Ayfie International AS (AIX) Earnings Call Transcript

Good morning. I'm Herman Sjoberg, CEO of Ayfie. And with me today, I have Hege Nikolaisen, our new Chief Operating Officer. Welcome to this presentation of our financial report for the first half of 2025. Let's jump right into core of Ayfie's business model. Imagine walking into work tomorrow and you have no access to your company data, no knowledge of your contracts, your product notes, no service manuals, no knowledge of its customers, no e-mail, no Internet, no nothing. How useful would you be? That's what our general AI is like inside the business, brilliant, but a stranger. ChatGPT is trained on public information. Now imagine if it can also see your SharePoint, your Teams data, your ERP, CRM, ticketing system data. Today, I'm presenting a very different Ayfie. Over the last 10 months, we have cleaned up, we have refocused, and we have refueled our business. Ayfie repositioned, that means 3 things. Product and platform, privately using AI on your data, secure and compliant, go-to-market, a partner-first engine with pricing and incentives that scales and finally, team and capital leadership, investors and operating systems to execute on that strategy. So you will notice that our revenue is lower than last year. In the first half of 2025, NOK 6.6 million versus NOK 8.7 million in the first half of 2024. That's our effect of our customer mix shift, while we rebuild the go-to-market strategy. So instead of chasing one-off sales, we invested to sell and grow through partners. And that meant real work and big internal changes. We have replaced our ERP software. We have a subscription management live. We have automated sign-ups. We have automated payments. We have partner contracts, kickback models and sales incentives. So when our partners push us, we can now actually handle that volume. So on the cost and capital side, the elements has changed a lot, but the total is slightly down versus last year. Other operating expenses higher due to intentional product investments. And we also strengthened the balance sheet with a NOK 16 million private placement in May. So we now have a 50% equity ratio. So this is execution towards our partner-driven business model. The lag is visible in the revenue, but the capacity to grow is now in place. So to start, I want to show the power in our technology, known as RAG, Retrieval Augmented Generation. That's the business Ayfie is in. Ayfie retrieves the right facts from your internal systems and let the AI models work with them. With citations, respecting permissions and without moving and perhaps even more importantly, exposing sensitive data. That's something our customers care deeply about. So let's compare our models with on the right-hand side and left without Ayfie RAG connected to the large language models. So without RAG, models like ChatGPT or Claude or whatever you prefer, is limited to public knowledge. So if you ask a question like what are the capital of Norway? It will answer that question based on publicly available data. And in that example, with or without RAG, the question will be Oslo, obviously. But with RAG, connected to your internal system, it can answer so much more than those publicly available questions. So if I ask a question like how many vacation days do I have left this year? If you have a large language model without Ayfie to the left-hand side, this will happen. It will say that I don't have access to your HR system. So I can't see your exact vacation balance, but you can log in, you can navigate the vacation and absence section, select the current year, export or screen shot it. So you will get a recipe, so to say, to execute that task, answer that question. But if you take the same large language model and you connect Ayfie to it, this will happen. It will look up in your HR system, the exact values that you ask and give you a super specific, super fast answer, exactly what you need in that business process. So you can even take this even further. So if I ask plan 1 week off in October, find a stand-in and update the staffing plan. So what happens if you have our large language models based on public data? It will give you, again, a plan. How do you do it? Check your company's leave policy, choose your preferred week, confirm that with your manager. You get a plan, you get a recipe to execute on that task. But with Ayfie, agentic features connected to your internal data, it will actually do it for you. It will look up what are good dates to have that week off, what's the coverage, who can step in for you in your role, and it can even update your schedule, your calendar, your Slack messages, et cetera, based on what you just proposed. You can simply click Approve All and it will be done. So that's so much more efficient. So if you are wondering why this moment is different for Ayfie because we have been in business for quite some time, look at this curve. The Retrieval Augmented Generation market, it's compounding towards the tens of billions over the next decade. It's huge. And our story fits that curve. We were founded all the way back in 2011 by Ed Iacobucci, same guy who founded Citrix, with a DNA for infrastructure that scales. And for years, we have been building the boring hard parts, connectors into message systems, permission access, incremental indexing and even on-prem options. And you have some customers that have been using us for quite some time verifying that technology. So it was truly brilliant technology, but we were too early, way too early, and that has been painful for our investors. So then the large language models came along for 3-plus years ago and changed the market dramatically, putting fresh air into the relevance of RAG. Suddenly, what I have to admit, looked a little bit like legacy technology suddenly became a head start, a big head start on the rest of the market. So cloud, on-prem, data residency control, that's precisely what our customers want from RAG, and that's what we have been building for more than a decade. So Ayfie, we were early, but now the market is finally here. So to the investors and alumina, who backed us, thank you. The groundwork you've funded is the advantage that we scale today. So from here, we will measure success by one thing and one thing only, how many people do actual work using Ayfie. Finally, so to scale a partner-first model, you need operators who has done it in the earlier model before. Sindre Johansen, our new Chief Commercial Officer, background from the Visma Systems. He has built partner revenue from both sides as a distribution partner and also on the vendor side. He brings the incentive structures, the enablement and the commercial agreements that we need to have in place to scale successfully with our partners. I'm also proud to introduce Hege Nikolaisen. She has helped take 1X Technologies to scale to global awareness and scale. Quite a unique Norwegian story there, supporting major international funding rounds, building operations, operations are very important and global brands. So I'm very happy to have you both. And with that, Hege, over to you.

