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Ladies and gentlemen, welcome to the BIMobject Q1 Report 2021. [Operator Instructions]I will now hand the call over to Carl Silbersky.
Good afternoon, and welcome to BIMobject Q1 2021 Financial Report Audiocast. My name is Carl Silbersky. I'm the CEO. And together with me today I got Alexander Dahlquist, the CFO.All right. Let's go into the report. Next slide, operator. I just wanted to bring the BIMobject business, and we are a global marketplace for the construction industry. What we do is that we help manufacturers of building products reach, influence and understand architects, engineers and constructors worldwide. Very important to outline, we are a completely worldwide company which doesn't have boundaries. That's the scalability.Operator, next slide, please. As you know, BIMobject is today a double-sided marketplace. On one side, you have the brands, many of you know, the manufacturers. And they upload BIMobjects on the platform, and we help them create the BIMobject. On the other side, you have the customers. The customers in this place is -- sorry, the users. And the users in this place is normally architects and engineers or operators of buildings around the world coming on to our platform to download BIMobject and use them in construction -- in digital construction.Well, the question then arises, what is the value we create for our users? If we look at 2020, we had approximately 25 million downloads on the platform. Well, what we do then is that since we are a platform that hosts so millions of BIMobject files, we make it easier for the users to search and minimize the time they spend on searching this. That means taking away billable time for architects and engineers.When we estimate the back of an envelope saying like let's say an architect or an engineer wants to find an object takes approximately 60 minutes on the web to find one. If they go to BIMobject, it takes only seconds. To create an object, you can do that, you can create a generic object. It takes some hours to do that one. So let's stay with the numbers and say that if we create -- the create -- time savings we create, conservatively you can estimate from $40 an hour, and we approximately save an hour's time or billable time for an architect or engineers. If you multiply that over 25 million downloads, you get $1 billion in value creation. And I think that's very important to keep in mind. The value creation generated to users at BIMobject in 2020 is easily estimated $1 billion. And that's the market we are, of course, eyeing on one side.Operator, if we go to the next slide. We have -- maybe some of you noticed that we have not removed it, but we stopped talking so much about the downloads and the brands on the platform. What we look for is a more holistic view. When we look at BIMobject, we will look at from a flywheel of growth perspective. The number of users is extremely important as they drive the downloads. And the downloads in the quarter that we saw we estimate as customer value, it was 7.3 million downloads. The 7.3 million downloads provides inputs and data into our 2,100 brands, and we grew approximately 81 brands in the quarter.Well, what we do then from the brands is that we help them to increase their exposure on the platform, and we grew our product pages as the brand for our pages 6,000 of them and from -- to 93,000 private pages in the quarter. Extremely important we're thinking about them is the whole flywheel of growth. The more users we grow on the platform that accumulates more downloads, which itself gives more value to the brands and increases the brand's optimization of the platform by uploading more objects. This is absolutely a platform economy of scale, and it's close to 0 cost for additional users and brand.Operator, I want to talk about the year. So we go to the next slide. I have to say it was a year of a turnaround. And we really have laid down the track of growth. I mean over a year now, both me and the team have worked around the clock to turn BIMobject around and I really mean that. We really have turned it around. And what we have also been able to do is to create sustainable, profitable growth. On a rolling 12-month comparison, we have cut operating costs by SEK 75 million year-to-date. And we have completely transformed the entire organization.The focus on revenue and new customers came starting back in 2020 in March when I took over as the interim Head of Sales. And in January, I promoted David Kullander, who was previous Chief Marketing Officer to Chief Revenue Officer. And David has already recruited new sales organization lead -- new sales leadership team, all with strong staff industry experience, and he's starting to scaling up the sales team in markets where we see a lot of traction today.The sales force effectiveness is visible as we are driving around the customer acquisition costs. But we're also seeing a whole new leadership. And just to name some examples on that one. The new go-to-market leadership consists of a new Chief Revenue Officer, David, as I mentioned; Director of Demand Generation; Sales Director EMEA; new Sales Director North America and Direct of Customer Success. That's just some of the people who we've put in place in the last 9 months of the