Hello, and welcome to today's broadcast with Checkin.com, where CEO Christian Karlsson and CFO Martin Boimel will present the report for the second quarter of 2024. After the presentation, there will be a Q&A. With that said, I hand over the floor to you, Christian.
Thank you, Ludvig, and good morning. My name is Christian Karlsson, and I'm the acting CEO of Checkin.com Group since end of May this year. So even if I'm the new CEO, I probably previously worked six year in the group as Chief Commercial Officer, and today I have with me our CFO, Martin, and we will go through our latest quarter report. What I mainly will go through myself is my comments from the CEO letter. I hope that you have been reading the report, but also about the business in general and the development in our main verticals. I will then hand over to Martin to go through more to the financial part, and we leave it, of course, with a lot of room for questions.
Just as in Q1, we have continued to see weak travel volumes through the quarter. We have also had a breakthrough into the fintech industry after the quarter. As you obviously can see in the on our net revenue for quarter two, we have a revenue that's going sideways compared to Q1, but also year-on-year. Obviously, we had a really challenging first half of the year, but I feel we are really well-positioned for the upcoming year. On the upside, though, even if we have a strong enterprise focus, which means that we focus on the largest companies on internet, we still signed a double-digit number of new contracts in the quarter. As I mentioned, we also had a breakthrough in the fintech industry after the quarter.
I will follow up a little bit about that later in the presentation. We have a strong belief in our new travel product, which is now live in Ireland with Europe's largest airline. A little bit about our verticals. Our main verticals for those of you listening for the first time are travel, fintech, and iGaming. So I will go a little bit into our current development around our verticals. But first of all, travel. As you all have seen, like we've been facing some challenges around the travel vertical, which is mainly related to a less amount of bookings through third quarter bookings, where the volumes are down, like 38% year-on-year.
The last year, we, as a company, has continued to invest heavily product-wise and also in the sales and marketing part, just around the travel industry. So far, it's not been paying off, not either with our current customers or not with, like, potential new customers, but we see a strong demand of an interest of our product. We have in Q2 released, together with Europe's largest airline, our new travel product that should cover all type of bookings, and I'm happy to announce that it's also now live in the Irish market, and we hope for an expected rollout on key markets going forward here. Also, as I was a little bit into, we're having a lot of interest around the products in travel.
We have many several discussions going on, and where a few of them feels like they are in the ending stage. On the fintech vertical, we have been speaking about the last quarters about this big Swedish fintech company. I'm happy also to announce that we have been growing that business quite a lot. So we are live now in more markets than before, including the U.S. market, and they also now become our second-largest customers in terms of revenue, now in August already. We've been working really close with the product development together with this company, and we see that now we are in a good stage with that product to be really competitive against other banks, fintechs, and insurance companies.
iGaming was before one of our most important verticals, but that's been decreasing a bit once we have been focusing more of our resources into travel and fintech. Even though we still see a lot of interest of our products in iGaming, the conditions has changed a bit in the regulated markets. We see that many of our current customers are operating in less markets. We see that many has like harder time to make money, basically, which has also affected our revenue a bit in the iGaming market. Except that, I'm also happy to announce today that we sent a press release this morning about that we have signed a agreement with Stake.com, which is the fastest-growing iGaming company in the world at the moment.
I'm super happy that they would like to work with us and then use our software. Upcoming, we see great opportunities from the new regulations coming in Brazil, end of the year. With a lot of interest of our product, and we have already started to work with one company in Brazil and to be able to help them with their regulation. I feel that we are in a really good position to gain more momentum there. Our financial targets remains, the financial targets are like a variant of classic SaaS metric, which is called Rule of 40, which measures the profitable growth. And the target is to maximize the sum of the revenue growth per share and EBITDA margin.
The target stays firm, and our ambition is still to exceed 80% of our annual basis. Year-to-year, on the last twelve months, now we are at 55%, which makes it that we need to have a rollout now in coming up, especially in the travel industry, two key markets to be able to reach our ambition for the year. But the goal stays the same, and ambition stays the same, but to reach the ambition, we will need to have a rollout to the key markets now in the coming month. And then I leave over to Martin for some financial highlights.
Thank you, Christian. The quarterly report itself is packed with a lot of numbers, and my goal here for this presentation is to go through the financial highlights. As we already, Christian already mentioned, net revenues fell with 3% in the quarter compared to the same quarter last year. We had revenues of 20.4 million SEK in the quarter. The organic growth was also minus 3%, given that there were no impacts from acquisitions this year. The gross margin was 75% in the quarter. That's lower than we've had before, and as we mentioned earlier, it's due to the capacity expansion that we have invested in and in order to meet future demands. I can come back to that a little bit later.
