Hi, and welcome back to ABG Investor Days. My name is Alice Beer. I work here as an equity analyst, and with me today I have Oliver Lundgren, CEO of Skolon. So with that, Oliver, please go ahead with your presentation.
Thank you, and hi everyone. So now we're going to talk about digital learning and the SaaS company Skolon. And what we're doing at Skolon is that we work with the vision to create a better, more inclusive, and more successful school by enabling digital learning for everyone. And we are building a company around an idea that is based on a real problem in society. So back in 2015, this was the news in Sweden and also in other countries about our PISA report and the results falling. And we did a study and could see that it took up to 10 minutes to get going with digital educational tools in the classroom. And that needs to be done in 10 seconds. And that is the reason why we started Skolon, to be able to help students and teachers to get access to digital educational tools easy and secure.
And what we also found out is that there is an ongoing global change happening in the educational system right now, so moving away from a traditional way of working that has been almost the same since the beginning of the Industrial Revolution into a world where we are working more with digital tools, where we are adapting the learning more to every individual, where we also can lift away administration from teachers and so on, so both in the classroom scenario, but also overall in a school, and for example, looking at Sweden, we could see that up to 20% of a teacher's time is going to administration, in quite basic administration that should be solved by digital tools, so in this space, there is a lot of things going on and a lot of opportunities for technology to make a positive change.
And what we do at Skolon is that we make the digital tools accessible for teachers and students. So we have built a SaaS company around a platform that makes the tools easy and accessible and secure to access for all teachers and students in one place. So what you can see on the screen is the typical start page for a teacher or student working with Skolon. So when they fire up the computer or iPad or anything like that, this is what they see. Their individual collection of all the tools that they have in one place. And when they click a tool, they will get access right away. So instead of having multiple sign-ins, multiple passwords, and so on, they have everything in one place, personalized for them, ready and easy to use.
To be able to do that, we have gathered all the educational tools in one place. So we have in this platform today more than 200 partners with more than 5,500 digital applications that are integrated to this platform and to our APIs, making it available for teachers and students in school to use easily. What we can help this partner with is easier onboarding, access to the right data they need to be able to run in the classroom, and also a marketplace for them to reach new customers. We have built a complete end-to-end solution to bring simplicity and safety when using digital tools in the classroom. Besides gathering all the tools they already have, we also have an app store which enables one-click buy and automated distribution.
So now it's easy for students and teachers to get on with new tools, and they can find it as an app store we all already know, and they can buy license, even if it's one license or 10,000 licenses, they can buy it easy and get access to the right students within minutes instead of weeks, which is the traditional way of working. We have also built-in functionality in this platform for management of data, securing GDPR compliance and so on, which is a very important question for the schools and the municipalities running the schools. And we have an API framework that fosters this unique ecosystem. And we have also built integration with partners like Google, Microsoft, and so on to make all the tools available in their ecosystems as well. So today, Skolon is one of the biggest and most popular edtech platforms in the Nordic.
We have more than 800,000 paying users in the platform operating in five countries. Sweden, where we started, is still the biggest. Here, nowadays, almost half of teachers and students have an account in Skolon. But we are also growing fast in countries like Norway, which was our second country, and England, which is a much bigger country, of course, that is an important market going forward for us. What we also have done is that we have enabled to have a very low churn rate. So we have had a churn rate roughly around 2% for the last years and even below that in the last year as well. So satisfied with that, which also makes it possible to work on a long-term basis with the customer, which is important for us, of course, and also shows that we can really create the value for our users out there.
We have built a business model which we call the two-sided marketplace, which consists of primarily recurring revenue. So we have over 90% of recurring revenue from the customers and the partners. So our primary customer is the organizations that run the schools and have the teachers and the students. So it could be, as we in Swedish call, friskolor, or municipalities or regions or stuff like that. They buy Skolon for the users, but they can also buy content on Skolon for their users, where we then have a revenue share with the content providers. And the content providers also pay to be on the platform, to access the data, take part of the marketplace, and stuff like that. So we also have a revenue stream there as well.
We are in the value chain between the end customer and the content provider, creating value for them both. During the last years, we have been able to grow the business based on this model. Having annual revenue above 50% organically year over year, we have been able to do that with a positive cash flow from the operational activities. We have not, up until the last quarter, been able to do that with operational profit, but that was possible in the last quarter. The last quarter that we have reported from this half year, we also have a positive EBITDA as well. What we have done the last years is that we have continuous growth in Sweden, as we can see. We continue to grow in our home market, but we have also started to grow more in other markets.
So we have really seen the growth kick off in markets like Norway and England, and stuff like I was saying before. And this is, I would say, fueled by growth in both paying users and ARPU. So we continue to see a growth quarter over quarter of the paying users in the platform, but we also see an increased revenue per paying users. And when we have a growing user base and a growing income per user, we can see the growth that we have achieved. And this is what we are working on going forward as well, of course. So the start of this year has been similar. So a growth of roughly 50% even this year, increasing paying users and increasing revenue per paying user. And we also have, I would say, a strong financial position.
