Thank you for standing by. Welcome and thank you for joining the Artificial Solutions Invitation to Presentation of Q4 Report 2021. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a Q&A session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Press the star key followed by zero for operator assistance. I would now like to turn the conference over to Per Ottosson, CEO. Please go ahead.
Good morning. Thank you all for tuning in today to our Q4 2021 results presentation. Our PowerPoint, you can find that on artificialsolutions.com investors and quarterly reports. Please go in there and click it since we're not sharing this obviously over the phone. Good morning. It's been an interesting Q4, and I can say that at this point we have done our transformation and 2022 will be the focus of scaling up from the position we're in. We're now transformed fully into a software as a service company. Some of you may or may not be familiar with the company. I'm gonna go through a bit about us as well and then talk more about the financials for the quarter and what our other achievements are for the quarter.
Now I'm on slide two. The two people talking today are me and Fredrik Törgren. Suffice it to say that we've done transformations and turnaround from scale-ups before. We are hoping to achieve the same here, of course, and we're halfway through this journey. I will talk on slide three, again, for those of you who are not familiar with what we are and what we do. This is a presentation or a schematic to show the space that we are in. The space we're in is called Conversational AI, which is a subset of the AI software industry, and it's a subset which is worth roughly SEK 130 billion and has a CAGR of 22%.
This is a market that attracts a lot of attention right now, and we were very early in this market. We started already back in 2021 when people were running around with Ericsson T28 flip phones. This market is all about a customer, an employee, a citizen coming into a system and asking something. That's the left part of the schematic. Can you help me? That could be a service request. I have a question. That could be an information request. I need to get this done, an action request. Requests of different kinds and sorts and asking for some kind of action usually come into a human. With Conversational AI, they come into what we like to call the bot. The bot now needs to interpret what is it that this person is saying. Do they want something?
Did they give me any places, other details such as names? Is there a date in there maybe? What kind of request is this? What are they asking for? Is the user happy, upset? Have we interacted before? All that the bot now needs to understand and then also potentially take the action. Best of breed in the industry today is that 20% of a total interaction from the left to the right can be managed by the bot. Typically this is that you've trained the bot on a few use cases where the bot can manage it themselves. Our one example that we have today, which is also measured transactional net promoter score in this, is Swisscom.
They have 1.8 million phone calls coming from the left, the bot interpreting those, and in 20% of those cases, the bot actually also responds and manages the full interaction. That obviously is a good ROI, so there's a lower cost since there's no human involved in answering. Interestingly enough, there's also an 18-point transactional NPS. The net promoter score, the customer satisfaction goes up with 18 points with the bot answering versus the human answering. That's the industry we're in. We are leading in this industry, and we also have some of the foundational patents in this industry because we started really early. The stage we were at in 2014 with Ask Anna is where most of our competitors are at today.
What we built during that period, the technology we built during that period, is what we're now bearing the fruits of in a software as a service model, and that's what we're scaling up during 2022. I'm gonna move to slide 4, give a bit more information about us and a bit more flavor about our business. We were founded in 2001. Again, that's a long, long time ago. That's before the iPhone, before the iPad, before even some of our employees were out of school. This is interesting to us because we made many of those learnings that others have made early on, and those who are doing it today, we actually saw recently in the Swedish media a large Swedish public organization who said they've now been at it for 3 years.
Basically, the feedback that they gave in that interview was the feedback that we got from IKEA in 2014. We started building our platform after receiving feedback like that from our customers, and that's what's achieved this great platform that today has a patent value. You see that at the bottom left of the text and also bottom left of the squares. 1.6 billion SEK is the patent and IP portfolio valuation that we conducted during Q4. This was done by a company called OxFirst. OxFirst does this for many companies. One of the more notorious ones this year was Philip Morris, which has also been, that report has been waltzing through the European Union, all sorts of instances, and it's a quite reputable organization.
