Welcome to today's event, where we have the pleasure to present the Agillic. Joined from the company today to help us through the presentation and answer questions in the end is CEO Emre Gürsoy and CFO Claus Bojesen. Today's event, the Q2 and half year results, we will go through and look at the achievements and look into the rest of the year. As always, you're very welcome to ask questions in the box down below. Do it during the presentation, but we will primarily take the questions in the end of the presentation. For now, I think I will hand the call over to you, Emre.
Thank you very much for the kind introduction, and good morning to everyone. Glad that you joined us into our presentation. I'm here together with Claus, my CFO, and we would like to take you through our Q2 and half-year results for 2024. I would like to start with a very short introduction for those who are not aware of what Agillic and Agillic's technology is all about. Agillic's customer experience platform works with brands through data-driven insights and content to create, automate, and send personalized messages. Now, our platform is able to do this in greater scale, which is the reason why we call it sending personalized communication to millions.
Doing this personalized level and having the effect of such timely messaging to the right people at the right time, gives some meaningful and profitable customer experiences, and this is the core of our business. Our technology's benefit is basically delivering enhanced customer satisfactions, which delivers higher retention, increased customer lifetime value, and bottom line. If we look at our company, very quick snapshot, we operate in 10 markets, where we have our clients, where we have only three of them. We have our team members. Our main office is in Copenhagen, and then we have team members in Germany and also in Romania for the development team. 100% of our business is SaaS-based.
Currently, we are 39 employees, and we have 113 clients, and we have been on the Nasdaq First North Growth Market since 2018. Jumping into the highlights. We have completed the half year 2024 with a total revenue of DKK 29.6 million, around 20 million, a positive EBITDA of DKK 0.6 million, subscription ARR DKK 51.7 million, and a total ARR of DKK 61.7 million. Altogether, when we look at the performance of our achievements, we are down on revenue and ARR, mainly driven from, as we have also mentioned in Q1, some heavy client losses, some substantial important clients that have been acquired or consolidated their technology for the reasons that they have left our portfolio, has the effect both on Q1, and thereby in half-year results.
On the other hand, our operational efforts behind working on our objectives of delivering a positive EBITDA, positive cash flow from operations, that we have achieved accordingly, also end of the half year. And what we'd like to do today, take you through the details of this exercise and how we have done, what we have done, and how we see the rest of the year, for the second half. Jumping in.
As you may know, in July, on the fifth of July, we received the final decision on the tax credit review that has been ongoing for a couple of years with a solid outcome that we received a 71% acceptance of our previously applied tax credit. That influenced our financials of 2024. First of all, we will have a tax income that is increased for historical years of DKK 8.8 million and an interest increase of DKK 1.7 million. A total net result effect of DKK 10.5 million here in 2025, or 2024, sorry.
We will also, based on the approval that we have received of the previous year, apply for an amount of the tax credit regarding 2023 , which will impact our 2024 financials, and potentially, thereby, close down the tax credit applications and the products that we have developed and applied tax credit for.
Mm-hmm.
As Emre said, our total revenue for the first half was DKK 29.6 million. It combines of DKK 24.9 million revenue from our subscription and DKK 4.7 million from our transactions. If we compare to previous half years, we can see that we have an increase in revenue from subscription since 2022, while we have a decrease in transactions from revenue from 5.9 to 4.7. The decrease from last year's half-year report of DKK 32.7 million is due to the client losses that we saw here in primarily in Q1.
If we look a little bit more over, quarters by quarters, we can also see that the major impact of the losses came from, from Q1, which has dropped from, Q1 2023, so it's DKK 13.1 million to DKK 12.6 million in this Q1, while it has stabilized here in Q2 at DKK 12.3 million. On top of that, we can also see that the revenue from transaction has slightly increased from Q1 to Q2, and that is in line with our expectations and how we see the development, that we will see a slight increase over the quarters. The next slide shows about committed future revenue.
