Hi everyone, and a very warm welcome to join me, Johanna, and Jörgen here in the car.
Good morning, everyone.
As some of you have seen before, we are here today, the 29th of October, to discuss the quarterly report, which we just released this morning. We'll do the traditional start and how's your feeling about this report, Jörgen?
Well, I think it's a pretty good report, especially in relative terms. In absolute terms, I would have liked the order intake to be a bit better. Some of the bigger discussions pushed into Q4, Saab, as you know, being one of them. In general, I'm happy.
Looking at the result or at the net sales, this is actually our second-best quarter ever, which is not that bad.
No, that's correct, especially in the context of Q3 having the summer months. We're, June, July, typically vacation time in the Nordic countries. July, August, typically the vacation time in the rest of the world. Given that Q3 normally is a bit slower than the other three quarters over the year, indeed, it's the second strongest quarter in our history, which is, I think, good.
Another number, which we actually mention for the first time in, oh, years, is the annual recurring revenue that we report this time. Why is this an important metric for us?
Well, most of our business is recurring annual subscriptions, which are automatically renewed, which means that indeed we're a SaaS company. Historically, we have not had, I would say, a typical SaaS metrics being reported on a systemic and continuous way. We could have selected monthly recurring revenues, MRR. We could have selected contracted monthly recurring revenues, CMRR, or we could have selected annual recurring revenues, ARR. Now we have selected ARR, and we will report that for the owners and for ourselves on a quarterly basis. Again, now we released the number for the first time, and I think we also note that over the year, we actually grew ARR 87% from the number coming into 2020 until the number now that we have coming out of Q3. I think that's a pretty good growth rate on the ARR.
Looking at the net sales so far this year, we've increased them with 57% compared to last year. Cost, on the other side, has only increased with 3%. Are you happy with that balance?
As we touched on before in a previous discussion we had, we need to get to a black zero sooner than later. We need a top line which is growing significantly faster than the cost side. Is a 57% growth on the top line and a 3% cost growth a good balance? Well, sometimes you need to grow cost to grow the top line. For us, it's opportunity based. If we have good opportunities, we will invest to grow the top line. For sure, the balance itself is a good one, because if we can maintain this, it means that we have a strong prediction versus getting to a black zero.
Speaking of cost, one of the most cost-intensive activities we have is actually our product maintenance and product development, which is also something you touch about, where you talk about our roadmap moving forward. Can you explain a little bit more the importance of our roadmap?
Well, it's the functionality of the product that create customer value and keeps the customers happy. I'm happy with where we are in two aspects. First of all, I think the content of the roadmap is strong. We have good ideas. We have a good plan for the development and the actual release of additional functions. I'm also very happy about the process, and the process being having a continuous dialogue with the customer base, which we typically have on a monthly basis today. Ping-ponging and discussing the roadmap with the customer base, taking input, establishing a good schedule for deployment of each of the additional functionality. I think it's a strong part on our side, and I know that the customers are happy with both the content and the process.
Speaking of customers, both during the Q3 quarter and also after the quarter, we've signed some quite interesting contracts. Which ones do you think are most significant for us?
Correct. Well, I think we are still strong and doing well in the food and beverage industry. We signed MULTIVAC. Signed Coesia, so they are a packaging company which is in this ecosystem. Additional success here. I do think that NTT and Nippon and Japan, covering Asia in terms of partnership is a good one because I think we had the opportunity to become a bit stronger on the Asian market. Of course, Saab now, that brings us into the aerospace and defense market with its peculiar security requirements, which we now have passed. I think especially the Saab one gives ground for similar business with our other aerospace companies. I think it's a good mix.
Looking at 2020, we have roughly two months left of this year. Which activities do you think are most important for us to focus on during these two months?
Well, if you look at where we are currently coming out of Q3, we have already surpassed the full 2019 net sales, which I think is good. Still one quarter to go. Of course, the order intake is essential. We need to close bigger customers, we need to close smaller, important customers which have the ability to scale in the next step. It's about continuing the good momentum and make sure that we actually get ink on the paper, especially with the big customers, before the end of the year.
Mm-hmm. With that said, would you like to give any outlook on the last quarter financially?
I will try to avoid being too forward-looking here. I just note that, okay, we passed 2019 full net sales already. I think we have a strong pipeline with a lot of prospects and a lot of customers. We are discussing with bigger customers at the moment. Obviously, these have to, again, be signed and landed before New Year to get it onto 2020. I feel good, to be honest.
Yeah. With that, I think we should wrap this up for this time, and we very much look forward to returning to you with a full review on 2020 within a few months.
Yeah. Thank you, Johanna, and goodbye everyone, and see you in February.