Welcome everybody to the earnings report of Q4. My name is Frank Schuil, CEO of Safello.
My name is Johan Edin, CFO of Safello.
All right, let's have a look at the agenda for today, if we could pull it up. Yep. We will start with comments from me, then Johan, and then we'll go into Q&A. If you have any comments, please leave them in the comment section, and we will address them at the presentation or after in the Q&A section. Starting with the first slide, as you can see from this longer term view, Safello has been growing since 2018, where we really found our product market fit. I want to just stress the importance for Safello to focus on growth, which has been the primary focus for the company for the last years.
Certainly after the IPO funds have been raised to allocate capital to further accelerate the growth. We can, you know, confirm here if you see from the graph that growth is just simply following the trend line that we started all the way back in 2018. For those of you who have followed the product development cycle for Safello, you obviously were aware for the launch of the Safello Wallet. We just wanted to show you this graph that since the release, we've seen a great uptick in the adoption of the Safello Wallet. Part of the success there is that we have integrated this into the core product. It's a default option for users to actually get the wallet activated.
Going into the overall numbers, we increased our user base from 30,000 users to 150,000 users, and we're almost at 600,000 orders that we processed at over SEK 1.5 billion, almost SEK 1.6 billion in total volume that we process as a company. If we then look at the turnover, here also looking at a longer time perspective, you can see that the overall growth trend is intact, and it would hit another record on the turnover. Here you see a distribution in the different product categories that we have, the Widget, the Web App, the Partner Track, and Mobile.
An interesting thing for those who have not maybe followed Safello for a longer period of time, and maybe not as highlighted in the prospectus, we have a partner track, and this is really where we see the opportunity for 2022. To highlight that in a single slide, we recently did a presentation on the MiCA regulation that is upcoming, and has been approved by the European Council. I recommend everybody who's curious about that legislation, to read up on it, because it really changes the game for the crypto market in Europe. Is really the starting point for financial institution to be forced to consider how they're gonna implement their cryptocurrency into their own offerings.
That is further sparked by the internet level of crypto adoption that we're seeing globally, that is in line with the internet adoption at the time, going ultimately to a prediction of 1 billion users or more. Coming into 2022, we see that Safello is very well positioned to go after those financial institutions, not only banks, a broader section of financial institutions, and companies that want to enable crypto functionality. Why?
We have obviously been the Safello of the crypto market, so the longevity of our business, having worked in crypto for over nine years and having both the data from all the users, retail users that we have and all the different scenarios and hacking attack vectors, seeing the different kind of schemes that you need to harden the processes as well as the platform. We've gone through that. We've gone through different bull and bear markets over this nine-year period, and with that, obviously, we have a lot of knowledge within the company. Secondly, we are the market leader today in Sweden, Swedish market leader, with over 250,000 users.
We obviously have experience with the end user experience, customer experience, which can be difficult to navigate. Then again, to stretch the point, we've been following a compliance first approach from day one, which is also fairly unique in our industry. A final point from me on the efforts that we've been making on the content. On the one end, we have some coverage from the likes of Redeye and some other people that are following us. But we also wanted to make an effort to continually educate those stakeholders that maybe we haven't reached yet, but they could be interested in our stock or in our apps, and we think there's synergy between both. We have our channels.
Of course, we have our own channel via safello.com, but also our platform, bitcoin.se, which is the largest educational information site. Then we started doing other types of content on YouTube that we distribute, as well as Twitter, LinkedIn, which we then feed back into our community on Discord. Press releases we distribute to Cision. This is part of broadening the educational base of what the crypto market is about, but also very much what Safello is about and hopefully see that stakeholders can meet each other in between. We love everybody's feedback on this and where we can improve, but we hope that you appreciate our efforts. This is also an effort with the earnings call to be part of the education to our shareholders.
All right. Sorry, clicking the wrong link. With that, I'd like to hand it over to our CFO, Johan Edin.
Thank you, Frank. Just a brief summary of the fourth quarter. We did reach a record turnover of SEK 215 million. That's a 102% increase since the fourth quarter of 2020. We did see reduced gross margins, primarily due to reduced fees that were announced during Q4 or early in Q4. We did lower the fees temporarily during the campaign, but also permanently lowered the highest fees that we're charging. We've been increasing the headcount, and as a result, we have a higher cost base. We also had a marketing campaign in Q4, both physical and online. I would like to stress that the marketing campaign was about SEK 2.4 million in the fourth quarter.