They value our patents and IP to be SEK 1.6 billion. Now, we use those patent and IP, of course, to provide our software-as-a-service service. We are not licensing them as such. We believe that our technology advantage is what provides an advantage to customers. What we do is we have an 86-language support platform where you build easily and you maintain easily a solution within the conversational AI space. Those are the two main factors today. There's quite a lot of competitors out there who try to build easily. It could be a no-code approach where it's purely graphical, but you will hit the roof quickly on the volume side and the maintenance side of that. We both build and run this for you in a better way. Our partners or customers, they do the actual building.
We provide the platform that makes it easy to build. Our trailing or last 12 months ending December 2021. Note that that is not a classic software-as-a-service measure. We are still transforming from a licensed PS model, and we no longer have PS. What you see now is that we actually are back on track where the software revenue now compensates for the fact that we removed our PS. We've sold that PS portfolio off. That's no longer with the company. That's being built by our partners or our customers today. Our trailing 12 months then, so that this is not forward-looking classic ARR, our recurring revenues are 36.7 million SEK. That's the blue portion that you see at the top right of this slide number four in our presentation.
You see that the dark blue, that's what we are aiming to grow. The total revenue now, you see is 45.3, but the dark blue portion, 36.7, that's the recurring software revenue. There we have a growth of 18%, and that's the one that we're aiming to grow now going forward. We financed during this year 120 plus SEK 250 million, 250 as the debt and 120 as equity, putting us on a solid footing going forward for this year. At the bottom left, you see some of our customers. We have seven new customers acquired on the software-as-a-service model this year, and some of those you see at the bottom left. Interestingly enough, these are the really large implementations.
They're really sort of stellar references that you want to have in this industry, and we're quite unique in having this reference base. That's of course a very strong piece now as we're building out our sales and marketing organization during 2022. Our strategic partners, the ones that have really made a big dent this year is our relationship to Microsoft, where we're doing several campaigns together with Microsoft, also visiting the Mobile World Congress together in two weeks. We have CSG, have done several large engagements, and their total PS revenue on our platform last year was over $6 million. They're making good money off of us today. CGI, similar type of numbers, also very good and generating a pipeline for us.
Ernst & Young has also proven to be a very solid partner for us, being able to take the software and use it for things that we had not imagined before. Very interesting that our partners are delivering, and that's really a point of strength as we go into 2022. I do want to mention that we have a 95% renewal rate in the last two years. We will start as our legacy revenue decreases as we convert our customers to software as a service. We will of course start reporting on real SaaS metrics. A 95% renewal rate is very good and with growth in our new SaaS customers, that of course is gonna provide for good net retention rates going forward. The next slide is our executive management.
I'm gonna mention this again because this is the team that now is gonna build this out. The sort of stable person in our company is Andreas Wieweg. He's been with us for a long time. He's the one that took all those learnings back in 2014 and started building the platform that we then patented, and which is the basis for our software-as-a-service offering, which we're now taking to market in a strong way in 2022. Apart from that, the management team is new and quite experienced people from the software-as-a-service industry, and we feel quite secure that this is the team that's gonna be able to build out our revenues now in 2022 and going forward. Next slide is number 6, and these are some of the operational highlights for the year.
Q4 2021 was the final step in our transformation. We got Nicolas Köllerstedt, our CRO that you saw on the last slide. He came in from Snowflake to start building out the sales organization, and we now have a sales process. We are using a methodology called MEDDIC, which we have implemented, and we've started now recruiting sales into that sales motion. Currently a small sales organization with five salespeople, one being focused on partners, but that is being built out during this year. Quite happy with the build-up in the salespeople we do have and with the new SaaS model and how it's being received in the market. We have happy customers. In my career, which is quite long in the software industry, I haven't really seen customers this happy.
Partially that's because of SaaS, but also our on-prem customers, our legacy customers are quite happy with us as well. We get some very good customer feedback at the end of the year, and in the Q4 as we had our sort of wrap-ups of the year with our customers. Very happy with that and very happy with our product team and our customer success team and how they're delivering value to our customers. We are accelerating on growth, so we have traction now, 17% growth, Q4 2020 versus Q4 2021 on the adjusted recurring revenues. Some of you may remember, if you're new, that we've taken the old upfront revenue recognition and adjusted that to be a month-over-month revenue recognition since we're no longer recognizing deals or revenues upfront.
