Agillic A/S

CSE:AGILC

Earnings Call Transcript

[Unknown Analyst]

Hi and welcome to today's event, where we have the pleasure to present Agillic. From the company to help us through today's presentation, we have CEO, Emre Gursoy. Today's event will, of course, focus down on the Q1 results. Kind of if I should give some headlines.

Some growth momentum, 26% in the ARR, 20% last month, so rising. Maybe what I focused in on was the largest customer intake you've had for many, many quarters. As long as I can remember back under number-wise so -- so all in all, it looks like the business dynamic at least out there looks very, very strong. It was a little bit on the cost side -- on the cash flow side, but I'm sure you will get more into that, Emre.

As always, ask questions down in the box down below. Do it in English or in Danish, I will try in Danish, I will try and translate it to the best of my ability, but feel welcome to ask the questions in Danish also.

But Emre, I think we should -- I will hand the call over to you, and you can take it from here.

[Emre Gürsoy, executive]

Perfect. Thank you very much. Let's kick off, and I will try to do my best to cover the full spectrum. Let's start with a very quick introduction to our company, assuming that there might be some attendees for the first time hearing about Agillic.

So Agillic is a Software-as-a-Service platform, operating internationally within marketing technology sector. Our omnichannel market automation platform is the preferred solution for brands to work with data-driven insights to create, automate and send almost one-to-one personalized communications in their customer portfolio. That's why we sum up of our unique proposition of personalized communications to millions that comes from -- directly from the core of our platform's abilities.

Through the activation of this first part of data, our clients, they maximize the value of every customer experience in their portfolio with higher conversion, higher retention and increased customer lifetime value.

We have -- we are just in Q1, crossed over the 100-client barrier. Now, we have 105 clients. We have clients in 11 markets. They're operating with our platform or through our platform over 170 markets. The broad penetration of our client base covers retail, finance, travel and hospitality, technology cloud, entertainment and gaming type of companies mainly. And the common dominator across all these type of companies is that they're all first-party data-rich companies. They are customer-centric companies, and they all are highly dependent on their customer loyalty. That's where we come into the picture and make a difference for their long-term customer lifetime value there by revenue generation.

We have 47 employees in 5 different locations, mainly in Copenhagen. And then we have our sales teams in Norway, Sweden, Germany, and then we also have our development teams in Romania and in Ukraine.

Now, the good results that we have also that, Michael, as I mentioned, that we have achieved our highest AAR ever with DKK 58.8 million, total ARR results, which is very promising for us.

Now, if we dive into some of the highlights of our business performance in Q1, our total revenue in Q1 is DKK 14 million. That's the highest, as you can see. What I usually do is I usually use the trends to give kind of an understanding of our development -- ongoing development. And in the middle, you can see our EBITDA with minus 1.7% in Q1, and I'll give you more details on that one as we go through.

And on the right side, you can see that our AAR development -- total ARR development, having a quarter-on-quarter very strong development behind it.

Now, the EBITDA part of it, if we just quickly touch on it, is that it is mainly the costs that are increasing in Q1 that has, I call them the joker cost, which is basically the market situation has created a whole new cost structure across the board, which we are also aligning naturally our structure. But it is one of the main drivers of the changes in Q1.

If we look into the SaaS highlights of the Q1. Now, that's quite a strong year-on-year development on our ARR. Total ARR, 26%. 14% of that one is driven from our subscription increase and 145% of it is coming from our transactions part of the ARR. These are very satisfactory numbers as we go through our guidance and how we are looking into Q3 -- Q2, Q3 forward.

And looking on the right side, where we have the total revenue of an 11% increase. Mainly, the heavy part of this increase is driven from our transactional part of revenue with a 160% increase. And then a slight downside on the revenue on the subscription part of it, which we're also addressing as we go through. That is mainly from the large portion of the high increases on the existing revenue. Client uplifts in Q1 2021 gives us quite a strong base to get higher, but that is also one of the reasons on why we are on the minus 2.

