Summary
After a year-end, which showed the best result so far in the company's history, cBrain is off to a good start in the new year with progress both in Denmark and internationally.
At the same time, cBrain continues to develop its position as a provider of a new type of software, aimed at public authorities that support the global fight against climate change. cBrain calls the new type of software "Climate software for authorities".
cBrain sees a large and rapidly growing market for this type of solution and has just announced its first agreement in California where the company will supply climate software.
Progress based on organic growth
At the beginning of the year, cBrain could celebrate a year-end, which showed the best results so far in the company's history. Revenue grew by 29%, from DKK 120 million in 2020 to DKK 155 million in 2021.
The progress is based on pure organic growth. At the same time, most of the growth has been achieved through increased sales of software subscriptions, in the form of so-called cloud services, as well as increased sales of software licenses.
As a result, earnings before tax (EBT) grew by 94%, from DKK 20 million in 2020 to DKK 39 million in 2021, which meant that cBrain reached earnings before tax margin (EBT-margin) of 25% in 2021.
Revenue from software subscriptions grew by 31%, from DKK 64 million in 2020 to DKK 84 million in 2021, which means that software subscriptions now account for 54% of total revenue.
cBrain has no long-term loans, and at the beginning of the year, cBrain's cash and receivables in the form of debtors totaled approx. DKK 100 million. cBrain thus has a solid financial position at the beginning of the year.
The Danish market
In the Danish market, cBrain currently serves more than 75 authorities, of which 17 are from the 21 ministerial departments.
cBrain notes continued good progress, with customers continuously expanding their use of F2 in the form of more and more users and new modules. At the same time, cBrain is also seeing more and more customers starting to use F2 to support professional processes, which represents a very large market potential for cBrain.
cBrain can therefore look forward to continued progress in Denmark, with continued increased sales of software subscriptions. Including both increased sales to existing customers and agreements with new customers who choose to introduce F2 as a digital platform.
Export
As in the Danish market, cBrain's international growth strategy is based on organic growth.
The strategy has proven increasingly successful. The accounts for 2021 showed an export growth of 116%, with an export turnover which grew from 17 million kroner in the year 2020 to 37 million kroner in the year 2021. Thus, exports accounted for 24% of the total turnover in the year 2021.
The organic growth strategy requires only limited investments and capital needs, as cBrain, for example, does not need capital for use in acquisitions. cBrain notes with satisfaction that the company's international activities contribute to both good earnings and a solid positive cash flow.
As a result, cBrain also has the financial strength to continue initiating activities in new countries, in parallel with the expansion of current international activities.
Germany
In Germany, cBrain has succeeded in becoming a supplier to one of the largest German authorities, and cBrain continues to expand its staff in the Berlin office in line with new tasks.
In 2021, cBrain entered into a major framework agreement in Germany with the relevant authority, which covers standard software and maintenance of up to DKK 250 million over the coming years.
cBrain has so far only activated a small part of the framework agreement, but cBrain expects that this agreement alone will ensure continued growth in Germany over the coming years. When this will happen depends on the time of commissioning of a number of major projects at the customer.
In the German market, cBrain has so far concentrated on the work of the above-mentioned authority. But as part of cBrain's plan for the year 2022, cBrain has now taken the first steps towards marketing F2 more widely in Germany. This includes a further expansion of the collaboration with the consulting company Nortal, with which cBrain has entered into a collaboration agreement in Germany.
The United Arab Emirates
In 2021, cBrain delivered its fifth F2 solution to the Ministry of Finance of the Emirates. A solution that supports the collection, audit and reporting of company information to the OECD in order to avoid tax evasion.
The Ministry of Finance of the Emirates recommended this solution to the global WSIS award, which is sponsored by the United Nations and which honors solutions that support the 17 world goals. This naturally strengthens and supports cBrain's continued efforts in the Emirates.
In March 2022, cBrain was able to announce that the Ministry of Finance of the United Arab Emirates had once again nominated an F2 solution to the global WSIS award in the year 2022. This solution supports debt collection, which the Ministry of Finance handles on behalf of the state.
cBrain sees the nominations as a recognition of cBrain's work and deliveries, and it naturally supports cBrain's further opportunities in the United Arab Emirates.
