Bambuser AB (publ)

Hi, everyone. My name is Mariam Ghiramani, and I'm the CEO of Bamboozer. I want to welcome you to this Q3 report that will be held by myself and our acting CFO, Jonas Lagerstrom. Today's agenda is a brief company overview for those who are new to Bamboozer. I will go through the key highlights of the quarter, and then Jonas will guide you through our SaaS KPIs and financials. We will wrap this session with a Q&A in the end. Bamboozer is the global leading live shopping company. We work with more than 300 brands that leverage our technology on a daily basis. To mention a few of them is QVC, Tax Fifth Avenue, Clarence and Givenchy. We have offices in Stockholm, New York, London, Tokyo and Turku, We have customers in 56 countries, we broadcast into 72 countries, and we have more than 25 languages in our player. What I'm the most proud of is our diversity and inclusion as a tech company. 60% of our senior management is female, we are 34 nationalities, and we speak 29 languages. Bamboozer launched the current live video SaaS service in January 2020. We had since then had a very strong ARR momentum that we're very proud of. We're just warming up for continued growth. Bamboozer offers two main products. The first one is our one-to-many and our current flagship product, representing over 90% of our ARR. The product allows our customers to stream a show on their own website, but also push the stream out to social platform, such as YouTube. If I just go through the product very briefly, normally our customers stream from a smartphone, but you can also use external cameras for more professional shows. In the player, we have interactive features such as chat and like. We have, when you push a product you would like to watch, then you will be redirected into the native checkout of the retailer. Our platform is agnostic and we do social media multicasting. Our second product is our one, two, one-to-one that we launched in 2021 by adding one-to-one as a customer service tool we enable brands to invite customers into private shoppable video calls with sales staff there is two way of entering a one-to-one call either it's a drop-in or a scheduled meeting with the clients it's a face-to-face and a two-way audio and video We have some of the best in class features in this product. This also is the same as the one-to-many, so you have a native add to cart and a checkout, and normally you connect the one-to-one to your booking and CRM systems. We sell our product in three tiers, and what differentiates our tiers is features, customer service, and SLAs. The typical contract duration is 12 months. And our revenue model is based on three pillars. We have a fixed one-time fee for onboarding and setup. Then we have the fixed SaaS license fee. And then we have the usage fee that is a variable fee. If you look to the one-to-many, it is based on streamed hours, which is how many people who watch a show and how long they stay in a show. And the one-to-one usage fee is driven by the number of agents. Bamboozer Plus was launched 1st of September this year. This is the result of us merging Relatable, a social media agency that we acquired last year, and our own professional services. We now have a new offering covering four areas, strategy and creative, influencer marketing, production, and education. The way we charge for Bamboozer Plus is either a retainer or by project. This is a key differentiator for us at Bamboozer. To be able to support our customers in the live video shopping journey with Bamboozer Plus, we shorten their time to success. As you can see, we're truly a global company with customers and partners across Americas, EMEA and APAC. Then I will walk you through the key highlights of Q3, starting with Hugo Boss. Hugo Boss has been a pioneer in fashion since 1924. They're headquartered in Möttingen, and they have over 1,100 stores worldwide. They have been a customer for ours since September 2021. They broadcasted their fall and winter 2022 show from Milan Fashion Week across 13 sites globally. They used our Simulcast feature, making product hydration possible for all 13 countries for the hour-long event across each site. No brand have ever attempted to stream like this and also make it shoppable. The average viewing time was 15 minutes and they had 12,000 viewers during the live. Moving on to US and Bloomingdale's. So we got the pleasure of using Bamboozer Plus production team onsite for this iconic gala live stream. They streamed live from their store in New York. This show has the highest number of live viewers and attributed sales for a single Bloomingdale live event to date. The average viewing time was 11 minutes and they had a 477% ROI on the show. So this was the first time for us attending Dreamforce. We had the US team and our dedicated Salesforce partner managers represented. Bamboozer was featured as one of three partners on their main commerce keynote. They have more than 7,000 partners globally, so we were very proud of being one of those. A fun note is that we have a joint sticker, as you can see here, aka Astro together, and we are actually the first partner ever to have a joint sticker. We truly believe that Salesforce will be a key partner for us. Bamboozer will be live on their app exchange in Q4, and this will unlock massive potential for us. And lastly, we partnered with Perfect Corp to offer virtual try-ons in our one-to-one shopping experience. This solution was premiered with our joint client, Perfume Christian Dior. Perfect Corp is the industry leader for virtual try-ons in makeup. And together we create a unique and very powerful digital shopping experience for our end consumers. Perfume Christian Dior is live in France and UK. And next up is the US market. With that, I will leave it over to Jonas.

