Welcome everybody to our earnings call for 2025. Sorry. Welcome everybody to our earnings call for LeadDesk for 2024. My name is Olli Nokso-Koivisto. I'm the CEO of LeadDesk, and I'm super happy to be able to present to you our 2024 numbers. As we've published today, we had a strong profitability in 2024, which now lays a good foundation for us for an ambitious 2025, which is a transformational year for us. I'm super excited now to be able to tell you more about it. Together later on on the call, I also have Kaisa Rönkkö, who's our CFO, who will be deep diving you into our numbers for last year. More detailed on the agenda. First, we take a deep dive into LeadDesk. What do we do? Who do we serve? Then we look at some key takeaways from last year.
We do a deep dive into Chisen, the acquisition we did late last year in Norway. Then we'll briefly look at our guidance before deep diving more into last year's financials together with Kaisa. After that, I'll be walking you through our strategy and the market outlook. At the end, we'll have a fireside chat and a chance for your questions later on there. Let's get to business. LeadDesk in brief. For LeadDesk, we have two main markets. One, our home market in the Nordics, and our growth market in continental Europe. Our home market, Finland, Sweden, and Norway, especially now with the Chisen acquisition, represents a major part of our revenues. At the same time, Finland, through the Chisen acquisition, has become the second largest market, with Norway surpassing Finland as the largest market for LeadDesk now.
This change is transformational, of course, as we are more and more now a European company, and we can focus on the broad market, firstly in our home market, and then also in continental Europe. Looking at the journey, deep diving into the journey since our IPO, we've managed to grow well. We have also managed to grow our profitability well in line with both organic growth, but even then surpassing that. We can really show profitable growth for last year. Last year's EBITDA, 15%, we are super happy about that. We see this as a development we want to continue forward. Key takeaways from last year from my perspective. Firstly, the profitability improvement. We did a lot of work concerning profitability last year. Now we can really build a solid foundation, which we can expand further.
International growth, as said, going forward, Finland is no longer our largest market. Norway has surpassed that. We see that well under 30% of our revenues come from Finland. Acquisition-wise, Chisen at the late part of the year is going to be transformational for the company and 2025. This was also supported by our early acquisition in the summer of Telematics, also in Norway. Now with these acquisitions and with our organic growth, we can really excel in that market. We've continued investments into AI. We've had follow-ups on that in our releases throughout the year. Last year, we've released five products to general availability on the AI field. Now all our customers, for example, have access to AI-based transcriptions of all the voice calls on the LeadDesk platform.
These really are great achievements, which then allows us for further development in 2025, for example, text analysis and AI training of other systems. This is a great achievement, and I'm super happy about it. We can offer it to all our customers as a standard included in the standard product. As earlier said, Chisen is a transformational deal for us. We're super excited about it. We get great access to healthcare and public sector, for example, now in Norway. This also allows us more scale, which we can then use for benefits on both efficiency, but also growth going forward. Last year, some 15% EBITDA. Super happy about that. We did a lot of hard work, a lot of hard decisions, and a lot of dedication involved in that. We reached the very high end of our guidance.
On the other hand, on the revenue growth and sales side, we managed to work on that as well. Of course, the majority of the focus was working on profitability, which we see also going up in the future, as you will see in our guidance. Short deep dive then into Chisen. Chisen is really a growth catalyst for us. It is transformational in the sense that we are really now a true European player. Our home market is strong. It is very strong. We can both grow and be profitable here, which is super exciting. At the same time, we get better access to, for example, the public and the healthcare sectors now in Norway, which, combined with our Finnish healthcare success, is a great synergy in itself. We will also be able to provide LeadDesk AI services to Chisen customers going forward.
At the same time, Chisen has great products such as, for example, Social Pods, which will then benefit existing LeadDesk customers. In a nutshell, Chisen before the recent 2024 profitability measures was around EUR 9 million in revenues. As we've stated, there will be a decline in that now. There was one in 2024. That is something we've taken into account. It's under control and handled. They've, for example, run down a product whereby then they've been able to now concentrate on more profitable business. On the EBITDA side, there's a lot of development in Chisen. As you've seen from the previously published numbers, Chisen has been hardly working on their profitability. We see these effects also then in 2025. There is, of course, going to be one-off costs relating to the integration.
