Hello, everyone, and good morning, and welcome to Lime Technologies Q3 update. My name is Nils Olsson. Been working at Lime since 2006, and took the CEO position in 2021, and today, I'm very glad to have Anders here, our new CFO.
Hello, everyone. I'm very glad to be on board with Lime. Looking forward to the journey going forward.
Perfect. Thanks for that, and let's start giving a brief overview of Lime before we jump into the Q3 presentation. So, yes, and before we start, feel free to write any questions in the chat, and we will answer them at the end of the session. So, let's start looking into a bit of what Lime really is about, and we always been running Lime with a very long-term perspective, and as you can see, that has left us with a fantastic footprint. In more than 20 years now, we have grown on average 19% per year with an EBITDA margin of 25% on average per year, and I think that's something that we, of course, are very proud about.
But no matter how big we've been, how many offices we had, how many customers we had, we more or less have had the same goal from the start, and that is to help our customers to become really, really good and strong in sales and customer care, so they can help their customers in a good way, meaning that we focus on the end customer. And we do our best, we help our customers at the best when we combine really strong software, which we deliver in our four platforms, with great expertise. And we help our customers to solve mission-critical problems, and which means that we become a natural part of the company's core processes. Over the years, we have scaled our business into several markets, and we started with Norway and Finland in 2010.
We opened up Denmark in 2015, and from 2020, we entered Netherlands and Germany, and we also welcomed Lime Connect and SportAdmin to the Lime Group. Today, we are present in seven markets, 11 offices, and we have almost 500 employees. Looking into some of our key success factors, as I started with, I think the long-term profitable growth, combining that gives us a really, really strong foundation. We have a goal to have increased the share of recurring revenue, and today, we see that we have 64%, so we are moving in the right direction there. It's a predictive model, so I think that gives us a good starting point.
We also have a sticky customer base, meaning that we do business with many customers every month, every year, and we are not depending on one or two big customers. And something that I would say is the foundation of Lime that has built the success over time is a strong corporate culture. We are combining strong performance with care. So, looking into a little bit of Q3 then, and I give you a little bit of a sum up before we jump into the more detailed slides. And as you can see, we closed the third quarter with 18% sales growth, 25% EBITDA margin, and 28% ARR growth. So overall, I would say strong numbers.
And as always, the third quarter is a little bit special when it comes to the summer holidays in July, and it also, of course, spills over into August. August and the beginning of September, this year, were a little bit more challenging than usual in this period. And it was tougher to close deals with both new and existing customers. However, I'm very, very pleased with our mindset and our activity level to get closer to our customers. And this led to a great pipeline development over the month, and a much, much better finish in the quarter, with many nice deals in all our business units, and I will come back to that in a few slides. But looking into our four different business units, starting with Lime CRM.
And we are focusing on speeding up Lime CRM, especially on the Expert Services side. We know that there are no shortcuts, and the solution is to really work close with our customers and focus on creating value for them, and of course, solving their pains and challenges. As I said, I'm really happy with our mindset and our way of working. And doing this also means that we are increasing the pace on the sales side, and that will leave us with a good position when the market is opening up. If we look into Lime Go, I would say the good performances continue. Our focus on attracting larger companies is getting results, and the value of our average deal has increased over the year. Due to this, we can see the good development.
We are strengthening the Lime Go team with a number of nice recruits, both on the sales and in product development. And talking about Connect, we also see a good trend continuing there. And this quarter, we have done some really nice product features, released some nice product features. And talking about one of them, our first version of our mobile app during the quarter, and it has been one of our most requested features, and I would say it has a great potential both to our new and existing customers. And another thing that I'd have seen a good progress within the quarter in Lime Connect is a strong development in our marketing team.
We have done many webinars over the quarter, and I would say it gives us a steady stream of leads, both that we can target on new sales and in upselling. And if we look into SportAdmin, the business in SportAdmin is a little bit more term-based, where you see many deals happen at the end of each term. So a strong start in each term is really important for good sales in the coming period. I'm pleased if we look into how we handle the start in the autumn, great activity levels, and we have built a strong pipeline, which I really hope that could give us a good closing for the end of the year. But of course, there is some nice deals which I will come back to also now in Q3.
