Hello, welcome to today's webcast presentation with Checkin.com Group that's presenting the Q1 report for 2023. With us presenting today, we have the CEO, Kristoffer Cassel, and CFO, Martin Bäuml. After the presentation, there will be a Q&A section. With that said, please go ahead.
Thank you, Martin. My name is Kristoffer Cassel, and I'm the CEO. I think we will follow the format we've had in previous quarterly presentations, where I go into some highlights from the business updates, and then Martin runs through some of the numbers, and that we leave plenty of time at the end for Q&A. So I'll dive straight into it. I feel that Q1 was really a quarter which in many ways was undecided. In one way, it was quite weak, revenue-wise. In another way, we put the foundation for the breakthrough that happened after the quarter ended in the travel segment. Sort of have mixed feelings about the quarter. As I said, the net revenue was weaker than expected.
We ended the quarter with SEK 18.8 million in revenues. It is the highest Q1 revenue we've ever had, but for those that followed us, I think we have had 25 quarters out of the last 25 quarters, I think two quarters have not been all-time high. Our ambition levels are higher than this, but the revenues were pushed down mainly from a drop in volume from our iGaming clients. We had an increase in revenue from fixed packages, but not enough to offset this drop. I think we have seen the iGaming customers were weaker in Q1 than Q4, and this market has been a bit struggling for the past couple of quarters.
This has pushed down the Net Revenue Retention to 108%, which is an all-time low. NRR for us is one of the most key metrics to understand our business and that will that decides on how capital-efficient growth we can achieve. It's an important metric, and we hope that it, that it comes back more to historic levels. We have mainly fixed packages, but on top of those, we also charge for additional usage, and that additional usage is around 30% of revenues. This gives us an upside when partners grow quickly. It gives us basically a straight leverage with the growth, but it is of course volatile and during Q1, we saw lower volumes.
On the other hand, as I said, after the quarter, we had a breakthrough in the travel segment. We have talked many times about our focus in this segment and that we are working together with one of Europe's largest airlines to extend their usage of our software. Now two additional modules are in use in production since April 14th. This is already 5x historic volumes from this client, meaning basically 5x more revenue that they are running on right now, and we're still at fairly low shares of check-in. Out of this client's total user flows, our software is still applied maybe on somewhere between 5%-10% after this increase. Our expectation is that they will increase the usage further throughout Q2, and basically have big hopes for this.
We think it's a potential game changer in the travel segment, but also that this in itself will have an impact on the group's total metrics. This was made possible by large investments in capacity during Q1. Basically, the whole company focused on making sure that we can handle these big volumes when they come. The max capacity of the system is now more than six times the historic levels and also built so that we can continue to scale even further. This was technically quite a big challenge. Everyone sort of chipped in and we pulled through, and this is why we can accept these volumes now and we're sort of ready to take on quite extreme volumes going forward. This is needed because we are focusing on enterprise-level clients.
We see that the largest clients we need to win to win the market. I think that the internet as a whole is consolidating so that larger and larger players are taking more and more of the total activity. We need to win the big airlines. We need to win the big financial services. We need to keep winning the big iGaming clients. This is our focus. Can also add that the usage for other segments outside iGaming is developing nicely. We have a broader customer mix than ever before, and we keep making sort of progress in many different industries. We also have several potential mega clients both in North America and Europe, which we hope can be a similar success to the airline we talked about before.
The lead times are longer. When we go after these big clients, it takes some time, but we think it's worth the investment and that we keep thinking long term about this, that will fuel the growth in the coming years for us if we play it right. We're also still looking for new acquisitions. A lot of the work Martin is doing, you never get to see, because we haven't made an acquisition in the past 12 months. We feel now that the macro situation has stabilized a bit and that the valuations are more, basically that the parties we speak to are more in line with what they can expect in terms of valuation. We are looking for leading technology within niche areas.
We look for excellent in excellence in the teams and strong product-driven companies that can add to our software. I think I can also add that when we talk about technology in niche areas, we mean it both from a sort of technological standpoint, but also as a possibility to acquire technologies that are niched into some of these segments, whether that's travel or fintech and so on. I think we are having some very interesting discussions and fingers crossed we can come back with some news in this area. Our 2025 target remains, which is to keep growing the net revenue at 86% annually. This is organic and through acquisitions. This means that we'll have a net revenue for the full year of 2025 of half a billion SEK.
