage to a coming sell. That is sort of what we see right now. Sorry, no data on that yet. Perhaps at the capital markets day? Maybe. Maybe. Good segue there. Good idea. We’ll dig into the numbers. What’s the churn rate and net revenue retention in Lasernet?

I mean, you do not disclose any exact numbers, so I do not expect you to do that here either, but could you give some? I think we will come back to that at the capital markets day. Okay. I see. Great. The strategy of significant investment in other ERP ecosystems mentioned last webcast seems to be altered to a clear focus mainly on Dynamics. Is that the right interpretation? Yes. Near-term, absolutely double down on Dynamics and what we know. Of course, going forward, there are very interesting opportunities outside Dynamics as well. That must not be forgotten. Right now, in the near term, 2026-2027, double down on Dynamics and the ecosystems where we know how they work, we are well established, etc. Okay.

Of course, taking care of the verifying business we have in the Temenos ecosystems as well, naturally, but sort of doing what we know well, we start there. Sounds reasonable. Again, also coming back to it because we see, I mean, we spoke about sort of a year ago, we won a deal through IFS, which is extremely interesting. That client, Munters, really saw a need for us. There is something there. Again, taking the investment to go all into that and penetrating that kind of ecosystem, we are parking that for a while while focusing on where we have good competence and infrastructure. Sounds reasonable. Another question here. Will the other segment, and I mean, that’s basically the group, common costs, be able to scale down given the divestment? And by how much, do you reckon?

That is, of course, a good question. Yes, we are, of course, as always, when we talk about margin improvements, we’re talking margin improvements in the Lasernet former business area as well as in the supporting functions. Absolutely. We’re not mentioning a number yet. That is efforts that are being done, as always. Of course, it means supporting function as a whole. If we’re catering to a business that’s half the size compared to before, of course, there’s room for improvements, definitely. Numbers, we will not mention at this point. I see. Yes, also adding to that topic, we are now splitting the business into two pieces. Of course, we want to see that they work standalone. The joint entity was more complicated than Lasernet alone.

Going forward a few quarters, of course, we will see more clearly where we can simplify things and thereby come down in costs. That is absolutely a focus. Okay. Great. We also got a question about what you will do with the proceeds from the divestment. I think you have answered that already. We will get more info at the capital markets day, right? Yes. What other initiatives do you have to expand your partner network? What is the timeline and cost to onboard a new partner? I do not think we have any really solid data that detailed. When it comes to continued expansion, yes, attracting more partners is important, being more active in the ecosystem towards the partners, but also towards the end user, investing in the go-to-market, absolutely a priority the coming year. Really making sure that we facilitate for our partners to do business.

For example, the Essentials program is one piece of that. As well, attracting more partners is also important. Again, we shall be much more present in the ecosystem and active in the ecosystem going forward. Okay. We touched upon this before this presentation when we were talking that perhaps it’s even more important to strengthen the partners you already have than finding new ones. I mean, could you elaborate on that perhaps? Absolutely. We have, for example, Alithya, which is a large partner. Making sure that everyone in that organization knows about us, that we’re in all of their deals, that we come in early to the deals, but also that we bring something to the table in terms of leads, etc. Nurturing that and deepening that cooperation is absolutely very important.

We have our large partner Tabella that we have been working with for a long time. Deepening those types of cooperations with joint marketing and joint activities is, of course, absolutely key and in line with our strategy to do more of the things we know that we do well. I see. I mean, you mentioned 21% CAGR the last 10 years, but only 13% the last two years. Will the higher growth come back, or can you elaborate on the slowdown? Ethics. Yeah. No, but I think our journey going forward, I think looking at the past few years, we’ve had a stable growth journey. In the short term, I don’t think we see large deviations from that growth journey. That will need to come with more investments. We’ve had investments historically where we’re saying now we want to grow with profitability.

I think 20% growth is not probably the growth journey we are on. I mean, obviously, not right now. Again, coming back to where we want to be, of course, we want to do more. Again, Dynamics is the fastest growing ERP system in the world. Dynamics is growing in terms of how they chase low-end SAP. They are going up in ticket size. That will have an impact on us. We are not in that ecosystem. We are not working with all the customers in there. We are primarily targeting the F&O segment, for example. There is a lot of things we can do within that ecosystem to grow our revenues with our scalable business model. Of course, that will be the focus going forward. I see.

You mentioned last, I think we have touched upon this question, actually, but it’s about other ERP systems. Yeah. I think you touched upon it already. Let’s move to the next question. It is a big world out there with the different ERP systems. There is a lot of legacy products that do similar things to ours. There is a lot of opportunities out there. Again, I’m again emphasizing that there is a lot of opportunity. Near term, we do more of what we do well now. There are very interesting things that we are looking into. Yeah. Okay. What’s your take on a share repurchasing program compared to a dividend program from the money attained from the divestment? I mean, I guess it’s a question for the board of directors, but do you have any comments on that?

No, not really. No. We’ll come back to that one shortly. Yeah. Great. What’s the customer acquisition costs in Lasernet? And that’s also something we’ll come back to at the capital markets day. Great. With that, I want to give you one last opportunity to ask questions. You touched upon e-invoicing in your CEO letter, and you’re seeing some orders coming from that. I mean, could you elaborate a bit? Why is that increasing the demand for Lasernet? Our business is driven by the fact that our ecosystem is growing. I touched on that. It is driven by value chains being digitized. Finally, these standards increase the number of variants of documents and the number of documents you need to have. That’s why these standards are important to drive automation and variants of the documents flowing back and forth.

That is one of several drivers of our business. It is interesting to see that this is now starting from very—we’re starting to see a movement there because it’s been talked, people have been talking about this for quite some time. Now we start to see something there. It’s a little trend coming. Interesting. Also, I mean, you come from a quite soft Q2. We saw a rebound in the ACV, and I mean, especially considering the churn and also that Q3 tend to be a bit softer due to vacations and so on. I mean, could you elaborate a bit? What’s driving the improvement, and what can we expect looking forward? I mean, is this momentum here to stay? I would say so because we have had—we see good momentum and have seen good momentum in the Dynamics business.

Now we see the bank and finance business starting up. We see this level as realistic going forward. Of course, in our business model, we are dependent on partners. We are a part of a solution. We are not driving the solution. That means we are not totally in control of how a sales cycle is developing. That was very clearly seen in Q1 and Q2 when our bank and finance business was soft. I see. We have one last question from the web. Do you have a five-year or longer-term plan in discussion? What is the margin target? Good question. That is to the point, that question. That is very good to know. Of course, we have internally a five-year plan.

Externally, we’ll share our targets and what they will be externally at the capital markets day. I see. Sounds like we have a lot to look forward to.

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