Good afternoon and welcome to this Q4 2024 Presentation and Q&A with Risk Intelligence. With us today, we have the CEO and the CFO. First, there will be a presentation and afterwards a Q&A where the CEO and CFO will answer questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to Risk Intelligence to start the presentation. Hans and Jens, your line is now open.
Thank you very much, Anas, and thank you for being with us today for this presentation of Q4 and end of the year. Maybe you say a few words, Jens.
Yes, thank you for letting us in today and presenting this just released report from last week.
First, this one. Some of you know it quite well. Yep. The agenda for today is a quick overview of the Q4 main activities, then the Q4 report highlights by Jens, and then the 2025 outlook, and then we go to the Q&A session. The main activities in Q4 is that we focused on the renewal process with some churn compared to what we had. As you may remember, we've had down to 0% in some of the quarters. That was, you can say, unnatural. We had three licenses churned in Q4, and we had the reduction of one other license, two licenses actually, due to mergers. One of these churned licenses is expected to return in 2025, and that had to do, it's a government client, and it had to do with government budgets to do.
We also had two new clients for the Risk Intelligence System on the maritime side. We had some limited restructuring and refinancing and rollover of long-term loans. That is something we did at the end of the year. We also kicked off the new commercial business segmentation strategy in early December. That was an internal kickoff where we are going to work with five business segments: commercial maritime, which is the classic business segment for Risk Intelligence with tankers and containers and bulk carriers and flag states and shipowners associations; energy, which is oil and gas, so the classic energy, but also renewables with offshore wind farms; insurance, which is entirely maritime as well; government and defense, which is both government organizations and defense and intelligence; and the last one is land-based logistics with LandR isk Logistics. At the end of the year, we also looked into new resources for government and defense because this is not a new area as such, but as a segment, it's a new area. Over to you, Jens.
I will unmute so you can hear me. Thank you, Hans. Yes, looking at the fourth quarter report in a glance, we highlighted actually four points that we want to look further into or at least highlight. Total revenue increased for the full year 30% and 31% in Q4. Our recurring revenue or total recurring revenue grew 21% for the full year. Our EBITDA increased 56% and 35% respectively in Q or in the full year and in Q4. Our cash flow CFFO actually improved 52% full year compared to 2023. Our revenue for the full year increased 30%, that's the recognized revenue, and our invoiced revenue increased 24%. That should be seen together with a cost increase of only 7%, which of course gives an EBITDA increase of 56%, still negative, but in our terms, a huge improvement.
Our operational cash flow, as I just said, 52% up, that's more than DKK 4 million better than 2023 for the full year. At the bottom line, our net cash flow, many hundred percent better than the year before, but again, DKK 1.1 million or almost DKK 1.2 million better than 2023. In terms of churn, Hans has been his way around it, but 1.4% for the full year. Total ARR growth 21%. System ARR growth, which is purely system licenses, growth 20%, and our NRR, which is the increase in the current customer base, is 24% up. As you can see, it's, well, it's a graphic, the right side. It's just the numbers I mentioned. Yep. Back to you, Hans.
Yeah, thank you. In 2025, the main focus will be on the implementation of the business segmentation strategy. Each of the five areas that I mentioned before has very specific price sensitivity and very specific decision-making levels depending on which segment it is. It is also very different areas, their operations, you can say, or their main challenges, which means that we will further direct communication, marketing, lead generation, but not the least, actually, some of our staff will be covering one, two, three, one, two, three business segments each and will thereby have a higher specialization for each segment. This means that if you are a new prospective client and you go to our webpage, you will immediately find where to go to, which you cannot at the moment if you are not commercial maritime.
That is like one of the examples on how we are going to do this. It will also be used to prioritize resources, both financial resources, but also human resources in which areas the commercial department is going after. Obviously, we are going to service all five, but if the ARR, so the ARPU, is also different between the five segments and the decision-making is different and the price sensitivity, these three elements will be part of the prioritization of where to use the resources going forward. The guidance, we have a guidance saying an ARR growth of 15%-30%. A system ARR will then reach almost DKK 27 million-DKK 30.4 million with a positive EBITDA and a net result zero. That is break-even, basically. Net cash flow positive. That leads us to the Q&A session.
