Hello, everyone. Welcome to this Q2 presentation with Risk Intelligence. With us today, we have the Chief Executive Officer of Risk Intelligence, Hans Tino Hansen. First, there will be a presentation, and afterwards a Q&A, where the Chief Executive Officer will answer all questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io for the Q&A. 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 for the presentation. Your line is now open.
Thank you very much, Anders, and good to be with you today. With these words, I will start the presentation about the Q2 and the questions that have been sent in. First of all, a few words from the Chief Financial Officer. The agenda, which is pretty simple, the highlights from the Q2 interim report, and then the Q&A. First of all, I would like to address the significant growth in invoiced revenue in Q2, which was almost equal to the growth in Q1, and that's for the invoiced revenue. By 42% and 43% in Q1. Obviously, the invoiced revenue is what is the basis for liquidity, but also for future growth, while the recognized revenue comes with a time lag.
The time lag is what you can see on the right-hand side. That's where we recognize the revenue over the period of the license periods, or for instance, normally 12 months. On the left-hand side, you see some of the highlights. We had a 15% growth in the first six months of the recognized revenue, while we had 76% of the invoiced revenue. Cost increased by 8%, and EBITDA increased by -10%, so it increased to show little bit higher negative. If we look isolated on the quarter, then we had 14% increase in the recognized revenue, and we had 42%, as mentioned, on the invoiced revenue.
Costs were reduced by 1%, and we have basically reached a cost level and organizational level that will stay around those figures for the foreseeable future. We had an improvement of EBITDA from EUR -2.2 million to EUR -1.5 million, or 31%, during Q2. We have also mentioned that in our communication and press releases, that we will have positive cash flow from operations during Q4, and this is because we have a stable cost level and increasing revenue level. It will take a bit more time before we get positive EBITDA because in the reported figures, because that comes from the recognized revenue, where there is a time lag, as you can see on the figure to the right.
If we then look at the important metrics, we had an increase in the first half of the year of 13% on ARR and 15% on the total recurring revenue. We had an increase of ARPU, $251,000 from $138,000 for the same period last year. We had a churn of 0.9%, we then had the important, one of the most important figures, which is the NRR. The net retention rate of 116%, compared to 111% for the same period last year.
We then, look at the, figures for the quarter, we had a 44% increase on total ARR and we had a 55% increase of system ARR, and 0.9% churn. You can see the quarters on the right-hand side. It should be said that our ARR is annualized 12 months back, so it's not the contract value, going 12 months forward. Any questions to this?
Perfect. Thank you for that, Hans. Let's move to the Q&A.
T he first question here: Has any of the LandRisk deals been invoiced and recognized as revenue in H1 or do you expect it to be realized in H2?
Yes and no. We have had the DHL deal has been invoiced in Q2, so that it falls in the first half of the year. DSV has been invoiced in Q1, Q2, and Q3. It's split between two parts of the year. That's when it's been recognized.
Perfect. The, the next question: Can you provide some insights into the LandRisk pipeline after the agreement with DHL and DSV? Do you see increased interest from other land-based logistics and transportation companies?
Yeah, after the press release on DHL, we were approached by a number of companies. Some of them we had dialogue with previously, some of them, we hadn't. They are active in the pipeline together with others that we reached out to. These are not only logistics and transportation companies, but also brand owners, and industrial companies that use or will use, or are contemplating using, LandRisk Logistics to look at their supply chains, and also how they can work with their logistics providers to increase the security for the crew, obviously, and the, the, the drivers, but more importantly, from their side, for the cargo, which is what they are, that they are owning the cargo.
As communicated many times previously, the lead time on LandRisk Logistics is far longer than the maritime lead time, where the maritime deals until this moment have been almost transaction in kind of in essence, but so three, four months, while the LandRisk Logistics is up to or more than 12 months. The reason for that is that it, it is subscription-based, but we are adapting certain things to the clients. It's something between subscription, transaction, and solution sales. That could be that these companies would like to have their own data embedded into their view, which we have already developed last year or something similar. Obviously, some of these things that we develop can be used for other clients as well.
Perfect. The next question is regarding your new platform. What will be new with the expected platform launch in Q4 and how do you expect this to contribute to increased ARR and growth?
T hank you for the question. The new platform is planned for launch in Q4, as mentioned, and with our partner, Geollect, we are on track with the development schedule. This is not always what is in the real world when it comes to IT projects, but we are actually on track. The new platform will significantly change how we tailor the available features and third-party data to each user type within the company. Until now, the subscription has been for MaRisk and/or PortRisk together on the maritime side, and it has basically been the number of users that has been the criteria that could be set.
