Oneflow AB (publ)

Okay, good morning. Welcome to all of you to this earnings call for Q1 2026. Okay, so my name is Anders Samnes. I'm the CEO of the company and next to me we have Nathalie Hjelve, CFO of OneFlow. And as always, please use the Q&A button in Zoom and we'll get back to the questions in the end of this presentation. And please don't use the chat. OK, first, some highlights for the quarter. ARR keeps growing and we ended at 194.2 billion in Q1, which is up 80% year over year. If we look at the total CLM market, it has been growing for the last years in the range between 10 and 15%, depending on which analyst you ask, but in the range 10 to 15%, and last year it was close to 10%. So we are actually growing somewhat faster than the market, so we take market share. Also considering the sentiment that's been around for the last few years, it's not that many companies in the Nordics that keep this growth in this market. So we are quite happy in one flow. Net new ARR reached slightly north of 11 million for the quarter, which is one of the highest we've had in the company. ARR per FTE, important KPI to measure our efficiency of almost 50% year over year. Net and gross retention. 97 and 87 percent, which is up one percent on both actually since Q4 last year, and EBITDA 16 percent and EBIT minus 12 percent. I know that many of you like to talk about the rule of 40, So if you take our, and there are different ways of calculating that one, but the most common way seems to be the ARR growth and plus the EBITDA margin. So, one year ago, if you summarized our AR growth and in the terminology one year ago, we had 1% and today it's at 34%. Where would it be next year? We'll see. Okay then, so there are always so many people joining this call, so we just like to take one slide and just very on a high level describe what we are about. We work with contracts, the full lifecycle, contract lifecycle management. pre-sign, sign, post-sign. You can do all the steps in the process in one flow. You can build templates in a very powerful editor. You can collaborate in real time. You can manage your contracts and analyze the contracts. And of course, we have a lot of ai support throughout every step in the process everything from writing highlighting improvement areas highlighting risks in the contracts give you suggestions for how you can improve the content uh you can summarize you can even describe or make templates for how you want us to summarize the contract what data to focus on and so on and you can you can extract the data with ai you can you can analyze all your contracts throughout all workspaces with ai to kind of find out the For example, contracts that deviate from the template or if you want to find out if some contracts are missing a clause or if a value is below or above X and so on, it's a really, really powerful AI capabilities across all steps in the process. I'm not going to talk much about AI today, but I would just like to say that since there seems to be some, at least some in the market, that feel that we talk about the death of software. To me, this is just the biggest bullshit. Can I use that word? I think it's fine. Today, it's a Friday.

It's a Friday, exactly.

