Welcome to Bambuser Q1 2024 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Maryam Ghahremani and CFO Jonas Lagerström. Please go ahead.
Good afternoon, and welcome to Bambuser Q1 2024 report. I am Maryam Ghahremani, the CEO, and I will hold this presentation together with CFO, Jonas Lagerström. Our agenda today includes a quick company introduction, an overview of our Q1 highlights, and a dive into our soft KPIs and financials. Thank you for joining us, and let's begin. Bambuser is at the forefront of the video commerce industry. Our journey began in 2007, initially providing a groundbreaking video technology that allowed users to stream live video from their mobile devices. In late 2019, we made a strategic pivot into the world of video commerce, a move that has since then drawn in more than 350 prominent brands, spanning across 45 countries. Our global footprint now extends to key locations such as New York, London, Paris, Tokyo, Turkey, and our headquarters in Stockholm.
Since the beginning, we've been achieving strong ARR growth. However, since a couple of quarters, we're facing a tougher market, with customer churn and longer sales cycles among our enterprise clients, affecting our ARR growth rates. We remain optimistic about our long-term ARR prospects, given the significant market opportunities ahead, and we're pleased to report that our net new bookings showed a plus this quarter, even if it doesn't show in the ARR as of yet. The battle for the attention of the modern consumer is fierce and competitive. "The true scale commodity," as said by Satya Nadella, CEO of Microsoft, as of today, the most valuable company in the world. Consumer attention spans are shortening, going from 2.5 minutes in 2000 to 1.3 seconds as of today, across both Gen Y and Z.
Over $600 billion will be spent on digital advertising in 2024. By simply spending more money, you won't win the customer's attention. To win, you must understand where your consumers are spending their time today. And the smartest brands are taking these moments of attention and turning them into memorable experiences, and that is exactly what Bambuser is doing, taking these categories and transforming them into inspiration, education, purchase, and retention. By embracing video commerce, brands will win a significant part of the e-com market that is estimated to be worth $8.5 trillion in GMV by 2030. I will now guide you through some of the key highlights from the first quarter. Among some of the wins this quarter was Currys, Fossil, and Altar'd State. We also had successful expansions with Dior and Clarins.
I want to take this opportunity, highlighting a customer story we did last quarter with Sonos. They really understood how to adopt our platform and using video commerce to enhance customer relationships and drive sales. Their ROI of their investment in Bambuser is a remarkable 3,507%. This is an example of how video commerce can significantly revolutionize the customer engagement and profitability for the merchants. We introduced our first general release around AI. The AI moderator helps our merchants to moderate chats during live shows by offering real-time suggested answers. By connecting to product detail pages and other data around the show and the merchant, this feature saves time and resources for the merchants, while they can answer accurately and also fast to keep the audience engaged.
We released our Shopify app during the quarter, enabling Shopify merchants to seamlessly and independently onboard and use Bambuser's social selling solution, also known as One- to- Many. This is a great opportunity for smaller merchants to try out our solution and then grow with us as their business evolves. It also gives us credibility in the Shopify ecosystem, which is important for the larger customers on Shopify Plus. A significant event after the quarter was the acquisition of Klarna's virtual shopping solution, established by Hero, currently under working name, Bamchat. This chat first solution gives merchants a powerful tool to communicate with the customer and drive conversion through insight-driven chats. The Hero solution would gradually be integrated into our One-to-One solution. That is becoming a full digital clienteling solution, offering the best in class in terms of chat and video call.
The acquisition also means that we're welcoming a number of few new merchants with an estimated ARR of approximately SEK 9.5 million. I'm now leaving over to Jonas Lagerström, who will present the SaaS KPIs and financials.
Thank you. So if we start with ARR bridge, ARR was -24% year-over-year at constant exchange rates, and -8% quarter-over-quarter. New business is still a bit slow, but we're seeing better momentum in customer dialogues, and this quarter also showed a small plus in net new bookings. ARR by customer, during Q1, we saw a decrease in the number of customer groups compared to the previous quarter, but we witnessed a flat development in ARR per customer group, which is due to less downsell and smaller ARR tickets per churn customer, which also suggests that we are churning smaller customers. In some cases, the usage-based pricing model is still driving initial decreased ARR, which we anticipate will go back to growth over time.
If we look at the regions, they all show negative ARR growth, with APAC having the most challenging quarter with churn and downsell. Moving over to the net revenue retention, our top 20 accounts reached an NR of 101%. The group NR came in at 65% in this quarter, more or less in line with the last quarter. This is the last quarter we are presenting, sorry, t his is the first quarter we are presenting our net sales without Relatable, that was divested last quarter. The SaaS sales were down 22% year-over-year, in line with the ARR development. The gross margin also now only reflects our SaaS business and reached 79%, a decrease a decrease of 2 percentage points year-over-year and 1 percentage point up from last quarter.