This is revenue or invoices for licenses that we have invoiced and where we have received the money from the clients that is being taken into revenue in the future, after 30 June. We see that from H1 2023 to half year 2024, we are fairly stable, increased slightly from DKK 28.1 to 28.4 million . Why is that a little bit both odd but also positive? That is because the committed revenue is driven by the development in our ARR from subscription. If we look on the right side, you can see that the ARR subscriptions over the years has increased in an index.
But, as we lost a few clients here in the Q1, we can see that the index on the ARR subscription decreased. But due to our improved commitment among our current clients, we can still maintain and slightly increase our future committed revenue.
That's mainly driven by the uplifts.
Yes.
Yes, which we'll talk a bit later.
On the EBITDA side, H1 year 2024, DKK 0.6 million, which is slightly lower than H1 2023. This is despite that we had the decrease in the revenue on more than DKK 3 million, and the reason why we have maintained a positive EBITDA is because we have managed to increase our gross profit margin on our revenue, and we have lower employee costs. On the right side, on top of, we provided a DKK 0.6 million positive EBITDA, we have here in the first half year had one-time cost related to consultancy service of DKK 0.8 million. If you adjust for that, we actually had an increase in EBITDA. To give a little bit more insight into the details.
On the ARR side, over the quarters, we have had a change in ARR of minus 7.7% year over year in the total ARR. And if we look at the ARR from subscription, the same thing as with revenue, it has stabilized here in Q2, while we, on the transaction side, have seen an increase from Q1 to Q2. So we're now on ARR transactions of DKK 10 million. And if we look ahead, we are seeing also from the historical side, that the Q3 and Q4 quarters on ARR subscription is the heavy part of the year, which is also something that I will come back to when we talk about our maintained guidance. A little bit more on the SaaS highlights.
113 clients due to the losses of clients, primarily in Q1. We have maintained half a million in average ARR, a slight decline from last year, and due to our optimization of the business and adaptation that we have implemented during Q4 last year and Q1, we have increased our revenue per employee from 130 to 133 here in H1 of 2024. Looking at net revenue retention, again, the impact of the losses of the clients has a negative effect on our net revenue retention. It's 88%, slightly the same as in Q1.
And if we look apart from that, from the losses, we have actually performed quite good in the rest among our existing clients. That also leads to a customer acquisition cost that slightly increased, but still very, very low at DKK 500,000, and leading to a payback period to recover CAC of 12 months. Going into a little more details on our cash position. This is our cash-adjusted EBITDA and how that has developed over the half years or three years. Basically, we have, by the operational efficiency that we have, led to the positive EBITDA this year of DKK 0.6 million, so almost the same as last year.
And on the impact from development in ARR from subscription, that leads to the committed revenue that we spoke about earlier in the presentation, has a positive impact on DKK 0.3 million in 2024, first half year. What happens is, if we increase and when we increase the ARR on subscription, that will also lead to an additional committed revenue, which will have a positive impact on our cash-adjusted EBITDA, like we had in 2022.
At the same time, we have, through our releases that we have done this year, also optimized our R&D development that has led to that our investment in R&D has decreased by DKK 1.2 million compared to 2022, and actually adapting to the current situation, and Emma will speak a little bit more about that later on in the presentation. So heading in the right direction for a positive cash-adjusted EBITDA towards 2025. If we look at the finance cash flow side, where we started the year with DKK 9.8 million, in Q1, we had cash flow from operations of 0.0, while we, here in Q2, performed a positive DKK 2.6 million in cash flow from operations.
The investment side's slightly on the, on the same level, but lower, as I commented in the previous slide, going from DKK 3 million to DKK 2.7 million here in Q2, and that is the expectations that we will maintain at that level throughout the, the year of DKK 2.7 million per quarter. Then in Q2, we had a DKK -2.7 million from cash flow from financing, which is related to installments on our current debt structure. We have also announced the tax credit, and the tax credit decision that came in July is expected to have a positive impact here in Q3 of the announced DKK 2.1 million. So the DKK 2.1 million from the cash tax credit is not included in the first half year.