Our SaaS revenues are increasing, and we signed a number of new customer contracts during Q4. Very interesting, Banca Widiba. There's been a lot of talk about Meta. Banca Widiba in Italy are actually using our software to provide a speech service in a Meta-like VR banking service, which I believe to be one of the first in Europe and maybe even potentially globally. Quite an interesting use case as we're moving into the metaverse to see what that can give. Banco BPM, also a very good Italian customer, Italian bank. GrapeTree, interesting. They do medical staffing, so you would call that stafettläkare maybe in Sweden, in the Midwest and are expanding across the US.
This is so our software is gonna provide a way for them to provide a better service to both their employees and their customers. Scania, large truck maker, of course, Škoda, both of these being in the Volkswagen Group, and we're now working with other entities within the Volkswagen Group as well to expand. HelloFresh, very interesting in moving into new brands, and HelloFresh is launching new brands all the time. Some very interesting developments going on there as well. SelectQuote, which is a healthcare administration company back in the U.S., working to make healthcare plans easier to administrate and work on. What we're doing now is recruiting on all the supporting sales activities. That's a big focus for Q1 to get people in.
Of course, it takes a while to get them in and build that pipeline out. But in the meantime, of course, we're working on expanding the usage in our existing customers. The SaaS platform is providing revenues in a delayed fashion since we charge for API calls, but we'll go more into that as we go along. Capital Four has helped us with a SEK 250 million credit facility over five years. It's a PIK interest, meaning we pay the interest at the end, so very good for our cash position. Of course, we exited the quarter with a very good cash position, over 100 million SEK in cash.
We have gotten another cash injection from research and development, and we got the approval of our 2020 application for this, which is gonna provide us with a cash refund in next year at the end of the year. At the beginning of next year of SEK 5 million. This is because we have most of our development in Barcelona, and in Spain, you get a cash credit for software developed in Spain. This is quite beneficial for us. Also, Barcelona is very beneficial to us because it provides us with a very diverse workforce, so we're very happy in having our R&D sitting in Spain and in Barcelona. The next slide, I just wanna provide some flavor to software as a service. What's the big deal?
Why are even our existing customers moving over to software as a service? To the left, you see a typical situation in a customer environment today. Customers who are maintaining our platform themselves, they need to maintain the servers, the network, the storage, all these different boxes, and then the virtualization layer on top of that. They need to monitor all of this. There's temperature, there's cabling, all sorts of mundane physical things that they need to manage. As they do that, there's a cost incurred in this, and this is a large portion of our industry today. Many of our customers have deployments that look like this, and also many of our competitor customers have deployments that look like this. Our offering software as a service takes all of that away.
You no longer need to maintain any of those boxes or networks or storage yourself. The second part of this is that when you no longer maintain it yourself, and we maintain one instance for all of our customers, then to the right, you see a front page of WIRED, which was from December in 2021, and so the end of Q4. What you see there is a picture of a big hole in the internet, which was the Log4j, which is a logging product which is open source and used, for example, in the Apache web servers, and which is very commonly used across many companies today. I would estimate that there's hundreds of...
In any enterprise company today, there's hundreds of applications running Log4j. Now, there was a hole in this which wasn't necessarily a bug, but there was a hole that was found in this where you could basically submit a request to these servers and then take over the service's administrator. Now, if you were running these servers yourself, that meant that your IT department now needed to patch hundreds of servers. Not only it's not simple, right? You need to understand the context, you need to understand what versions you're on, and you need to build the patch for those servers yourself. We did this, of course, and within the first 12 hours, we had the first patch available. As this vulnerability evolved, we were patching within the next 24, 48 hours along the way.
Our customers that were on SaaS were protected the whole way. There's still companies out there and applications out there which have not been patched at all for Log4j, providing a huge security exposure to the outside. In Sweden, we of course saw the Coop disaster in June, I think, or July last year, when you couldn't even go in their shop because they had their systems sitting on-prem, so in their own data center. Big advantages to our customers and really helping our customers move to SaaS quicker, which is what we're pushing, and that's also, of course, what our revenue model has been built on, we get more revenue as customers move to SaaS and grow, and they grow easier when they move to SaaS.
