Hi and welcome to this call with Agillic and the company's CEO, Emre Gürsoy, and CFO, Claus Boysen. Today's topic is the Q4 and annual results for 2023, which came out this morning. Before I hand over the call to the management, I will remind the audience that you can write in your questions here on our platform in the comments section. I will make sure to ask all the questions in the Q&A session after the management presentation. With that said, I will hand over the word to you, Emre.
Thank you very much, and thank you for those who are joining us for this morning's session. My name is Emre. I'm the CEO of Agillic.
I'm Claus Boysen, the CFO of Agillic.
This morning, what we would like to do is, we have shared our annual report and our ESG report for 2023 earlier today, and we would like to go into the details of the results, the strategy, the execution of the strategy, and the overall outlook for the future that we are looking for. Before we start with that, I would very much like to take you through very quickly about our company and our product, what we do. For those who are joining us as the first time, Agillic is a customer experience platform, and it empowers brands to work with data and content to create and automate and send personalized messages, which we call it personalized communication to millions because it has the capacity to do in a very, very large amount.
Now, the interesting thing behind this one is because these kind of activities, they create a top-line and bottom-line effect, which we collect these under effectiveness of higher conversion for our customers, enhance customer satisfaction, higher retention, and increase customer lifetime value for those who are using the platform. Besides the efficiency effect of our platform, which is easy to work with, it's an automation platform, it is simple to work with, brings increasing efficiency results for those customers of ours working with the platform. If we take a look at a snapshot, we are currently housing clients from 10 different markets in Europe. There are 222 clients in our portfolio. They sit very much in first-party data-rich industries. These industries will be retail, subscription type of businesses, finance, travel, hospitality.
These are the type of verticals where there are high level of first-party data, where they are really interested in activating this data and this customer base through our platform. We are 100% SaaS business. We do not do any professional services. So everything that we share with you as our SaaS numbers, AR numbers, they are driven from our licenses and transactional gains. We have around 50 employees from 11 different nationalities. The largest office is in Copenhagen. And to 2018, we have been listed in Nasdaq, and since then, we have been sharing our quarterly reports with the investors. If you look at our top-line results for annual results for 2023, we have a revenue of DKK 64.7 million, a positive EBITDA of DKK 1.9 million. Our subscription part of the ARR has increased to DKK 57.8 million, and the total ARR is around DKK 70 million.
We'll go into the details with much more granular evaluation of these. Now, in the world that we are operating, what are the realities that we are facing right now here in 2023 and as we are right now? So two sides that I would like to share. Number one is what kind of investments are being done in Europe. This is a result. This is a study from Gartner, which you can see on the left side of the page. There are IT spending investments increasingly happening in Europe. If you look at the largest portion of the investments are going to the software investments. And if you look at the percentages on the top, 45% of these investments are mostly looking into those effectiveness and 53% on the operational efficiencies that I was also talking about earlier, which I'll talk more in a minute.
On the other side of the page, this is the more dynamic environment in regards to the behavior, what's happening, and how the purchase cycles are taking place. So we have talked about this earlier. In 2023, there has been a slowdown on the sales cycles, which is basically driven from those clients that are prospects that we are speaking to. Their decision-making process has been slower. Now, why? Because there are a couple of reasons for that, and we'd like to talk a bit about this. Number one is the behavior has changed. It's because the way that they have been purchasing IT solutions, software solutions, it has changed to a different way of looking and evaluating the investments. The decision-making process had been much more granular, and it changed the touchpoints.
In the past, we were speaking to people in different levels, but now it's been pushed up because the investment decision-making has been pulled up to the higher levels of the organizations, and we are now speaking to top management and sometimes even on the board level. Now, it is also important to mention that we are an investment. Our average ARR is around DKK 600,000. So we are not a small SaaS solution that you can buy with a credit card and it's phased and off you go. This is an investment. It affects the company's future from a results perspective. So the decisions have been pulling up.