If we look a little bit more on the guidance side, we are today at DKK 51.7 million in ARR subscription, and our guidance is DKK 56-60 million. If we look at the past couple of years of how H2 of the year is performing and how we have invested and adapted to the current situation and invested in our sales organization, we expect that we can maintain the guidance and land between DKK 56-60 million in ARR subscription. On the ARR and transaction side, we are here at the per June, at DKK 10 million, and historically, we will see that the ARR transaction usually increases throughout H2 of the year, wherefore we maintain the guidance between DKK 10-14 million.
If we go a little bit to what has actually impacted these guidance that we historically talked about. All the geopolitical impact on prices has reduced our transactions from the past, wherefore we have guided in the range of DKK 10-14 million. We now see that it seems like it has remained stable. We have guided for the reservation of potential reductions in ARR, mainly driven from Q1, and we still remain focused on our sustainable organic growth, while we want to make sure that we have a positive and increasing EBITDA in 2024.
Also, the change in the assessment of the tax credit scheme that has significantly influenced how we have been able to operate within the last number of quarters because of the uncertainties related to the outcome of the tax credit scheme, and with the case behind us, we can now increase on our focus to get back on the growth track.
Right. Thank you. Now, the uncertainties, that some of them we have eliminated, some of them are still ahead of us, and there are things that we can work on, some things that are in our control. In the beginning of the year, when we were presenting our plan for 2024, I presented this slide, and I've mentioned that how we are going to be investing into our technology and how we'd see the 2024's strategic involvement on the technology side. On the top left corner, we talked about the integration of AI, artificial intelligence, into the business outcomes, how we will do this, what we should do about it.
On the other side, in the corner, bottom right, we talked about where we are planning to launch in March, April, our Content Designer, one of the largest platform updates that we have done for many years, the completion of that. We have completed it as planned in Q1, and in Q2, we start working quite heavily on how we're gonna look into the AI and integration of that one into our roadmap, but on the other side, top right corner, it was very important for us as we step into the development of new features and product development, we would want to make sure that it is absolutely synchronized with 100% commercial and market needs.
So having that perspective, bringing AI into our business, we wanted to make sure that the value that we are going out to the market with, it's accelerating us as a growth engine for our clients' businesses. So what we have done is we have followed this strategy 100%, and then we have seen the results of it, and I wanted to share some of them with you from the selected highlights from half year, and then the second half, I wanna talk about. So on the left side, we have put some of the examples of the acceleration of business impact, how do we deliver value and improve customer experiences, and thereby a higher profitable outcomes for our clients? Examples of client stories that we own by videos that we produce and we publish, and we share.
The number of new clients that we have gained, as we are sharing the news how we can actually add value into their business and how we literally live up to that. So this portion of value creation has been a fundamental part of our way of talking about technology. Now, when we talk about our technology, we also involve our technology with this commercial mindset. So what other commercial perspectives can we add? And that will make our clients' life better, easier, and the outcomes are more substantial. The Content Designer launch was aimed at making life much easier to work with our platform. This was the major effect for our clients, and it's actually improving the whole integration ability of our platform towards the future work that they have to work with.
On the AI side, though, that was a very important point of how we will be working, because everybody speaks about AI, but the point is, how do you actually work with AI? How do you embed AI into your processes and products, and how do you apply AI for some business results? So we have defined a strategy. Number one, we called it AI plus Agillic, which means AI solutions that can be integrated to Agillic for immediate outcome. Number two, AI in Agillic, which means AI solutions being built within Agillic platform and thereby served as a part of our platform to our clients. And number three, AI for Agillic, it's AI solutions that will be internally in the house, will be exercising to improve efficiency and effectiveness the way that we work.
Now, these three elements have been the main point of how we actually approach to AI and start working with it. Now, number one, let me just give you a couple of examples. This is not the future. This is actually a bit of the past. AI plus Agillic is something that number of our clients are already exercising together with their Agillic instance. So they have an AI algorithm that they work, and they bring this into their business. This could be about predictions, this could be about optimization, this could be about recommendations. Such AI solutions are being integrated into Agillic, and thereby delivering automated solutions from AI to automation and final outcome with no human touch attached to it.
