October - December 2023 (compared to the same period last year, Upsales group)
- Net sales grew by 3.1% to MSEK 36.3 (35.2)
- Annual recurring revenue (ARR) at the end of the quarter was MSEK 140.4, a change of -3.7% during the last 12 months
- ARR changed by MSEK -0.8 during the quarter
- EBITDA decreased to MSEK 9.2 (9.3)
- EBITDA margin decreased to 25.3% (26.5%)
- Operating profit (EBIT) decreased to MSEK 7.1 (7.5)
- Net income decreased to MSEK 5.8 (5.9)
- Cash flow from operating activities decreased to MSEK 9.8 (18.0)
January - December 2023 (compared to the same period last year, Upsales group)
- Net sales grew by 12.1% to MSEK 145.2 (129.6)
- EBITDA increased to MSEK 42.6 (35.6)
- EBITDA margin increased to 29.4% (27.5%)
- Operating profit (EBIT) increased to MSEK 34.4 (28.5)
- Net income increased to MSEK 27.6 (22.5)
- Cash flow from operating activities decreased to MSEK 32.4 (33.7)
CEO COMMENT
In the last quarter of 2023, Annual Recurring Revenue (ARR) amounted to 140.4 MSEK, a change of -3.7% compared to the same period the previous year. ARR decreased by -0.8 MSEK during the quarter. Upsales has a strong cash position and continued profitability with an EBITDA-margin of 25.3% during the quarter. For the annual general meeting, the board proposes an ordinary dividend of 1.50 SEK per share.
ARR decreased slightly in the fourth quarter due to new sales and expansions being lower than churn and contractions. In 2023, we made many changes in our sales organisation that were necessary to support our strategy of moving up-market and increasing the average contract value per customer. In the short term, this hurt our growth rates, and from a growth perspective, I will remember 2023 as an Annus horribilis. But when I zoom out and look at the bigger picture, I see a significantly improved company compared to twelve months ago. The changes we have made give us the capability to return to rapid growth. Our work of building sales capacity, i.e. hiring more people for the sales organisation, continued with good progress during the quarter. We are also seeing positive results from our Customer engagement team, launched in the second half of 2023 to reduce churn and increase customer engagement. Our strategy is to be the best sales and marketing platform for Nordic mid-sized companies (companies between 100-2000 employees). We can offer this target group a faster time-to-value at a more attractive price than our competitors. These customers appreciate our local presence and integrations with the local ecosystem, while being a full scale platform. Our team of in-house specialists is also a key differentiator, eliminating the need for third-party consultants. Legislations (GDPR etc.) also play in our favour, where we have a unique positioning with our 100% Swedish data centre.
My colleagues in the product team continued to release many exciting new features and offerings in the last quarter. We continued the development of the Upsales Customer Portfolio, which helps customers see both risks and opportunities among their customers. Another source that helps you understand customers is your customer service. Unfiltered purchase and churn signals are gathered here, which, with the right tools, can help companies both retain and grow customers. During the first part of 2024, Upsales will launch a new service, Upsales Customer Support. Here, the customer service team works on the same platform as the sales and marketing teams. This will also increase our total addressable market. We are also continuing to deepen our subscription service. With these features, customers get complete control of subscription revenue, where flexibility, control and overview are the focus. In the future, we will also deepen the sales support for those Upsales customers who, in turn, have larger organisations as customers. Upsales is expected to clarify even the most complex customer and sales structures.
The ARR growth in 2023 can't be blamed on external circumstances (macro etc.), as we continue to see an ample opportunity in the market for Upsales with a continued demand for Upsales products and services. With reduced churn rates and increased sales capacity, I am confident that Upsales will return to ARR growth in the first half of 2024.
Daniel Wikberg
Founder & CEO