With the new platform, we will both have a number of few features, new features that will be available in the standard solution, a number of new features, which will be available at an additional cost, and then a range of third-party data that comes through agreements that Geollect has with third-party providers that will be available at a cost as well. This means that the revenue stream has grown from one, the basic subscription, so to speak, to three, one being the add-on features that we control, and the third one being the third-party data. That could be AIS position data, it could be weather data, it could be a lot of different things that is available through Geollect. Finally, there will be an increase in the license fee.
This is similar to when we launched the existing plan, platform. A t that time, we had 24% price increase. This means that the platform will be an important enabler for growth, both with our existing clients, but also with the new ones that we are aiming to acquire. If we look at the sales from the strategy, the growth plan in the strategy, we have increased sales to existing clients where the new platform will be instrumental, but also increase sales on advisory services, our consulting arm, to our clients. Acquisition of new clients in existing markets, but also acquisition of new clients in new markets with partners, mostly.
When then the new platform with the different types of sales streams, including the third-party data, the price increase, that would be more than the annual 3% standard price increase, is also sales through partnerships that will come on-online in 2024, and then obviously LandRisk Logistics, that is, you can say new in 2023 compared to earlier.
Perfect. Thank you for that, thorough answer. The next question is regarding the net retention rate. With NRR for H1 at 116%, it was one of the highest reported NRR levels since the IPO. Has anything product or strategy-wise changed since you were able to increase NRR?
You can say that it is part of the 2025 strategy, that has been part since last year. It's a combination of upsell to clients, which is an integral part of the strategy and the price increase that we had from January 1st . T hen again, with the launch of the new platform, we believe that we can sustain or even increase the net retention rate going forward. One of the ways to consistently sustain or increase is also to keep the churn down, and the churn that we have between 0% and 2% historically on average, is something that we can only keep at that level if we keep the long-term client relationships that we've been working on for a long time.
It's also part of the strategy to maintain those.
Perfect. The next question: What can be done, your ideas and plans, to improve liquidity and volume in the Risk Intelligence stock? As an investor, it's frustrating to see so little trade and way too low stock price on Spotlight Stock Market, in a good company with solid business and product and a good future outlook.
I couldn't agree more. As one that also have a few shares, it is frustrating to see. I mean, there are two main issues. One is the growth market, that, as you know, have been challenged over the last 12 months. There are, of course, good cases, but most of them have been not so good. That has hit the share price and trading volumes for Risk Intelligence, like other companies, but us to a certain extent. You can see the index on the right-hand side, which has been taken from Avanza, with Risk Intelligence in dark green and Spotlight on light blue, that's the lower line, and First North with the green or light green color.
That's the index from this year. It just tells us something about that the whole market is actually more or less in check or stalemate, meaning that they are not as such in the index, any big movements. We have been moving up and down. The whole market, we cannot influence the market. That part is difficult to deal with. At the same time, I guess that our the market are waiting for the positive cash flow on our side. Obviously, when we have positive EBITDA and profit, then things will change.
We do have plans, and we are working on putting forward positive news on major deals and and similar, and we will try to engage more and more in presentations like this, and in that way, try to increase the knowledge and awareness about the Risk Intelligence share, and also that you, as you mentioned, the one that posted the question, that it is actually a good company with a solid business, products, and good future outlook. Then we can see if we can increase liquidity and the share price for that matter, but most importantly, the trading in the first place.
Perfect. The next question is around the future profits and dividends. Is it possible to say anything about how big the profit should be before issuing dividends to shareholders? When is it expected that dividends will be issued to shareholders?
As a growth company, profit will initially primarily be reinvested in the company. The Board of D irectors have the aim to issue dividends at a certain level in the future. This level has not been defined, and the same applies to, to timing, so I cannot really say anything about that in more detail at the moment.
For now, we have the last question here regarding funding: With the recent received funding package, do you have the capital you need at the moment for the 2025 strategy and to reach profitability and positive cash flow?
The current funding package ensures sufficient capital to reach positive cash flow by Q4, which is an important step, obviously . Positive cash flow, that is from operations, that's not the total positive cash flow necessarily. The Board of D irectors has a medium-term goal to improve the balance sheet, remove all short-term debt, and substantially reduce financial costs. It is in the plan to change that in the future.
Perfect. That was all the questions pre-submitted via Stokk.io. As we can see, there is no current questions pending so we have been through the entire Q&A. Before we end, I will give the word to you, Hans, for some final remarks.
Yeah. Thank you very much, Anders, and thank you for those attending or watching this presentation at a later stage. I hope that you got your questions answered in a manner which satisfies your kind of want for more knowledge about Risk Intelligence. If not, I hope that we can see you at the next Q&A session where I hope that you will submit more questions. They are all very good and they are to the core of the issues in Intelligence, but also the prospects and positive outlook of Risk Intelligence. Thank you very much.