Now, what we have been doing in the meantime because when you push the behavior upwards and the top management and board's involvement is coming into the picture, they are looking at something very different than what we used to work and interact with, the different levels. Because the different levels in lower levels, they were used to buying marketing solutions or they knew exactly comparison everything. When you are coming up, you're speaking to people who have not purchased maybe a Martech solution in the past. So their questions are more in the, "What is the return on investment? What will be the top and bottom line effect that we will get, and how fast can we get that? What kind of other investments do we need to put into this one towards?" So it's basically questions that are much more business-driven.
And that's what we have been working quite heavily in 2023, investing in a new department, looking into these areas to dig into, turning our conversations with our prospects and the conversations around results and business impact. And we are also pushing beyond we are not selling a technology, just the license, but the total cost of engagement versus competition. So when we are looking at the competition, you shouldn't just look at the license fees, but you should look at the total cost of engagement within a certain period of time, what other investments you have to do from the internal users that you have to hire new people to you have to have multiple partners, and how long would that take, and the whole big picture. When you look at this, we are in a very, very competitive stage.
So this picture should give you a kind of an understanding of what we have been going through in 2023, and this is the new world that we'll be living as of now for 2024 because this is not going to change in the short period of time. Now, why are we so focused on this, and do we have enough stories and facts and proof points that we can actually go and claim this? This is one of the things that we have been pulling a lot about our clients. I mean, these are some snapshots of our clients, facts and figures behind the results that have generated for their business, and Agillic has been part of this catalyst in the process of achieving these tasks. For example, top left corner, Kvik, they are talking about 73% time saving.
Now, they're operating in eight markets, and they're talking to millions of people, and there's a sales cycle that they work with 13 years. So people, they change their kitchens or bathrooms every 13 years on an average, and you have to hit this right person at the right time, building a relationship of many, many years, and by the time the decision is being taken, you need to be there with relevant information. Now, imagine doing this for millions of people in eight different markets. That's the automation's power. That's the impact that we can bring on the table. So what we can do, these are some examples of whether it's an effectiveness top-line effect or efficiency bottom-line impact. This is the conversation that we are taking into our stories in 2024, and this is the part that we are moving forward.
That's why I like to call it that Agillic is a growth engine. It's a business platform. It's a customer experience platform that delivers business results. That's the story that we are focusing on at the moment. Let's look at some more numbers.
So as Emre mentioned in the introduction, our total revenue for 2023 ended at DKK 64.7 million, and that was generated mainly by a minor growth in our ARR or our revenue from subscription that increased to DKK 52.4 million, while our revenue transactions dropped to DKK 12 million, a total revenue decrease of 3% that was impacted heavily by the transaction revenue. We will come a little bit more back to these revenue transactions revenues a little bit later in the presentation. Our committed future revenue at the year-end 2023 ended at DKK 28.4 million. Basically, you can say that DKK 28.4 million of our next year's revenue is already secured and committed. And if you look towards the revenue that we had in 2023, which is DKK 52.4 million, it's more than 40% that actually is already in the books and committed for 2024.
So a fairly strong number for our 2024 numbers and a good platform. If we look at our EBITDA, in 2020, we started a financial strategy to deliver positive EBITDA. We have done that now for the fourth consecutive year and growing it each year. Now, this year, we ended at DKK 1.9 million EBITDA versus the DKK 1.1 million last year, an increase of 71%. If we then go further into the ARR numbers, also split between ARR from subscription and ARR from transactions. So over the last many years, we have grown our ARR from subscription, which is the core side of the business and generating the highest margin to the company. And we ended 2023 with DKK 57.8 million in ARR from subscription.
The total ARR, although, changed at -9% compared to last year, and that was impacted purely by the decrease in ARR from transactions. So if we go a little bit more into the ARR of transactions, what happened? So when we looked into 2023 a year ago, we saw that each consecutive year, we started the year and grow every year towards the end of the year. And this year, it was more balanced from Q2 and until the year-end. The reasons for this is that we have seen the global price increases in the SMS cost. We have a third-party supplier that delivers SMS. So we are reluctant on what the prices are in the market, and we forward that to our clients. So when the price increases, the usage among our clients will decrease if it's getting too expensive on their P&L.
