April - June 2023 (compared to the same period last year, Upsales group)
•Net sales grew by 13.9% to MSEK 36.7 (32.2)
•Annual recurring revenue (ARR) at the end of the quarter was MSEK 141.4, an increase of 9.4% during the last 12 months
•ARR changed by MSEK 0.0 during the quarter
•EBITDA increased to MSEK 11.9 (7.6)
•EBITDA margin increased to 32.3% (23.4%)
•Operating profit (EBIT) increased to MSEK 9.8 (5.8)
•Net income increased to MSEK 7.9 (4.6)
•Cash flow from operating activities increased to MSEK 7.2 (3.3)
January - June 2023 (compared to the same period last year, Upsales group)
•Net sales grew by 18.1% to MSEK 72.9 (61.8)
•EBITDA increased to MSEK 21.3 (13.2)
•EBITDA margin increased to 29.2% (21.4%)
•Operating profit (EBIT) increased to MSEK 17.2 (9.7)
•Net income increased to MSEK 13.8 (7.6)
•Cash flow from operating activities increased to MSEK 20.7 (8.4)
CEO COMMENT
During the second quarter of 2023, net revenue increased to 36.7 MSEK, representing a growth of 13.9% during the last twelve months. Our Annual Recurring Revenue (ARR) amounted to 141.4 MSEK at the end of the period, representing a growth of 9.4% during the last twelve months. Upsales continue to grow with profitability, and EBITDA increased to 11.9 MSEK, representing a margin of 32.3%. Our cash flow from operating activities increased by 120% to 7.2 MSEK, and net cash at the end of the quarter was 45.1 MSEK.
I’m not happy with the ARR growth in the second quarter. The ARR remained unchanged from the previous quarter because churn and contractions were at the same level as new sales and expansions. Our main objective is to build a strong sales capacity to get us back to rapid growth rates. This means that in the short-term, we will focus less on our international expansion and more on building sales capacity in general. This quarter, we’ve continued building the sales organisation needed for our growth ambitions in the coming years. The sales organisation and practices from the last couple of years took Upsales ARR to 141 MSEK. We’re focused on creating an organisation to grow the ARR to 1 billion SEK. We recruited our new Chief Revenue Officer, Christian Nyberg, who will join Upsales in August with several new sales team members. Mr Nyberg has a strong sales management background from software companies such as Salesforce and MongoDB and holds an M. Sc. degree in Finance from the Stockholm School of Economics. We’ve also hired Linn Sterby as Head of people, joining the management team after the summer. Linn will focus on accelerating hiring and continue building a solid company culture. We plan to continue building the team rapidly in the second half of 2023 and onwards. The necessary changes in our sales organisation have had a negative short-term impact on our growth rates. My view is that the long-term growth opportunity for Upsales remains strong, and the slower ARR growth in the first half of 2023 is not the result of a weaker market. Upsales has a competitive offering and a scalable business model with high effectiveness and customer satisfaction. We aim to have a strong sales capacity at the end of the year, but we don’t expect ARR growth to improve during Q3.
Increasing our average deal size and selling more add-ons and upgrades to larger customers is essential to our strategy. We continue to invest in our product, adding more functionality for companies with advanced requirements. The product team is in the final stage of releasing our CPQ offering targeting customers with complex quotes and orders. We’ve also added more features related to our Swedish cloud, which remain a key requirement for data privacy-sensitive customers. The engineering team is also growing, with several new members joining us after the summer.
Although I’m not happy with the current ARR growth rates, I’m excited about pursuing future opportunities for Upsales and continue building a great company with my existing and new colleagues.
Daniel Wikberg, Founder & CEO