Welcome to Qliro Q3 report 2023. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO, Christoffer Rutgersson, and CFO, Robert Stambro. Please go ahead.
Good morning, everyone, and welcome to today's presentation of Qliro's quarterly report for the third quarter. With me today, I have Robert Stambro, our CFO, and I'm Christoffer Rutgersson, CEO of the company. So we are happy with the third quarter. We're strengthening our position and continued growth, and we are our third profitable quarter. So revenue is growing 10% in the quarter, reaching SEK 112.6 million in a declining e-commerce market. We have decreased our operating cost by 12%, and our operating profit is reaching SEK 3.9 million, adjusted for items affecting comparability. We are starting to see the long-term effect of the investments within our profitability program, and we have enhanced our offering, focusing on conversion, upsell, and customer loyalty for our e-commerce merchants.
We are implementing our payment strategy, and we're showing good progress in this area, with total payments volume increasing 2% in the quarter, despite the declining e-commerce sector in the Nordics and in Sweden in general. And we are winning merchant, and especially during the third quarter, we signed up the enterprise merchant, Proteinbolaget, that was also going live on our platform in early October. In total, we are now 33 active merchants connected to our platform, increasing with eight in the quarter compared to the second quarter this year. Also, as part of our payment strategy, we have now launched our Unified Payments offering, including both card payments and Swish going live in the third quarter, and we have more payment methods that we will add into this offering during the year and next year.
At the end of the period, we also launched a new strategic partnership with the AI platform, Sift Lab, where we're integrating them into our upsell module on the platform. With that, I will hand over to Robert, our CFO, to walk you through the financials, and I will come back a bit later to kinda run through the kind of strategic progress in the payments business.
Thank you, Christoffer. Q3 was yet another quarter of growth and profitability. Qliro has, since the start of the year, generated a profit of SEK 7.8 million, excluding IACs. That is SEK 59 million better than the same period last year. So in other words, Qliro is on, is on a good way to reach their profitability target for the full year 2023. Income grew in the quarter with 10% in a market that declined with 5%, according to Svensk Handel. The income growth was mainly driven by payment solution. Cost efficiencies within the profitability pro-program has pushed down our cost base, excluding IAC, from SEK 90.7 million last year to SEK 79.4 million in this quarter. Credit losses increased, mainly driven by payments and the growth of the lending book, combined with less invoices compared to BNPL volumes.
So to sum it up, we are profitable for the third quarter in a row during 2023. Income grew with 10%, primarily driven by payment solution, and we stand firm with being profitable for the full year 2023. It stands clear that the implemented efficiency and digitalization initiative within the profitability program have given the intended long-term results. The cost base was reduced by SEK 11.3 million, excluding IACs, amounting to SEK 79.4 million. We had a total of SEK 2.3 million in IACs in the quarter as part of our restructuring work within product and tech. That stands for about 50% of all employees at our company. The intended effect of the restructure is to increase our speed and ability to reach our product and tech strategy.
We are firm believers that hosting events like we did at Moderna Museet in Stockholm during Q2, where we invite the leading e-commerce merchants, our investments are important to achieve our growth strategy. In the beginning of October, we therefore hosted a similar event in Gothenburg, that attracted near to 200 guests from the e-commerce industry, and more events will come. We continue to focus on cost control and continue with our way of making quarterly update of our forecasting. This to quickly adjust to changes in market environment. With that said, it is important to highlight that we are now entering Q4, which means high e-commerce volumes and corresponding costs. Q4 is traditionally a quarter with higher cost level than other quarters, as can be seen in Q4 2022.
So all in all, we can see that the investments in automation, efficiency, and digitalization has given long-term results on costs. We are on our way to deliver on profitability for full year 2023. Payment solutions continue to show progress in the quarter, and the progress resembles Q2 to a large extent. New sales resources are starting to come up to speed, and the number of active merchants grew with 35% year-over-year, and we grew our merchant base with eight additional merchants in the quarter. Qliro shows good resilience in the declining e-commerce market. The total payment volume increased with 2% compared to the market in general. That decreased with 5%, according to Svensk Handel.
