January - March 2024 (compared to the same period last year, Upsales group)
- Net sales grew by 3.0 % to MSEK 37.3 (36.2)
- Annual recurring revenue (ARR) at the end of the quarter was MSEK 135.9, a change of -3.9 % during the last 12 months
- ARR changed by MSEK -4.5 during the quarter
- EBITDA decreased to MSEK 8.7 (9.4)
- EBITDA margin decreased to 23.2 % (26.0 %)
- Operating profit (EBIT) decreased to MSEK 6.5 (7.4)
- Net income decreased to MSEK 5.4 (5.9)
- Cash flow from operating activities decreased to MSEK 7.9 (13.6)
CEO COMMENT
In the first quarter of 2024, Annual Recurring Revenue (ARR) amounted to 135.9 MSEK, a change of -3.9 % compared to the same period the previous year. ARR decreased by -4.5 MSEK during the quarter. At the same time, Upsales showed continued profitability with an EBITDA margin of 23.2 % during the quarter. Cash flow from operating activities decreased to MSEK 7.9 (13.6), which is mainly explained by higher income tax paid in the quarter compared to the same period last year.
In the first quarter, the work of returning Upsales to ARR growth continued with good progress. From history, we know that the first quarter is always challenging as there is a large share of contract renewals and, therefore, a large share of churn. We had slightly more optimistic expectations for the first quarter, but the ARR growth was affected by a larger deal that did not materialise. The outlook remains unchanged, and we still see a long and stable growth runway for Upsales going forward. As previously communicated, we expect to show ARR growth on a quarter-over-quarter basis in Q2 2024. I'm proud that we continue to report an EBITDA margin well over 20% even though we have continued to invest in growing the sales and product organisation during this period with low revenue growth. The plan and outlook ahead is still profitable growth.
The product team has continued to work tirelessly to find solutions to our customers' growth challenges. During the quarter, we have broadened our product suite to include customer service as well as project management. We have continued developing revenue automation features such as CPQ and subscription billing. We are also building and adding more features to support complex organisational structures, as customers want to use Upsales to consolidate larger groups and multi-level organisations. These features are crucial requirements for larger customers who want to automate more parts of the selling process and grow revenues without increasing cost-of-sales.
I spent a lot of time in the first quarter meeting the CEOs of existing and potential customers. The feedback we get is that Upsales, with its positioning towards Nordic companies, is a strategic partner for the companies in our niche. With a dedicated local team, our focus on solving specific use cases combined with local hosting solving GDPR issues, these customers credit us for being able to deliver more value, faster than our international competitors.
Daniel Wikberg
Founder & CEO