Good morning, and welcome to the first earnings call of 2023 for Cyviz. I'm Espen Gylvik, the CEO of the company, and with me today, I have Marius Skagen, the CFO of the company. We will take you through the agenda today, approximately 20 minutes, and after that, we will open for questions. Let's just kick off on a good Friday. I'm extremely happy to be here today and share the financial results of the Q1 of 2023 for Cyviz. We have strong growth on all financial KPIs. As we said after Q1 2022, quite a tough bet on Marius and on my end that that should be the last quarter Cyviz would report negative EBITDA.
I'm proud to say that Q1 2023 is the fourth consecutive quarter with positive EBITDA, a strengthen of Q1 2022 to Q1 2023 with NOK 21 million on the EBITDA side. close to doubling our revenue and improving our gross profit with 124%, making Q1 one of the best quarters ever for the company. The order intake, as we have stated early, also when we went public, of aspiring to grow +30%, is still continuing to grow. The order intake for the quarter was NOK 157 million, giving the company an opportunity to continue the growth journey we are on. With that, I think we move to the next slide. Order intake is important for us as an underlying proxy on how the company perform and how we will perform going forward.
If we look at this from a perspective of when we went public and up until today, we have grown our order intake with more than 3.5 times. Now with NOK 447 million growth, which is a strong indicator that the strategy we applied from January 1st, 2021, is continue to pay off. I am also pleased to see that the order backlog, which is the proxy and the indication for Q2, Q3 revenue, is at close to all-time high with NOK 302 million. We have also seen a very good development in our gross profit with NOK 110 million improvement since last year. As I stated in the beginning, this is the fourth consecutive quarter with positive EBITDA. EBITDA have developed in a positive direction with NOK 56 million since last year.
I like to reiterate that it is driven by a couple of very, very important things. First and foremost, 170 very passionate, dedicated colleagues that goes up every morning to, like, make a difference for the company, our customers, and the shareholders. A key decision we made early 2021 of investing in critical components with a view of challenges on components hitting the market at some point late 2021, early 2022. That has given us the opportunity to continue to deliver to customers on customer expectations on quality and time, and also provided a very strong competitive advantage towards those we compete with on a global scale that is betting on a different type of architecture that have had 52-70 weeks of lead time.
This is just an indication on how the future is developing on order intake, on gross profit, and EBITDA in a 12-month rolling perspective. Okay. Just wanna spend a couple of minutes for those of you that are either new to this company or who have followed us for a while. We are a global technology provider for comprehensive conference and control rooms, as well as command and experience centers. I mean, the company started in 1998, and we have created the next level collaboration spaces that assures inclusive meetings and create the right level of experience for both in-person and remote workers. This is the concept of hybrid work that became quite obvious during COVID, and not at least after COVID. We serve global enterprise and governments with the highest requirements for usability, security, and quality.
Our cross-platform experience that we deliver to manage and control systems and resources across enterprises is what makes us the preferred choice for both regional and global customers with complex needs. With that, I think we move to today's most important thing, the business highlights. Marius.
The business highlights. Thank you very much. First of all, we are very proud of our booking this time. It is a 31% growth compared to the same quarter last year. Remember now that back then, that was an all-time high for us. We have raised the bar every single quarter now for ourselves, for continuously outgrowing both the market and increasing the share of wallet. This is sort of a picture that we continue on delivering on our growth journey. Remember, the, the trend is evident from Q4 and also into Q1 in terms of the diversification of the portfolio. This time, the NOK 159 million in bookings are spread across a wide array of customers.
Demand for mission-critical solutions, high-end collaboration rooms continues, evident through some of the most significant wins that you are seeing right now. Some of them, let's take the $6.5 million dollar deal that we did late March. That is a returning customer for us. We are delivering that to a government and defense customer, plus 60 high-end meeting rooms, operation centers. That is good for us to see that the demand continues. Also, on the left-hand side, you see the $1.9 million dollar deal awarded to us. Strategic importance of many reasons, but this time we deliver boardrooms, we will deliver executive collaboration, and high-end meeting rooms for an energy company.