I wanted to explain that, and now I'm gonna give it over to Fredrik to talk about some of the key financial highlights. Fredrik, our CFO, please.
Thank you, Per. Thank you. So moving into the next slide, please, which kinda highlights the key financial highlights for the quarter. From a CFO perspective, I'm very satisfied that we can actually show a number of metrics that are actually evidencing a lot that we are executing on our strategy in the way that we have guided for. I think that is. Yeah, I'm very pleased with that. To summarize, I would say our sales metrics in the quarter keep growing. Our SaaS business is also increasing in importance, and we also secured financing for our operations to summarize the quarter.
Net sales adjusted amounted to SEK 10.2 million in Q4 2020 versus SEK 10.4 million in Q4 2021, so up 2%. The adjusted recurring revenues amounted to SEK 8.1 million in Q4 2020 versus SEK 9.4 million in Q4 2021. That is actually up 17%. That is, as Per already mentioned, I mean, one of the key metrics that we are steering at the moment as we are also kind of transforming from a kind of non-SaaS software company with PS into becoming kind of a pure SaaS company where we will focus more on the more kind of forward-looking metrics.
This is a very kind of good metric, and we're also very pleased that we can show a significant growth in this metric. The impact from our new 71 customers on SaaS is starting to be visible in our revenues, but we're still, as Per mentioned, ramping up, so we expect more to come. In December 2021, the recurring revenues derived from SaaS customers is, as I said, increasingly important importance and constituted 25% of total adjusted recurring revenue. This is, of course, a metric that we will track in order to see also the development of our execution of our plan. We also expect this number to grow as we add more customers to SaaS and also as we are ramping up on those customers on API call volumes.
On a rolling twelve-month basis, the adjusted recurring revenues increased with 8%, versus Q4 2020 and amounted to SEK 36.7 million. These adjusted recurring revenues in Q4 then also accounted for 90% of total sales, which basically means that we are again executing on our strategy and focus on growing the recurring revenue streams. As Per mentioned earlier, the professional services revenue is according to plan, consequently also decreasing. It's very much kind of we are executing on our plan as I started off with. Also a positive thing is that we actually also report net sales growth on reported net sales up 1% Q4 2020 versus Q4 2021.
I think we have highlighted details on this kind of revenue recognition for our adjusted numbers in the quarterly report. For those that are interested to look into more details on that, you can also go into our quarterly report on pages 4-5 to get more information about that. We continue to keep a good cost control and reported adjusted EBITDA of SEK -16.6 million. We also then when we closed the quarter, we also had a strong cash position, having SEK 112 million in the bank. Overall, we are on a positive revenue trajectory, and our recurring revenues are growing in a good way, even if there is still limited revenue impact from the new customer wins during 2021.
In that regard, very positive if we look a bit ahead. Next slide, please. This is a summary slide on the key metrics that we measure and follow in the company. It's also kind of linked to the execution of our strategy. Our recurring revenues, license and support together with usage revenues in the old model and subscription fees and API call revenues under the new SaaS model, they are key for us as a SaaS company. They are continuing to grow, and it's as I said, a key metric for us in our focus on building a SaaS company, and also over a longer period of time, also creating long-term shareholder value.
Therefore, it's really satisfying to see that we increased it from SEK 34 million to SEK 37 million in Q4 2021, a growth of 8%. What is also good is that we also can see that the recurring revenues are also growing with 4%, Q3 2021 versus Q4 2021. That's a kind of trajectory we want to continue on and of course, ramp up even more. I already mentioned that we had 25% of revenues coming from SaaS customer in December, and I think that is also something that we track internally and also will show externally going forward as well. And also as a comparison, this 25% can be compared with 14%, which was the number in Q3 2021. We are progressing on converting into the SaaS model, basically.
We also see continued strong commitment and high interest on our SaaS offering from our existing customers, and we expect many of them to go on the SaaS model in 2022 as well. We go to the next slide. We show this in previous presentations as well. We have, as we have guided, we keep good cost control. The ones of you that have followed us, you are well aware that we did significant kind of OPEX reductions in Q4 2020, which showed full effect in Q1 2021. This cost reduction was basically done to align the new product-led SaaS strategy that we are now working on. We continue to keep the low OPEX level.