Thank you so much, Herman. I am super excited to be joining Ayfie and seeing the company tackle the next phase of growth and to withdraw the potential that Herman just laid out. We are going to acquire customers, and we're going to acquire them through partners. The last few months, we have closed in exciting amount of new partners, and we've trained a total of 150 sales representatives in those companies. Partners have the capacity to cover large grounds and industries and also taking our technology internationally. We have now approached a good mix of both public and private sectors and have closed in a bunch of new customers that we're also going to show you. Partners will be the core of our growth, and it's personally what makes me very excited to be a part of this adventure, their relation and knowledge to their clients and the businesses and their core markets will give us and then the opportunity to profit on the technology that we've been through the last decade plus. There are strong implications that -- from these partners that Ayfie has a great market fit for both U.K. and Australia. We will continue to explore expansion in close collaboration with our partners. These partners that we've already onboarded have quite thorough due diligence processes when they accept new technology in their portfolio. So that leaves another quality mark for us that we're obviously very proud of. And I want to especially highlight Crayon and Canon as our new partners, covering large enterprise client base. And Canon also -- Crayon being represented in 68 countries. They evaluate Ayfie as the best and the only available RAG AI solution on the market that allows businesses to extract the benefits of LLMs connected with your own business data. They also see a great fit towards the public sector due to the privacy compliance, and we will get back to that later. We also have Frend as a partner, covering law, mid-market and public sector, and Deloitte covering public sector in large enterprises. We have Arribatec covering oil and offshore and high demanding security sectors. The pipeline for new partners are filling up, and we acknowledge that it's also quite some work to onboard them. We have, therefore, developed these 4-step process into becoming a partner. So as a step 1, we spend quite some time together with a partner, validating their technology and seeing if it's a good go-to-market or product market fit together with Ayfie and the partner. We now offer a much clearer value proposition together with the partner, and we have an attractive pricing models, allowing them to easily understand how they can capitalize on our technology vice versa. As a step 2, we integrate them and present them for our system with -- for finance, support and reporting. We have transparent pricing structure in place, allowing the same conditions for all parties and all partners combined with the kickback model divided on 3 levels. Together with that, we also have systems for billing, finance, support and whatever is needed to get these partners up to speed and report on what value they're actually creating together with us. As a step 3, we are training a sales team, 150 sales representatives out with the prior partners companies has been trained and are ready to scale together with Ayfie in the markets this upcoming autumn. We have a support system internally that can help them answer questions, establishing knowledge bases and helping them with whatever they need as they integrate Ayfie into the platforms of the clients. Let's look at our new clients that are onboarded. We see that it's being used by actually both nongovernmental organizations, private companies and also a public sector. We have -- we're very proud to say that we ensure safe data handling and faster, more reliable work, and we are growing quickly with partners like Crayon, Arribatec and Advansia. What is especially heartwarming for me is Save the Children case. It's a case with direct humanitarian impact, where we have someone, who is kind of a super user of Ayfie within Save the Children. He says the following. So when he collects the donations compliance is critical. He has to go through a bunch of documents, understand regulations, validate that up until -- the country that the donor is from, et cetera, et cetera. So what someone does today, he logs into Ayfie, he prompts the system, I have this donor. Are they compliant? What are the things that I need to be aware of? And Ayfie presents him with a short answer that is a compiled stack of all the documental systems and whatever Save the Children have across their Ayfie platform. So the impact here is actually that he can quickly verify the donor and the children will get faster money -- the children aid will get faster access to money and help. We also have Vår Energi, who, via our partner, Arribatec, delivered a fully integrated white-labeled solution inside Arribatec's platform, they started with the quality system quickly seeing the value of having this LLM-RAG-LLM. And now looking to put Ayfie into the whole technology stack and scale it across the full organization. At last, we also want to talk about Akershus Municipality -- County Municipality. It's delivered in partnership with Advansia and Crayon. And Crayon has a strong presence in the public sector and covering 50% of Norwegian municipalities. That means no tender process is required as the partner is already approved and integrated supplier, enabling a quicker adoption of Ayfie secure AI solutions in the public sector. That saves us a lot of time. Now we've spent 15 years kind of perfecting RAG and nerding out on search technology. And now we see the ideal -- it's the ideal companion for powerful AI platforms. Large language models are experts on everything. But with Ayfie, they can now also be an expert on your organization, and you can search fully private. I think this is a powerful quote from Sam Altman, also acknowledging the fact that, retrieval and memory aren't buzzwords; they are infrastructure. And the more context you have, the better these systems get. So he acknowledges that ChatGPT also needs an extra layer of tech support in order to extract and really get that stickiness in the product that they have. These big companies are facing a new phase of competition in the market. They need to figure out how do we make sure that people keep on to use ChatGPT, Claude, whatever. Microsoft, OpenAI and big tech leaders are now looking to RAG as the new puzzle piece to really extract the big potential that is currently unutilized in the enterprise market. So needless to say, we are very excited to be in the forefront of this new trend.