This is an opportunity. This is the beginning of SaaS 2.0. And we are super excited about the times we're in. And I speak on behalf of everybody in the company. And I think the ecosystem of SaaS entrepreneurs as well. So this is the beginning of SaaS 2.0. So it's really, really exciting times. Okay, then. So I'm not going to go through all the product releases we had in the quarter, but I just picked out a few highlights. We had a really, really upgrade on our search capabilities. So you can do really powerful searches across all your workspaces to find whatever you want to find. In a second, we launched a whole new Document overview list, which is a very central part of the application. You can customize it in so many ways and you can see contracts. We get a much bigger overview of the contracts today than you could a few weeks back. AI extract has no more data points, is smarter. You can extract stuff that you could not do before and combinations of stuff. uh we've always had many currencies but the new thing here is that now you can have many currencies in the same workspace in the same database and you can combine them so that's of course powerful for companies that are of some size and have operations across different countries um we One of the strong USPs with OneFlow is that you can build an interactive web-based contract and not this kind of PDF paper experience and we had a huge upgrade on our image section this quarter as well which is can make your contracts or offers look even more stunning. It can be more kind of fulfilling to the whole experience. Data export, we've had that for many years, obviously, but now we can, at a much more detailed level, define how you want to export your data, what kind of data you want to export and so on. Tax fields, we did a huge upgrade on that as well in the quarter. Now you can, to a much more detailed level, define how you want VAT or whatever tax field you have to look like in a product table. that can be quite complicated because companies want to expose this table in so many different ways. And there can be multiple tables that you have to summarize and so on. So this is actually a quite big thing. And last but not least, Flex HRM, a new integration that we launched. And lots of other stuff I'm not going to go into today, but this is just some of the highlights for the quarter. Back to some numbers. Net new ARR was up almost 100% since Q1 last year. So we had a really strong start of the year and one of the strongest quarters ever actually, if you look to the right. We have to go back to Q1 2024 to see a quarter that was actually the all-time high we had. And just an interesting thing to note about that. If we compare this quarter, Q1 this year, to Q1 in 2024, gross new ARR was exactly the same in those two quarters. What makes them different is the churn, which has been higher over the last few years and quarters and even last quarter. So the churn was higher in Q1 this year compared to two years back. However, the churn is now... getting falling. We'll talk more about that in a few slides. So we have focused a lot on efficiency over the last few years, ways of working and the We actually achieved this with fewer sales reps this year than we had in Q1 last year. So almost double Net New Year R on a lot fewer sales reps because we are more effective in ways of working. We have done many changes in our go to market motion and ICP. So we are actually faster in many ways today. Yeah, I think I'm gonna move on to the next slide. We had an ARR growth at 18% year over year, ended at 194.2. And if you include April, it was at now 195.3. We have guided the market that our target is to achieve at least 30% growth and also to become profitable without raising more cash. However, we've also said that we will not focus or we will prioritize profitability today over growth and accept that we will not be able to reach the growth target in the short term. So still that stance, we're going to reiterate our targets. We focus really hard on becoming profitable. And once we have achieved that, we will be able to put some more weight on the growth again. And we strongly believe we have a plan. on how we can exceed 30% growth again. So obviously we have been through a phase for the last two years where we have cut some costs in several rounds and we have trimmed the organization. And when you go through stages like that, there are always ripple effects. So it's hard to maintain a really high growth and increasing growth in such an environment. But now this is behind us and a lot of things is actually pointing in the right direction again. What also is going to obviously at some point help to fuel our growth is that the market has been for the last few years a little bit tricky. At some point that will change, we believe. We are making a lot of improvements in the product. We have a new product strategy, which we are super enthusiastic about. are filling the gaps we are making customers more happy we are solving new problems for customers and we also made some huge changes in our go to market motion and and icp and also a proof that we are actually point moving the needle now in the right direction is that we actually almost double net new ARR in Q1 this year compared to last year with a fewer headcounts because we are working in a smarter way. ARR per FTE up almost 50% year over year. Internally, we talked a lot about achieve more with less. It is a good mantra that we believe strongly in. That's actually what excellence is about and we are almost growing at 20% almost and almost 50% efficiency improvement in combination that's quite strong I would say in this market so why this is important this KPI I mean we are an ARR first company our revenue is 99% recovery 99% recovery cross margin at 92% our main cost is salaries salaries salaries salaries and so this should actually give a very good idea on what on on when we will break the magic point of becoming profitable um and the pattern here we started with a quite low uh it's been like like half a million and seven hundred thousand so this is quite common in sauce because uh because in sauce the costs come up front you need to build something amazing before you can sell it but the beauty of sauce is that it is recurring so yeah a very common pattern but now we are strongly moving up in the right direction um Also, two of our favorite KPIs, net and gross retention. Gross retention include churn and contraction, also called downgrades. And net retention is a catch-all. That's churn, contraction, and expansion. We did improve net retention by 1% in Q1 versus Q4. And we did improve cross retention with 1% in Q1 versus Q4. What we also can say, or we brought in the report today, this morning, is that we do see now that the trend has shifted. The churn is going down. We believe that Q2 will be even better and that we know are going to move both net and gross retention up and up and up. If you look at some of the customer cohorts that are within our ICP, the net retention only today is way above 100%. So we have been through a phase where we have made a shift. We had a huge bucket of companies that did not fit as well. And now this bucket has become much smaller. And we believe that now it's going to be up, up, up going forward. So drivers for retention rate, obviously, when we are through this phase of becoming profitable, we can refocus our internal efforts, market fundamentals, product improvements, and what we talked about in the GTM. What we see is that The further away from the ICP the customer is, the higher churn rate we had and the lower expansion rate we've had, which makes sense obviously. So churn and expansion problems we've had is for customers that's far away from the ICP. We increased our paying customers by 8% in Q1 versus Q1 last year. And the ARPA went up 9%. And ARPA is average revenue per account. We can also disclose that we talked a lot about our GTM and ICP shift that we went through last year. In Q1 this year, we increased our ACV by 70%. Initial ACV. ACV is annual contract value. So the initial annual contract value increased by 70% in Q1 this year. The ARPA is the total customer base. So it takes more time to move that needle, but 9% is really, really strong considering that this is the total customer base. So why did we succeed to increase our initial ACV so much in Q1? Manufacturers, pricing and packaging is one of them. We are adding more value to the customers. We are solving new problems for customers. And it has a lot also to do with our focus internally when it comes to the GTM and ICP. And then, of course, you always have the renegotiation component and the more sales from our marketplace. Okay then, I think I will leave the next slide to you, Nathalie.

