Good afternoon and welcome to this Q3 2025 presentation and Q&A hosted by Risk Intelligence. With us today, we have the CEO and CFO of Risk Intelligence. First, the company will give a presentation followed by a Q&A session where they will address questions submitted live, as well as those sent in beforehand. I will now hand over the word to Risk Intelligence. Please go ahead, your mic is now open.
Thank you very much, Anders, for having us today for our presentation of the Q3 report and for the Q&A session afterwards with some very interesting questions that we have received. Do you want to add anything, Jens, before we start?
No, that's fine. We'll welcome everybody.
Very good. First, a little slide here. Yeah. The agenda is, as like previous quarterly reports, our main activities in Q3, Q3 report highlights that Jens will go through, and then 2025 outlook and guidance, and then questions and answers of the questions that have been submitted earlier. Q3, we have been signing new clients. Not all of them have been in press releases. One in commercial maritime, which is shipping, two in energy, one in government defense, and one in land risk. We've had significant upsell to existing clients during renewals. We, unfortunately, as many will know, had a termination of a major U.S. government client license agreement. We have had a growing pipeline with sales lead generation, so what you can call inbound leads. We have continued development of the five business segments that we've been working on during the year.
We've had a partner launch with NAVTOR of Nav Station, their existing product with the Risk Intelligence system layer in September, so at the very end of the quarter. We also initiated strategy development, including a new commercial strategy that will be finalized and launched during 2026. Over to you, Jens.
Yeah, thank you. As usual, we'll not go through all numbers, but we have highlighted some of the, as we think, are the more interesting. Recognized revenue, we were up 9% compared to the quarter last year. Of course, the invoice revenue was impacted by the U.S. government client that Hans just mentioned, so we are 12% below the same quarter last year. Our cost is still in good shape, as we would say, 2% lower than last year. Of course, that gives some leverage to the bottom line on EBITDA, which we have a positive EBITDA of DKK 758,000, which is the third quarter in a row where we actually have positive EBITDA. That small is that for the quarter in terms of numbers. I'm not sure if I can, I cannot. Can you? Yeah, thank you.
If we look at the year to date, similar numbers or trends, we are up by 12% by the top line, the recognized revenue. Invoiced, more or less exactly the same level as last year. Of course, impact again by the missing U.S. government client. Cost, total cost, 3% lower for the nine-month period, which gives, of course, a leverage or spread of the 15% in terms of the revenue and the lower cost, which gives a positive EBITDA of DKK 1 million, which is almost DKK 3 million higher than 2024. Yeah. A more graphical presentation, but again, you can see the quarters in revenues, all three quarters are showing growth on the recognized revenue. In terms of the metrics, of course, impact by a missing U.S. government client, the churn first, 7.5%, which is, I'm not sure if it's record high, but it's close to.
Again, total ARR, a small growth of 2%. The system ARR impact and 1% lower than last year. NRR, again, impact by the missing client that we had last year and we do not have now. 80% on the NRR compared with 164% for 2024. That is more or less that. Over to you, Hans.
Yeah, and it's just to say that we haven't changed anything in the guidance for 2025. Thank you.
That takes us to the Q&A. Thank you for that, Hans and Jens. The first question is, you maintain guidance on system ARR, DKK 26.9 million-DKK 30.4 million as of Q3 2025. The figure was DKK 22.8 million. Can that really be achieved and what will drive progress?
There are several factors which may increase ARR, namely new deals to be closed in Q4, upsell as part of the large number of renewals in Q4. We are just in the middle of them. We almost finalized the whole renewal process of 44 clients, recurring revenue from partner sales of our data in Q4 and for 2026, as well as already known price and contract increases during 2026. That is what kind of composes the total ARR for 31st of December and of course onwards.
What happens with the sales of a land risk? Are there any new contracts on the way? Do not think we have heard much.
Yes, as already mentioned, we actually closed one agreement with a cargo owner during the reporting period and have several in the pipeline, but it has been difficult to close agreements with the smaller and medium-sized potential clients in logistics. Actually, we have some success in cargo owners, which are obviously much bigger companies often, but not so much success in the smaller and medium-sized logistics companies.
The third question is around your commercial strategy. With the current geopolitical situation, we can agree that your system should be a fit for many more clients, B2G and B2B. Are you satisfied with the current closings or would it be relevant to ramp up aiming for much more in 2026 with the costs related to this as well?
Yes. As mentioned earlier in the presentation, we are working on a new strategy, including a new commercial strategy, which will be launched during 2026. Through the transition with the five business segments, both business to government and business to business will be addressed in the strategy.
Will the deal with the U.S. federal client, which was terminated 1st of October, come back again?