This is already existing, and this is already running with number of our clients from travel agencies, travel and hospitality businesses or retail businesses heavily are engaged with that. AI in Agillic is the second area where we specifically develop solutions that will make our clients' life easier, and thereby create faster, more efficient, and more valuable outcomes for their working processes within Agillic and the outcome at the end to their clients. Number one, AI Translator. We have selected this because this is one of the important, process optimization elements that we have identified together with our, clients. Our product team is engaging with these conversations to identify the most relevant and required systems, and this is now being launched at the end of summer, to all our clients. So it's gonna be part of the embedded, solution within the Agillic platform.
Then we have identified a number of other solutions that will be embedded within the system one by one, and that's the... all the R&D team is working towards. So the way we look at AI in MarTech is, it's a transformation and it's a business opportunity. It's not just something as an IT project, the way we see it for our clients, and that's how we also approach to that when we are speaking with our clients. So it's a very important part of our future because we work with data, we work with content, and these are the two that are highly accelerated with the AI altogether. So this is a very important part of our-- what we have been working on in H1, and as we go through for the product development for next year, for the rest, next half year.
Yeah, I can take the question when you are finished, but let's jump back to this and maybe get some more examples so we really understand it. But just finish the presentation, then I will ask questions.
Yes. This is my last slide, then we can jump into the questions right away. Now, it's very important that we have one pain point, which is basically on the ARR side. We've been hit. I mean, we are running our company effectively, we are running our processes, operations as good as it can get. Now, what we need to do is we need to improve our ARR. Now, when we'll define the strategy for our ARR growth, we have also defined these four areas: market expanding, you know, our approach into international markets. We've said Nordics plus Germany. This is. We're following this 100%, and we have good traction in the market with our partners.
But on the other side, our partners that we have been defining our go-to-market strategy with, they have been going through a whole transition themselves because the market conditions also had an impact, negative impact on their business. So most of them have been going through some structural changes, some consolidations, some acquisitions or, mergers. So all that together slowed down their engagement in regard to the going out and engaging with the new businesses. So that's something that we have really been pushing, with them to activate, to generalize this. On the third element, our pricing focus, which is because price increases and pricing model is a continuous, exercise for us, and we have now developed our model-...
We completed the model, we tested the model, and now we are producing, you know, going out to the market for the new clients in the new international markets with this new model. Why we like that one is because the feedback we get from the prospects, it's very positive, and it's very promising because it reflects the client journey within the customer experience, which allows us to ease the uplifts and new feature launches much better than ever. And lastly, the net revenue retention. This has been the point that it has also hit us badly this year, which we mentioned as churn. The way we look at the net revenue retention, there are four elements. You have the churn, you have the uplifts, you have the downgrades, and price increases.
Now, when we look at these four elements, churn, as we mentioned, it has been driven out of our control, quite negatively this year. But when we look at the things that are in our control, so these are the uplifts and downgrades and price increases, we have been running quite a successful net revenue retention, better than any of the years we have seen before. So if the minute that we can, come to the other side of the churn, the wave, we will be in a much better shape. This is what we are looking for.
Now, in the meantime, it was very important that moving out of the tax credit shadow of the uncertainties, it also allowed us to invest on a couple of key roles that we wanted to invest on. And this is what we have done on the commercial side, on the sales side. So because this is the ARR increased growth portion, we are putting a lot of effort on that one, and we have not finished, we are adding more people. So that is all our focus for H2, ARR, improve ARR, and deliver the growth parameters that we have talked about. This is from us for now, and I would love to take the questions, as you said.
Yeah, perfect. I'll just start up, and then we can take it. Just to... Because you also. You are actually one of the first one who has mentioned this, and everybody are talking about the analysts, that if you are not adapted, if you can't convince, you know, for an AI future, that you are-
Yeah
... you are, you have a system that goes into it. It's very hard discussions you're having right now with to sell your system. So maybe to get a little bit understanding, and maybe this is AI plus Agillic, right? The integration into this one, because if I see your field, I know content has now gotten very, very cheap to produce and I guess also very, very cheap to personalize. You know, I imagine, you know, that it knows everything about me. You can almost write in my name in the system, and it will collect and actually generate something, you know, that maybe content providers had to generate in the future. So how is your integration in with that? Because that's not what you're doing. You are helping the customers when they have made this content.