That is a good segue to sort of shed some light on that vertical, because last year, same quarter last year, the energy vertical for us made up only 1.3% of total bookings. This year, as you can see from the pie chart, down left, it's 12%. For me, that absolute figure is not the most important thing. For me, is that those 12% is not made up of one single deal. Again, spread across a wide array of customers, both in Europe and in the Middle East. With that, would you like to share some insights, more insights on sort of the activity level we see now in the verticals, regions?
Sure, I can. I think it's important also to, like, just make it very clear. When you talk about percentages, I mean, a percentage is a percentage, but at the end of the day, the value of a percentage is based on the number you use the percentage on. The booking numbers are way higher this quarter than it was in Q1 last year. 12% of a much higher number is still a significant amount of dollars. I think what we are trying to elaborate here, and what Marius is focusing on, is we see a very continuous positive trend of existing customers continue to buy over and over.
Some people might say, "Yeah, maybe you have delivered so complex solutions, so it's really hard to change." I think the fact is, and we know that also because we do, I mean, customer service survey every year to figure out, I mean, what can we be better at? What are customers satisfied with? I think it's a sentiment from customers to our company that what we deliver delivers on or beyond their expectation. That's why they continue to buy. I mean, a customer spending close to 70 million NOK on an additional purchase on an existing, I mean, relationship with Cyviz is for us, I mean, exactly what we are striving to make happen every single day. That is to create satisfied large customers buying over and over and over.
I think as Marius mentioned briefly, we see a positive uptick, especially in the energy sector right now.
We do.
Probably a consequence of higher oil price, higher gas price, more cash into the company. It gives them some sort of like a financial incitement to invest in modernizing their digital collaboration type of technology. For us, it's great. Knowing up that our competitors has bet on building physical things on site with a technology that has 52-70 weeks lead time, it creates tons of new opportunities for us to gain more market share and delight more customers. Yeah, we have seen a small, not like a stalling, but a slight dip in the private sector or the enterprise sector with certain large global tech companies in particular.
I think most people have, that reads newspaper, have seen that a lot of these large companies have done some sort of cost saving exercises, done some sort of layoffs to align their type of cost base and business model for future growth. We talk to these companies more or less every week, and I do see a positive trend picking up again from Q3 this year, when most of these companies are entering into new physical year. I think the diversification that Marius talked about in 2022 and today as well is really paying off because we have that ability to continue to grow even though one part of a vertical starts to slow down for a period, we compensate by increased growth in others.
During the last six, seven, eight months, government defense have definitely been that type of vertical that have picked up and are a key part of the growth we see in Q1, and also the growth we expect to come in Q2.
Absolutely. It creates sort of a natural hedge in the total business model and through the portfolio. All right, financials. The headliners you already took, right? Strong growth on all financial KPIs. Some more insights to first the revenue. We entered this quarter with NOK 273 million with a backlog. We turned that into a 97% growth. That is a good figure. Regardless of percentages or absolute number, it is a good figure. It is the highest revenue ever reported in Q1 for Cyviz. That revenue is generated through both large and medium projects. Good, sort of returning accounts like Accenture, you have Aker BP, you have Archaea generating that both in the U.S., Europe and the Middle East.
For this quarter, North America was the largest commercial region and making up 35% of the total revenue. Pay also attention to gross profit and the coherent gross margin of 48%. Again, the highest figure we have reported since we went public. It is good, it is driven by several accretive factors. Most important in my world is that we now see higher margins than we anticipated from large and medium projects spread again across the verticals. Also, needless to say, we have accretive effect of the strong dollar versus NOK.
If I even just add one comment to that.
Sure.
I think it's also a consequence of. I mean, we started. I mean, when we launched our strategy for growth, profitable growth in 2021, we also saw that we have tons of things internally that we could improve, including like professionalizing every single type of interaction internally. I think also the type of collaboration between the front end, like the sales part, and the ones running operations, is working way better today. I think this part of this is also a consequence of less margin. It's just falling down to the floor that we don't control. It's a combination of a lot of internal efforts, but also the ability to put more value in the conversations we have with customers, allowing us actually to charge better margins on projects than we've ever done in certain regions.
