Oneflow AB (publ)

to this update of the highlights from the third quarter interim report for OneFlow. My name is Anders Hamnes, I'm the CEO of the company and next to me we have Nathalie Hjelve, CFO of OneFlow. As always, please use the Q&A function in Zoom and not the chat, and we will get back to your questions at the end of this presentation. First, some highlights for the quarter. ARR closed in at 179.7. And we also published yesterday the end of October numbers, which was 179.9. We had a currency headwind of around 700,000 in October. And year to date, we had a currency headwind of 4.2 million. ARR had the same growth rate in Q3 as in Q2, closed in at 19%, or 19.5 actually, but yeah. Net new ARR, up 19% year over year, 8.5 million sec in net new ARR, which is actually up 30% since Q2 this year. ARR per full-time employee, 37% growth year-over-year. Net and gross retention came in also at the same level as in Q2, 87% on gross and 97% on net. And to the maybe biggest highlight of the quarter, positive EBITDA, 16% on EBITDA and minus 12% on EBIT. EBITDA for Q3 last year was minus 17%, and last quarter we had minus 20%. So as always, we just like to take this opportunity and share with the new participant briefly what we do at OneFlow. We are a contract lifecycle management platform. We help people in sales, procurement, legal, finance, HR, all departments to manage contracts and the full lifecycle end-to-end solution. You can create Flexible templates in OneFlow. You can collaborate in real time. Of course, you can approve and sign and post sign. You can manage contracts inside OneFlow. You can be on top of your obligations and liabilities, get notifications, filter, analyze. And we also have a lot of really powerful AI solutions, both in the pre-sign and the post-sign buckets. to help and assist our users to make better calls and to be on top of everything. And one of the great advantages with OneFlow is that you can save a lot of time compared to working with Word. PDF or even e-sign. I mean, there are a lot of e-sign vendors in the market, as you know, that focus on the sign bar in the middle here, but they only solve a very small part of a much bigger problem, in our opinion. So this year has been quite eventful for the company. We have made a lot of changes in the company, not only in headcount, but even in headcount. And we have also made two very important hires this year. So we have I mean, we all have our sweet spot and the phase that OneFlow is in right now, the stage that we are in right now, and also where we are heading, we needed a different kind of leaders in the top management team. So we have added two really, really strong profiles to the company. Markus started as a CRO, Chief Revenue Officer, in June this year. And I think it's funny just to mention that he even has a doctor's degree. That's not so common. Doctor's degree in organizational leadership. He has extensive experience within sales, marketing, strategy, leadership, specifically within B2B SaaS and B2B, actually B2B software in general. And he also spent nine years in ProSales, a company working dedicated with research, advice, strategy, and either leadership training for companies in the B2B space. So a really, really interesting background for what we needed in our CRO profile. Kristoff started quite recently in September. Also a very, very heavy track record within product and product management. He came from a role as head of product at Entecard, almost six years at Entecard. And a little funny side note is that Kristoff actually worked in OneFlow some time back. He spent two years there from 2017 to 2019. Then it was a very small company. Kristoff was the only guy in products. and so he was a solo player and that time maybe the company wasn't the best fit for Kristoff because his profile is more for bigger teams like we are now so we have kept him warm over the years because it was also kind of a big loss back then but we are super happy to have him back in the team. So before we dive into the numbers, just some highlights from the product. And of course, we don't list all the things we do in the product. We just mention some of the bigger events. Otherwise, this list would have been really long. So in Q3, we added what we call internal notes. So we can have notes to documents in the company and, of course, collaborate with notes and so on across the team. AI summary, you can get a brief summary of the most important stuff in your contracts in a second instead of reading the whole contract. And we are constantly, constantly doing a lot of improvements in our AI insights offering. It's a really powerful feature. You can scan through all your contracts, find deviations and so on. And before we had fixed playbooks, but now you can even customize your own playbooks. This is really, really, really powerful. customize even severity and bridge risk levels and so on. And everything you do and write closest feedback and so on will inform our AI agent and make it more accurate and more exact. This is not based on chat keepity. So this has been trained on contracts for very many years. So a lot of years. So this is really, really a product that we're really, really proud of. Data retention, of course, we are in the kind of compliance business. Contract is your goal. It's your obligations. It's your everything. So we need to be top notch on that. And we had a lot of new rules and more flexibility when it comes to data retention that was launched during the quarter. It's very important, especially for enterprise companies. White labeling, you can now have a much stronger brand profile with the counterparties in the contract. So OneFlow is toned down, if you'd like. You can brand your mails and contracts and so on in different ways. personal time zone and data format. We have always had this kind of basic level, but now it is way more powerful. This is obviously very important for big enterprises working globally. And to us, this was kind of a thing we just needed to upgrade heavily when we opened our office in the US a few weeks back. Integration is one of the kind of key features in OneFlow. We have a lot of really powerful integrations, and this is kind of an ongoing thing. We had several improvements this quarter on HubSpot, Dynamics, Pipedrive, and UpSales, and we even launched a new integration to Lime CRM. We had an old one that was just Sunset, but now it's a totally new integration to Lime, and Talent Recruitee, an HGS system. After the quarter, we made several new improvements to SuperOffice and into Lime, and we also launched what we call multiple custom email domains. This is maybe also a feature for