Good morning, everyone, and welcome to our Lime Technologies Q4 update. My name is Nils, and I've been at Lime since 2006, and running as CEO since 2021.
Hi, I'm Maria Wester. I've joined Lime in November 2022 as the CFO, so I've been here for a little bit more than a year now. Feel free to write any questions in the chat, and we will answer them in the end of the session.
Great. Thanks for that, Maria. Before we jump into the Q4 update and the sum up of 2023, let me give you a little bit of overview of Lime as a company. We've always been running Lime with a long-term perspective, and I think that has left us with a fantastic footprint over the years. In more than 20 years now, we have been growing Lime on average 90% per year, with an EBITDA margin of 25% on average per year. I think that's something to be really, really proud of.
But no matter how big we've been, how many customers we had, and so on, I think that our goal has more or less always been the same, and that is to help our companies to become really, really strong in sales and customer care so they can help their customers in a good way.
A s a supplier, we are the strongest when we can combine really good expertise with great software to solve business-critical processes and become a natural part of the company's core processes. So when the customer feels that we have really fully understood their business and packaged that with a great solution that match their needs, we know that we have succeeded.
We've been scaling now Lime for a couple of years, and if we look back the most recent years, we've been opening up our office in Netherlands in 2020, in Cologne with in 2021, where we also welcome Userlike a nd also now in the beginning of this year, we also welcome SportAdmin to the Lime group.
Looking at this, we have a little bit more than 400 employees, and from a customer perspective, we have around 80,000 users with 6,500 customers in 2023. I f we look at some of our key success factors, I would say that, of course, the long-term profitable growth, to have a steady development, both on the growth side and on the profitability side.
We have a sticky business model, so 60% are recurring revenue, which means that it's a predictable model and a stable revenue stream. We have a sticky customer base, so the top 10 customers stands for around 7% of our revenue, and the biggest one stands for around 1%, which means that we are not depending on a couple of few bigger ones.
Something that has really built Lime to what it is today is the culture, where we are looking at two really big important topics, that's performance and care, and of course, always putting the customer in the center. That's something that we are working with continuously year- after- year, and to really build on a successful culture going forward.
L et's look into the sum up of Q4 and 2023 a nd if we look at Q4, we have a sales growth of 14%, and we continue to deliver, I would say, a good quarter with profitable growth in a quite tough market. EBITDA margin 26%, and an ARR growth of 16% a nd something that I think is positive in the quarter is that we see an increased subscription revenues growing with a good percentage, and I would say that is also in line with our strategy.
If we sum up then 2023, we see that we reached a growth of 18% in a full year, with an EBITDA margin of 26%, ARR growth 16%. So in general, I would say that we have a very good full year in 2023, where we also see that the organic side is 100% organic on the growth side. If we look at our position when it comes to our improved cash flow, we see overall that we have a strong financial position, which allow us actually to increase dividend with 25%.
So the board of directors proposes a dividend of SEK 3.50 per share, which is equivalent to SEK 46.5 million and 56% of net profit. If we zoom out a bit and look at the general market, we can see that demand for CRM is growing steadily, though a little bit more slow in the business business climate, I would say.
The trend, which I would say that we have played an important role in, is that CRM is moving a little bit away from being only sales and customer management to an approach where we're actually managing the entire customer journey and becoming more of a hub for the organization. Specific solutions are more and more asked for, and we can see an increased focus on industry-specific functions.
Looking at this from a Lime perspective, I would say that we are well-equipped for the current development, and we offer great solutions, which are industry-focused in real estate, in utility, in consultancy business, and wholesale, where we are now actually adding the fifth focus industry, for membership organizations.
To further strengthen that, it's really nice to welcome our new acquisition here in the beginning of January, SportAdmin, where we did the acquisition of the market-leading, really fast-growing and profitable SaaS company. SportAdmin delivers a business-critical solution, tailored for sports clubs. It also helps the club in itself, the team, and of course, its members.
