Good afternoon and welcome to this financial results presentation and Q&A with Risk Intelligence. With us today, we have the CEO Hans Tino Hansen and the CFO Jens Krøis. 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. Your line is now open.
Thank you very much, Anders. It's good to be here with you all today online for this session about our Q4 end-of-year report and the Q&A session, where we're also going to talk a little bit about the future. Just a little bit from Jens Krøis here, his CFO slide. Then Jens and I, we have today a quick brief on the Q4 main activities. Jens will go through the Q4 end-of-year report highlights. We'll talk a little bit about the 2024 outlook, and then we will move to Q&A. If we start with the Q4 main activities, then for those of you who watched our Q3 report, much was about the launch and the rollout of the new platform, where we talked about the final development of the new platform.
Q4, we actually had the launch and the rollout, which was a big event for us and a big milestone in our strategy because the new platform provides us with a number of new opportunities. From one end, it provides us with a license fee price increase. It also provides us with three revenue streams from the license instead of one, both the features and also the third-party add-on that we have. We had that basically on top of the renewal process for 1st of January, which is the calendar year renewals, which are the bulk of our renewals during the year. So it was a good and positive experience going through the renewal process with our clients with a new platform.
We did that on top of the rights issue that we carried out successfully in October, where we managed to remove all short-term loan debt because of the proceeds from the rights issue. You may have seen that in the balance as well. It also partly provided cash for the investments that we've done in the new platform. So both saving or reducing debt and reducing interest in the future, but also part of providing the platform for future growth, the new platform. Here's just a quick screendump of the new platform with third-party data integrated with ships positions. Then I will hand over to Jens, who will take you through some of the highlights of the report. The floor is yours, Jens.
Yeah, thank you. And a warm welcome from my end as well to everybody listening in. If we first look at the quarterly numbers for the fourth quarter, this is kind of a busy slide, but I kind of framed in what is actually interesting about the fourth quarter numbers. And if you look at the right column, we have plus percentages in all numbers. Worth saying is, of course, the revenue. If you look at the revenue, that's a reported revenue. We tend to look more at the invoiced revenue, which is actually the invoice we have sent to customers during those three months. And that is actually up by 28%. So that's kind of the picture of the activity level as well in the company.
If you look at the gross margin, I've highlighted kind of a new gross margin because we've been told in the market that people don't understand our gross margin. And that's because of the Danish rules and how we should actually report our numbers, which is the 43% and the 40% in 2022. If we actually take it as a SaaS company, which we tend to compare us to, then we actually have a gross margin of 99.6%. And that's because we have actually very little cost that goes directly connected to the revenue. And again, that explains that our revenue actually is more or less leveraged. If we look at the cost, that's a plus top 2%, and that's actually not positive but a negative.
But again, comparing with the 28% activity level in the invoice revenue, then it's kind of a—I think it's very positive that we actually keep the cost at a level when we actually increase the invoice by 28%. That's more or less what I would say about the fourth quarter numbers. If we look at the full year, then we have more or less the same picture: 14% up by the reported revenue. That's after we have prioritized into the future. But again, the full year, 26% up in invoiced revenue. And again, the gross margin, 98.3% as a SaaS company. Looking at the EBT or let's look at the cost first. It's actually 8% for the full year increase. But compared to an invoiced revenue of +26%, we actually think it's good.
The EBT, that's earnings before taxes and after interest, we come out 3% lower than 2022. And that's, of course, as Hans was briefly touched, based on the short-term loans that has actually costed us more than in 2022. Yeah, that's about it on the reported numbers. Then if we look at our metrics, our SaaS metrics, then we actually have changed our way of calculating our annual recurring revenue. We sent out a press release, I think it was during January. We have, before this, looked back 12 months back on an average to calculate our annual recurring revenue as from 1st of January. And again, changing the comparing numbers for 2022, we calculate this by looking forward. So that's kind of a change. But again, comparing us to other SaaS companies, this is actually how they do it.
So, now if we look at the numbers, then for the quarter, we don't make the annual recurring revenue for quarters anymore due to the new calculation method. But what we would like to just have a glance look of is, of course, our renewal ratio that was 100%. So every client renewed their license, so 0% in churn. At this quarter or at this reporting period, we have made numbers for the old way of calculating the ARR. I think this is the last time you will see the old definition calculated because it doesn't make sense anymore. Looking at the full year numbers, we have an ARR growth of 26% of our total recurring revenue. If you only look at our system recurring revenue, we are up by 27% compared to 2022.
