Bambuser AB (publ)

Good morning, and welcome to Bamboozer Q1 2023 report. I am Maryam Gurimani, the CEO, and I will hold this presentation together with acting CFO, Jonas Lagerstrom. Today's agenda will cover a short company introduction for people new to Bamboozer. We will then move over to Q4 highlights and finish off with SaaS KPIs and financials. Bamboozer is the world's leading video commerce company. We were founded in 2007 by offering a video technology that lets users stream live video from their mobile phones. We pivoted into video commerce at the end of 2019 and have since then attracted over 350 brands across 45 countries. We have a global presence in New York, London, Paris, Tokyo, Turku, and Stockholm, where we have our HQ. We have since the start delivered a strong ARR momentum. For this quarter, we faced some headwind due to weaker macro, churn, and delay in deal closing as we are in conversations with more enterprise customers who typically have a more complex procurement process. The world is changing, and it's changing fast. Today, most e-com sites are static. meaning that they only have text and images to describe the products. However, we are all interactive more and more with video today. I'm sure that in the last 24 hours, you have already consumed some sort of video with FaceTime, Zoom, YouTube, or any other services. These consumer trends will turn into business, and it is only a matter of time before video can become standard in e-commerce. The evolution to video is unstoppable. Bamboozer offers a shopping experience that taps into today's consumer behavior around video. With Bamboozer, our merchants can 10X their conversion, repurpose the content by using snippets from the shows in social media, on product landing pages, or even use existing videos and make them shoppable. The customers are making more informed purchases, and as a result of that, we see decreased returns among our customers. Video commerce is the future and something that has a significant presence in China. The western part of the world is five to seven years behind China, where we noted massive GMV growth and general adaption. We have assessed the market opportunity and estimated that the global total addressable market is over 250 billion SIC and growing. The market is wide open with low penetration. Our core market opportunity is estimated to be over 9 billion SEC. It consists of larger companies being present in the regions and verticals we currently serve. Bamboozer is the leading SaaS company in the video commerce space and well positioned as demand grows. Our product suite consists of two products. One to many is our flagship product and stands for over 90% of our ARR. This is the solution when one of multiple hosts is interacting with many viewers. It is very easy to get started. You can basically start from your smartphone or use external cameras. The viewers can interact through chat and send likes during the show. The one-to-many solution has a full product promotion and add-to-cart functionality. One of our core strengths is that we use the merchant's native checkouts. This is important as the checkout is very often the most important step in the customer buying journey that the merchants have spent most time iterating in order to achieve the highest conversion. One-to-many integrates seamlessly with the customer journey. Our solution is also platform agnostic, meaning that we can work with more or less all e-commerce platforms, such as Salesforce, Commerce Cloud, Shopify, or Magento, to name a few. Our other product is one-to-one. This is our solution that allows the merchants to have a face-to-face conversation between the end consumer and the brand representative, either in the form of a drop-in or a scheduled meeting. Our solution is very strong in verticals such as beauty and consumer electronics. We also see demand in verticals that have complex purchase journeys, such as automotive and luxury. Our one-to-one solution has an interactive shopping layer that integrates with the merchant's native add-to-cart function and checkout. We also have integration to several booking and CRM systems. Bamboozer is present across the globe with over 350 paying customers, and we're proud to have some of the best-in-class merchants and partners using our video commerce platform globally. Now, please let me walk you through some Q1 highlights. We successfully acquired new customers such as Sonos and Cybex, and renewed and expand customers such as Clarance, Net-a-Porter, and Dick's Sporting Goods. We launched our own booking system for one-to-one, which was a feature that our customers had to have with another service provider before. It is still possible for our customers to integrate their preferred booking system with our platform, but the fact that we now offer our own booking system really sharpens our offering. A booked one-to-one call has an average duration of 50 minutes, and the average order value is plus 65% versus unassisted e-commerce sales. We are proud to welcome Sonos as a customer. Sonos is a perfect example of our ideal customer profile, the kind of customer we are pursuing. This was a lead through our Salesforce partnership channel, and we're excited to see what other opportunities our partnership channels will present. We released our one-to-many SDK that allows our customers to integrate our technology into their own consumer-facing apps. Our customers can now offer their end consumers a customized journey with full control. This is a product that our customers have asked us to offer, and it creates a strong stickiness as we integrate quite deep into our customers' tech stack. With that, I'm now leaving over to our Acting CFO, Jonas Lagerstrom.