We've also not capitalized any development costs in 2021, which, yeah, so some people would argue that we should, but we haven't. As a result, we're not building the balance sheet. I think with the team we have in place, we're well positioned to accelerate the business in 2022. We have more capacity on the development side. And we also have the wallet or custody infrastructure in place where we can launch new features going forward. In the report, we have been talking about the customer types. As you can see, the Retail part is still the dominant part of this, whereas Business and Premium have been growing over the year.
Also perhaps not grown as fast as we would have liked to. One thing to consider when looking at Safello is we did an IPO in the second quarter of 2021. We raised roughly SEK 40 million in cash, and we had a cash balance of SEK 53 million following Q2. In Q3, we invested around SEK 10 million in crypto assets that we hold on the balance sheet, and they're held at cost unless there is a significant movement in either direction, in which case the value would be tested. Looking at the cash balance of Q4, we had SEK 34.6 million in cash and another SEK 10 million worth of crypto sitting on the balance sheet.
Whereas we are investing, as we said we would in the prospectus, I still think we have a comfortable cash position going into 2022, where we will try and accelerate the growth and grow the business into profitability over time. Exactly how the market develops is, of course, anybody's guess. But I think we're well-positioned both to accelerate growth and to weather any storms that may come during the year. We've added the P&L and the balance sheet here. I mean, also summing up 2021, we saw growth of 140% in terms of turnover. Gross profit roughly doubled since 2020 as well. It's been a good year.
Would we like to grow faster? Perhaps. I think we are a conservative player in this field, and we're expanding as we see fit. I think we can move on. On the balance sheet, as I commented, we do have SEK 10.1 million worth of cryptocurrency and the cash balances. As I mentioned, we're not capitalizing costs in 2021 from a development point of view, which of course affects the result in the P&L. We think it's a fair way to do it for now, and we may change that policy going forward.
Looking forward into 2022, as we said, we will continue to develop the business and our business model and grow into the larger cost base that we have acquired. We will accelerate product development and improve our product offering while monitoring the cost base and the cash position, particularly in relation to where the market takes us, given geopolitical risks and the crypto market in general. As Frank also alluded to, we will further develop our partnership model this year. Well, that's exciting, and we'll see where it gets us. Thank you.
Thank you. I think that moves us into Q&A. Oh, yeah, I'm clicking there, but the laptop is here. We've got some questions here from Nicholas Savos. He asks, "Hi. Hi, both. You mentioned the partner offering. Please tell us more about how you aim to sell this service to other providers, the expectations for 2022, as well as the business model. Thanks." Well, thank you, Nicholas. So what we've seen over the past quarters, I would say a different attitude from financial institutions towards cryptocurrency, and specifically towards our business as well as potentially being able to help them get into crypto.
Obviously, we wanted to highlight that we have this offering already and it's in our prospectus for Safello Partners. Now, this we started in conjunction with the widget that came out in 2018, which was sort of the product market fit that set forth the growth that we've been seeing over the past years. At that time we had it as a focus area where we integrated with the likes of Opera, the web browser, but also Bitcoin wallets like Edge Wallet, Mycelium Wallet, as well as with bitcoin.se, which we ultimately ended up acquiring.
Those partnerships actually are still integrated with us, which shows, I think, the strength of how Safello has been positioned already as a partner that can work with third parties to help them activate crypto functionality in their business. At that time we had also, for instance, an API, which we never widely deployed, but it's along these lines that we're looking at serving the institutions and a broader circle of companies that we're in discussions with to help them get into crypto. The time it speaks to the timeliness of where we are now, the MiCA regulation, and we did this episode on the regulatory environment change on the Safello Show for those who are interested.
We speak about 39 minutes, I think, on the MiCA regulation, what it means, how it impacts our business, and what it means for the overall market landscape, is a window that starts moving institutions towards the crypto market. If we look at our expectations, our expectations is that the market is going to accelerate with this adoption. Of course, the macroeconomic landscape that Johan referred to, some of that is outside of our control. At the same time, when you look at our growth and project it over the cryptocurrency market growth, we've been independently growing in times where the crypto market wasn't growing, so there is not a perfect correlation there.
