Warm welcome to the presentation of the second quarterly report of 2023. As usual, we'll take questions at the end, so please send in your questions to the email that you can see on this slide, ir@bimobject.com. With us today, we have four people. Peter Bang, who is the Chairman of the Board. We have Martin Lindh, the CEO of BIMobject and Chairman of the Board of Carbonz ero. Rasmus Ekberg, the CEO of Carbonz ero. Then we have me, Sofia Sundbom, who is usually working with all things people at BIMobject, and today, I'm also your host. I would like to first hand over the microphone to Peter Bang, the Chairman of the Board.
Thank you. Yeah, thank you, Sofia. I'm very pleased to be here today with you, and Martin, and Rasmus. We in BIMobject, we are really on a consistent, positive journey, both towards our profitability goal, but also in building an organization with new competencies, stabilizing the organization, and also taking some necessary bets where we believe there will be a big potential in the future. One of them is Carbon zero. I'm also very pleased that you are here today, Rasmus, and opening a little more up the box and telling us about Carbon zero and all the great things we are doing there, and also the opportunities we see there. Pleased to be here today with another quarter of consistent positive development.
I will hand over to you, Martin, to start off as usual. Martin.
Thank you for that, Peter. Let's start with a short recap of who we are as a company before we delve into the quarterly results and where we are as a company as of the end of the quarter. For those ones of you who doesn't know BIMobject and what we do, BIM is a quite important topic here. It is the, the, the way stands for Building Information Modeling, and it's the way, the standard way of working digitally in the construction industry. It is used across the industry throughout the construction process in all different steps there. It is used by all different stakeholders, and its adoption is growing across the, across the board. Why we are in this industry and, and this technology is because it is a super powerful technology.
It is built upon product-level objects. Basically, what we do is you take a building product, you digitize that, and you would have two components. One is the geometric aspect of the product, but you will also have the data points that are relevant for the individual products. It could be an identifying ID, it could be the product properties, and also includes sustainability data that, for instance, Carbon zero is working with in with their platform. This we work with as a platform. I mean, our company, BIMobject, is basically a web platform where these types of BIM objects are available to architects, designers, engineers, around the world. Today, we have progressed for quite some time.
We are now at well above three million registers, cumulatively, registered users on our platform. We have users in many countries in the world. We have reached levels where we have between 400,000-500,000 monthly active users, monthly active downloading users, I should say, on our platform. Many of the known architects firms around the world use us as a tool to get product specific data to their designs and building processes. We operate three platforms as of today. We have BIMobject, which is the main BIM site. We also have Polantis, a French BIM site, and as well as Prodikt, which is related to Carbon zero.
The content we have on these platforms comes from over 2,000 building product brands and covers more than 120,000 product pages. Many of these product pages includes what we call as parametric objects, which is a lot of variations of different products and product families. We have a good set of content for our users on, on the platform. In the second quarter, we have a couple of highlights, which we presented in the report we released this morning. We have a good progression in all basic metrics that we present in the reports. We had a good growth in the AR. We had a turnover growth in similar direction.
We had improved result, which I will come back to a little bit more later to address. We had a good, healthy growth on the user base of in our platform, and we remain a very strong cash balance to creating a lot of flexibility for us in how we can operate going forward. In the quarter, we had a couple of press releases. Some we have already mentioned here regarding Tom Dixon, also my appointment I had earlier in the quarter. We also in the quarter appointed Per Göransson to Director of Finance. Per has been with BIMobject for a couple of years and doing, been quite instrumental in how we have built up the finance function.
It's very pleasing to see also how we can bring in or bring up, I would say, people in the organization to develop as leader and take larger responsibilities. From the Carbon zero side, they had signed an agreement with K2A, who has a very ambitious climate target and is then using a Carbon zero's platform product to enable those. On top of that, Carbon zero also launched its service partner program in the Swedish market, helping them to scale up their sales through their service partners. Other events that happened that were more internal events is that we, as a part of the strategy, launched our sales pod implementation or, like, the kickoff of that.
We also have launched a new AEC-focused development team, which we will also come back a little bit more on in this presentation. Finally, also, we have started from this quarter to include Carbonzero's financials in our quarterly reporting. This is the kickoff of that in this report and in this presentation. First, let's also address the outlook that we have, or like the, the macro environment that we are in. We raised some concerns about it in the last two or three quarters because we have seen that it affects our industry. We want to provide an update on our view on that.
