Welcome to this live queue with FormPipe. I'm joined here today by CFO Joakim Alfredson, and we will later be joined by CEO Christian Sundin for the Q&A session. As always, I want to highlight the possibility to ask questions below the stream on our homepage. But now it's time for Joakim Alfredson. Welcome.
Thank you very much, Patrick. As you can see, yes, I'm not Christian. He is currently in the US, visiting our American sales team there to discuss Lasernet with them. Good fun. Just happy to be here today and looking forward to this session with you to discuss the Q3 highlights. Diving right in. Three things that I would like to put emphasis on here today is the first thing is that we finally see that delivery is delivering, which should of course be natural, but has not always been the case in Sweden, the recent quarters. We see very positive signs coming through there now and we're happy to see that once again in the Q3 report.
I would like to highlight the growth of ARR, 19% growth year-on-year, which is a very strong number, and it's the most important one in our numbers, I think. Lastly, I would like to point out that we have won the Landbrugsstyrelsen tender, which is important for us and caters for a continued very solid business in Denmark going forward. Okay, I see that the clicker is not really working here, so. There we go. Well, the quarter has some positive trends that I would like to highlight, but as well, also some hiccups, I'm afraid. On the positive side, we have what I mentioned about the Swedish delivery organization now finally showing very good improvements, both organizational-wise and also numbers-wise.
Good to see that is finally on the right track. On the people side as well, I would like to point out. We also see continued good traction in the business area private. We have a SaaS ACV in the quarter of SEK 6.5 million compared to last year, SEK 5.6 million. It's not a huge difference in numbers, but there is a but there that I will come back to later as well. Lastly, again, the tender with Landbrugsstyrelsen, I would like to point out that we are still in the standstill period here and it could well be challenged, but it has been communicated, so we are free to talk about it. This is a big contract, total value of around DKK 250 million over four years.
We are siding here with a partner, one of the very large international consultancy houses. The Formpipe share of this revenue stream is around DKK 20 million per year. It puts the organization in Denmark at ease and gives us better flexibility to work with the staffing of different projects. It's really good, and it's a good marketing win as well. On the negative side, though, we see lower delivery revenues coming through from Denmark that we have been accustomed with the latest quarters. Reasons for that is that we have spent a lot of time preparing for this tender with Landbrugsstyrelsen, which has cost us billable hours, I'm afraid.
We have had a very substantial new release of the product TAS, which also has affected our billability ratios negatively in this quarter. Looking at the private business area, unfortunately, we have witnessed longer sales cycles. Temenos is explaining this in their quarterly report, and we are here depending on Temenos to close the deals. Slower sales cycles in the Temenos channel is not necessarily a bad thing. If I for a second here take off my CFO glasses and put on my sales guy glasses, we have an upside here. Since we are continuously getting closer and closer in the relationship with Temenos, we are now in around 20% of all of their pipeline deals. A year back, we were only in two or three of them.
The longer it takes for these to materialize, the probability that we will be included in more deals actually is increasing. In the short term, in this quarter, this is a negative, of course, but in the longer perspective, this could actually be good that we get the chance to get included in more deals, the quarters to come. Also, I would like to point out the currency is of course affecting us as well. We gain some on the revenue lines, actually SEK 3.5 million in this quarter alone, which accounts for 3% of the growth we recognize.
Unfortunately, we're even more hit on the cost side, where cost expands by SEK 4.9 million. The reason for this is the offshore account with Ukraine, where we pay them in US dollars and the dollar against the SEK has weakened around 30% to the dollar during this year alone. A huge hit there, unfortunately, and this is a bit out of our hands, of course. To summarize this a bit, the things that we can control, we see really strong, good trends, with the exception of the Danish billability, of course, in this quarter. Trend-wise, things looks good for the future. Going into the details here, I see that the animation has been lost here.
This is a really messy picture for you, I can see. If we sum the growth, total sales, we see that is up 10% from last year, or SEK 11 million, which is a good number. Again, whereof SEK 3.5 million comes from the strengthening or the weakening of the Swedish krona. Recurring revenues are up 15% or SEK 11 million, mostly stemming from the increase in SaaS revenue of SEK 7 million compared to last year's quarter three. We see that delivery revenues are up SEK 2 million despite the shortfall of revenue from Denmark, which amounts to approximately four and a half million kronors in this quarter.
