Good afternoon, and welcome to this Q&A with Risk Intelligence. The CEO of Risk Intelligence, Hans Tino Hansen, and the CFO, Jens Krøis, will first of all make a short presentation before we move into the Q&A session. The company will address the questions received through Stokk.io , and if there's any more questions in the live presentation, you can submit them here by text. The event is being recorded and will be made available after the event is done. I will now hand over the presentation to Hans and Jens. Here you go. Hans and Jens, can you get sound on your mic? We have sound on, I think.
Yeah. Yeah. Okay. We were in the belief that you were running the sound and camera. Thank you for being here today with us and it's the first time we have this session. It's kind of a little bit of a tryout. Because the questions have been focusing on our strategy and the figures in our strategy, then we have focused on these. We've actually tried to answer all 8 questions that we have received so far. My name is, as mentioned, is Hans Tino Hansen, and I'm the founder and CEO of Risk Intelligence.
I'm Jens Krøis, the CFO of the company.
Yeah. A very short presentation. First of all, this one, which I normally call the CFO text, Jens' text, I believe that you now have read it and can be heard to its content. Today we'll talk about the strategy. We will also talk about the strategy that was launched in September 2022. We're also going to talk about how the new revenue recognition has an impact on the strategy figures, then we'll talk a little bit about the funding of the strategy until 2025.
The strategy was launched in September 2022. Th e whole idea is to future-proof our position as a global market leader in security risk intelligence, both when it comes to content, so deepening, but also to increase our position in the market and take a bigger market share, so widening our business. The vision for the company is to become the leading global supply chain security intelligence provider to the entire supply chain market. That means port and at sea, the maritime bit where we already are, on land, where we are getting into finally, and then air as well. Air is not in the air, but it's air transportation, so actually basically, air cargo terminals we're talking about. The latter part will be at a later stage.
We have five strategic milestones: refocusing the business on maritime security, land-based security as an independent business area, commercial partnerships, an average growth year-on-year of 30%, and a positive net result. If we go to milestone one, we have delivered growth solely on the maritime side, from 2018 until today. It's a market that we know. It's a market where we have partners and have got more partners through the last six months. It's an area where we both can have more business together with our existing clients but also acquire new clients. We will launch a new platform for the Risk Intelligence System at the end of 2023.
We did that last time in 2015, it's delivered by a partner company, Geollect, this will be a strong enabler for the strategy. As you already know, we haven't delivered on LandRisk until now. That has changed very recently. This meant that we have taken a decision that while we are investing in future for the maritime side, including the new platform and partnerships predominantly on the maritime side, then we have decided that investments on the land side will go hand in hand with client opportunities or client contracts. This is what we've already done with the companies that are coming online here in Q1.
We are building one of our main revenue streams for the strategy to reach the 30% growth and DKK 50 million in 2025 by strong commercial partnerships, where w e are expanding the market horizontally and vertically. Horizontally means that we are adding new markets that haven't been addressed before or where we've taken the decision that we couldn't enter them unless we had a partner. When we are looking into expanding the market vertically, that means that we are selling more to existing client base, such as the commercial shipping fleet, where we will through partners, sell more to other parts of the company, including down to the ships without cannibalizing the existing revenue.
We have an aim for DKK 50 million in 2025, and an average growth of 30% until and including 2025. We'll get back to that in a moment. If we look at the impact from the revenue recognition, remember that the strategy was made prior to the decision to change the revenue recognition from the time of invoicing, to full periodisation. Meaning that most contracts are 12 months, so that the revenue has been periodized over 12 months. This has an impact on a number of items.
One of them is, top line, revenue and top line growth, especially to the top line itself, where you can see the column on the right-hand side, where 2022 was the invoice figure, and the middle blue color is the revenue that was brought forward, so recurring revenue that was brought forward from 2021. The light blue, is the revenue from 2022 that remains in 2022. As you can see, it is smaller than was, than was invoiced. This is mainly because, as a growth company, and as, because we have 66% of our revenue in the second half of the year, revenue will be moved forward into the following year. As we see, it has an impact all the way.
ARR will not be impacted, except that we have a minor adjustment in Q that was made in. That is a result of our previous revenue recognition, where we had a time of invoicing as well, and that had to be removed before we implemented the new. Going forward, we have a clean table speed, and the first of January will be fully periodicized when it comes to everything that is license-based. Services or consulting will not be, will not have another revenue recognition. If we look at the 2023 and the positive result from 2023, because of the revenue being pushed from 2023 into 2024, and the growth part was being pushed into 2024, we moved the target from 3 to 2024.