Despite the continued kind of lower revenues compared to Q3 and Q4, especially last year, and the lower gross margins, we still have an EBITDA of SEK 2.7 million in the quarter, and that's a margin of 13%. The cash flow is somewhat improved compared to last year, and the cash flow from operating activities lands at SEK 2.2 million. We ended the quarter with a cash position of a little bit more than SEK 35 million, and an equity ratio of 87%. So if we jump into the details with the net revenue, for those of you who have listened before, you recognize this, these building blocks, where we now added the last, or the, the latest yellow building block here, SEK 20.4 million of revenues in Q2, as we mentioned.
That's that corresponds to the growth of -3% compared to last year. And as Christian already mentioned, that's a lot of impact from the travel industry, especially when comparing to Q3 and Q4 last year. If we jump to gross profit, the gross profit in the quarter went down to SEK 15.3 million, and that's mostly driven by the falling or the decrease in revenues. And the gross margin of 75% is lower than we previously had, around 85%. And I think the story here is the same as what I told you in the Q1 report.
It's because of the investments we've taken in the capacity expansions in order to meet our largest clients' or our largest customers' future rollout plans. We need to be ready when that comes, and we have optimized the systems to be able to run with higher volumes and meet that higher demand. And when those volumes haven't really materialized yet, then, by definition, the gross margin will be lower for a while. And that's a little bit driven by that even the direct costs are not completely variable with the underlying volume, and they are rather, you know, incremental capacity steps, if you will.
And that is what happened now when we've actually invested in a few more steps, i.e., increasing costs, and we're ready to meet the demand when that comes. If we go to sales and marketing, we have increased these investments and put SEK 4.5 million into sales and marketing in the quarter, corresponding to 22% of revenues. For the first six months of the year, we are at 21% of revenues. If we go a little bit further down on the income statement, we reach EBITDA. It is down a bit, as we mentioned before.
Compared to last year, EBITDA landed at SEK 2.7 million for the quarter, corresponding to a margin of 13%. And similar to what I mentioned in the gross margin, you can say that we've optimized the company to meet higher demands and to be a bigger company. And when we have slightly lower revenues than we had hoped for, this is what happens to the margins. But as Christian mentioned, we are in a very good position with high leverage to increase these margins when the net revenue is coming in. And finally, we ended the quarter with a cash position of just over SEK 35 million, and an equity ratio of 87%.
And with that, I can pass it back to Christian for some closing comments.
Thank you, Martin. Just to summarize, we have continued to see low volumes in the travel segment through the whole half of the first year of 2024. We have our new travel product live in Ireland, and for all type of bookings, not just related to third-party bookings through Europe's largest airline. We have a breakthrough in the fintech vertical of the quarter, where now in August, they are our second-largest customer in form of revenue. And so as Martin just talked about, we are really well-positioned for leverage when we're increasing our volumes and traffic from our largest customers. And with that, I'll leave back to Ludvig for the Q&A.
Thank you so much for the presentation here, and we have received a lot of questions, so I think we go straight into it here. You have gone from high growth to lower growth, and now to negative growth. What is not working here?
Yes. As I just talked about, we have seen like a decrease, especially in the volumes from our travel segment. We have invested heavily in the last year in the travel industry, both on the product side and on the sales and marketing side. Unfortunately, yeah, this has not paid off, and it's related to like less amount of third-party bookings, where our volumes has been decreasing quite a lot. It's mainly around that. Still, we hope that this should be up and running soon, especially in the key markets, and then we hope to get back to the real growth again.
In previous calls, you believed that travel volumes would return during the summer. Why hasn't that happened?
Yeah, it's almost that I need to repeat my answer from the previous question, but we had, like, strong belief that it should come. Unfortunately, the new product we've been developing together has just been released in one market so far, and we're waiting for some key markets to be released. In the combination, of course, that our online travel agencies has, like, decreased amount of volumes.
Thank you. Christian, you're now the CEO at Checkin. How will your employees notice that you have become the new CEO?
Yes, so, that, that's correct. I don't think they will feel a big difference. I've been with the company for six years, so obviously I know everyone, and Kristoffer is still a active, like, chairman part and chairman in the company. But obviously, since I'm coming more from a commercial background, it's like I believe that people probably should feel that it could be a little bit more commercial, both in the sales and marketing focus going forward.
