Our aim is to take you through the numbers that we have published yesterday regarding Q4 and annual results for 2022. If I may start with a quick update of what we actually do. Agillic is an omnichannel marketing automation platform. It empowers brands to work with data-driven insights and content to create, automate, and send personalized communication to millions. Why is this important? Is because creating the most impactful and meaningful and profitable customer experiences is a very unique way of improving business results. What we mean by that one is that our clients have the ability, by improved customer experiences, increase their conversion, increase the customer satisfaction, and thereby retain their clients for a longer customer lifetime value. If you look at a quick snapshot of our business, we operate in 10 European markets at the moment.
We are 48 team members. 100% of our business is SaaS business. We have single technology platform that we operate with. Back in 2018, we went onto First North Nasdaq stock market. The last couple of years we have won many clients, and thereby many awards via our clients, and that's why we like that one is that it's because they're winning the awards on their business performances via our platform utilization, which we are very proud of. If you look at the big picture, we are operating in a large business environment. If you look at the MarTech, marketing technology industry altogether, that's almost $350 billion business.
If you look at the marketing automation platform space that we are operating, that will be quite as large as DKK 11 billion is expected in the next two, three years. Going back to the numbers we have published yesterday, we're quite pleased with the performance that we have achieved. Following the guidance that we have shared with the market, if you start with the revenue, we have reached DKK 67 million revenue at the end of the year. This is the upper range of our guidance. The second on the EBITDA side, we have, again, we are in the guidance DKK 1.1 million. The total ARR we have achieved DKK 76.7 million, again in the upper range of our guidance. All together, back in 2022, we have updated our guidance 3x in August, in October, and December.
In total, our increases on the guidance updates were mostly related to both ARR and the EBITDA side. The overall picture if you look at it, the overall ARR increase year-over-year is 37.7%, which is quite a substantial increase compared to our last couple of developments. Now, this is all happening in a combination of multiple things together. New business, new clients gaining, and then in the meantime we are also increasing our engagement with our existing client portfolio. The way that we look at it is the net revenue retention. When we look at that one, we have achieved 106% this year, which is higher than the last couple of years. Overall meaning that we are retaining our clients within our portfolio.
The next one we look at it, the average ARR, that is growing. Around 14% we have achieved growth year-over-year. Now which that also tells us that overall engagement with our clients per-client average is increasing because they're utilizing more of our platform. We are inspiring them more ideas and more engagement through the subscription and the transactions that they are engaging with our business. Now, combination of that with our go-to-market strategy allows us to say that our customer acquisition cost has been declining year-over-year, and now we are down to months to recover, down to three months. This is also another very important element that the way we look at the business initiatives. These are the highlights, which we'll talk in a minute in much more detail.
Emre, if I may, the net retention rate is a very important number in your business. It tells you that your customers are engaging with your platform. Have you driven this in somehow, or is it that your platform has been better or customers have learned to get more out of the platform, if you understand? What is driving that? 106 is a good number, but maybe the journey from 82 is quite impressive.
You're absolutely right. I mean, we're also comparing years across the board. This is a journey. I mean, we look at the way that we look at our engagement with our clients, it's not a one-time engagement. It starts with a strong onboarding. It continues in the customer lifetime journey. The way that we look at our customers engagement with our platform is a continuous journey. What we do is with our customer success team members, our center of excellence team, our support team, fully engaging with how to increase utilization opportunities and make more business impact for our clients. This is their main reason of focusing on this engagement. That naturally has an impact on the net revenue retention, as well as also retaining the clients in the portfolio.
Perfect. Thank you.
This year we have also had another report yesterday. It's our first time we have published our ESG report. We're quite dedicated for that engagement. Back in 2021, we have received Nasdaq's ESG Transparency Partner badge. This year we have decided to increase our commitment for our focus on sustainability and making sure that we have actually certain guidelines that not only we can live up to, but also report to the market. We have choose to publish certain criterias that we will be sharing with the market on ongoing basis regarding the criterias that are most suitable on our side.