Another good reason for -- explains that the very increased number of the revenue numbers that we have on the Q1 with new clients. There are 9 of them. Most of them are having the revenue impact in the coming or the following quarter, so that is mainly the staggered effect of it. But it is coming, and that's a very promising leverage.

If you look at the big picture of our overall ARR performance, what you're seeing on the chart is that annual actual numbers on 2020, 2021 on the total ARR. And then the middle part is representing our Q1 ARR performance, which is a nice way of upwards going -- having heading towards our guidance of DKK 65 million to DKK 70 million for the full year part of our ARR guidance.

In addition to that, we also have -- the last 2 years have been running with our Reboot strategy that financial goals towards 2023. There mainly is double-digit growth on our subscription part of our ARR, which we are achieving. We have achieved positive EBITDA for the last 2 years annually. We are aiming the same for this year and then creating a positive cash from the operations, which we also achieved in last year on an annual basis. We are aiming for the same in this year.

So we -- overall, we believe that we have a strong performance on our guidance, and we are keeping our guidance as it is as we see it.

If we look at some of the details of the financial -- key financial highlights for the year is, I think it's important to mention some of the details. I mean, as Michael mentioned in the beginning, the most important parts, we got good growth on the top line. It's important to dig into the EBITDA and cost base and then the cash in hand.

So even though year-over-year, we have a smaller number of employees. And if you look at that one, if we start with the employee cost, we are 47 people now. We used to be 50 last year. There's an increase on our -- 14% increase in our employee cost. That is one of the market conditions that we are living with as well as our continuously increasing competencies and the capabilities that we are seeking from our international experienced new members. That lifts up the cost, which is part of our exercise, but it is another market reality that we are doing.

And then we have the -- naturally the joker cost that, across the board, all our expenses are increasing, which gives us a whole -- another cost base that we need to work with, which we are addressing. That is also -- giving also operational cost increase of 37%. Altogether, these costs are giving a minus DKK 1.7 million on our EBITDA performance in Q1.

Though we are not making any compromises on our growth, strategic decisions that we have defined, and these are mainly going on to new sales directors joining into our organization in new and international markets. We are continuously increasing the partner engagements and our joint go-to-market activities on the international markets, and we have C-level investments that are part of our future growth performance that are all combined within this structure.

We also have adjustments to our -- covered our resource relocations from our key team, which is also within the unexpected cost structure that we had in Q1. And all this are being addressed altogether.

Now on the cash side, and I think it will also be the most important question that everybody has been -- since we have this morning I've been receiving, is that will you be interested to increase your cash base? Will there be any need for that one? At the moment, we are still saying that, within the given circumstances that we see it for the rest of the year, we will not need any cash increase. We are -- when we look at our revenue generation and our growth rate, in the next couple of quarters, it doesn't seem like there will be any need for that at the moment.

Now on the cash side, there are also some other items that has had an effect on this decline. One of them is we had a COVID-19 VAT loan, which we paid back in Q1. It was a one-time payment coming in Q1. And then there are a couple of our clients who have had some COVID impact in their business. They wanted to postpone their -- short-term postponement of their payments, which they've already -- we did and they already paid them, but that falls into April in Q2, not in Q1. That's one of the other reasons.

So altogether, when we look at our cash status, we are still in the plan. And thereby in Q2, there will be some corrections that will be putting us back to where we're supposed to be.

[Unknown Analyst]

Emre, if I can ask some questions. Is it a full year payment of -- for the client, you have an average around DKK 600,000 per client?

[Emre Gürsoy, executive]

No, that was for the Q1.

[Unknown Analyst]

That was for the Q1.

[Emre Gürsoy, executive]

That was only for the Q1, and that's already completed. It was just a bit of an unexpected delay, but shorter.

[Unknown Analyst]

Just to kind of figure out the size. I know we don't want to mention the amount probably, but just to figure out what size it was. I don't know whether we can give some ballpark of...