We have grown our net cash if we take away the dividend we did in the spring in May, and we have also no loans and stuff like that, so I think we have a strong financial position for the journey we are doing here, which is good in the financial climate that we have had the last couple of years. We have built an organization with 40 members, with offices in our local markets in south of Sweden and here in Stockholm, organized, I would say, typically as a SaaS software company where we run our own product development and stuff like that. We also work quite much with the sustainability area. This is an important area for the society, school, and the future generation going in schools nowadays, and we take this very seriously together with our customers.
Many of our customers have very high ambitions in this area as well, so we have been working with this strategically over the last couple of years and are working together with research institutes and stuff like that to also see how can we help them to get better outcomes and so on in learning, so if we look ahead and what we are doing now, we think that our greatest opportunities lie ahead of us, and that is what we, of course, are working very actively with right now, so our long-term vision is that we have set up a financial target of having an average growth or recurring revenue per 50% per year. The last years, we have been able to be above that, and of course, that makes the goal harder to reach, but that's a good part of the goal as well.
Working hard continues to achieve that. We shall accelerate the revenue by adding more paying users, but as we also have a big user base, also increase the revenue per user, which makes this interesting. Our long-term goal and vision is to become a market leader in Europe, a position that we already hold in the Nordic region. We also can see that we are ahead in the Nordics. If we compare to other bigger markets in Europe, so we are really trying to be there when other markets now are taking the steps that we did five, ten years ago. Countries like Germany or Spain, for example, they are investing in hardware, they are investing in Wi-Fi and stuff like that now.
We think there is an opportunity for us and our content partners to be there in those markets when they kick off and grow in the coming years. We also, of course, want to be there and drive innovation within edtech and develop our platform by creating new features and so on based on the latest technologies. We have pointed out five different areas where we see substantial opportunities. One of those is continuous growth in the Nordics. We are in a growing market. We are in a position in this market that is strong. We're going to focus both on increasing the ARPU and also increasing with more users in this market. We are going to focus on scaling up in the United Kingdom. Last year, we entered that market. Now we have roughly 100,000 paying users in that market.
We have an organization established, and it is a market that is seven times larger than the Swedish one. It's also a strategic interesting market because the market there is very similar to many of the other Commonwealth markets, so one of the global biggest educational systems, I would say, we have in the U.K., so interesting going forward working with that. We are also looking at geographical expansion, as I mentioned just earlier, where we see that other countries are behind, but they are now investing both on a European level, but also on a country level to come forward, so we think we are well positioned to be part of that transformation, and the last year, we have been able to add many of the international content providers that weren't possible for us to have in the platform when we only operated in Sweden.
Now when we are in more markets, we are more interested for them, and now they are joining our platform, and we can have them with us when we go to other new markets as well, so that has been an important development the last year for us. We are also working a lot with product developments. Today, for example, we are targeting the students and the teachers, not the parents. We are looking at that. What can we do there? We are also looking at what can we do in higher education and other areas as well, so there is significant opportunity to grow our markets in existing countries as well by reaching new target groups, and that is something that we're looking at.
We are also working with AI and what we can do with the data we have in the platform to help teachers and students to find new tools more easy and stuff like that. Things that have been very complicated to build before, but with AI, it's much simpler to develop, so that is also an opportunity, and we have a lot of data that we can use in the platform, and we also see going forward potential acquisitions in the market, which is quite fragmented and where we also see that we can take advantage of the platform that we have in place and all the users that we already have, so that is Skolon and what we are working on right now, so a short introduction of where we are and what we are looking to achieve in the coming years. All right.
Thank you, Oliver.
For that presentation. We'll go ahead with a few questions. So you've had a very exciting year filled with a lot of news. Say you have the digital national test in Sweden, you have partnerships with Padlet and Canva and a lot of large Norwegian contracts. Which of these would you say that you are most excited about and will be the most important going forward?
So several of them are important, of course, but I would say the international content providers are really interesting. If you go some years back, if you look at Norway, for example, when we launched in Norway, we had no content providers there. Now we have, I would say, almost all the big content providers, the local ones in Norway. And now we are growing a lot in Norway. It was the same in Sweden in the beginning and so on.
But what we now are achieving is that we can get the big international ones that are big in many countries, like Canva with tens of thousands of millions of users, with Padlet, 40 million users globally and so on. And they haven't been interested to work with us before because we couldn't bring them a big enough market to build an integration. But now we can when we are in more countries, and they really feel that we are an interested relevant partner for them. So I think that will really help us in the coming years when we have content that is relevant in the markets we already are in, where we can bring more value to the customers and increase the ARPU and stuff like that with that content.
But we can also be able to use that content in new markets from day one, which I think is very interesting.
All right. Thank you, Oliver, for that. And going into 2025 and beyond, maybe, what is your priority regarding growing your user base versus growing your revenue per user?
I would say they are both important, and we are working strategically with them combined. And I think that is one of our unique values that we are able to do both. So we will prioritize them both. I would say it's a little bit different in the different markets. I would say in more mature markets, I think growing the ARPU is more of a focus. But in new markets, it's definitely focused on growing with new users and building that. So I would say the focus is a little bit different from the markets. All right.
