Welcome to the Oneflow call report for second quarter. Still people coming into the meeting I can see, but it's 10:04 A.M., so I guess we can just start anyway. Thank you for attending. My name is Anders Hamnes, and I'm the CEO and founder of the company. There is a tab button somewhere called Q&A, so please submit questions there and not use the chat because it's easier for us to work with the Q&A feature. We'll get back to the questions in the end of this meeting. First, some highlights for the quarter. Our ARR ended at SEK 75 million or, to be accurate, SEK 74.7 million, up 66% over the last 12 months. The net new ARR was up 28%.
It's important to understand that this is actually growth of growth because the growth was 66, but our last year growth is up 28%. We have an ARR to sales ratio of 135%, because we are growing so much, it is much higher than our net sales. Net retention ended at 121%, which is very strong, and 94% on gross retention. LTV:CAC around 13 for the quarter, which means that we, for every krona we invest, we get 13 kronor back. I just want to say like one minute about the concept to those of you that are new to Oneflow. We are an eContract platform where you can create contract templates, you can collaborate in real time, make changes, communicate, discuss, do it all in one place.
Of course, you can sign your contracts and when you're done, you can also manage your contracts inside Oneflow. For example, be notified on key events and work with the data in the contracts. We also offer a lot of analytics tools along this journey, and we have a lot of powerful integrations, of course. Three main sales channels. Direct sales, very high touch effort, outbound, inbound. We do have several sales teams working on prospecting, booking meetings, and so on, focusing more on the medium-sized enterprise companies. Partner sales. We do have different partner programs working very well actually. Self-serve. Two parts. One part is marketing driven. Marketing generate leads to the homepage.
They sign up in a freemium, and then some of those people convert. Or product driven, which means that the counterpart inside a contract will be able to convert into a freemium. Then we're gonna work on them to try to convert them into a paid plan. If you look at the ARR, which is of course our main KPI, because sales is actually a lagging indicator. SEK 75 million for the quarter, up from SEK 45 million last year, a growth of 66%. If you look at the graph to the right, it looks like we are in some kind of a negative trend, and that's not how we see it ourselves because the reason second quarter and third quarter last year was so high is also related to that the corona kicked in one year earlier.
Sales was a little bit slower than, so that was why the growth maybe was slightly higher in Q2 and Q3 2021. We don't expect this to be a downward trend. We will get back to our target in the end of this deck, but we're gonna remain our ARR target, which implies that we have to stay north of 60% year-over-year growth to reach our ambitious target. We definitely don't see this as a downward trend. We want to stay at these levels at least. Net new ARR, if you take the new ARR and then you add expansion ARR, you get gross new ARR. If you subtract churn and downgrade, you have the net.
That's how much the ARR is growing. All-time high second quarter, SEK 9 million, up from SEK 7 million one year earlier, which is a growth of 28%. As I said on the summary slide, this is actually a growth of a growth, so to say, so because the growth is 66%. To the right, you have based on seasonality, so you can see the different that Q3, for example, is a quite much weaker quarter, obviously due to vacation holiday season. July and also most of August is quite slow for most companies. Then there is a slight. Q2 and Q4 is slightly better than Q1 normally. Q1 is also a very strong quarter. Retention rates.
The Gross Retention was 94%, up from 93% one year earlier. It does, of course, include downgrades. Not only churn, but also downgrades. I mean, there will always be some churn, and we are quite high. Maybe it could be a percent or two better, but more than that is not realistic. There will always be some churn. Things are happening. Companies are going bankrupt and getting bought up and different things. So there's always some gross churn out there. Net Retention rate 121, up from 115 one year ago. We have a very strong sales within existing customers, which is very important for us.
We expect this to remain very high that customers are starting to use. Typically, we enter, for example, to sales or HR, and then we grow and expand into other departments along the road. We had 68% more paying users this quarter than we had one year ago. Slightly more than 25,000 seats are paying for Oneflow. This does, of course, not include freemium or what they call guest users, which means co-counterparties in contracts. These are like real seats with a password, 25,000. To the right, you have the average ARR per seat, and it looks like it's going down. Actually, it's not.
