Welcome all to this presentation of our Q4 2025 report, and it's gonna be Per and Fredrik presenting here today. I'd also like to remind you that this is being recorded and will be shared on our website afterwards. You can find the report on teneoai.com/investors. It's been a bit of a tumultuous year. The year went quite well. The pipeline was developing very well, and we had good growth throughout the year. Then we had one really adverse event at the end of the year, which affected us financially. Thankfully, we've found some ways to parry that, and I'm quite sure that this is just a temporary setback. I'm gonna talk a bit about first the market, then the business, and then Fredrik will go into the numbers.
I wanna start with the market because the market has a lot of impact on what's happening. Our pipeline is just as strong. It's actually grown even more since Q4, as well as since Q3, when we last reported. It is growing quite healthily, but it's also quite difficult to get that final signature on the paper. Enterprise sales is always difficult. It always takes time, and we, of course, only do enterprise sales. It's become even more difficult in this environment because of everything happening in the AI industry. I want to talk a bit about that, but I also want to talk about the fact that we do win the pilots we engage with and with all these new entrants.
We are quite confident that we will close out these businesses in our pipeline as well, although it's been delayed a bit. Let's start with the market update. To do the market update, I want to start with a very busy slide, which looks like this. This is Teneo and the things that Teneo does. Now, we've been developing Teneo for, well, 20 years, but let's say at least the last 10 years, we've been building on the edge cases, the things that you really need to do to get a really good version of user input on the left, all the way over to response. If you look at this, the purple ones are the ones that we have built, which are proprietary to us. Many of them are included in our patents.
Then you see, and if it's not clear, I'm just gonna make it even more clear, this is the portion in our solutions which is covered by large language models like Gemini, Claude, OpenAI, et cetera. The Teneo solution is a much, much bigger solution with much more that's needed to build a good user input to response, so answering the phone and responding, than just LLMs. At the same time, the market is now full of what I call LLM wrappers, and this has now become quite a ubiquitous term. You hear it from many different actors in the industry that these are the companies that are building an interface on top of an LLM model. As the LLM models are growing, that interface becomes less and less relevant.
These companies will all need to build all the stuff that you see as the purple stuff in order to make a really good solution work in customer support. Many of them are, of course, promising already that they're doing this, although they just have the yellow stuff and a few of the purple boxes built today. If we look at those market entrants and how they're being valued in the U.S., which is also very much part of why the Board has decided to do a strategic review, is because these companies are now financing themselves in ways which, you know, is just unbelievable, if you know what the technology stack is behind these. ElevenLabs, of course, is a voice company now moving into our space, Conversational AI. Sierra is a startup company.
It was on the board of OpenAI. Bret Taylor started this company, and they are building AI agents, where they now, the latest is now that they have an outbound caller that calls and says, "Would you like to remortgage your house or condo?" Or whatever it is, and you would say, "Yes," and then it connects to a human. They call that Conversational AI. We call that funny answering machine type technology. Decagon, Parloa, Poly, all of these are entrants into our market now in the last two quarters, and that's been part of the delay in the pipeline. We've had to fight these in several pilots. We fought all of them except for ElevenLabs. Essentially, we had a customer join us in September.
The customer we signed in September, they were trying to build with ElevenLabs, but we haven't really seen them in pilots. All the others, we've been fighting in pilots and won. We just recently won a reseller partner that's gonna work with us. We didn't yet sign the contract with them. We did win the pilot. I mentioned that also in the Q4 report, which you will find on the web. Look at these evaluations. ElevenLabs, $781 million total funding, Sierra $635. This is the cash that they've received, and just about all of it is last year, and most of it is in the Q4. Here's the ARR, which of course, they're private, so it's estimates.
I seriously doubt, for example, the Sierra number here. That's a number they said they grew from November 13 to December 15, from $100-$150, if you look at the press releases and the valuations and then the ARR multiples. I'm showing this for two reasons. One, yes, it's why the board has decided on the strategic review. It is why JPMorgan, Redeye are interested in working on this together with us, because they see, of course, a big gap here in the valuations. It's also, this is what the fear, uncertainty and doubt that has been hitting us in the market. I want to talk about some of the patents that we have.
We've updated the patent report that we did back in 2019, and if you compare that, you'll see that the patent valuation is up from $164 million to $191 million. Then the citations on the patents, and this is really interesting, are up from 5.84 to 19.9. We are now at 19.9 average for citations per patent per year, whereas the industry average would be 2.05. This is interesting because it's cited by many, such as Apple, Microsoft, IBM, even JPMorgan, but it's cited by many.
