Okay, good morning to all of you. It's 10:00 A.M., and welcome to Q4 2023 update. My name is Anders Hamnes, and I'm the CEO of Oneflow. Next to me we have Natalie Jelveh, our CFO. Also please use the Q&A function and not the chat, so we'll get back to the questions at the end of this presentation. First, as always, some highlights for the last quarter of last year. We closed in at SEK 129.3 total ARR. This is our kind of main KPI, and the growth rate at the end of the year was 43%. End of January, we had SEK 133 total ARR, and the growth rate at that point was 44%. All-time high net new ARR, SEK 13.2. I'll get back to that in a minute.
ARR to sales ratio, 130, which is super high, because we are a very focused ARR company. We don't have much one-offs. We most of what we do is on a recurring basis. Net and gross retention is roughly at the same level as it's been for the last few quarters. So 110 on net retention, meaning that we grow 10% per year on our existing customers, and gross retention 91%, meaning that we have a churn around 9%. Paying users ended the year at slightly ahead of 41,000. So just one slide on what we do to those of you that are new to Oneflow. So we are a platform for handling contracts, all kinds of contracts: sales, procurement, legal, HR, and you can do all the steps in the process in Oneflow.
So, Oneflow, an end-to-end solution for handling contracts, pre-sign, stuff like creating beautiful templates and negotiating your contracts, collaborating with the counterparties, and also, of course, the post-sign parts where you can manage your contracts and have control of your obligations and so on. So all the steps in the process in one single application. Net New ARR came in at SEK 13.2 million, last quarter of the year. And also actually it was actually SEK 14.2 million, but because the euro and NOK declined during the last quarter of last year, we lost roughly SEK 1 million on the portfolio. So we did actually have even better sales than this during the quarter. December month was also our best month ever. We had like SEK 8 million in gross new ARR December. So it was an amazing month.
Another interesting fact is that if you look at the top five deals during the quarter, it came from four different countries. Another interesting note is that first quarter last year we lost a big customer to DocuSign. This is a huge enterprise company. You have all heard about it. We lost it to DocuSign because they had something or a better integration with SAP than we had. They came back to us in the fourth quarter of the year because all their employees loved using Oneflow. They said that we had so much better interface and experience than with DocuSign. That's, of course, we're very proud of. We already knew this, of course, but just confirms that we are on the right track.
Another interesting note here is that we had actually fewer sales reps in Q4 last year than we had one year earlier. The market is still challenging, but we managed to crush an all-time high with headwind of currencies on fewer sales reps during the quarter. So we did actually very good. Total ARR closed the year at SEK 129, 43% growth rate, end of January, SEK 133 in total ARR. As you can see from the graph to the right, the growth rate has been declining for some time. I would just have two comments to that. First, one reason has to do with the pandemic because when we had this high growth rate in 2022, ahead of 70%, it was because also since one year earlier we had a little bit slower growth because of the pandemic.
Also since I would say fall 2022, it has been tougher in the market. Right now the growth is under pressure and in 2022 we had some kind of tailwind from the pandemic. That's also that explains why it is declining. Another fact is that we opened three offices outside of the Nordics in 2022. And this has required a lot of effort from senior staff in Oneflow and top sales reps in Oneflow to onboard and train all of our new colleagues outside of the Nordics. And this has been going on during 2022, 2023, and of course is still a focus area to improve in our markets outside the Nordics, which is France, Netherlands, and the U.K. We expect the growth rate to stabilize. We had a growth rate of 44% in January.
And of course, as I guess all of you know, means even though it's been declining, this is still amazing. How many companies in the SaaS space, in the Nordics, at our size, are even close to our growth rate? I don't, I'm not sure if any are. So this is still very, very fast growth. Net and Gross Retention rates. So Gross Retention includes, of course, churn and downgrade, but not expansion. And if you also include expansion sales, then we have Net Retention. This is below what it would've been in a normal market. There is a high pressure on churn and expansion is tougher than before. And we have had over the last quarters, given the reason that small companies do, with a weak balance sheet, do churn in a higher extent than before.
Even larger companies lay off people and reduce the number of seats. This is still the issue. Also I would say that during the last six months, we have even seen a lot more bankruptcies than before. Even it's not only small companies, even semi-small or semi-large companies that goes into bankruptcy. So it is still quite, I would say, challenging market. That said, since late fall last year, the gross retention on a monthly basis has been increasing just very little, but little bit every month. End of last year we had 91.9%, end of January this year, 91.5%. So it is in a very slow increasing trend.
