QUARTERLY REPORT: OCTOBER TO DECEMBER 2023
RECURRING REVENUES +47% IN 2023 AND STRONG BEGINNING OF 2024
OCTOBER TO DECEMBER 2023
- Recurring revenues amounted to 15.7 MSEK (12.0), +31%
- Total ARR amounted to 63.0 MSEK (47.9), +31%
- NRR +145% (123)
- SaaS ARR amounted to 31.0 MSEK (24.9), +24%
- SaaS API Call Volumes 18.1 million (13.2), +37 %
- Net sales amounted to 15.8 MSEK (13.0), + 22%
- Gross margin amounted to 77% (55)
- EBITDA adjusted amounted to -5.8 MSEK (-18.3)
- Earnings per share amounted to -0.2 SEK (-3.4)
JANUARY TO DECEMBER 2023
- Recurring revenues amounted to 60.0 MSEK (40.7), +47%
- Total ARR amounted to 63.0 MSEK (47.9), +31%
- NRR +145% (123)
- SaaS ARR amounted to 31.0 MSEK (24.9), +24%
- SaaS API Call Volumes 18.1 million (13.2), +37 %
- Net sales amounted to 60.5 MSEK (45.7), + 33%
- Gross margin amounted to 67% (55)
- EBITDA adjusted amounted to -50.7 MSEK (-76.6)
- Earnings per share amounted to -0.6 SEK (-13.0)
EVENTS DURING THE QUARTER
- Rights issue of 26 MSEK announced
- Renewal of existing SaaS subscription agreement with A1 Bulgaria, a multinational Telecom Operator
- Renewal of license agreement with Italian banks, Widiba and BPM
- Renewal of license agreement with TIAA, a US based large bank
- Telefónica presented an integrated Teneo powered LLM pilot
- HRSA launched a live Generative AI use case in Teneo
- Teneo.ai unveils Adaptive Answers to enhanced personalized customer service for Contact Centers
- Teneo.ai announces Generative AI Orchestration, offering up to 98% Cost Reduction in Generative AI Operations
- Board of Directors announced a review of strategic alternatives to maximize shareholder value
EVENTS AFTER THE QUARTER
- Successfully closed rights issue with a 166% subscription rate and providing the company with 26 MSEK
- Renewal of SaaS agreement with Medtronic, one of the largest medical device companies in the world
- New Partnership agreement signed with System Integrator and AWS Connect Partner, EPAM
- New structure of sales organization New Business and Global Channels and Customer Sales and Engagement focused on existing accounts
- Teneo 7.4 + Copilot released in January 2024
- Teneo.ai Unveils Advanced RAG Solutions for Enterprise AI
KEY FIGURES
(For definitions please see page 21)
| OCT-DEC 2023 | OCT-DEC 2022 | JAN-DEC 2023 | JAN-DEC 2022 | |
| Net sales (MSEK) | 15.8 | 13.0 | 60.5 | 45.7 |
| Recurring revenues (MSEK) | 15.7 | 12.0 | 60.0 | 40.7 |
| SaaS ARR (MSEK) | 31.0 | 24.9 | 31.0 | 24.9 |
| SaaS API Call Volumes (Million) | 18.1 | 13.2 | 18.1 | 13.2 |
| NRR % | 145% | 123% | 145% | 123% |
| Gross margin (1) % | 77% | 55% | 67% | 55% |
| EBITDA adjusted (MSEK) | -5.8 | -18.3 | -50.7 | -76.6 |
| Earnings per share, SEK | -0.2 | -3.4 | -0.6 | -13.0 |
| Cash flow from operating activities before changes in working capital |
-8.6 | -19.1 | -53.8 | -81.5 |
|
(1) 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 21. |
CEO STATEMENT
Dear shareholders, colleagues, customers, and partners:
As we close the final chapter of 2023, I am pleased to report a period marked by substantial growth, strategic milestones, and pivotal advancements. This quarter, our team's focus on innovation and customer success has propelled our performance, reflecting positively in our financial and operational achievements.
Financials
In the financial sphere, our performance the fourth quarter 2023 has been a testament to the robustness and reliability of our business model, with recurring software revenues marking a significant leap to 15.7 MSEK, a 31% increase from the previous year, and a 47% growth for the full year 2023. This growth is further mirrored in our Software as a Service (SaaS) segment, where the Annual Recurring Revenue (ARR) reached 31.0 MSEK, showcasing a solid 24% growth year-over-year. Moreover, we witnessed our net sales ascend to 15.8 MSEK, a notable 22% improvement from the last year, alongside our gross margin jumping to 77%. This remarkable rise in gross margin underlines the scalability and operational efficiency embedded within our business model. Despite these significant strides in revenue and margin, we observed an adjusted EBITDA of -5.8 MSEK. Though this figure stands in the negative territory, it marks a considerable improvement compared to the previous year, signaling a positive momentum that we are keenly focused on maintaining and building upon in 2024.
