Summary
cBrain celebrates a good start to the year. cBrain observes at positive development, both in Denmark and internationally, while growth in the first quarter is well in line with the announced expectations.
In parallel with this, cBrain has come off to a good start on implementing the extended growth plan for the period 2023-2025. This applies to both the investment in climate software and the establishment of a partner channel.
As part of the climate initiative, cBrain has for some time worked with solutions that support the UN's Sustainable Development Goal number 6: Clean Water and Sanitation.
This led to the first projects in California, and in March cBrain participated in the UN 2023 Water Conference in New York. In connection with this, the UN has adopted a set of best practices for public digitization within the water area ("Blueprints for digital water governance"), developed by cBrain in collaboration with the Danish Environmental Protection Agency. The best practices are now posted on the UN website for inspiration and use by other authorities across the world.
Time is running out, and the efforts of the authorities across the world are crucial in the fight against climate change. But even when politicians have agreed on climate initiatives and the financing is in place, it often takes several years to implement the initiatives because it requires new and complex IT systems.
By reusing digital best-practice experiences, authorities can greatly reduce the time gap from political decision on new initiatives to the time when the initiatives are implemented in practice. By sharing "blueprints" for inspiration and reuse for authorities across the world, cBrain and the Danish Environmental Protection Agency are supporting the global climate effort. At the same time, cBrain notes that this initiative opens up new contacts with authorities in a number of different countries.
It is cBrain's goal that the customers themselves or with the help of external consultants can take over all or parts of the tasks that cBrain currently handles in connection with the delivery and implementation of F2-based solutions. This initiative is called "F2 for Partners", and it is expected to be able to accelerate growth in the long term by minimizing dependence on cBrain's own consulting resources.
cBrain uses a number of self-developed tools when configuring and delivering F2 solutions such as climate software. The further development and release of these tools are decisive factors in supporting partners, so that the tools can be used by the customers themselves or by external consultants.
The further development of the tools is progressing according to plan. cBrain thus expects to be able to release the first version of F2 Service Builder before the summer holidays.
F2 Service Builder is a groundbreaking new tool that enables customers and consultants to set up and maintain individual business processes in F2 as easily as filling in a spreadsheet. This means that professional processes can be set up much faster and with significant cost reduction. cBrain therefore expects that F2 Service Builder will be able to move market shares in parallel with supporting the establishment of a partner channel.
The release of F2 Service Builder is therefore an important milestone in cBrain's growth plan.
Good growth and earnings in the first quarter
Compared to the results for the same period last year, the internal accounts show revenue growth of over 30% in Q1 2023 as well as earnings before tax (EBT) of over 25%.
For the financial year 2023, cBrain has announced an expected revenue growth of 15-20% and earnings before tax (EBT) of 18-22%. The results in the first quarter of the year are thus considerably higher than the announced expectations for the year.
The positive results are due to an increase in turnover of software, while the turnover in sales of hourly-based services is slightly lower than the turnover of hourly-based services in the same period last year.
This development is in line with the announced growth plans with a focus increased software sales, and the figures point to a good start to the execution of the company’s extended growth plan for the period 2023-2025.
Part of the revenue increase in the first quarter can be attributed to non-recurring income (software licenses) in connection with software sales. At the same time, the implementation of the extended growth plan entails considerable uncertainty regarding the economic expectations. Based on this, cBrain maintains its expectations for the financial year 2023.
The growth plan is based on 3 initiatives
cBrain advanced and began the implementation of an extended growth plan for the period 2023-2025 in the autumn of 2022.
The growth plan is based on 3 measures: continued expansion of the existing business, increased focus on selling climate software to authorities, and the establishment of a partner channel.
cBrain continues to expand its position in Denmark
On the Danish market, cBrain is pleased with the continued progress and expansion of existing business, with both new customers and new projects.
At the beginning of the year, cBrain announced that the City of Copenhagen has chosen cBrain as supplier of a new grant management system in the Culture and Leisure Administration. The new system will support just over 2,000 grant management cases annually in the Culture and Leisure Administration, and it will be used by approx. 1,000 democratic voluntary associations and 50 evening schools.
The agreement is important because it supports cBrain's position as a supplier of solutions for grant management, while also supporting cBrain's ability to increasingly open up the municipal market.
cBrain has also announced an agreement with the Danish Immigration Service to implement F2. cBrain has previously announced agreements with the Department of the Ministry of Immigration and Integration, the Danish Return Agency Service, and the Danish Agency for International Recruitment and Integration. The new agreement with the Danish Immigration Service means that cBrain now supports both the department and all agencies in the group.