Our adjusted EBITDA continues to improve despite a lower net sales, and we see an improvement of SEK 6 million year-over-year, an improvement with 20%. Consequently, we see similar improvements in our operating expenses that have been stabilized for the last three consecutive quarters. It's worth highlighting that this quarter includes one-time costs relating to layoffs of approximately SEK 3.7 million. The reduced OpEx is a result of our initiatives of right-sizing the organization and the cost overview of office space, tech stack, and marketing costs. Finally, the cash flow was SEK -24.7 million, a positive development from last quarter. The main driver is the improvement of our adjusted EBITDA in absolute numbers, which can be seen in the operating cash flow.
We end this quarter with a cash balance of SEK 247.3 million, which we consider is sufficient, taking the company to positive cash flow. We have now reached end of the presentation, and we are now inviting you to a Q&A session.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nikola Kalanoski from ABG Sundal Collier. Please go ahead.
Yep, thanks for the presentation. Just a couple of questions from my end. So firstly, the churn appears to be a bit elevated still. Could you please help us understand what sort of clients are still churning and whether you foresee this to change during 2024?
So, hi, Nikola. It is still, I would say, the long-term smaller customers that are churning. And that is due to a quite tough market. We know that e-com and retail is still undergoing tough times. And and I would say the appetite for shopping hasn't really bounced back, which, in the end of the day, will affect us as we're selling to retail and brands. So what we see is still the long tail that is churning due to mostly resources and budget restraints.
Yep, very clear. Very clear. And then a question on on Bamchat. You mentioned that some Hero clients are coming along. Do you foresee any significant cross-selling opportunities within Bamchat with your existing client base?
Yes. We have— If we just look at the initial discussions we have had with existing customers on the Bambuser side, first of all, we do have a couple of overlapping customers that are currently customer, both with the Klarna Hero solution and Bambuser. They think this is amazing. And we also have customers that immediately showed interest. This is still very early days. But we believe that there is a good amount of existing customers in our Bambuser install base that are very interested in Bamchat. We also know that some of the very, very big enterprises are looking for consolidation across the various solutions, and they today have too many solutions, sort of more or less solving the same thing. So we do see that there is a very good upside in cross-selling.
If you look at the number of merchants from the Klarna/Hero side, they're not that many, but they are still a good amount and very good IPs for us that have also showed interest in the Bambuser platform. So the answer is absolutely, yes.
Yeah, that's great. And, you mentioned that some clients, I think during the presentation, see a very high return on investment at times over, I think the number you mentioned was close to 3,500%. Have these figures, which are obviously great, made you consider altering the price dynamics, or will perhaps the new pricing model that you've implemented make it more favorable for Bambuser in the end?
I think it's a good question. I think it's amazing that the customers are having a very high ROI. That's that's just amazing, and that's that's what we want them to have. I think in in in all honesty, we do not want to be a customer for them. We want to be a revenue driver for them. So we really want them to have a high ROI, and we can do both. We can have a adequate pricing with an adequate margin, while still the customers are getting a high ROI. So I don't see that those two things sort of goes against each other. So I think my answer to your question is yes, with the new usage-based pricing, we can do both.
Yeah, that sounds very constructive. And finally, could you please explain why the digital clienteling solution is more resilient compared to the social commerce solution from a client's perspective?
Sorry, Nikola, can you, can you explain the question again? Or you mean-
Yes, of course. You mentioned, I believe in the, in the CEO comments, that the Digital Clienteling solution was a bit more resilient compared to the social commerce solution, which is One-to-Many. And if you could help us understand that from a client's perspective, why that is the case, I think that would be very helpful.
Yeah. So when it comes to the Digital Clienteling, that is typically much deeper integrated in the infrastructure of the merchants. It's connected to a CRM, or other adjacent systems, or, of course, also the e-commerce, but also a fairly deep CRM integration. It's also a strategic bet where they allocate resources that can actually be on the other side, answering either chat or video calls. So it's like a much more sort of cemented commit from the merchants that this is something that they're gonna be serious with over a long period of time. When it comes to the social selling, that is something that you, in comparison, more easily can shut on and off.
And if you don't have the resources, you can just say that, "Okay, we will not do any more live shows, or we will not put up any more videos." So that's why we see that has a better resilience. But also note what we mentioned with the shoppable videos, that we are now doing our main, like, a general release in Q2. That will most likely change the dynamics a bit here as well, where we will see better resilience in our social selling solution because you would not be forced to do that many live shows. You can use existing videos and deploy them across your e-commerce.
I can also add to the Digital Clienteling. As Jonas said, it's a much deeper integration into the back end of the merchant, which takes time, and it's a quite bigger investment. And also I would say it's a P&L exercise for them because you need to find stores or store associates, you need to train them. So it's a really much deeper integration into the overall way of working, which also gives us a more long-term commitment from the brands.
All right. Great. Thanks a lot. That's all for me.
Thank you.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you so much for joining us, and have a good day.