Good morning. I will now guide you through the SaaS KPIs and financials. We have restated our ARR as we have updated our ARR definition to include discounts. We will therefore use this updated ARR definition when we communicate ARR going forward. I would also like to remind you that we start account for ARR when a license period begins and we post the ARR as shown when the license period ends, even if we are in discussion with the customer about renewals. If the customer comes back at any time after the churn, we will post it as new business. The AR growth was 26% year-over-year at constant exchange rates. The quarter-over-quarter growth was flat, and it was a challenging quarter with a weaker macro that delayed several new business discussions, and we were also impacted by churn in the quarter. EMEA represented over 60% the new business and we also saw strong growth in APAC. We're not satisfied with the growth but notice that the customer churning have a lower average AR profile than the group average. We are working to refine our ideal customer profile to onboard customers with better retention opportunity and also setting up tactics to reach that customer group as effective as possible. We are introducing A new pricing model in Q2 that would allow the customers to grow with us as they increase adoption of our video commerce platform. And we're also refining our time to value customer journey so our customers get as much value as possible from our platform in the shortest amount of time. Our net revenue retention improves slightly quarter over quarter for all accounts. and we remain strong in our enterprise segment. The somewhat weaker quarter-over-quarter NRR amongst the enterprise and top 20 accounts come from that we have been very successful upselling our current enterprise accounts in the past 12 months. For a good portion of the enterprise accounts, our current pricing model limits us to grow at the same rate this quarter. As mentioned earlier, we are introducing a new pricing model that would allow us to continue to grow our accounts over time as they increase adoption and get customer value. The number of customer groups declined quarter-by-quarter due to churn as already being addressed. However, we see a 5% growth year-over-year, and we are pleased to see that the average ARR by customer group continues to grow with 30% year-over-year. We see this as evidence that our focus on enterprise accounts is paying off. Let's move on to AR by region. APAC demonstrated high growth and now represents 13% of the total AR. Beauty and electronics were strong verticals. Our move on more mature markets, Americas and EMEA, did not see the same growth, but it was still successful in growing verticals such as passion and home and garden for EMEA, and accessories and jewelry for Americas. EMEA remains as the largest region with 51%. If we look at the product mix, it is similar to the previous quarter. One-to-one has taken approximately one additional percent of the total ARR share with strong growth in APAC and Americas. One-to-many saw growth in all regions led by APAC, in percentage growth. However, Americas and EMEA accounted for the growth in monetary terms. We are pleased to introduce a function-based income statement this quarter. We are, as of now, breaking out the expenses by function, namely S&M, R&D, and G&A. This also means that we are presenting a gross margin that reflects our business model. We believe that this will give better transparency and improve benchmarking with other listed SaaS companies. If we look at the net sales development, it grew 1% year-over-year, mainly impacted by weaker professional services. As mentioned in previous reports, we are focusing our professional services around our SaaS offering. Hence, it is expected to see a decline year-over-year until the transition is completed. Most important is that we are growing are SaaS net sales with 25% year-over-year. The SaaS gross margin improved 10% year-over-year, sorry, 10 percentage points year-over-year. The margin improvement was driven by better scale of our fixed costs. The gross margin for professional services is equivalent to adjusted EBITDA margin, meaning that we recognize typical OPEX costs such as staff costs, assignment costs, subcontractors, but not amortization, and depreciation as cost of revenue. We saw 3% improvement, excuse me, 3% disappointment improvement year over year for the professional services. For adjusted EBITDA, we noticed a small decline quarter over quarter due to increased spending in marketing and IT and due to weaker net sales from professional services. Most importantly, the underlying trend is positive and we improved adjusted EBITDA margin with 30 million SEK year over year. We continued our initiatives to become leaner and more efficient as an organization. We're continuing this work in Q2 by reallocating capital where it truly moves our business forward in terms of improved ARR and free cash flow. And let's finish with the cash flow. We noticed a similar trend in the free cash flow as with adjusted EBITDA. This quarter was a bit affected by negative working capital, but we see the same underlying trend that points in the direction of our positive cash flow target. Our cash balance was 348 million SEC, which we consider sufficient, taking us to positive cash flow. Thank you for listening. We are now moving on to the Q&A session where we are ready to answer your questions.

Thank you. If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Eric Colson from Cape View Capital. Please go ahead.