So how are you making sure that you are integrated into this new world? And I know it's not a fixed world.
Absolutely.
I'm sure that no one still knows which systems will be used and to get an understanding, do you integrate seamlessly with all those, you know, solutions that they will now use to create very much personalized content, very, very cheap?
Yes. Actually, let me start by giving some examples to every part of it, so because that will give maybe a more detailed perspective around it.
Yeah.
If we start with the number one, which we call AI plus Agillic. Let me give you some examples. This could be a retail company or a travel hospitality company. Let's take the travel hospitality. We're actually working for a case to actually put a video with this and then share with everyone to kind of understand the details of it.
Yeah.
So the travel agency is sitting down with lots of information in regards to their database, in regards to their previous customers, current engaging customers, and they're speaking to quite a lot of the detailed information of their data of each person and their interest and what their behavior is, what they're searching. When you're saying that, "Hey, I want to go to Thailand because I think that it is the sun is the part what I need in this part of the month," and so on and so forth, you're doing this. But then on the other side, there are algorithms that are working for travel hospitality businesses.
The specialty of this AI algorithm is that they predict behaviors within the database, and based on that, it makes recommendations of whom to talk about what, because it's predicting-
Yeah
... based on the trends. Now, that connection is being integrated into Agillic. That's something we already have, and when this integration is in place, the AI predictions are going straight into the Agillic platform. Agillic platform is delivering to the right audience, in the right channel, in the right time.
Yeah.
Now, it will also be, which we call it, like, you wanted to go to Thailand, but you find yourself in Egypt. It's because, what you were really looking for, your behavior is telling that you are more interested in what Egypt can offer, but you thought that it was Thailand. So this optimization exercise with another AI algorithm is also integrated into Agillic. So these algorithms are available for companies to buy from their specialist companies. What we do, we integrate ourselves into these solutions. Now, why do we need to do this in an integration? Can't we just do it ourselves? No, because if you will be doing this, then we need to do this especially for every industry that we engage with, because there are different algorithms for different industries.
What we excel is, we want to integrate easily, very fast to all these applications. So this is the AI plus Agillic one, and we already have number of retail clients, number of travel agencies, number of other ones working with this.
... And secondly, you know, then it will actually, instead of showing me a video of Thailand, show me a video of Egypt, right?
Oh, yeah.
So you also seamlessly and this video-
Oh-
may, may not, not even exist, it might just be created for me, right? Through an AI.
No, it's like this.
You know, about the precise hotel, you know, that I... They know that I will love.
Yeah, so true.
And how do you connect with that?
Yeah, so this is so true. Now, this is where Agillic's power coming in place, and that's why it's very important. Because as I said in the beginning, Agillic can deliver on a personalized level, so if the AI system is telling, "Tell Michael, show him this, tell him this price, tell him this message," and then tell Claus another message, another video, another price, the system can handle this because AI is pushing this, and this can be activated from Agillic's platform. We can deliver 100,000 different messages at the same time because machine-to-machine delivery is the integration working behind that, so this is the power of personalization, and the best way the AI works is when you don't know it's actually working for you.
This is the case in most of the situations, that the AI integrations are delivering these kind of solutions to the customer bases of certain companies.
then just to be sure, you know, then it makes a video for me, actually. You know, you can just go from text to video-
Yes.
That will seamlessly also integrate, that it has actually made a special video for me only. I know we are a little bit in the future here, but it's actually possible that it writes a manuscript on behalf of my information and makes a video that is AI-driven, and you can also seamlessly make sure that I'm shown this video.
Now, this is a way of looking at it from the end user's perspective. Yes.
Yes.
You might receive as an offer, personalized to you. This could be a video, this could be a clip, this could be a text, this could be whatever it might be. It could even be the price. Now, from the company's perspective, there's also another utilization of AI in such basis, so now we are talking about the travel agencies. Say, for example, you have, as a travel agency, 100 offers in Thailand, 10 in Egypt. You look at your...
