Hello, and welcome, and good afternoon. Thank you for joining our Earnings Call on our Q3 2023 Numbers. Let's take a brief look at the agenda for today. We will share updates today on our business performance for the first nine months of 2023. We'll share the financial results for the first nine months, and we will provide an outlook for the rest of the year, 2023. At the end of the call, we will be able to take your questions. Thank you. Before we dive into the actual content, let me briefly point your attention to our disclaimer regarding forward-looking statements. Okay. So let me start with the overview of the key points, the key financials. So, our ARR is up 10% compared to the same figure 12 months ago.
We closed the quarter at EUR 37 million. In addition to that 37 million, we had a contract signature with Otto, one of our largest customers here in Germany, Otto Group, that increased our ARR substantially, and you'll see the impact of that contract renewal in our Q4 numbers. We have successfully launched and refined our market positioning of products with the start of the Espresso campaign that we launched on November thirteenth. We also issued a press release yesterday around that, and I'll share some more updates on what Espresso is and how it helps us in the future to sharpen our positioning and to sign up new customer, new logos. Our EBITDA loss was reduced by 53%.
So for the nine months 2022, we had EUR -8.7 million. For the first 9 months of this year, we had a total EBITDA negative of EUR -4.1 million. We had some contract starts that were delayed between 3-6 months. That had an impact of our overall EBITDA target numbers. So some of the revenues that we had anticipated to come earlier, came in later. We will catch up on those effects in 2024. Our liquid funds are on a healthy level despite the delayed cash-in from those 2023 contracts. And with those impact, we had adjusted our outlook for the rest of 2023.
So let me briefly talk about the numbers here on the right side of the slide. Our ARR we expect to be in the range of EUR 40 million-EUR 42 million for 2023. We had previously guided EUR 42.5 million-EUR 44 million. Our adjusted EBITDA will be in the range of -5.5 to -4.5 million EUR, where we had previously guided -3 to -1 million EUR. Our liquid funds will be in between 11-13 million EUR, with our previous guidance that included our capital raise earlier this year of EUR 15.8 million-EUR 17.8 million. So let's take a deeper look into this year's ARR development. We started the year with...
We ended 2022 and started the year with EUR 35.3 million. As of end of 2023, we were at EUR 37.0 million. As I mentioned before, we had some incremental revenue coming shortly after the end of September. So that basically brings us to EUR 38.3 million right now, if we count this in. So when you do the year-over-year comparison, you see that we increased Q3 versus Q3 by 10%. We also saw the revenues, the revenue increase picking up in Q3, and that trend will continue in Q4. So, some of the con...
Of the contract signings that we were planning to have in Q3, in addition to the Otto deal that I mentioned, have moved into Q4, but we are confident that we will be able to close these deals in Q4. Our overall customer churn has gone down compared to last quarters, but new logo wins, unfortunately, are still flat. So that's an area where we expect to see more improvements in the future, also with the impact of our Espresso launch. We have been working on many initiatives that will drive new logo acquisition up, but it'll. We've seen early traction. For example, we just had a customer win in the U.S. this week, due to our Espresso positioning.
But things take time, so it takes a few more quarters till we see that new logo sign up picking up. As we were able to grow ARR 10% on a year-on-year basis, our customer base went down, which means that ticket sizes, while losing customers, are still smaller than the ones that we gained. We will provide more details on ARR development in the financial section. So let's look at our current pipeline for the remainder of the year. As you can see on this slide, we have opportunities in the order of EUR 4 million-EUR 5 million. So on the left, see net upsell opportunities, which are existing customers that we know, where we have some opportunities to grow the business.
This also takes into account some known churn risk that we have with existing customers. So, our pipeline here is between EUR 3 million-EUR 4 million, split between, our EMEA region and, the Americas. In addition to that, we have, a total number of 10 new logos, eight in EMEA, two in Americas, that also have a pipeline of about EUR 1 million. So combined, that's a EUR 4 million-EUR 5 million pipeline for the remainder of this year. So let's look at our positioning, our strategy, and how we're approaching the market. As stated already in our, H2 earnings call, we have refined our go-to-market approach, as you can see on the slide here.