If we go back to our business, I just want to share a couple of highlights on how we create value, what kind of value that we create via our platform to our clients. We claim the personalized communication to millions because of our platform's unique ability to deliver almost on individual level communication and a spontaneous engagement. We usually define it as Agillic as a growth engine, you know, enabling companies or clients to capitalize on their first-party data via improved customer experiences.
What does that mean is that we allow our via our platform, our clients are able to communicate with the first-party data allowance and accept that they have received from their own customers, that they can engage with them in the most relevant, most timely, and most relevant channel that the customer would like to be communicated with. That relevance increases value increases and converts into the business altogether. The way that we. This is the big picture that you're looking at, is where the data comes from and how we work together with our customers' data all together. This is a very unique ability for our business, and we are very, very proud to say that that personalized communication to millions because it's a unique offering. That unique offering is relevant to multiple industries.
What we are looking at right now is the number of industries that we are engaged with: retail, finance, travel, energy, entertainment, and gaming. Number of them, and there are more industries that we'll be engaging with. The reason that we can do that is more and more companies within different industries are understanding the importance of first-party data and engaging with their customers for a long-term relationship. This unique opportunity allows us to work with new segments, new industries, new regions or geographies without making any difference in our product. That is the core of our scalability for our internationalization process. Does that work? Yes, it does. Here's what we were saying that a growth engine that we were claiming. We have start putting together multiple client stories.
We reached out to our clients and we said, "Would you be interested to share your business success and how Agillic played a role in this within that exercise?" These different client stories that started showing very interesting ways of how our clients are utilizing their first-party data. Some are using it for elimination of churn, for example, Fitness World. Some are increasing customer loyalty and more upsell, Matas. Some are increasing their portfolio engagement for unique new product, relevant product offerings, that's Story House. FCK, this is the football club from Copenhagen, they're not thinking about selling seats in the stadium, they're thinking about creating fans for life and turning into a media house. These are all different stories that are uniquely creating real true business results. This is the story of Agillic.
Now let's look into more into the details of our numbers.
Looking back at 2022, we made a revenue of DKK 67 million, which was in the high range of our latest guidance of DKK 65 million-DKK 67 million. We have also, in half year 2022, we started reporting on what we call committed future revenue or deferred revenue, which again, has increased and now it's up to DKK 29.2 million. That number shows what contractual commitments and payments that has been made for future revenue. This revenue will be a part of our next year revenue already committed. If we look at the EBITDA level, once again, the third year in a row, we have increased our EBITDA and has reached DKK 1.1 million in EBITDA.
Our growth rate here on total ARR, we are now at a EUR 10 million high level mark that we have reached with a growth of 37.7% in total ARR. This is driven by a combination of increase in ARR from subscription, but a lot of it in 2022 came from transactions. That was due to, among others, that the travel industry came back after the COVID-19 and started making a lot more transactional communication to their customers, which has increased our volume. It has also an effect from the prices of using, for instance, SMS channels, where the prices worldwide has gone up in more, in some countries even more than others. It's a combination of several things that the ARR and transaction has increased in 2022.
If we look at some SaaS highlights, by the end of 2022, we reached 118 clients and with an average ARR of DKK 650,000 or DKK 0.65 million, an increase in average ARR of 14%. We look at our strategy of internationalizing our business and going towards international clients, if we look at the number of clients that we have won that was coming from an international market, it was 36% in 2022 compared with it was only 15% in 2021. It is very much in alignment with the value that also comes with the contract of our international clients, meaning that the number of new clients that we have won in value, Danish krone, 39% of it is coming from international new clients.
The net revenue retention, as you also asked a question about, is 106%. It's a very strong number, where we again has increased both due to maintaining our current customers but also making sure that they are uplifting or utilizing our platform even more. Our customer acquisition cost is DKK 0.1 million. It's a very low number. It's not a goal in itself to be at that level. It is a effect from a change in our way of thinking how to market ourself through partners rather than direct marketing, direct sales. A lot of our client wins in 2022 came from partners, and that is our main focus because together with the partners, the partners are needed for the customers, and together with the partners, we can go more broadly.