Nevertheless, we are very confident and able to be guiding a lot higher EBITDA margin than for 2024. Super exciting. I think that this is going to be really transformational for us. Looking at the guidance for 2025. For 2025, we are guiding 23%-33% in annual revenue growth. This is, of course, helped by the Chisen acquisition, which we will see for roughly 11 months of this year. On the profitability side, as you saw, we reached the very high end of our guidance for 2024. Now we can really be confident in hiking that up to 14%-19% for 2025. Big things happening for LeadDesk in 2025. Very excited about that. Let's do a bit of a deep dive into the financials and the numbers.
Before that, we did have a leadership change going on now. Kaisa is now leaving the company, and we have Teemu Rautiainen starting as our CFO in late March. This is Kaisa's last call, but I'll let her in now to present the great numbers we had for last year.
Thanks, Olli. It is great to end my LeadDesk career with such good numbers. Now let me share the main highlights of last year's numbers with you. First, let's have a look at the revenue side. 2024 was a year of stable revenue growth with total growth of 7.9% in comparable currencies. This year, we also exceeded the EUR 30 million milestone with full year revenue reaching EUR 31.6 million. Relative organic growth was again strongest in continental Europe, especially in Spain and Netherlands. In absolute terms, growth was strongest in our Nordic home market. This growth was led by Norway, even without the impact of the Telematics acquisition. For the annual recurring revenue contract base, our growth for last year was 3.4%, reaching EUR 26 million at the end of the year.
This growth was somewhat slower compared to previous years, mainly due to our conscious decision to focus on more profitable clients. If we move on to the profitability side, and this is what I'm most proud of, I'm very proud of the development we've done over the past couple of years, and especially during 2024, when we reached almost 15% of EBITDA margin. The improvement in EBITDA margin was driven by the scaling benefits as revenue grew, and also our other profitability enhancing measures, such as the previously mentioned decision to focus on more profitable clients, and also our strong focus on efficiency improvement. Naturally, we've continued to keep the strict cost control that we initiated some while ago. Of course, this profitability improvement is also visible in our cash flow.
The operative cash flow for the full year reached EUR 4.5 million, which is a EUR 1.3 million improvement from previous year. We managed to keep the networking capital in control while growing the EBITDA. In addition to the positive cash flow from operations, our overall cash position was further strengthened by the sale of the minority stake in ProFinder at the end of November. This had a positive cash flow impact of EUR 2.6 million. This was all from the main financials. I will now let Olli tell you a little bit more about our strategy for this year.
Thank you, Kaisa. We've sharpened our focus. We're now focusing firstly on profitability and then on growth. I'll tell you all about that now. On our targets, they remain the same. We want to be the number one in Europe. We want to be the number one contact center software in Europe with 1 billion customer interactions annually, with EUR 100 million in revenues, and with a nice 20% EBITDA margin. This is our target, be number one in Europe, 1 billion interactions per year, over EUR 100 million in revenue, and a 20% EBITDA margin. Exciting target. How do we reach that? That's going to be reached by both the home market growth. Nordic, Finland, Sweden, Norway, we're going to be growing here. We're going to be doing it profitably. This is a core foundation for our other activities.
The continental market is huge. We see that by excelling in that market with focused efforts, we can really then do nice growth there going forward. As we know, inorganic growth is important to us. It's a very good market now for M&A and non-organic growth. There are double the amount of competitors on the European market compared to the U.S. There's a lot of local champions. The European market has been very fragmented. Going forward, you need continental scale that we have in order to excel. That's why the inorganic growth part is very good for us. On top of this, we see there's going to be a lot of opportunities for us to take the extra step in AI with new AI tools helping our customers out in handling the customer interactions. It's a huge potential for us going forward.
We are currently successfully executing on the strategy that we've communicated. We are focusing on strengthening our profitability. This will enable us to have an even stronger financial foundation going forward than on the next step, which is larger growth and larger focus on organic growth. It also allows us to execute successfully on the M&A strategy. We've been doing good acquisitions where we've been able to get scaling benefits and work on our profitability together with the scale. That is something we really want to continue. At the same time, we are looking at also heightening the organic growth going forward, especially in the later part of this year and going to 2026. Our Northern Star, EUR 100 million in revenues, 20% EBITDA margin.