I just want to reiterate where we are and also talk a little bit about the progress that we made in each of these areas. We made really good progress with our BI acceleration by winning new customers and upselling existing customers. We launched our Espresso initiative that basically focuses us on accelerating an existing data analytics and BI stack. We are working closely with partners in that space, so the logos that you see here on the left side, Data Virtuality, Tableau, MicroStrategy. And then in the middle, we're progressing on articulating our AI acceleration story. So we have a deeper partnership now with Veezoo. Veezoo is a tool that provides a ChatGPT-like interface to data analytics engines, such as our in Exasol.
So customers can actually use natural language to query complex data and do their own analytics using AI technologies. We're also partnering with other companies in this space, and stay tuned. We'll update on future development in that sector in the future as well. And our data warehouse automation tool, the new product that we have in the market since the last... or for the last six months, Yotilla. We actually signed our first new customer for Yotilla this quarter, so it's the first customer, and we also established partnerships with Snowflake implementation system integrators.
So we are making progress with Yotilla, both on direct customer interest, as well as expanding our partner network. And we're complementing basically Snowflake and also Amazon Redshift data analytics engines with that. So let me give you a brief overview on what we did in terms of the productization, since our last update, last quarter. So by now, we introduced and launched the Exasol Espresso product. It's basically a next-generation in-memory analytics database, a core Exasol database, that allows customers to accelerate their existing data stack. So they don't have to replace their data warehouse with a new solution. They can bring in Exasol Espresso, and Espresso basically serves as the acceleration layer in an existing data analytics stack.
So, around that Espresso launch, we redesigned our website. So I recommend that you take a look at our new website. It has a new marketing video that's right in center of the website. So we're driving demand generation towards that website. We also improved and streamlined our trial experience based on our SaaS product for Espresso. So what is Espresso? So we're transforming business intelligence into better insights. So what does that mean? We provide customers with faster insights, so customers get to their data much faster. We're basically solving that spinning wheel problem that customers have. So they sit in front of their BI tool, and they wait minutes or even hours for the queries to come back.
With Exasol, we'll remove that spinning wheel and let queries come back within seconds. So anything below three seconds, that's the goal for any BI and data analytics query. We let customers go deeper, so they can integrate different data sources, combine them through the Espresso layer. And we help customers to optimize their costs. So the return on investment in bringing in an Espresso solution is up to 300% over an existing solution, 'cause customers could simply have the ability to reduce hardware requirements and gain more speed. As I said, we've signed our first new customer with the Espresso messaging. It's a company in the U.S.
It's a national leader in developing and marketing and distributing life and health insurance and retirement planning solutions. This customer will use Espresso to accelerate their predictive analytics in their insurance distribution. So we're very excited about that, and this also has some... It's a new logo win, and it has a positive impact on our North America business. So one key element of Espresso is its ability to connect to different features, which make data analytics for customers even more flexible. Today, Espresso easily connects to Data Virtuality and Veezoo. Data Virtuality allows users to extract, transform, and load data from all their existing data sources into Exasol. Users can easily create and automate data replication jobs for frequent updates without any line of code, eliminating the need for manual data retrieval.
Veezoo, briefly touched upon it already, enables customers to simply ask questions in natural language to query their database, and immediately get trusted answers from billions of rows of data, and offers smart suggestions for follow-up questions to guide data exploration. That really complements an existing data analytics stack, like I said, by providing a ChatGPT-like interface. It increases the connectivity of our database to other data analytic tools, and this is one important element of our overall product strategy. So overall, we see Espresso as a very powerful approach to support our new logo generation, which will help existing and future customers to get their data analytics to the next level. So thank you. With that, I'll hand over to my colleague, Jan-Dirk Henrich, for more details on our financial results. JD?
Thank you, Jörg. Let me now provide you with an update on the first nine months of the year from a financial perspective. As you will see, we were able to achieve a continued improvement in our profitability, despite the overall slower growth performance. But before we dive into profitability metrics, let's start with the review of our subscription metrics, in the 12-month rolling perspective, as usual. As Jörg mentioned, we ended the third quarter of 2023 with a 12-month growth performance of around 10%. In that, upselling to existing customers continued to be the dominant driver of growth. But in general, we observed a slowdown of the gross upsell rate to 160% from 120% in the year before.