If we start with that environment and also what's happening in the industry from our perspective, we see the following. First of all, inflation, we see that coming down across many markets. That's obviously a very good sign, and final relief for us. It could, of course, go up again, but we're, we're happy when it goes down. Interest rates, hopefully about to peak. There is more discussions now about potential peaks than just discussions about further increases. The effects on the building industry, from our perspective, we see that it varies between different markets. I mean, basically, all markets are affected in one way or another, but it is quite differently on how, how it impacts different markets.
I think especially in the Nordics and in Sweden, I think we are more affected, but for us, that's a, a, a smaller market. In general, what's happening then is that we see lower levels of new builds, although renovations being less affected. More importantly, and also in perhaps more in the area where we play, or come to play, is within digitalization. We see that progressing in the industry, and is a little bit perhaps and hopefully unrelated to other macro events that is happening. So we- that's a good space to be in. Secondly, and is the environmental legislations, they are progressing both in Europe and in, in other count- countries as well.
The implications for us as a group, so far and what we have experienced in the second quarter, has been the following. We do see that new deals or the new AR, it takes a longer time for us to close. There's a larger hesitation amongst the building product manufacturers in making final decisions on how and which platforms they want to add to their portfolio. We've seen that similar trend in other periods, like for the COVID crisis, and that's and I guess a natural reaction for how any company react in a new environment with an increased degree of uncertainty. From previous experiences, and might be lucky again, there might be a backlog that we could potentially leverage.
What is more comforting for us to see is that our existing customers seems to be quite willing to stay on with us as a platform. In second quarter, the reported churn level came down, came in quite low compared to the last couple of years. That was a very comforting indication for us. We also had higher levels of service orders coming in in the second quarter from existing clients, showing that they like our services and are willing to continue to put down resources and efforts into expanding in this area. We also have continuously seen a strong growth momentum in the activity of our monthly downloading users.
That's also, of course, good to see that also from the design point of view, it is good activity on, on the site. Finally, like, quite unlike the historic crisis we have seen a couple of years ago, where sustainability initiatives were more like a luxury done in the good times, now it is quite unstoppable. The legislations are coming in is quite clear, and it is requiring companies to work and report on sustainability matters. There, of course, digitalization, and especially sustainability-related digitalization comes into play to quite a large extent. Let's move on to the strategy of the company. It is a guiding direction for us.
We launched a new strategy 2nd quarter of 4th quarter last year. We try to regularly come back to that in these presentations, also because we feel it, it is important that we stay on a consistent path, and we keep delivering on the strategy to reach progression. The strategy is moving us towards being a world-leading provider of building product information, which is preferred by architects, engineers, constructors and property owners. To give you a short update on where we are on the strategy, what I see as a CEO at BIMobject is a great internal commitment and focus, where the strategy has a lot of different areas and it covers most parts of the organization, so it requires a lot of collaboration and collective efforts.
What is a very appreciative for me to see is that we have many leaders in, in the company that are maturing, developing, and becoming stronger and more independent in the way that they drive these initial internal initiatives. That, that is quite, quite, quite good to see. We also feel that the strategy is sustainable also in the new macro environment. I, I think we have the right initiatives that we are focusing on, and we are also very happy we started with cost initiatives late last year. I think that comes well into play now.
Also, from a longer perspective, we also have initiatives in new growth areas and things like that, that a crisis is also about the end of the crisis and how to come out of the crisis, and not only to sort of manage a new environment. I think that is a super important for us as a company, not only to focus on costs, but also on the growth side. We do see progression in most areas according to plan. There's not too much changes on since the last time we reported this for the first quarter. If you want to get more details into how we're doing on the individual areas, I think you could listen in to the last quarterly presentation and get that.
Then, we have a recurring review of our strategy, and we're also gonna have that this year, is in the third quarter. We, don't expect any large changes to, the strategy, strategic directions we have. We're quite happy with that. We will, of course, have small adjustments to it, and we will update you on those. Overall, we feel that the strategy is quite solid and, that we're moving in a, in a good direction. Let's talk a little bit more about, some of the initiatives we have related to the strategy.