This is the optimization exercise: You look at your offers in the market in Egypt, and you say, "The 10 I know out of my current activities, the timing, the interest, these 10 will most likely be sold to those who already been interested." But when you look at the Thailand, optimization-wise, while people are searching Egypt, then you actually would like to channel them to Thailand because that's where your optimization requires attention.
Yes.
But then you start telling each person, "Yes, you might get these things, but look at Thailand. There's also these things are happening in Thailand. There is this..." So this optimization exercise is also being done, and it also depends on because you're not sitting and actually keeping an eye on your portfolio of how many offers, where has been sold momentarily. This is also being managed by the AI behind the scenes. Again, this can be integrated to Agillic, or it is being integrated to Agillic, and it is working behind the scenes seamlessly. So these are the utilization examples of why we choose AI plus Agillic integration model, because it already works seamlessly. The part with AI in Agillic, the difference here is the other part you were speaking about. So how can we... So now we create the embedded solution within Agillic platform.
The user, when they are working with the system, they can engage with certain facilities and features without leaving the system with the speed and efficiency and quality that they can get without leaving the system. So for example, let's take an example, the very same example of the translator, the travel agency. They are requiring, for example, they are sitting here in Denmark, they're operating in five markets, so that means that everything that is being produced and being out, sent out, has to be in, let's say, five different languages. To be able to manage such quantity of data being ran and managed in a high-level quality, most companies are still working with traditional models.
I mean, basically, there's a text, this text moves into one file to another file, that goes to a translator, comes back, being checked, goes back to the system, gets back into the system, and people copy-paste each of these translated versions to the tagged areas, and thereby it starts working. You know, mind-blowingly, it is the exercise still today. So and people are quite happy because they can track their Excel sheets. They're usually in Excel sheets. But what we're doing now is we have created the AI translator module within Agillic. So when you're writing your text, that is being translated behind the scenes to a number of languages that you utilize, and it is already embedded in the system and is tagged into the areas. So once you put this, it just works with it. Can you imagine the amount of time?
This is an efficiency exercise, and thereby quality, too. Efficiency exercise that allows the number of people working with the system, how many hours they have saved and the speed into this exercise. So this is where we work with AI in Agillic. It's where we create these efficiency exercises. Now, the next round, and we are working number of solutions right now, including content generation, including image, including, you know, every one of these typical AI-driven acceleration activities, we are working one by one on all of them to embed into the system.
... And perfect, and I think AI for Agillic, that's kind of where a lot of companies has come to, so I will not ask you any questions there.
Yeah, yeah, of course.
You know, you're just seamlessly working with AI in your own organization, and how, I guess, how you interact with customers and, probably how you integrate this, your system when you have sold it, and so on. That, that's-
Absolutely
... that, that's what we're talking about.
And it's a co-creation process, too. We have invited some of our clients, so some of our clients working with us on the AI translator initiative, so they are working with it, testing it, measuring. Because this is one of the important parts, because what we wanna do is we wanna measure the success. So how many, how many hours of efficiency we have included? What's the quality change? What have we actually achieved together? And this will be documented so that when we go out and talk about this, we have some real use cases, some real results to talk about.
Perfect. I know it was a, it was long, but I think it was very important, because every company is facing this. If you're not AI-ready, you don't need to be, you know, have a lot of AI embedded in yourself, but you really need to seamlessly integrate with it. And it seems like we at least see a good part of that. And then let's jump to the financial part of this.
Yeah.
Is this upselling? Is it upselling or is it making your system better for your customers, so you maintain customers? Or can you actually upsell these new features, you might say?
I would say both. We are actually in the process of evaluating. So number one rule that we have created, with any kind of new, commercially driven product technology developments, we always start, as the project starts, we always ask this question from the start: "Is this something to empower the platform to a higher quality, or is this a feature that we should be- we will be able to sell, and what will be the price of that one?" So right now, I will answer your question as, these features that we're working on will be an additional, cost, feature that with the new model, that for the new clients that we're going with. So it is very important to answer this question already in the beginning of the development process, and also talk to the clients, because this is very important.