It's a mix of currency, professionalism, and the ability to, like, convey customers to invest more and pay more for high-quality solutions from Cyviz.
Yeah, I know that. That is a good drill down. EBITDA-wise, again, we started last year -18.3. We spent this quarter turning that into a 21 million growth or improvement. That's a good thing. Meaning we leave now, this quarter or the Q1 , with a rolling twelve-month trend of NOK 30 million. Bookings, we've been told, on the previous page, 31% growth. It is compared to a quarter that was all-time high back then. Comparing to the quarter in 2021 to extend the line a bit, you see a 80% growth. That's a good. Insights more on the sort of pie chart that you saw on the previous page. Q1 of 2022 was dominated by the corporate segment, with Accenture owning almost everything.
That made up 60% of total bookings last year. This year it is 37%. Still good, I like it, but I like it way better when I drill down on those 33% or 37% because it is not dominated now by one single client. It's spread across a wide array of customers. Needless to say, we believe this is a strong quarter. We are proud of those NOK 159 million, but, and it needs to be a but, the lion's share of the bookings arrived late in the quarter, and that had some short-term negative effects on cash flow, which I will drill down on right now. Overall, we deliver a negative operating cash flow of NOK 7.1 million. Now, that is still an improvement of NOK 60 million compared to last year. The key drivers this time for Q1 is pretty simple.
I'm gonna make 3 of them. One, we needed and need continuously to do strategic ramp-up of inventories. We need to secure those strategic components and hardware. That has increased or that contributes to that negative operating cash flow. Number 2, that follows an operational high activity level, which triggers a high volume of payables that we need to have in terms of vendors and sub-suppliers. 65% of bookings arrive late, meaning, late meaning the last 2 weeks of this quarter. That will have no positive cash effect before they are due during Q2. That's sort of the top 3 things I would like to point out from my from my view. Please elaborate a bit more on the strategic ramp-up. I think that is a basic need to know.
A lot of the things we are doing as a company when we deliver complete solutions is like a project-based sale. That requires that we do use our own technology from hardware, software, platform, et cetera, and corporate that with third-party, the best of third-party hardware on matrices and displays, et cetera. I wouldn't change our strategy for a second. I mean, we are growing so much faster than anyone we compete with. We made smart decisions back in 2021, we have been very consistent on staying on that. We know that with large volumes coming late in the quarter. cash flow might be impacted in that quarter by itself, but it also going to be gradually like smoothing out when you move into the next quarter and then the following quarter.
As long as we don't like, put too much pressure on our type of cash and credit line, so we can continue to be forward-leaning and aggressive when it comes to like growing our business, we will continue to make decisions that allows us to gain market share, grow faster than our competitor, and make smart decisions on behalf of the company. I mean, it's quite obvious, but it might have a negative effect on the cash flow outlook for a quarter isolated. Over a 2, 3-quarter timeframe, you would see that that smoothens out.
You know, it would definitely be negative if it was not triggered by high operational activity.
Exactly.
I would be nervous. We said that also during Q2 last year.
Yeah.
It ended well during Q3 and Q4. Just a snapshot now of the accounts receivable, you see almost or above NOK 89 million. Pay attention to the first figure, that is overdue from last year. That made up 1.6%.
Mm.
of the total invoiced amount from last year. Now, revert two, three years back from Cyviz, you would never see that figure.
Nope.
Way much higher.
Yep.
That comes as a consequence, like we stated, midterm last year, increased or improved that process of cash collection. We stopped the bank behavior and improved the way we collect cash. We have overdue or the snapshot now shows, ultimo Q2, we will receive NOK 89 million. Again, we are confident that the cash flow will normalize during Q2 and Q3.
Yeah. Just going to be very, very, very short on this. I mean, we have, I think, talked about most of these things. I think the most important things here is when you look at the sectors, it swings. I mean, there was a time where Microsoft, I mean, round up like 70% of a quarter.
