Interim report Q2 2023 CGit Holding AB (publ)

Mölndal.                                                                                    2023-08-18

Group financial overview

Our consulting and contract business continues to grow. Delivery times for products connected to the classic IT infrastructure business are still extensive, but have improved considerably at the end of Q2, although they still affect our Q2 result. It is very positive that we are finally starting to see more normal delivery times going forward. Pipe and prospect for the second half of the year also look good.

Turnover amounts to SEK 22.9 million (SEK 23.4 million in the same period last year). Q2 is also affected by extensive delivery times, but we are beginning to clearly see the effect of both the measures we put in place during Q1 and the new collaborations we have started with new suppliers such as Cohesity. We feel confident that it will generate increased sales during H2 which compensates for the levels we have during H1 regarding product and solution business.

Annual recurring revenue (ARR) from current operations increases by 12.3% and amounts to SEK 7.2 million (SEK 6.4 million in the same period last year).

The gross margin for current operations increases by 15.9% and lands at 50.8% (43.8%).

EBITDA lands at SEK -1,234 thousand (SEK 286 thousand). During Q2, we have had a large increase in costs for our name change and the legal costs connected to the litigation surrounding our former trademark.

The group’s profit per share Q2 2023 lands at SEK -1.48 (SEK 0.38 same period last year).

During the period, the litigation with CGI continues. Negotiations have been ongoing throughout 2023 and this has negatively affected our results during the current period. We have now reached a constructive dialogue and are expected to reach a settlement during Q3.

A MESSAGE FROM THE CEO 

AI has been in the spotlight like never before recently. The development in AI has created a series of opportunities and challenges for companies, organizations, and society. By using technology responsibly and strategically, we can take full advantage of its benefits and work to build a more efficient, innovative, and sustainable future. It has also generated a discussion around ethics, morality, and sustainability around AI. How do we limit and regulate a technology that is literally rushing forward and has a development curve like no other? We have navigated this balancing act for the past six months while dealing with recession, inflation, component shortages and a lawsuit that cost time, commitment, and money.

We present a quarterly report for Q2 2023, where we report on our impact, within Sweden’s basic industry and business, through our pioneering AI solutions. During the last quarter, we have focused on reaching the entire country and our investment has proven to be successful. By targeting companies that are ”technical innovators” and ”early adopters”, we have succeeded in offering revolutionary AI solutions within ”Automated Quality Control”. It aims to seamlessly integrate AI into our customers’ production processes, ultimately providing benefits such as capacity optimization, improved quality management, better decision-making and, not least, flexibility. We are doing this in the eye of the storm of recession, inflation and a changing industry that is not only evolutionary changing, but I am convinced that when we look back in 2023, we will be talking about a paradigm shift!

Q2 2023 has been a challenging quarter for us where we’ve been dealing with acquired business that we haven’t been able to deliver due to the component shortage, finally as I said we’re starting to see a normalization of that. We have also managed a wait-and-see market in line with the economic situation where we see that a number of larger AI infrastructure deals have been pushed forward. This has resulted in a declining result and a declining turnover. However, I have good hopes that we will make up for it in the second half of the year.

In the past six months, we have accelerated the development of our AI services. It also means that we have invested more in the solutions. This applies to our proprietary tool for orchestration, resource, and data management, AiQu. We have been developing AiQu for a couple of years now and it is becoming more and more complete, and we see that we offer the market something unique and more and more people are opening their eyes to our software. The number of companies that have realized the power of investing or starting to supplement their business with AI and GPU-based computing power also realize the need to optimize the environment, here AiQu is unique! A result of our intensified investments in our AI solutions is that we have now been approved to deal AiQu via one of the major international distributors, Arrow. It means that we can reach out to a completely different arena, and we look forward to the effects of this. We also have several PoCér (proof of concept) in progress, with some major international companies that create a new kind of presence on the international market!

This also applies to our concept of AI as a Service, where we handle everything from datacenter management to applied AI. We have niched our focus on ”Automated Quality Control” and Swedish basic industry. Automated Quality Control via AI makes it possible to seamlessly integrate AI into our customers’ production processes, which provides benefits around capacity optimization. We can raise quality management to a whole new level, we create a better basis for daily decision-making, and this provides better sustainability, economy and not least a flexibility that has sometimes been lacking in the industry.

Our target group has been clearly defined as all of Sweden’s basic industry and business. By offering AI solutions that meet their specific needs, we have been able to establish ourselves as a reliable partner and leading player in the sector. We understand that to make an impact in this critical sector, it requires companies that are ”technical innovators” and ”early adopters” that are prepared to take the step into the new AI era that is reshaping the industry. Aixia manages the entire lifecycle, from datacenter management to applied AI. This gives us a unique position in the market.

