Admicom Oyj (ADMCM) Earnings Call Transcript
September 15, 2026
Earnings Call Speaker Segments
All right. Welcome to the Admicom's Q3 pre-silent call. We are here again with our dear analysts and covering some of the questions before we start our silent period. So we'll do it in a Q&A style as before, and we'll open up for questions. So please raise your hand for asking for your turn. Let's start with Daniel.
Yes. Thanks, Simo. Maybe the obvious question on this latest news on this Google data center announcement or big investment in Finland and the obvious impacts your customer, your building service engineering customers. Maybe two things here. I mean, can you remind us of what kind of exposure do you currently have on this HVAC side or so? And secondly, how do you, in the big picture, see this kind of investment impacting your clientele as for now?
Yes. Great question. And of course, a big news for Finland and the Finnish economy. We definitely welcome these sort of investments also for the construction sector. Of course, construction sector will be very much the beneficiary of these large investments. And if I recall right, one of the large construction companies who is publicly listed in Finland were estimating that the construction phase of these larger data center projects is in the range of EUR 200 million to EUR 400 million, given up to EUR 0.5 billion in terms of the construction part of the investment. So out of this EUR 13 billion, which Google announced as an investment in the Finland, I would say that quite a big part of that will be somehow associated with the construction work. So it is a big factor for the construction industry and also, of course, relates then to a positive -- more positive outlook for the whole construction industry. We are serving over 3,000 customers in the construction sector in Finland. And some of them will be definitely taking part in these value chains regarding these large projects. So they are very, let's say, chain construction projects with a lot of subcontracting happening at the local level as well. And what I know from the customer conversations that I have had during this year, we know that many of our customers are using, for example, our quantity take-off and cost estimation tools to help in the bidding for these projects. So there will be definitely use cases and customers of ours who are directly also involved in these opportunities. But if we're looking at the construction market overall, and we have seen now a couple of months of positive development in the overall construction revenue volumes. The data center projects, they are playing a certain part in that -- a bit of a boost in the overall construction market. But unfortunately, it's not helping all 60,000 companies in Finland operating in the construction market. So what we see is that we have a very polarized picture in the current customer base. We see approximately 1/3 of our ERP customers having somewhat tough time and not growing in their revenues and 1/3 is somewhat in a good growth pace. So it's, kind of, like netting out the total effect from our perspective. But we do believe that this positive news will have a positive impact also into consumer confidence. And to us, one of the critical factors for getting our customer base, meaning the construction companies in the residential new building and in the renovation sector to start to see higher volumes is coming from the demand. So consumer confidence starting to pick up, investors starting to put more focus into starting new projects. So those are the kinds of indicators what we are looking for as well. So we are monitoring our own customer base and their performance, and we're monitoring the indicators in the market overall. We very warmly welcome these large data center investments, but it will only benefit directly a portion of our clientele and actually quite small number of customers. But for those, it's a significant revenue boost and hopefully then creating a more positive sentiment in the market overall. Good. Atte, over to you.
Now of course, it's been summertime, but you have still been planning new recruitments for this year, especially in the AI front. So can you say anything about those planned growth investments at this point?
Yes. So after our change negotiations that we completed in June, we have now started to shift gears and start ramping up the new skills and competencies. So we have now the first batch of new positions open, and we have been very happy with the amount of applicants for those roles. It seems like we're an interesting company and we can provide interesting opportunities. I would say that some of the roles are in final closing stages and some are still in the candidate selection and candidate interview stages. So I would say that the first round of these recruitments will be done during this month, and then we will be initiating the next ones. And in some roles, for example, these AI-specific roles, they're not easy to find, and we have a quite high threshold in what kind of competencies are we looking for. But at the same time, we are prepared to speed up the development work and speed up the process by using some external consultancy support like we have been mentioning before so that if we don't get all the headcount that we're planning to get in the second year half, we will be using external support through consulting as well. So we keep the bar high. We want to have the best of the people to join our team. And if we have some time delay in having those people coming in, we will be also using consultants to get up to speed.
How about the M&A market? I know that you have been actively screening potential candidates. And so, is the situation still the same as the private valuations are pretty high and it's tough to make deals? I think SmartCraft was also mentioning that in their earnings report.