With the current setup, I feel comfortable with this target and very excited to be able to strive for that. The whole organization is behind reaching these targets. When we look at the market, let's look at the market a bit. The CCAS market, the market we're in, contact center as a service, is over EUR 1 billion market in Europe in the markets where we're at, with the split between SME and enterprise, roughly 50-50. Especially in the continental market, still some over 40% of the potential customers are working on an on-premise solution. This is a lot different in the Nordics. Still, the continental market is relying quite a bit on legacy on-premise solutions. The market in itself is then divided into outbound contact centers, call centers, and contact centers.
The outbound, typically sales side, that's still quite a bit one channel. That's still telephony. Then we have the call centers, which is telephony going in and out, especially, for example, transportation, healthcare sector, public sector. They are focusing quite heavily still on the call center market. You have the contact center market, which is all channels, social media, messaging, telephony, all combined. We can service all these different subsegments. Looking at the growth levels in the markets and why we've decided on working on more profitability in the Nordics and having the growth market focus more in the continental market. If we look at the numbers, these are by Frost & Sullivan. Frost & Sullivan expect 16% growth in the continental market going forward, while at the same time the Nordics is at 8%.
We, of course, need to be a part of this growth and are part of this growth in the continental market. This is where we will excel also in the future, while, of course, we at the same time need to grow in the Nordics. We need to be more conscious of the profitability choices we make here. Simply put, continental market, it is a huge market growing faster, the Nordic market growing slower. Here we can really work on our profitability together with growth. On the short-term outlook, this remains largely the same. There are some tailwinds and there are some headwinds. Going then to the first tailwind here, there is still quite a bit of enterprise investment depth. The market situation for mid-size and large companies is still hard, which means that they have had to look at their cost base very tightly.
Of course, then that builds up the investment depth that we can help. LeadDesk is very easy to take into use. It has great potential to help customers with their profitability and efficiency targets. At the same time, of course, on the headwind side, there's still the economic situation. Companies are slower to move and make these investments. On the headwind side, on tailwind side, there is a great need for efficiency, especially in the Nordics. We see this. This has changed a bit now in the continental market. Especially in our largest market, in our home market in the Nordics, there's a lot of need for operational efficiency. We can really help in that. At the same time, of course, the flip side of the coin is that the customers, they want to curb costs.
On that, we see, for example, oversubscription levels at a really low level. Customers are really tight on having just the right amount of user accounts activated and all that. They are really looking at what they are paying for. That is, of course, a headwind for us. At the same time, we are the ones to provide the efficiency. For example, with one of the AI tools, the AI dialer, we saw a 20% increase at the enterprise customer after taking that into use. That is the kind of thing that we can then help out with. AI adoption, it is a big topic. AI adoption, especially in contact centers. Here we see that we can help our customers out with their AI needs. Our customers are relying on us for all their customer communication.
We have the strings connected to our system. We have the data, which we can then use to provide these services back to the customers. They do not need to go to a separate provider, think about master data and all that. It is all here, easy to take into use, get the efficiency gains, and get the benefits. On the flip side, there is a lot of regulation coming, especially from the EU, regarding AI, the Digital Act, and so on, which, of course, then makes especially the larger customers hesitant into taking these new features into use, which we can, of course, as a major player now in the European market, help with as well. There is still the hesitance that we see. All in all, to summarize up, we had very good progress in the second half, especially super happy about the profitability.
We did a lot of big work on that in 2024. Cision acquisition is transformational for us. Norway is our largest market. We can address the public sector, healthcare even better in all our home market countries. We can now confidently guide revenue growth of 23%-33% together with a nice EBITDA margin of 14%-19%, which is a clear increase from our previous guidance for 2024. Very excited about 2025 and happy, especially on the profit development in 2024. That concludes this part of the earnings call. We will continue with a chance for you to ask questions. We will have a fireside chat going forward. Thanks, everybody. See you in a minute.
All fireside chat. My name is Lotta Buckland. I'm here to host this fireside chat and ask my questions and yours from Olli and Kaisa. Some housekeeping to begin with. The webcast that you are watching has a little chat box. Please deposit your questions there. I will be keeping an eye on the chat room and conveying all your questions to Olli and Kaisa. First of all, thank you for the presentation. Congratulations on the strong profitability development. You exceeded analysts' forecasts in terms of revenue and profitability. Is that correct?