Of course, we've never really tried to license or use this in any way, because it used to be that our competitors were the same as us, sort of entrants in the market, quite cash poor, but not really somebody that will go after anything in the patent space. These patents are very strong, and all of them are used by us, which means that we are using the technology in live customer implementations, which is quite important for the valuation, but it's also quite important for the strength of the patent when it comes to other factors. Those other factors are, again, part of this, why the strategic review has been initiated and why I want to give this market update.
This is an overlap produced by Claude Legal. It is not something that, you know, it doesn't say that we could go after a certain company for a patent infringement, but it's very much an indication of the overlap between our technology, our patents, and what these new entrants are doing in the market. I also added in Microsoft here and Zoom just to show you that also it's just not the new entrants, but many companies are now working in this space, too. On the left side, you have our patents.
You have the key functionality, and I'm sorry about the font in this. There's just no way for me to make it big enough because, of course, it contains a lot more information, this table, than just this, but this is an overview. You have the legend at the bottom, so strong, meaning there's a strong overlap between the technology that these companies are talking about in their technical documentation on the web, and our patents and what we are using live with customers today. If you look at Sierra, for example, you see it's a very strong overlap. Decagon, very strong overlap, and PolyAI, strong, Parloa, et cetera. Microsoft, very strong overlap. However, Microsoft cites our patents as well, right? So it's a slightly different case.
The interesting thing with Sierra, Decagon, Parloa, and Poly is that they don't cite our patents, so they don't acknowledge that we have patents. They also never went out and said that they have any patents themselves in this space. None of these companies have patents in our space. Microsoft has patents in our space, so that's a different, slightly different. This is the background, right? Very high valuations, and all of them are trying to build now technology in our space. We have the tech, it's already been proven in the market, and we're really going out strong in this market today with that technology. I want to leave that as a background. We're not saying that we're going after these companies for patent infringements. What I'm saying is, we have the tech already, and that's why we're winning these pilots.
With that, moving into a business update, and I want to start with the technology, because this is quite strong. We did talk about this in the Q3 report. We launched it during Q4, and it's being rolled out to the customers as well now during Q4. There's many, many things in this that are interesting for customers, but I would really like to call out two of them. Public APIs. That means that now customers can integrate Teneo into their solution.
This is very interesting to somebody like a Zoom, Parloa, Microsoft or somebody else, because they could take the functionalities we have with the patents we have, integrate that in, and that's also why we have started an OEM go-to-market motion, primarily in the U.S. today, where we are talking to these type of companies about doing exactly that. Deferred Annotations is also quite important. This means that you can, instead of having lots of... what, for example, Sierra does to increase their accuracy is they ask many different models about a certain utterance, what that means. A customer says something, what did they really say? If you ask many models, it's going to cost a lot of money. We don't have to do that. We can use our Deferred Annotation technology and use LLMs once and not again in customer conversations.
This is a very, very strong point. This is also ties into what we call our Hybrid AI technology. That's the technology where we use machine learning, our own patents, TLML, and we combine that with LLM learning. The second thing is we launched a lot of industry-specific voice AI solutions. Typically, customers that want to build a complete solution would probably spend about six months. It's quite quick to get up and running, but if you want to build a complete solution for utility, for retail, et cetera, that took some time. What we decided to do is cut that time. We pre-built solutions where they just have to configure them for their company. In a telco, for example, it's quite common to ask about accounts. You know, my subscriptions, you want to have troubleshooting.
I have problems with my eSIM. I can't get it to work. You want to be able to scale across regions, et cetera. With these pre-built flows, it's much faster, and also with pre-built integrations to now build out the flows that you need as a telco, as a retailer, as a utility, as a travel company. That's, of course, key in our pilots . It's also key in our sales. Then we come to the adverse event, which had a lot of impact, and also then has initiated many of the things that have been going on in January and the beginning now of February. We had an original setup with one of our large customers, where we could not sell to the customer directly. We had to have the customer served via a partner.
This partner didn't have anything in our space, so we did quite a strong contract with them with several non-compete clauses. They were not allowed to sell anything that competed with our solution and neither to this customer, of course, but also not to the broader market. It was our tech, their delivery. They started talking about a new solution that they had in the market already back in May. We made it quite clear to them that, you know, "That's great, guys, but you still have this contract with us. There's no way that you're taking that to the market." They even started now positioning that to our customer, we learned during the summer. We warned them again during Q3 that this is not something that's allowed.
