Hi, everyone. My name is Johanna Edler Pihl, and I'm the CMO at XMReality. With me today, I have our CEO, Jörgen Remmelg.
Good morning, Johanna, and good morning, everyone.
We are here to give you some highlights from the Q1 2023 report that we just released. To start with, Jörgen, what is your general comment on the result?
To see the order intake increase 27% year-over-year is positive.
Mm-hmm.
Now also to see the net sales increase for the second quarter in a row is also positive. Of course, I had more expectations for the Annual Recurring Revenues.
Yeah. Let's get back to the ARR. First off, let's stick a little bit with the order intake, which was up 27% year-over-year. Are there any deals or customers that you would like to highlight behind these results?
Yeah. I would say, first of all, Toshiba.
Mm-hmm.
Okay. It's signed by the U.S. team. It's a big company. It has potential. They are very satisfied with the product. I think that's a very positive.
Mm-hmm
Q1 order intake. I would say in general terms, partnerships, starting to move finally.
Mm-hmm.
licenses starting to come in, both in terms of Pointmedia, which is Norway.
Mm-hmm.
We also have Viveo and of course, that large multinational industrial global company which has a branded version of the product which also now have started to order their first licenses. I would say Toshiba partnership, that's the order intake highlights, I believe, from Q1.
Yeah, I agree. I mean, adding to Toshiba, that was actually a deal which we took with a hard competition.
Right. Stiff competition.
Mm-hmm.
It's good now to see that the new product is really competitive in the overall landscape.
Just staying a little bit with the partnerships, and we've actually done some communication around the partnership with Viveo, a Swedish company, active within the facility management and more, well, specifically within call center. How come that our product is being used within this application?
I would say the housing and facility management is not new.
Mm-hmm.
We have that usage in the U.K. with Sovereign, with Cobalt, for the social housing. I think what is new here is the usage within the call centers.
Mm-hmm
W here Viveo do an excellent job for us. The first application, again, is gonna be SBB
Mm-hmm
W hich is a large, Swedish real estate owner. That is new for us. It is business to consumer
Mm-hmm
M ore than business to business. Obviously here, there are lots of call centers, so there's great potential. If you think of the product, especially with the procedures we have in the product where, let's say, a call center person with less knowledge can help a tenant to diagnose what is wrong with a fuse or, why it's cold in the apartment and so on, it's actually really supported by the procedures, and you can use that to diagnose. As I would say, one of the big real estate owners said, "Well, this is a good way for us to give the tenants some love.
Yes, definitely.
So
I mean, I think most people can identify with something breaking down in their apartment, and the only thing you want is someone to actually diagnose that quickly. You don't want to hear that they're gonna come by in a week's time.
Yeah. Right. This is interesting for us.
Mm-hmm.
It's a complement to facility management, and we are actively observing how we're doing in this market to see if this is actually an interesting vertical for us going forward. As I wrote in the report.
Mm-hmm
we had a very positive reception at the real estate trade show in Kista in Stockholm.
Yeah. FastighetsMässan. Yeah.
FastighetsMässan. Yeah. Where we had, some 60 leads coming out.
Mm-hmm
Of that, which is actually more than we have seen in other fairs.
Mm-hmm.
We need to see the quality of those 60 because it's a new vertical for us, for sure. Positive so far.
Mm-hmm. Now let's get back to the Annual Recurring Revenues because many of you might be wondering how come that we see an increase in order intake but such a little movement for the ARR. What's the reason behind this?
Right. Order intake increased 27%, and ARR increased 1%, right? The order intake has renewals, it has hardware, it has new orders, and it also had proof of concepts and pilot projects.
Mm-hmm.
Not so much hardware this quarter. Couple of smart glasses and some Pointpads. Of course, the renewals. We're missing a big new order in the quarter.
Yeah, that's true.
We have started quite some pilots and proof of concepts, which is obviously, a project with customers three-six months in assessing the product and that will follow into normally an annual subscription.
Mm-hmm. Yeah.
Quite a few with, I would say, a good mix of companies, involving also large companies.
Yeah. Just to clarify, it's not until they actually go to an annual subscription that they are counted into the ARR?
Correct. It has to be an annual subscription contract, as you say.
Yep. One of the long-term goals that we have communicated is the fact that we, by the end of 2024, want to have a positive cash flow. Of course, an important milestone to get there is not only to increase sales but also to have a control over cost. During this quarter, we decreased cost both year-over-year and also compared to the previous quarter. Where have we done those decreases?
Right. Cost decreased at 12% compared to the year-over-year comparison and 17% compared to Q4 2022. We have a new product in place, right? We want to complement the increased top line with a cost reduction.
Mm
T hat we have now achieved here. We believe that we have taken the product to a new level. The product have also been moved into something which is much easier to maintain, much more versatile, and requires less versions
Mm
T o be compatible with different, hardware types. We believe we have taken the big investment on the product side. We still will move the product forward, don't get us wrong here. We also see that, selling to existing customer will be more efficient for us on the sales side.
Mm.
We don't believe we have to increase the sales force that much because we do have a new product that can target existing customers. Top line is gonna go up, and now we saw cost going down. We have a competitive product. We have taken that to a competitive level, and we believe that we have a much better product suit now than before, allowing us to reduce the product development crew a little bit now that we did in Q4 of 2022.
What will be the focus the upcoming quarter?
Well, we have a strong pipeline, a strong sales pipeline. It sits at the highest level in the company's history. It is increasing with mainly new opportunities in the U.S. and in Europe, a mix of existing customers and new opportunities.
Mm.
obviously, we want that pipeline to continue to increase at the good rate, that it has increased since November. foremost, to close pipeline elements.
Mm
... into, subscriptions, that again moves into the Annual Recurring Revenues. That is obviously the, the main focus going forward now.
Thank you, Jörgen. I think we'll call it a day with that, and get back to work then.
Yeah. Thank you, Johanna, and thank you all for listening in.
Yep. Bye.
Bye.