Thank you. If you look at the development over the past six months, the venture towards enterprise feels like a little bit like a failure. Why are you sticking with it?
Yeah, I think it can, of course, look like a failure when you're looking into the revenue. For myself, I don't feel it, it's a failure at all, especially in the like steps we're taking on the product development side together with those enterprise customers. So I feel like, especially from the product side, we've been taking big steps, both in the travel and in the fintech industry. Unfortunately, right now, yes, it looks like a failure in form of revenue, but I'm convinced that once we grow together with the partners and with potential existing signings as well, we should see this as a successful opportunity in the enterprise for the future.
Thank you. Will you reach your financial goal of 80% for 2024?
Martin, do you want to-
Yeah, sure. I think, first of all, we just need to clarify the goal or the top financial target. It's what the board has given us. It's to maximize the revenue growth per share plus the EBITDA margin. And the reasoning behind that is that we, as a company, can choose a little bit to invest more in growth driving activities to grow faster and maybe less profitable, or focus more on profitability and maybe at the expense of slower growth. And as Christian said on the slide, I think it's a variant of the classical Rule of 40 target that many kind of scale-up companies or venture-backed companies are using.
We have an ambition level to reach 80% on an annual basis. And given a kind of slow start in 2024, it of course looks a little bit tough to reach that target or not that target, that ambition, for 2024. But if we get the rollout that Christian has talked about here from our largest customers, then we believe that is still that is still doable this year. And so the target remains to maximize the growth per share, plus the EBITDA margin, and the ambition level is still to reach 80%.
Thank you. Many iGaming companies have done well during the football Euros. Is that anything that Checkin has noticed?
Yes. We have seen, of course, increased activity in the iGaming vertical. For quarter two, I think two championship is, like, 17 days. So obviously we've seen a little bit of spike. But since iGaming is, like, a less important vertical for us compared to what it was for a few years back, revenue-wise, we don't see that as a big spike like that. But of course, we see that it grows, like, in general, but it's nothing really, we believe that or will be a big chunk of the revenue.
Thank you. You told us that the software has removed some travel bookings, which has caused the volumes to drop. Is there a risk that the same thing will happen within several verticals other than travel?
I believe that this, how should I say, this OTA bookings, this is, like, one case—use case of many. It's the only place we're using this today, with these specific customers as well. So I can't see that there's a risk at all going forward, and that we should see this decrease going forward in, like, either in, travel or in other verticals.
Thank you. What potential do you see in the collaboration with Klarna?
We have never announced any deal with Klarna, but what we have said is that we're working with a Swedish international fintech company, and where the potential is huge. We're working daily together with them to increase the amount of markets we arrive with. It's also really fun to say that we also now have launched in United States, and also now in August, they are becoming our second-largest customer in form of revenue. Yeah, I'm really excited for the future with this partnership.
Thank you. For several quarters, you have talked about strengthened collaborations with your biggest customer, but at the same time, growth has largely stopped. How should that be interpreted?
I think this question's been coming up already a few times. And I think I already answered that, in the beginning of the Q&A here. But as we said before, it's related to the rollout of our biggest customers, and I think we can, after that, go to the next question.
Yes. Thank you. Equity analysts believe that the sales will be strong in your Q2 here. What do you think about that?
Of course, our ambition is to have much more stronger numbers than we have on Q2 and even in Q1, of course, obviously. I don't have so much more to comment about that, but of course, we're working everything as hard as we can to grow this business. But otherwise, I don't have any, like, other major comments around that.
Thank you. How can NRR continue to be positive when you lose revenue compared to last year?
Should I take that?
Yeah.
So it's a little bit technical here. The NRR number that we report or that we have in our quarterly report, it's a net revenue retention LTM over the last 12 months, is what that means. Which means it's the average NRR over the last four quarters. So that's why it can be like this, where we actually lose revenue, but the NRR LTM is actually positive. So it's a little bit kind of counterintuitive here, and it's something that we need to decide on whether we should make this clear. But this is the way we have reported it since we started reporting NRR, and we have defined this, and we follow the definitions in a similar way throughout every quarterly report.
But, but, but the question is fair, given that we actually lose revenue in total. Of course, by definition, NRR must be below 100%. And, if you compare Q2 last year with this year's Q2, that is kind of by definition, it needs to be below 100%, which is a... Which it is. But the 103% that we show in the report is actually the average over the last four quarters. So that's the explanation.
Thank you. How close are you to signing new large clients to reduce dependence on a few?