One of the most important themes of the strategy is a direction towards profitable growth, as we call it, meaning that we not only want to grow, we also want to grow by having positive profits, and that is a journey for us as a company. We, let's say, we have made, if we look at this from a longer perspective, we have made progression over the last eight quarters in which is what we cover in the monthly, the quarterly report in terms of net sales and also in AR, and we're quite happy with that. We have more importantly, perhaps, is that on the EBITDA level, we have made quite strong movement forward.
Our EBITDA margin has reduced from -86% to -12%. That is a very good step forward, especially in the last quarter, where we now start to see more of the effects from the cost program that was launched in the end of last year. This quarter, we had SEK -4.8 million in EBITDA, bringing us closer towards real profitability. Even SEK -2.1 million we would be at if we'd be adjusting also costs that we have with Carbonzero, which was acquired early last year, for from a more comparison point of view. SEK -6 million would actually be the best result in the company's history. We're very proud and happy about this progression.
For any SaaS company, especially ones that are not yet profitable, the cash is an improved, more and more important metric to look at. We have been working quite hard to improve the cash runway over the years. Cash runway, you can see, you can view as, at the current burn rate we're in, in a quarter, for how many years at that level would the cash last if we continue at the same rate? That has been increasing over the time. Even if we burn cash, the duration of the cash that remains has increased. Now, especially with this quarter, we report that it has significantly increased to more than 10 years ahead. We're really starting to take a strong movement forward in this area.
In the quarter, as mentioned, we deployed an AEC team for developing products in this area. AEC stands for architects, engineers, and constructors, so that will be sort of like the users on our site. We have around 400,000-500,000 monthly downloading users today. That base is also growing with around 30% a year. Today, BIMobject, we don't offer any features today, which we monetize upon onto these users. Basically, we provide a service which is free to use, and that is, of course, great for all the architects and also something we want to do. We want to help building product manufacturers to get their products out to the market.
We also feel that there are services that we could provide to this group that would be good for them and also for us as a company. What we did was that we have conducted some quite good research in or extensive research in the fourth quarter when we launched the strategy and also the first one this year, to make sure we really understood the clients. We wanted to identify pain points in this community where we can come into play. We developed multiple solution areas for where, which would be relevant for us to, to develop. Those we tried to or, or the solution areas, what we did when we sort of like identify them is that we, we wanted to create network effects.
We wanted to have solutions which be, will be enhanced by leveraging other benefits that we already can provide. That could be, for instance, the content portfolio we have, or the reach we have, or the network with building product manufacturers or similar. That, that, that work has been sort of like centered around that. Also, we've been quite clear on that, you know, how we deploy it, it could be a mix of approaches here. It could be through acquisitions, partnerships, and also internal efforts. This team that we have now deployed is, is sort of like the internal effort in building features or services around this area.
Yes, my plan here today is to share one area which we're working at, which is the first task that we have put to this team, and that is to drive traffic towards a Revit add-in. A large share of our users are working with Autodesk's tool, Revit. What we want to do here is to sort of build on what we have, but also create something new. We have, this is a tool which will bring us closer to the daily work environment of our users. We will connect the content portfolio, which we have on bimobject.com, also link it to closer with the manufacturers, as well as third-party traffic, and then connect it with the users.
A lot of users today, or like the users today, they are on a sort of like a freemium plan. This add-in will also provide us a great tool for where we can add other services or value-adding features to convert the traffic towards a pro offer and also to enterprise solutions. We will, we will come back more about this as we go in, in, in further presentations. I wanted to hand over to Rasmus and his presentation about Carbonzero. Please, Rasmus.
Thank you, Martin. Hey, everyone. Let's start with a little bit of a background. What is Carbonzero? To understand it a little bit better. The reason for Carbonzero to exist is really two-sided. We're here to solve two major problems. One is to help the industry, really, to get the return on investment with all their engagement in innovation and sustainability, and the ability to bring that value forward into their own sales force and forward out to the market. On the other side, we have a problem with the projects. Today, it's inefficient, it's costly, and we need to find a way to work more coherent, more inclusive in the projects to increase the efficiency. What we believe is that there's a need for the platform.