At the same time, it turns out that they also renegotiated the main agreement with the customer to be a service with SLA contract instead of a product contract, which stipulated Teneo. What they did, that not only did they then replace technology at the customer, they also started targeting other prospects with this new technology, which might even be infringing, as in they've copied some of our technology as well. We could initiate the legal action on this already right before Christmas, as we were aware of all the things that were happening.
The really unhappy thing for the customer here is that the customer now has an inferior solution, and the bad thing for us and our shareholders, and you guys, is, of course, that that revenue is no longer flowing to us, since the customer is no longer using Teneo for these flows. It is now using this partner's own solution. You can look, look at Trustpilot, the partners, the customers', the customer satisfaction scores have really nosedived after this, and they're hovering around 1. 1 is the lowest you can have on Trustpilot. Unhappy customer, and unhappy customer of customers, but again, impact on us is revenue. We've engaged directly with the customer.
We initiated there already directly when we were aware of this in December, and we've had numerous meetings where we now have the specification from them on what they need from us to rebuild the solution for them directly, and to supply software to them directly. We are expecting a full recovery of this with a contract that goes direct, and thereby be getting back to revenue levels, but also ARR levels sometime during Q2 of this year. This, of course, had a cash impact that initiated many of the financial things that you also see in the report today, but it also, of course, moves our target of $20 million ARR a bit further out. Strong pipeline, some of those customers still aren't signing, but we're working on to get them to sign.
Then also, this direct engagement is gonna get some of that recover that revenue in Q2. That's our expectation. Okay, the financing that I mentioned. What happened then is also because of the cash flow issue and because of the revenue drop, we had, or our lender had some covenants that we were then potentially breaching. They have been very, very, very, very good and renegotiated these with us, waived those covenants so that they don't impact our business anymore, because this is now a course of action we would still be renegotiating the loan during Q1-Q2 this year. This means that the financer situation is very secure, and of course, this was done with some key shareholders, so want to remain anonymous.
That basically just gave us a subordinated debt, so a loan that can be converted either in the financing round, or if there was some kind of M&A event, they would get a 15% interest on this. It's a loan that is basically, you know. Thank you very much, shareholders. This is very strong support, and this aligns very much that we can now just keep executing on the goals, and no longer have a financial sort of shadow hanging over the company. Very happy with that, and thank you very much to these key shareholders that took this step to secure our finances and our debt situation.
Some of the operational highlights then, it was a year of growth in 2025, with a turbulent end, which initiated, of course, all this communication we've been doing to the market. We launched these industry-specific solutions. You can find them on our website under Solutions. Scroll down to the bottom, you'll find them all. We released Teneo 8, a very important release to us, with public APIs, and this annotation saves customers money, but also does accuracy. We have the patent valuations and the citations are heavily up, very, very important. We have this partner that breached the contract, which we anticipate recovering funds from them, so getting damages from them, but also, of course, regaining the customer. We have several pilot wins, wins versus the wrappers.
One being a reseller partner that we're gonna be signing in the next few days, so we'll announce that separately. Also in three customers, and one of them where we're now at the final stages as well of wrapping up the paperwork. Renewal agreements with some very interesting customers, two banks, which is quite important to us. We're seeing that the bank segment is waking up to this type of technology as well. The strategic review initiated, of course, on the basis of seeing what's happening in the market right now. I want to just take this last one, which I find very, very important. This is a graph that I've shown before. It is the graph of how the accuracy develops in a live deployment that we do to May.
This was verified by a company called Sierra. It was done on a BANKING77 data set, which has then been benchmarked by many others. You see some of them in that square at the bottom, Microsoft, Dialogflow, and Google, Cognigy, et cetera. If you look at the right side, this is what happens in a multi-turn conversation. What's multi-turn? Hi, how can I help you today? Well, I have a problem with my billing. Okay, what billing is it for your broadband? No, it's actually for the eSIM on my mobile phone.
Okay. If you do six interactions or six turns in a call, if you have Amazon Lex as your provider, which is part of Amazon Connect, or you have Teneo, you see at the top here, Teneo has a 99% accuracy and understanding, and Amazon Lex, 89%. With six interactions, that would put you at 94% understanding with Teneo, but 50% understanding with Lex. This is the real problem in the market. What do large companies find? We have, of course, one really large customer with a really large volume that is working with Dialogflow, and they find exactly that, that they do not understand what the customer says, the customer gets frustrated, and it then has to go off to a human, and they can't automate the call. This is really the key feature still of Teneo.