Yes, thank you very much. So I would like to start to... give you a little brief of what happened in the company this quarter when it comes to some of our strategic review. We had a strategic review of our go-to-market strategy, which has now resulted in that we are three distinct regions that faces our customers, where we have sales, marketing, and customer service. They use the power and scale of our HQ functions Where we can see CRM, controlling, billing, and so forth. This also meant that we right-sized the company and resulted in annual cost savings in excess of 30 million SEK that we will see the start of the next coming quarter. We saw some of it this quarter as well. user adoption so our flagship product one to many and so a strong year-to-year growth when it comes to unique viewers and number of shows we start to see some seasonality in the figures as you can see we did have a decline from last quarter that is mainly driven by um that we have a number of real estate customers that do produce quite many shows. And Q2 was, sorry, Q3 was a quite slow season. looking at our one-to-one and this is our smallest product in our product suite but yet growing so we had a really really strong number of calls growth even though they came from quite small numbers but they are mainly driven by customers within the electronics industry all right so let's go into the sauce kpis and the financials First of all, before we go into this, I think it's very important that we, or that you understand how we define our customers as that is extremely essential in how we calculate our SaaS KPIs. So customer group is the sort of ultimate customer in our customer hierarchy. We have customers with quite complex legal structures where we typically sign an MSA with. a master service agreement, they in turn do not use the product. Instead, their subsidiaries are using it, which we sign individual agreements with. That can be due to that they're divided by different brands, different markets, or a combination. And then the paying customers have merchants. Those are the retailers that the end consumer is facing. We use merchants sometimes when we describe, for example, how many countries we are active in, as an example. So in this context, if a customer group is added, we will post it as new business. If customer A would churn, it will be a downsell. If customer B would add a product, it would consequently be an upsell. So I think this is very essential for everybody to understand. And this quarter was strong. We added on 38 new customer groups and had successful renewal and expansion with 26 customer groups. And looking more at our SaaS KPIs, we saw a strong growth of 98% year over year, landing at 142.4 million SEC in ARR this quarter. Looking at the GRR, We are not super happy with 78%, of course, but we also do realize that one of the reasons why we do see that high churn is that we had a number of customers that joined us during the pandemic that were not perhaps the right customer long-term, and we also see some small and medium enterprise customers that currently don't have the budget or the resources to sort of be active within the live video shopping space. However, looking at the NRR, which was 94%, again, 94% is nothing we want to be proud of. We should for sure be over 100. However, if we look at our enterprise customers, we had a very strong NRR of 138%. So that is very satisfying. And as you can see here, we had 285 customer groups and 300, excuse me, 355 logos. And the logos would be the ones that would represent merchants. If you remember the last slide. And also we had 17 of our customers that had AR over 1 million seconds. Okay, moving over to our ARR Bridge. January this year was the first year we could record data on this granular level. So we are pleased to show you the ARR Bridge for the three last quarters. As you can see, We had strong business, strong new business in all quarters. The churn improves here in the last quarter. But we also had some tailwind from the weak Swedish krona, which created a positive FX effect for us, especially in the last quarter. So going forward, this is, we want to show you the ARB on the last 12 months. But as of now, we only have data for the last nine months. So that's why these reports shows this. If we look at the AR by customer, this is just a chart that describes the previous slide. But as you can see, we ended this quarter with 285 customer groups, which we're very proud of because you can see that it's a very strong growing trend. where we add new customer groups every quarter. But most importantly is that we also grow our average AR per customer group. And that is a true strength. So we are now at 500K, half million Swedish kronor in average AR. Moving forward with the AR split amongst our products. So we have our flagship product. One to many stands for 93%. One to one stands for 6%. And others, which is our legacy business that we now sunsetting is 1%. And the legacy business in this context is our old broadcasting service that we have a few customers left of. If we move into our regions, Americas came in strong this quarter with a year-over-year growth of 168%. APEC also had a very strong growth year-over-year with 196%. EMEA had a solid quarter and remains as a largest region. As you can see here, they're almost 50% of our total AR. However, the USA United States is our largest country. Net sales. So, um, the lilac bars are, are, uh, net sales for sauce that continue to grow. This includes license onboarding and usage. and as you may have already noticed there is a lag in our net sales growth sorry there's a discrepancy between our net sales growth and our ARR growth and the main reason for that is that we did have some onboarding discounting this quarter that we used and also that it's a timing thing a lot of these contracts came in quite late in September, so they have not been able to be revenue recognized as much for this quarter. And that is very typical timing issue when it comes to the SaaS business. Professional services is still in its transition and to move over to the entire bambusa plus offering. Um, so, but what we do see as a highlight this quarter is that the blend in the net sales. And what's more healthy from our point of view, because it included more of the total bambusa plus offering. um let's look at the gross margin so this was the first quarter or this is the first quarter where we um show you our gross margin and this is also the first step of us um actually um publishing a functional based pnl that we aim to do um i will not give you the exact time timing but it needs to be in q1 23. so the gross margin for sauce the cost of revenue there which is the base for the calculation includes our onboarding team the customer success team that works with retention and then all software that is used to run the platform um we also made um adjustment this quarter a year-to-date adjustment of 1.7 million sec that affected this gross margin uh negatively and that was mainly due to that we re-identified reclassified some software costs from opex up to cost of revenue we also believe that the gross margin will improve over time as we do see that a lot of these costs are fixed and that they will not grow in par with our net sales growth Professional services had a negative gross margin of 17%. So, um, what is very important for everybody to understand is that the way we have sort of, um. Defined our gross margin for professional services. is that we include everything in cost of revenue, including all salaries. So the salaries, all costs associated with our assignments, everything. So you can say that this is quite equivalent to EBITDA. Speaking of EBITDA, and more specifically, adjusted ebitda we did see improvement this quarter compared to last quarter or less quarters and what is also positive is that the ebitda margin in percentage also improves and this is Of course, a result of our net sales growth, but also better cost control. And, I mean, we talked about the program of 30 million SEK. That's one thing. But, ongoingly, we also have a strict cost control. So, we are very dedicated to improve this EBITDA margin going forward. I would also like to highlight that in this quarter, we did have a one-off impact, a one-off cost related to some of the layoffs that we did of 2.3 million SEK. And it was not cash flow. It did not impact the cash for this quarter, but it will the two following quarters. and the last slide for this presentation is our cash balance so we closed at 401 million sec this quarter we reiterates that we strongly believe that the cash balance is sufficient to take us to positive cash flow And we can also see from our free cash flow chart to the very right that we had a quite strong improvement this quarter. And that is, again, mainly due to improved cost control, but also that we have been more successful in getting more months paid upfront from our customers. So with that said, I'm leaving over to our Q&A session.

