Hello, and welcome to today's webcast with Checkin.com, where CEO Kristoffer Cassel and CFO Martin Bäuml will present the third quarter of 2023. After the presentation, there will be a Q&A. With that said, I will hand over the word to you, Kristoffer.
Thank you, Ludvig. And thanks for everyone listening in to this webcast. For those of you who have listened before, I think the format will be roughly the same, which is I will look at some highlights of the business and some of the points from the quarter, and Martin will later go into some of the numbers. But our assumption is that you have read the report and that you have some knowledge of us as a company beforehand. We plan to leave plenty of time for questions at the end, so feel free to ask questions. As I say in my CEO letter, it feels like we are on a new level.
The growth from last quarter is more than 40%, and more or less all the metrics in the report is improved from last quarter. And the revenues takes a big step up. We closed the quarter at SEK 29.9 million for the quarter, and this is obviously by far the biggest quarter we've had, and a big step up. And if we look at it from another perspective, we can see how big this building block, so to speak, is. We're already this year have more revenue than we had for the or more or less equal the revenue we had for the full last year. And this growth 76% compared to last year, that's fully organic.
and, if you compare that to last year, we had an organic growth of 52%, so organic, strong growth, and we're adding the biggest quarter yet. And we're doing this while we significantly improve our profitability. And our gross margin, which is historically around 85%, this quarter, it's 84%, really gives us scalability. So, a large chunk of the new revenue trickles down throughout the P&L and improves the profitability and cash flows throughout the report. The EBITDA of SEK 10.9 million for the quarter, that's more than a fourfold from last year. Most margins are improving or all margins, and the EBITDA margin is at 36% for this quarter.
For those of you who have listened in before, we have sort of, for a number of quarters now, gradually improved the EBITDA margin, as we have grown the top line, and I think this is an expectation that we have also going forward. The EBIT is also positive, SEK 4.7 million, and sort of positive net result in the end as well. So we're growing very rapidly, and we're doing this while significantly improving profitability. And this scalability that our business model enables also allows us to do continued investments in long-term growth activities. We're now financing the investments in R&D and product development, as well as sales and marketing and so on, with cash flow from the operating activities.
This quarter, we generated almost SEK 8 million in cash flow, and we're doing still large investments in R&D and products. But even with that, we have a positive cash flow after investments. We have also added that as a metric to the report, so it's easier to follow how the cash flow looks like after those investments. And as we speak now, we're building net cash, basically. So we're a strong financial position where the profitability improvements translates into a improved cash flow as well. And the strength of the report is foremost driven by the travel segment.
This is now our largest customer vertical from a revenue perspective, and it's almost completely dominated by the large European airline that we have worked with for a couple of years now, and that we have talked about in previous reports as well. So this customer has increased the usage of our software, adding new modules and increasing their usage, and this means that the net revenue retention increases significantly. So this quarter, we're at 173% NRR, and this is a big driver behind this growth that we're seeing. As I previously said, I think the NRR metric is one of the key metrics to understand how healthy our business is and how it's going.
So we have a very strong momentum, and although this sort of materializes in this quarter's number, of course, it's a result of hard work and sort of long-term investments that we've done for a number of quarters. So, we work together with this large client for, as I said, more than two years, and it's a continued work, and we managed to achieve these numbers, not only in this quarter, of course, but through the work we have done, in the previous quarters as well... And this largest customer, it creates a sort of a high leverage. The size of the customer could be seen negatively, as a weakness. But of course, for us, starting the company less than seven years ago, this was a customer we could sort of only dream about.
It's a customer that handles hundreds of millions of passengers each year, and with that, there is a clear connection between the growth of this customer and the growth of the group. So if we can develop this relationship and increase their usage of our software, then that's a positive effect on our growth. We feel comfortable with this. We feel that it's really fun to have this sort of impact big clients, and we're working actively to grow this customer further in close collaboration with them and actively get them to use more aspects of the software. It's important to add that we are. Our focus is to add similar customers and keep a high NRR.
So if we can just add a handful more large enterprise clients, I think, we can have really strong quarters ahead of us. So that's the big focus commercially. We continue to focus on enterprise clients. There is a potential for strong growth, even with just a handful of such cases. But it requires, as we have seen with this airline client, and as we've seen with other big enterprise clients, it requires long-term, sort of persistent work. It will take several quarters, so it's sort of longer lead times, but hopefully creates great leverage once the usage comes.
And one good example of this type of customer that we have big hope for is a large Swedish fintech company that has integrated our software now into their own products. And we hope that they will enter a revenue-generating phase in the coming quarter or maybe in the coming quarters. And we feel quite proud of this cooperation. They are really strong in their area. They have world-leading products, and it's very inspiring, and we hope that this is a relationship that can sort of mimic what we have managed to achieve together with airline. But we also have discussion with several others, large, transformative clients. So the focus on big clients continue, and we see what effect it can have if we play our cards right.