[Emre Gürsoy, executive]

Giving a ballpark will be something similar to that. But it is a substantial payment, let's see, that will give us -- it will be remarkable when we look at it on the numbers.

So there -- as I said, in Q2, that will be adjusted, so that will give us a clear picture.

[Unknown Analyst]

Okay. And -- sorry, and...

[Emre Gürsoy, executive]

As long as we are not looking into new capital increase, that should give us a very good benchmark of where we are.

[Unknown Analyst]

And then you also mentioned something in the reporting about you're looking at your cost structure. I know you have seen it rise and you want to address it. Maybe can you -- I don't know whether you will comment on it later, or can you give some examples on how you can address it? Everybody is feeling this. It must be pretty hard to -- in this inflationary environment to try and address some of the -- to try and address the cost side now. So maybe if you can give some kind of examples about how you want to address the rising cost and maybe get it a little bit back to normal levels again?

[Emre Gürsoy, executive]

Naturally, naturally.

I mean, it's a pain that everybody is feeling at the moment. What we are addressing is that there are different pillars that we are looking into. One of them is operational efficiencies, which means that how do we make sure that our efficiency within as a company, how can we increase this one?

I mean, if you look at it, 2 years ago when I joined the company, there were -- I think it was around 2018, 20%, higher number of employees we have had to a lower amount of -- a much lower amount of ARR. So -- what we have been -- across the board, what we have always been working with, how do we create -- get the best people, hire the best people, ask them to work with the best processes, and thereby, how can we automate these processes? So there is a continuous efficiency exercise that we run in the company to get the most operational efficiency for the areas of interest.

In addition, we are looking into suppliers. We're looking into renegotiations with suppliers or addressing new suppliers. So this vendor pressure, because everybody is feeling the same pressure and there are some better deals out there for better conditions and better quality, but there is a continuous search for that one. And in addition, of course, we're also looking into reflecting these price increases also on our own prices because as we are buying higher prices, we are also selling.

So it's across the board. It is not one-time at all. It's a search, and I'm very happy that Claus, as our Senior CFO, has joined us as of 1st of March. We are now together very much key on focusing on these solutions.

[Unknown Analyst]

So I also have a question here, so I think maybe it fits now. Have you paid more per client? You're coming in, the customer acquisition cost, you're getting in more clients. Have you raised the price for getting in new clients? Or if you understand what I mean, increased -- the marketing spend to get in more clients? Or is it not that, that is driving it? I know you don't give your CAC number in quarters, but if you can just kind of elaborate whether it's -- whether it stands...

[Emre Gürsoy, executive]

Naturally -- yes, of course, you're right. We do -- we give it on an annual basis, and we had a very strong 2021 on 8 months on recovery of the CAC and CAC was DKK 300,000. So now these are very, very high numbers in regards to that one.

But to answer your question straight forward, no. It is not costing us higher numbers. It's not increasing that way. It is because more and more, we are activating our strategy with our partners in the international market. Now, if there is anything that is increasing is our joint go-to-market activities with our partners. That is pure business, so it is one of the best investments we can do to make noise together with our partners in that market so that we can create the awareness and the interest to our portfolio.

So that kind of engagements are increasing. I will give another example in a minute. But other than that, as we go through and I have to say, better the people, better the processes, higher the impact. That is also -- we are also experiencing as we go through right now.

[Unknown Analyst]

Perfect. So it's -- to clear it out, it's not you spend a lot of more money to get the highest number of clients and no?

[Emre Gürsoy, executive]

No, no. If I look at -- just to follow up on your question also, if you look at the key SaaS highlights of our performance now, I mean, as I mentioned, the ARR is increasing quite nicely on the 26% on the total ARR, the subscription part of 14% transaction, 145%. Now, all that together gives us a very good base of the plans for the -- for the next quarters as we are moving in.