Thanks for taking my questions. It's Erik at KPU Capital. First of all, thanks for your hard work for shareholders, and thanks for providing the ARR bridge. I think it's very helpful, and also for the back quarters earlier this year. I was wondering if you could maybe help just discuss a little bit more the different components so we understand how to think about them going forward. If we look at new business, it accelerated through the year, 14 million first quarter, now 21 million. I understand it's a lumpy number, but what sort of level would you be pleased with going forward if we think about the next two, three quarters on average? 20 million a good number, or was that a little bit high? Could it come down, or do you think you could actually do more? That would be my first question. And then one question on churn as well. Churn has been quite tricky to estimate. If we talk about absolute numbers, it was 5 million, first quarter 9 million and down to 5 million again. What level of churn do you think, and again, I know it's lumpy, but what level of churn would you hope to achieve going forward? 5% of your ARR on an annual basis, 10%, 20%, just some kind of ambition that would be helpful to understand what you're aiming for. Thank you.

Yes, thank you for those questions, um, in terms of the new business. What we would be comfortable with going forward. I mean, we are, we are, we're still in a new space, so we are very careful of giving, um, um, future outlook. Um, sort of guidance, so we will. We will refrain from doing that to give you any explicit numbers. But what I can tell you is that. what you see in the ar bitch is that it's it's um that is um how should i put it a a comfortable growth um that we would be satisfied with if that would continue um if i can address it like that and then for the shirn i would say that that that is something that we would consider improve of course over time we don't think that we will see any drastic moves quarter over quarter but you know it's it will improve over time if we can be somewhere around around 90 And that would be comfortable when we can go up to 95. I'm not sure. Again, I still think that this is a quite new space. So we are learning a lot about our customers and trying to find that ideal customer profile. But what we do see, where we have found that ideal customer profile that we currently work with, those enterprise customers, there we have a very low share. And as you can see, we had a very positive NRR. So it may be a bit of a fluffy answer, but I'm trying to not give you too precise guidance because we do not feel that we are comfortable doing that right now. I understand. That's very helpful. Thank you.