The current annual run rate was 117 million SEK in Q4 2021. I mean, the OPEX cost base being below 10 million SEK a month, basically. I think this is very much kind of in line with what we have guided for in previous quarterly reports and presentations. Going forward, I think we expect to increase OPEX somewhat from the Q4 levels and onwards, primarily as we're adding key commercial positions to further kind of execute on our new strategy and grow sales even more. We keep a very kind of careful control of costs going forward as well. Next slide. Just quickly on the 5-year PIK loan that we secured in December. Per mentioned a bit about it, so I will not go into details.
We are very pleased with the financing, especially as it provides us with an even stronger cash position than we had before to carry out our strategy and execute on our strategy. As you can see, the funds table to the right. We started the month with SEK 96 million in cash, and then we have received a gross amount of SEK 250 million from the new loan. We have done repayments of approximately SEK 200 million to former debt providers that we have had financing the company. With the financing, of course, our interest cost is being reduced with more than 7 percentage points versus the previous debt financing.
Especially good for us as a growth company, still cash flow negative, we don't need to pay any cash interest until after the 5-year period unless the loan is maturing. That's very good. Also I think what is also worth mentioning is, of course, that the financing as such may seem high with 9.5%, but I think that should also be compared with what the cost of financing with equity would have been, which I think would have been significantly higher. All in all, very positive with the financing and having it in place. I think yeah very pleased basically with the final thing we have closed. With that, we move to the next slide, please. A bit of continuation, I would say.
I mean, we mentioned on previous slide, we started Q4 with SEK 96 million in cash, and our liquidity has continuously been strengthened during the year. As many of you are aware, we managed to close a successful directed issue in Q2, providing us with SEK 120 million, excluding transactional costs. We closed the credit facility in Q4, adding SEK 250 million. On top of that, we ended the year with SEK 112 million in the bank. Beginning of January, we also received SEK 6 million as a R&D cash refund that Per mentioned that we received from the R&D work that we do in Spain, further strengthening our cash position.
Pro forma, we had SEK 118 million end of year. All in all, I think the strong cash position in Q4 also enable us to drive and execute on our strategy to 100%. Very pleased with this. With that, I hand over to you again, Per.
Thank you very much, Fredrik. I'm gonna go through quickly on slide 13, our business model. Again, some of you have seen this before, but I want to highlight how it works and also give a bit of understanding to the delays that you will see in revenue from our SaaS customers, but how that actually works over time. On slide 13, you see to the left, that's a large customer and a small customer. That's just for modeling purposes. Of course, there's customers that are in between the two. To the right, you see the pricing that makes up those bars on the left. To the right, this is all subscription revenue. First of all, you need to pay for access to the development platform. This is called Teneo.
The whole product set is Teneo. You get Teneo, you start working, you start building. For a smaller customer, they might pay us EUR 7,500 because they only need 5 seats. A larger customer maybe needs 7, 8, 9 seats, and they would pay EUR 10,000 per month to us. We actually charge the same in dollars, so it would also be $10,000 if it's slightly less for the U.S., which is common for SaaS and for software companies. The big one that is the one that, of course, is generating revenues over time is the API call revenue. This is when you deploy. You've built your solution, you're deploying it. Typically takes 6-9 months for a smaller customer, 9-12 months for a larger customer.
As you deploy, you will start ramping up gradually to more and more conversations, which then gives more and more API calls. We estimate in our modeling that a large customer gives EUR 24,000 per month in API calls and a smaller EUR 2,000. We already now see that we're gonna have customers that are larger than the 24,000. On the other hand, we have a few that are gonna be smaller than this 2,000-4,000, so we think this is a good average. We have data, which is basically data analytics platform connected into the Power BI platform of Microsoft. That's revenue is gonna be around 10% of the API calls in our model.