enterprises and global teams operating in different regions. So you can send contracts from different emails based on what regions and so on you are active in. So let's go into the numbers. A net new ARR closed in at 8.5 in the quarter, 19% growth year over year. And if you look on the graph to the right, you can see that, or even to the left, actually, you can see that we have a nice trend this year. It's been increasing quarter on quarter. And even 8.5 is up around 30% since Q2 this year. Heavy currency headwind, as we said in the beginning of the deck, so 4.2 million year to date. If we zoom in at the numbers for the third quarter, we actually had an all-time high in new ARR. an all-time high in expansion ARR, but we also had an all-time high in churn ARR. That was why the net new was pushed a little bit down. It is still quite windy outside. It's been windy for some time now. Gross new ARR, so if you add new and expansion, you get gross new ARR. We had 14 million in the quarter, and this was just behind the all-time high across all quarters, which was 14.5 actually. So gross new was actually quite good but the big bully here is the churn actually. And we also had end of Q3 signed contracts worth around 6.6 million that will be recognized after the quarter. ARR almost 180 now and that this is a 19% growth year over year. And if we fix the currency, it will be slightly north of 20%. We have guided the market before and we reiterate our same guiding that we still gonna stick with a goal of reaching 30% growth again. But now we made a quite hard turn right to become profitable. If you go back a few years, we didn't expect it to be kind of this rough, the right turn. But we have been selling a little bit more over the last few years than we were planning to do. So that was why we needed to just make this turn a little bit rougher. So, of course, it's hard to balance becoming profitable and also to maintain the high growth base. So our focus is now primarily to become profitable and try to grow as much as we can. But it's heavily weighted over to profitability at the moment. This is going to shift, obviously, but we'll comment more on that later. How can we... see an excellent growth again. Obviously, many factors always, but one, obviously, the external factor is the market fundamentals at some point that might change. We do have a lot of new features and product enhancements all the time. So there are gaps in the product that we know about. We know the pain points. We know why we lose when we lose. We know why we win when we win, of course. So we have a very, I would say, really, really interesting backlog for 2026 to fix that. We have launched many really heavyweight AI features over the last few years. I'm not sure actually if the market recognized this in the same way as the private market does these days, to be honest. This is not some AI fluff that a lot of companies talk about these days. I mean, even my toothbrush has AI on it today. So, I mean, this is, I mean, we have really invested heavily in AI over years now. So I'm really proud of what we have to offer, what we can offer. What we experience in the market when it comes to selling AI is that most companies are still sitting a little bit on the barge. Customers are very immature when it comes to AI. We all talk about it. We all use chat GPT for kind of maybe polishing some email or whatever, but this is not... using AI in your work to analyze stuff and so on is still a little bit immature. But what we see now is that more and more companies actually take the step and start to experiment with AI in a different way, which is a very interesting sign for the future. And we are in a great position at Bonflow. We are not in the backseat. We are having our hands on the wheel in the front seat there. And mid and long term, we see this going to have a big impact for Bonflow. And of course, we do a lot of improvements in our go to market motion and in our product as well all the time. So a lot of things here that's going to play together and going to bend the curve at some point. We had an ARR per FTE end of Q3 at around 1.1 million sec, which is up almost 40% year over year. And in combination with an ARR growth of almost 20%, this is, in our opinion, at least quite impressive. Efficiency is about achieving more with less. And that is exactly what we're doing at the moment. And this is an important KPI, obviously, because we are an ARR company and 98% of the revenue is recurring. And we don't basically, I mean, gross margin is 93%. So it's a very, very small coax here. Our main cost is salary, salary and salary. And this is why this metric should be a good indicator for when we're going to break the magic line and become profitable at some point. Yeah. The net gross retention rate was stable. from Q2 this year, 87 and 89%. Gross retention include down, gross retention include churn and downgrade and not expansion and net retention rate includes everything, churn, downgrade and expansion. Over the last few years, two years, one and a half year actually, we've had a quite balanced mix between downgrade and churn, or when I say churn now I mean terminations, it's around 50-50, and it's the same kind of mix now in Q3, 50% downgrade and 50% terminations. I know that some companies don't report actually downgrades. That's what you should do, of course. So it has stabilized now and the drivers for increasing the net retention rates, obviously, as we said in the two slides ago, underlying market fundamentals, new features, new integrations. product enhancements, gaps. We have a lot of really, really interesting AI features that's ready for market that might not be as ready yet as our features, but that's going to change soon, we think. GTM and product-wise, many, many changes. And even product packaging is something that we believe is going to help us out here to bring the net and gross back to where we want them to be. Paying customers increased 12% year over year and the average customer value up 6% just hit the 40,000 sec mark. And we believe that the ACV is going to continue to increase going forward. This is a very important focus area for us at the moment. Again, it's about features, deeper integrations, adding more value to customers, adding more value to customers and solving new problems to customers. And packaging is also going to be a very important component here to increase the ACV. We do constantly renegotiate contracts with our customers. And we also have this marketplace that we launched earlier this year where we are upselling add-ons to the plants that our customers are in. Maybe I will leave the stick to you now, Natalie.