Yes. Well, definitely, there is still somewhat of a challenge when it comes to our publicly traded company multiples and the private sector multiples. But we have a very systematic approach for the M&A screening and the criteria we set for ourselves in December during the Capital Markets Day, we're still holding on to that criteria pretty much. So we're using that to screen the prospects, and we have been doing active outreach, and we have been going through hundreds of potential customers as a desktop exercise and also we have gone through quite an extensive outreach campaign. And I've been mentioning that it's, like, trying to find a needle from a haystack, but I'm confident that there is a needle in the haystack. So we continue searching. So we haven't given up on that. And thanks to Henna Kotilainen and our very systematic process in the M&A side and also the use of very skilled advisers there, I think we're making good progress. Nothing to announce, but we're making good progress with the screening of the market.
Still could -- little bit talk about the market situation. If we compare your overall feeling during the Q2 report and now after the summer, how do you feel in your customer base is the situation getting better? Of course, we now see those big data center deals. But otherwise, is the trend getting better under the hood?
Yes. Maybe Satu, you can comment.
Yes. Maybe I can comment first and then you can continue. So I believe it was in March when the RT, so the Construction Federation in Finland gave their previous economist view, and that was really depressing at that time. Since then, I think the sentiment has gotten more positive, which is really, really good. I think we see that and hear that from our own customer base, but also the sort of the leading indicators that we are monitoring and also some of the lagging indicators like, for example, the revenue growth in the sector as a whole, they are getting more positive. So I'm, for example, eagerly waiting for the next economist summary that will be published in early October, I believe is it maybe 1 day before our Q3 comes out. So we will get some fresh outlook of the market, which is really good. I think the sentiment for the housing construction hasn't improved significantly, at least that's what we are hearing. But the other sectors are definitely seem to be doing a bit better. But Simo already mentioned that our customer base is quite polarized. So, we have talked about the risk of bankruptcies still being around us because the downturn has been so long that there will definitely be companies who won't have the ability to survive if they don't have now projects coming in or they might not even survive if they have projects because they have run out of cash. So I think the situation is still a little bit maybe volatile. But in my opinion, the sentiment has definitely gotten better.
Yes. I would concur with that. And we have some really positive growth stories that we also launched in the RaksaBarometri that we launched last week. And we can definitely see that customers from their -- how they have been changing their ways of working during the recession time, they have been really -- they have been able to differentiate in the market, and they have put investment into being able to do the right project selection and find the growth opportunities through specialization in the market. So not only the market is giving some boost to some companies, but also during the downturn and the recession, some of our customers have really taken a leap forward in how they perform better than the others. And I guess this is one of the reasons why we also see our customer base being very polarized. So we have clearly the winners and clearly the ones lagging behind. And I think when the market starts to turn, the ones improving their operational capabilities, they will accelerate really, really significantly as the market starts to pick up. But unfortunately, the large-scale impacts from the market turn is not visible in the current customer base. And of course, we monitor that carefully all the time. Daniel?
Yes. Maybe one question on this industry consolidation headwind that was happening or is happening at the moment. I guess this is something that has been prevalent in the building service engineering side. I mean, the likes of Bravida and others are consolidating the market because of the data center boom and whatnot. So how do you see this -- first of all, has there been any instances where Admicom software has sort of gained market share, so to speak, through this consolidation as of late? Or has all of these cases recently been so that they drop Admicom's solutions and take some other group solution? Maybe that's the first part of the question.
Yes. So well, first of all, we're being extremely active in securing our strong position with these larger groups of companies. And I would say that we have been making good progress in finding those opportunities and also making sure that the group leadership for those companies understand how we can best serve their entities and help them as a group. So we have been very active in this field. And there are certain consolidators, especially the ones having their ownership or headquarters outside of Finland, who have been selecting that the group financial services, for example, are run on a group financial ERP system that is not Ultima as we might expect. So for those companies, then we have stayed in the role of helping them in their project ERP side and project management side, but the financial services and the financial ERP side of Ultima has been moving to the group financial platforms. So that's natural and something we can't really avoid. But luckily, we have a broad portfolio. So we're not completely losing the customer relationship. And even though the finances would be run on a separate platform, we can still continue serving them with other products. But I would say that we have been doing very proactive work in securing our good position. And hopefully, we can speak more about those customer cases as we move forward.
All right and then...