If we also look, the DKK 0.1 million in CAC reflects also the months to recover CAC which is down to an extreme low number of three months. After three months of contractual period, we start earning money on each of our clients. If we look into our cash flow, the 2022 started with DKK 20.6 million, and in Q3, we reported that we were at DKK 1.8 million in cash balance and that Q4 would have a positive cash flow from operations that would end the total year with a positive cash flow from operations, which it did. At year-end, we have DKK 7.4 million in cash position.
A huge part of it is of course our R&D investments, which is at DKK 13.5 million, while our cash flow from operations is DKK 3.1 million. In 2022, in the summer, we also changed our financial platform, so we paid back some loans in order to restructuring our installments and interest for the following period of time, which has also is also shown now in our cash flow. We have already three strategic goals before 2022, where we want to achieve a positive EBITDA, a double-digit growth in our ARR and positive cash flow from operations. Now, the next step we want to take is that we want to make a cash-adjusted EBITDA positive.
Cash-adjusted EBITDA positive is a measurement of our EBITDA less our R&D investment plus what we have in deferred revenue, the committed revenue. If we look at 2022, our EBITDA at DKK 1.1 million, and our R&D investment was DKK 13.3 million, and then we have a plus on the deferred income, taking us close to -DKK 10 million in cash-adjusted EBITDA in 2022. Our new strategic goal is that per 2024, we want to be cash-adjusted EBITDA and be, in that way, self-sufficient on our cash situation. If we look at some of the of our new guidance, we have our guidance on revenue is DKK 79 million-DKK 83 million. Our EBITDA is DKK 1 million-DKK 4 million, and our total ARR is DKK 89 million-DKK 95 million.
The ARR is mainly driven by an expected growth in our ARR from subscription, which will also drive some of the strategy towards an increased deferred revenue, as I was speaking about earlier on in the cash-adjusted EBITDA. On the transaction side, we ended 2022 on DKK 22.6 million, and we have guided DKK 23 million-DKK 25 million in ARR on transactions. The reason that we are fairly conservative on the transaction is because it is partly without our influence, but it also has a huge influence from macroeconomic environment, meaning how is retail going to be in 2023 based on wars and inflation and so forth? How is travel going to be? The number of transactions is more insecure for 2023.
On the other hand, we also see that there is more a must rather than a need to have a similar platform as Agillic's, where you, where you are more effective with your data, with your first-party data, so you can reach out to the market and be efficient and sustain with your customers and gain new customers.
Actually, to look a little bit at that, I understand that you need the macro environment really can affect the transaction part. You're not master of that.
Actually there's also a question out here. Many software companies are facing slower growth and postponement of investment decisions. You have a relatively high price, so a lot of people are now moving to some other models where it's cheaper to get in. You are not. The macro economic environment is also, should also affect your subscriptions. A little bit about why do you still expect that? Have you changed your way of going to market selling to the customers in any way so you actually are, you know, looking at other software companies pretty positive on going into 2023 even with the macro environment out there?
Have you changed anything in your processes, and why are you, on the subscription side, not saying maybe the macro will affect you so much?
Yes, it is correct that once you look at investments at this size, the decision has been taken to a higher level in the companies. We also see a slower way to decision-making. On the other hand, we have a very strong pipeline. That is one of the cases. The other thing is that our strategy together with our partners, that idea about making an efficient life and making sure that our customers maintain their customers and maintain their life cycle and maintain their growth is a way that they can see that it's a good return on investment even on a high investment like this.
We see this more like a must than a need in the future, therefore, the subscription part is not as much impacted by the inflation and the macroeconomic environment in our mind.