We have a few training and expert services that we provide usually to the partner. Those are small revenue, which don't really have a big impact. The big impact is the blue portion, which is the API calls that you see here, the SEK 2.9 in the large customer. That's what we're after. That's what we're aiming for. With that, let's have a summary slide before we go into Q&A. What are we?
We are a horizontal technology delivered as a software as a service platform built with our experiences from 2001 and patented and lots of forward citations on our patents, which meant that our patents and IP were valued by OxFirst at SEK 1.6 billion in the report produced in Q4. We have growth in our recurring revenues, 17%. Obviously, now that we start focusing on building out sales with Nicolas Köllerstedt, our new CRO that came in from Snowflake and with the marketing engine, we're gonna be aiming at growing that more. Of course, also aiming to grow that at existing customers with our customer success organization. We've implemented cost reductions during 2021 and are now at a 34% lower cost than we were before.
That's the basis that we start building from. We are working with Microsoft as a what's called an IP co-sell incentivized partner, meaning that a Microsoft salesperson has all incentive to work with us. They actually get commission for working with us, and we help them build out on their 1,700+ LUIS customers. Now, this is very key to our go-to-market motion. We do that together with Microsoft partners as well, since many of these customers are Microsoft partner customers. That's where we're building our sales organization on top of. With partnerships going direct to our customers, but obviously leveraging the strength that Microsoft has in these customers. The team that has come in to a large extent comes from a company that is in the same industry, and that company was valued at SEK 13 billion last year.
I was of course early in building that, but large portion of our team also comes from that. We've done this before. We scaled a software as a service solution in the conversational AI space before. Our market has a 22% CAGR and is worth about SEK 130 billion in 2022. This is of course a market that attracts a lot of companies, but we believe we have the strongest technology. Now we also need to build the strongest marketing and go-to-market organization in that. Interestingly enough, another aspect of going from SaaS. Going from on-prem to SaaS is that deploying in the Microsoft Azure cloud and our default deployment is in the Microsoft Azure cloud in Sweden.
Since they have a regionalized cloud, that actually provides a carbon reduction of 84% to our customers according to calculations if you use the Gartner carbon dioxide calculator. That's also quite substantial. You will be moving into a much better environmental aspect as well as you move from on-prem to SaaS. Going forward, we have a good position there. That's a summary of where we stand. A good position starting in 2022. We see already that even though we've removed PS, our revenue is growing again. Very happy with that. With that, I leave it over to Q&A.
Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Forbes Goldman from Redeye. Please go ahead.
Yes, good morning. Eight customers in the current source model, how many of these would you say are live with their solutions and how many are still in development? Thank you.
About half of them are live, but they go live with. Typically, what they do is they go live with 1% of traffic and then 5. They scale as they're testing the solution and testing the customer satisfaction solution. Half of them are live, half of them are still working to go live, and those half that are live are ramping.
All right. Interesting. When would you say the time period from initially going live to complete ramp up, is that 6 months, 12 months?
This is something that we still estimate since our delivery model has changed. We don't typically control the project anymore, right? It used to be that we also sold the project. It depends a bit on the customer and the partner, but we believe nine months to be the average once you go live. It takes about six to nine months to go live and then nine months to ramp from zero to 100% of the traffic that they're aiming to do in their project. Which could be, for example, the large tech firm that we may not mention the name of, but we have released that we did a deal with them.
They started their implementation in May of last year. They've gone live with the U.S. and Japan, and then they have another 60 countries and another 3 business lines that they're ramping during this year.
Okay, great. Thank you. You're building out the sales team. Are you finding challenges to find the right people for the job and how many people do you expect to recruit this way?
There are challenges of course in recruiting right now, I would say especially in the U.S. with wage inflation and lots of still venture capital going into our business. What we've done is we first trained on the profile so that we know exactly the sales model. The sales model is with partners. We go direct to the customer, but we will always fulfill together with a partner unless the customer happens to be very, a few of our customers are very technically astute and can build themselves. Then of course there wouldn't really be a need for a partner. We have now found the profile and now we're searching for the profile and we are building a good pipeline of that profile.
I think we'll be able to have a good salesperson on board before the end of Q2 and ramped up. It also takes about three months to ramp them up, of course. We have two started this at the beginning of this quarter, and we expect them to be quite productive in the Q2.