And maybe still continuing, just explaining the churn impact from those consolidations. So when we -- and if we have an agreement with the group regarding the whole group entity covering all the companies, if there is a new customer bought into this group entity, typically, we end the contract with this single entity and we move the customer relationship and the volume to the group contract. So there, we might see churn on this other side where this single instance or entity will be discontinuing, but then we see upsell in the group entity. And typically, as you might expect, some of these larger entities or groups may have some commercial terms that are more favorable for larger volumes than the small ones, and there might be an MRR impact when moving these to the group entity. So that's kind of like the dynamics that is happening at the moment in the market.
Yes. And maybe the follow-up on this is how do you see the risk that the current maybe 1/3, as you said, of your current customer base, they are having a good time currently, but they should be under the microscope for this kind of consolidation as well. If sort of a thinking what is trending and what is attractive at the moment. So what kind of risk do you see this ahead because you are talking with your customers and so on. So are they up for sale? Or are they seeing this development as negative or what should we think?
I would say that this -- there's a natural -- there are natural reasons for some of the companies to join these group entities. So there are founders who want to exit the business or want to liquidate their assets and ownership. So not everyone is jumping on this bandwagon. And there is only so much these consolidators can do. And I would say that it's a fairly healthy trend that we're seeing in these consolidators because Finland has had a very fragmented construction sector with very many small players, like we have only 6,000 companies who have revenue more than EUR 1 million, but we have in Finland and Estonia, 75,000 construction companies in total. So you can imagine how many man and van and other smaller companies we have in the field. And it is also better for us to have more of the centralized groups and more larger entities that we can serve because that also increases our average revenue per customer and also the average deal size, which is very positive for our business development moving forward. So, I do see that this is a natural evolution, and there's always consolidation trends happening and a lto of buy-and-build operations going on. And those will continue. But maybe for the past couple of years, we have had a lot more activity in this than maybe before. But I would say that it is starting to normalize already. So maybe now it's moving to new areas like we have some of the renovation construction companies starting to consolidate and these sort of things. So, we are active in those discussions and want to secure our strong position for all of those consolidators. Emil, over to you.
Yes. Sorry, I was a little bit late. Maybe just continuing on the consolidation thing. I wonder, do you think this is a little bit of a symptom of the weak market in general? So, kind of, when the market picks up, maybe consolidation doesn't really continue because then all the companies would be a little bit more expensive. If there is a small company that is not doing that well -- maybe it's more -- it's better to be part of a larger group. But then when it starts to go better, then you really want to have all the winnings for yourself.
Yes. Well, definitely, this is a symptom of a very long recession in the market and a lot of smaller companies wanting to have access to broader shoulders, both financially and also from a value chain perspective. So, they can share opportunities, they can have synergistic, like, specialty areas that are then combined stronger together. So what we have heard from these consolidators and groups of companies that they have been more successful in bidding for larger projects because they can combine the scale from multiple companies. And they can combine, for example, for the HVAC side and then you can have a specialized player from the cooling side and so on. So they can make very broad scope propositions for big players like Kesko and S Group and others who are looking for more bigger players to work with. So there has been a lot of demand from the buyer side and main contractor side also to play with the bigger players so that they can have more scale and more geographical coverage from those -- so I would say that it's a typical symptom of a very tough market and also the buyers wanting to consolidate their supplier base. So it's coming from a lot from there. And also, there's a lot of capital in the market. So there are a lot of investors who are willing to invest a lot of money to the buy-and-build projects, and that's been also very visible. So, construction overall has been, I think, more hot area for PEs than ever before, and it's been visible with a lot of surge of capital to this field.
Yes. That's clear. And then if we kind of go back, I think there was a question maybe on the data center and if that shows for you at all. But maybe the other way around to think about it is that creating any increases in prices? I mean, I could imagine that material prices, for example, start to rise. Is there any kind of the secondary effects that you're seeing happening in the market now?
We're not seeing directly those, and we're not maybe in a direct position to have that firsthand visibility. What I have heard from the market is that, for example, civil construction and for example, land moving is starting to be very busy in certain areas of Finland because we have a lot of these large-scale data center projects going on because it might employ tens of land moving companies to this one lot doing the groundwork and doing the land moving work. So this area, for example, has been almost slightly in, let's say, in a capacity restricted situation. So that obviously then increases potentially the prices for other projects. So some of the more geographical area suppliers have been very, very highly utilized. So I would say that, that has been something that has caught my ear. But other than that, I haven't heard anything about component prices, material price increases or anything else. Daniel?