Because if we are bringing an efficiency factor of 10 times, then it is also important to actually be recognized and get prized and valued for that, and receive a payment for this. I think it's a very fair thing. Though, we will always check with competition. This is a very important part, too.
Yeah.
If it's a standard exercise for all the competition is doing, then if you go out and try to sell it, that will be, you know, a negative thing rather than a positive thing, so we need to adjust this depending on the situation.
Situation. Makes a lot of sense that don't compete with a lot, some of the big AI companies.
And we-
... unless you can specialize it into your area.
We test everything. We test everything, because everybody says AI, everybody says, "We do this, we do this," and then sometimes it's pretty good to see it side by side and say, "This is what they do, this is what we do," and then you can also ask for it.
Yeah. Then there's a question from the audience: "How is the sentiment in the MarTech market? And are you still focusing on Germany as the next growth market, despite slow growth, you know, macro economy in Germany, and especially on the consumer side?" Which normally seems to affect you a little bit more than maybe other companies, that as you are selling MarTech, you know, if the consumer is not that well off, then I think that impact you more. So are you still focusing on Germany? And how are the general sentiment to MarTech? You talk about prolonged decision-making, but is there still a feel that if you can drive more sales, people are actually willing to invest into it, you know? If you understand what I mean.
Yes.
They know that-
Absolutely
... they know they need something to drive their sales more than they have maybe needed to push sales before that.
Absolutely. Very good question, and it's a question that we almost like every day, we go through this in our mind, you know: "Are we doing the right thing? Is that the right element in place?" The strategy is absolutely there. What we see in the market space right now in Germany. I mean, the economic situation, no need to explain it, it is what it is. They're going through some tough times, but that doesn't mean that what we are coming out with is not something they don't need. Regardless of. Actually, they need it more than ever. The situation that they're living in, as a company, you really wanna make sure that you get the most out of your first-party data, your current client base, to its maximum, instead of going out for chasing the new ones.
So from what we are coming out with as an offering is what they need most. From the process of going through the sales process and locking down, yes, there are some obstacles. You know, why is it longer? You know, we always ask. Yes, the decisions are taking longer because of economic reasons, higher interest rates, whatever, the changes in the organization. But also, this is a very important point: what people used to have $100,000 to spend on, or euros to spend on, without asking other people, they do not have that permission anymore. So more people involved to the decision process, and those people are not working, not necessarily always in sync, or their strategic perspective and understanding of the what we are coming up with is absolutely right away there. And so it takes longer.
These are the things that are taking longer. But do we have promising conversations in Germany? Yes, we do. Do we have promising closures that we are actually expecting within the next month? Yes, we do. So from the perspective of are we focusing on Germany, is that the right one? Yes, we need to do this, because we need to make sure that we are internationalizing. And the number one place after Nordics is Germany.
Perfect. And then, yeah, you were maybe we touched upon it here the expected acceleration into H2. You mentioned seasonality, and that is normal in your business, and it's also we can see that in your figures. But it still needs to accelerate a lot or maybe the trend needs to go away. Is it only normal seasonality, or do we also have a little bit view into your current pipeline? You know, that maybe something is moving closer. So if you understand that it's also a little bit based on, you might say, your pipeline and how they are moving along in the process of being closed. Of course, nothing is certain, but.
Right.
That's the message you have.
Right. Right. If you start with the facts, I mean, if you look at it from this one, Q4, especially, has been always a stronger quarter year over year, all the time. I certainly cannot describe exactly why, but this is the fact. This has been going on year over year. It's not because that we don't wanna close anything in August or September. It's not because of anything, other things we do, but this is the way it's been going on. So Q4 is a heavy... and this year looks like it's gonna be greater than ever.
If I look at our pipeline, and if you look at it from the previous years versus this year, the way that our pipeline has been growing and the number of salespeople that we have added and their engagements, and I'm really happy with their focus, vertical focus, vertical, value conversations, vertical-driven, engagements within these in the, in the markets, the pipeline is greater than before. So it also gives us a comforting factor. So this is what I can say from now.