As you'll see later, the slowdown occurred dominantly in our EMEA North region, but I'll go into some more detail on that later. ARR churn in value terms increased to 8% from 4% in the previous year, partly driven by some exceptional churn due to Russia earlier in the year. But as you will see in general, the higher ARR churn rate was also due mostly from our EMEA North region. Customer churn slowed down in Q3 compared to previous quarters and was now more in line with quarterly churn observed prior to Q4 2022, as you saw on the chart that Jörg led you through earlier. It was still elevated, on an elevated level, though, in the twelve-month view.
In the past 12 months, we saw a range of smaller customers consolidating their tech stacks, or focusing their IT spend in an overall more depressed economic climate. Also, the delayed release of our SaaS product, which we ultimately launched, in May this year, led to the migration of some customers to SaaS competitors like Snowflake. Overall, though, churned customers have lower average contract volumes than new customers. While the 24 customers that we lost had an average size of about 63K EUR, the nine new customers we acquired had an average size of a 100K EUR. Also, while the churn rate was elevated compared to historical levels, the single-digit churn we are exhibiting as a business overall is still comparatively on a low level within our industry.
Therefore, accelerating new customer acquisition is and remains the primary focus of our efforts, as Jörg has already pointed out in his section, and also going a bit in detail about how we're planning to do this with our three-pronged positioning in the market. Looking briefly into the ARR development by region, it becomes apparent that the observed slowdown in our global growth rate was driven mostly by our region, EMEA North. This is where performance weakened the most, with current net revenue retention standing at only 95%. On the positive side, we see a strong performance in our U.S. business, with 12-month growth standing at 29% as of September 2023, and as well, the net NRR retention rate stood at a very healthy 120%.
Now, if we look at the big deals that we're still expecting in the EMEA Central region until rest of the year, we're pretty confident that the net revenue retention in that region, and therefore overall growth in the EMEA Central region, will significantly pick up in Q4. Likewise, we are confident that we will be able to continue to build on the strong America trajectory that's already visible on this chart. Looking at our EBITDA performance in the first nine months, we're happy that we were able to continue to improve our quarterly profitability. If both the nine-month EBITDA and the Q3 EBITDA were well above the comparable period in prior year. Q3 EBITDA even improved by almost 75% compared to the same quarter last year, getting us closer to break even, which is and remains our clear goal for early next year.
This was achieved by continued top-line growth on one hand, but mostly by a further improved cost base. While this is true for almost every cost item, it's particularly true for personnel and marketing expenses. The improvement in the personnel structure compensated negative effects from necessary salary increases this year and inflation adjustments that were paid to our employees. So while the decline in the personnel expenses is not extremely significant on a nine-month view, looking at the inflationary effect that had to be compensated, we were very happy to be able to keep it constant or in slightly declining mode. Marketing spend is overall at significantly lower levels due to the termination of sports marketing activities, with the last contracts related to that now running out in mid-year, and showing full impact in Q3 2023.
This helped compensate rising IT infrastructure costs that were mostly related to higher electricity costs for server operations, higher cloud infrastructure costs, as well as required reinvestment into our server landscape. As you know, we limit our EBITDA adjustments to effect caused by IPO-related stock programs, as well as costs related to financing measures. As such, the adjusted EBITDA shown on this page does not include the approximately EUR 300,000 costs associated with the capital raise that we conducted end of June. While they are not part of the formal adjustments, I would also like to point out two additional non-recurring effects that have affected our nine-month results, as I did in our last call.
First of all, year-to-date personnel costs, as shown here, included roughly EUR 700 thousand of severance payments for changes we made to the management level in the company earlier this year. Among others, this included changes in the key functions of Chief People Officer and Chief Marketing Officer. These EUR 700 thousand of severance were offset by a EUR 900 thousand, one-off effect in other operating income, impacting gross profit, as shown on this page. That is related to research subsidies that have retroactively been granted to us by the federal government for the development of our technology. And that program promotes innovative products and grants with a subsidy of 25% of the personnel costs incurred for entitled projects.
Now, for the years 2020 or for projects in the years 2020 and 2021, we have been granted a net subsidy of EUR 900,000. As we continued to push innovation, we have meanwhile been granted an additional EUR 850,000 of research subsidies for projects undertaken in 2022. These EUR 850,000 will take effect in Q4 this year, and that has already been factored into our revised EBITDA guidance for the year. Overall, adjusted EBITDA, as shown here, was therefore positively impacted at the nine-month closing by a net EUR 200,000 of one-off effects. While we do not formally adjust for those effects, I wanted to nevertheless point them out to you.
