QUARTERLY REPORT JANUARY TO MARCH 2023

STELLAR GROWTH - SAAS ARR AND SAAS API CALL VOLUMES +134% AND 243% YoY

JANUARY TO MARCH 2023

• SaaS ARR amounted to 30.2 MSEK (12.9), +134%
• SaaS API Call Volumes 18.9 million (5.5), +243 %
• Total ARR amounted to 57.3 MSEK (33.8), +70%
• Recurring revenues amounted to 13.4 MSEK (8.8), + 53%
• Net sales amounted to 13.6 MSEK (10.1), + 35%
• Gross margin (*) amounted 56% (60)
• EBITDA adjusted amounted to -18.1 MSEK (-17.9)
• Earnings per share amounted to 0.1 SEK -0.4

EVENTS DURING THE QUARTER

• Launch of OpenQuestion, the quickest way to get rid of keypad navigation
• OpenQuestion awarded the top MetriStar prize for its groundbreaking approach
• ChatGPT integration through Microsoft Azure Cognitive Services
• New offering website - Teneo.ai - launched
• Renewal of agreement with the leading Italian online bank Widiba (Wise Dialog Bank)
• Renewal of agreement with Folksam, a leading insurance company in Sweden
• Successfully closed rights issue providing the company with 96 MSEK
• Renegotiated 4-year 250 MSEK PIK credit facility
• New partnership with Accelerate Venture Holdings (AVH), AVH to use Teneo to build outbound calling capabilities
• New partnership with Valcon, a leading European IT consultancy services company
• New partnership with COS Mantenimiento, a leading Spanish IT services company
• New partnership with Acuity Integrated, a leading Customer Experience (CX) services company
• Telecom operator A1 Bulgaria, part of A1 Group, launched a new customer care agent built on Teneo
• Awarded ISO 27001 certification – a key security assurance confirmation for a SaaS company
• Simplification of internal procedures initiated in Q1 2023 leading to cost reductions with impact in Q2 2023

EVENTS AFTER THE QUARTER      

• Renewal of SaaS agreement Global American Tech company
• Renewal of SaaS agreement with Medtronic, one of the largest medical device companies in the world
• New Nomination Committee appointed in April 2023

KEY FIGURES

(For definitions please see page 18)

	JAN-MAR2023	JAN-MAR2022	JAN-DEC 2022
Net sales (MSEK)	13.6	10.1	45.7
Recurring revenues (MSEK)	13.4	8.8	40.7
SaaS ARR (MSEK)	30.2	12.9	25.1
SaaS API Call Volumes (Million)	18.9	5.5	13.8
Gross margin (*) %	56%	60%	55%
EBITDA Adjusted (MSEK)	-18.1	-17.9	-78.0
Earnings per share, SEK	0.1	-0.4	-13.0
Cash flow from operating activities before financial items and taxation (MSEK)	-25.1	-20.1	-77.9

(*) The company has changed gross margin calculation and restated previous year figures for comparative purposes. Sales commission plan has been updated and is now linked to SaaS ARR growth. See Definitions on page 18.

CEO STATEMENT

Dear shareholders, colleagues, customers, and partners:

I have to start with a big thank you for the successful completion of our capital raise, and I would like to express my gratitude for your continued trust in our business. Business wise, we underwent a significant transformation. Since launching our SaaS model in 2021, we have established a solid customer base, demonstrating impressive quarter-over-quarter and year-over-year growth. For example, our SaaS ARR grew a stellar 21% QoQ and 135% Y-o-Y. The growth in revenues from our existing customers shows how our solution provides clear value to them.

Upon engaging with our SaaS customers, we discovered that the most valued feature of our Teneo platform was its ability to deliver on a long-standing promise from numerous industry players to get rid of the dreaded press 1 for, 2 for… customer care experience.

OpenQuestion – an Opportunity for Contact Centers

The challenge we address is the decline in customer experience resulting from companies transitioning to cost-saving keypad navigation systems. According to Contact Babel, the leading research and analysis firm for the contact center industry, 78% of companies in the English-speaking world use these systems today, resulting in a cumbersome and time-consuming process for customers to reach the appropriate department.

Our solution, OpenQuestion, is built on the Teneo platform and designed to re-introduce the personalized touch of traditional switchboard experiences. OpenQuestion allows customers to simply state their inquiry in an open-question format. Our intelligent system interprets their requests, asks clarifying questions if needed, and connects them to the appropriate party. Once this is deployed the platform allows for automations in all channels. It is the developments in the AI space in the last year that has made this product possible to take to market. 

By offering OpenQuestion as a value-added layer on top of Teneo.ai, we anticipate a streamlined sales cycle, and once sold delivering substantial cost savings and enhanced customer experiences within a 90-day timeframe. In contrast, marketing Teneo.ai as a standalone service without OpenQuestion typically necessitates customer experimentation and evaluation prior to adoption. 

Cost Focus 

We assert that the present moment is right for drawing new customers to Teneo, with the novel solution OpenQuestion substantially diminishing customer acquisition costs. Consequently, we have implemented measures to manage costs while maintaining a competitive presence in the market. These measures include streamlining support functions and foregoing salary increases for the current fiscal year. This strategic approach enables us to preserve existing cost structures while concurrently bolstering revenue from both established and prospective clients. 

Revenue Development 

Our revenue continues to grow rapidly with a 134 % increase on the SaaS ARR YoY. Total ARR grew to 57.3 MSEK. As an example of the model strength, our Global American Tech customer is growing rapidly and in March 2023 its volumes grew with 77% vs. December 2022, showing the potential of Teneo once customers start to scale. That our SaaS ARR has hit 30.2 MSEK two years after launching this product in the market is very impressive. Our SaaS is growing faster than the market and this year we aim to use our funds to also gain new customers that can grow their usage. 

A Year to Focus on Expanding Our Customer Base 

In 2023 we will move to focus more on acquiring new customers. This will hurt short-term profitability – as also evident in Q1 2023 - but seeing how customers growing their usage this will pay off handsomely over time. One such endeavor is the customer/partner AVH which will be using OpenQuestion in an outbound motion. We are watching this space intently as this could open yet another growth market for our platform. 2023 has started with an AI roar and we are committed to build on that momentum.

Per Ottosson, CEO

This disclosure contains information that Artificial Solutions International AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 28-04-2023 07:30 CET.