Clear.
You talked a bit about your targets. It's very ambitious at 50% organic growth annually. Could you expand a bit more on that, maybe for next year and forward? How are you going to be able to achieve that goal?
Yeah, so as you say, it is an ambitious goal. And to be able to do that, we saw that we need to expand into new markets. We saw that a couple of years ago, and that's why we got into the United Kingdom and even other countries we are looking at as well.
So I would say it's a combination of continuing to be very focused on growth in our existing markets, continuing to bring value to our users, because if we do that, I think we have a great opportunity to continue to grow there and also continue to be successful in new markets, adding a few more markets as well. So I think that combination and also develop the platform, of course, with new features, new functions that can bring new value. I think that combination is what we are working on day and night, I would say, to continue to reach our goals. So very focused on delivering on the plan we have. And we really feel that if we have the plan in place, we know what to do, but execution is key here. So that's what we are focused on.
All right. Thank you. That's very insightful.
If we think about more the international expansion, you grew your ratio of international sales from 2% in 2021 to about 40% now. Quite a rapid expansion. Can you talk a bit more when you look at entering new markets? What are your priorities? Really, how are you planning to expand going forward internationally?
Looking at new markets, for us, it's very important to find key customers early, find customers that are leaders that other customers are looking at. In our sector, trust is important, and to be able to show strong references is really important. It's not about going into new markets and spending tens of millions of SEK on ads or something like that.
It's about coming in and showing early value with customers so other customers can look at that and you have a good, strong reference case and finding the right people to build that and so on. So I would say that model that we have found there, I think that is the one we're going to go with even in your markets as well. But important is, of course, the level of how digital are they, is content providers that we already have relevant, how big is that market, the local market, but is it also a market that has value for other markets as well? Take, for example, a market like Spain. They have a lot of content there that they're using in the whole Latin America, for example. That is interesting and so on.
So those are things that we are looking at now when we are looking at other new potential markets going forward. But we are going to do it step by step. We are going to do it with generating results in the countries that we are in to be able to invest in new countries. So we should be offensive. We should be able to build, but we should also do it in a controlled way, so to say. So balancing those two, I think, is important going forward.
All right. And speaking of your current markets, have you learned anything? What would you say are the key really differences in the markets if we think about customers and what they want and their demands?
So as we deliver a technology platform, solving access, solving GDPR, solving data security, that is questions that are very common on the different markets.
What is not 100% common is the content. So it's one tool that you work with, math in one country is maybe not the same in another one or historically or something like that. But the questions we are working with are very similar. So it is adding the local content together with international content that is important. And of course, finding the right local business team and stuff like that. I would say that's the same in many industries, like business is local, so you need to understand the local market, you need to understand the local ecosystem, and to build from that.
All right. Thank you. And during your presentation, you mentioned additional user groups as a focus for you. Is Skolon available, or could it be available in the future for, say, universities and high schools?
And why have you begun to really focus on younger children?
So we have focused on what you call K - 12, grundskola and gymnasium in Swedish, firstly because that is the biggest group. So in Sweden, we have roughly 1.4 million potential users in that group. But if you take Komvux, for example, that's 50% of that group. So then you are well above over 2 million potential users, for example. Then you have universities, not the same amount of users as Komvux, but almost. So we have started with the biggest one, and we have started with the one where we see a lot of potential to bring value. But we have also seen that we can bring value to the other groups as well. So for example, many municipalities, they are running the Komvux as well, for example.
We have some of them that have already started using Skolon there. We will definitely continue working with that going forward as well. Same customer, a little bit different users, but we can still bring a lot of value. Yeah, definitely continue building functionalities and get on board the content providers that are relevant for them in that group as well.
All right. Great. If we talk quickly about competition, could you maybe explain how the competitive landscape looks in Sweden and in the U.K. maybe? Are there huge differences? Does it look the same?
Yeah. Internationally, I would say our main competitor is a company called Clever and a U.K.-Australian company called Wonde. Globally, we are a few companies building a platform like this.
But on a more local level, I would say the competition landscape is more of municipalities trying to do their own thing, running local stuff for anything like that. So not like a pure competition here, more of other ways of working, I would say. So I definitely think that we have a great, strong position here in the Nordics. And I also think we have a great opportunity looking into Europe because the GDPR and data regulation rules and so on create a high entry barrier for our competitors. So I think that's a great opportunity for us that we are looking on and that we are, of course, going to try to use as much as possible.
All right. And if you compare yourself to, say, Clever, Wonde, or any other large players, what makes Skolon stand out?
So I would say it's the technology and the platform that we have built. But I mean, I have a greater amount of respect for our competitors, but I see that when we are competing against them now in the U.K., for example, we do a bit of that. And I think that we can handle that competition well and we are able to win customers and so on in direct comparison. So I think in bigger markets, I think it's also good that we are more than one driving these questions, raising the challenge for the customers and so on. So I think we can handle that well as well.
All right. Thank you. Unfortunately, we are out of time, but thank you, Oliver, for this great presentation, and thank you for everyone listening.
Thank you.