Modelon AB Interim report Q1 2022
Annual Recurring Revenue growth continues
Q1 Highlights
- ARR increased to MSEK 39.4 (30.6), an annual growth of 29%
- Net revenue amounted to MSEK 17.8 (20.6), of which software revenues were MSEK 11.6 (8.8)
- EBIT amounted to MSEK -12.7 (-6.7), including development costs of MSEK 13.5 (11.0)
- Net result amounted to MSEK -12.8 (-6.6)
- Earnings per share amounted to SEK -1.16 (-0.87) before dilution
- Financial result for the period reflects the ongoing investment phase for accelerated growth
Comments from the CEO
ARR growth continues
Annual recurring revenue in the first quarter of 2022 grew 29% compared to Q1 2021. With the Q1 ARR of MSEK 39.4, we remain on track towards the ARR target of MSEK 100 in 2024.
Software revenue in Q1 increased 32% compared to Q1 2021. The share of software revenue has increased from 43% to 65% in the first quarter compared to Q1 2021 and illustrates the strategic shift towards product license revenues from the 2020 introduction of Modelon Impact.
We are pleased to see that our new account wins for Modelon Impact have a global spread, with increasing activity in Asia following our investment in sales capacity there. North America continues to be the strongest region in terms of new business. In line with our land-and-expand sales strategy, new accounts generated a majority of the sales growth during the quarter, with increasing upsell on existing accounts as well as migration of long-term customers from our legacy multi-platform products to Modelon Impact.
Notable new customer wins during the first quarter include:
- Global leader in engineering and R&D services
- Global building technologies provider
- Chinese IoT leader
- German national research center
- Hydrogen research institute in Brazil
- Global industrial machinery and automation leader
- Korean smart factory specialist
- Austrian engineering simulation services company
- Global fuel cell stack developer
These customers are market and technology pioneers that choose Modelon Impact to drive innovation and transformation in areas such as hydrogen-based green energy and industrial internet-of-things. For example, 1W1 GmbH is a German innovator of methanol fuel cell systems and a recent Modelon customer that represents well the intense, growing activity in hydrogen and fuel cell technologies. 1W1’s CTO recently provided a testimonial about Modelon’s value as a simulation solution provider: “Modelon beat out the other solutions we have evaluated because of the range of component libraries supplied in Modelon Impact and Modelon’s dedication to its customers.”
Pipeline development was robust during Q1, with activity in all regions (Europe, North America and Asia) and industries (Automotive, Energy, Aerospace, Industrial Equipment), with North America and Energy continuing to stand out as the strongest opportunities. During the quarter we participated in industry events such as the AHR Expo in Las Vegas on HVAC and Refrigeration, which resulted in several high-quality leads. We see clear benefits in our pipeline development from the return to face-to-face industry events and customer visits.
We are pleased to have 12 committed customer keynotes and presentations for our upcoming Modelon Innovate international user conference in Stockholm in October. At the conference, we look forward to further testimonials on industrial use-cases and success stories from using our simulation solutions from renowned industry leaders such as NASA Jet Propulsion Laboratory, Volvo Autonomous Solutions, Heliogen, MAN Energy Solutions, and more.
Investing in product development and commercial progress
Our growth investments in product and commercial activities are, since the third quarter 2021, fully self-funded with all product development costs expensed. In the period from 2018 through the first half of 2021, the early development of Modelon Impact was co-funded in partnership with a U.S. enterprise customer, with the customer funding recognized as services revenue. The planned strategic shift to self-funding is reflected in a 48% increase in development costs in the trailing twelve-month period, while the Q1 2022 increase of 23% reflects the gradual end of this transition period. After Q2 2022, investors will more clearly be able to compare revenues and development costs on a like-for-like basis.
Modelon Impact development
Modelon Impact 2022.1 was successfully released on February 21, as previously reported. Market response to our unique cloud native solution and vision remains positive, with a growing following among potential customers. Current development is focused on further strengthening the cloud capabilities and scalability. Our industry experts are also evolving the workflow and library content in key application areas, such as hydrogen-based energy systems.
We head into the remaining quarters of 2022 with an increasing pipeline of exciting opportunities and an ambitious roadmap for Modelon Impact’s SaaS evolution. We are proud to be pioneering the system simulation market with our cloud native Modelon Impact platform and are encouraged by the praise and energy we receive from our valued customers – some of the world’s most demanding and innovative companies. We remain confident in our 2024 target of MSEK 100 in annual recurring revenues.
Magnus Gäfvert, CEO Modelon
Lund, May 17, 2022
Investor presentation
Modelon invites investors to a presentation of the Q1 interim report at 10am CET on May 17, 2022. CEO Magnus Gäfvert and CFO Jonas Eborn will present the Q1 earnings in an audiocast: https://tv.streamfabriken.com/modelon-q1-report-2022.
The complete Q1 interim report is attached to this press release and is also made available on the company webpage: www.modelon.com/investor-relations.