Several companies, especially retailers, have reduced the number of SMS communications to align with the budgets and the new market cost structure during 2023. If we look at the seasonality again, we usually saw the last two years that it doubled over the years or over the quarters, while we in 2023 saw a decline of 29%. That also led to an ARR decrease of 46% year-over-year. What are the main factors for the decrease versus last year? Geopolitical and macroeconomic situation has caused the majority of this declining. We have shown here three countries that have been significantly impacted by what we call geopolitical situations. And those are all three markets that have dropped significantly in our clients' uses of communication with SMSs to these countries. Significantly decreases from 2022 to 2023 on all three markets.
And if we look at it quarter-over-quarter in 2024 or sorry, in 2023, we saw the decrease in Q1 and into Q2, a balance in Q3. And then suddenly, we saw another decrease in Q4 when the war started in Israel. So highly impacted and majority of the impact from our decline in transactions is based on these geopolitical factors. A bit more on our SaaS metrics and our SaaS highlights. The number of clients by year-end was 122 versus 118 last year. We remained at our average ARR of DKK 600,000 that Emre also spoke about. It's a product that, in average, to our clients costs DKK 600,000. If we look a little bit more into our strategy on gaining more international clients, we have increased the number of clients that we have won that were international in 2023 compared to 2022.
So in 2023, 40% of our new clients came from the international market. Although out of those clients, they brought in 17% of the new ARR value compared to last year, where it was 39%. So this, in all, means that the number of clients that we have gained from international markets, in average, has a lower ARR than our general average. And the factor here is that it's not necessarily a pattern of what is an international win versus a national win. It's more like which clients are we gaining. So some clients, they're ranging an ARR from DKK 100,000 and some up to several DKK million.
And of course, if you hit a client in the international market that is a bigger client, then this percentage will, of course, naturally grow from international wins. So the number of clients is the main topic here that we are focusing on.
On the net revenue retention, we ended 2023 at 99%, adjusted for the FX exchange to Norwegian krone. So it's close to 100%. It's based on uplift that we have done with our clients and price adjustments, but also the impact from what Emre said in the market about how do clients look at the cost side and how do they look at their technology. It also means that they are impacted by the geopolitical markets and maybe see a volume that is decreasing in their segment, which impacts us. And that means that they need to follow with that in the downgrade. So therefore, we ended the year close to 100% in our net revenue retention. On our customer acquisition cost, we remained at what we will say a very low level at DKK 200,000 or DKK 0.2 million at the year-end 2023.
So year-over-year, we aim to spend our customer acquisition cost through our partners and our partner network and generate new customers and new clients through our partner network, which means that we can maintain our customer acquisition cost at a fairly low level. And that, of course, leads to a months-to-recover CAC of only six months. So based on the growth that we have in revenue from subscription and the decline in transactions revenue, we still look at our operations often and make sure that we have a top-class operational excellence. So over the years, we focus on sustainable capital-efficient growth. And that means that we are looking towards how our cost base is and how can we grow within that frame.
We have increased the revenue per employee over the last three years by 41%, so still focusing on a fairly steady level and lower level in the employees over the four years versus a steady increase in our revenue. So that generates, of course, the EBITDA of DKK 1.9 million that we are able to grow this index year over year and provide a solid platform to drive EBITDA margin in the future for the future growth.
Yes. I think if you actually do this exercise on the ARR level, you will also see that the number is much greater. This is the way also we can also look at it that we are not dependent on the number of people that we have to increase our ARR. This is another way of saying that we have established a strong business model to expand and scale the business without necessarily increasing the number of employees.
Next slide is about our cash flow highlights for 2023. We started the year with DKK 7.4 million and ended the year with DKK 9.8 million. In general, we saw that our cash flow from operations were lower than we originally expected, but mainly the reason for that is that our closed contracts in Q4 were in late December, and there were a few postponed receivables that were received in January. So all this is or most of this is related to seasonality. Our strategy remains that we want to be cash flow operational positive.
The cash flow from operation is constant. We have been constant in those investments over the last couple of years, and we invested DKK 11.7 million in our software in 2023. And then the cash flow from finances was, of course, impacted by the capital increase that was done in Q1 2023 when we had Viking on board.
This is different.