So summing up, we feel that we have sort of created shareholder value during this quarter. It's our first quarter with our new financial target. It's sort of a variant of the classic Rule of 40 SaaS metric. It aims to capture profitable growth in short. And our goal is to maximize the sum of growth per share and EBITDA margin. So this quarter, we had 70% revenue growth per share, and we had a 36% EBITDA margin. So the actuals came out at 106%. Of course, you should probably see this on a much longer basis. The board have set the ambition to exceed 80% on an annual basis.
The key here is, of course, if we can consistently keep delivering high growth and profitability, we will continue to create big values for us as shareholders. With that, I will leave to Martin for some focus on the numbers.
Thank you, Kristoffer. So, a little bit of a further deep dive into the numbers. So, net revenue up 76% compared to the same quarter last year, ending at SEK 29.9 million. I think we were just SEK 3,000 from being able to round up to SEK 30 million, but sometimes you're on the other side of the stick, or you get a shorter stick. Gross profit amounted to SEK 25 million, 84%, in line with where we've been previous quarters.
EBITDA, we're starting to see or we're continuing to see continued efficiency improvements and scalability of the business model, ending at SEK 10.9 million in the quarter, with a margin of 36%, which is a big increase compared to previous quarters and also same quarter last year. And the cash flow from operating activities is also growing significantly to SEK 7.7 million kronor in the quarter. And just anecdotally, that's pretty much exactly the same number as we had in revenue when we went to the... When we did our IPO two years ago. So now we have that in cash flow from operating activities, which is just another anecdote that we're you know on this growth journey.
We ended the quarter with cash and cash equivalent of close to SEK 32 million and a equity ratio of 85%. So if we flip to the building block page that I know that many of you have seen before, we're adding the largest building block by far in this quarter, the SEK 29.9 million yellow block here, up 76% compared to last year. Which means that we're almost exactly at the same total revenue year to date as we were for the full year 2022, around SEK 70 million. And just to reiterate that this is fully organic, so the 76% is fully organic growth.
Another anecdote is that we added between Q2 and Q3 around SEK 8.9 million in revenue, and that's also, as you can see to the left in the chart, that's higher than the total revenue in many of the quarters leading up to our IPO two years ago. Another metric that shows how much we've grown this quarter. Flipping to gross profit, we generated gross margin of 84% in the quarter, which is in line with previous years and previous quarters. Again, it's the high gross margins that we're able to achieve that enables us to invest in revenue-generating activities, mostly product development and sales and marketing.
If we flip to sales and marketing specifically, we invested SEK 4.1 million in the quarter in sales and marketing, marketing activities, which corresponds to 14% of net revenue. And I know that we've guided higher than that in terms of sales and marketing investments, but given our strong growth in revenues, mathematically, that kind of 14% is mathematically a little bit lower than I think we can expect to see going forward. If we go to EBITDA, again, reiterating, we continue to see the scalability of our business model working and improve in combination with improved efficiency overall, and also some synergies from the acquisitions we did, which really led to this big margin increase.
So we ended. We had SEK 10.9 million in EBITDA in the quarter, which corresponds to 36%, which is up 22 percentage units compared to same quarter last year. And finally, we ended the quarter with cash of almost SEK 32 million and an equity ratio of 85%. And with that, I'll pass it back to Kristoffer for some general comments and Q&A.
Yeah. Thank you, Martin. Yeah, so basically, to sum up Q3, from my perspective, we're taking a big step in terms of revenue, really to a new level. We greatly improve profitability. We do this fully organic, and with a strong net revenue retention. Yeah, basically, we're looking forward to finishing off this year strongly. So it's obviously a report that we enjoy to present. And with that, I think we can take some questions from the audience.
Thank you so much for the presentation. I think we'll go to the questions right ahead. What is behind your success in combining growth and profitability during Q3?
I think, Martin touched upon that, that our high gross margins allow us to keep a lot of the revenue after direct costs, which means it sort of trickles down throughout the P&L statement. And that's sort of thanks to the fact that we're selling software. So if a client of ours increased their usage of the software, it doesn't really mean an increased cost base for us, except these direct costs. So that it's sort of inherent in the business model, I would say, that we have a very scalable model, which means that as we grow, profitability has improved. And we have shown that for a number of quarters in a row now.
The EBITDA margin is improving further. Will that trend continue?
Hey, I think we, or I wrote in the CEO letter that we have an expectation that the EBITDA margin will continue to improve as we scale further. Obviously, there is some limit to that if you look at in the very long term, but for the next couple of quarters or so, that's an expectation that we're having.
Processes with several other large customers are mentioned in the report. Can you tell us more about who they are and what they might mean going forward?
Yeah, I think, as we said, we're speaking to large clients in all the verticals, basically. I think it's both looking at additional airlines, it's looking at large fintech clients. I talked earlier today about this large fintech company, Swedish fintech company, which we have a strong sort of strong expectations for, and that we're very proud of having as a client, and that we hope that they can go into revenue-generating phase very shortly. But we continue to focus on big enterprise clients and... With some luck, we will be able to recreate the success we've had together with this large airline.