J ust like us, they help their customers throughout the customer journey. I think, the acquisition, in general, is very exciting, and where we see a continued, high growth potential, both on the local market in Sweden, but in the long run, also, moving that to an international expansion.
I've been talking about this for, some quarters, that we are looking into new segments, and, our position in the membership organization, I would say, were even further strengthened in Q4, when we welcomed two really nice, customers, and I'm really happy that it's also on the Danish market, Dansk Cyklistforbund and Rådet for Bæredygtigt Byggeri, as new customers during the quarter.
I think that we see more or less the same pattern as we see with our utility companies or and our and real estate companies, that we add really significant value to their organizations, where we help them to manage business-critical processes with a strong focus on adding actually high value for the member itself.
So looking at that, we are automating the member registration, simplifying invoicing processes, optimizing websites, and creating target communication for the members, with the goal of helping our customers to make their members' lives easier. From an international perspective, we've done several deals during the quarter, which I'm really, really happy about, and also in our focus industries. Examples of wholesale sector, I would say the Finnish company, Componenta, the German company, Dieckja.
Going forward here, we, and I've been saying that we, and we will continue to focus on this, that we will continue to build a more international company. Looking at the full year of 2023, we can achieve actually more than what we did last year, and that's my belief. Also, that all of our markets has a potential of actually growing faster.
So we will continue, as I said, to have a big focus on the internationalization in 2024. Last bullet point here, looking at the recruitment. We are always looking for very talented people. What we are looking into, and as I said in the start, is employees that can balance performance with care, where we always have the customer in the center.
The other side is, of course, about retaining and developing existing talents a nd I will say that this, of course, is equally important to actually attract new ones. W e see positive effects here from our efforts in both 2022 and 2023, where we have extended the average length of the employment, resulting in a low employee churn, which has actually gradually decreased therefore from 2022 and forward.
I n an industry where we see that competition for really, really skilled employees is tough, we are proud to see that we have a very attractive company, which is reflecting in more than 7,000 applications during 2023.
Looking at the final rate, we can see that we are hiring 73 new employees in 2023, where we have recently actually completed the first onboarding period in Lund. As always, this is a fantastic way to kick off the new year. The recruitment now is started for 2024, and we will continue to look for more talent in 2024 and recruit in a high pace.
Looking at the agenda, we have the order intake, the revenues, profit, and of course, a bit of sum up. Of course, you have a possibility then to ask questions moving on. Starting to look at the order intake, I said it in the beginning that we, the low customer concentration, top 10 customers stand for 7%, the biggest one 1%.
In a market situation like this, where it is a little bit tougher, I would say this is a good, very good for us because we are not depending on one or a few big ones, but we are making deals with many customers in different geographies, in different industries. In the quarter, we see that we continue to close nice deals all markets.
I'm really happy about the membership deals on the Danish market, which is really, really strong. The wholesale, as I mentioned, that we get both in Finland, Componenta, but also that we start doing deals in Germany from a Lime perspective. But also to see Userlike doing really nice deals with nice brand. Dr. Oetker is one of those. Y ou see also on the top right corner, the European Labor Authority is a really important customer, moving on.
A lso that we are doing nice deals on our other platform, which is Lime Go, where we close Delicato, which is, of course, a nice brand, and also have really nice snacks. So I think that's a good thing that we are doing deals with all our platforms and in all our geographies. Looking from a revenue perspective, we can look into the ARR, and in this case, we see that that we have a good development on the ARR side.
We are doing a subscription increase of 21%, and we see a decline in the service agreement, which is exactly in line with our strategy. We are transforming our customers from the old on-prems and service agreements up to subscription and cloud, which is in line with our strategy, and that is a project that will be going on here both in 2024 and in 2025 as well.
In general, then we end up on a growth on the ARR side with 16%. Looking from a recurring revenue perspective, and we see our different revenue streams and the development from more or less 2015, when we started to transform the price model from upfront to subscription.