Thank you so much. Perfect. So we continue to increase our net sales, and that's, of course, in line with our increase in ARR growth. We have improved our net sales with 21%, ending up at 43%. million in Q3. Also looking from a year-to-day perspective, we can see that we have actually improved our net sales with 25%, closing at 124 million year-to-day numbers compared to 99 million we had in the same period last year. Sweden is still our strongest market when it comes to the net sales. It stands for 59% of our net sales, but we're quite strong in the Nordic. We have Norway at 14% and Finland at 10%. And then the remaining 17% comes from the rest of the world. If you look at the shares of net sales coming from regions outside of Sweden, we see that percentage steadily increasing. We ended up at 41%, which is approximately the same percentage we had last quarter. However, we do believe that this percentage will increase as we expand into other regions outside of the Nordics. The majority, almost all our net sales, is connected to our software recurring revenue, which stands for 98% of our net sales, and the remaining 2% comes from professional services. As you can see, our gross margin continues to be quite high and strong at 93%. Looking at the last quarters, we are around 93%. But we do... I think that we do know that the gross margin will slightly decrease in upcoming periods. Now, the reason for that, if you look at the cost of service sold expenses that we have, the majority of that or the large portion of that is connected to sales commission to our partners. Now, the partner channel is very important to us, of course, a really strong channel we have and a very important partnership that we recently established. engaged to was the partnership that we have with OneFlow North America. Now, OneFlow North America is a company that is established on the North American market, and that is our way to expand the North American market. And as you know, the North American market is a big market with great potential. And besides the partnership agreement that we have with North America, we also have 20% ownership in OneFlow North America. And I'm happy to share that we have actually closed our first deal and many more to come from North America. We have a really strong leadership team in OneFlo North America. So there's very good and high potentials on a rapid expansion in that market. But besides the partnership agreement and 20% ownership that we have in North America, we also have an option to buy the remaining 80% of that company. And so initially, we do believe that the gross margin will decrease because the partner commission will increase. But in a couple of years, when we make the decision to buy the remaining 80%, of course, our gross margin will increase a bit, approximately at the same level that we have today. As Anders mentioned in the beginning of the presentation, this quarter is a very big financial milestone for OneFlow. We closed EBITDA with a positive number of 7.1. This is a really great improvement if you look at the last quarter at minus 8.5, but also compared to where we were one year ago at minus 7 million. So a really important milestone have been achieved this quarter with a positive EBITDA. Also, if you look at the year-to-day numbers for EBITDA, we close at minus 10. And this is to compare with last year, we have approximately at minus 35. So this is a 71% improvement from where we were one year ago. Also looking at EBIT, EBIT have also, of course, improved significantly during the quarter, closing at minus 5 million to compare to the minus approximately 16 million we had one year ago. Also from a year-to-date perspective, we have improved EBIT with 27%, closing at minus 45 million for 2025 year-to-date. So a really big, big milestone for OneFlow this quarter. Also looking at the EBIT and EBITDR margin, we have an EBITDR margin that is positive, closing at plus 16%. And compare this to where we were one year ago, minus 17%. So this is a really big achievement this quarter. And more to come, of course, as you know, as Andrew mentioned, our most important priority right now is to steer one flow towards profitability. So that's a really big focus that we have. EBIT flows at minus 12%, but our predictions is, of course, continue the work that we've done, reviewing the way that we work. We have a really great organization, a strong organization, really good product and expansion that we do in North America. All focused right now on driving OneFlow towards profitability. stabilizing the cost base, having this strong mobilization, a very strong product, but also continue to grow in ARR. We have not changed. Our financial goals are remaining. We do believe in an ARR growth above 30%. And this is a long-term perspective. It's long-term financial goals that we have, but also to reach profitability with current funding. And as Anders mentioned, in the short run, we do understand that we do not have the 30% year-over-year growth when it comes to ARR. But in the long run, That is our ambition. Let's see if we've received any questions in the Q&A.

A lot of questions.