Great. When thinking about your customers, do you expect any particular industries to make a push this year? Do you have any control over that or would you say that your customers, it's very much driven by your partners?
It is driven by the partners. We of course will pick partners and focus together with partners on the industries that we see have the most potential. The most potential for this year is telco, where together with Microsoft, we are at the Mobile World Congress talking about our great joint references in the telco space, such as Telefónica and A1. This is a big focus also for the telcos as we speak, as they are moving their contact center platforms into the cloud. This enables much bigger usage of the type of technology that we provide.
Big focus for us is telco, and then it's the retail space where we see expansion in our retail, existing retail customers, but also see a large movement in retail, where several large retailers are now in discussions with us about all sorts of new business models built on top of this technology. Those will be the two focuses, but then there's always banks and insurance that also come in. The two big ones will be telco, retail.
Thank you. You've announced a lot of customers in the new model. Almost all are very big companies, if not all. But you do have an effort as well to push against some smaller customers. Have you noticed any particular traction in that area yet and their usage of your platform?
No, we actually found that the smaller customers are lacking some functionality, which we are in early access beta right now, and that we're introducing at the beginning of Q2. The smaller customer space requires today a bit more. They are a bit more technically astute themselves to be able to utilize the product. That's something that we're working on. The pipeline there is somewhat small. It's not growing at the same pace as it is on the, what I would call the enterprise space. That's quite correct, Forbes. It's the customers we announced, with the exception for GrapeTree, which we also just announced now with the report, all of them have been larger customers. Yes.
All right. Then I remember from a previous conference call, you mentioned something about a security framework that would have to be developed to get existing customers in the U.S. and Switzerland to transition to the new model. Do you have an updated timeline of what's going on with that?
Yeah, the timeline is that we're done with this at the end of this year. That's what our timeline points to. Customers that we're discussing with, such as the large telcos in the U.S., are now fine with the security framework. As long as we execute on our plan, but they would be willing to move over. They're looking at planning for how to move over to SaaS also in the U.S. We've designed it, and we're now working to essentially get this certified by auditors during this year, so that in Q1 2023 it will also be certified. Customers are happy to move over even before certification, as long as we're in the process.
Maybe the Log4j has also given customers some time to think, because maybe it's not more secure to be on-prem, because it took a long time for some of them to patch their on-prem solutions, which are of course exposed to the internet. That's the point of our solutions, typically. That also gave a good push to customers to move to SaaS.
Great. Thank you, Per. I'll finish off with one more question. You have an excellent cash position now, more than SEK 100 million, which is a great improvement compared to previous years. How do you expect to utilize the funds now in the near term?
Sales and marketing. The product is there, SaaS is done. It's all done. Now it's sales and marketing.
Well, excellent. Thank you very much.
Thank you, Forbes.
As a reminder, if you would like to ask a question, please press star followed by one on your touchtone telephone. The next question is from the line of Love Hultgren from Private Investor. Please go ahead.
Yes. Hi, guys. Congrats on very nice progress on transitioning the legacy base to the new SaaS model during the quarter. You previously mentioned on the Q2 call that you had about SEK 6.56 million per month worth of usage if the existing customer base were to switch over to SaaS. And that would mean, you know, around SEK 80 million in ARR if all existing customers switch to SaaS. And then in the Q3 call, you said you expected, you know, basically all legacy customers to switch to SaaS, many during 2022. I think this time you said many.
Could you elaborate a little bit on this process and you know the possible usage volumes that you expect to switch over in this year and possible usage volumes that you know might not be switched over in the near term kind of?
Yes. Fredrik, do you wanna touch a bit on that? I'll just start maybe with the process of moving over to SaaS.
Thanks, Love. From a process perspective, the first step is, like, Forbes just asked here, for them to accept our SaaS as a secure solution for their environments. We're past that point at almost all customers. I would say there's two customers left that have not really accepted that. Then the next step is to have the time for the actual migration because the on-prem customers typically have not been updating as we've gone along. Some of them are even on the 10.05, whereas we're on six point, the last on-prem was 6.2, meaning that the customer also needs to migrate some of the functionality to move up, which means there's a project to it. That means it needs to go into their planning on projects.