Correct.
Things floats around, and there are things that potentially like put the slowdown on that, and then they come back. I think the difference in Cyviz today versus a couple of years ago is that we have a much better and broader customer portfolio base. We also have more people working across multiple verticals than we had a couple of years ago. That gives us the opportunity to always have that type of opportunity to pull either in the left trigger or the right trigger to balance. When Q1 2022 was like largely driven by corporate, you see that Q1 this year is more driven by government and defense. You would have more of a balance during Q2, and you might have a larger corporate portion in Q3.
It's just an evidence and a sentiment that executing on a core strategy with 170 dedicated people every single day gives you the right level of opportunities to continue to grow our business and reduce a lot of risk you historically would have had because you were too dependent on one or two specific verticals. I think that's quite important. The book-to-bill ratio is still good. I mean, as long as that is higher than 1, we just prove that we are able to pull in more new business versus what we turn into revenue. Even though we are growing revenue significantly quarter- by- quarter, should serve as a good indication for those who pay attention to the company and our shareholders that the growth journey will continue in Q2, into Q3, and also at the end of this year.
The final slide, just wanna reiterate, there is no doubt from our board, from us, from the expectations from the market, that profitable growth is the single most important parameter that we focus on. We also have had a need to reach some sort of critical mass in running business to capitalize and build that type of profitable growth engine. I think we are in that landscape today. I'm pretty sure that we will continue to prove that during this year. We have a strategy that was built and launched in 2021. We are quite prudent and consistent to deliver on that. We have also talked about the new type of directional add-ons to the company to improve margins, build a much bigger recurring software base.
I do see a lot of positive trends now on our platform, the new services, the services we are going to launch in the market early Q3 as well. We have tested it with some of the largest companies on the planet. They have signed it off, approved it both for internal and external usage. I am extremely positive when it comes to the future outlook to use the essence of Cyviz technology around the platform and everything we integrate on that to take the next step of driving profitable growth for the company. I mean, we compete in a global market with some large global, a lot of regional. Most of them have put all their bets on building from scratch solutions to compete with Cyviz on a Crestron framework, for those of you who know that. Crestron did not pay attention in 2021.
They provide still a very, very long challenging lead time for all our competitors, for 52-70 weeks lead time on specific components. We are using that type of opportunity for everything it's worth, and we'll continue to go out aggressively and drive growth in new biz as long as that window is there. Our next level collaboration solutions is quite sought after in the marketplace. We see a much higher type of inbound request as well from completely new customers and also partners that would like to take our technology out to their customers. I mean, for a 20th second my view on the future, we are where we should be, slightly ahead of plan.
The outlook for Q2, Q3, and Q4 this year looks quite promising, and I'm quite confident that Marius and I, quarter- by- quarter, will have a chance to stand here in front of all of you and tell positive story and prove that what we commit to the market is something we are capable of delivering on quarter- by- quarter, month- after- month. With that, I think we round up and open up for questions.
Good. We have some. We have five actually. First one is from Jan Tore. Are you able to utilize AI in your business?
That's a very good question. I mean, the simple answer is yes. We are definitely in a place where we technicality and theoretically and strategically should find ways of utilizing AI. It's a part of what we have, like, started to elaborate and evaluate internally. We are actually, as we speak now, setting up an AI workshop also with external specialists to see how we can, like, take advantage of the right part of what AI provides today and in the future to enhance our solutions, automate a lot of the type of functionalities and services that our solution provides to customer today, to create more competitiveness, but also build additional services through the platform that also would positively stimulate and build up on our SaaS recurring business model.
Yeah. On the services side, we have another one. You have previously talked about future profitability deriving from new services related to platform, including Teams agent, monitoring, tunnel agent, and what have you. Any news to report there?
Sure.
He asks.
I mean, in general, I mean, don't get caught up in some of the namings because, I mean, some of these are internal type of just, like, work names. I mean, the monitoring agent and the tunnel agent, as you mentioned, we do have a schedule of launching that commercially into the market at some point in Q3 this year. We are on the path to do that. We have done a lot of customer testing. We will continue to do that with some of the largest, most significantly important customers and companies from a tech point of view over the next month or so.