S ubscription, I would say, is growing steadily, 21% in Q4, 20% last twelve months, and stands for today 55% of the revenue. Service agreements, as we said, last slide, is a little bit declining and stands for 5% today, and we will continue to do the transformation. More or less, no upfront payments, and we also see that expert services has had a good growth, full year, and in Q4 is growing 13%. T oday, they stand for 39% of the revenue. I t will continue to grow, but in the long run, decrease as a part of the total net sales going forward.
So, looking into the revenue, 14% growth in Q4, and the last 12 months, 18% growth and 100% organic. If we look at the split between our segments, Sweden grows in Q4, 12%, and the rest of Europe, 19%. Then looking there at the full year of 2023, we see that Sweden is growing 16% and 22% in the rest of Europe.
I think that looking into the year, I think 16% on the Swedish market is a good growth, but we have more potential of growing faster in the rest of Europe, and that will be a focus area going forward. We can have a better continuity, closing deals on a regular basis in all our markets. Moving on to profit, Maria?
Yes, thank you, Nils. EBITDA in the fourth quarter reached 25.9%, compared with 25.1% for the same quarter as the year before. Looking at the latest 12 months, the Q4 is at 25.7%, compared to 25.5%, so in line with the last quarter's margin and our financial targets. On the right-hand side, we have the latest 12 months EBITDA development.
As you can see, we reached a higher EBITDA margin of around 29% during the pandemic. Now, we are back to a more normal and lasting level to support our future growth, investing in sales, marketing, staff, our products, and so forth. The last 12 months in Q4 at 2023, we have reached an EBITDA of 26%, as we are now able to invest more in future growth.
Since we have good growth in our revenues, we have a positive underlying pressure on the EBITDA margin. As we have already communicated, we'll continue to prioritize long-term growth over short-term profitability. Looking at the OpEx development, on the left-hand side, we have our personnel expenses. That is the largest expense in our profit and loss. Looking at the personnel expenses in relation to the net sales latest twelve months in Q4 2023, is at 57%, compared to 55% in Q4 2022.
The increase of 21% is in our personnel expenses for the latest 12 months, is explained by that we have invested more in employee activities, staffing, compensation, and benefits. The investment in our employees is continuing to increase the lower churn and better pace, especially in expert services, compared with previous year. On the right-hand side, we have our operating expenses.
As you can see, our operating expenses increased by 0% in the quarter and 7% in the latest 12 months. The increase during the latest 12 months is due to that we have invested more in future growth by marketing, sales events, and product development.
Thanks for that, Maria. Let's then look into the summary and our financial targets. L ooking then at the last 12 months in 2023, as you can see, we reached a growth of 18% the last 12 months, compared to the target of 18. We have reached an EBITDA margin of 26, compared to the goal of being above 25.
T he net debt in relation to EBITDA should be less than 2.5, where we today in last 12 months are 0.5. I n 2023, the board has proposed an increased dividend of SEK 46.5 million, corresponding to 56% of net profit. So now, 2023 is now closed, more or less, and 2024 is well underway.
At Lime, we are always looking ahead, and we will continue to develop our focus industries, have a focus on the internationalization, recruitment, and of course, on our product offering. I would say that doing this, that allow us to do what we always done best, and that is to help our customers become the heroes in making life easier for the end users. So, thanks a lot for listening in, and let's see if there is any questions in the chat.
Yeah, we have some questions. Nils, how is the acquisition strategy looking? What is Lime looking for, or do you prioritize the organic growth?
I would say that we have M&A in our strategy, and so that is something that we are always more or less investigating and talking to a lot of companies b ut of course, the organic growth is still very important for us a nd I really believe that it's a measurement on, okay, how well is all our different geographies and the core business functioning.
N ow we did SportAdmin here in the beginning of January. So I think that we will not become a company that do five or 10 acquisitions on a yearly basis. But it is in our strategy, so of course, we will continue to look for interesting companies.
Thank you, Nils. Could you give some flavors on how the different countries is performing in rest of Europe?