Providing some details on our personnel development, the company consisted of a headcount of 185 Exasolians as of end of September, so that's not a big change compared to last quarter, as we basically converge towards our target range of 175-185 people. And we are therefore on a good level going into 2024 in terms of organizational size and cost position.
Looking at our cash bridge, we can see that the adjusted EBITDA of EUR -4.1 million, as mentioned before, adjusted by the EUR 300,000 cost of capital increase, were accompanied by an operational net cash burn of EUR 2.9 million, which excludes effects from final one-off payments of EUR 1.9 million for IPO-related stock programs, as well as the cash injection related to the capital increase earlier this year of EUR 6.8 million. Including these two effects, our cash position has increased by a net EUR 2 million in the first nine months of this year. Therefore, our overall cash conversion remains on a good level. This was achieved in an overall adversarial market environment, where payment behavior has overall worsened significantly.
Even with big customers, we see significantly deteriorated payment behavior, but by and large, we were able to successfully mitigate the effects of those. The cash performance that you see here on the chart does not yet include the cash impact from the research grants that I mentioned earlier. Because they, at the time of quarter end, we were still awaiting payout of those subsidies by the local finance authorities. I'm happy to share that meanwhile, these grants have been paid out as of this morning, so you will see the effects also from them in our cash balance by year-end. T hese effects have already been factored into our revised guidance, so this is not an on-top effect to the revised guidance that we provided, which I will come back to at the end of my section.
Overall, this cash performance has put our liquid funds to EUR 14.7 million at the end of September. For Q4, we expect another quarter of cash consumption. As stated earlier, some of the large contracts that were signed in Q3 and will still be signed in Q4 will not affect our cash flow this fiscal year, as they will be effective contract start date beginning of next year only. And while this puts our year-end cash position under pressure, this means that we will see a corresponding catch-up effect in cash balance in Q1 2024, as these contracts are invoiced and then also ultimately paid.
Now, with the changes in our product and market positioning that Jörg talked about, and several major upsells taking hold in Q4 this year, we are confident to achieve our stated goal of profitability early in 2024, bringing our continuous journey towards that goal since Q4 2021 to a successful close. That brings me to the outlook for the rest of the year. Despite the expected strong Q4 performance in ARR, our overall growth dynamic in 2024 was not as we expected and planned it to be. As explained, this was in large parts driven by three factors: One, a relatively sluggish new logo acquisition, which does not yet show the impact from our revised market positioning. Second, our overall poor performance of the EMEA North region.
And third, an elevated churn rate compared to historical levels due to the factors that I talked about in the ARR section. As a consequence, we adjusted our guidance for the full year to EUR 40 million-EUR 42 million, implying an overall growth rate of 13%-19%, or 16% at the midpoint. As a consequence, we also adjusted our EBITDA and cash guidance for the full year. Now, provided that the ARR growth this year will have dominantly occurred in Q4, so it will have a Q4 seasonality, which is even stronger than the one that we've observed in the past. The associated EBITDA and cash shortfalls versus plan will be disproportionately higher compared to the ARR shortfall.
Indeed, as some major deals, like the recent upsell with Otto, will only have a contractual start date on January first. There's actually no associated profit and cash impact before year-end within this fiscal year, with an according catch-up in Q1. We therefore adjusted our EBITDA guidance for the full year to EUR -5.5 million-EUR -4.5 million, and our projection of year-end cash balance to EUR 11-13 million. With a continued focus on cost discipline and the delayed impact of Q4 deals kicking in in Q1, we are confident to achieve our stated goal of break-even latest by Q2 2024, or within Q2 2024. That would conclude my financial update.
As usual, we look forward to meeting and interacting with you through our different channels during the rest of the year and throughout the next year, and hopefully also meet at the upcoming Equity Forum in Frankfurt, end of this month, where Christoph and I will be present and available for in-person meetings and discussions. And with that, I thank you for your attention, and we look forward to your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Gentlemen, there are no questions at this moment over the phone.
Okay. Jörg, you want to say the closing statements, or may I?
Okay. Thank you very much for joining our call, and I'll see or talk to you next time. Thank you. Goodbye, and have a nice day.