To add on that one, I think, it is quite right that the process is still running. It is just running slower. What I mean by that one is the decision process. It used to be the D-level decisions, which is the director-level decisions, were not on the engagements as such as our product. Now it's went up to the C-level. When we're speaking about the C-level engagements, this is more about, the requirements are different because they are looking for business cases, return on investment, customer lifetime value, and, you know, increasing of, real business results. That's a very good news for us because this is what we really like to talk about, not only talk about technology or features, but talk about business impact. This is the good news of it.
The other side of the same medallion is that it takes longer time for most of the customers that we're dealing with, prospects we are dealing with, their organization's readiness to do that such engagement. We do help a lot on this process. Our center of excellence team is really engaged on these kind of conversations. This will have a kind of a positive effect on the subscription side of it. That's what we believe.
Two things. You haven't changed your process. The market just fits you better, because you have always been very hard on data. Should I understand it like that? Secondly, you also mentioned new businesses coming in and this first-party data. I saw MercadoLibre this morning telling that they are earning all their money on commercials because they have all the customers. First-party data versus third-party data has been so important. I really seeing a push there. I know you will say yes, are you really seeing a push, people starting to understand the third-party data you cannot use in, with the same value anymore?
Is that also what is lying behind your positive view, let's say, I think compared to other software companies, pretty positive view on 2023?
Yeah. I think it will be very important to differentiate that, you know, I think it's, we need to go into nuances of, you know, just technology company, all of them in the same basket. I think that would be unfair to say that. But I think it will be very important to mention first-party data used to sit on the fourth or the fifth seat of a bus. And it wasn't that important because the front seats were taken by the third-party data, cookies and all that stuff. Now, regulations, changes and, there are different perspectives of understanding how to utilize first-party data. The economic turnaround, the microeconomy altogether, suddenly first-party data is sitting on the front row right now.
What's happening is now the real business impact is coming from first-party data engagements for the customers that we're working with. That importance, it makes it relevant. Now, can a company change from one day to another? All right, now we understand that third-party data is not available. Now we need to work on first-party data. It takes time to build up your first-party data database because what it means is you need to engage with your customers in a relevant way and get their permission to speak to. You know, they will say, "Okay, you might connect with me. You might speak with me." To be able to that credibility, you need to build that.
Any brand out there is saying that first-party data is not our interest, they're out of business in a year or two because with the speed of changes going on right now, you know, if you don't get on board on that one, you'll be really left out. What we are trying to do is finding the customers that we would like to gain in our portfolio in the new geographies who has already started that journey, who has already moved into the more sophisticated part of the conversation. That's where we come into the picture. That's one side. The other, if you look at the, not the Nordics, but down into further south into Europe, there are more and more digitalization, digital transformation. These companies are maturing. The countries are maturing right now, the businesses.
Not the enterprise, they've already been matured, but the small medium businesses, medium business that we are engaged with, they're maturing. As we come in with that engagement on the first-party data with the matured engagement, sophisticated way of doing business and their level crossing each other, I think there's a very, very interesting opportunity for us, which we are basically building all our strategy to harvest.
There was another question. I haven't seen you announce so many new partners. Do you have the partners you have you stopped announcing them but still increasing your total amount of partnerships? Do you have the partners you need also to target those market outside the Nordic region?
We do have partner programs that are basically engagements starting from bronze level to silver and gold. We have technology partnerships that are in a global level. I would say we will continue to build our partner network. We do have different stages, different geographies, different partners, but while we are growing their engagement and building strong relationships with them, we're also looking into new partnerships in new geographies. When I say geography, don't get me wrong, we don't look at Germany and say, "Oh, we need a partner in Germany." We look at partnerships in local cities such as in Berlin, such as in Hamburg, because that is the kind of business that we are establishing with ecosystem and network of these partners.
That's one of the reasons that partners are quite engaged with us, because we come in to build a win-win-win model together with them.
If we can close the partnership, there's a question here. How much of your growth or overall revenue is driven by partners? I think you alluded to it that it was quite a large part. I don't know whether you give out the exact amount of your revenue growth that has coming from partners.
We don't give that exact number, but I can tell it's the majority of our ARR and revenue that in 2022 came from cooperation together with partners.