Thanks. 173% NRR is very high. Do you think you can maintain this level going forward? You have updated your financial target during the quarter. How did you reason about that?
I'll start off with the NRR question, then I guess.
Yeah.
So the net revenue retention rate is 173%. I think it's the highest we've ever had. I think comparing with peers, it's extremely high, but it's worth noting that over time, if you look at the last couple of years, we have been around 130%, 140%. So yes, I think we can keep high NRR numbers. Will it be exactly the same for many years to come? Who knows? But having high net revenue retention rates, it's really a good metric to understand what the momentum is in the business, and how we are sort of doing as a company. So hopefully, yes, we manage to hold high numbers in the coming quarters as well.
As I mentioned earlier, you have updated your financial target during the quarter. How did you reason about that?
I think the key is that we want a financial target that reflects how we create value for us as shareholders. So really, shareholder value creation. The old target was purely sort of growth for the sake of growth, without taking into account the dilution for the owners and without taking into account profitability. So the new metric, which I went through a bit, but that is the sum of a revenue growth per share summarized with the EBITDA margin. We feel that's a very good and sort of balanced metric for measuring a profitable growth and an efficient growth. So we put the ambition high at 80%. A sort of classic bar would be sort of 40%.
We have put it at 80%, and as I said, this quarter, we come out way above that with 106%.
The cooperation with the airline seems to dominate the growth. Is there room for further growth there?
Yes, we believe so.
A lot of questioning about growing here, but can you keep growing this fast?
I think, if you look at us historically, we have been... This quarter, we had 76% revenue growth, all organic. But if you look for the last, let's say, four or five years, we have had growth rates close to that, consistently. So yes, I think we can grow fast also going forward. If you look compared to last quarter, it's a growth of more than 40%, quarter-on-quarter, and that's of course, a growth that's hard to sustain for a long period of time. I hope we can, but I think my expectations is that we can continue to grow like we have done historically.
Thanks. How do you view the risk of being dependent on individual larger customers versus the growth they create?
I think I touched upon that before. We feel that we're very honored and sort of proud to be able to have this type of mega clients, something we could only dream about when we started the company. We see it as something positive, that if we do a good work together with them, it creates a strong growth for the company. I think what we focus on is keep developing those relationships and adding more huge clients, rather than sort of being defensive and trying to find small clients. We want the biggest ones.
We believe the internet will consolidate on bigger players, and we need to be the provider of software to those big, big players, whether that's the airline we talked about, whether it's the fintech company that we are now hoping to get into a revenue-generating phase, or if it's other such big players.
Thanks. Will there be any more acquisitions?
I hope so. Me and Martin are spending quite a lot of time on M&A still. It's been a turbulent year in terms of valuations and so on, and we feel that's have stabilized a bit. So yes, hopefully. We have done two acquisitions almost two years ago, and we feel those were very very good good acquisitions. And we hope to follow up with with a with another quality- with another high-quality acquisition if we do something. So sort of this type of work where the market only sees when we actually finalize it, that's when we can communicate something. But we're still working on it, and we believe there are still opportunities out there.
What are your expectations regarding the fintech collaboration? When do you think it will start, have an effect on your figures?
... I think I mentioned it before, but I think the coming quarters is a good expectation for when it's sort of starting to generate revenue, and then hopefully we can recreate the sort of long-term growth that we have had with other big clients. So it's hopefully something that will continue to add to the growth in many quarters to come.
Can you elaborate just a bit on how gross costs have gone up in real terms? Is it server cost, or what is it, more concrete?
I guess the person asking the question is referring to the direct costs, that's in the gross margin. So the direct costs are defined as any cost that increases when we process more volumes. So as we take more volumes, as our software is used to a larger extent, any costs that are increasing by that is taking as a direct cost. As a percentage of the revenue, that has been very stable over time at 15%, so we have a gross margin of 85%. It means that around 15% goes to cost, and the rest we sort of keep. Not sure if that answered the question, but that's my interpretation of what was asked.
Thanks. Moving on to the last question here: How large is the customer concentration now after the major airline customer has expanded?
As, as we touched upon that, it's a major part of the growth this quarter coming from that, from that client. And, so in that perspective, that client is, is by far our biggest client. But looking at different segments, and sort of biggest, bigger perspective, now the airline or travel vertical is our biggest vertical, but it's quite evenly distributed now between, travel, fintech, gaming and gambling, and other segments in terms of revenue. So from, from the sort of high-level perspective, we are much less dependent on, on, specific sectors. We have a broader concentration overall, but with this big travel client, that, that is, that is sort of an outlier in that.
Thanks so much for the presentation and answering our questions here, and good luck going forward.
Thank you. Thanks for everyone listening in as well.