API Call Volume growth
We saw API Call volumes growing again although still not quite up to August 2023 levels when we had full steam ahead on WhatsApp. Two of our US customers have restarted their WhatsApp channels albeit with many limitations for security reasons and the beginning of this 2024, we see these volumes pick up again. The WhatsApp voice channel still is plagued by fraudulent calls trying to steal data or goods and Meta (owner of WhatsApp) is working to mitigate this. But it is back as a channel to reach Teneo and we see higher API Call volumes beginning of the first quarter 2024 than during the fourth quarter 2023. So, volumes are back!
Reorganization
During the fourth quarter 2023, we initiated a reorganization to prepare for 2024. We have split the Go To Market organization into two parts. One organization being responsible for all new sales and one responsible for existing accounts. This will both increase focus on existing accounts and on new accounts. These teams manage customers and prospects across our focus markets which are US, UK, Germany, Switzerland, Northern Europe. The focus on serving new customers is now half of our go to market organization which will ensure we get 1-2 new customers a quarter this year.
Strategic Initiatives and Achievements
The past quarter has been a period rich with strategic endeavors, all designed to position us in the lead for 2024. Our successful and oversubscribed (166%) rights issue initiated in the fourth quarter 2023 and closed in February 2024 injected approximately 25 MSEK into our operations, significantly bolstering our financial standing and better positioning us for further expansion into new customers. Additionally, we undertook the task of refining our Annual Recurring Revenue (ARR) measurement methodology. This adjustment, aimed at achieving greater stability, mirrors our dedication to maintaining transparency and accuracy in our reporting practices.
Central to our strategy this quarter has been our partnerships and innovations in product development. We launched integrated and live generative AI use cases in collaboration with Telefónica and HRSA, showcasing our leadership in technological innovation. Furthermore, our ability to renew agreements with esteemed customers like A1 Bulgaria, Widiba, BPM, and TIAA has not only solidified our market presence but also reaffirmed the trust our customers place in us. Moreover, our strides in AI technology, evidenced by the introduction of Accuracy booster and Generative AI Orchestration, have established new benchmarks within the industry, underscoring our commitment of leading through innovation.
Strategic Review
The board of directors of Artificial Solutions announced on October 26, 2023, that it initiates a review of strategic alternatives to maximize shareholder value, as a consequence of the rapidly evolving market landscape in the field where Artificial Solutions is present.
The review is still ongoing with interested parties and the board of directors has not set a timetable for completion of its review and has not committed to any obligation to make any further announcements until final decisions are made by the company’s board of directors.
The board of directors emphasizes based on the ongoing strategic review discussions that our company is a leading player in the AI and Contact Center Software verticals and that we are recognized by many larger players in the industry as a leader.
KLARNA SHOWCASES THE POTENTIAL IN WHAT WE DO
Klarna announced in a press release on February 24, 2024, that they handle two thirds of their customer care requests, equivalent to what 700 human agents can respond to, with a virtual AI Assistant. A total of 2.3 million chats have been managed so far. This put great focus on using AI for Customer Care. Klarna is natively digital with a modern application stack and with a B2C customer structure that has always been offered only chat in customer care.
Our customers situations are more complex. They all offer phone as a primary means of contact as this channel also is used for selling to customers calling. They also have many disparate systems that contain the relevant information for a customer discussion making integration and performance key issues. This makes what our customers achieve with Teneo.ai even more impressive.
Although our customers seldomly talk about how much staff time has been freed up it is easy to see that every million calls managed without a human per month means at least 1000 less staff in the Contact Center. In a Swedish context a Telia or Tele2 could save one thousand times a million annual per staff cost or a billion SEK. Several of our customers, for example Telefonica Germany, have already surpassed one million managed inbound calls per month.
Handling voice instead of chat and replacing the dreaded “Listen Carefully!” Keypad Navigation Menu leading to phone queues with our OpenQuestion “How can I help you today?” gives happy customers and big savings.
Managing more than a million phone calls per month separates our Teneo from all other players in the industry – and now Klarna has helped start the discussion on the impact on staffing – the real Return on Investment.
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 12-03-2024 07:30 CET.