License revenue, as we discussed in previous quarters, are trending down. We are losing SEK 2 million compared to last year. This is something that we have grown accustomed to, and even more so now when also public sector is turning towards SaaS and subscription purchases. This will continue along this way. Moving to the cost side. Staff line is up by 18% from last year. We have grown the headcount by a net 8 persons. In that number, there are both pluses and minuses, but the net is up 8. We see that we are affected by salary inflation and also some exchange rates come in here to increase that number.
Looking at the sales expenses, they are driven by the increased sales of SaaS and Lasernet, but also has been affected by a bigger use of subcontractors in the Danish delivery organization. With the Landbrugsstyrelsen tender not being certain, we have used subcontractors instead of hirings. Now with the possible win of that contract, we will be able to plan the organization better going forward. Other costs are higher. We are still comparing with last year that was sort of affected by the pandemic still. We see more marketing and more traveling compared to last year. Also here, we get the effect from the dollar in the offshore account.
In this quarter alone, the dollar has increased our offshore spending by SEK 1.7 million, which is, percentage-wise, pretty big. One SEK 1.7 million on the total spend of SEK 13 million is what it is. Summing up the costs, they are up SEK 20 million, which leaves SEK 6 million in EBIT, which is down quite substantially from last year, as you can see. We are considering this to be sort of the low point of our transitioning towards. We have worked very hard with the organization, and we feel that we now have passed the low point with profitability and things are starting to progress in the right direction, profit-wise.
We see that we are in the low point here and are expecting better quarters to come. Looking at the ACV, we see that this year's ACV, this quarter's ACV is SEK 6 million compared to last year is 10. The big difference there is actually Denmark, who had a really good last year and accounted for SEK 4 million out of that 10. We see that the SaaS is driving this with SEK 7 million out of that 6. Again, it's private driving the most of the SaaS sales in this quarter. Q3 is not a really strong quarter when it comes to sales in public sector. This is as expected, I would say.
The outgoing ARR is SEK 345 million, which is up by SEK 54 million from last year, or 19%. Also here, of course, there is a currency effect. Out of those 54, some SEK 18 million is currency related. If the Swedish krona does not strengthen against the other currencies, SEK 345 million is what we're expecting in revenue, as of now. You have seen this graph before. It pretty much looks the same each quarter. What is interesting is to see that the top right graph is actually the staples there are getting higher and higher. The increase from quarter to quarter is bigger. It's getting larger.
Year to date, we cover 66% of the revenue is from recurring. We see that year-on-year growth is 15% in this quarter. We've had a long-term trend here from going back from 2014 with a strong growth in recurring revenue. The graph down to the right is used to be my favorite graph. It's not really anymore by that time since the line is pointing downwards. We still are over 80% of the fixed operating costs, and we see that now we are stabilizing the business and this line will start climbing upwards again.
Again, the level of recurring revenue is what has allowed us to be so forward-leaning in this growth strategy that we have been driving quite aggressively the past quarters or years. Ending with this picture to see how the SaaS has been built up during the years, this graph is starting to stretch out pretty long, so next year we will have to get rid of 2017. The picture is very clear that the emphasis we put on growth is paying off, and we are on a different level now than a couple of years back. We're continuing on this route forward. That was my last slide, I think. Thank you. There we go.
Thank you, Joakim. Once again, I want to highlight the opportunity to ask question below the stream. I will start with the ACV, like you mentioned or showed us, it's still a lot higher than it was a few years ago, but at the same time, it's slightly lower than what we have seen in recent quarters. You mentioned that banking customers have postponed their investment decisions. Why is that? And do you expect the softer banking market to continue?
Sorry to say, I don't really have a good answer to what they expect the banking business to go. That one. But we see that Temenos is not losing out on the deals from the pipeline. They are still there, and they are working with them. They are just not converting into sales as of right now. As long as they're there, we're still in the game. As I mentioned, the longer they take, the higher the probability that we will be included in more of their deals. Yeah, both negative and positive, I think.
Okay, while the private and SaaS ACV were quite okay or quite good, support and maintenance, and Sweden had a negative ACV, what are the reasons behind that?