The platform is Prodikt, a platform run by Carbonzero, which really here to enable both the industry to bring forward their products in the face of the projects, and also for the projects to work much faster and agile with their analytics and their product selection. If we look upon Carbonzero's role in the building industry, it's really about generating a secure supply of third-party verified product data, and then we need to distribute it for the right stakeholders in an attractive and relevant format. This is really, really important. The overload of information is already there. What is needed now is to put it forward in the right format, at the right time, in the right phase of the building process. This means that we support all stages of the building process.
This is also where BIMobject and Carbonzero find so many synergies, which we really take down the project, the full BIM model, that is really like all the objects containing there, is then imported into the platform. Then we help the constructor, the main contractor, the property owners, and everyone else, the architects, to go forward and optimize their project. The approach is really to be the bridge of data between the industry, from the manufacturers, bringing their data in a very, very structured way, in a data template, manifest it to the market inside the platform. Therefore, it's so easy for us to then address it out to the distributors, the property owners, the architect, the contractors, the technical consultants. All and every one of those stakeholders is our customers and users.
First, before we go into the financial numbers and so on, we will start with some, what's happening on the market the last 18 months. We got two big regulations coming in European level. First one is called CPR. This is really a regulation that will is related to the actual products and the need of climate data on the products to be a part of the CE marking. That's also why we see such an increase of that kind of analytics of products to be able to manifest the climate impact on the product. At the bottom, you see the CSRD. That's a reporting directive that is applied on the actual corporate company level, but it's really skyrocketing the need of accurate sustainability data on the products to be able to report and reduce.
Because what we're coming into now is from a stage where it's been okay for many companies to say, "We have an ambition. We have a target. We have a goal." Now, companies needs to declare reduction. What is happening? How is the development going? The need of better data is there. We also see, regarding the market, development for the projects, there is a continuous growth of green building certifications. This is different certifications that you can apply on your project, where you also, up to 3% of your budget is allocated, to be able to comply with different standards. We have seen this going on for many years now, it only continues to grow, which is really important for the market all over.
This year, we're now up to + 50 building product manufacturers that have signed up for prodikt.com. We have also more than 30 ongoing EPD projects. That is, as I mentioned before, project where we help the manufacturers to analyze their products and the ability for them to put the climate impact on the product itself. If you look at the other side of the business, the users, we now have 13 frame agreements with major property owners in Sweden, because this is important. Carbonzero, at the moment, is a Swedish-focused company. We are looking to expand the business, but right now, the numbers you see are from Sweden. Approximately 50% of the AR, you see the top right, is generated from the user segment, from the project organization, and the other half is from the manufacturers.
It's really a two-sided platform, both regarding revenue and usage. At the moment, we have more than 4,500 projects started inside the platform. It's just a good KPI to see the level of engagement in the platform, and it's really nice for us to see. We have a fantastic start of 2023, which also followed up with a great, great Q2, regarding net sales. Regarding the EBITDA, as you know, we are a scale-up company. We have a burn rate and we need to keep it at a moderate level, but also in a level where we really can have the possibilities and the conditions to further grow the company outside of Sweden.
During quarter two, we launched an important part, important stage for Carbonzero in bringing forward an efficient way to grow and to increase our sales towards the user side of the platform. Therefore, we launched a Prodikt service partner program, which is really targeted towards the consultancy firms that is working with the projects today. We give them an education, a certification of being a Prodikt professional user, which they then can use in their relations to the property owners, to the contractor. Therefore, we also get a more organic growth and a more efficient sales process and a greater reach in the market, and also work up the loyalty and stickiness of the platform in the market.
Thank you very much, Martin.
Thank you for that, Rasmus. It is really exciting to follow you and see how you build up your platform, and also how much things that you have managed to accomplish in a very, very short time, especially in how you started to monetize and create value-adding services for the AEC community. I think that is really cool to see. It will also be great to follow you as you grow internationally. I agree, there is a lot of synergies between our company and learnings and experiences that we continuously share with, with each other to, to help both parties in our joint growth journey. All right, let's go to the more specific details on our financials.
We present this basically the same way each quarter to provide good consistency for our listeners. We have in our annual recurring revenue, which we present here at the constant currency level, we can see that we continued to increase in that, also for the second quarter. Of course, we want to grow even faster. We're working hard on it, but also giving the environment we're in, we're quite happy. We are still progressing in a fairly stable rate. We also in net sales, we can see in this breakout that the second quarter this year, we have been progressing quite well in services. That's the light green bar here, and that is good.