I think it's important to mention, too, we would like it to be as high as possible. I mean, this is something we are really championing across the board, and we established one of the new establishments of 2022, a partner enablement team in our organization really working, engaging with existing partners to grow their business and new partners, identify them and target them, and actually build relationships with them. We really champion the idea of building stronger and a better engaged partner network. If I may jump again-
Two of the... If I can allude a little bit on the partnership, there is also... There's a strong side, the customer acquisition cost goes down, but you also lose a little bit of your ability to push or something like that. Then on your gross margin side, just to understand, your gross margins is falling. Is that entirely due to transaction being a larger part? Or are you delivering more value, your partners, you get it in by partners, but you actually need also to deliver more of the total value of that through the partnerships? The second part is, do you see any downfalls?
Are you seeing any be partner-driven, meaning that you are not so much in lead of that as if you were doing it yourself?
If we start at the margins, it is only the transaction that has driven it. On, particularly, some of the transaction, which is SMS related, we have third-party costs, which means that they have increased and the amount of margin that we can make on that part is limited, and that reduces the overall margin on our.
Mm-hmm
On our revenue. When it comes to the partner, that doesn't change the gross profit margin. It's the same. What they do, they win because they sell additional things to the customers. They're not, besides the marketing platform which we are selling to the customers.
I don't know if you will elaborate on the last one.
Yeah, I would just say that, there might be some kind of a misunderstanding around this. These are not resellers. These are partners that are actually working together with our platform and other technologies of our client's ecosystem. What Claus is referring to is this is a kind of a engagement where they can grow their business with a strong relationship with the clients as well as helping our clients to get more value out of Agillic platform.
Mm-hmm. You don't need to give him any cut of the piece, as you might say. That's not your business model. It is that they use your platform to drive their own value on top of that.
I think what Claus mentioned is that kind of relationship, financial compensation relationship, has no impact to the gross profit. There may be some, of course, opportunities that we collect. I mean, I can say that, you know, we invest in our partner engagements, we use this co-creation, co-selling, co-marketing, co-existing. It's a very important part of our relationship. We put a lot on the table. They put on the table to exactly, you know, collectively create greater value to the prospects, to the clients that we're engaging together. I was speaking to one of our, I can mention this one of our technology partners. They're a global company, we have been chosen the fourth fastest-growing partner engagement globally in this technology company.
If I may mention the first three, you might know them. They're called Google, Meta, and AWS. As the fourth one in that, kind of a business level, I'm quite pleased to see that we can actually, engage, you know, that level, with technology companies on a global basis.
Perfect. Thank you.
All right. Now, I wanted to follow up on that question on the partners, because you have underlined a very important part of our growth parameters. Here you can see our growth strategy continuing the very same Reboot 2.1 that we have established in 2021. The whole focus is all about how do we our market penetration into the geographic areas that we are targeting. How do we increase our partner program, accelerate this in these geographies, in these cities with the right partner structures? Look into our pricing on continuous basis, both to align with the market expectations, still be competitive, but also keep our gross profit in mind. Look into the opportunities to increase our platform's utilization of our existing clients. How do we inspire them? How do we guide them?
How do we lift them up, which is basically the whole uplift and elimination of losing the clients. Lastly, is how do we continuously improve our product and support our growth strategy with the product's strength and features and opportunities that are attached to that? These are the five key parameters as we continue to focus on, invest on as we step into the new year, which we are actually already in. The last slide that we would like to share with you is, why would you be interested to invest in Agillic and our business? We define four, five items that we believe that are quite important. I mean, we have a very well-functioning, proven growth strategy.
When I say that, I refer back to last three years and the way that we have built our business and our results. The markets, the macroeconomic movement, the first-party data focus, it is becoming a very important part that brings the digitalization and whole digital transformation moving from nice to have to must have, as Claus mentioned. The markets are getting ready. The platform, our platform is ready today to be engaged in anywhere as it is without any further modifications. Lastly, the organization. That's something we always work behind the scenes to be ahead and get ourselves ready, and that is management size is ready, and now we're looking into how to expand each unit in itself for the scalable approach that we are putting in behind the whole structure.
