Upsales Technology AB (publ) - interim report Q1 2023

January - March 2023
(compared to the same period last year, Upsales group)
•Net sales grew by 22.7 % to MSEK 36.2 (29.5)
•Annual recurring revenue (ARR) at the end of the quarter was MSEK 141.4, an increase of 17.4 % during the last 12 months
•ARR decreased by MSEK 4.4 during the quarter 
•EBITDA increased to MSEK 9.4 (5.6)
•EBITDA margin increased to 26.0 % (19.1 %)
•Operating profit (EBIT) increased to MSEK 7.4 (3.9) 
•Net income increased to MSEK 5.9 (3.1) 
•Cash flow from operating activities increased to MSEK 13.6 (5.2)

CEO COMMENT
During the first quarter of 2023, net revenue increased to 36.2 MSEK, representing a growth of 22.7 % during the last twelve months. Our Annual Recurring Revenue (ARR) amounted to 141.4 MSEK at the end of the period, representing a growth of 17.4 % during the last twelve months. ARR decreased by 4.4 MSEK during the quarter. Upsales continue to grow with profitability, and EBITDA increased to 9.4 MSEK, representing a margin of 26.0 %. Our cash flow from operating activities increased by 162 % to 13.6 MSEK and net cash at the end of the quarter was 72.6 MSEK.

I always take a long-term view of everything we do at Upsales, but I am not satisfied with the development of the ARR during the quarter. ARR decreased during the quarter mainly because of weaker sales and timing effects related to specific deals. Our long-term view of the market is still very positive, with plenty of potential in our existing customer base and the market as a whole. During the quarter, we worked intensively on the launch of our new offering targeting the upper segment of our client base. The purpose of this is to win larger contracts with new customers as well as maximise the potential in the existing customer base. We are also looking to strengthen the sales organisation's leadership, which is necessary for the next step in our growth journey. While making this change is needed to sustain long-term growth, it may take some time to see the full effect of these changes. When working with our largest customers, we see a clear opportunity to help them get more value from Upsales and solve additional business problems. Our plan remains the same. We continue investing in the product, customer success, and the sales organisation. 

At the end of the first quarter, our Swedish cloud became fully operational, and the first clients are now starting to use the platform. During the quarter, we closed a new client within the financial sector, where Swedish hosting was a key requirement when selecting a vendor. We are happy to be able to offer a full-scale CRM solution for clients with high-security standards.

Scalability has always been a core part of our product strategy. An exciting development related to this is the increased importance of product-led growth for Upsales. The first step in this journey was eliminating the need for custom consulting to deliver what the customers demanded. This was successfully accomplished a few years ago. The second step is to reduce the need for training, support and one-to-one communication with customers to achieve their business goals using Upsales. A part of our expansion ARR is already coming from this area, where customers are adding seats and add-ons and increasing the ARR without any effort from the sales team. This is a result of our work with growing scalability in the product. The result is more value for our customers, a more scalable business, and increased revenue per employee.

Daniel Wikberg, Founder & CEO