Yes.
Very good. Now, in fact, your EBITDA margin target for 2024 was 10-15%. Now for 2025, it's up. It's 14-19%. Now, looking into the future, where is this margin boost going to come from?
Yeah, first of all, we're already at 15%. Within that new guidance. Going forward, we're just going to keep doing what we've done so far. As our revenue continues to grow, we will enjoy the scale benefits. We will be also benefiting from the Chisen acquisition, helping with the scale from that. Of course, there will be some, of course, related to that integration. Those are taken into account in that guidance. We are very confident with that new guidance.
We've done a lot of hard work regarding profitability in 2024. I see that this will keep on benefiting then for 2025. As Kaisa said, the scaling benefits of Chisen also really helped there. Very, very confident in that.
Cool. Lots of questions coming in in the chat, I can see. Let's talk about Zisson a little bit first. It was a big acquisition. Can you tell me a little bit more about the synergies that you expect, both in product development, in revenue, in cost savings?
Yes. Looking at Chisen, they have a great product, especially in the public sector, healthcare sectors, where we also have a great product in Finland for the healthcare sector. Here, I see a good combination happening. We can really focus on that area. Public sector, the healthcare sector especially, is going to be a big thing going forward together with Chisen. On the other hand, Chisen had a great product called Social Pods, which not only handles the private social messaging, which we already have on our own platform, but also on the public messaging side, which has become more and more popular in the last years, including TikTok and Instagram and all that. We can really leverage that for cross-sell and upsell going forward then as well.
All right. Very good. There is actually a Zisson-related question here. Are you seeing the improved access to healthcare sector more as an upsell opportunity, or do you think you can win new clients in that segment with the combined forces?
I think that it's both, of course. We can service better and wider. At the same time, this really helps us to win new customers. As combined, we have an even better product. Especially in the Finnish healthcare sector, CoopAx and CoopAx systems and the functionality related to CoopAx has been a key. While in Norway, it hasn't yet been and played as big of a role. There are great opportunities for the combination of bringing some of the learnings from Norway, combining that with the learnings in Finland, and also addressing the Swedish market better.
All right. How significant of a revenue contraction are you expecting to see for Zisson still in 2025 due to the product ramp-up? Is Antti's question.
Ramp-down, I guess.
Right. Ramp-up.
Yes. Yes. As part of the efficiency measures, Chisen has ramped down a product they had. That was already done some time ago. Now the last customers are leaving or have left that platform already. We know and we've modeled all that. It's in all our financial calculations. It's well handled. It's well taken into account in our guidance for 2025. I feel very comfortable with the guidance there. That takes all these into account. Of course, profitability measures have their price. We're happy to see a stronger Chisen now than it was previously.
All right. We have some numbers questions. The ARR decline in Q4, what was the main reason for this? Is Jakko's question. Did you see some large customer or customers leaving? If so, in which geographic area? What was driving this? Competition?
In 2024, we've had to work a lot on our profitability. That includes also more concentration on the profitable customers and modeling our ideal customer profile, ICP, better so that we can really address those customers which are profitable for us and where there's least effort, of course, then for us in the onboarding. That's something we've really worked on and have had to make conscious decisions on, who do we serve in order to get to the profitability levels that we've been able to achieve. Of course, then the profitability levels that we are now guiding for 2025.
There is a question here. Your revenue grew much faster in Q4 than earlier in the year. What were the drivers behind this? Is that what you were talking about here with more profitable clients?
Yes, more profitable clients who have also the possibility then for more professional services as part of the onboardings and looking at the total dynamic of the customer relationship. That is a big item for us and has been a big item for us in the second half, especially.
We previously talked about the onboardings of some larger enterprise clients. Those are visible in the H2 numbers.
All right. Some M&A questions. You have some capacity left after Zisson. However, are you ready to make next steps already in 2025, or do you need to digest Zisson transaction first? Let me just combine it with another question, which are you still focused on M&A to gain market share in the Nordics, or has your focus started to shift towards continental Europe?