So this is a different topic. This is a little bit more complicated topic. But Agillic has, in the period of 2019 to 2022, applied for tax credit. And that was based on the interpretation at the point in time and based on consultancy with our advisors, and as many other companies have done it. However, lately or in the latest period of time, there has been a change in the assessment and interpretation from the Danish tax authorities. And that changes also our point of view of how we are going to present the numbers in our financials. So in 2019 and 2020, we have received tax credit for DKK 6.4 million.
Those DKK 6.4 million that we have received, we are now in a position where we have requests from tax authorities, and we have an appeal of the case of a verdict from the tax authorities that we potentially can end up repaying those DKK 6.4 million, which, including interest, would be DKK 8.3 million. So the maximum repayment to the tax authorities for the tax credit we have applied for and received in 2019 and 2020 is the DKK 6.4 million plus interest. Then we have also applied for tax credit in 2021 and 2022. We haven't received those money. So they were presented in our financial reports earlier as a receivable. Those DKK 6 million as a receivable has been reversed, so we don't have a receivable anymore. And that impacts our P&L, the tax line, for DKK 12.4 million and interest of DKK 1.9.
So that is the main impact of how our net profit this year is actually so negative. So again, the maximum of this is DKK 8.3 as calculated as of year-end. When we are going to and if we are going to repay it is still very uncertain. When is impossible to say, but we do not expect that it will be this year. But we are taking the precaution of anything can happen because of the latest interpretations differ all the time.
But we can say that we have taken the worst case in our books in 2023.
Yes.
Yes. All right. So from there on, how do we look at 2024? We expect revenue in the area in the range of DKK 62 million-DKK 66 million and positive EBITDA of DKK 0 million-DKK 2 million and an ARR of DKK 66 million-DKK 74 million. The ARR consists of ARR from transactions that we have said is between DKK 10 million-DKK 14 million. It was ended at DKK 12.3 million in 2023. The reason for us having the range above and below the number we came out with by the end of 2023 is explained by the volatile situations that we are facing and presented in the ARR transaction part. While we on the ARR growth sides are expecting a stable or a slight growth. The reason why we are doing that on the ARR is because we have geopolitical impacts that we have spoken about.
The consumer behavior of our clients' clients is impacting the business and consequently can lead to a decrease or downgrade in our license fee if the client is decreasing their volumes. We have made a reservation for a potential reduction in ARR in our guidance because we see that we have, in June 2023 and potentially also into 2024, business and technology consolidation. Business consolidation means companies that are acquired by larger companies and then forced to or may or may not be forced to use their marketing automation software or their software that competes with our software or a technology consolidation where it simply is an IT infrastructure where they say they only want to use one IT infrastructure or service supplier. And thereby, it's a consolidation that can impact whether they will maintain with the Agillic software solution. We also remain focused on the sustainable organic growth.
So we still strive towards positive and increasing EBITDA in 2024 and constantly adapting to the volumes that we see. Then the last thing was the tax credit. So the change in the assessment means that we have to be prepared for a repayment of the DKK 8.3 million. And that also will impact our timing of when we can invest in growth. And that will be a decision that we constantly review as the year goes by. Yeah. So we must say that we have been quite conservative and cautious in our approach for 2024, how we look at the market and the developments. But on the other side, we are also a technology company, and we have a product, and we constantly invest on this one.
What I would like to give you a bit of a highlight about a couple of very important items in regards to our platform and what we are working and about to complete and where we're starting in 2024. Number one, and I don't think anyone any soul left in the business world today that hasn't heard about the AI movement and the impact on the businesses. It is so relevant and highly, highly easy for us to work with because of our product's construction. Let me just start with this. What we have already done in 2023 is how we have integrated AI solutions into Agillic platform. Now, when I say AI solutions, there are so many of them. These are not every industry has a number of suppliers working with very specific algorithms designed for different use cases, solving different problems for these industries.
As a best-of-breed platform, what we have achieved to do is combine our platform to these kind of solutions that our clients have chosen to work with in their business. We have a couple of examples of these. We are coming out, actually, some cases very shortly with some really good results behind it. And this allows us to say we are AI-ready because we can amplify the business outcomes immediately because we are integration-ready. Besides some other AI alternatives I'm going to talk about also for our internal purposes. On the other side, we have also completed a very large platform upgrade for ourselves.