I would add to it that as we spoke about the NRR, yes, we wrote that, that the loss of clients were the heavy one was in the beginning of the year.
In June.
Our general NRR, if we exclude churn, is better than ever.
Yeah.
Which is also a parameter of what we've spoken about earlier, creating a department of Center of Excellence, where we actually go out to our clients and tell them what value we can create if they lift up this and this and this, and this is what we start seeing on our uplift side, on the current client, so a lot of parameters that is working the right way.
I guess that's a faster decision process to upsell than getting a new... Is that, would that be in general?
Absolutely. Absolutely. It's all about risk avoidance, especially for with the new prospects.
Yeah.
It's the risk part that is taking the long decision process.
The longest, yes. And then, there's a question: Is most of your new sales driven by your own sales team or your partner channel? You know, because normally when the market gets a little bit tougher, it's easier to push with your own sales team because yeah, it's easier to push them out and drive that. So, a little bit of a feel of what is driving right now the sales, your partners or your own sales team?
I think this year, in 2024, it will be fair to say is if you look at from earlier this year to till now, our sales team's engagement on driving the sales is in an increasing curve. As we increase the number of our sales team members, our engagement out in the market, yes, we do this with what we call co-marketing, co-selling with our partners, but our sales team is the main power behind the conversations at the moment. Why? It's because partners, as I mentioned a bit earlier, have been quite busy with some structural changes and some other focus areas in their perspective, and sales was not on their agenda because they had to turn around.
So that lack of focus on growth, but more retention and fixing their company, we had to go out and take the ball and run with it. We cannot wait. So that's why our sales team is, even though we are co-selling still, but mainly is driven by our sales team.
Maybe a question, maybe mostly for Claus. You know, you have made some cost savings, so you keep your EBITDA, which is one of your target as a company. Are they permanent? Or maybe they are permanent, but will you actually, if you see the increased activity, also start to increase your cost base going into H2 ?
First of all, we can maintain, but the thing is that when we again are growing in a growth mode, we will always evaluate, is it the right time to invest to get further growth, or should we just on the basis increase our EBITDA level, so that will be a matter of the circumstances. We have a very sustainable platform, where with a number of increases in ARR from subscription, we can lend most of it on EBITDA line from a short to midterm basis, but if you want to run it from a long-term perspective, you also need to reinvest, and depending on whether it's Germany that's growing, do you need to have more people in Germany, and so forth. So...
Perfect. And lastly, on the balance sheet, as you said, can you talk a little bit about your cash position, your balance sheet, and maybe, taking into account that I guess this tax case has lifted a lot of uncertainty off, yeah, both your business, but maybe mostly on your balance sheet. So, a little bit about thoughts about cash position, balance sheet, and maybe in the viewpoint of that this uncertainty with the tax case has been lifted.
Absolutely, so what we see is that we have optimized our investments in R&D. That's the first element. The second element is we know that we don't have a liability on the tax credit, but we can actually receive some money back from the treasury and apply for something that will come in later this year. So that's eliminating a lot of uncertainty to some assets. And on the balance sheet side, when we grow our ARR, we will also increase our committed revenue, which will also impact our cash position. On top of that, we have our debt structure that we currently have, and we have started paying installments this year.
And we will, of course, after these uncertainties has been eliminated, it's a lot more easy to actually discuss whether we have the right terms and conditions under the current structure. So that's a natural thing to follow up on, so we balance it and make sure that the money is created for growth and for the company.
Perfect. I think that was the last question, and I know we spent a lot of time on AI, but I think finally we got to talk about AI-
Right
... on some of the software companies, so that was actually nice. I hope the audience didn't find it too long, but I think you need to understand your investments in the light of the AI world. We can discuss how fast it will come, but I guess no matter what, it will come, and it's important to understand. So I hope for understanding that we spend a lot of time, and thank you for exemplifying it, because I think it's, without that, it's very, very hard to understand. So thank you to you, Hilmar and Claus, for taking us through your company and presentation and results, and thank you for the audience listening in.
Thank you.
Thank you.