Now, there's another interesting thing to mention here that if you look at Q1 last year when you and I were speaking about the circumstances, it was a year of -- we were one of the companies who were highly impacted by the COVID due to our client base within travel and hospitality. Now if you look at the numbers last year, we were trying to explain why we have lost DKK 9.2 million on ARR from the year before. To get that now, we're in the same situation. Now, this time, we are now going on with DKK 12.2 million up versus -- on our ARR versus our last year Q1.

So there's a movement in the right direction and the market trends are showing really strong positive development behind that one.

So the barrier of 100, 105 clients, we're in the right direction, and we are keeping our average ARR still around DKK 500,000, DKK 600,000, which is a very, very strong position for us because that is actually a very strong position from the way that we are going in.

Now, the very interesting part that I would like to highlight a couple of details that are going back to your question. If you look at our Reboot 2.1 strategy, it was mainly focused on growth with partners on international market. So I thought that one of the best ways to actually tell where and how are we doing is tell exactly how are we doing on these parameters.

So internationalization. If you look at that one, now, I would like to give some numbers that will give some feeling of that one. 36% of our new Q1 clients are from international markets. 4 out of 9 new clients are international market clients. Now, this is another strong way of saying that almost 4 out of 9 in the last quarter is from international, showing that we are in the right direction as a growth rate.

Another element that I would like to mention is that "Made in Europe." That is a new strong promise that we're going out in the international markets with especially in Europe because with the new compliance rules and regulations made in Europe, as Agillic is made in Europe, retained in Europe, servicing in Europe, is a very strong promise when we are actually competing out there. So this is becoming a very strong internalization parameter for us as a proposition.

And lastly, is that on January 1, we have had Sturla -- Sturla Lang is our new Sales Director in Norway. He joined on January 1, and I can now tell you that already in the time that he has been with us, we can see some real strong impact.

On the partner-driven acceleration. Now, I would like to give some other numbers. Out of the 9 new clients we got, 7 of them have been together with our solution partners. We won these clients together with our solution partners, 7 of them. In addition, 4 of the 9 wins that we have, they were together with our technology growth partners. Some of them were also overlapping with the solution partners.

So what is happening is now we have created this ecosystem of partner-driven growth and partners -- technology growth partners, solution partners and us altogether growing in the right direction. Almost half of the business is growing internationally, and this is with the partners. So it's a perfect match, it's coming together.

Then, we have a very strong message in Q1 that late March, we came up with a reseller agreement we have had in Germany. And the Blue Planet, I'll talk in the next slide a bit more about this one. And then lastly is that we are also expanding our team here in Agillic with the partner team members. This is also becoming a very important part of our growth for the future.

Couple of newsworthy mentions. We are running a European research together with Forrester with an omnichannel marketing automation. That is a very interesting research because that has never been done before, so we are the first one who is going to do it, and we're going to own it. We have C-level growth. I mentioned Claus joining us as a CFO at 1st of March. And then we have also just announced that as of 1st of May, Lars Kejser, highly experienced within this space that we are operating, joined us as our Chief Client Officer and very heavily experienced within the partner engagements. So the team is getting stronger. I'm very happy about that. And then we also welcome Ellen Swanson as our VP of Service Operations.

Now, besides is R&D management responsibility, it comes with a very strong compliancy and security knowledge from his background. It is a very important aspect, as I mentioned, Made in Europe is a proposition that we are trying to own as we are owning with -- together with competencies that such as Ellen is bringing into our space.

And then lastly is Dansk Erhverv, Danish Chamber of Commerce, is doing another award for 2022 in regards to e-commerce space, and several of our clients are within that space. We're very proud of that one, the news are coming up in the next month.

Now going back to the reseller, DACH. I think I would like to mention a couple of details on that one because I think it's worth mentioning. As we announced the partnership, Wall Street Online even picked up this news, the one left corner article there is from their side. It's -- it was a very important piece of news because it's a new way of doing business also in Germany. And in Germany, the digitalization is number 1, one of the 3 strategic priorities within the government, so there's a major push behind it.