This is the one that differentiates us. This is the one that we push at customers, but also, of course, very much a part of the strategic review. With that, I'm going to hand it over to Fredrik to go through some of the financials.
Thank you, Per. I think we can move to the next slide there. I think the headline on the slide is a bit kind of showcasing the quarter. As Per mentioned, we have a partner that has infringed on our joint agreement, and that also has put us in a situation where our revenues have declined. The deviation in sales and SaaS ARR in the fourth quarter stems from a dispute with a reselling partner in the U.S., as Per mentioned. That's also what we highlighted in our press release in kind of mid-January 2026. This, as I started out, obviously impacts our key metrics negatively in the quarter.
However, the company pipeline for new customers is, however, still continuing to develop really favorable, and we are progressing the sales pipeline and continue to have a strong momentum with new customers. I think this is also a consequence of the fact that we have initiated, you know, the procedure of differentiating the technology early in the process by building pilots. I think Per also brought this up earlier in the business update. I think that is key also for us to really speed up the closure of new customers and signing agreements with them. I think that is the positive note, I think, to capture here.
Obviously, I think also, we sell to a large extent in the US dollar, which, year-over-year, has negative impacts on our revenues in the quarter of 7%. That's also a partial explanation to the decline in the quarter, but not only, as has been clear here. Our net sales in constant currency amounted to SEK 20 million in the quarter, versus SEK 26.5 million last year. SaaS ARR in constant currency amounted to SEK 62.5 million, versus SEK 75.1 million. Also, total ARR declined in constant currency, going from SEK 104 million to SEK 77 million.
A clear drop in Q4 2025 versus 2024 due to this dispute that we are having with our reselling partner in the U.S. Despite the volume decline in the quarter, we continue to show stable gross margins at 85%. That's also a good thing, that we can show that our model is consistent and that we can keep up profitability. We continue to carefully invest in sales and marketing, and I think that's also what we have guided for in previous quarters. We also managed to keep cost control. I think we'll come back to the OpEx, where we actually see a decline in our OpEx versus previous quarters. Adjusted EBITDA in Q4 amounted to SEK 6 million.
The higher number versus last year is a consequence of the drop we see in volumes in the quarter. Also to mention, I think the financing that we secured with our key shareholders. We will receive SEK 25 million net by way of a subordinated debt. I think Per went through the key terms and conditions for that loan. We are very thankful for that contribution by these key shareholders. Next slide, Per. NRR is a metric that we have showcased in the past. Our strategy has been to really grow on existing accounts and help them grow on existing use cases, and also by adding new use cases.
On top of that, obviously, also add new customers. It's a measurement of how well we manage to grow existing accounts. A number of 100% means that we are growing in this aspect. This quarter, we are showing only 93%, so it's clear decline versus previous quarters. That is a consequence, obviously, of the decline in revenues we see in the fourth quarter of 2025. Going forward, as Per already mentioned, is adding volumes from our strong pipeline to get additional revenues, and then also to bring back the partner customer as well. Next slide, Per. Another key metric of ours is obviously SaaS API call volumes.
API call volumes on SaaS is our key indicator, I would say, on how things are developing in our business. It's also then showing how much our customer and how much they are using applications and using the platform. The more applications, solutions, covered regions, et cetera, the higher API call volumes. Which is clear in this graph, is that we recognize a decline in SaaS API call volumes in the quarter. On the positive note, we can also see that, aside from the last quarter, we also, on a full year basis, also managed to grow the volumes generated with 37%. That's a positive note to take in here.
New volume away from our pipeline as we close new customers, and we have strong beliefs in closing new customers near term. Next slide, Per, please. As already mentioned, currency had a negative impact on our ARR in the fourth quarter. Therefore, I think it's very important also to show and focus on the metric in constant currency. The SaaS ARR in constant currency versus Q4 2024 declined with 17% year-over-year. For total ARR, the decline was at 26% versus Q4 2024. We are, as already mentioned, working on bringing in new customers to get back in business to show growth. I think that's our main objective in the operations going forward.
