Morning, and welcome to today's web class presentation, where Albert will be presenting the Q2 Report for 2023. With us presenting, we have the CEO and Co-founder; Arta Mandegari, and the Co-CEO and Co-founder; Salman Eskandari, who will be presenting today. If you have any questions, you can use the form that is located to the right. With that said, I'll hand over the word to you guys. Please go ahead with your presentation.
Thank you very much, Martin, and good morning, everyone, and thank you for calling in to our presentation of the interim report for the second quarter of 2023. We are happy to welcome you here today, to share our recent activities and deliveries for the period of April, May, and June this year. The agenda for today will be as follows. We still believe it's relevant to introduce you and to iterate our vision with Albert and why we exist and we will do that in a short introduction, and which will be followed with the summary of the Q2 deliveries. This will thereafter be followed up with highlights and the financials presented by Salman. At last, we will close with a short summary and key takeaways before we end the presentation with opening up for a Q&A session.
Us presenting here today are the founders of Albert. It's me, Arta Mandegari; co-founder and co-CEO, and Salman Eskandari; co-CEO, and the other co-founder in the founder duo. Worth to mention is that, as earlier communicated, we have appointed a new top management team, where we're handing over to our two new CEOs, Jonas Mårtensson and Anne-Louise Wiren . Furthermore, also as earlier communicated, we are very happy to have Katarina Strivall joining us as a new group CFO. Hence, this will be Salman and my last Conference Call presentation, and we are very much looking forward to be more operational and are very happy and proud over the new trio, who will guide you through our operation and future quarterly reports going forward.
As mentioned, we believe it's important to reiterate what we're building here with Albert and why we exist. The best way of doing this is, like always, explaining our vision, which is to give every child in Europe a custom learning experience throughout our products, apps, and services. The way we're doing this is, that with through technology, are eliminating the human element in the learning experience, and doing this enable us to offer quality and custom learning experience at the price affordable to the many, and thus being one of the leading actors who are democratizing learning in Europe. We started with mathematics for consumers, and today we are moving into one of the leading Eur- European one-stop shops for learning platforms for kids aged one to 16.
We offer several subjects: mathematics, basic programming, English, Swedish, reading and writing, also geography, physics, and biology. We started as a direct-to-consumer company, but now we have grown into and built a significant B2B business unit selling to schools. Today, the B2B business unit is contributing to more than 50% of our net sales and ARR. We are active in seven core markets: Sweden, Norway, Denmark, Poland, Finland, U.K. and U.S. and we have helped over 700,000 households in our B2C offering and millions of students in our B2B offering. Worth to mention is that these children have solved more than 80 million exercises in our product portfolio.
We're an innovative team of around 125 individuals in our group, all with a diverse background, where approximately 80% of the staff are working with product and technology. As per Q2 closing, our customer base in the B2B and B2C combined generates just above SEK 206 million in annual recurring revenue, or ARR. This is a 51% growth year-over-year, where -4% are organic and 62% are acquired growth. As we've been communicating before, we have a laser focus on the cash at hand, and as per Q2 closing, we have SEK 106 million cash at hand, and we feel very confident delivering on the plan to reach profitability without any further cash injections.
Also worth to mention is that we're doing the quarter are growing our B2B contribution to our sales and ARR which today is 53%, and this will strengthen our financial profile even more going forward. This because B2B sales generally have longer customer contracts and significantly lower churn. Hence, investments for keeping and growing our top line or our net sales won't be as cash intensive. The net sales for the quarter summed up to SEK 51 million and grew 64% year-over-year, where -5% are organic and 69% are acquired growth. Looking quarter-over-quarter, which is a little bit more important here, is that the net sales actually grew 7.5%.
It's the, I mean, the slight decrease in organic sales and ARR are, it's important for us to mention it's fully according to plan, and it's a result of our shift to focus to profitability. Short term, we will see a minor decrease in the B2C growth due to less investments in B2C marketing. It's a short-term effect, which will be compensated by more profitable and sustainable B2B growth going forward. Looking quarter, quarter, quarter-over-quarter, we can already see that the net sales is picking up and growing since the Q1.
