Upsales Technology AB (publ) - interim report Q3 2023

July - September 2023 (compared to the same period last year, Upsales group)

• Net sales grew by 10.2 % to MSEK 36.0 (32.7)
• Annual recurring revenue (ARR) at the end of the quarter was MSEK 141.2, an increase of 3.5 % during the last 12 months
• ARR changed by MSEK -0.3* during the quarter
• EBITDA decreased to MSEK 12.2 (13.1)
• EBITDA margin decreased to 33.9 % (40.2 %)
• Operating profit (EBIT) decreased to MSEK 10.1 (11.3)
• Net income decreased to MSEK 8.0 (9.0)
• Cash flow from operating activities decreased to MSEK 1.8 (7.3)
  * Exact number -266 KSEK

January - September 2023 (compared to the same period last year, Upsales group)

• Net sales grew by 15.4 % to MSEK 108.9 (94.4)
• EBITDA increased to MSEK 33.5 (26.3)
• EBITDA margin increased to 30.7 % (27.9 %)
• Operating profit (EBIT) increased to MSEK 27.3 (21.0)
• Net income increased to MSEK 21.8 (16.6)
• Cash flow from operating activities increased to MSEK 22.5 (15.8)

CEO COMMENT
During the third quarter of 2023, net sales increased to 36.0 MSEK, representing a growth of 10.2 % during the last twelve months. Our Annual Recurring Revenue (ARR) amounted to 141.2 MSEK at the end of the period, representing a growth of 3.5 % during the last twelve months. Net revenue decreased slightly quarter over quarter because of lower one-offs and consulting revenue, which is typical for Q3. EBITDA decreased to 12.2 MSEK, representing a margin of 33.9 %. Higher personnel costs related to investments in the sales organisation explain the lower EBITDA margin. Personnel cost per employee is higher, which aligns with our strategy to build more seniority in our sales team. Excluding personnel costs, our OPEX remained roughly unchanged. Cash flow from operating activities decreased to 1.8 MSEK, mainly due to changes in net working capital.

As expected and previously communicated, ARR growth rates did not improve in the third quarter. We continue building the sales capacity needed to support our growth ambitions, and I’m happy with the progress made in the third quarter. Our new CRO joined in August to continue building the team and position Upsales to win larger deals. In Q3, we noted an increase in average deal size, with several wins in tough competition with our much larger competitors.

Upsales was founded with the vision of helping sales organisations become more effective and increase the return on sales and marketing investments. This vision took us to where we are today, working with customers in the Nordics, ranging from fast-growing start-ups to multinational companies with thousands of employees. Customers appreciate Upsales speed of execution and the short time it takes from launch to actual value. Now, more than ever, customers are looking for quick results without breaking the bank or spending years on costly implementation projects before seeing any value. During the quarter, we made several exciting improvements in the product, including the launch of our new Company Data Hub. This product includes risk and credit data, which lets our customers manage the risk in their customer base from within their Upsales account. We continue to have a customer-centric approach, working closely with existing and new customers to make sure we solve the right problems in the right way.

Although the general market conditions (i.e. macro) are challenging, we continue to see a strong opportunity for Upsales, and I’m happy with our position in the market. Upsales is still a small company with plenty of opportunities and a long growth runway ahead of us. Together with the management team, my top priority remains to take us back to rapid ARR growth.
 
Daniel Wikberg
Founder & CEO