Yes. Just a small housekeeping question on this annual adjustment fees or monthly fees that are being in transition currently. So should we still expect small fee headwinds for Q3? And then if we think about the rolling fees going forward, maybe in Q4, there could be first sort of signs of positive contribution. Is this a right assumption?
Yes, so if we start from the annual adjustment fees, so in the second quarter, we have typically invoiced about 2/3 and then 1/3 in the third quarter. So yes, that is the expectation that from previous year's Q3, this Q3 we will have less of those. Then regarding the monthly adjustment fee. So our plan still is that we will transition all the remaining customers to the new monthly revenue-based billing model this year. So we are progressing as planned. And every time we transition customers from the old annual adjustment fee model to the new monthly-based model, there is a one-off effect. So the customers' fee goes either up or down, depending on how well their estimated revenue has been in line with what they are currently generating. So that is one component that has some volatility to our ARR development definitely this year. It's a little bit difficult to estimate in detail will that be up or down in sort of in aggregate and how much, but because there are companies in both directions. When will we start seeing the sort of the upsell from the revenue-based monthly fees? As said, our customer base is a little bit polarized. We have customers who are already growing. If they are in the monthly-based fee, the monthly-based fee is already going up. Then we have customers who are not growing. They are still in -- operating in a -- with a declining revenue. So if they are in the monthly model, they are generating downsell for us. So we will probably comment in a little bit more detail how we have seen this element behave this year when we publish our Q3 results. But just based on the customer base and how their revenues are developing, it's both ways at the moment.
Atte?
Still if you can give a quick update on the AI topic. So remember the SaaS apocalypse in February, and now it's been like 6 months -- over 6 months from that. So how has your thinking evolved during this time? Or are you seeing any erratic changes in the competitive landscape?
Yes. So we are, of course, clearly -- very carefully monitoring our churn customers and the reasons for that. And we haven't seen any churn because of AI, either internal development or some competitor coming out with extraordinary AI capabilities. So I would say that the progress has been fairly conservative and very, I would say, careful from the customer side, how to ramp up those capabilities. We are very much focusing on building our own capabilities in this area, and we have been -- as we discussed in the Q2 earnings call, we have been progressing in building the connectivity for AI to our existing products and also to bring also embedded AI capabilities into our existing products. And hopefully, we can tell more about those as well as we go into the Q3 earnings call, and we will do some -- later this year, we will do some announcements of the product capabilities for our customers as well. And I think the main development focus is in having all products to have the connectivity to AI capabilities so that we can deploy agents is about creating the first agent workflows that can then use those interfaces for the products and then also have those first embedded features in the products as well. And we have been doing a lot of interviews to our customers and also this RaksaBarometri, which I definitely recommend you to read how our customers have been doing in the time of recession. They have been mentioning the top use cases they have seen or they have been using AI for. And it's been mainly document-related simple use cases like helping to summarize documents or helping to create documents and these kinds of things. What we are looking for is we want to embed AI into more complex systemic problems, like how do you actually run the whole project and have more project insights in the different stages of the life cycle, which you can't really resolve with just deploying ChatGPT or Claude on your own, but you need to have multiple of the systems to provide data and insights for agents that you can then deploy for more of these complex use cases. And of course, we are monitoring carefully what's happening outside of Finland in this domain. So we have been exploring companies with some AI capabilities, and we try to stay ahead in terms of the vision and how and when we should be bringing the capabilities out and whether we should be more open with our products and the interfaces so that also external agentic platforms should interact with our products. So all of those are in the making, and I'm really looking forward to the rest of the year with some of the announcements and some of the concrete features that we can bring out to the customers and really help them to succeed and build better in the future. All right. Thank you all for your great questions, like always. And of course, in the beginning, I forgot to introduce myself. So I was Simo Leisti, the CEO of Admicom, and I was here with Satu Helamo, our CFO. And thank you for Q3 pre-silent call for our dear analysts, and the recording will be out on our web pages in a moment's time. Thank you very much, and I'll see you then in the Q3 earnings call.
Thank you.
Thank you. Bye.
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