We can go to the next slide, Per, please. On this slide, I think it's not that much to say, but it's clear that we have seen a decline in net sales in the quarters during 2025, where initially the impact was very much coming from currency. Then, obviously, which has been seen in the last quarter, it's an effect of the dispute or disagreement that we are having with our U.S. reselling partner. I think that's the key takeaway from this slide. We can move to the next slide, Per, please.
In this slide, I just want to highlight and emphasize the fact that on a full year basis, we have actually done pretty well, even though we would obviously wanted to have even more revenues and not least, you know, continue to have those revenues in Q4. I think it's important also to see that we are doing something which is very positive from developing the business as such, and also given the pipeline, the strong pipeline that we also see. There is fundamentals to continue this growth. We can continue on the next slide, Per, please. As already said, we show a stable gross margin in the quarter, 85%. That's up with five percentage points versus Q4 2024.
A positive thing, and also shows that we can keep up good profitability despite then also showcasing lower volume in a quarter. Next slide, Per. On OpEx, we have guided for that we will, during 2025, continue to carefully invest in sales and marketing activities, since this is a very interesting market that we're present in, and where we also perceive that we have a very strong position to capture new business. That has been the rationale for doing these selective investments in sales and marketing. However, we also guided for that we will be careful in these investments, and that we will be careful in not spending too much or aggressively on OpEx in other areas.
I think our number in Q4 really indicates this, that we continue to have cost control and also that going forward. We will continue on the path of doing careful investments in sales and marketing activities, but we don't foresee any major increases in OpEx levels at this point in time. Next slide, Per. Cash position and financing. We had SEK 17 million in the bank end of year 2025. We have collected accounts receivables of SEK 5 million in the beginning of 2026, so adding to SEK 22 million in adjusted cash position. On top of that, we now have also secured additional SEK 25 million in a new subordinated debt from key shareholders.
That will improve our cash position and will also enable us to execute on our operational plans and also conclude on new deals with new customers. With that, Per, I'm leaving over for you for the last slide.
Thank you. Yes, just to summarize before we go to Q&A. It was a year of growth. Very strong growth for the pipeline, but we did have a turbulent end, as we've been through a few times. Very much saved by our shareholders and our lender being amenable to a good solution here. We are now in a strong position to execute on that pipeline and also get back to where we were with sort of a base. We have a base, and then pipeline, and then have stepped up to the $20 million target, ARR target. The launching of industry-specific solutions, I think has been quite strong.
If you look at the interest from our website, it is something that very much helps us also in these pilots that we are executing now. Remembering Q3, we sort of regeared our sales to be more that we prove. We tell customers, "Yeah, sure, have a look at Sierra, Parloa, and the others, but let's do a pilot." We released, of course, Teneo 8 with those public APIs, that deferred annotation. The patent valuation citations are up. The partner breach of contract, we are going after this, both for damages, but then also going out directly to the customer. Have already engaged in those discussions, and have the demands from the customer, what the customer needs. Several pilot wins versus the wrappers, as I call them. Those are the companies you saw on that evaluation slide.
Several renewal agreements, and again, very importantly, within bank and finance, which is probably something that we are starting more and more to see interest from as well. The strategic review initiated together with this loan from our shareholders. We believe we have some very, very interesting quarters ahead of us here at Teneo. I'm gonna leave this over to the Q.&A. As usual, you have to raise your hand. I then unmute you, and then once I mute you, you can unmute yourself. There's a two-step process to it. Just have to raise your hand for me to unmute you. I don't see any raised hands. Do you, Fredrik?
Nope.
No. Let's just see if anybody is saying anything in the chat.
Tell me that. I check if maybe reactions are not allowed. I don't know if it's related to that. Sorry, let me just double-check, please.
Oh, okay. Yeah, then they can't raise their hand. Actually, they could still raise their hand. Well, there seems to be nothing else. Again, I want to conclude by thanking these key shareholders for the support. It was a bit of a tumultuous end of the year and beginning of the year, but I'm quite sure that we're on the right path. We have a strong pipeline, and we will get back to the revenue numbers. Also, we do have a very strong technology in the market that is now waking up, which you saw by the patent citations. I mean, that's really, really, really big numbers. We're talking about average citations per year here.
Strong interest in the market, and the new entrants with a lot of money do not have any of the patents nor the technology. Very interesting to see what the strategic review is gonna do, but also very interesting to see what the next few weeks, and months, and quarters give in terms of new customers. Thank you again to the shareholders, and thank you all.