Our renewal ratio for the full year, 99.4%, which is a churn of 0.6%, which is through our glasses are very good as well. Our NRR, which is the net recurring revenue per customer, is 27% up in upsell on an average. Just looking at the old way of calculating the system ARR, we had a growth of 60%. Yeah. Next slide, Hans. So this is kind of recalculating the quarter for the fourth quarter for 2022 and the fourth quarter for 2023, the new way of calculating. And it shows just the 26% we were up on the total ARR. It's just to say we are still on a trend by calculating the Q4 2022 at the new definition. Yep. I think it's back to you, Hans, then. Or yeah.
Thank you, Jens. For those who are interested, then the forward-looking ARR takes into consideration known license agreement-based price increases. And that's it. So there's no estimates. It's not like a net kind of recurring revenue. We don't have any estimates for upsell or anything in that figure. It is basically the known license agreement-based revenue for the next 12 months. The guidance for 2024 is a growth of ARR between 15%-27%. And as you saw, we had 27% or sorry, 26% on total ARR last year. We are aiming for a system ARR between DKK 22.4 million-DKK 25.3 million for 2024. EBITDA will be small positive or around zero, net result negative, and net cash flow positive. We'll get back to why we see a net result negative and EBITDA around zero. And that's basically because of the reported figures that are based on periodization.
Then on the Q&A session, we have looked into the seven questions that have been received an hour ago. We have divided them into three, even if they are obviously in many ways connected: pipeline, sales and revenue, and then financial result. If we start with the first question, Anders.
Yeah, perfect. So the first question is, with the war between Israel and Hamas, war in Ukraine, and increased risk of attacks on ships near Yemen, it seems like a situation where companies should be looking for a solution like yours. Two questions. How are you taking advantage of this risk in yourselves, and why are you experiencing more inbounds and outbound leads?
Yeah. Thank you for the question. Obviously, this has further fueled the interest in our product. We have had a lot of interest in our product. And it has actually come at the same time as a lot of interest because of the new platform. And if we look at the outbound communication marketing, lead generation first, then we have both made reference to both Ukraine and the Red Sea, so the Houthis, in general communication on LinkedIn and other social media. But we also delivered white papers and reports on the areas free to clients and potential clients in our database. This means that for a number of weeks, actually quite a few weeks until very recently, they got a weekly Red Sea report if they were interested without any charge. And we got a lot of positive feedback on those reports.
In terms of inbound leads, we've had a significant uptake both due to the conflicts but also due to the new platform, as I mentioned, and the operational capabilities it offers. Thank you.
And then the next part of that question, why are we not seeing an increase in the number of contracts?
Yeah. First of all, I'd like to turn the attention to our disclaimer on our press releases. I guess that most people, they don't read them. They just read the headlines if they read them at all. But further down in the press release, there is a disclaimer saying that Risk Intelligence typically uses press releases to announce new clients or significant expansions of existing client contracts in accordance with the wishes of those clients. However, there may be other business deals that Risk Intelligence chooses not to or cannot disclose through press releases. All deals classified as MAR, so Market Abuse Regulation, will always be announced through press releases. That goes without saying. So this means that we are only, you can say, cherry-picking to some extent for some of the press releases. We are not putting a press release out on every single new client that we get.
It could also be because that this client does not wish to be exposed with a press release, even an unnamed one, because there are certain, you can say, types of clients that you could identify regardless. We have seen a significant increase in potential clients on trial for the system after the launch. This week's press release on the Swedish Shipowners’ Association is a direct result of the new capabilities of the new system. We couldn't have sold that one with the old platform. That's quite interesting and probably good to know that there are actually coming in clients because of the new solution where we integrate all these different things compared to the old version of our product.
We have also had about 17 new clients that have requested and had delivered 1, 2, 3, or maybe 4 small reports, what we call Voyage Risk Assessments. The Voyage Risk Assessment is a specific report for a ship that goes between port A and port B. In this case, they had to go through the Red Sea. They use these risk assessments in order to get off the charter with their charter. So it's an oil company or any other type of charter. Or they do it to negotiate terms to change that or to argue to go south around the Cape, so the long way around Africa. As I mentioned, we had 17 new clients. We also had a number, many of our existing clients, ordering these reports. But we had 17 new clients. These are not system clients.
So we would not and they are it's maybe between EUR 1,000 and EUR 3,000, EUR 4,000 euros each in turnover. All this turnover goes to advisory services, so our consulting arm. However, it doesn't mean that some of them will not, at some point, come into our pipeline for the system because now they know about our quality. They've seen the report. They've used it, and hopefully successfully, in their negotiations. Perhaps we will continue to obviously communicate with them and send them marketing and free products. Then maybe we can get some of them into the system. Some of them are quite small, so they would most likely not take up a subscription. Some of them could actually take up a subscription at some point.
The next question. Looking at your guidance for 2024, how much of the expected growth is coming from upsells and new platform compared to new clients?