Yeah, I think if we start with the German market and from a Userlike perspective, and I've communicated this in more or less on a regular basis on quarters. So I think that Userlike has steadily done an improvement in 2023, which I'm very happy to see. We had a tough year in 2022, so both closing more deals, keeping customers, but also from an organizational perspective, I think that we can really see an improvement.
We have had a couple of launches in our product portfolio, which is of course, one that was really good timing was the AI Automation Hub for Userlike, which I think has contributed to a better product offering in 2023.
In general, I think the Norwegian market has done a good job in a couple of years now. Steady growth and has really grown up to be a company in itself. We could also see that we've been struggling a bit on Nordic markets, where I expect more in 2024, both on if we take the Danish market and the Finnish market as an example.
Could you give some flavor to the different verticals and how they are performing?
If we look into the verticals, I think it's very interesting to see that we continue to have a very good traction, both on the real estate and the utility segment, which is really nice to see. I talked about this in the Q3 update, that we were building a good pipeline in the utility segment.
A lso now that we can see that we closed quite many new deals in the utility segment. We had a picture on Solarbio and Bioenergy, Solnod, Nacka Energi, Telge Water Limning. So I think that's really nice to see that we have done a couple of new deals here in Q4.
Also in the real estate segment, as I said, I think we've had a little bit tougher situation on the consultancy segment. Wholesale is generally our bread and butter deal, which is a big focus on the Finnish market. We can see that this quarter we closed a really important one in Finland.
I nteresting to now look into the fifth focus vertical with membership, where we have, I would say, good traction. A s I said, I'm especially happy to see that we have a good traction on that in the Danish market, because that gives us a possibility to really scope the market. It gives us a chance to build a strong brand in one of our verticals, and that's something that we will continue to focus on.
What do you believe the main growth drivers in 2024 will be a nd how do you plan approach the recruiting this year?
Starting with growth, I mean, what we would like to see is that we would like to have a continuous, good growth, in development in our subscriptions, of course. That's the main driver that we are really keen on seeing an improvement, and also keeping up the levels.
The goal here, of course, is to increase over time the recurring revenues. So today, we are at around, like, 60%, but moving that upwards. So that's an important point. The second part of the question, Maria, what was that?
How do you feel about the recruiting plan?
Looking into the recruitment plan, I think it's important for us to to continue to recruit, 'cause we see that we doing the recruit will help us to grow in a long-term perspective. So it's not what we recruit this year or this summer that will help us, especially with the growth, but it will help us to grow, continue to grow Lime in the long-term perspective. So what we see, I think, of course, depending on how we perform on the employee churn and so on, but I think that we will, we'll, at least recruit in the same pace as we've done in 2023.
How do you look at the, the trends in... Sorry, how do you look at the, the trends in the order intake in Q1?
I think, I mean, the trends so far, I think that it's no big difference looking into the market. I think always January is a quite... I don't like the start, the January month in general, and I've never done that throughout my 18 years at Lime. So it's no difference this year, 'cause I think the deals that you probably looking to close in Q4, s ome of them, of course, spills over to the start of January and Q1.
But it takes a while before all our customers and prospects are back at work, and so on. So it's hard to say this in this kind of short period, but I think that in general, it's more or less the same type of climate that we've had in Q4. So no difference in that sense.
What is so attractive with the vertical membership organization?
But I think, the membership, it's in one way, quite similar to how we help our customers in both the utility and real estate a nd it's about it's a very, like, targeted market. So it's also that we really end up in the core processes of these organizations.
W hen we do that, it becomes a really business-critical system for those kind of companies and organizations, which means that they get a high value from our offering, both from the expertise, since we've done many deals within that segment before, combining that with a packaged solution. T hat combined gives us a really good segment where we know that these customers will stay for a long time, and we can help out developing them over time.
So I like, I really like the membership segment, and I think that over the last couple of years, we actually improved our offering. The same type of software and add-ons that are used both in the utility segment, in the real estate segment, are used also in the membership segment, which means that you have forms, you have portals, you have marketing communications. So those things are acquisitions that we've done, both in 2018, 2019, and so on.