Well, I think there is always some churn in the numbers. Normally, though, Q3 is a very slow quarter when it comes to new sales, so the churn number comes through, which it wouldn't otherwise. Nothing radical.
Okay. The positive momentum in public Sweden continued in the quarter. What response have you got from your customers regarding the reorganization so far?
Good reactions, I'd say. They like doing that the product company takes more ownership of their solution. Customers want to do more. They want to expand the use of their products. Positive, I would say.
Okay. Public Denmark came in rather soft compared to a strong third quarter last year, I should say, due to lower deliveries, primarily. I mean, you have talked a bit about why, but what should we expect going forward? Should we expect those factors that you mentioned to fade or what's the best?
Yes, I would expect them to fade out. Of course, the tender with Landbrugsstyrelsen is over and done with. So that will not, we will not spend more time on that. Now, of course, should the standstill period run out on thirty-first of October. If we then sign the contract with them, we go into a period of initiating how we will work together and the handover phase. That will of course require some time, but not in the amounts of what has gone in there yet. Also the TAS release has now been released to the customers.
There are still some work being done here during October, but I'm expecting better numbers to come through in Q4 already.
Okay. Once again, I want to highlight the opportunity to ask questions below the stream on our webpage. Since the last quarter of 2021, you reached a new higher level of ACV. However, since then you have continued investing in the private segment, especially. When should we expect the investments to pay off in an even higher ACV possibly?
Yeah. We are investing for growth, which has paid off pretty well so far. What we have experienced is that there is a lag. There is a time lag of around almost one year when we do invest in capacity before that pays off in actual sales. Where we are now is that we sort of have reached. We will continue to grow in terms of staff, but we will not grow at the same pace as we had done during the last couple of periods. The cost increase will slow down and the revenue increase will keep up or increase faster is the plan.
Okay, let's talk a bit about macroeconomics. I mean, your public segments are probably quite resilient, I suppose. What about the private segment? What's your view on the sensitivity to the economic cycle?
Well, really hard to have an answer on that, I would say. I think we have two big segments in the private side. I mean, one is the Dynamics side, which spans from very small companies to quite large organizations. Of course we have the Temenos track as well. I'm sure that some of the smaller businesses will be perhaps postponing investments like this. It's too early to say. We don't really see that yet. It's just speculation, but it could well be. Regarding the public sector, yes, they are resilient, but in the end, we are using taxpayers' money.
When taxes go down, so does the budget for public sector. There's just a longer lag before we see that effect, I would say.
Okay. You mentioned that currencies have a negative effect on the result, and we also see some inflation, but you also have some indexing on your deals.
Yes
In most cases at least. I mean, could you tell us a bit about the impact of those factors and how they get into your numbers relative to each other?
Yeah, absolutely. I mean, in the public sector, we have agreements clearly stipulating that we have the right to index our agreements. They're on different terms, different indices, so, etc. And some only allows us to account for 80% of the index uplift, and so forth. In the total picture, we are allowed to index the contracts. In Denmark, however, we have a slightly worse situation because many of the new contracts there are on a fixed uplift of 1.5%. Actually, there's a lot of IT companies now in Denmark joining forces to call this a force majeure and thereby allow them to index to higher uplifts, basically.
We're not sure where that will land in as of now. What is, though, is that there will be a time lag here. We see the cost effect coming right now, and will be very apparent in the coming periods, while the indexation will be a more smooth uplift and have a dragged out effect. Since these are billed on 12 months or annually, and the effect will come on the next invoice going out to the customer. There will be a gradual increase here.
Okay. Last chance for you in the audience to ask any questions, and as I mentioned, you can ask questions below the stream on our homepage. For the second consecutive quarter, you have a negative net recruitment. I suppose you would prefer to add to the headcount. What can you do to reverse the trend?
We have been working very hard with that. It's mostly in Sweden that this has been a factor. What we see now, we see that we have sort of come to terms with it and that we are now in a good trend with the staff. Of course, when people resign, it does take some time before they sort of drop out. That's what we see now. We're crossing our fingers that things will be smoother now, not as turbulent as has been. The ambition is of course to grow, and we will continue to grow and recruit people.
Okay. Thank you very much, Joakim.
Thank you. Pleasure.