Perfect. Thank you, Jens and Hans, for the presentation. Let's jump directly into the Q&A where it is divided into two categories. First, financial results, and next, sales and growth. The first question is, in 2024, you improved your results before taxes with DKK 3.4 million from minus DKK 14.3 million to minus DKK 10.9 million. In your guidance, you suggest reaching zero in 2025. How do you plan to achieve a more than three times larger improvement of the bottom line in 2025 than 2024, where the 20% price increase provided a considerable benefit?
Yeah. Two things. First of all, as explained, I think at several of the previous quarterly presentations, the 20% price increase only applies to renewals that are not part of multi-year agreements. These are predominantly with larger clients, meaning that they have two- to five-year agreements with set price increases. This means that the impact is not 20% on all system revenue during 2024. Secondly, the above numbers that you are referring to are the recognized figures. If the 20% is applied at the time of renewal, and if this is just for, as an example, 1st of October, then the revenue will be distributed over the following 12 months, and only four will be allocated to 2024, and eight will be allocated to 2025. There are two items at play here. One is that not all is 20%.
Secondly, with the recognized revenue, it is distributed on the license length, and thereby only part of it will actually belong to 2024. Thereby, if it is at the end of the year, some of it will be pushed into 2025. If we go one step back, the most important driver is the difference between the growth in revenue and the growth in costs, in this case, 30% and 7%, which in 2024 led to a net increase of 23%. As we expect lower growth in costs for 2025, lower than 7%, and reduced financial costs because of the refinancing package that we made public the other day, this will lead to zero or break-even, even at a lower top-line growth than in 2024.
Could you elaborate on the nature and size of the one-time costs in Q4?
Yes and no. We cannot share the actual figures because if we had to do that, it had to be shared to the market first, so we can't do this in this presentation. The nature is restructuring at a part of our business, and where, according to reporting legislation, we have to assign to the year the restructuring is implemented. On top of that, we have one-time costs related to financing in Q4, costs which will not be repeated in 2025.
Then we jump.
Basically, we are going to have a cost reduction from this in 2025 and much less financing costs in 2025.
Yeah. We jump on to the next category, sales and growth. The first question here is, can you elaborate on why you only had 1% growth in invoiced revenue for Q4?
Yeah. In Q4, we had a growth in system ARR of 20%, which is within guidance. This is a result of new sales, which was lower than usual, as we already discussed. It is an upsell to existing clients. It is minus the churn of the three licenses, as well as a reduction in license value, primarily due to mergers between two times two clients. Unfortunately, it would be great if they merged with others, but here is four licenses becoming two licenses, so that is a reduction as well. Some of this will return in 2025. We actually already got one of them from one of the mergers, and this will be implemented most likely in this quarter. It is still unknown when and how much will come in return in total. As I also mentioned, one of the churn licenses will likely return in 2025. This means that the net increase in invoiced revenue is actually a result of all of the above because the advisory services actually delivered on par with the year before.
We arrive at the final pre-submitted question. Can you explain the new commercial strategy you talk about? How do you believe this will help increase revenue and acquisition of new customers? At the moment, most growth comes from price increase, and the speed of new customers is very slow. What is your plan to increase this?
Yeah, as mentioned before, it's a misunderstanding that our growth primarily comes from price increases, but it's correct that the number of new clients in Q4 is lower than usual. However, upsell on the year is 24%. That's very key to us, and it's part of our strategy to have an increased upsell to our existing clients. The business segmentation, as mentioned earlier, will drive growth as each segment has its own particular profile on price sensitivity and decision-making level, and the strategy will adapt a commercial approach, communication, marketing, and lead generation and sales process to fit each profile rather than most of what we've done the last five years, which is have a more general model and then adapt as we got the leads in. We are going to do it much more segmented and much more according to the profile and the language of the individual business segments.
That was all the pre-submitted questions that we have received from the audience, and we have not received any live questions, so that finalizes the Q&A for now. Before we end the webcast, I will just hand over the word for you again if you have any final remarks to end with.
Jens, do you want to start?
Yeah, I can. It is always a pleasure. How can it not be to present this way? Thank you for listening in, and yeah, see you next time, as you can say.
Yeah, thank you. I would like to thank both those who are listening in, even if you're listening in later and downloading the stream, but also to Anas for running this for us. I think it's very effective, and people can hopefully get useful replies to their answers. Thank you very much.