Along the way, we have faced challenges, including convincing the traditionally conservative base industry and business community of the benefits of AI. By focusing on ”technical innovators” and ”early adopters”, we have succeeded in overcoming these obstacles and create a strong demand for our ground-breaking AI solutions. Already during the pandemic, we noticed the effects of the component shortage, we began to expand our consulting team and began to put more effort into our contract revenue (ARR). It takes time in a turbulent environment and an industry that is undergoing both development and change. In the coming six months, we will see the visible effects of these investments.

During Q2, we have made adequate investments in our brand and the name change to Aixia, a name change that is in line with the development of the industry and technology. By reevaluating our brand and adapting to the spirit of the times we are in now, we show that we are an innovative and future-creating player. An innovative name gives us the opportunity to clearly communicate our core values and more easily create a unique position on the market as the IT/AI company we are. We will differentiate ourselves from competitors with whom we have previously been compared and confused. In addition, this name change gives us increased flexibility for future company development and strengthens our presence on the national and international market.

In order to meet the increased cost mass we had during the first half of the year, we are initiating a savings package. The savings package aims to review the entire mass of costs but with a focus on overheads. We expect that the savings package will provide approx. 7% savings over the year. Areas that will be handled include employee benefits due to changed working methods, an effect of the pandemic but which we see is permanent. We will do similar measures regarding premises which are also an effect of changed working methods.

In summary, we are continuing our investment in AI, we are reviewing our cost structure. We continue our reallocation around our revenue legs with a greater focus on recurring contract revenue (ARR) and service revenue linked to our consulting corps and we continue to have an adaptive approach to the recession and the change we see in the industry with a strong determination to sum up a good and profitable 2023 at the turn of the year.

//

Mattias Bergkvist, CEO

Significant events Q2 2023

2023-04-20
Aixia contracts for Proof of Concept to improve plastic product quality using AI.

Aixia and a leading company in the plastics industry jointly conduct a Proof of Concept to improve the quality of plastic products. Aixia, formerly known as CGit, has entered into a cooperation agreement with a leading company in the plastics industry and operates globally, to conduct a Proof of Concept (PoC) to automate the quality control of plastic products. Aixia’s expertise in AI and smart tools will play a crucial role in the project, which aims to increase efficiency and lower costs in the company’s production.

Aixia’s solutions and technology will help the company realize, grow and accelerate their AI projects in a cost-effective and time-saving way. Aixia and the customer look forward to working together on this exciting project to further improve the quality and efficiency of the production of plastic products on a global scale.

2023-04-21
Aixia enters into a strategic agreement with the Swedish Fair worth at least SEK 12 million.

Aixia (formerly CGit), a leading Swedish supplier of IT infrastructure solutions, is proud to announce that it has entered into a strategic agreement with the Swedish Fair, one of the largest meeting places in the Nordics.

The agreement, which runs over five years, means that Aixia will be responsible for expanding and modernizing the Swedish Fair’s network infrastructure as well as taking on extended operational and support responsibility. Since 2010, Aixia has been a trusted partner to the Swedish Trade Fair, and now they will jointly invest in a new network infrastructure. The new network will offer increased security, availability, and capacity as well as greater flexibility than before. The first part of the agreement concerns investments of around SEK 10 million and will then run for a total contract period of 5 years, with the possibility of additional investments of around SEK 40 million. The agreement also includes that Aixia will offer network operation as a service as well as server operation, standby and service desk.

2023-05-03
Aixia acquires a new order with Ports Group, value SEK 3 million.

Aixia takes new orders within the next generation data center and security platform. The client, Ports Group, is one of the leaders in comprehensive brand safety solutions. Ports Group needs to take the next step in future-proofing its environment and securing the capacity for future needs from the market.

Aixia delivers the next generation datacenter solution that is part of Aixia’s IT infrastructure concept to meet customers’ needs for modern and future-proof IT infrastructure.

The order is worth SEK 3 million. Aixia takes new order with Ports Group, value SEK 3 million.

2023-05-05
Aixia first in Europe to offer NVIDIA’s groundbreaking supercomputer, DGX H100.

NVIDIA’s DGX platform is the premier solution for initiating and developing AI projects. Since 2017, Aixia has supplied all versions of NVIDIA’s DGX platforms. We have designed, implemented, and delivered some of the largest AI-focused datacenters in the Nordics. NVIDIA’s DGX platform provides a fully supported hardware and software stack, enabling businesses to concentrate on creating value instead of spending time building, testing, and configuring complex infrastructure.

As one of the pioneer companies in Europe, Aixia has recently received its first DGX H100 unit. Aixia will make the DGX H100 available to anyone interested in testing and evaluating this cutting-edge technology through our proprietary AI Orchestration software, AiQu. Aixia has a history of being at the forefront of innovation, as we were one of the first to offer the DGX 1 and DGX A100 as cloud services. Aixia is an Nvidia DGX Elite Partner.