Yes. Looking at 2025, the first part of the year, we need to concentrate on Zisson integration. We really need to execute fast on that to enable us to look at more M&A opportunities and to execute on that. Of course, we have to now really concentrate that we get the benefits that we are looking for in the Zisson merger. After that, we can then start looking at other opportunities. I think that M&A for 2025 is totally on the table. We, of course, have to do it diligently. We have to execute well on the Zisson integration now and get those benefits that we are looking for.
There was the other part of the question on whether your focus has started to shift towards continental Europe, or are we still looking at the Nordics?
Yes. Looking at that, Nordics is still super interesting for us. It's our home market. Here we can really excel, as we do have already teams, both back office and front office, in all the Nordic countries, Finland, Sweden, and Norway. Also, these integrations are a lot easier, and we do get scaling benefits faster. Nordics is very interesting to us in the future as well. When it comes to technology, for example, technology acquisitions and product acquisitions, complementary product acquisitions really make sense in the Nordics, where we already have that development capability, the product management capabilities, and so on. We have a great customer base to leverage.
There's a quite specific question about the continental growth, which is from Jakko. Your continental European growth is driven by Spain and Netherlands. How is Germany performing given the legacy of low SaaS penetration?
Yes, that is true. It is also visible in basically all the market statistics that Germany is a slow grower in market adoption. At the same time, we do see that the adoption is heightening. I was just this week, I was visiting the Contact Center World Congress in Berlin together with the pod. What you see there is that it has changed now. Still last year, you would see hard phones on sales, those traditional hard phones, landlines, and all that. This year, I did not see any of that. The AI message and the cloud message is crisp and clear now also in Germany, which is different from last year, a few years back, especially. With the advent of AI, I think the German market will change as well. They will adopt more cloud.
I'm glad you mentioned AI. Obviously, I don't think there's a single results call this year that doesn't mention AI in any company. Jakko has a question regarding your largest customers who seek efficiency gains via AI. Do you see them developing own AI tools to improve efficiency, or is LeadDesk able to deliver the AI-related efficiency with the features you have created?
Both. Both. I see that the very large customers, they are very conscious of AI. They own their own AI vision. When it comes to executing on that vision, we see that especially in the customer communication setup, we are the partners who can provide the technology to support that. For example, with our AI-based transcriptions included in the packages, with our conversational AI, and so on, we are a very important part of that. If you think about a customer who runs their customer service on LeadDesk, they have all their emails, all their calls, all their customer interaction on our platform. We can help them leverage their own data straight away. You do not have to go and train somebody else's conversational AI. You have all the data already in the system.
It is just about turning features on and doing fine-tuning instead of a large project. I think that this is the dynamic that's happening now, that we can really help when it comes to the customer interaction part of the AI vision. With the mid-size, small companies, it is, of course, different. They are asking us and having us then help them gain their efficiencies. For them, they are not so much buying AI, but rather now the conversations with customers have turned to the benefits. It is just that it is provided by AI. The dialogue has changed a bit to talking about the benefits instead of the features.
You did mention in the presentation that five AI-powered products were in production by the end of 2024, and more were to be launched during 2025. What kinds of new product features do you expect to launch in 2025?
Of course, there's going to be multiple. One of the things that I'm very excited about is what we can do now that we have all these transcriptions happening for our customers, what kind of analysis we can build on that. Now we have the base capability. All our customers have the base capability of texturizing all the conversations on the telephone. Through that, we can provide, for example, agent coaching, AI-based agent coaching, automatic quality assurance, and helping them out in summarizing the calls for their CRM, for example. This is super exciting stuff that really helps our customers out. I actually just heard this week that we were invited to a large customer. It's a large Norwegian customer, where they wanted to bring us to the board to show the great stuff that we've been helping them out with.
I think this is the kind of message that I'm really happy to hear.
That's really exciting. A very specific question coming from Arnet. What was the churn in 2024?
We haven't given any churn figures per se. On the ARR growth for last year was.
3.4% in comparable currencies. There has been some churn. As Olli mentioned, we haven't disclosed that specific number. We are not disclosing it at the moment either.
There's a question about organic growth. Your organic growth in 2024 was some 5%-6%. Given that the growth was driven by the European market, could you describe the reasons for muted growth in the Nordics?
Yes, as we've said. We are focusing our growth efforts and have been focusing the growth efforts in 2024 on the continental market. We have been focusing our profitability actions on the Nordic market. That has been the focus. That is also in line with the results. The focus point has been quite heavily, as you can see, in the great results on profitability. That has been driven by the Nordic profitability. We have been focusing on growth in continental Europe.