The reason it has declined has also to do with the Net Retention, because we have, during the last quarter, signed several bigger deals with existing big accounts. For example, a big company with a lot of seats, they will get a volume discount. During the last quarter, we had actually several of those deals, big companies, big customers already having a lot of seats with us, and they bought more seats, and they had a lower agreed price. As you can see on the Net Retention, we had quite strong number there for the quarter. That's the reason that the average price is dropping a little bit.
If you look at cohorts on the price for different company segments, it's actually going up a little bit in most categories. Net sales at SEK 16.5, up 59% last quarter. Outside Sweden, we had 24% last quarter, which is also in a very nice trend. There is a huge market in Sweden for us, and we have a lot more to do in Sweden. Of course, we want more, so European expansion is very important for us over the coming years. To talk a little bit more about expansion. Today we have customers in 27 countries. Net sales out of Sweden, 24%. We have had for several years now, teams in Norway and Finland working very well.
They are like more in a mature state now. They have sound KPIs, which is great. We opened an office in U.K. in May last quarter. They had a headcount of seven by the end of Q2. Today, it's actually eight there. We also hired a lot of people in Netherlands and France. We are also in process with a lot of people there. The subsidiaries are established in those countries as well. We are planning to open the offices in the beginning of September this year. We don't expect any huge ARR contribution this year for any of these actual markets. It's gonna take time, but next year we should definitely see some nice contribution to our growth.
Why do we expand? I mean, of course, contracts has a huge potential in every country because every company, even every department in every company, in every country have contracts. The market is huge, and Sweden and the Nordics are definitely leading the evolution here together with U.K. and the U.S. Europe is maybe most countries five years behind the Nordics here. We believe that now is a very good timing. We have done an extensive research on these markets, and now is a very good timing for us to enter France, Netherlands, and the U.K. We are very enthusiastic about this expansion. Gross margin 95%. Net Retention rate 94.5% for the last quarter.
The graph is starting at 80 here, so if it started at zero, it would look like a flat line. It is actually. We expect it to remain at this levels. The reason or the biggest chunk, around 2/3 of our cost of sales is related to commission to partners, and 1/3 is typical traditional cost of sales stuff. The biggest vendor is AWS for hosting. As I said, 2/3 of the cost of sales is to partners. That's why it might be a little bit hard for us to accurately, like, predict if it's gonna be 1% or 2% up or down.
If you have some big partner deals coming in, then it will impact a little bit on the gross margin. We expect it to remain on these levels going forward. Slightly higher costs. This is completely in line with the company plan to invest in product, which means people and in new market entries. Increased cost mainly consist of higher employee costs. We had 124 employees at the end of the second quarter. This is up from 84 a year ago. Also in Sri Lanka, we have a team of 11 developers by the end of the quarter, which was up from 3 one year ago.
We are adding a lot of people to the product here to develop an even stronger platform. We did establish three offices outside the Nordics in the second quarter, which also had a lot of costs related. That is why the cost is going up a little bit. According to plan, we are in the early stage, and we have a very heavy focus on building the product and to take a position as a thought leader first in Europe. We're gonna keep our EBIT target for 2026 as we went back to in the last slide. This is just a short something. LTV/CAC is another very important SaaS KPI.
Of course, it goes down because the CAC is going up for the reasons I explained in the previous graph. The LTV is very high because we have a very low churn. Actually, when we calculate the LTV here, you can do that in different ways, and we have decided to do it in a very simple way because most companies do. We just take the ARR per customer and divide it by the churn. What is wrong with that is that it does not include expansion sales to those customers. We know that there is a lot of expansion. I mean, we have a net retention of 121% for the last quarter, and it's been stable and growing for a very long time.
There is another formula you could use, but it's quite advanced. I decided to keep it to the simple one because that one everybody understands. Anyway, we had 13 for Q2, which means that we get 13 SEK back for every SEK we invest, which is very good. Again, we are investing heavily now in new markets and adding more developers. That is the reason the CAC is going up a little bit. We are launching stuff every week. We had one major release this quarter, that was our new editor. We have been working on it for a year.
It's a huge project, and it has been a blocker for us for adding new and powerful, so-called cool features on top of the editor. Now it's out there. It's a relief. Now we can start to focus more on building the fancy features on top of the editor. We are, as I said many times before, in a product race. We have to build a very strong platform, and that costs people. We are hiring a lot of people these days. Of course, we will deploy our funds wisely. We also pay very close attention to our culture, which is a cornerstone or in our DNA to always be very culture-focused in Oneflow.