Blue Planet is also -- is a digital marketplace, and a reseller for cloud solutions with highly established SaaS solutions within their portfolio. They already have Slack, Salesforce, DocuSign, [indiscernible], and so we are becoming one of their portfolio of services and -- software solutions. And our main focus, together with them, it's what they call Mittelstand in Germany. It's basically small, medium enterprises as we are highly focused on. That's also their focus.

Now, the interesting thing about Mittelstand in Germany, and I was blown away with the numbers as we are working together with them there, we're digging more and more, there are 1 million companies in Germany falling into this category called small, medium business enterprises. There are over 20 million people working in that space. 40% of the German gross investment comes from there, and 30% of the German exports comes from Mittelstand. So this is a very rich, as they call it, is the backbone of Germany, as they call it over there. And the last 3 days I've been in Germany, so I'm like very energized with this whole thing. It's just an amazing thing.

So already in May, in Hamburg, there is this -- the one on the top right, I put that OMR 2022, that's a digital conference, 50,000 to 60,000 people are expected. We are there with Blue Planet with our team, sales team, and we are part of their portfolio, meeting with the market. This is already our engagement go-to-market model.

So going back to your question, Michael, kind of increases on our -- if anything increasing? Yes, we are there with all our team members, all the material, all our engagement. It's all about making sure that we have the strongest awareness creation activities to harvest the potentials of the 50,000 to 60,000 people that are present.

[Unknown Analyst]

If I can have a clearing question because normally, some of your partnerships is someone who goes out and do it, really marketing agencies to use your program to go out and do it. Is that also the case here with the Blue? Or is that more like a digital reseller where you also need to partner up with other ecosystems, find someone implementing it and find someone who runs their customer database, and then on top of yours? Is that Blue who puts the bits and pieces together more than going directly into the client and building their system? Is that correctly understood?

[Emre Gürsoy, executive]

Very good question. Blue Planet is a reseller at the moment. What we are doing together with them is that they already have their own network of solution partners, the ones the joint meeting as the implementation partners. We do have our own 3 solution partners in Germany already. So what we are doing is we are putting together a solution partner portfolio from their side, from our side, and so that we are getting richer in the solution partner space in Germany too.

Because in Germany, you also have to think about the geographically, the northern part of Germany, middle part of Germany and the lower part of Germany. So we are also trying to get ready with partners in each area, so that making it as easy as possible for the clients that we will be approaching to. Everything is in German, all the team members are German, so we can get them all started.

Lastly, I just want to mention from our side that -- and I think this is quite important for -- to mention, that we are very proud of carrying great Danish business success stories of our clients to the international market. So what we're doing is not -- we are not only selling our SaaS, we're actually selling our clients' success out in the international market and scaling the maximum of it. So we are doing a lot of webinars in Germany, Sweden, Norway, together with our clients, together with our partners, creating success stories and how we can actually get the most out of it for everyone over there.

In addition, we have put together these client stories on video of our clients telling their success story. We started with [ Minto ], then we've got [ Maytas ]. Now, we are about to come up with IO Interactive in one of the next phase. We already have a queue or pipeline of clients who are willing to tell their stories from Sweden -- from Norway and from Sweden. So what we -- these are all the amazing stories coming out live to create. When you are coming from a whole Nordic country, in a market like Germany, it is an amazing power to come up with stories such as told by clients that they know of. Everybody knows IO Interactive's name, everybody knows [ Minto's ] name, and they're also very well aware of what [ Maytas' ] success is all about in the Nordics.

So all this together, giving us a good acceleration opportunity.

[Unknown Analyst]

And do you -- still catching the big fish in Germany. I guess a star client is always good in a known geography. So I guess you're also trying to catch that one where you can really use that, but I know it's a little bit longer. I guess that.

Do we have any -- something that is big enough for you already in Germany to go out and see this is what we do for them? I know you don't have the result yet because they are calling in now, but are there something in the pipeline where you could also use the local -- maybe a local star down there to kind of go out and show you?