Geopolitics these days affects everything. Jake has a question here. Maybe Jakko, Jake. Will Trump administration have any effect on the business going forward?
For us, we are focusing on the European market. This is the geopolitics are actually a great point here. There's a huge moat to enter the European market from the U.S. due to the high regulation that we have here and the very varied market. We have many countries, many languages, and local laws, regulations, a lot of different teleoperators. There's a lot of different competition in different countries. By being a continental champion and focusing on the European market, we can work with our strengths here. Just in actually CCW, I was meeting up with a prospect.
What's CCW?
In the Contact Center World that I mentioned. In the Congress, I was meeting up with a prospect who was anxious to change to us because we know the market and we have everything they need in the European market. They had a good solution, but it wasn't fitting to their local needs. This is something that we can really provide for European companies.
All right. Arnet has another question, which is the share has a muted interest. What will you do to increase the interest and increase traded volume apart from doing the good operational work you do?
Yeah, I think it all comes down to the operational work. Showing the profitability, higher profitability now together with the revenue hike, there's going to be more interest because of that being more international. Norway being our largest market now, having more visibility in Norway, and, of course, Sweden going forward, these very exciting things. Investors, of course, are typically also conscious of their local markets. For example, after the Zisson acquisition, I've had more interest from these kind of companies that are these kind of investors that are more international focused. This is, I think, some dynamic that will continue as we are less of a Finnish company, even though our HQ is here and our DNA comes from here. We are a European company. That is something that I see having an impact.
The continental European growth then, could you open up a bit more of what kind of customers you are winning and from what type of competition are you winning these clients?
We are winning more on the mid and large side. That is the market where we're more winning now. That is due to the conscious decisions of working on the more profitable markets. I'm happy to say that we are, for example, winning from the US competitors who've managed to win, for example, enterprise customers in Finland. We've been able to win them over to us, partly due to AI and our capabilities there, but also that we know the local market, we know the needs, we have the perfect product for these markets. That is something that I'm super actually excited about, that we can move up market now. We are really a credible player with a great product on that market as well.
Okay. Antti here is trying to find out something that I'm not sure you guys are going to be able to talk about. His question is, have you discussed share buybacks with the board? Obviously, you have strategic interest in M&A, but with increasing cash flows, this might not be an issue. Can you talk about what talks you've had with the board?
Yeah. Of course, it's all about capital allocation. Like where do we see the best capital allocation from the point of view of the shareholders and point of view of executing on our strategy. In our strategy, of course, now we are looking at profitability. That's the first phase that we're now in. That allows us, of course, to work in organic means in many ways. We also see that the market is transforming. We have a really good track record of M&A. That's the other option then. Like do you want to invest in organic growth, in M&A, or do you do own share buybacks? That's the capital allocation question, of course, that the board always has to consider.
So far, there is that northern star of reaching that 100 million. Keeping that in mind, maybe that answers the question also.
Right. The 100 million, you had actually a very interesting investor presentation in November. I watched it online. If you just go to investors.leaddesk.com and just scroll down on the page, you can find the video titled Investor Day 2024 and all the accompanying materials. You talked about strategy a lot there. Today you mentioned that you will strengthen profitability and focus on growth. How is that going to happen? Do you want to talk about that a little bit?
Yeah. That is going to be two-phased. Now we are looking at profitability and especially like now if we concentrate on 2025, we are going to be focusing on the benefits we get from the scale together with Zisson and with the new market focus. That is something we are now working hard on. Going forward, once we reach a level of profitability that we are comfortable with, that this is the great foundation we can execute higher organic growth and more M&A on as well, we will start investing more highly even on that. Of course, we will be continuing efforts throughout the first phase as well. Now the focus is really on profitability.
All right. I think those are all the questions that we had in the chat. Thank you so much for being very active and for writing in all of your questions. Now I hope everyone's just going to go out and buy a bunch of shares. I can say that because I do not work for you. I think you should do that right now while you're at your keyboard. Thank you so much, Olli and Kaisa, for this chat. Congratulations on a great year.
Thanks, Martin.
Thank you.
Thanks, everybody.