We still feel very confident about this target. We believe that although we had a weak Q1, we have set up the business for success in the remainder of the year, and all the way to 2025. This is what we focus on. This is the full focus and still our only financial target. I leave over to Martin, who can go through the numbers a bit.
Yeah. Thanks, Kristoffer. As previously, you've all read the report, and it's full of numbers and details. In this presentation, I'm just gonna go through and highlight the key subjects and then leave some time also for questions in the end. As Kristoffer said, net sales increased by 19% compared to the same quarter last year, up to SEK 18.8 million. The organic growth was 16%. The gross margin was in line with previous years, at 83%. We continue to realize synergies from the acquisitions as well as general efficiency gains, which led to an increase in EBITDA compared to last year.
We now have an EBITDA of plus 2.8 million SEK, which corresponds to a margin of 15%. Cash flow from operating activities also follow that, those profitability improvements and landed on 2.6 million SEK in the quarter. We ended the quarter with a cash position of 41.7 million SEK and an equity ratio of 83%. Looking a little bit more in detail on the net revenue, as said, we now added a further building block into this chart that you may recognize from previous presentations, which is a new yellow building block here, 18.8 million SEK for Q1 2023, which is a growth of 19% compared to last year, out of which 16% was organic.
If we flip to gross profit, we also grew that up to 15.5 million krona in the quarter, corresponding to 83% margin. As you can see on the picture to the right, which is in line with the historical quarters, I think we've been around 83%-87% historically. We've said it before, it's these high gross margins that allows us to further invest into, you know, growth-driving activities, like product development and sales and marketing. Looking specifically in sales and marketing, we have seen a lot of improved efficiency and a even greater focus on enterprise customers.
We spent around SEK 3 million on sales and marketing in the quarter, corresponding to 16% of net revenue in the quarter, which is a little bit lower than we've had historically. Over time, we think that this ratio will be in line with previous guidance, which has been around 25% of net revenues. Going to EBITDA, as we mentioned before, we continued to see improved efficiency, efficiencies and synergies across the group, which has led to strong margin improvement compared to last year.
We landed at SEK 2.8 million for the quarter, which is a margin of 15%, which is an improvement of 19 percentage units compared to last year, also higher than previous years, as you can see in the chart to the right. This is something we also believe that we will continue to gradually improve over time. Finally, we ended the quarter with a cash position of SEK 41.7 million and an equity ratio of 83%. With that, I'll hand it back to Kristoffer for some final remarks and the Q&A.
Thank you, Martin. yeah, just to summarize Q1, it is a weak quarter from a revenue perspective. We did these large investments in capacity, which enable us to break through after the quarter ended in the travel segment. We have a strong financial position, which allows us to think long term and to take the steps that we believe is right for the long-term growth. as I said in my CEO letter, I feel I look forward for the year ahead and I feel we're in a strong position. With that, I'll leave for questions.
Thank you, Kristoffer and Martin, for that presentation. Now we'll jump into the Q&A section, and I will take the first one here. Can you describe how the development in marketing and sales is going, and will this quota increase during the year?
Yes. I think that Martin did a good summary of this. Basically, we're at 16% right now. We think that over time it should stabilize around 25%. It's all about finding efficiency and making sure that we spend money and that it sort of pays a return quickly enough to make sense. With our focus on enterprise clients, we have been more efficient than before. Over time, and sort of in average, we think around 25%, although it might differ quarter by quarter a bit. Around 25%, I think is what you should expect.
Is Checkin.com's growth stalling?
I think it's a good question given Q1 revenues. If you look at the quarter one on its own, I think it's a valid question. We should grow faster. On the other hand, if you look at the work we did and the breakthrough we had after the quarter ended, you get a very different picture. We feel that the long term, we are in a very good position. We feel confident about the goal towards 2025. That's what we are pushing for.
Mm-hmm. Thank you. You mentioned reduced volumes from among other things, iGaming. Do you think they'll turn upwards again?
iGaming has been a market for us that has been very strong for many years now and a strong driver of our Net Revenue Retention and developing well. It has been a growing market, both in general, but also thanks to regulation that has evolved positively. I think that right now it's sort of a bit undecided how it will go. We see that our customers invest slightly less than before in customer acquisition and so on. Of course, over time, do I believe people will continue to gamble? Do I believe people will continue to gamble online? Yes, I do. I think we have a very strong position in that market. Whether that happens this year or in the coming years, I believe, of course, we'll come back.