[Emre Gürsoy, executive]

It could very well be. It could very well be. It's -- I mean, we have multiple -- in the pipeline, it's a very quite a strong pipeline. I mean, don't -- let's not forget. I mean, in addition to Blue Planet, the reseller engagement, we already have our direct sales channel that is still running full power, and we're actually increasing the number of members. So our engagement is dual and the pipeline already now shows multiple interesting, very interesting names.

And the very -- another important thing to mention is the size is different when we come into the German market because their first party data is bigger, population is greater, so the opportunities are much more interesting than what we have experienced in the past. So that will be my key.

And one last thing that I just want to mention that it sounds a bit of an advertising of yourself. But I mean, [indiscernible] put together an investment case, and you don't even know that I was going to say this. But the investment case is actually telling quite a good story of our development because we have had one in mid last year, and then now we have another one with the Annual Report results, so it just tells a very nice good story of the progress that we are achieving. So anyone who is interested to read it.

That's all for me, so we can take questions.

[Unknown Analyst]

Perfect, let's take some questions. I think we answered someone -- there's a question here.

Which geographic market have you landed most of the new clients in, and is there a tendency in industries? I already -- you looked at, you said 4 of them was international. And if there are tendencies in industries, you're moving a little bit away from retail more to the online, which is part of your strategy. I don't know whether you can kind of give some tendencies on geographies, and maybe industries also you are landing the new clients in?

[Emre Gürsoy, executive]

Yes. Very good question.

The first part of the question, I would like to answer with the very nice increase that we have seen has been in Norway. There is a very strong -- not only Sturla joining us on the 1st of January and the impact that he has created, but also the partners that we have. We already have multiple partners, including [indiscernible], and their engagement in the market has been really, really promising and the interest in it.

The second part of your question, whether we are moving in different directions than retail, yes. What is very happening -- very much happening is what I call it the horizontalization of businesses. What I mean by that one is that companies used to work in pillars. Now, they are thinking customer-centric, so they are becoming horizontally aligned. Meaning, they are putting customer centricity in the core of their business growth, thereby comes first party data importance and thereby comes any kind of software that allows them to create impact of improving their customer experiences. And that's where we are coming in with a very strong offering.

So what we are seeing is now that more and more companies are moving into that direction, and then they are creating that interest of first-party data utilization. So we are in many other areas than just retail, as I mentioned earlier.

[Operator]

And then there's a question here. I don't think you have given your upsell, but is it -- are you starting to focus more on selling to existing customers? Or is it primarily still focused on getting new clients in that, that should drive the growth, upselling? I know that's transaction-based also by you, so it's not a clear one. Or is it -- if you should kind of say, what you will think will drive the ARR growth to reach your guidance? Is that new clients? Or is it also upselling to existing clients?

[Emre Gürsoy, executive]

I will say there are actually 3 players here. One of them is the -- naturally, the new clients. The second one is our net growth on existing clients. When I say net growth, meaning that you have the uplift, you have the downgrades, you're going to have the churn, so it's a client portfolio's net growth. And then the last one is partner-driven growth.

So when we look at all these 3, we are looking at it collectively, and we are putting pressure behind every angle of it. So our customer success team and customer support teams' joint efforts driven by -- with Lars Kejser, the new Chief Client Officer. His main goal is actually level up all our clients, not just because of it should be ARR driven. It's also doing -- the business is growing, that the clients get the most out of the platform that they're working with because they can actually increase tremendous businesses through the utilization of the platform in a better structure on their side. So that's what we are also inspiring with.

But the focus on the client -- existing clients is equally as important for our new clients and equally important is our partner-driven sales of what we're trying to achieve together with our partners. So all 3 are in the same time, we are focusing.

[Unknown Analyst]

And then I think you have answered, but I think we should have it. Do you need to raise new capital? You kind of elaborate a little bit on the cash and the expectations for that, just to get that cleared out.