The customer reach of Qliro continued to grow, and 5.6 million consumers have used our checkout the last 12 months, a growth of 180,000 new unique customers since one year ago. We have seen a clear shift in the customer preferences towards BNPL volume. They grew 7% in favor of invoices that decreased with 10% year-over-year. This had a positive impact on our income generation. The Take Rate, which is the operating income divided by total payment volume from both Pay Now and Pay Later, grew from 3.1% - 3.4%. The change was driven by the increase in BNPL volume and additional SME merchants onboarded. In other words, we are yielding better on every volume krona processed on our payment solutions platform than one year ago. Qliro performed well in the declining e-commerce market.
Income grows with 10%, driven by the increased interest in our BNPL products compared to invoice, combined with improved Take Rate. During 2022, we launched a new strategy with a clear focus on merchants, widening focus on sales, including SME, and the introduction of Unified Payments. Unified Payments for cards was launched earlier this year. Swish has now been launched in this quarter, resulting in reduced administrations for merchants, and more unified payment methods will be included in the future. This will simplify onboarding of new merchants, improve our merchant experience, as well as enable Qliro to capitalize on Pay Now volumes. We continue to work with improvements on the conversion in the checkout that enhance profitability, both for merchants and for Qliro. In this quarter, we delivered access to the latest technology developed by Sift Lab to increase conversion by AI in Qliro's upsell module.
Parfym.se has doubled their additional sales by using this technology. This will have a positive effect over time on the take rate and income development. Credit losses grew in the quarter, driven by 9% growth of lending to the public and the change composition in between BNPL volume that requires more reservations than invoice that requires less reservations. As mentioned, BNPL volume grew with 7%, whereas invoices decreased with 10%. We have, apart from that, entered into a new SRG agreement in Sweden. Worth to notice is the improvement in risk-adjusted income throughout the year, 2023 year to date, compared to last year. Credit losses year to date, 2023, did not grow at all compared to the same period last year, and at the same time, income grew with 11%.
So to sum it up, we have launched Swish as a unified payment. We have launched improvements in the checkout that will benefit merchants, Qliro, and customers over time. Payment solutions grew with 10%, driven by interest in the BNPL products and higher take rates. The digital banking loan book continued to shrink in size and has lost 13% since last year. It now stands for 32% of Qliro's total loan book, compared to 37% last year. The SEK 150 million reduction of the loan book since Q3 last year has not affected the operating income negatively. The increase in income margins has mitigated the loan book drop. Operating income was SEK 18.6 million in Q3, SEK 1.6 million higher than Q3 last year.
The income margin, which measures the income of the funding cost of a loan book, has, at the same time, increased by 190 basis points since last year. The reason for the increased margins is the gradual movement in the customer mix throughout the year, where we lose more low-risk customers than we attract. This has caused the operating margin to go up and consequently increased credit losses. By deducting the credit loss level from operating income, we can see that the underlying risk-adjusted income margin has improved with 120 basis points from Q3 2022. So to sum it up, digital banking is a smaller part of our balance sheet compared to one year ago. Improvements in income margin have mitigated the reduction of the loan book. Let's look briefly at the capital and liquidity position.
Qliro has a capital adequacy ratio of 4.8% or SEK 143 million to regulatory requirement. The liquidity position is strong, which is proven by LCR of 434% and net stable funding ratio 126. The lending activities are focused on the Nordic countries and are funded mainly by deposit in Sweden and in Germany. Lending in Norway and Denmark is financed by the swap market. And with that, I hand over the word to you again, Christoffer. Thank you.
Thank you, Robert. We are working hard to establish our position as the most merchant-friendly payments provider in Northern Europe, and we are focusing on delivering a world-leading experience for our merchants and their customer journey. This is extremely important for us, that the customer or the consumer is the customer of the merchant, and we support that journey and don't take it over and sell something else, as many of our competitors do. This is one of the big reasons why many merchants are shifting over to Qliro from competing solutions.