EBITDA is a KPI which we mentioned several times, is very, very important for us right now, we see a year-over-year improvement with 45% summed up to minus SEK 6.9 million for the quarter, which could be compared to minus SEK 12.6 million last year. With that, I hand over to Salman, who will walk you through some Q2 highlights.
Thank you, Arta. I will go through the highlights of Q2, splitting them up in B2C and B2B, as the activities we are doing in the different segments are quite different, before moving on to the financials. Looking at B2C, Arta mentioned it briefly already. Operational efficiency has been a key focus area, and during a couple of quarters now, we have been strongly focusing on improving basically the LTV/CAC ratio. I mean, the lifetime value over the customer acquisition cost ratio, and also improving the cash flow profile of the business. This has a negative effect on the organic growth in B2C, mainly because with a strong reduction of investments in paid B2C marketing, the volumes of new subscribers brought in will be lower.
However, what is really worth to mention is that the reduction in OPEX for B2C is significantly higher than the reduction in growth, which basically means that we are bringing in still a quite high volume of new subscribers, but at a significantly lower customer acquisition cost than before. Our focus has also been on increasing LTV, and the cash flow profile. One key part of that is to increase the number of annual subscribers across all B2C brands and also all markets, where we can also learn a lot from Holy Owly. We mentioned briefly in the report, this has been successful in Sweden. We launched it a while ago, with more than 40% of new customers on web in Sweden, choosing annual plans.
Now we are going to replicate that also across all other markets, but also all distribution channels, when it comes to B2C. We did a couple of acquisitions in January. The only B2C acquisition was Holy Owly. When we now focus on integration, it's really to integrate in a way that supports the strategy of improving the ratio and improving the cash flow. Holy Owly is our learning language learning platform for children aged three to 12, where you can learn English, Spanish and French. They were acquired in January. The first step in the integration was to localize and launch it in Sweden, which was completed during the second quarter. Now also, we will see how we can add basically IP from Albert to Holy Owly offering in France.
The operations are fully integrated. Teams in marketing, product development, and other areas are basically working as one unit together with Albert. Moving over to B2B, the focus is a bit different. There, we are investing in growth. It's a profitable segment with, as Arta mentioned, sticky revenues. It goes fully hand in hand with our strategy to reach profitability on a group level. What is worth to mention in B2B is that the investments they yield more long-term results. The sales cycles in B2B are longer, meaning that the investments we do today will pay off a bit further down the line in the future. One example of that I think is relevant to mention, is Sumdog.
During the end of last year, we saw a decrease in sales for Sumdog, and when asked about it, we explained that we have done a shift in strategy, focusing less on high volume of basically smaller schools in England, and instead moving to lower volume of larger schools, or in the England case, Multi-Academy Trusts, MATs. MATs are basically a group of schools that work together and do purchases together. That strategy has paid off. We've closed several deals in Q1, additionally, some deals in Q2, and there is a strong pipeline moving forward as well. Strawbees and Film & Skola, they are continuing to perform strongly, where Film & Skola is the cash cow of the group, contributing with both positive EBITDA and cash flow.
B2B is growing both year-over-year and quarter-over-quarter, despite Q2 being generally a weaker quarter of the year. Majority of sales in B2B come together with the school starts in Q1 and Q3. When it comes to integration of the acquisitions, on the B2B side, we spent a lot of time during the spring to analyze where to put our focus. We have a lot of B2B companies in the group now, and where should we kind of take the first step and start to dig deeper? Several pre-studies were conducted. One of them was to launch Strawbees in the U.K. together with Sumdog. B2B sales is very relationship-based.