Very good. Thank you, Hege. It's -- let me close now with why this moment matters for Ayfie. Of course. In the first half, we made a choice to fundamentally rewire how we are going to grow. So we now have 150 sales representatives up against -- last time I was here, it was like 5 internal ones. So that's like a huge change. And we also have all the systems to support that growth in place. So that's kind of the big, big difference now from last time I presented there. So yes, first half year revenue line, that reflects, unfortunately, our rebuild year. But it also reflects a decision to scale, what I'm 100% sure is the right way through partners. So the machine is now switched on. In the second half year, we are going to be working very hard to capitalize on those changes, turning a great product, which we really have into broad adoption. So on behalf of Hege, Sindre and the whole Ayfie team, thank you for backing this turnaround. Ayfie repositioned is now live. We have the right product. We are at the right time and now also finally the right channel to distribute it in. So we are ready to grow at scale with partners and with control. With that, let's take your questions.

[Operator Instructions] We have the first question. Why do you think the changes you have implemented so far in 2025 will help Ayfie succeed?

We already have the partner program in place, and we see -- we already collect the fruits of it. We have new clients onboarded, and we are filling up the pipeline for new partners as well. In addition to that, we have an excellent management team. So I think these are the 3 main pillars that will pull us through the next years.

And we're already seeing the results of that, right? I mean we have -- I think it was even in the last slide, we have increased now from 5 in-house to more than 100 salespeople.

Sales representative, yes...

That have the relationships already. So that's a huge difference.

Second question. Why not just buy ChatGPT Enterprise?

Yes. Yes. I can take that. We get that question a lot. How to explain this? I mean, when you use an AI agent, there are basically 3 kind of components. There is the thinking part, kind of the engine that creates the answers and both ChatGPT Enterprise and Ayfie uses ChatGPT for that. They deliver the engine, and they even have support, even a part of their distribution strategy is being implemented into vendors like Ayfie software. So we are not competing there. You will get -- you can use ChatGPT using Ayfie and you can use ChatGPT using ChatGPT Enterprise. And then there is the RAG part, which is where Ayfie really excels because if you have something that thinks, it will need data to think on and work with. And Ayfie is about retrieving that relevant information, and feeding it to ChatGPT. So -- and in that regards, we are not competing either because if you have ChatGPT Enterprise, you can connect that to Ayfie and you will get much more value out of ChatGPT Enterprise. So we are about the RAG and that's the main part. So I think the only place where we really compete is kind of the user interface. And why did we develop that? Basically because people want fully integrated solutions to buy directly. So ChatGPT Enterprise, they have per user license model, quite expensive for some, while we offer a fixed price per Enterprise. But that's -- the user interface is really the less important one of the RAG and thinking part. Those are the components that we really create value. And we are not competing in that regards..

I just want to add also the privacy layer, the fact that law firms now can use powerful language models like ChatGPT or Claude or whatever they prefer a Copilot and knowing that it's fully private and not to be shared with these major tech companies or not to be red flagged as sensitive content often do...

It's a very a good one. Just to build on that. I mean if you are using big tech AI, they have quite some monitoring and abuse monitoring in place, which could be a problem in terms of sensitive data because in some cases, your data might be read by some people employed at big tech. But using Ayfie, you can build the whole solution behind your own firewall, so to say. So that's also a huge advantage.