Government agencies form a central element in cBrain's growth plan because they constitute a significant part of the market potential for F2, both for use in EDRMS (electronic document and records management system) and as a digital platform for professional processes. The continued influx of new agencies in Denmark is therefore important and reinforces cBrain’s expansion of its domestic market position as a supplier to the Danish authorities.
cBrain has also entered into two new agreements with the Danish Energy Agency, which has chosen to use F2 as a digital platform for grant management in the heat pump scheme and as part of the solution for the new heating bill scheme. cBrain welcomes the new solutions, which support the green transition and assist the with rising energy prices.
The agreements with the Danish Energy Agency are important for cBrain, not only in Denmark, but also internationally as they support cBrain's international investment in climate software for authorities. At the same time, the agreements expand cBrain's position as a supplier of grant management solutions, as they open up the energy area, which in itself represents a large international market.
New agreements and orders strengthen international progress
Digitization is high on the agenda for the government in Ghana, both as basic digital support for the authorities' work and for the authorities' efforts in connection with the climate challenge.
cBrain has been in dialogue with central authorities in Ghana for a long time, which has involved visits by delegations to Denmark and meetings with authorities in Ghana. In parallel with this, cBrain announced in November 2022, based on bilateral meetings during COP27 in Egypt, a cooperation agreement with the Environmental Protection Agency in Ghana, where the aim is to reuse Danish experience and thus accelerate climate action.
As the next step in Ghana, at the beginning of the year cBrain established a 50/50 joint venture company in collaboration with the local Ghanaian consulting and software house Omni Strategies.
Based on the new company cBrain Omni Ghana Limited and the collaboration with Omni Strategies, cBrain hopes to contribute to the digitization of the public sector in Ghana by reusing the experience that cBrain has built up over many years of cooperation with Danish authorities, and by reusing cBrain's extensive library of F2-based solutions.
In February, cBrain announced an agreement in Ukraine to support the reconstruction of the municipal infrastructure in Makariv. The agreement is with the Ukrainian Fund for Energy Efficiency and Energy Savings (UFEES), which is a publicly funded non-governmental organization in Ukraine, and the Makariv Settlement Council, which is located in the Kyiv region.
As the first step in the agreement, cBrain has initiated a pilot project to help digitize the Makariv municipality administration. The goal is, based on F2 and Danish administrative best practices, to support governance, administration and secure case processing in connection with the reconstruction of the municipality's infrastructure, which has been destroyed due to the occupation of the region.
In parallel with the signing of the agreement, cBrain has been invited to participate in the ReBuild Ukraine Conference in Warsaw, Poland, together with the Danish Ministry of Foreign Affairs. The conference is attended by more than 300 European companies, financial institutions and public authorities, including a number of ministries and municipalities from Ukraine, e.g. Makariv Settlement Council.
The Ukrainian state has long had its focus on public digitization, and cBrain has had a dialogue with the Ukrainian authorities for several years, which, among other things, has entailed hosted visits with the participation of high-ranking officials and politicians from the Ukrainian central administration at cBrain’s office in Copenhagen. As a result of this work, cBrain can now contribute to the reconstruction in Ukraine and hopefully contribute to the digitization of the public sector in Ukraine in the long run.
cBrain has previously entered into a large framework contract for the delivery of F2 licenses to the Deutsche Rentenversicherung Bund. The framework agreement is based on successful support of business processes and services across the group, which has branches in all German states.
In March, cBrain announced that it had been awarded a contract for the supply of additional consulting services in connection with the continued implementation of F2. The contract is for just over 2,500 man-days, which has a value for cBrain of approx. 25 million DKK.
This contract is important to cBrain because it consolidates the continued success at Deutsche Rentenversicherung. At the same time, the German central administration faces large investments as part of the digital transformation of the German authorities, and the continued success of Deutsche Rentenversicherung is therefore also important for cBrain, because it helps to position cBrain as a supplier to other German authorities.
F2 Climate Software supports “Closing the water management gap”
The second initiative in the extended international growth plan is an increased investment in F2 Climate Software.
F2 Climate solutions form a special group of F2-based professional processes which support the authorities' efforts in the global fight against climate change, from nature restoration and preparedness to reduction of greenhouse gas emissions.
F2 Climate solutions are defined and configured directly in the F2 standard software. This means that it is possible to set up and deliver the solutions much faster than the time it normally takes to digitize complex public professional processes, and this is important because time is a decisive factor in the fight against climate change.