[Emre Gürsoy, executive]

Absolutely, absolutely. For the -- I think it's a very important question, and it's really important to mention.

For the current foreseen period of the year, we are not planning to search for more capital at the current rate that we are working on. We are on plans. We just have to align a few details, and then we will be able to be completed the year without any capital increase.

[Unknown Analyst]

And there's a plan. What is your plan to Germany and The United States? I think we kind of went to your plans with Germany, really targeting that large market. But United States, are you -- this sentence now, Europe-focused, compliance-wise data between those countries and such stuff. I really focusing only on Europe in the short to medium term. Are you also looking maybe to the -- to going to the big fish, The United -- American market?

[Emre Gürsoy, executive]

No. I mean, it's -- I always say the same thing. At the end of the game, I mean, growth is the name of the game, and that game can only be played once you crack U.S. in the greatest level.

But before you get there, what we are trying to do right now is that establish our closest markets and achieve the growth together with our partners. It's all about cracking the model. Once that starts rolling, then we can focus on the next one and the next one and the next one.

Now, the approach for U.S., we are ready to -- we got clients. We got partners in -- most of our technology partners are U.S. partners. So when we are in engagement with them, they are already introducing us to the different levers. What my -- from a business perspective, that is an opportunity that we continue to see for the right moment with the right partner or leadership to engage with that. But until then, what our focus will be is the Nordics and Germany to make sure that our first rate is up.

And if you look at the total addressable market within Germany and the rest of the Nordics, you will be quite impressed by just that, achieving that will be tremendously successful. So we are keeping an eye on The U.S., looking for the right opportunity, but in the meantime, growing in 2 key markets.

[Unknown Analyst]

And then there's also -- I hear that a lot. This first party data, third-party data. If you look a little bit at the industry, it looks clearly that privacy is getting higher and higher on everybody's agenda, making it very difficult to use third-party data. You are a first-party deliverer. Have you seen some of the rising interest into your company, which we can't see on the client base. Is that drawn by that? Is it still too early, clients realizing that they can't do the marketing the same way they did in the old days, need to focus on the customer-centric own data? Is that -- are you starting to see it in your numbers? Or are you starting to see it in your customers coming to you and discussing with you how can we raise that part of our business compared to using a third-party data? Is that something you are seeing somewhere?

[Emre Gürsoy, executive]

Highly. Actually, it's quite interesting. It is increasing every day, and we can almost feel the change. And there's a kind of a wave moving and it's getting larger and larger, and capturing a greater number of companies' interest to really understand what are these regulations actually trying to do.

And the very interesting thing is, and this is always the case. The end users, the customers out there are faster. They are moving much faster than the organizations, how can they follow up behind there where they are right now. And that's what happened with first-party, third-party engagement. First, everybody share their data. They actually thought that, that is the way. What would that mean? And now suddenly, there's an awakening going on from the end user's perspective, privacy is a top priority. Governments are regulating that one.

Now suddenly, all the companies who have been harvesting third-party data and building all their business based on that, suddenly realizing that this is not the possibility going forward. So they are now focusing on what would that mean? How can they start collecting or increase their first-party data? And how can they actually start building real true customer experiences with their first-party conversations? That's where we come into the picture, and we can see that.

And it is growing every day. Especially like, as I mentioned in the last couple of days, I was in Germany. And what I've seen over there is that, that interest is greater over there because there's a greater interest for rules and regulations and following them. And then thereby, there's -- interest is higher. So the question of compliance is coming up much faster in the conversations whereas in the Nordics, it is coming a bit lower, and in The U.S., maybe it's not coming until certain conversations are taking in a certain segment. So that is the case right now.

[Unknown Analyst]

And maybe it's a little bit of a leading question. I served it to you, but actually to kind of get your feeling on it. I guess now having this partner ecosystem must be even more important to you because, I guess, now you start to attract clients who have always lived from third-party data, not having built anything right on the first party. And you are a layer of starting to do that and using that. So I guess the ecosystem also helped you a little bit here because I guess now, some clients -- the clients you maybe have addressed in the past has actually had it and want to be better at using first party. But maybe now, someone is coming in without having actually built any first-party data. Or am I a little bit too optimistic on your ways of your partners?

