Modelon AB Interim report Q1 2024
Faster Modelon Impact growth in Q1
Q1 Highlights
- ARR increased to MSEK52.6 (46.2), an annual growth of 14%
- Net revenue amounted to MSEK 18.3 (18.0), of which software revenue was MSEK 13.5 (12.0)
- Cash flow from operations amounted to MSEK -4.1 (-1.8)
- EBIT amounted to MSEK -14.4 (-18.3), including development costs of MSEK 14.8 (15.6)
- Net income amounted to MSEK -14.2 (-18.1)
- Earnings per share amounted to SEK -1. 29 (-1.65) before dilution.
Comments from the CEO
Faster Modelon Impact growth in Q1
The first quarter saw continued ARR growth driven by our flagship cloud platform Modelon Impact. ARR amounted to MSEK 52.6, 14% growth vs. 2023. Modelon Impact ARR growth was 29% vs. Q1 2023 with sequential growth of 19% vs. Q4 2023.
Certain sales bottlenecks that slowed Modelon Impact growth during 2023 have been resolved, in particular related to on-premise installation.
The professional services business supports new product sales and upsell activities with implementation and onboarding projects for new and existing customers. Services revenues during the first quarter were lower than in the comparable period and were affected by the major new release of Modelon Impact during the quarter, which demanded simulation engineering resources that otherwise deliver services to customers.
Customer wins, high pipeline activity and new growth initiatives
Positive developments during Q1 included new account wins, an increasing share of upsell, and a tendency toward larger initial deal sizes. Key customer wins included:
- British multi-national oil and gas company (upsell)
- US global leader in energy storage systems
- US multinational manufacturer of home appliances
- British multinational professional services firm
- US innovator in carbon-free energy systems for sustainable maritime transportation (upsell)
- Chinese commercial aircraft manufacturer
- German smart buildings energy systems consultancy
- Korean automotive thermal management system developer (upsell).
Global pipeline activity was high throughout Q1 and provides strong momentum for the coming quarters.
During Q1 we established a new, agile, cross-functional team to drive growth in selected high-potential industry verticals. The growth team is already increasing the sales pipeline with its focused outreach and rapid product iterations.
We have continued developing commercial opportunities broadly, frequently in applications related to clean, sustainable energy for the Energy, Aerospace, Automotive and Industrial Equipment industries. In these disciplines, Modelon Impact provides demonstrated high value across the engineering life cycle and particularly in the innovation and development phases.
During the first quarter, we published a customer testimonial from Turboden, a Mitsubishi Heavy Industries Group company based in Italy. Turboden is a global leader in the design and production of large heat pumps for reliable clean energy systems integrating sources such as renewables (biomass, geothermal, solar), traditional fuels, and waste heat from industrial processes, waste incinerators, engines or gas turbines. Turboden is using Modelon Impact as a tool to deliver cutting-edge, resilient solutions in the field of sustainable energy. Modelon Impact enables Turboden to assess and validate their new heat pump technology.
Planning is underway of our second international user conference Modelon Innovate, to be held in Copenhagen October 10-11, with a strong line-up of customer presentations under the theme “Where Simulation Meets Sustainability.”
Modelon Impact 2024.1 released in Q1
Version 2024.1 of Modelon Impact was released to SaaS customers on February 27, including improvements and new capabilities in online collaboration with workspace and app sharing, a seamless upgrade experience, and strengthened integration with Microsoft Excel, as well as improvements related to the model builder, experimentation, simulation solvers and diagnostics. The new release also included significantly improved and streamlined packaging of the customer managed on-premise version of Modelon Impact.
The 2024.1 release introduced the new Energy Systems Optimization solution, which is a streamlined packaging of capabilities in Modelon Impact evolved in a sequence of customer engagements, such as the previous case study with Honda Motor Company on “Driving Towards Carbon Neutrality with System Simulation.” The solution enables energy system engineers to optimize their decision making in component selection and sizing, operation of energy storage systems and energy source selection. This enables Honda, for example, to simultaneously meet demanding requirements on working capital, operating cost and sustainability in the design and configuration of complex manufacturing sites.
The release included new industry-specific capabilities and improvements including hydrogen storage, CAD geometry import, thermal management system enhancements, direct air capture technologies, residential heat pumps, refrigeration, electrification, and general thermo-fluid system enhancements.
With the return to robust growth of our flagship product Modelon Impact during Q1 and the high pipeline activity level, we enter the spring and summer months with energy, confidence and optimism. Our financial goals remain our top focus, to turn cash flow positive in the short term, reach 35% ARR growth in the medium term, and exceed a profit margin of 20% in the long term.
Passing the baton to Modelon’s new CEO
After twelve years as CEO of Modelon I will hand over the role to Jan Häglund on July 1st. I am humbled, proud and deeply grateful to have worked with such an outstanding and unique global team during this period. Together, we have transformed the company with our strong vision and, through Modelon Impact, we have established Modelon as a global leader in system simulation on the cloud. I am thrilled about the opportunities ahead and certain that the company is positioned for continued success.
Magnus Gäfvert, CEO Modelon
Lund, May 14, 2024
Investor presentation
Modelon invites investors to a presentation of the Q1 interim report at 10.00am CET on May 14, 2024. CEO Magnus Gäfvert and CFO Jonas Eborn will present the Q1 earnings in a webcast. Register here.
The complete Q1 interim report is attached to this press release and is also made available on the company webpage: http://www.modelon.com/investor-relations/#FinancialReports.