Time is running out, and the efforts of the authorities across the world are crucial in the fight against climate change. But even when politicians have agreed on climate initiatives and the financing is in place, it often takes several years to implement the initiatives because it requires new and complex IT systems. It is therefore important that solutions can be delivered quickly, which makes cBrain particularly attractive to the authorities that work with climate challenges.
By reusing digital best-practice experiences, authorities can greatly reduce the time gap from political decision on new initiatives to the time when the initiatives are implemented in practice.
As a supplier of climate solutions that can be quickly delivered and reused, cBrain can thus contribute directly to the global fight against climate change. In this connection, cBrain has established a dedicated international department which is responsible for implementing the climate strategy.
The department is growing fast, and at the end of the first quarter, cBrain's climate office had local employees on 3 continents outside Europe who work with business development: in North America (San Francisco), Africa (Nairobi) and Asia-Pacific (Sydney), respectively. At the same time, cBrain has succeeded in going live with new F2 climate solutions in Kenya and California.
As part of the climate focus, cBrain has for some time worked with solutions that support the UN's Sustainable Development Goal number 6: Clean Water and Sanitation based on Danish experience with drinking water protection, wastewater control and environmental permits.
In March cBrain participated in the UN 2023 Water Conference in New York, which is the first of its kind in many years. In connection with this, the UN has Water Action Agenda, and cBrain has, in agreement with the Danish Environmental Protection Agency, contributed a set of best practices for public digitization within the water sector ("Blueprints for digital water governance").
These best practices are based on process and workflow descriptions that cBrain has developed in collaboration with the Danish Environmental Protection Agency, and they are now, via the UN's Water Action Agenda, freely available to other authorities across the world.
A library of best practice descriptions enables reuse and thus an acceleration of the authorities' efforts in the water area, which is described as "Closing the water management gap".
cBrain also has both a deep insight into process and workflow descriptions and a number of ready-to-use climate solutions that support the processes. As a result, cBrain is now experiencing interest from authorities in various parts of the world who are interested in working with cBrain as a possible supplier.
Read more about cBrain's efforts in connection with Sustainable Development Goal number 6: Clean Water and Sanitation and the blueprints for digital water governance on the UN website:
https://sdgs.un.org/partnerships/sharing-blueprints-digital-water-governance
cBrain is developing tools for partners
The third initiative in the extended international growth plan is called "F2 for Partners". The aim is to let customers themselves or with the help of external consultants take over all or parts of the tasks that cBrain currently handles in connection with the delivery and implementation of F2-based solutions.
Although cBrain manages to deliver solutions both faster and in fewer hours, the time required for implementation is still significant. By shifting tasks to customers and external consultants, cBrain expects to be able to accelerate growth by minimizing dependence on both cBrain's own consulting resources and ongoing expansion.
In order to support partners, however, it is crucial that cBrain further develops the tools currently used internally in connection with the development and adaptation of solutions such as traditional F2 professional processes and F2 Climate software. By releasing a number of the tools that are currently used internally in cBrain, customers themselves or with the help of external consultants are able to take over an increasingly large part of the implementation task.
The further development of the tools is progressing according to plan, and cBrain expects to release the first version of a new tool, which is called F2 Service Builder, already in Q2 2023.
With F2, cBrain has proven what few thought possible. In close cooperation with Danish authorities, cBrain has designed and developed a fully integrated platform, a completely new type of standard software, which contains all the functions an authority needs for administration. Ready for operation, without the need for either special programming or a lot of consulting hours.
At the same time, F2 offers a built-in process engine that can be configured without limitations to support and automate any professional process. This applies to both small and large complex case areas. End-to-end and automated, covering all steps in the case process from self-service to case processing, journaling and management reporting.
It is groundbreaking to be able to deliver complex solutions to the public sector based on standard software, and which can be adapted without programming. It shows a completely new path for public digitization and forms the technological basis for cBrain's success as a supplier to authorities.
cBrain is now taking the next major technological steps by further developing the process engine so that it can also be used by customers and external consultants. This happens through a series of steps, in parallel with cBrain developing its strategy for cooperation with partners.
The first F2 tool for use by partners is called F2 Service Builder. F2 Service Builder is a groundbreaking new tool that enables customers and consultants to set up and maintain individual professional processes in F2 as easily as filling in a spreadsheet.
This means that professional processes can be set up much faster and with significant cost reduction. cBrain therefore expects that F2 Service Builder will be able to move market shares in parallel with supporting the establishment of a partner channel.
The release of F2 Service Builder, the first tool for use by partners, constitutes a milestone for cBrain’s growth plan. It is cBrain's expectation to announce the release of F2 Service Builder before the summer holidays.