I can just add to Jonas also. So I think the sharing, as, as Jonah said, it's hard, but, but I would say that it is because we onboarded a lot of, um, uh, smaller businesses, uh, that doesn't have, um, uh, actually the budget I would say that it isn't the biggest issue. It's the resources. They don't have the resources to do the live shows. So that's where we're seeing Churn. And looking at our enterprise customers, I mean, this is what we are learning as we grow, and this is where our focus is now. And we believe that that is going to continue going forward.

That's very helpful. Maybe one question on new business and not discussing numbers, but where would you say Going forward right now in your discussions and when you talk to prospective clients, are the biggest opportunities any particular industry or any particular geography where you see, oh, wow, here is a lot of opportunity over the next 12 months?

I would say where we're the strongest is fashion and beauty. That's where we started and that's where we have great traction. Then we have a couple of verticals that is growing for us, which I would say is consumer electronics, home interior, auto. It's small, but we think that that is a vertical that is growing. they are on the, I'd say, going to digitalize the next coming year. So they will move over to this type of a way of selling. I would say that there is, if you look to the one-to-one, it is very strong within the consumer electronics rather than fashion and beauty. So we also see different verticals working for the two different products. That would be my answer, if you have anything to add.

Yeah, I mean, I can just add if we look at geography, so. Um, I mean, we, we are, uh, America is very strong for us and we can also see that. There are plenty of customers there that will really suit our profile at this very point. Um, of course, um, as well, but I would expect growth mostly in, uh, in America's and going forward, uh, because that's also where, um. Which is a bit strange, but we are based in Japan. In APEX, obviously, we are quite Japan-centric. But you want to think that Japan is more on trend when it comes to, for example, live video shopping. But in that sense, they're a bit more hesitant in comparison to EMEA and Americas. So those are the two regions we would see would be most important for us.

But also we have our smallest team in APEC or in Japan also. If you look to the number of employees, the US team is the most, the biggest one, but also in terms of looking at how long they have been here, that team had been up and running for almost two years now, and it takes time to employ and get people up to speed. So I would say that is why we are having that success in the US because that was the first market out of Stockholm that we really started to employ. um and add team members so they're they're they're full-scale team experienced and i would say emea is the next one and then we have the apac team that is the newest team and and the fewest um employees that's very helpful thank you maybe one more question if i may just on the cost side if we look at just a total cost base for the company it was uh

I think if I have my numbers right, $117 million Q1, $170 million Q2, so stability, and then $123 million this quarter. And if we adjust that for the extraordinary costs that Jonas mentioned, the $2.3 million, let's call it $120 million, so up a couple of million, but relative stability here. If we look over the next few quarters and with the cost-saving program in mind, how should we think about the costs Is it sort of stable at this level 120M or do you think it will keep growing? Because we have a lot of inflation. And even though you're saving cost it to go up, or could it actually come down just to understand which trajectory it will have. That would be helpful.

Of course, um, so 1st of all, the. The, uh, the annual cost saving is something we want to, um, we wanted to. inform you about because it's obviously a material thing. However, I would not consider it as a net cost saving over time because we will add more talent to the company where needed. However, we are very focused on our adjusted EBITDA. So whether that means that we will have more revenue that will, in that sense, compensate for higher cost base, that's something that we cannot really tell you here and now. But those 30 million that we announced will basically be a gradual cost saving the coming, I would say, 12 months. Um, and, um, in terms of if we expect our cost base to grow specifically, no, I would not say that. However, again, we, we, we are more obsessed with, uh, with adjusted EBITDA rather than the cost base. So, I mean, it is a relation between, um, revenue and, and cost. So, um, I don't know if that answers your question. But at least it gives you more about idea of how we sort of see our business from a financial point of view.

Yeah, I understand. Maybe I could just ask in a different way, just headcount in the next two, three quarters. Is it going up or down, you think, from the current level?

I would say it would be, it could perhaps fluctuate because that's always a snapshot we have chosen to do in a period reporting when it comes to our employees and not average. But I would say that this figure, roughly 200 employees, is um um will likely not decrease extremely much and likely not increase extremely either so it will hover around that plus or minus a few okay that's very helpful thank you thank you

As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no questions at this time. So I hand the conference back to the speakers for web questions or any closing comments.

So we want to thank everyone who listened in today and Yes, we will end this session.

Yeah, we don't seem to have any web questions. So thank you very much for listening and see you next quarter.

Yes. Thank you.

Thank you.