Last bullet point, investment in future growth, and I think it's important that we continue to focus on long-term profitable growth. We are doing this by keeping investing in sales, marketing, product development, and recruitment. And during the quarter, we have recruited more than 30 new employees, onboarded them here in August, which means that we are building for the future. And already now, we are starting to fill up the positions for the onboarding in January. In general, we know that the game on the market is tough in the Nordics, but it's something that we've been playing successfully for over 20 years. And with a strong position, we think that we have every possibility to keep gaining market shares regardless of the market conditions. So jumping into a little bit more slides on Q3.
Today, we will cover the order intake, the revenue, the profit, and on the end, some summaries, and of course, questions, but starting with the order intake, and as we have communicated before, our customer concentration is low. Today, our top 10 customers stands for 7% of the revenue, and the biggest customer is 1% of the revenue, and I would say, in this type of business climate, it's very good for us that we're not depending on one or a few big customers. We are making deals with many customers in different regions, in different geographies, in different industries every month. In general, if we look at the market situation, I would say it remains similar to previous quarters, with long sales processes and more decision-makers involved.
As I started with, I think this quarter in Q3 was a little bit slower than expected in the beginning, but it gave us—despite this, we built the pipeline, and our order intake closing the quarter is quite solid, I would say, with many important deals in all business areas. Looking into some of the deals that we closed, you can see that on the right-hand side, and we continue to do business in our industry verticals in Lime CRM. During the quarter, we welcome companies like the utility company, Skagerak Energi, a really nice brand, Finnish wholesale companies, Masino. That's actually our biggest deal yet on the Finnish market, and the Swedish comparison site, Prisjakt.
It's also nice to see that we are building a stronger and a better reference base in our membership vertical with a case, as you can see, Privattandläkarna , and continuously, we are working with our transformation deals. This time, I'm really glad to announce OBOS, which is actually one of our first Lime CRM customers back in the days. Also, we welcome customers such as Park Nordic, where they offer parking solution for commercial buildings and office buildings, and if we look into Lime Connect this quarter, just to give an example where we welcome LeaseTeq. This is a new customer for us and a Swiss digital leasing provider.
One thing that I really like with this deal is that it shows that we not only have a strong offering on the German market, but it's also actually growing in the DACH region. And from a Sport Admin perspective, one of our core verticals in Sport Admin is swimming, and therefore, it feels extra good to welcome Svenska Simning to Sport Admin. And it's an organization who wants to improve the sports of swimming. So let's look into the revenue side, and starting with the ARR. And as you know, we are a product company, and a very important KPI for that is the ARR growth. Looking into the different drivers there, you can see our subscription alone is growing by 31% compared to Q3 2023, which is a strong number.
Looking at the service agreements, you can see that they are decreasing 22% in the quarter, which is in line, actually, with our strategy. It means that we are converting customers with old upfront agreements into new subscription agreements, and that's an ongoing project that I've been talking about, and we will continue working with this kind of transformation. In total, it builds up to a 28% growth in our ARR, which is a strong number. Looking at our different revenue streams, and you can see that this is the revenue streams development since 2018. Looking at subscription is steadily growing, 31% in Q3, and also last twelve months, you see a 31% growth in subscription. Today, that stands for 60% of our revenue.
Service agreement stands for 4%, so it means, as I said, we continue to transform our customer base from service agreements into subscription. And in total, this adds up to 64% recurring revenue, which I'm really happy about, to see that kind of development moving around from 60 up to 64, and this is exactly in line with our strategy. The old upfront payment model is more or less the same amount as last quarter, less than 1% today. And Expert Services today stands for 35% of the revenue, as you've seen, and we see a little bit slower pace on the Expert Services side. And it will. I will definitely say what we were working for better improvements in that area.
So it will continue to grow, but in the long run, decrease as a part of the total net sales going forward. If we look at the revenue side, and looking at the growth, we reached 18% in Q3, and the last 12 months, we have 18% as well. And if we look at the split between our segments, we see Sweden grows by 25%, and the rest of Europe, 6%. And last 12 months, 19% in Sweden and 15% in rest of Europe. And of course, the growth in rest of Europe is nothing that we are satisfied with, but we need to look into two different angles here. Looking at the software side, we see a growth that are on an okay level in the quarter.