Sumdog has a strong position in the U.K., the pre-study confirmed both that there is a market need, but also that there is a feasibility to sell. Now we're working on localizing the product, the curriculum, and basically preparing ourselves for a launch during the second half of 2023. Revenue and cost synergies will continue to be a strong focus area during the second half of the year in B2B, with further investments to grow the B2B revenues. Moving on to the financials. ARR is growing 58% year-over-year to SEK 206 million. Generally, actually, both in B2B and B2C, Q1 and Q3 are strong quarters of growth when it comes to school start.
Growth is primarily driven by B2B, and with less revenue fluctuations due to the, both the increased share of B2B in the group, but also due to increased share of annual subscription sales in B2C. Net sales is growing 64% year-over-year, -5% organic, and the remaining part, acquired growth, also driven primarily by B2B and the acquisitions made during January 2023. We have talked about the net sales already. It sums up to SEK 51.1 million for the quarter. When it comes to the adjusted gross margin, it landed on 79.9% for the quarter, compared to 93.8%, same quarter last year. This is really a result of how the group has changed with the acquisitions.
With Strawbees, with Film & Skola, they have different gross margin profiles. Strawbees has some hardware sales, and Film & Skola license some of their content. It's a natural decrease in gross margin, given how the group structure has changed. Worth to mention on the positive side is that our commitments towards Edimia education sellers, so the, the previous owners of what is today, the Albert Junior platform, ended now in 2023, which has a positive effect on the adjusted gross margin. EBITDA for the period landed on negative SEK 6.9 million, compared to negative SEK 12.6 million last year. This is mainly a result of less spend in B2C marketing.
How we calculate EBITDA, the operating results landed on negative SEK 20.6 million, where we add back amortization of acquired intangible assets, which is a result of the acquisitions we did both in January and before. Cash flow from operating activities on negative SEK 5.2 million, which is a significant improvement from same quarter last year, which was negative SEK 21.5 million. Also related to less spend, which is one factor, and the other factor is the B2B sales and the sales of annual subscriptions, where we get the payment upfront for a full year. Which also explains the last item here, the working capital, which was negative SEK 44.9 million for the same reason. With that, I hand over to Arta for a summary.
Thank you, Salman. For the shareholders who have followed up for a while, probably recognize that, that it's very important for us to build trust and to deliver on the promises that we have given. Hence, we would like to do a short recap on what we have communicated before and how we're delivering on it. Already in Q4 last year, we communicated that we, due to macro and financial market climate, will prioritize profitability and cash. Now we are trending well towards profitability, where we, through significant cost savings and focus on operational efficiency, improved our EBITDA with 45% year-over-year, and these numbers now are delivered 2 quarters in a row, both in quarter one and now quarter two.
During Q4 last year, we also mentioned that we focus, or we focus a lot on the rationale behind our most recent acquisitions, where we communicated that, that the B2B establishment will decrease the risk and improve the financial profile of the company. Last quarter, in Q1, we could report a positive cash flow, that was due to, or thanks to our seasonality in our invoicing period, periods for the B2B business. This quarter, if you look at the cash flow, we have a negative cash flow of SEK 5 million for the entire quarter, which is 75% less cash burn compared to the same period last year. Furthermore, in Q4 last year, we communicated that we will focus a lot on integrations and the synergies.
Now, as you could hear from Salman's presentation, we could probably say that basically all the B2C integrations has gone very smooth and are almost done, where Holy Owly launch in Sweden is a great example to highlight. On the B2B side of the business, it's also performing very well and according to plan. Here we could use the example of Sumdog and Strawbees are now realizing sales and product synergies between each other, where Sumdog is selling Strawbees product in the U.K.. It's a great example to highlight. We're ending this presentation with some key takeaways that we would like to highlight for this quarter. First, it's very important to reiterate the fact that our EBITDA and cash flow focus still remains, and investments are shifting more to B2B.