I think it's one of the largest ones of the last couple of many years that gives us not only the power to serve our clients with a better and much more efficient platform but also allows us to be more agile and more feature-driven and more commercially market trends-connected platform ability for improving our ability to create some solutions that can accelerate our commercial growth on the other side. Overall, whether it's an AI solution, whether it's a product platform upgrade or the features, they're all connected under two large promises. Number one is our effectiveness. So it's basically top-line impact that we generate for our clients.
On the other side, doing this in a simpler, automated, faster fashion so that less people are involved into the process of less human touch into the processes of working with our platform and thereby improving the efficiencies for our clients' businesses. These are the two unique areas that we're looking. Now, if I jump into our with these platform upgrades and improvements and the focus around it, there are these six areas that we focus as our growth strategy pillars. They're all thinking with the main thinking of internationalization and scalable and repeatable go-to-market strategy. These are all the initiatives that we are applying once but in multiple markets. On the left side, we start with the market presence and expanding this into the new geographies that we are approaching to. We have focus markets such as Germany and Norway right now.
And in the meantime, we're working with other markets where we can apply the same model that we are working with. Second area, it's our partners. As I said before, we do not have any professional services. So we work very closely with our partners to complete our exercise towards our clients. And when we talk about partners, there are two specific areas. One, how do we help activate our partners through co-creation, co-selling, co-marketing, various activities that we can do this more efficiently in the areas that we are going into the market? And the second is searching and bringing more partners into our portfolio. This is both in the new markets such as Germany and Norway that we are working really high and also going into the new markets and how do we enter to the new markets with the new partners?
The third area, as a SaaS company, we never finish looking into our pricing and pricing model and pricing levels. We always measure what we can do better, what we can improve. There's another area when we have been doing this year-over-year, and we're going to continue to do so also in 2024, looking into the markets that we are going into, looking into the areas of improvement in our model as well as the levels. Fourth area, what do we need to do to improve the net revenue retention and increase the platform utilization for greater upsells, for greater price increases, for greater engagement with our clients so that they get the most out of the value out of the platform but in the meantime, their ARR engagement with us increases?
There's a specific activity and a department established for this, and they're working very focused on this area. Bringing about the product-insufficient commercial market needs, which I was talking about earlier, is another very important area this year that we will be able to do this in much shorter cycles with higher impact. This combined with the artificial intelligence-driven initiatives. Now, let's talk about this in three levels. So we have clients that have established their own data scientist and AI setup, and they've been training their own modules for almost the last 12 months. Not every company can do that. So there's another group of companies, our clients. They're looking for segment and industry-specific algorithm solutions that they can work with. Now, the important thing is algorithms should be activated.
That's where Agillic comes into the picture, and that's where our integration is successfully creating some results for those companies. Overall, I was attending a meeting yesterday with a client of ours, and then it's basically bringing to a level where their customers are saying, "You know me so well." That is the key sentence. The AI should be generating the relevance, the time, the engagement. Everything is coming together into that level. The third level that we are working on is how do we bring certain AI solutions within our product itself? So that's another separate area our product team is working on, some small solutions that will be generic for everyone so they can actually be activated but in the meantime, still supporting our continuous development.
When I'm speaking about all these different areas, there's also a very strong platform of our business establishment that allows us to do such detailed conversations. I put them into three different areas. It's basically strategic initiatives, the financial readiness, product readiness, and across the board, of course, comes people readiness. So the strategic readiness, it's what we believe that what we have established for our go-to-market activities and the way that we have established our strategy in this for the last couple of years, it is a solid, proven model that allows us to replicate and scale our business to grow in these new markets that we're establishing. On the financial readiness part, I believe we have shown our ability to deliver cash. In the last couple of years, we have been able to do this.
We have been doing positive EBITDA for the last four years, and we have a very, very strong focus on how do we turn the cash EBITDA positive into our lives in the very shortest period of time. So this acceleration and the term of move forward from positive EBITDA to cash-positive EBITDA is the whole mindset behind the financial focus. And the product readiness, the elements that I've mentioned earlier, the way that we're looking at it, also supported with certain parts of it. For example, we are one of the very, very few and actually less than two left right now, independent customer success platforms operating within the customer experience platform, sorry, operating within Europe that are fully compliant.