The eNPS for the quarter, last quarter was 83, which is super high. The average in Sweden is 14. Because success will not make anybody happy, but happiness will give success. We believe to hire talent and to keep a very strong and good culture is the key to success. To the goals. We will remain our ARR target of SEK 600 million by the end of 2026, and also an EBIT margin the same year of at least 20%+, which means that we have to turn this EBIT margin curve relatively soon. Of course. Yeah. Let me go to the questions here. Do you see longer deal cycles? How would you handle a potentially slower market due to the macro?
We do not see any longer deal cycles, and we do not see yet any signs when it comes to increased churn and so on due to the economic situation out there. Not yet. It might, of course, happen. We have written something about that in our interim report, also, and we have to be, like, on alert, of course. As long as we don't see any signs, we just continue as planned. Of course, we have to turn the vessel if we see any indications. I mean, we are meshing a lot with our customers.
We are working with health scores and so on, and we track every event they do, and we can see quite early on if something is wrong with a company, then we can see it quite early in most cases. Yeah. Is your hiring pace as expected or slower than expected? Well, to be open about that, before the IPO, we had to slow down a little bit because of everything that happened in the world, you know. We didn't know exactly when it would happen and if it would be so successful as it actually was. We had to slow down a little bit for some time before the IPO.
When we finalized the IPO and raised the money, we could increase our efforts again to hire more people. I would say now, today, we are back to where we want to be on the speed of hiring. There was maybe a six months' time that we were not hiring as much as we planned because we needed to keep our runway and not take any risks. International expansion progress and traction with new offices and also existing presence. We have closed several deals in U.K. already. It is far too early to say. We know it takes time, but we have a very strong team.
It has actually been easier to hire people in U.K. and France, I would say, than here in Sweden and Norway and Finland. It is quite hard to find talent these days. But in U.K. and France, we are very impressed about the level of or the amount of applications and also how strong they have been. Again, too early to say. Average revenue per user slightly lower, solely due to expansions or anything to do with new sales pricing as well? Well, we have not, as you can see from our homepage, we have not increased our prices. We have a project ongoing actually to discuss that. Because we believe ourselves that we are quite cheap actually.
We will get back to that during this fall. We have not officially increased our prices. The decline in the average revenue per user was related to the mix of companies buying more expansion seats during the quarter. Would it be relevant for you to expand your product offering with KYC/AML solution? We'll get back to that. We don't disclose what's in our product backlog. Could you elaborate on key target customer group? Is your platform built primarily for internal or external use? Well, we have, of course, in the early years focused on industries where that are more tech-savvy, where adoption is easier, which has been of course consulting companies and tech companies.
I would say today we have a quite broad customer portfolio. Yes, we do in our outbound sales and marketing efforts, we do have a more Crossing the Chasm philosophy and that we focus more narrow on industries where we know that the penetration is gonna be easier. How do you prioritize OpEx increases? Could you give examples of investments you have chosen not to do, and why? Which implies that we have changed our mind in some way, but we have not actually. I don't think I can give any examples of something that we plan to do and then plan not to do it.
I think, I hope I have answered all questions, and if I have not, please send me an email, and we'll get back to you as soon as we have time today. Thank you for attending and wish you all a great weekend. Okay. Thank you. Bye-bye. Cheers.
For just $67, you can make as many videos as you want, and you never need to pick up a camera or use any fancy editing software. With Doodly, you drag, you drop, you tweak some settings, and boom, video done. It'll take you just a few minutes. Let's hear from the Doodly creator, Brad, to see why Doodly is so easy to use and why you should grab this offer right now.
Hi, I'm Brad Callen, and in this video, I'm gonna show you how anyone can quickly and easily create doodle videos just like the one you're watching right now using Doodly. All right. Here I am inside the Doodly software, which is available for Mac and PC. You'll notice that you can choose the style of your video, selecting from whiteboard, blackboard, green board, glass board, and for more advanced users, you can even use a green screen background, giving you lots of control over the video style. In this example, let's create a new.
The mix, if you go further back, as you can see from the prospectus at some point in 2017, 2018, 2019.