This comes a lot from the existing customers we have. We have a lot of internal initiatives around that, so we're good to see that it materialized quite well in the, in the second quarter. On the operating cost side, we have remained at quite healthy level. We'll come back a little bit more on that, I think, on next page, to discuss a little bit or explain a little bit on the development we see on the, on the operating cost side as well. For the income statement, the net sales came in higher, and again, partly from sales, but also from the stable growth in the platform business. There is some also, of course, some positive FX effects on, on top line, that, that is helping the, the, the growth here.
I think more importantly, on the cost side, what we see here is that we have generally good cost control in the company. There's an improved margin in our service business, and that, that we are happy to see. Coming to the personnel costs, they have been at a quite stable level, and that is actually quite, quite good. The reason for that is that we launched a cost program at the end of last year, where effects are starting to materialize quite well. That is also balanced by a couple of different factors. One thing is that we invest in Carbonzero, so we have, we do have cost there that we want to increase.
They, they, they are growing. We also have new initiatives, of course, that we have in the company that are important for the long term, as well as we have a negative impact from the changes in the currency rates. If you also would include annual salary revision and all of that, we have been able to contain the cost base quite well for personnel costs, which is the majority of the costs we have in our company. That with stable costs and growth, we will have a good development, of course, on our profits. Yes, on the balance sheet side, we have throughout the year improved our effectiveness in collecting receivables.
That is helping our, our cash flow, which has been quite, quite good this year. However, as you can see, the receivable- receivables here have been increasing, partially that is related to revaluation with higher currency rates. That, of course, has a, an effect on the share size of the receivables. We do have a very strong remaining cash position, which provides us a lot of flexibility and maneuverability going forward. Okay, let's conclude this presentation with the following. Second quarter this year was another positive quarter, where we did have a significant progression in our journey towards profitable growth.
We also have gained an improved comfort of the effects for us as a company in this changed microenvironment, and we are also, as a company, progressing in our strategic implementation. With that, I would like to thank you for listening in to the presentation.
Now we will have time for questions. Please send in your questions, if you haven't already, to ir@bimobject.com, and we will start with the Q&A now. All right, we have received a couple of questions, and I would like to ask you first, Rasmus, what are the international plans for BIMobject and Carbonzero? Sorry, for Carbonzero.
G ood question. I will keep it short, just to give you a little bit background here, the whole company started with a very international view upon both the market and the data in the platform, due to the fact that we worked internationally within Saint-Gobain regarding these questions before. The need in the market is global, and the way we handle the data, which we're very, very unique globally on, is also international. Right now, we're really working on getting a really solid position in the Swedish market. That is totally our strategical focus, during 2022 and 2023. We're right now looking into expansion into the Nordics, during 2024.
All right. Thank you so much, Rasmus. I have another one for you, directly. Then I would like to hear you, reflect a bit upon the link between Carbonzero and BIMobject.
Definitely. BIMobject is really, like, the global leader when it comes to the BIM objects. As Martin explained, BIM objects, as such, is always a product, so to say. The life cycle of an object, it goes from being a solitary product into a model, and the model is often a house, a building, a project. That's where Prodikt comes in, because Prodikt can take the full model, import it into Prodikt platform, and keep the product data, and help the project organization then to really optimize the way they build and the way they select products. Together, we really enable a unique life cycle of data during the whole building process for the market.
Thank you so much, Rasmus. Thank you. Over to you, Martin. First question, I have is, when do you expect to monetize the, on the first user product? Basically, when will you start selling the first product to users?
Yes. I think the questions regarding monetization of users has been a question that we have received for many, or for a long time, and is also something that we, of course, feel very passionate about doing. But we want, we have done twice also in the history that wasn't successful. I think we have made a completely different stab at it this time. It feels very good that we did the research we did. And also, if we look at the team and the approach we're working with, it seems, feels like a solid approach that we have, because we know that it will have many benefits, independent of how successful it is or not. It feels like a very natural part to do.
The reason why we went to this Revit add-in as a first step is because the current format of the website is perhaps not the most easiest to create these services from. We see this tool that we're building as a much more robust way or a platform where we can add these types of features or services on. What we will do is, I think we will release it in steps. You will see, you know, how it develops and when we are at different points.