Thank you. So our net sales came in at 48 million in Q1, up 22% year over year. As Anders mentioned, almost 100% or 99% of our net sales is connected to software recurring revenue. But I think what's even more important here is to look at the consistency behind that growth. So we have increased our net sales quarter by quarter, going from 33 million in Q2 of 24, increasing it to 48 million this quarter. Another thing I want to highlight here is the progress that we are doing internationally. A couple of quarters ago, approximately a third of our net sales came from regions outside of Sweden, and that percentage have increased to 44%. this quarter. And what this is telling us is that our offering is actually resonating well beyond the Swedish market. The Swedish market is still our largest market, representing 56% of our net sales. But what we're seeing is strong contributions from Norway, Finland, rest of Europe, and of course, our international market as well. And what this gives us is a resilience and a broader platform for future growth. So two things to take away from this is that we continue to grow our net sales every quarter, and we also are establishing and making our offering outside of Sweden even stronger. Looking at our gross margin in Q1, we delivered a gross margin of 92%, which is in line with the constant high levels we've maintained over time. And what is our gross margin telling us? So it's highlighting the strength and the scalability in our business model. It also reflects the efficiency that we have in our platform. So we are able to continue to grow while still investing in product development, investing in international expansion, and of course, our customer growth as well. So overall here, we are not just growing, but we are growing with very strong margins, and this is supporting a long-term scalability. On profitability, we continue to deliver strong progress in Q1. EBITDA came in at 7.6 million, making this the third quarter with a positive EBITDA. And compared to just one year ago, this reflects the progress that we made in scaling the business more efficiently. As Anders mentioned, a smaller, tighter team, good structure in the organization, and we are working more efficiently. At EBIT levels, the results are still impacted by our investment in product development and our amortization of historical capitalized development costs. One thing that's important to understand here is that these investments are intentional and they remain quite important. We will still continue to invest in product development and strengthening our platform. And this all will support our future growth. So overall, what this is reflecting is that OneFlow is scaling while continuing investing in the future potential of growth. EBITDA and EBIT margin are still, we have seen a lot of improvement here over the last year. EBITDA margin have improved significantly comparing to what we were one year ago with the negative, really negative levels and now up to having three quarters with positive EBITDA. So in Q1, EBITDA margin came in at 16%. And the EBIT levels have also improved significantly, although they are still affected by our product development investments. What I also want to say here is that what this is showing us is the scalability in our business model. As revenue continues to grow, we are seeing a strong operating leverage, but also a clear path toward sustainable profitability. Another very important milestone this quarter was achieving a positive net cash flow. In Q1, we delivered a positive net cash flow of 7.4 million. And over the last two quarters, we have seen steadily improving our cash generation quarter by quarter, moving from very negative levels to more positive territories. And this improvement is driven by a few things. First of all, a stronger underlying profitability and EBT performance. We have continued to increase our customer base, which increases our recurring cash flows. And we have a better working capital efficiency. And that includes, among many things, lowering our DSO and have a faster cash conversion. So overall, this is another sign that the business is maturing well and not only growing in revenue, but also converting that growth into healthier cash generations. Our financial goals remain the same as last year. We have a long-term goal to reach an ARR growth year-over-year over 30% and to reach profitability within current funding. What we are focusing on right now is to reach the profitability with current funding, and once that is achieved, we will increase the growth acceleration again But maintaining a healthy profitability, that will always be important and a focus for us. And just to summarize the highlights of Q1. So we had an 18% ARR growth year over year. 49% improvement on ARR per FTE, showing us higher productivity per employee. We have increased our net and gross retention, both with one percent compared to where we were in Q4 last year. We continue to have a positive EBITDA and a milestone for this quarter was reaching a positive net cash flow.