Also, thanks to the 50/50 split, B2B versus B2C, and the long-term contracts on the B2B side, it's very important to highlight that the B2B contribution of the group from the net sales perspective is growing and stabilizing the financial profile even further, with less cash needed to keep and grow the net sales going forward. As mentioned in earlier communication, we are very happy to be successful in landing the three recruitments who will be in charge of taking this company to the next level. Jonas and Louise have already been operational with fantastic results and taking over as co-CEOs, and Katarina made her first day at work two days ago as our new group CFO.
We are happy, excited, and I think most importantly, very confident in their ability to drive group results in the right direction. Next report will be delivered and presented by them. With that, we would like to thank you very much for tuning in to our conference call, and we now open for a Q&A session.
Thank you very much for that presentation, and now we'll jump into the Q&A section, like you said there. We'll start with the first question. You talked about reaching profitability with no further capital injections in a couple of reports in a row now. How confident are you with this?
Well, we have, if you listen to the report, we have more than SEK 100 million. I think more specifically, SEK 106 million cash in bank, and we have sales of more than SEK 200 million a year, whereof more than 50% of the sales are stemming from stable B2B contracts. First quarter this year, we had a positive cash flow. This quarter, we are burning SEK 5 million, which means a negative cash flow of approximately SEK 2.5 million for the entire H1, first half of this year, January to June. Looking at this, we are already, at this point, not very far away from a positive cash flow.
I would say we are very confident that we will reach this, and it's important for us to deliver on our earlier communication.
Thank you. Could you tell us a bit more about the new management?
Yes, of course. We can start with Jonas. He's our former COO, who joined the group already 1 and a half year ago. He has an entrepreneurial background, starting a couple of companies before and joined most recently from senior strategy positions from the automotive industry, and has been a part of driving Volvo Cars' Care by Volvo concept, which is a car as a subscription service. He know the business and the colleagues very well here at Albert now, and will be mainly focused on the B2C side of the business. Anne-Louise was the former CEO of Strawbees, and before that, she came from senior C-level positions from the telco industry, where she gathered great competence in operations from subscription services, both within B2B and B2C.
At Albert, she will be the co-CEO together with Jonas, but she will have a more focus on the B2B side of the business. Our new group CFO, Katarina Strivall, comes from almost 20 years of CFO experience, recently joined from Norconsult, and before that, from EVRY, where she was EVRY, which at that point was a publicly listed company, where she'd been very involved in both tech, IT, and M&A activities. We couldn't be happier and more confident with this trio.
Okay, perfect. I will take one more final question here. You've made a lot of acquisitions. How are the integrations going, and can we expect more mergers and acquisitions activity going forward?
Good question. If we divide it into integrations and further acquisitions, we can start with integrations. We briefly mentioned it in this presentation already. But on a broader picture, as Arta said, it's important for us to deliver on our promises. When we did the acquisitions, we said we would explore synergies. Those who have been following Albert and following Arta and myself know that we are not really fond of major investments without knowing what the outcome could be, or at least to gain confidence in the outcome. Even less so with the increased when the cost of capital has increased. Short-term integration activities are the ones presented here.
We look to establish basically confidence in that, we can launch in other markets, with the products we have, we can, bundle the products, and in the B2B case, that we can utilize existing sales force and relationships to sell additional products to the same customer. On the long term, there comes basically more product integrations. We are not confident enough to invest heavily in product integrations yet, but that is a likely outcome in the future. When it comes to further M&A, we have ongoing dialogues, but as we have said before, the climate is not right to explore additional M&A now. We have already done some, M&A, and, and it wouldn't feel right to continuing adding to the group the way the macroeconomic climate is right now.
Our focus is to create operational efficiency, reach profitability with the companies that we have in the group today. We always keep the dialogues alive because those relationships take a long time to build, and there might come a time where the climate is more favorable to look for additional M&A.
Okay. Thank you very much, Arta and Salman, for presenting today and answering all the questions. A big thanks to all of the viewers who followed along for Albert's Q2 report for 2023. Hope you have a great rest of the day, and until next time, thank you very much, and goodbye.
Thank you.
Thank you.