You have broadened your customer base to many new industries. Is that a conscious strategy?
It is, yes. I think it's not that we, that we're sort of leaving iGaming. iGaming is a very important market for us still, and it's a market where we, where we are really leaders. We believe that adding adding other industries, and we have around 20 different industries, if you read the annual report, where we have customers that are active, and some verticals where we have many clients, like financial services, and like travel, which we talked a lot about today. Broadening to more sectors also makes us less less sensitive to specific industries, how they develop and so on. I think it's good for us. We believe that many, many industries will gain from using our software. We continue to broaden the customer mix.
The EBITDA margin improved by 19 percentage points. What would you say is behind that increase?
I think the biggest driver for that is the synergies that we did last year when integrating the two acquisitions we did. We also sharpened the efficiency in general in the organization. That's a big driver. The other big driver for EBITDA is growth. As we grow, the profits grow because we have relatively flat and stable cost structure. With scale, the profitability should increase, and that's why we also guide in the report that we believe that the EBITDA margins will continue to go up throughout the year. Yeah. I think that's the guidance we give on that. As I said, the reason is synergies, efficiency, and growth.
Okay. Thank you. What does a breakthrough in volume mean? Can you develop around the 500% plus in volume for the airline?
Of course, it means a lot for us, both in terms of showing that we're able to work with such a mega client. Inside travel, we think that hopefully gives positive effects when speaking to other airlines and other actors in the travel space. Also in itself, 500% volumes compared to historic levels also means 500% revenues and it means that this client is growing with us. This is a start. They have been live around a month, slightly less than a month with these new modules of our software, and we have hopes that we continue to grow the relationship further in the coming months.
Already in the Q4 report, there were talks of hopes for higher volumes from a major airline, and now you have sharply increased actual volumes. What can we expect from this?
It's a similar question to the previous one. I think the answer is similar. I think we should be happy that we are now live with these additional two modules. We are happy that we see this increase in volumes already. Our expectations is more than that. I think this customer, we estimate that somewhere between one and two. That the share of Checkin.com, so the number of users that goes through our software compared to all their users were somewhere around 1%-2% and now, is now around 5%-10%. There is still a lot of room, given those numbers, to grow further. We will see. It's a long-term effort. It's just 1 client.
I think the other interesting part is, of course, can we get more such clients, now that we can win this big one?
Are these increasing volumes included in the figures for Q1?
No, they are not.
Has the airline customer communicated any plans for their increased volumes?
We are. How should I say? There is discussions. There is no set plans, and I think there's Like always, there is a gradual rollout, and we have expectations that rollout continues. I think we will see. We will see and it all depends, of course, how it goes. If we continue to work well and be successful, the rollout will continue, let's see.
Mm-hmm. How would a successful expansion affect your other key figures?
I think, if we make it really basic, if we start at the top, it would increase our revenue, or it does increase our revenue already. When the revenue increases, as I mentioned before, I think the profitability follows with that growth to some extent. I think everyone should, though, be aware that the gross margin, we have a gross margin of around 85% over time, and I think for these big mega clients, there's a slightly different pricing point, which means that I think you should calculate with slightly lower gross margins. It is clear that it's positive for the growth and the revenue, which means it should be positive also further down in the P&L statement.
Profitability remains strong, and according to the report, it's expected to continue upwards. What are your thoughts on profitability and cash flow versus growth going forward?
I got that question a couple of times, My view is that there is not a contradiction between growth and profitability. It's rather the opposite, that growth is what fuels the profitability. We need to grow to become more profitable. If we succeed growing according to plan, we just say it is 6% year-over-year, we will be quite a profitable company. I think there's no alternative to that. That's what we focus on, and if we manage to deliver on the growth, the profitability comes.
Several possible acquisitions are mentioned in 2023. Can you tell us a bit more about what kind of technology or company you are looking for?
I mentioned a bit earlier, I sort of can repeat what I said. We're looking for specialized technology within niche areas. That can be both in terms of niche technologies, but also in niche areas like travel or fintech or any of the other verticals where we believe there is still plenty of opportunity. We're speaking to some companies and, yeah, we see that there's a lot of interesting technologies out there that would benefit a lot from being part of Checkin.com Group.
Okay. Thank you very much, Kristoffer and Martin, for presenting today and answering our questions. A big thanks to all of you who followed along this presentation with the Checkin.com Group. Hope you have a great rest of the day, and until next time, thank you and goodbye.
Thank you.