We expect net and Gross Retention to get back to more normalized levels when we are over this tough kind of recession, or economy that we all experience at the moment. And, what do you mean about that is that Gross Retention should in a normal market for us be between 94%-95%. And the Net Retention should in a normal market be in the range 115%-120%. We believe that the Gross Retention will slowly, slowly increase from the current levels. We have seen the bottom there. That's gonna improve quarter by quarter going forward, we believe. But we also believe that the expansion sales is quite, it is still quite tough to do expansion sales.
So we believe that the net retention is gonna be around these levels still for some quarters before companies start to add seats again and we can increase our expansion ARR. Paying users increased by 41% in the last quarter of the year. And if you look at the graph to the right, we have increased our average ARR per user during five quarters. And then in the last quarter of last year, it went down again. And the reason for that is mainly related to one big deal. One big deal that we signed outside the Nordics. It's a very big company and they needed a lot of seats for a special use case. And most of those seats wouldn't send that many contracts per year. So it's a special deal. They got a lot of seats from us. And this company pulls down this number a lot.
So if you take that company out of the numbers, the growth in Q4 would've been 3.5% instead, 3.5%. And we do expect the ARR per user to increase going forward. Sorry.
Yes. And looking at our net sales, our net sales ended up at 28.4% in Q4, and this is representing an amazing growth of 40% comparing to the same period the year before. If you look at the net sales, the majority of our net sales is connected to our software-related, recurring revenue, which stands for 96% of the total net sales. And the remaining 4% is connected to our professional services. Now we continue to have a strong ARR net sales ratio ended up at a high level of 130% by the end of Q4 last year. We made a lot of investments, of course, in growth last year in our new markets outside of the Nordics.
We can see the increase of percentages of net sales coming from other countries outside or other markets outside of Sweden. We ended up Q4, at 33% of our net sales coming from other markets, outside of Sweden. This is a number and this is a percentage that we receive will continue to grow as we become more and more established in those markets. Now if you look at our paying users, we had paying users in 40 countries, by the end of last year, which is amazing. We continue to have a steady and high level on our gross margin ended up at 94%. Looking at our largest costs of service expenses, the majority is related to our commission to our partners, which stands for approximately 4%.
Now this is a percentage that has increased and we foresee it to continue to increase as we establish more and more collaborations. Looking forward, our expectation is that gross margin will be at a steady and high level, going forward. EBITDA ended up at -SEK 18.1 million in Q4, and this is corresponding to an EBITDA margin of -63%. Now one of our main focuses is to steer Oneflow towards profitability. And we made several strategic decisions and changes to us to making sure that that is something that we are striving towards. One of these, decisions that we have made have been to reduce our workforce. And the main reason for that is to optimize our organization, making sure that we become even more efficient and more and, and increasing our performance as well. This reduction, is approximately stands for 5% of our workforce.
Now some of these employees that have been affected by the downsizing are today under termination period. They will be compensated in the beginning of months of 2024. However, the full termination cost has been allocated to Q4, and that stands for approximately SEK 1.2 million. Now besides this one-time cost, our increase in operation expenses is largely explained by our investments both in the new markets or the growth in new markets, but also, of course, our investments in our product development. The increase cost mainly is connected to us having an increased cost in our personnel cost. And if you look at the average number of employees, we had an average of 165 employees in Q4 last year comparing to 148 employees for the same period the year before that.
And as mentioned, this is in line, in accordance with our plans to both invest in new markets, but also, of course, investing in our product. Now if you look at our EBIT, our EBIT amounted at -SEK 26.5 million, and that is corresponding to an EBITDA margin of -93%. Now besides the increase of costs that I already mentioned, our depreciation have also increased, and this is connected to us investing more in our capitalized development work. Heading towards profitability, as mentioned, this is one of our main focuses. It's to make sure that we steer Oneflow towards profitability. And we made several decisions and strategic decisions and several changes. We increased our focus on efficiency. We increase, we reevaluate the way of working.
We aim to increase our speed of releases, enhance our product even more, and this doing that and continue to have strong sales numbers. Now we monitor our cost base thoroughly and make changes to it to make sure it stays at a comfortable level considering our cash reserve, but also our estimations on sales growth going forward. Now if you haven't used Oneflow, I strongly recommend you to do that because Oneflow is a need-to-have product. It sells at a low cost with a high return on investment. Our financial goals maintain up two parts. It's growth and it's profitability. We believe and we aim towards having an ARR of SEK 500 million by the end of 2027. We also believe in aiming towards having an EBITDA margin of 20% by the end of 2027, while, of course, still maintaining strong focus on growth.
Okay, so Q&A. Let's see here in the Q&A chat. So the first question is the one-off of SEK 1.2 million, is that included in personnel costs or in other OPEX in the quarter?
So the SEK 1.2 that is allocated towards employee expenses, so personnel costs, not other OPEX.