Now, this gives us a tremendous edge knowing that in a market such as Germany, there is a continuously increased focus around compliancy and being chosen as the compliant platform. Lastly, most of the things that we have talked about, I won't go through all the details, but the most important thing is we keep focusing on creating value, delivering value, effectiveness, and efficiency on both top line and bottom line, and then being a modern product that is what I like to call a modern product because we are AI-ready. We are ready to integrate. We work with it. We are working with it. We are creating results with it. So we don't have to work towards an AI-driven solution. We are already delivering it with our clients in their businesses today. This was the quick sum up of our year and our progress for 2024.
Thank you, Emre. Claus, should we jump to questions?
Sure.
Perfect. Okay. So here you have the commercial growth strategy ending, but we have a statement here from someone asking, "Many of Viking Venture's portfolio companies have grown through acquisitions of competitors. Is an M&A strategy also something that you consider? And in such a case, would that be to win new customers or improve your technology?" And I guess you mentioned here that it wasn't a plan for you right now, but could it be something that if it comes up to you, could be relevant for you?
I mean, first of all, any kind of M&A strategy, that should be driven by our board of directors, naturally. But I would say, I mean, Claus just mentioned it a couple of minutes ago, consolidation is the name of the game. It's happening in 2023, 2024 in our client side and the companies that we're opposing. So it is, of course, an opportunity and a possibility. And when we say M&A, M&A can be in many different ways, from a technology perspective, from a market penetration perspective, from expanding your technology. There are so many different ways of looking at it. But I would say for the current time being, we are working with the strategy that we have agreed within the current stage with our board of directors, and we are focusing on delivering that.
Perfect. Then we have a few questions about the cost side because there is a question here about the guidance for 2024 seems to show none or little growth. Since you don't expect to grow, should you reduce your costs? And there is also a question here about the staff cost in terms of what your thoughts are about this part of the cost. So maybe some reflections on the cost side.
Yeah. So first of all, we always work to be ready for whatever happens in the market. We work with the factor of operational excellence. Our salary cost and our number of employees in 2023 were steady. We have increased our revenue not only if you look at revenue from subscription, it has increased year-over-year per employee but also in the total revenue. So we continue to focus on making every revenue count better on bottom line. So we still also, even though we see some challenges here into 2024 on the growth side, we still aim to have a positive EBITDA of DKK 0 million-DKK 2 million. So we are adapting the cost side constantly to make sure that we invest the right money. It's the same thing with the tax credit. What kind of money do we have to invest in?
How much do we have to invest in growth and in our market penetration? That's what we are calling sustainable growth and operational excellence.
More specific, can you live up to the cash flow expectation, positive operations in 2024 without reducing your costs?
Cash flow from operations, we are expecting that we can deliver a positive cash flow from operations under the guidance that we have provided.
Perfect. Then we also have a question about the revenue side. I think the question here comes around when you have the slide, Emre, about the sales pitch where you showed the value creation and the results from some of your customers, including Kvik. I guess the question here is around why you don't generate more revenue in these customers when the results and the value creation are that high for the customers.
I can start on doing that. It's a combination of many clients. Some clients provide uplifts, and those clients that we are speaking of and that actually show and utilize on our platform in the way that they are not struggling either with their own economies, for instance, those we are uplifting. That's also why we are providing an NRR close to 100 because it's a combination of, of course, downgrades but also uplifts. We are utilizing, and we are generating more revenue on those clients.
Perfect. Then we also have some questions about the churn, and you mentioned the net retention rate. I know you don't report churn in your annual report, and you also mentioned the business combination for your client side, the technology combination as well. But can you give us some more flavor on it? Could there be something else in the market right now in terms of companies in financial issues and so on that also increase the churn rate or the net, or you can say decrease the net retention rate? Do you see that as well?