Yeah. Thank you for the question. This year will be characterized by the rollout of the new platform. This leads in growth in revenue from the license fee increase and upsell to existing clients prior or at their respective renewal dates. So this means, in practice, that the effect from the increased price for the new system will cascade through the year. It's not something that happens for all of the value from 1st of January. For those that renew in, let's say, 1st of September, it will happen either before 1st of September or close to 1st of September when they renew the contract. So the effect will come throughout the year. And at the end of the year, we will reach those who renewed for 1st of January. And obviously, they already had, most of them, the price increase.
There are some that are on multi-year fixed agreements where some of them have the 2024 as the last year. Obviously, those multi-year agreements will be coming up for renewal as well and renegotiation, meaning that there are even some of those that are 1st of January or calendar year. There are actually some of those that will have maybe 20%-30% in total in upsell and increase. So that is a significant part of 2024. We also work, as I mentioned, with a number of new clients. And I can't actually remember that our pipeline has been as good as it is right now. I think we should have to go back to Somali piracy days where the company was also substantially smaller to see the same level of interest on the system. So combination of existing clients and new clients.
Can you provide some insights into your pipeline on your maritime products and separately your Land Risk and Land Risk Logistics solutions? Do you expect to close any Land Risk deals during 2024?
Yeah. I already addressed the maritime pipeline, which is looking quite promising. There are also an increasing number of clients in the pipeline for LandRisk Logistics. They are in different stages. I think we discussed it before, that the lead time and the complexity of LandRisk Logistics and these organizations that we're dealing with is quite higher, meaning that the lead time is also longer. We do expect to close one or more LandRisk Logistics deals during 2024.
Congratulations with the new platform. Good work. In 2024, you will raise the license fees, and some clients will add extra features. But how will you ensure growth in 2025 and forward? Is it through extra sales to existing clients, or are you expecting to sign many new clients based on the new platform?
Yeah. I partly answered some of it in for 2024, which obviously will provide the basis for 2025. But as presented in the autumn and also as part of our 2025 strategy, we are aiming to increase our revenue streams with API as a product. That's one. We do have clients that have API where they basically get our data integrated into their own systems, either government or some of the big corporations. But more importantly, with API integration into partners and partner sales, we have two partnership agreements in place. And data is integrated. And the product launches will be end 2025, as we know right now. This is obviously out of our hands. It's NAVTOR in Norway, and it's International SOS. But that will most likely be from end 2024 and will start providing revenue in 2025.
But the foundation for growth in 2025 is obviously the recurring revenue from the existing clients plus the new one in 2024, as well as the new ones for 2025 and from the API product and then the partnerships on top of it. So that should provide the growth in 2025, where we hope to have accelerated the process from 2024.
How much revenue are you expecting in 2024 and 2025?
Yeah. We do not provide guidance of turnover, but guidance on ARR. We used to do that when we had the old way of kind of doing our financial reporting. But since then, we've changed to guidance on ARR in line with other SaaS-based companies. We basically deliver data on a SaaS platform. We do not deliver a SaaS product. So we're not like Salesforce or similar, more like Bloomberg, as I think I mentioned before. But in 2024, as mentioned under the Outlook, this is DKK 24.4 million-DKK 25.3 million.
A follow-up question there. When will you reach a positive net result?
Yeah. We expect, as mentioned, an EBITDA around zero and a negative result for 2024 and a positive EBITDA and also a positive result for 2025. However, I maybe address that these are the reported figures while our liquidity and thereby also our cash flow will be positive already from the year 2024.
And then we are at the final question. Do you still believe in the financial goals in the 2025 strategy, or is it completely shelved? Will you reach it a year or two later than anticipated, or what is the status of the strategy?
Yeah. If we only look at the financial goals, then we already communicated that when we changed our financial reporting principles to full periodization, we declared that that was at the end of 2022, so after the launch of the 2025 strategy, that it postponed the original financial goals within, in principle, 12 months. There is a model here where you can see kind of the impact on the reported figures, where you have the actual invoice in the darkest blue, and then you have the middle blue, which is what has been carried forward to the next year. And the light blue is what stays in the year, so to say. And this means that we have a time lag of about up to 12 months. It's a little bit difficult to say 12 months because periodization doesn't really work like that.
But it's kind of just to get the gist of it. This figure is trying to illustrate how the reported figures are lagging behind the actual invoiced figures.
That was all the questions. That finalizes the Q&A. Before we end the webcast, I will just hand over the word for you if you have any final remarks.
Yeah. Thank you for presenting to you today and for being able to answer your questions. Hopefully, you feel they've been answered. I think we are pleased to say that we are satisfied with the figures in the report and especially with the Outlook for 2024. I don't know if you have anything to add, Jens, here at the end.
No, I think you said it, Hans. But I could say thank you as well.
Thank you very much. Have a good day.