Okay. Next one. Other OPEX in Q4 is on the high side compared to historical quarters. How should we view the seasonality in other OPEX? Is the Q4 level the new normal, or is the comparable quarter number from last year a better starting point?
Yes, so I would say the Q4 numbers for other OPEX is a bit, it has a bit increased in that quarter, and that is connected to us making a decision to implement a new ERP system. So there are some consultancy costs included in that, and those have been allocated to Q4. Going forward, I mean, we're already live in the new ERP system. So basically I don't foresee that part to increase more, or the consultancy part connected to the ERP system will not increase more going forward. I would say something between an average between what we had the same period the year before that, so in 2022 and 2023, would be the normal standards going forward.
Okay, next one. How has your offering within legal and purchasing progressed? Are they available, and if so, how large are those markets compared to your current offerings? Okay, I can take that one. Yes, we are today stronger within sales and HR than we are within legal and purchasing. That said, we do have all the basic needs for legal and purchasing, and we have a lot of customers, really nice, big brands using Oneflow within those categories.
But we have a very interesting roadmap for this year, which includes a lot of, a lot of features which will benefit also purchasing and legal. But I would say the biggest market, the biggest market is, is by far sales. With the willingness to pay, the number of seats, and so on, sales is the biggest market. And within sales, we have a very, very strong product. So I would say that, I mean, we do, there are, of course, niche companies that do a lot of other kind of stuff. I mean, take purchasing. We're never going to build a supplier relationship management system. That's not, that's not us. But with from, from a contract standpoint, then we, then we have a very, I would say, a strong offering already, and it's going to be stronger this year.
On working capital, what is the normal seasonal pattern for quarter to quarter, which tie up to capital and which releases? And if you could please elaborate on the reasons for this. For example, high receivables in Q4, release in Q1, et cetera.
So, yes. So the normal seasonal pattern, it's, I mean, we are growing as a business and you know, our subscriptions and customer base is also growing. What we can see is in Q4 is the normal month where we would invoice the majority of our customers that has a starting license starting the 1st of January. So our working capital will be better in the end quarter of the year. So just trying to see the other question. High receivables in Q4. Yes, so the receivables will be higher in Q4 due to the fact that we do send out most of our yearly invoices in Q4. Hope I've answered the question. I haven't missed anything.
Yeah, please mail us afterwards if you feel that you need to yeah, dive deeper. Okay. Next one here. Based on your negative cash flow and current cash position, will you need to raise funds before hitting profitability? Yeah, we've got that question before, as well. It's obviously a very good question. And we, I mean, we will definitely not put ourselves in a position where we just have to raise more money. We have a very good plan for not doing so. So our goal is still to steer towards profitability without raising more money.
And I can understand that if you look at the EBITDA development of the last quarters, it seems like quite, quite, quite, quite flat. And that might be quite scary when the cash reserve is just ahead of SEK 100 million. But don't be that scared because you're going to see a big change in Q1, in Q2, in Q3, and so on. Things are moving. So don't be that scared. This is under control. We're going to, we will not put ourselves in a position that we have to raise more money. How do you see AI affect your product? We love AI. It's going to change the world and it's going to change our business as well. This is just good news.
We have not disclosed any news about. Oh, we do have AI Assist that we disclosed one year ago, which is a very popular feature. But since that time, we haven't disclosed anything new. Is it on our radar? It's much more than on our radar. We'll get back to you with more information on that later. But this is just good news for us and it's going to be an interesting future. How to see how AI can affect our kind of concept. We have plans for this. Do you see yourself, do you foresee yourself entering new markets in the near future? With physical boots on the ground? No. Not this year and most likely not even next year. Boots on the ground. That said, we do do a lot of stuff in other markets. We have customers in 40 countries.
From a partner perspective, a marketing perspective, we are in more markets today than those six or seven if you include Sri Lanka. But boots on the ground, which is the most expensive part, office and so on and employees, not this year and most likely not even next year. The focus now is to continue to improve in Amsterdam, in Paris, and in London. I can't see any more questions. Wait, wait, wait. Do you plan to cut more than 5%? Will that size really be enough? Well, if we did think that we would have needed more to cut more than 5%, we would have done it already. Because it is a lot of friction going on in the company from a culture perspective and so on.
People, people, of course, get scared and it opens a lot of doors and questions. So this is, this is always a very painful thing to do. So if we thought that we would have needed to do more than 5%, we would have done it already. So the plan is not to do any more redundancies in Oneflow. That's the plan. That's what, what, what we fight for. Okay, that was the last question.
Yep.
Have a wonderful Friday to all of you.
Have a good Friday.
Thank you.