That's where we stand with most of these customers and making it a bit more difficult to make a real prognosis on that. Our intent is still to move all the ones over in 2022, and if there's any ones that cannot be moved over, those would be either in Switzerland or would be banks. Apart from that, they should all be able to move over. Of course, in Switzerland, we do have a big user that a big portion of our usage that maybe would not switch over. That has to do with the Swiss laws being different.
Even though they're part of the EU, EEA, they still have other ways of looking at data privacy than in the rest of the world, I would say even maybe apart from China. To answer your question, most of it, but maybe not the majority of the volume, since one very large user, which is Switzerland, would probably remain. I don't know, Fredrik, if you wanna comment a bit more on that from a numbers perspective.
No, no, like, I think first of all, I think this is one of the key drivers. I think kind of the challenge is also, as I think Per answered on Forbes question earlier, in terms of the ramp up. I think that's also something we probably will look into Q1 when we also can see further kind of ramp up on the new source customers because I think those are the most interesting one from a API call volume perspective. Also, just put flavor, I think we are very much kind of ongoing on the transitioning of existing customers to SaaS.
I think we mentioned a couple of them also in the report has signed new SaaS agreement, that some of them are also kind of existing customers that we have converted. I will actually say that we. When we end Q1, we will probably have at least 10 customers on SaaS with the existing customer base that we have. On volumes, I think we are working on to find a way, good way to report this, and we'll do that going forward. One of the kind of things with our old contracts is that they are also not one to one completely linked to the volumes, to the actual volumes.
That can also be a bit kind of misinterpreted, I would say, if you would just plug the numbers one by one, because that will not be translated into actual revenues at the moment. Over time, that's of course the interesting thing. I think we will come back in Q1 and present a bit more flavor on the volumes on the API call volumes.
All right. Great. Thank you for that. In terms of Switzerland... Sorry, are you okay?
Yeah, we hear you. It cracks up a bit. In terms of Switzerland.
Yeah, yeah. So do I understand that correctly, that it's mostly a privacy, data privacy and regulation issue in Switzerland and not a problem in terms of, you know, negotiation, your customers kind of want to switch over, but the regulations must be, you must be compliant with that?
Yes. It's the German regulator for telco is perceived as being the harshest in the EU, but then Switzerland takes that a few steps further, making it very difficult to utilize cloud services for banks and telcos in Switzerland.
Got it. Thanks. One last question from me. In the Q3 report, you mentioned 14% of revenue is from SaaS, and now in Q4, 25% of revenue is from SaaS. That implies, you know, a very strong sequential growth of over 650% quarter-over-quarter. Is most of that growth from legacy customers that switch to SaaS since they, I assume they ramp up usage revenues faster, you know, since they're already having a lot of usage? Or have any of the new customers kind of started to ramp up earlier than expected?
I would say still the increase is mainly coming from new customers that we signed in 2021. The 7 that we have mentioned as new customers that also are SaaS customers, I would say that's where we see the new growth coming from companies that have switched over from the existing customer base. I think all in all looks very promising, I would say. We can clearly see that this kind of proportion will increase as we go.
Yeah. Thank you. That's great. The two new Italian banks that you announced, are they not on the SaaS contract? Because I noticed that it didn't say SaaS in the report.
Sorry, I'm not quite sure I heard that.
The two new Italian bank customers.
Right.
Yeah.
The banks at this point, we have not converted any of the banks into SaaS at this point.
All right. Got it. Those were legacy contracts that were signed, kind of.
Yep.
Yep. Yep.
All right. Great. That's all from me. Thanks.
Thank you.
There are no more questions at this time. I hand back to Per Ottosson for closing comments.
Okay. Thank you all. We're very happy to share this Q4 with you. Great cash position. Growth is coming now in the SaaS model, and now it's all about building up marketing and sales. Hopefully come back to you next time on that. Thank you all for your attention today, and thank you all for your confidence in us in building this company.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.
Thank you.
Thank you.