Companies are both some are seeing financial struggles. Some are seeing it because we have the macroeconomic impacts on how retail business is doing with the uncertainties and the volatile market conditions they have. So they are maybe pushed on their financial sides. It can also be companies in crisis, but it can also be companies that are acquired or looked into a different cost structure. So all those factors are naturally also impacting us. So I would say as long as we have such uncertainties in how the market will actually develop and what we see around the world, then there is always more precautiousness in the world. That impacts the idea of when you invest and how much you invest. And that's why we are talking about what are we providing to our clients? What are we talking about when we say value creation and efficiency and effectiveness?
We feel it's such an important factor in order to gain and regain both growth but also have and maintain the existing clients.
I think it's also important to mention partially 2023 and absolutely 2024 will be about resilience because you're absolutely right. The question is very, very relevant. I usually try to say we feel the pulse of the European economy in our business quite fast because our customer or our client portfolio is highly affected by the customer behavior and the economy that is hitting them. So there's a very close connection. Imagine as everything from the three markets that we talked about, there's a terrible situation that is going on, which has an impact on our side, and every European economy right now is impacted by the certain changes, the macroeconomic changes. It could also be the other way around. We don't have to change anything. So our platform is the same. Utilization increases.
Suddenly, the traffic increases, and then the whole thing changes to a whole nother environment. So for us, 2023 and 2024 we are looking at is a resilience. So we are in the game, and we are getting better, improving. But the real boom, I don't think, will be happening in 2024 for anyone because most of these industries that we are operating with, they're all facing the macroeconomic impact.
Yeah. Okay. Thanks. And Claus, turning over to the transaction sides, you also mentioned the SMS price and showed the graph about the development here. But we also have a question about the prices of the SMS transactions. Are these going more down again, or what is the outlook here?
That's very hard to say. I think that I read an article this morning about EU potentially changing some legislation because the telecom companies are not making enough or sufficient money. And it's the telecom companies that we are impacted by that actually set prices for the SMSs. And they are impacted by energy prices, taxes, and everything else. So if I could predict what you were saying, I could probably predict something else as well. I don't think that we will see in 2024 that the prices will decrease.
That's not my guess because of the uncertainties, because of the lack of maybe sufficient earnings in the industry of telecommunications.
Thanks. Okay. Moving on to a question about the gross margin. There is a general question here, and this was sent in before the annual report today. The question is here, why is your gross margin on a lower level than similar companies with a gross margin level of 85%-90%?
The simple answer to that is our gross margin on subscription is high. But the gross margin on our transaction is, of course, slowing down. So we can also see that the gross margin increased from 74%-81% from 2022 to 2023 based on the ARR from transaction actually decreasing. So there's a huge impact from the ARR transactions of why it is still a little bit lower than what you call the market segment here.
Yeah. I also think you covered the questions about AI pretty well. But if we look more long-term, do you expect AI to increase or improve your growth rate, accelerating the growth rates again? And also regarding your platform, do you expect any updates here that have a measurable effect on AR growth?
Right. Let me try to answer both questions. The first one, I certainly believe and hope so because one of the AI's impact will be basically there are generative AI works with two things. One of them is data. The other one is basically working with the content. And content is whether it's a text, whether it's a film, whether it's an image, it's all coming together. Now, having the speed and connecting this to a best-of-breed product like Agillic that can actually activate this, it's naturally a positive impact.
I mean, I hope that we will be seeing companies who in the past did not have the ability to invest a certain number of employees in a department and establish such complex structure to run a system as such will be able to actually run this without actually what we call the low-complexity commerce, which is basically machine speaking to machine environment. And thereby, you're actually speeding up. The efficiency is higher. The cost is lower. And then, yes, there will be hopefully a much greater impact. Now, how fast that will happen, that all depends on the developments that are happening across the board and on both sides of the technology. The second part of the question in regards to whether we will be able to improve our product with the AI, yes, that's also definitely the plan.
But we are very careful to choose where we are applying AI in our exercise because, and I'm not talking about the operational excellencies that certain department is using AI so they can be faster. I'm not talking about that. I'm talking about real product engagement and including AI-driven elements. It's very important that we build our product solid and future-ready, and we do not try to be something that we are not. And this is a very big part of our R&D discussions because you cannot compete with the AI companies working on a specific industry in a specific algorithm for a specific use case because we are a company for a platform for many utilization points. So we need to keep this position and allow us for integration as quickly as possible, as easy as possible to explode the acceleration.