We've actually in certain times really outperformed the crypto market growth, particularly the bear market in 2018, we saw a big run up where the market was one of the worst years of the crypto market in the last, well, what is it? It was a deep bear year after the 2017 run up. So around the business model, of course, we've had historically a revenue share model, which is based on, and the current integrations are also based on a revenue share model. So, that is a commission-based model based on the volume. One can think of other business models that might be very well suited in this area.
At this time, we cannot further comment on like how we view that and where we are in terms of that part of the assessment of how we address this market. What we will do is, I think moving forward is making the proposition into that area more clear, so involves Safello Partners to better address this to the market. Next question. You launched a couple of new cryptocurrencies during Q4. How has the interest been? I don't know if we have a backup slide to show there.
I think not, but what we can say is that within a short period of time that we added the cryptocurrencies, particularly Polkadot that we added, MATIC, and
Chainlink
Chainlink. Yes, Chainlink. If you look historically, that is pretty common with all cryptocurrency brokerages. You see the vast majority is Bitcoin, which is slightly different from a peer-to-peer exchange where there's more widespread trading across different currency pairs, but the brokerages is always quite dominant on the BTC pair. Then we have the runner-up is Ethereum. Excluding Bitcoin, we had within the time period that we launched, I think, over 30% was already coming from the other cryptocurrencies. It has a-
In terms of.
relative to the Ethereum order amount. Considering that we've had Ethereum support for I think a couple of years now, in relation to that, I think that is actually a very promising validation. It's a validation for adding multiple cryptocurrencies to our offering, as well as that you can see that quite directly in the fact that we did another record of orders in the quarter, as I had in the slide that I shared with you. I think, are there any other questions looking at the backlog? Any other additional thoughts for you on that, Johan or in general?
No. I mean, we said roughly 5%, I think in the quarterly report, so and that was the back end of December.
Right.
There, there's interest, but of course, you're starting small and hopefully it'll grow.
Yeah. I think it's about the relative adoption towards in relation to the other cryptocurrencies from my perspective, where I think we see at least a promising adoption and there is at least some validation from how I look at it in terms of the support for multiple cryptocurrencies. I think that those are all the questions that I'm seeing on the channel for today. If you have additional questions, please follow us in the Discord channel where we also have a channel of questions for management, where you can always reach us and we have quite active discussions with shareholders now and then on clarifying the market.
We understand that there are other cryptocurrency businesses of course in the market and the nuances between one company and the other is not always well known or well defined. We're there to help bridge that gap. There is another question, so we'll pull it up. From Magnus Ahlberg. Thanks for joining, Magnus. How do you leverage your collaboration with Klarna initiated about a year ago? Klarna has been integrated as an open banking partner.
The actual adoption in terms of that method of payment within Sweden, where we have of course Swish and we have other payment methods support as well, is not an amazing selling point for the Swedish user base where Swish, as we've seen from the competition that lost the Swish account, can have a pretty big impact. Swish is by far the most popular payment method. Where Klarna's set up integration could make a meaningful impact is obviously when we look across the borders. Now, what I will say that may be contradicting slightly our perspectives is that our primary focus is actually to capture this opportunity on the institutional side, where we're seeing real demand.
While internationalization is very much in the cards, the main focus has been the product innovation and the deepening of that end customer base, which is what we've been saying for quite some time. We're seeing some very tangible things come out of the demand side. The leverage of Klarna will come more into play when we look at internationalization, and it goes for other kind of integrations and partnerships that we have as well. We do have partners that can help us internationalize rather rapidly, and with connections to other parties that we could bring on board as well, where that could be the case.
For the Swedish market, the BankID Swish method is by far the most popular one. Looking here if there are any other questions. You know, I think those were the public questions that I see here. To repeat my point, visit our Discord channel. Also on YouTube we have, of course, this channel, but we are releasing content frequently. Articles, deep articles about the market and insights are also on bitcoin.se. For anything else, we obviously strongly recommend you to download our iOS or Android app to try out our service and spread the good word about Safello. Thank you for tuning in, and I hope to see you online and at our next earnings call.
Thank you.