During October, and as well in Gothenburg, as well as in June in Stockholm, we had big merchant events, most lately with more than 200 merchants and partners joining us in Gothenburg, talking about these topics and e-commerce and kind of profitability and growth in general. So we have launched, as part of this, our partnership with Sift Lab, where we, as Robert mentioned, are integrating kind of their AI product recommendation into our upsell module. So after a purchase, consumers can kind of add more items into the order, increasing sales, increasing value for our merchants. And that is kind of one of the elements that we kind of are differentiating versus competition in our kind of payment stack.
Also, we are kind of focusing on increasing growth for our merchants through kind of multiple kind of technical initiatives to not only do the upsell, but also increase conversion in our checkout, as well as kind of leading the consumer back to the merchant to kind of buy again and again. And as part of this, we have so far this year increased our leading checkout conversion by 1% in Sweden and roughly 3% in Norway, as an example. I mean, this is not the kind of simple task.
It's both due to kind of analytics in the checkout, it's due to kind of launching new payment methods in the checkout, improving how we save accounts, how we save cards, and kind of how we score the consumers, with the intention to kind of help our merchant boost sales, not only in the Nordics, but also kind of when expand outside the Nordics. And last but not least, we are working hard to kind of create loyal consumers that come back to our merchants and buy again and again. And we see in this current kind of macro environment where kind of consumers are spending less, and then many merchants are facing profitability issues, we see this as more important than ever. And kind of looking at our portfolio of merchants, some are kind of declining in volume and some are increasing in volume.
We see the ones that are still growing are the ones that are focusing mostly on kind of their consumer experience, ensuring they have happy consumers and loyal consumers that come back and buy again and again. So, this is kind of core to our offering. And some examples of kind of the merchants we want in during this year, you can see on this page, and all of the enterprise merchants are now fully live or kind of partly live on the platform, the last one going kind of fully live before Black Week. And we continue to winning merchants, both in Sweden, kind of and across the Nordics.
So also to recap a bit on our strategic direction that was presented earlier this year, as this is not new material, but we're working hard on all these five areas. So first of all, increasing our addressable market, launching Qliro also for smaller merchants, merchants that are processing SEK 10 million-SEK 100 million and are growing quickly and want kind of our enterprise capabilities of more modularity and then supporting them to grow. And that's kind of one of the reasons that we are increasing quicker in number of merchants now than before. Secondly, kind of building a great payments company, launching our collecting PSP offering, where we handle all the alternative payment methods outside the previous offering of focusing on pay later volumes.
So as mentioned, we have now launched cards, we have launched Swish, and we are adding more payment methods into this offering. And we have launched it under the name, not collecting PSP, but we call it Unified Payments in our marketing towards our merchants. Thirdly, we kind of are expanding with our merchants, and we see that more and more of the merchants that are joining the Qliro platform are using us in multiple markets. So we're now processing, I think it's up to 60 markets, but with decent volume in at least 30....
So, fourth, as mentioned, we are kind of working hard on kind of helping our merchants grow revenue, and especially in these times, where when many of our merchants, as the kind of e-commerce market in general, are facing kind of a worse consumer sentiment. We work on multiple initiatives to support the merchants grow, both from a conversion perspective, but as communicated also on helping them sell more to our upsell model and getting consumers come back, and but also through analytics and how we share data that they can use into CRM systems or personalization.
And last but not least, as part of our profitability program, we have not only invested in reducing cost, but also in creating a more scalable internal infrastructure of new systems and processes and kind of digitalized the foundation in order to grow the business going forward. So with that said, looking ahead, our sales teams are now kind of fully up to speed with focus on winning merchants, both in the enterprise and SME segment. So we have roughly tripled the sales team compared to a year ago, and we are continuing to focus on becoming a stronger payment partner by focusing not only on conversion, but also upsell features and building a loyal, returning consumers to our merchants. And we are including new payment option in our payment offering.
And, last but not least, our profitability ambition for the full year remain. With three profitable quarters behind us, we are quite confident we will reach profitability also for the full year. Thank you. We open up for questions.
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Thank you. Have a nice day!