All right. OK, then, so I can see that the first questions here is maybe more for you, so I can I can read them. Were there any one-time OPEX or cash flow effects in Q1, negative or positive?

Yes, so we had a one-time expense in Q1, approximately around 0.7, 0.8 million. That, of course, affected our result. We also, on a yearly basis, have a kickoff in January every year, so that also affects, of course, the numbers. But besides that, there is nothing else. Again, going back to what I mentioned previously, we are growing our sales, we are growing our ARR, but we are maintaining our cost base. And that of course, the combination of that will in the future, hopefully we were, and as you can see also in the last quarters, we have improved our net cash flow quarter from quarter.

Swedish revenue declined quarter to quarter. How come? Customer loss or something else?

As I mentioned there again, what we are seeing is that we are improving our growth in our international markets, so the markets outside of Sweden. So it's not so much that Sweden is declining, it's more that the percentage of the revenue coming from regions outside of Sweden is increasing. And this is a positive thing because we invested a lot in our markets external markets outside of the Nordics. So this is a positive trend, if you ask me.

Yeah, so the decline here is not decline in absolute numbers, it's in the growth, the growth decline. So the net, obviously, we had a positive net new year in Sweden for the quarter. So it's just that the growth went and growing faster outside. Okay, so what do you expect of working capital for the full year given the SEC 15 million release in Q1?

Again, I think I also answered this question. I mean, we are growing in revenue. We are growing in ARR. and we have stabilized our cost base. I don't see us increasing the cost base, but I do estimate that we will increase our growth in ARR and in net sales. So what we want to see in the upcoming quarters is of course a better cash generation quarter by quarter. it will go up and it will go down. But the ambition is, again, I mean, to steer OneFlow towards profitability with current cash funds. So that's the aim and that's what we're focusing on.

Yeah. So, I mean, we have a cash end of Q1 at 50. Yeah. And you need a buffer. So there is a limit to how much we can kind of play with it. That's maybe a bad word, but it should be possible to make some assumptions here that actually... Okay then, so is there any changes in the underlying market demand? No, versus one to two quarters ago. Talking about, there's a lot of changes when it comes to stuff internally in OneFlow. But the question is regarding underlying market demand. I would say it's pretty much the same as it's been for the last Even maybe one and a half year. It's been pretty much the same, actually.

More or less.

Not getting worse, not getting better. It is still growing, but it is challenging. It's been that for a few years, actually. But it's not getting worse, no. And not actually getting better either, I would say. From an external underlying market point of view. So we have to then improve from the inside to make it better. How is the US venture progressing? Well, we had two guys in December. We had three more coming in in Jan. So now they're still in ramp up. We are happy. We have seen deals. It will take some time. But yeah, we need more time to kind of give more, to show more input on that one. But things are moving according to plan. That's important to know. Things are moving according to plan. Why hasn't the margin continued to increase since Q3 of last year?

We're talking about the EBITDA margin or EBIT margin, I'm guessing.

I guess both.

Yeah, let's assume that. So, I mean, again, we have stabilized our cost base. I understand that many people would assume that they will see an increase quarter by quarter, but from a cost perspective, and there are some investments in a year that's more heavy in the first quarters and less heavy in other quarters. So for example, as for you that have followed OneFlow historically, you can see that Q3 is usually a very profitable quarter looking from an EBIT and EBITDR perspective because we have the summer periods and less in employee costs from an accounting perspective. Again, going back to our financial goals, our main focus is to continue to grow the business. We will still do investments during the year that we feel are necessary to support the future growth. and increase our sales. So the ambition is, of course, to improve both EBIT and EBITDA quarter by quarter in the upcoming periods.

I mean, we've made many, many changes in the organization over the last two years. And those changes will always, some of those changes will have a cash flow delay that you're carrying costs for some quarters and so on. When you are moving, turning direction, you will not be able to see this as a straight line in the accounting. It's not how it works. It will be it will be two or three quarters that are quite, that seems to be quite flat. And then there will be a bump. And then, so it's going to be a little bit, but you have to look at maybe floating four quarters to see the trend. Okay. I think that's the last question we had from the audience.

Perfect. Okay. All right. Thank you for joining.

Thank you for joining and wish you a wonderful. Happy Friday. Yes. Happy Friday. Bye-bye.

Bye.