... Unfortunately, that's so really difficult questions to answer. We're running a lot of like discussions. We're having a lot of discussions with many companies in different type of verticals all over the world. But as long as nothing is signed, I have nothing to announce here.
Thank you. The rollout plan for the fintech customer sounds really good. How much do you trust that the plan will be followed?
Yeah, I agree with that, and everything has been followed so far. We're having ambition and ambitious rollout plan together, and with more use cases and more markets. So I have nothing to feel that I worry about that, that the rollout plan should not go as we have planned. We have got really good feedback and especially feedback around our software. So yeah, it looks really promising.
Thank you. Since the software has reduced volumes from your largest customer, have you considered changed, billing model, for example, based on reduced unwanted traffic?
Not right now. We have no plans like that. So we have been like a good invoice model in general, I feel. But of course, if some opportunities will come up in the future, we're willing to look into that, but not where we are today.
Thank you. Have you gained any new customers through the collaboration with Playtech? And if so, in which industries?
No, not yet. Playtech is not live yet. We're still working together with them to get us live and get out on the first customers, but no revenue so far.
Thanks. What can you tell us about the new travel product?
The most important thing is to tell, like, the product is built in mind to cover all type of bookings, not just third-party bookings like OTAs. Of course, we hope a lot about this product, and we've been working together with this major airline we mentioned a lot about. But also I think it's... What should I say? It's also like a testament for us, like that we, as a company, can deliver on the next level on for this type of travel products, not just in the airline industry, but also in other industry, in the travel vertical, where we see a big interest right now. We are right now live on the Irish market, but we hope to get live in key markets in the short term.
Thank you. Can you tell us about the EBITDA development during the first half of the year?
Yeah, that would be me. So if you look at EBITDA for the first six months this year compared to last year, it's kind of the same revenues, and it's also pretty much the same margins, which means that the kind of cost base in between is the same. Of course, when we look at the revenue that we had in Q3 and Q4, our margins were a lot higher than we have now, right now. But that is kind of driven by the revenue increase.
Since we don't have that or that strong revenues right now, since we are kind of waiting for further rollouts, the EBITDA margin is a little bit lower than what we have seen, especially in the Q3 and Q4 last year.
Thank you. Is the Checkin rocket out of fuel?
No, I would say that we're recharging right now, at least if you're looking into the revenue. Obviously, our last report is weak, and our last report was weak in form of revenue. But we are at a really good stage in the company. We have closer partnerships than ever. We have also today signed Stake.com, which is a major iGaming operator. I think it's the fastest-growing one in the world at the moment. We also see that we're getting more invites to international RFPs and so on. We're part of more potential deals going on. So no, the feeling internally is not like that at all. But I can understand if you see the numbers from an external point of view, it looks like that.
But my feeling is not that at all. We are—we have a lot of, like, power left, and we will continue to drive that.
Thank you. You talk about continuing to look for acquisition, but it was a long time since we saw one. What can the market expect here?
Yes, we've been doing two acquisitions so far, GetID and Datacorp. We're always out there talking to a lot of companies, in the same way as we're talking to a lot of companies to start to use our software. Obviously, this process takes a bit more time. It should be the right timing. It should be right, the right multiples. This should be especially the right type of technology and team we're buying. We're always out there. We're talking to many companies. But like just today, I have nothing more to add there.
Thanks. The Gross Margin is historically low. Is it price pressure due to enterprise customer, or what is it due to?
Yeah, that is, it's easy to make that conclusion. But I would rather say that it's what we will discuss in this call right now is, the increased capacity investments that we have taken in order to be better prepared for the future expected increase in demand from our largest customers. So, yeah, I would rather say it's driven by that, by ourselves kind of increasing the capacity of the systems that is pushing down the gross margin at the moment.
Thank you. Moving on here to the last question. It looks like you made a new rights issue during the quarter. Can you tell us a bit more about that?
Yeah, and I can take that, too. Yes. Yeah, that's correct. We did a small rights issue as I guess someone saw in the press release that we issued in June and also in some of the figures in the cash flow statement in the report. And it's fully linked to employees using their stock options to buy shares in the company, so exercising options from employees, essentially. So, and in total, a few employees, a few key employees that has been with the company for a long time, invested a total of SEK 6 million in the business here in June.
Thank you. We received a lot of questions here today, and so unfortunately, we don't have the time to take them all. But thank you all for presenting and answering questions today, and I wish you all a pleasant week.
Thank you, Ludvig.