But looking at the full revenue, where we also include the Expert Services side, we are definitely not satisfied, and we have an improvement potential going forward. And as I said, over time, we want to build a more international company. That's where we put our focus to, to put in more employees, we put in more marketing money, so we are building a stronger brand, so we can go on an international expansion. Yes, Anders-
Yeah.
Let's look into the profit side.
Thank you, Nils. Looking into the profit, EBITDA in the third quarter reached 24.8%, compared to 25.6% for the same quarter as the year before. Looking at the last 12 months figures, EBITDA Q3 2024 amounted to 25.1%, compared to 25.5%, which is in line with our financial targets. On the right-hand side, we have the last 12 months EBITDA development over the last three years. As you can see, we reached a higher EBITDA margin of around 28% during the pandemic. Now we're back to normal and lasting level to support our future growth, investing in sales, marketing, staff, other products, and so forth. The last 12 months in Q3 2024, we have reached an EBITDA of 25%, as we're now able to invest more in future growth.
And as we have already communicated, we will continue to prioritize growth over profitability. Change to the next slide, and here is our OpEx development. On the left-hand side, we have our personnel expenses, which is the largest expense in our profit and loss. Personnel expenses in relation to net sales LTM in Q3 2024 amounted to 58% compared to 57% in Q3 2023. The increase in our personnel expenses for the last twelve months is partly explained by our acquisition of SportAdmin, which was done in January 2024, but also due to our continuous investment in staffing and employee activities. The investment in our employees is contributing to a lower churn. Looking on the right-hand side, we have our operating expenses.
As you can see, our other operating expenses increased by 14% the last 12 months. The increase is partly due to the acquisition of SportAdmin, and also that we are investing more in future growth by marketing, physical sales, and product development.
Perfect. Thanks for that, Anders. Let's move into a summary here and looking into our financial targets. Starting with sales growth, our objective is, in the medium term, to have a growth above 18%, and last twelve months, we are in line with that 18%. If we look at the EBITDA margin, we should have in medium term an EBITDA margin above 25%, and today we are last twelve months of 25%. Net debt in relation to EBITDA should be less than 2.5, and we are at 1.0 today, and if we look at our dividend policy, our dividend should correspond at least 50% of the net profit, and we ended up at 56%. Let's see if there is any questions in the chat, that we can answer.
Yes. And we have, first one is from Stefan Gauffin, and it says, in CEO statement, you say that you have seen positive signals in customer engagement and increasing pipeline.
Mm-hmm.
What does this mean? Should this give a better momentum in Q4, or should this be more positive for 2025?
Great question there, Stefan. I think you should see it that, of course, we closed less deals than expected in the first, yeah, one and a half, two months, or a little bit more than that, actually, in Q3. So what we've seen then is that you, of course, then should build pipe. The thing is that how good then are you in converting that pipeline that you actually built? Due to that, we didn't close any deals. Either they are more or less postponed in the future, or they are more or less lost to a competitor. The good thing that I saw in this quarter, that we built up the pipeline over the first months, but then we actually executed, and we had a good inflow of new closed deals, both...
On existing customer base, like the ones that I mentioned, OBOS, the transformation deals, but also on the new sales segment, which is really important for us. So of course, when we have that with us now, and I also think that we've started the first weeks after Q3 in a good way, in a good momentum. So I think that what we will see now is that we are start working with these projects, and hopefully that can then increase the pace on the Expert Services side.
Looking at the ARR development, it really depends on what you can see, when are these projects done, and of course, then there will be a split. You will see some positive effects in 2024 in Q4, but that's more normal business, but also you're building up that ARR, committed ARR into 2025. So it will be a mix, but of course, more close deals will help us to gain a better speed. The most important part now for our Expert Services department is to get these projects started, so we have a good momentum within them.
Okay, good. Going into the second question is from Victor Lindström, and he has two questions, and first one is: How is the coming internationalization of SportAdmin progressing?
I mean, we have been working with the internationalization question more or less since we took over Sport Admin in January, which mean that from a more like internal perspective, we are preparing the product so it can handle the international markets. There are some features that we need to have to be able to export the software internationally. I would say that is going according to plan, which is good. Then, on the other hand, we are more from a market perspective looking into or investigating different markets and how is the landscape for sports software actually working in UK, in Denmark, in Netherlands, in Germany, in Finland, and so on.
