Checkin.Com Group AB (publ)

Hi, and welcome to today's webcast with Checkin.com Group, where we have the interim CEO, Christa Karlsson, and CFO, Martin Boimu, presenting. If you have any questions, please use the form located to the right. And with that said, please go ahead with your presentation.

Thank you, Martin. Welcome and good morning. Great to see so many people listening in. My name is Christian Karlsson and I'm the Acting CEO. Together with our CFO Martin Bojermont I will walk you through our report for the third quarter today. I hope you had a chance to review the report in the morning and also that you've read our previous market update that we communicated three weeks ago. The plan today is for me to start by discussing the company's general development followed by Martin, who will go over the financial parts. After a brief summary, we will also open up for Q&A. The third quarter has continued to be challenging for us, much like the rest of the year has been. At the same time, we continue to see strong demand for our products and for our company, which we hope to capitalize on in 2025. Our revenue in the quarter amounted to 18.6 million Swedish kronors. It makes it to the lowest quarter in terms of revenue this year. If we compare it to the last year, the loss is primarily driven by lower revenue in the travel segment. If you compare for the quarters during 2024, the quarter is mainly affected by the loss of revenue from Datacorp with 3.3 million Swedish kronors. As I said in the beginning, we had a tough start of the year. We see 2024 as a lost year for us in terms of growth. which we are, of course, extremely disappointed with. This is primarily driven by our significant investments in product and marketing in the travel vertical, which has not been paid off yet. However, we are looking forward with great optimism into this vertical as we remain serious investments through the year. And we are in many discussions and ongoing procurement processes with many leading global airlines around the world. As we previously communicated in our market updates, there is some concerns around regarding our collaboration with this large Swedish fintech company, meaning that we currently have no revenue from this customer. However, we hope that this agreement should be up and running again. We have significant opportunities to capture market share in emerging Brazilian regulated IGME markets, which is expected to be regulated start from January 2025. We've also previously announced a partnership agreement with Cracio and are now live on their marketplace. That means that over 7,000 companies globally can use our products through a simple configuration on the creation platform. This allows us to reach new industries and regions where we haven't had any previously business. As I talked about in the beginning of the call, Datacorp is a company we acquired in the beginning of 2022, specialized in advanced technology, particularly in image analysis and facial recognition. And it's now fully live as part of our software offerings. With the acquisition of Datacorp, it was included revenue from a client called RingCentral, which was about 1.1 million Swedish krona per month. It was, however, also associated personal costs at the same levels. It's been difficult to scale this opportunity together, and we have, for that reason, agreed with Rikscentral to end the partnership. As a result of that, we recorded a negative net revenue of 3.3 million Swedish kroners in the quarter, while it also reducing the cost by the same amount. This has led to a reduction in the number of employees in the group, decreasing from 63 to 55 in the third quarter. Over the last year, we've made heavy investments in both product and marketing, especially targeting the travel vertical. Although this investment has not paid off yet, we are convinced that they are the right steps for the future. This industry is by much longer processes compared to other sectors, especially regarding procurement and regulatory compliance. which makes it to take considerably longer for us to close deals. Today, I feel there's a strong interest in the products through the entire vertical, particularly from airlines. And I'm happy also to announce that during the quarter, we signed an agreement with Flytab, which is a leading online travel agency in North America with over 5 million customers annually. This also demonstrates the broad uses of our technology within the travel vertical. So it's not only targeted, for example, to airlines and so on. We remain engaged in multiple serious discussions with several global airlines where we have made some really good progress. And we hope that we are approaching daily closures. In parallel, we are involved in several global procurement processes. iGaming industry has been a quite lean year for us, both due to challenging markets for existing clients and perhaps a little bit reduced focus on this industry on our part ourselves. However, we are now starting to see some demand rebound with a higher influx of customers and greater interest than before. I want to highlight the agreement with stake.com, the world's fastest growing iGaming company, which has already led to additional contracts for our products, even though they have not been going live yet. We also see great opportunities in the upcoming regulation in Brazil, which is expected to take effect on the 1st of January 2025. As part of this, we have already signed an agreement with Superbet, one of the operators that are expected to be one of the market leaders. With the current regulatory momentum and a general focus on enhancing customer knowledge, we feel really well positioned for additional opportunities going forward. As we have previously announced, we will not meet our goal for the full year to reach 80% of this classic stats metric, rule of 40, which combines the growth per share and the EBITDA margin. However, the goal remains in place going forward, and our ambition is to exceed 80% on an annual basis in 2025 as well. And with that, I will hand over to Martin to summarize the financial patch.

Thank you, Christian. Um, as we've done previously quarters, uh, the, the report itself has all the numbers you can think of, but in this presentation, uh, my thought is just to go through the financial highlights. Um, so starting with revenue, it fell 38% compared to the same quarter last year, uh, landed on 18.6 million Kroner. That growth was not affected by any acquisitions or disposal, so organic growth was also minus 38%. The gross margin was 73% in the quarter, lower than what we've experienced previously. And as we mentioned previously, it's due to the capacity that we are building to meet future demand. And despite continued depressed revenues, especially compared to Q3 and Q4, as you saw on Christian's earlier slide here, combined with lower gross margins, EBITDA still lands at plus 4.3 million kronor for the quarter, corresponding to a margin of 23%. And the cash flow from operating activities was plus 2 million kronor. And we ended the quarter with a cash position of 30.2 million and an equity ratio of 87%. So going into the details on net revenue here, for those of you who followed us before, you recognize this format. We've added another block, 18.6 million kronor in the quarter. And that's 38% lower as we already discussed compared to last year. And the decrease from last year was primarily driven by loss in the travel or lower revenues, I would say, by lower revenues in the travel segments, and especially our largest customer. And if you compare to the sequentially to Q2 this year, the loss or the loss in revenue compared to Q2 is primarily driven by the loss of or reduction of the revenues from DataCorp and RingCentral that Kristian already covered. Going to gross profit and gross margin, gross profit landed at 13.6 million in the quarter. That's lower than last year, driven by decreasing revenues, as we already mentioned. And the margin of 73% is also lower than what we've experienced previously, around 80 to 85%. This is either for full year 22 and 23. And this is because of the investments that we are making in expanded capacity in the systems to handle to be able to handle higher volumes and higher demand from our customers, and especially costs for server capacity and similar. So when our larger customers push through more volume and use our software more, just like Q3 and Q4 last year, we are ready to handle it, and the margin will go up again. The gross margin will go up again. And the reason behind this is that Many of our direct costs, especially servers and capacity related direct costs, are not completely variable with the underlying volume. So it's more like incremental capacity steps is probably the best way to describe this. And then you have this dynamic with a lower gross margin when revenues fall. And on the flip side, when revenues grow again, we expect the gross margin to go up. Going to sales and marketing, we have increased these investments slightly compared to last year. We invested 4.3 million in sales and marketing during this quarter, corresponding to 23% of revenues. And we are at 21% of revenues so far this year, as you see on the right hand chart there. Going to EBITDA, it decreased a bit from last year, landed at 4.3 million kronor in the quarter, corresponding to a margin of 23%. And the decrease from last year is driven primarily by falling revenues and gross margins. But it's also partially offset by lower personnel costs, as we were able to reduce the personnel associated with DataCorp and RingCentral, which Christian also already covered. And then finally, if we're looking at the cash position and equity ratio, we ended a quarter with a cash position of 30.2 million kronor and an equity ratio of 87%. And with that, I'll hand it back to Christian for some closing remarks and Q&A.