We have gotten, which is very happy to announce, I mean, both internal and external usage approval from some of the largest customers we have and some of the most, I mean, significant tech companies on the planet. Then, I mean, whoever listens to this can speculate who that is. Some of these customers are also the best ambassadors we have. I mean, they are selling Cyviz today to a lot of new customers.
Yeah.
Now they are starting to deploy our platform and also our software technology into their own technology centers and offices. Yes, there is very good progress on all of these things, and I find it also very positive to get requests from competitors specifically asking if they can, like, work with us on our platform and our software applications because what they have today do not deliver on the customer expectation, and what we have do. We are ahead of the journey on that, and I'm actually more positive personally today than I was a couple of months ago because I see how this now develops, and especially getting those significant sign-offs on those large customers, both for internal and external use, give me the confidence that we are on the right path.
I have strong confidence that this is going to, like, be the next step and a key part of the next chapter of Cyviz journey. It will definitely help improve the profitability and our recurring business as a company over the next years.
Wouldn't be a good question to end because now you're in a happy mood.
I mean, yeah.
I have one more for me.
Why shouldn't I be happy? I mean, we, I mean, we have 170 super passionate, dedicated people.
Yeah
...that goes out and make a difference every single day.
Includes you.
With the best technology in our industry, and we deliver, according to at least my personal opinion, a really strong Q1, and compared to Q1 last year, a fantastic Q1. We have provided ourself with a much better starting point for a successful 2023. Why shouldn't I be happy? It's Friday.
I...
A sunny Friday. I mean, come on.
Okay, two questions directed to the CFO. Number one, when do you expect to be profitable? Number two, do you need to raise more capital? On the second one, easy to answer. No. Number one, depends on what kind of profitability you're looking at. I assume you're looking at net profits, which shows -NOK 1 this quarter. We go to the outlook. We reiterate 30% or above 30% growth on revenue. Midterm, we say 15%-20% EBITDA margin. If you combine that with rolling 12 months trend now, it is midterm. We can state that.
Yeah. I think, I mean, the answer is, I think we are very close, and we might tweak this year to, like, be net profitable at the end of the year. That might not necessarily be the right strategy. If we see that there is opportunities to, I mean, improve growth with relatively low efforts, also because competitors are struggling, and we do investments in, I mean, the software application platform side, that will provide a much larger stream of recurring high-margin revenue going forward, we might choose, because it's the right thing to do, to invest a little bit more.
Still focus on driving profitable growth, good EBITDA numbers, but be okay with minus NOK 1 million, minus NOK 2 million net profit at the end of the year if that is what the company should do to focus on 2024, 2025, et cetera, and especially centered around growth and new tech and recurring.
Good. Last question is regarding customer segments. In which customer segments do you forecast continued investment and growth for Cyviz next 6-12 months? You've already answered that, we can sort of restate.
I think government and defense is going to continue to grow fast, driven by a lot of different parameters. I mean, defense is growing because a lot of them has to modernize. Unfortunately, the war in Ukraine has also put a lot more focus, not just on weapons and ammunition, but also on the technology side. I mean, security, new digital solutions is going to drive growth in that customer vertical. Governments across Europe, U.S., and Middle East definitely is on a very prosperous journey. I also see that private sector or corporate sector would start to positive pick-up at some point in Q3. I think they've been through that type of adjustment period now.
Not a lot of things happen in Q2 in large scale in that because most of them have physical years that ends in June, and budgets are divided and handed out. I think from August, mid-August to early September, I think we will see signs on picking up, and that goes for Microsoft and others of our core type of good, strong customers. I think the second half of the year would be very prosperous as well.
That concludes this happy broadcast. Last remarks, enjoy your evening. Future growth is here.
Thank you for participating. Have a fantastic weekend, and trust that we are here three months from now as well with an ambition on providing even better numbers.
Thank you very much.