Thanks. And then a few questions centered around your geographical presence. You can say, first of all, there's a question here regarding the Norwegian market. Why do you have more Norwegian customers than Swedish customers, also taking the country's size into account?
It is actually a historical reason. We have had a very, very strong partner in Germany, and we are still working together with them, and we are still working and growing fast together with them in the market. It's purely the relationship and a strong, solid establishment of a partner and technology company like us, our relationship. That is the main reason behind that. Now, when we were speaking about selecting the right place to choose which market that we should invest in ourselves, of course, Sweden is naturally a part of this conversation. But we have decided to focus our efforts more into Germany rather than Sweden because it was very important for us to get acceleration from Germany because Germany has put digitalization as one of the four major strategic achievements for the country's next 10 years.
If we can be part of that movement, if we can be establishing this structure for the middle-sized, small, medium-sized companies, this would be a much greater return on investment for us than being in Sweden. That was the main reason behind the thinking.
Yeah. And you also showed the map here where you are present right now in about 10 countries, right? And there's also a question about do you expect to expand outside these countries? Or yeah, as you said here, you're focusing more on Germany. But do you have any other insights?
Absolutely. Absolutely. So I can answer the question also in two different aspects. One is, yes, we are looking at it, but our main focus is Germany and Norway right now because we need to make sure that we get the benefits that we are targeting before we expand the portfolio to the new markets. But in the meantime, behind the scenes, there are a certain number of management members who are working on new market, new partner engagements because for us to approach and enter to a new market is highly driven from a partner relationship. So in the U.S., if I can find the right partner with the right engagement, will we be able to expand to the U.S.? Yes. Is that what we are doing right now? Not yet. We are now first focusing on the right market that we have selected as Germany.
It's stages that we need to go through.
Yeah. And speaking about the different markets, we also just received a question here about what is the revenue in Denmark, Sweden, Norway, and DACH? And I know you don't report on this, Claus, but yeah, can you give us some flavor on maybe some of the market differences? You already said something, Emre, but maybe going forward, is that something that you expect to report on and divide into different market numbers?
Currently, we are not. Therefore, it's not possible to sort of elaborate further on that. You can say we have our main office in Denmark. We have been established in Denmark for many years. That is, of course, our main market. That's also why we are using so much or more time and focus on internationalization. We know what we have achieved in Norway and want to utilize further on that. Then we want to invest in Germany on DACH, as Emre said. That's pretty much also the level of revenue generation that's impacted by that.
Sure. Okay. And then moving on to, you can say, more overall company, sorry, question. I'm not sure if you can answer this, but what are your thoughts about being a listed company on First North Denmark?
I can start. So the main idea behind being listed was originally for all companies that it should be an easier access to capital. But as well as I could ask you the same question, how has it been for the last one to two years? It has been much more difficult to raise capital on First North. And we have seen companies that have been delisting because, yeah, it's a cost, and it has not been able to utilize on any capital or a little or limited capital increase from that segment. So it provides other benefits. It provides that we actually are more mature and ready in other areas on financial aspects, communication to the market when we talk to clients. So those aspects, we definitely use First North for.
But on the other hand, it has been a turbulent last year or one and a half year also in the newspapers and the media.
Perfect. Let's move on to a final question we just received here from the audience. It's centered about a question here if you also should report positive EBIT. I know you have this, you can say, cash EBITDA strategic goal. Maybe you can just elaborate a bit on this.
Yeah. Basically, they're very, very connected. The reason why they're connected, or at least they have been for the last couple of years, is because the size of our investment is almost equal to the size of our depreciation. That's actually EBITDA cash versus EBIT, except that we are also in our EBITDA cash taking into account the committed revenue development. Close to EBITDA cash already.
Great. I think we went through all the questions from the audience. So I would like to say thank you very much to you, Emre, and Claus. And with that, I would like to conclude today's presentation. And wish everybody a good day.
Thank you.