2023-05-23
Aixia takes new order with existing customer, value SEK 1 million.

Aixia launches innovative network and Wi-Fi solution for modernization of the education sector. A customer in the education sector has chosen Aixia as their partner to upgrade their existing Wi-Fi and network to a high-performance solution, supporting their increased needs in an increasingly digitized learning environment. Worth SEK 1 million.

With the support of Aixia’s deep technical knowledge and long experience, the customer will introduce a new Wi-Fi and network solution from Arista. The solution is designed to improve performance and offer high security and simplified administration.

”Network operation as a service” is central to the arrangement, which will ensure continuous functionality through monitoring, support, and maintenance. This service is offered at different levels, adapted to the customer’s specific needs and expectations.

As part of the agreement, the customer will also implement Palo Alto Firewalls as part of their hosting solution. This service further strengthens the protection and reliability of the network and now includes a URL filtering function at no additional cost.

2023-06-19
Aixia takes new orders with two of our existing customers.

Two of our existing customers extend AiQu licenses to continue optimizing their AI/ML Ops solutions. The customers are active in research and innovation as well as in care and health. Several existing customers choose to both increase and extend their AiQu licenses, which gives us further receipts of the value AiQu creates for our customers.

We are incredibly happy to see that we are getting frequent license renewals at AiQu.

Steady influx of new and extension of existing customers gives us security in the investment.

Aixia thanks for the trust. It’s a lot of fun to be able to deliver solutions at the forefront of technology, I see it as another proof that we are at the absolute forefront with our offers and concepts, says Mattias Bergkvist, CEO of Aixia.

AiQu: AiQu is an easy-to-use orchestrator that helps companies utilize their resources, primarily GPUs, more efficiently. This means that the development work goes faster and thus also becomes more cost-effective. The tools traditionally used for scheduling and orchestrating CPU-based HPC environments are no longer the optimal choice for GPU-based systems. Organizations want their very valuable investments in both hardware and personnel to be used as efficiently as possible. That’s why we, Aixia, have developed AiQu, a versatile tool to help maximize your organization’s AI initiatives.

Significant events after the end of the period

2023-07-03
Aixia takes new order from Benify, worth SEK 4.3 million.

Aixia has been trusted to deliver the next generation of Hyperconverged Infrastructure (HCI) solution for a new customer. Benify is a fast-growing, independent HR tech company that helps companies and organizations around the world build a strong employer brand by aggregating and highlighting benefits and compensation offerings. The solution from Aixia guarantees to secure the customer’s computational and storage needs for a long time, and Aixia are incredibly proud and grateful for the trust. We look forward to a close collaboration with the customer in the coming years.

2023-07-17
Aixia takes new strategic order with international energy company.

Aixia takes a strategically important order in communications!

Aixia has been trusted to deliver the next generation communication solution to an existing customer. The customer, who is active in the international energy sector, has chosen to invest in a new communication platform to meet growth plans but also ensure availability and security. The choice of the solution and supplier is strategic for the customer as completely new requirements are set around security and accessibility linked to the environment. This is a first rollout of a new architecture which will then be delivered to several facilities. The first rollout has a value of SEK 500,000.

Aixia is incredibly proud and grateful for the trust. We look forward to a close cooperation with the customer during future expansion.

2023-07-26
Aixia acquires order with a new customer, value SEK 4.5 million.

Aixia has been trusted to deliver new AI infrastructure and the next generation datacenter solution to a new customer. The customer, which is the Hansson Brothers that are part of the international group Huitai Investment Group. Bröderna Hansson is a full range wholesaler in fish & shellfish with a focus on the grocery trade, commercial kitchens, delicatessens, food wholesalers and food chains. Aixia is trusted to deliver the latest in AI infrastructure and next-generation datacenter solutions with associated services.

”We wanted the best in AI and IT support to secure the best delivery of our services and products to our customers, because we work with fresh produce and have Just-in-time deliveries. We invest in AI solutions for product control system to future-proof our business,” says IT manager Amer Dzindic.

Aixia is incredibly proud and grateful for the trust. We look forward to a continued close collaboration with Bröderna Hansson during the upcoming expansion that they have ahead of them.

This information is information that CGit Holding AB (publ) is required to make public pursuant to the EU Market Abuse Regulation.
The information was provided by the above contact, for publication 2022-08-18.

FOR MORE I N FORMATION /

Get in touch with the company at:

CEO Mattias Bergkvist
Phone: 031-762 02 40
info@aixia.se
www.aixia.se

CGit Holding AB
Taljegårdsgatan 11
431 53 Mölndal