Nominations support cBrain's CSR strategy
cBrain is pursuing an offensive CSR strategy with a special focus on e.g. SDG 16: Peace, justice and strong institutions.
cBrain sees digital support for the work of public authorities as crucial to the development of strong and transparent democratic institutions, and it is a key element in cBrain's international growth plan. cBrain therefore welcomes the two nominations in the United Arab Emirates, which underpin the company's CSR strategy and work to support the United Nations' 17 SDG’s.
Climate software for use by public authorities
Globally, the pressure on the authorities to live up to the Paris Agreement's goal of minimizing greenhouse gas emissions is increasing, while biodiversity and nature restoration are also receiving increased attention.
As a supplier to the Danish Environmental Protection Agency, cBrain has built up expertise and a broad portfolio of F2-based solutions, which support the authorities' work in relation to climate efforts. cBrain calls this type of solution “climate software”, and by supporting the rapid digitization of regulatory processes, cBrain can contribute to climate efforts, including both nature restoration and reduction of greenhouse gas emissions.
In the summer of 2021, cBrain announced an agreement whereby cBrain will deliver an F2 solution to the authorities in Guyana. The solution helps the authorities administer the so-called CITES agreement, which supports the monitoring and regulation of international trade in endangered wildlife and plants, in this case in the Amazon rainforest.
cBrain has previously delivered a similar agreement to the Danish Environmental Protection Agency, so that the agreement with the authorities in Guyana substantiates that solutions developed in Denmark can be exported.
The solution in Guyana has been successfully put into operation and in relation to the first solution for the Danish Environmental Protection Agency, the solution in Guyana has now been further developed so that it also supports the management of quotas in connection with exports.
First F2 deal in California
In October 2021, cBrain was able to announce an agreement in California, where cBrain will advise local authorities on the digitization of processes in connection with green conversion of agriculture and capture of CO2 ("Carbon Farming") in order to reduce the CO2 footprint in the state.
In continuation of this, cBrain was able to announce recently, in the beginning of April, that cBrain, in continuation of the first advisory task, had entered into an agreement in California for the delivery of an F2-based solution.
The new F2 solution will support the authorities' work in connection with CO2 capture (“Carbon Farming”) and more sustainable agriculture (“Sustainable Farming”). The solution must support that landowners can offer land areas where there is an opportunity to establish forests and improve the aquatic environment, while investors can bid with projects and capital.
Afforestation and a better water environment are an important element in the green transition. The forests absorb and store CO2, and at the same time wood offers an alternative to, for example, CO2-emitting materials in construction. Similarly, an aquatic environment is among some of the important factors for the conservation of animal and plant life in streams, lakes and coastal waters, and thus biodiversity. The purpose of the new digital platform that cBrain will deliver in California is thus to support climate-robust solutions, accelerate afforestation and ensure a better water environment.
The agreement in California is obviously important to cBrain. It supports cBrain's investment in climate software exports, and at the same time, the agreement supports cBrain's entry into the US market.
Export of F2 climate software
Climate software for authorities is an increasingly important element in cBrain's growth and export strategy, and in the summer of 2021 cBrain began building a dedicated unit to support the investment in climate software.
At the same time, cBrain has increased its direct involvement in relation to the global climate agenda, i.a. through a site event at the UN General Assembly, participation in Sustainability Week at Expo2020 in the Emirates and not least participation at COP26 in Glasgow.
It is therefore also very gratifying that in a short time we have succeeded in announcing the first international agreements in the field of climate change.
Climate software as a cloud service
Due to the pressure to increase climate efforts, authorities are demanding a rapid delivery of climate solutions. Here, cBrain has a significant competitive advantage, because cBrain can quickly deliver F2 solutions.
Most of cBrain's competitors base their deliveries on tailor-made solutions, where software components and modules are integrated and further developed. In contrast, F2 can be configured to support individual needs, based on 100% standard software. It provides significantly faster deliveries, and it ensures a high quality of the solutions because it is standard software.
At the same time, it means that F2 is standard software, that it is technically easy to deliver F2 as a cloud service (Software-as-a-Service), which can further increase the delivery speed.
cBrain is therefore working to expand its cloud services internationally. The new solution in California will thus be delivered as an F2 cloud service.
Yours sincerly
Per Tejs Knudsen, CEO
Inquiries regarding this notice may be directed to
Ejvind Jørgensen, CFO, cBrain A/S, ir@cbrain.com, +45 2594 4973