I would say that we are narrowing that down to see more or less, okay, maybe one, two markets are a better fit to start with, if we look at the whole sentiment of the market conditions. So I would say it has good progress in general, the internationalization question.
Yep. Second question is, can you elaborate on SportAdmin's impact on profits and margins in the quarter?
We don't disclose if we look into exact numbers, both on the ARR side and on the profits, but in general, as when we did the acquisition, we had, I think there was an EBITDA of 17%. So of course, it has a little bit negative impact on the profit side, and that was what we expected over the years. We acquired Sport Admin mainly for the growth going forward, and that's the important part for us as well, so we will continue to invest in Sport Admin so we can have a high pace going forward on the growth side as well, so far I'm very satisfied with the acquisition of Sport Admin, and it has delivered what I expected both on growth and profitability.
Okay. We have another question coming in from Predrag Savinovic. How will the increased net recruitment impact the cost levels going forward? Are they fully reflected in the operating expenses for Q3? And answering to that one is that we did recruit a lot of people, a lot of new employees in August, which means that all expenses are not fully reflected in Q3. Going forward, you will see a different level on that.
Yeah. And I would say, in general, we recruited in line with when we look into the recruitment. I think that we had a good onboarding in August. So they start in, I would say, the sixth of-- yeah, was it like sixth or tenth of August? And it was around like 30 new employees coming in at that time. And we continue to see a quite low employee churn. It's more or less on, yeah, historically low numbers, which I think is an effect of that we are doing things better internally, better leadership, we are good on attracting and developing our talents.
But of course, it's a question on the market as well that has been a little bit more, a little bit tougher, and then, of course, that also reflect that people are staying. So I think, over time, we will probably see a little bit higher employee churn when the market is opening up again. That's why it's also important now to fill up the onboarding program in January, and that's a big focus for us at the moment, and where we are looking into to both junior, like the trainee program will run, but also find a little bit more senior, especially on the sales side, in rest of Europe.
Okay. Next question is coming from Anders Knutsson. Can you comment a bit on the very strong cash flow versus last year? And as you can see from the cash flow is very very strong is mainly due to that we have a very good business operating business generating positive cash flow each and every quarter. However there is looking comparing the two years here you can see that we have a very strong effect on cash flow from current operations. That is mainly due to a timing effect from previous year basically. So that's the-
Mm-hmm
... answer on that one. And, when do you expect to see Europe to be satisfactory? Is the second question from
Yeah, and I think there are differences in rest of Europe. If we look into it, I can give a little bit flavor on that. I think still we are continuing to do better in Lime Connect. I mean, as you know, we had a tough 2022, but I think we've seen better progress in 2023, and even better progress here in 2024. So on... I think that we have more potential, so of course, we are aiming for higher growth in Lime Connect as well. But in general, I feel quite, looking into where we are, I actually am quite satisfied with that development. Looking into Germany, in general, from a Lime CRM perspective, I'm also happy with that development.
If we put then compare that to previous markets that we entered with Lime CRM, Netherlands, Denmark, Norway, and Finland, we are actually having a much better pace on the German market compared to the other markets, if we put them on year one, and year two, and year three, and so on. So there are some markets where I think that we could expect more. I think that we could expect more from, especially on the Finnish market. I think that we are staffed in that way that we could actually be able to deliver more results and more sales going forward. So that's a market where we are working with, and I'm happy to see the new deal there with Masino. As I said, the biggest case ever on the Finnish market.
Hopefully, that could create some ripples on the water, and we can get some momentum and positive, positive motivation from that.
Okay. Next question is from Ina Julsrud , and she asks: "How is the mix between upsales versus new sales trending?
The mix is quite similar as before. I think that we are since after COVID, we became much better on doing the upsell side. So looking at the revenue split, we see approximately a fifty-fifty split on especially on the Lime CRM side. Lime Go side, we see a little bit more higher on the new sales side. And/or if we look into to both Connect and SportAdmin, we see also a split of around, like, 5050.
So, I think that was the last question for today. Thanks a lot for the engagement in the chat, and let's... I wish everyone a fantastic start of, or end, maybe, of the fall and start of the winter.
And if you have any questions, don't hesitate, just reach out and give me a call. Thank you very much. Bye-bye.