That's a very good question. As the U.S. fiscal budget only has been extended until 31st of January, it can only take place after this date if and when there is a permanent agreement for the full fiscal year until 30 September next year, and only if they see the same requirements as earlier. In other words, we actually don't know and we cannot ask about it until after the 31st of January if the budget is in place by 31st of January.
Can you elaborate a little on the loss of the U.S. client? Is it connected to the government shutdown, DOD attempts to reduce prices, or something third? Can clients opt out of fixed period contracts without compensation? Thirdly, if the contract is reinstated, do you believe it will be with a discount to the client or with the 20% price increase implemented?
The contract system in the U.S., the federal contract system is quite complicated. A contract like ours is a contract for five years, but it has to be approved, i.e., executed every year in a kind of independent process based on what was agreed in the framework agreement. There are no evergreen contracts with the U.S. government, so no, that is just automatically renewed. When it comes to commercial clients, and if we have multi-year agreements, then they cannot get out of these agreements unless there is compensation involved. That does not go for contracts like this. We have no indication if and when, as already mentioned, the contract may be renewed due to the current budgetary situation.
That's basically the same response that since the extension of the federal budget was only until 31st of January, we have to wait until then to raise the question and approach them again and maybe other parts of the same organization.
Facing a loss of one specific client, hence the impact on the MRR, could you then elaborate a bit on the missing spread of risk? Moreover, could you inform us about increased market and sales activities related to this, if any?
Yeah, a very large proportion of our clients are around our ARPU, maybe a little bit more plus because we also have advisory services on top of the ARPU. That is probably, let's say, about 95% of our revenue. Our pipeline activities focuses on these. A company like ours obviously cannot say no to a very large client just to reduce the risk of losing it again. That does not make any sense. We will say yes to them and we will know that there is a risk losing them, but well knowing that the 19%-95% of the remaining revenue is distributed on a much higher number of individual clients.
Looking at NAVTOR, regarding the agreement with NAVTOR , will you have to pay a fee to NAVTOR for clients using your service through them? Does that mean there's a risk of reduced income to you from existing clients converting from their current direct license agreement with you to a NAVTOR agreement?
As described in the press release of 29th of September, when we went to the market and NAVTOR came to the market with this launch, Nav Station is a product used onboard the vessel and is currently installed on more than 8,000 vessels, which now have the option to add a Risk Intelligence layer to their Nav Station suite. It is done on a company level, but for the ships. Few of our mutual clients have the Risk Intelligence system on their vessels, and some of those that have it on the vessels only have it on part of the fleet, while the Nav Station is on the total number of vessels in their fleet. They can opt to migrate to Nav Station at no loss of revenue to Risk Intelligence. This is only a very small subset of the 8,000 vessels that have Nav Station.
In other words, this is part of our strategy to deepen our existing market by selling more to the same client segments. As such, there is no risk of cannibalization. The launch of the product creates a new revenue stream, both for Risk Intelligence and for NAVTOR .
Comparing ARR and invoice revenue with Q3 2024, it looks like the loss of the U.S. client has set you back a little more than a year. Can we expect that it will take a year longer than previously expected to achieve profitability if the contract is not reinstated?
First of all, yes, as you could see from the growth numbers with plus two and minus one, then it's certainly correct. But our ARR is not the full kind of expression of our revenue. ARR is composed of renewals, upsell to existing clients, new sales to new clients, any churn or reduction of existing client contracts, and then recurring revenue from partners. As mentioned in the press release at the time of the termination, we expect the ARR loss to be replaced in the upcoming quarters. Secondly, the result is a combination of all revenues, system intelligence reports and advisory services, and all costs plus depreciation and tax, obviously, to get a net result. You have to look at the bigger picture, and this is what we communicated at the time.
With a slower road to profitability than anticipated and increasing debts, do you believe you will be able to keep financing your negative cash flow before uptake of new financing activities with new loans, or is there a risk of an emission?
First of all, we haven't communicated anything on expectations of a changing timing of profitability. We have actually positive cash flow from operations before financial costs of DKK 813,000 in Q3, and we expect to continue this positive trend. This basically means that our operating costs minus the financial ones are covered by our turnover. Our current planning is based on refinancing while reducing existing debt at the same time. Subsequently, we are not looking at any emissions.
That was actually all the questions that were sent in beforehand. As we have not received any live questions, that finalizes the Q&A for now. Before we end the webcast, I will just hand over the word for you for your final remarks.
Yeah, first of all, thank you for coming today to watch this or looking at it as being streamed later. Also, thank you very much for the very good questions. I think these questions are a very good indicator of the interest of our business and what we do. They are a very, it's a very good process to get these and to answer them as much and as best as we can. We always have the little caveat that if there is anything major for the market, we cannot disclose it at these kind of discussions or presentations. It has to be in press releases. Thank you very much today. Over to you, Jens.
Yeah, thank you for the time and thank you for today. That's my words. Fine.