The funding of the strategy has taken place, partly by two capital increases of about DKK 9.5 million, or 4.3 million shares. Debt has been reduced since first of January with a little bit more than DKK 10 million, both from debt conversion and from cash flow. Furthermore, we've secured facilities of about DKK 6.5 million for any need that may arise during the voyage, so to speak. They may be used in full or in part or not at all. Over to the questions.
Perfect. Thank you, Hans and Jens. Let's move on to the Q&A and make sure that we answer every question that has been stated. The first question: In the 2025 strategy, you expect 30% growth on average and a target of DKK 50 million in 2025. If I calculate a 30% average growth on your current revenue numbers of DKK 17.7 million in 2022, I get around DKK 38 million-DKK 39 million. Can you explain these targets of 30% growth per year and DKK 50 million in 2025 a bit further?
Yes. That, the answer lies in the change of revenue recognition, where revenue is postponed from the year of invoicing into the following year. As we have this 66% of our revenue in the second half of the year, it kind of accelerates that effect. However, the target in terms of invoiced revenue or which you could say liquidity, which is unchanged, the target of DKK 50 million remains the same.
Perfect. Question two: Between 2018 and 2022, the median ARR growth has been around 15%, and only 2020 saw an ARR growth above with 25%. In the 2025 strategy, you now expect on average 30% ARR and revenue growth. What has changed since you expect to be able to reach these growth numbers now?
Yeah. Thank you very much for the question. From 2018, so the IPO, to 2021, we delivered close to 20% average top-line growth based on the previous revenue recognition, and we had a 18% annual average growth in ARR. In 2022, we changed the revenue recognition as already mentioned. We see 2023 as the first normal year since 2019. As also mentioned, all revenue until this year has been generated from the maritime business. With this in mind, we use 20% growth rate as our baseline. Then the strategy is actually dealing with how we're going to take the company from 20%-30%. The first one is increase sales to existing clients. That has already been happening.
In the previous years, we had an NRR or net retention rate of 111%, meant that we sold 11% more to the existing clients in 2022 that we had in 2021. Acquisition of new clients in existing markets, something we've been doing as well. Acquisition of new clients in new markets, which is a new area, because we're going to do that together with some of our partners. We'll get back to that. As mentioned, we will have a new platform with increased sales possibilities because there will be many more features and it'll be much more adaptable to client customization in terms of what they need to different users, which would drive up revenue as well.
We will also in that platform have sales from third-party data that could be position systems like AIS. It can be weather, it can be sanctions and other overlays, and we will get revenue from these sales, of course, with a cost to the provider. We don't have that in the existing platform, so that's also new. We will also have price increases. The 1st one was issued on 1st of January with 11% to our existing clients, or rather all of those who were not on 2 or 3 year multi-year contracts. They will get it later. We will also have a price increase when we launch the new platform.
As an indication, when we had the launch of the new platform in 2015, we had a price increase of 24%. We will have sales through partnerships, as already mentioned, and we'll get back to that in a moment, which is also fairly new. We've had some on a lower level. As you have seen, LandRisk Logistics is about to add revenue as well. You can see that there are actually many new revenue streams compared to the existing revenue streams.
Next question. You recently made partnerships with Geollect and MedAire. Can you put some more words on these partnerships? What is the expected financial outcome of them, and what is the timeline before you begin to see revenue from the partnerships? Will Geollect and MedAire act as resellers of the Risk Intelligence System?
As also something we've addressed, this is a key area in the 2025 strategy. The aim is to increase our partnerships with partners that have the capability to increase our market access horizontally or vertically. Horizontally is to access new markets or markets that we haven't been able to address previously. The partnership with MedAire International SOS is an excellent example on horizontal expansion because their clients include 50% of the world's super yachts and 80% of the mega yachts globally. We will have a Risk Intelligence data feed via API into their products, which means that we can address a market that we haven't been able to address previously.
NAVTOR, which wasn't mentioned in the question, but is also one of our partners, is a fleet management and navigation systems provider to the commercial shipping fleet, so the fleet that we are already addressing, there we are talking about vertical expansion. There will be a data feed with into their products, which will increase our commercial shipping market. Geollect is a partner both on delivering products and analysis to private and government clients, but also the company that have been selected to build our new upcoming platform based on their new platform, which will be launched in 2023. Full revenue impact from all these partnerships will happen from 2024. Some of them will start during 2023.