[Emre Gürsoy, executive]

You're right. I mean, there are different layers of it. I mean, if you look at it, there are different maturity levels of our clients. Some of them are in the early stages, some of them in the mid, something of them in the last. The one thing for sure, no one is standing still. You cannot stand still. You have to be in a kind of a digital strategy. You have to run your customer experience as one of your top priorities, horizontalization of your business, all that has happened.

Now, what happens is most of our partners are actually helping our clients to look into possibilities of permission campaigns or activation campaigns or -- everything is all about how to create an increased relevance so that Michael will be interested to share his data with you, and then how you take good care of Michael so he never leaves you, and then how you become relevant for his life, so you can actually add up.

So all that process is driven by very strong technology competencies that we have, and then the partners' competencies of strategic and executional operation allow us to use this in their power focus how this services for our partners and partners to our clients. And this is the joint ecosystem that is growing altogether, and that is the most amazing part of it because everybody wins.

[Unknown Analyst]

Perfect. And then to a question. I don't know whether we can't see the -- not something clients -- the size of your client is -- maybe it's because you give it in [ 60,000 ]. But I guess at one point in time, you said one of our strategic is going abroad because bigger clients, bigger average selling price. Is it too early to ask to see that in your books? Because they are on top of some old clients who is not moving so fast. Or is that broken, that case where you expect when you go abroad, that it's bigger client and bigger average selling price?

[Emre Gürsoy, executive]

No. On the contrary. I mean, I would say -- I mean, naturally, not all our clients are living in that space. There are -- some of them are higher, some of them are lower. So some of the higher ones, let me just give you the picture. Some of the higher ones are international. And then if you look at the ones that we're gaining right now, they're also on the higher level of that what we're looking.

So the strategic thinking was absolutely correct. What we are seeing right now is proving that, too. But it is too early to see a difference on the average of like the number of them we need to gain has to be greater before we can change the statistically 105 clients average. So there will be -- but it is in the right direction. So we are feeling absolutely in the impact that we will be seeing as we go through.

But again, this has to be in the bigger markets such as Germany. That's one of the interest reasons that we are highly interested in German market.

[Claus Boysen, executive]

And then regarding -- you mentioned you had some development department in Ukraine and everybody, of course, is following all the atrocious pictures and so on. And then maybe a little bit glimmer of hope that it is getting better over there. Can you just share a little bit about your feelings and how you secured your employees or thinking about that?

[Emre Gürsoy, executive]

Absolutely, absolutely.

I mean, first and foremost, we have 3 employees working with us through a local partner. Now, the local partner is quite a large company. They have more than 3,000 employees, and they have been an amazing partner both for clients such as us or for their workforce.

They have managed a tremendous operational and logistical skills to relocate everyone in these areas who have been impacted. All families of the working team members have been guided to safer locations. This could be on the west part of -- sorry, -- this could be in the other markets in they were also operating because the same company operates in Bulgaria and Romania and some other markets, Poland. They moved them there, or if anyone that couldn't move, then they've been put on to the west part of Ukraine where they live in.

So we are in very quite tight contact with all our employees on a daily basis. Wherever they can work, they are working. They are really, really amazing. Under these conditions, they're still keeping an eye on -- and I think it's a very important part of their life too, because their life is continuing in the conditions that they are living in.

So all our team here and the team over there, there in a very tight relationship, and we are doing everything we can to ease their life and come over to the other side of this very hard period.

[Unknown Analyst]

Perfect. I think we will end by that. I don't think we have any further questions. Thank you, Emre, for taking us through the results, and digging a little bit. Thank you for joining also to the other side. Have a nice day.

[Unknown Executive]

Thank you. You too. Bye for now.