Altogether, we're stepping into 2023 with a strong focus, the same acceleration, and the same opportunities ahead of us. That's all from us.
Perfect.
Some questions if you like.
Yeah, we have covered some of them, but there's in here, average ARR from subscription per client has been decreasing over the past three years. I guess if you take your subscription amount, divided by a total amount of clients. I haven't done that, but I guess that's the calculation here. Why is that? Are you working with smaller clients? Are they losing less of your platform? Are you selling a smaller part as your service as a first sale point? How would you explain that?
I would say it is depending. We have what we call an ideal client profile. That means that they have to have a certain number of first-party data, a certain amount of volume, as you can see among our clients, in order to utilize our platform. It means that they're more mature. They can be in many ways. It can be a very, very big company, and they will have a huge ARR on subscription, or it can be a minor company compared to the average, which we have seen in some of the new customers that we have seen in 2023. That's why the subscription ARR new clients has decreased a little bit.
It is still within our ideal client profile, and that means that if they are in the smaller one, they are often also ready to mature more.
By mature more, if I should translate that, I understand that means that you might actually push some more on the transaction part by them. Or is it that you can upsell more to them?
Yeah.
Upsell.
it
Upsell
... that they are interested in more different type of communications and can do more with their customers.
You know, what they call the land and expand. I mean, it is in a different perspective, but it is the same kind of thinking.
Perfect. Then there's a question here. Can you explain why your guidance on EBIT is so low when you in H2 made DKK 2.9 million alone? You're growing your subscription, so with 25%. If you did the calculation, it doesn't fit up with your guidance on EBIT for the next year. Can you explain why you are not letting everything run to the EBITDA line?
Yeah. Two things. The growth in ARR and subscription. Historical tells us that most of it comes in Q4, and when ARR comes in in Q4, it has very, very little impact on revenue because it's only prorated into the months that it's active. It has very little impact on revenue and has very little impact on EBITDA. It has a lot to do with when the growth appears. I would like to have it all in Q1, because then it would also affect my revenue, and I could actually have a higher EBITDA. The fact is that historically we see that most of it comes in Q4, and therefore does not have the same impact on EBITDA. If we look at second half 2022 compared into what we're looking into 2023, we are still looking at an increase.
We are still guiding higher than we did last year. We are guiding from the minimum of where we ended in 2022 and up to DKK 4 million. It is still a strategy to make sure that we are ready for the next year and two years in our expansion and make the organization, particularly within our sales and customer success organization, ready to accelerate the growth that we are expecting. This is also very much in alignment with our cash EBITDA strategy that whether you close the contract Q4, Q1, we have to have two years to get there because we know by a fact that we will get there or we will aim to get there, but we have to invest in our organization as well to go there. We haven't invested hugely.
As you see, it's the same year-end number almost on our employee in 2022 as in 2021, which means that we have to adapt to the growth rates that we're looking into.
Perfect. If I may allude to this cash-adjusted EBIT at 2024 guidance, it kind of indicates that you will be running, as you said, self-sufficiently. You still have a 2023, and your bank account is, if I remember, DKK 7 million. Are there any raise on that the way to there, or can you bridge until you are cash-adjusted EBIT are positive in 2024? Do we have a way to bridge that without looking for extra capital that period?
Yeah. We have planned for this, so we know. That is also the road to a cash-adjusted positive EBITDA by 2024, that we will go up there. We will increase the combination of EBITDA and deferred revenue in 2023 and presumably maintain our R&D investment. We have a flexibility within DKK 10 million . We burned DKK 13 million in 2022, if we look at that. By the amount and the projections that we look into for 2023, sorry, it is there's no need for additional capital.
Perfect. I think we went through all the questions out there and went through the case. Thank you to you, Emre and Claus, for taking us through the presentation and thank you for people listening in. May everybody have a nice weekend.
Thank you very much.
Thank you.