Why such strong underlying growth for SportAdmin? Doesn't all sports clubs have an administration system, and what is the underlying market growth?
Looking at SportAdmin, they are the market leader today. A s you said, I think that the majority of customers or clubs today, they are starting to have a system. But it's also an untapped market if we look into the segment that is, well, a little bit underneath what SportAdmin is targeting today.
But also where you can really build on the segment where we have the market-leading position, where we can add more value and add-ons to existing customer base a nd the big difference, I would say, from SportAdmin compared to the competitors, is that they really come from helping the club, instead of many of the competition as a starting point from the members. So for us, we are, I would say, have a really, really strong offering for the club, and has over the years built up a great solution for both the teams and the members itself.
Thank you, Nils. When you talk about the aim to accelerate growth in 2024, is this without the impact of SportAdmin?
Of course, I mean, I think that we are looking into to keep on an organic growth. I think if I look from an international perspective, I think we can have a higher pace. I think, combining that with SportAdmin, we are still keeping our financial target of reaching an 18% total growth, with as a financial target, with combining that with a strong profitability of above 25%. So, I think that the combination here.
There is a slowdown in growth in expert services from 25% growth year-on-year in Q3 to 13% in Q4. Is there tougher comparable quarters in 2024, or is this a fair level to assume going forward?
I mean, I think it's a very relevant question when it comes to looking into expert services a nd we actually need to go back before a little bit in 2021, where we made the choice where we, the market was opening up after COVID.
We saw a big fluctuation on the labor market, and companies that didn't recruit that much throughout the pandemic were really eager to get new ones, and that was driving the wages up. W e felt that, though we cannot actually do that, 'cause that will not be a sustainable business model over time. So, meaning that we started to do a lot of recruits, and we got that.
We did a big recruitment round in 2022, in January, and even bigger one in August in 2022. O f course, it takes a little bit of time to get all of those employees up to speed a nd I would say Q4 2022 is where we really see the effects of all the recruitments that we've done in both January and August. So looking into now what we need, what kind of numbers and quarters, and so on, we of course meet much tougher numbers compared to what we did in 2022. I think that's an explanation of that you see that slowing down a bit.
But it's also an important to look into historically, where we've seen that, expert services, the years, both in 2022 and in 2023, are really, really high, on the growth side compared to historically numbers. W hat we are looking for is to have a higher growth on the, on the subscription revenues and balance that with a good growth on the, on the expert services side.
The 0.9 million, one-off related to the acquisitions. Is this impacting Sweden a nd what is this one-off? I can answer that. That is a cost that we have incurred to the acquisition of SportAdmin, so it's impacting Sweden. So let's see if there's any more questions. How significant or large is the new vertical that you now add? Can you reason a bit around its importance?
We don't disclose any, like, specific numbers in amount of revenue in our different verticals. But I would say it's a significant value for Lime 'c ause over time, we have built up a great customer base in that segment, so it's not only in 2022 or in 2023. We have done many deals over the years in that segment, but we see that we have a better offering now, we see that we have good traction.
I think, instead of what we have been discussing, is that, okay, should we open up a new geography, or should we instead... or should we instead open and broaden our scope when it comes to verticals?
I feel the timing for opening up a new market, we have plenty to do in our existing markets, where we have both Germany, we have Netherlands, and as I said, there's still a much potential to do better on the existing other markets as well.
So it meant that, for me, I think it's more reasonable to broaden the scope where we have a good references to start with, and it's a lot about reference selling in these kind of verticals, and also where we see that we have a good product fit, where we actually can help these companies with the digitalization and all the processes I discussed earlier. For me, going forward, I think the membership segment is equally important to expand, to grow, as the other four ones that we have already having today.
Thank you, Nils. That was the last question.
Thanks a lot. I f you have any other questions that you think of, don't hesitate to reach out to us. Either just give us a call or email us. So thanks a lot for listening in. Have a great day. Bye-bye.
Thank you. Bye.