I, I don't want to give a, a date for it, but rather, I think it will be more like, broken up in different, different steps that we will communicate about, at different time points ahead.
All right. Thank you. Stay tuned on the press releases then, I assume.
Yes.
Yeah.
The quarterly presentations.
The quarterly presentations. Good point. Cool. I'll move on then to the cost base. We have got a question that says like this: "Do you have any more room to lower your cost base, or is it already quite the end of the line on the cost side? If you can further drive down costs, by how much could you decrease your cost base?
Yes, so that, that, I think there's always room for, be even more efficient on costs. It is a question, though, when it comes to how much and what is the implications of, of doing that. Right now, I feel in the organization, we, we are starting to have a stronger and better organization. To a large extent, the, the, the vast majority of our cost base feel very relevant to have. We are on a good progression. We have a lot of initiatives we haven't talked about today, that we are building up in the organization, as well.
Of course, it will be as we mentioned, also a part of the, when we take a review of the strategy to think about what, I mean, how to grow the company in the right direction according to the strategy. We will take a look upon it and see how we should adapt or adjust, if needed, on the cost side as well. I think we will then come back to this topic later on. We will continuously monitor it, of course, on, so to make sure that we are on a good path forward.
Mm-hmm. Thank you. We move over a bit to customer churn and net retention rate. The first question here is, can you quantify the customer churn you have seen past quarter and compare it to the number you have seen on average in the past?
Yes. Also this is to from time to time, we get questions on on detailed KPIs. We we share some data points in in our quarterly reports and and presentations, and and some we we we don't go in that much into exact details of. What we try to do, and there's many reasons for that. One is also that we don't want to provide all the the competitors in market, all the information we have about the company, even if we know also that we we have a responsibility to be transparent to our shareholders. We try to balance it.
The way we balance it when it comes to certain KPIs, like, like churn, for instance, is that we try to guide a little bit more on, on how we're progressing, and where we are. To give a perspective on this, I think it was in 2021 when we renegotiated a lot of agreements. We had a period over a year where we basically went through all the agreements we had. We had a fairly high, high churn. What has happened since is that it has stabilized quite a lot, and it has been quite stable for some time. Do I believe that there's room to improve it? Yes, I do. It is a hard work to do it.
There's many factors that needs to come into play. Those we are working on. Yeah, but I think that, that sort of, like, provides a, a, a, a perspective.
An overview, yeah.
On, on, on that metric.
To the next question, can you share your net retention rate? You would answer no.
Yeah, I think it's the same thing. I mean, net retention rate is very much connected also to churn. So it's quite, quite similar. There is, of course, other factors involved in net retention rates. So you would have our ability to upsell to the existing clients or if they downgrade their offers. Churn is also a component in the net retention rate, of course. I think also in net retention rate, we have a lot of things to work on there as a company that we could and should do improve. I think there is a lot to do on, on upsales and that we could work with and should work on.
Yeah, hopefully it will continue to improve also going forward.
Thank you. Then, the last question, a bit back to the financials, is a question that says: What does the short-term investment, part of the cash position entail?
Yes, that's good. I think I missed to mention that in the presentation. We typically do it, but what we do, I mean, we have a fairly strong cash, cash position of currently around just shy of SEK 240 million. We don't want to keep it all as pure cash. We want to invest it in a responsible way. That part of the cash which we invest, we basically put in the short-term investments bucket in our balance sheet. Our philosophy regarding those investments is that they should be low risk and fairly accessible.
It would be like fixed income products or alike, where we would be able to basically pull the money and get them within a week if needed. We don't see, since it is that much of a need to do that urgently, but it should be very accessible, but still provide some additional interest. Now when we have this cash, it's kind of interesting to elaborate on we will get some positive cash flows from it, of course, if we invest in it, and if we have low profit, we will sort of have a positive cash flow, perhaps even quicker than the result will provide us. It's a nice asset to have in an environment like this.
Of course, also we should make sure that it's both handled responsible, in responsible way when it's, when we have it in, in the books. Also, I mean, if we find good and smart investments, it's also very nice to have that ability to use it for such things.
Thank you so much, Martin. That was all of the questions for this time. Thank you everyone who has been attending and listening, and we hope to see you in a quarter again.
Indeed. Thank you very much!