Next question. When inflation rises, some statistics and theories show that the demand for stolen goods rises, which could make theft and crimes go up. Does this create a macro environment where your product offerings become more attractive? How do you work strategically with the changing macro environment?
Thank you very much. This is a very good question, as the demand for stolen goods have a very large impact on the market for land-based logistics because it's predominantly truck-driven cargo through Europe. Land-based we cover globally, land-based logistics, the specialized product, is only Europe, at least for the time being. Crime scene is, on the maritime side, is low probability and high impact, now we're not talking about theft in ports and so on, we are about 400-500 incidents per year, the land-based cargo crime is medium to high probability and low impact, meaning that that's theft from trucks.
The volume is also much higher and in the tens of thousands. That means that an increase driven by inflation, or other political turmoil, even if it's only increasing 10% will result in thousands of more incidents compared to the maritime side. The addition of LandRisk and subsequently LandRisk Logistics was a strategic decision based on both what we then saw as a natural extension from the maritime operations and specifically the ports, because they are also a land-based facility. Also a strategic shift to hedge different types of risks that may develop differently across regions, but also across sectors such as maritime and land-based transportation. They do not necessarily have the same changes in risk at the same time.
Finally, the long-term market potential for these products, so LandRisk and LandRisk Logistics, is bigger than the maritime.
Next question. LandRisk is the product with the highest TAM and expected LTV over CAC, and a product you have been working and talking a lot about the past years. In the latest 2025 strategy update, it felt like you were gonna shift a lot of focus back to the maritime business and not prioritize LandRisk as much going forward. What is the reasoning behind this when you are beginning to see the first commercial traction?
Yeah. A good question. Of course, we have to bear in mind that the strategy is from September 2022, and the result that we are seeing is from January and February 2023. The decision was made in order to make investments follow client business and client contracts on the land side, instead of investing more without having land-based business contracts. When we launched LandRisk in October 2019, we expected a rollout during early 2020 . Everybody knows what happened then. The people that we had in the pipeline had to focus on securing and maintaining their own supply chains, logistical systems, and had no time to look into new security management systems.
We developed LandRisk Logistics and had important client input from Sony in the process and launched it during the end 2021. The market were only getting into back into shape during 2022, and we have now seen the first results with our press releases. The strategic refocusing on maritime was because this is the market we know and the market that we delivered in, while we, at the time of the development of the new strategy, had not delivered on the land side. We will invest on the land side business when there is client revenue to be had or there is a good probability that it will arrive in different client contracts.
Next question is also about LandRisk. You have previously stated that LandRisk ARR will amount to around DKK 425,000. With the new contract with DSV and the finalizing of the DHL contract, can you give some insight into whether these expected numbers apply to these contracts as well, or if these first clients are getting some kind of early discount?
Unfortunately, we cannot comment on contract value unless this has been agreed with the client. ARPU will be adjusted if there are changes to the average. In general, bigger clients pay more per agreement than smaller ones due to more users, add-ons, and other items that impact the license agreement. We can also say that in both cases, we're talking about one business unit in each that then we hope and plan to expand in both organizations.
The final question: At your latest AGM, you got the ability to increase the number of shares by up to 10 million new shares. Currently, I view this as a risk of significant dilution. Can you provide some insight into how much of this you plan to use in the nearest future, or how big a cash injection you would look for?
Thank you. This question is probably a little bit older, because we have carried out two capital increases, one on the 27th of February and one last Monday, 20th of March, with a total of DKK 9.5 million, or 4.3 million shares. That the EGM gave the mandate to the board of directors was not the same as all DKK 10 million was supposed to be used, within a certain time frame. It's basically a long-term time frame.
Perfect. That finalizes the questions that we have received. There is no questions here in the live event. I will hand it over to you again, Hans and Jens, for final remarks.
Yeah. Thank you, and thank you for joining us today. We have, I think it was a test for us. I think the questions were really good because it tells us something about where do we need to improve our communication, which are the areas that are probably difficult to understand from the strategy and from what has happened following the strategy. It really helps us in communication and understanding what to address going forward. I hope that we'll learn more with more questions coming in the next events.
Perfect. Thank you for that, Hans and Jens. Thank you for everyone who has listened in here. This was everything for today. See you later on another stage.
Thank you.