year.Also, important to say, in the reorg new management, we had a new Chief Product Officer, and that we also announced today, or yesterday, sorry about that, we have also got a new Chief Financial Officer, as Alexander is outgoing.So it has been a year of turnaround, but let's -- operator, let's move to the next slide. I think it's important here for me to separate -- to talk a little bit and separate our commercial development from our reported numbers. And there's a couple of things I want to detail here.First of all, we need to address the sharp decline of -- in the revenue, 21% year-over-year and it's very much caused by the services revenue. COVID-19-muted order inflow during 2020. And we currently have a low backlog even though sales have now been bouncing back. But just remember that services accounts today for less than 15% of the revenue. And I think to see us as a true service company, you need to focus on the platform revenue, the recurring business, the ARR.If you look at another thing worth highlighting is that the loss of license fee impacted platform net sales in the quarter. While the platform revenues continued to grow, 3% year-over-year, but the -- it declined sequentially. So from Q4 to Q1, it went down here 0.6 -- SEK 600,000. I mean this is explained especially by the ending of the $1 million annual license fee revenues from our Japanese joint venture. That was partially offset by a new deal that I spoke to you about approximately a year ago, and that's the Thai deal we created with SCG. But of course, it hits us pretty badly when it comes to the platform net sales. So if you think about the loss we have taken and you think about the growth then, so it's not that bad when things matter to consider.Focus again has always been on ARR, and our underlying annual recurring revenue grew 15% over the year. But again, it was flat sequentially. It was down here SEK 200,000 in the quarter. We were able to increase the prices, as we spoke a lot about, to the vast majority of our customers. But the situation of delayed renewals in Q4 and also related downgrades in North America has impacted us. And also worth highlighting, we -- in the cost-cutting and in orders increase our efficiency as a company, we cut the French sales team that was poorly performing, and that kind of, of course, also impacted little bit of churn in the French market, and we're seeing that in the quarter. We are confident of bouncing back from that part in next coming quarters.That was me. Now over to Alexander to talk a little bit about the financials. Operator, next slide, please.
Okay. Thank you, Carl. As Carl just mentioned, platform sales, there is some growth year-on-year. It's up 3%. But here, it's important to say that there also is a huge currency impact of a total of 8% compared to Q1 last year. At the same time, that is approximately minus 3% quarter-over-quarter. We -- in our platform sales, we include not only our recurring revenue, but also the sales, as Carl also mentioned, from our joint ventures. At the same time, we're now launching more products that are not pure ARR. They are also go into our platform sales, but are not included in our ARR figure.Earnings, we see a 33% improvement there, and this is mostly related to the cut in cost, as mentioned already here. We have worked hard on this, and our loss is becoming less and less quarter-over-quarter, and focus will remain there. This also has a positive impact on our cash flow. Also here, we saw an improvement against last year, despite the fact that last year we did very large one-off actions on collections or cash collections from our customers. So we managed to improve despite the one-off improvements from last year.Operator, please, next slide. During the last reports as well, we've also mentioned that we will move more and more into SaaS metrics as we mature. So now we will start presenting ARR as the contractual values for 1 year, both at constant currency. Taking away the currency effect, it gives us a better show of how the company is developing. And here again, we see the slight increase only from Q4 to Q1 that Carl also explained from some downgrades in the U.S. Also, we spoke a lot about the delayed renewals where we decided after we weren't going to complete them, so we took the most churn in this quarter.Okay. Operator, next slide, please. We started our cost-cutting at the end of Q1 last year, and we've now amounted SEK 75 million over that 12-month year period. We went out and said we would save SEK 50 million. So it's quite an achievement to almost reach 50% more. Quarter against quarter, that's down 18%. And at the same time, we've managed to make some new hires in marketing and sales in Q1. Moving forward, we will remain very cost conscious, but at the same time, there will be investments when we can support those by data, and data shows us that it's worth investing again.Operator, next slide, please. Of course, this has a very good impact on our cash flow as well. The cost reduction program is the main driver for that improvement we see in the cash flow. Also, the work we've done on cash collection, I already mentioned once that we did some really big improvements last year, but we now have processes in place that we maintain and actually improve on. So our overall DSO is also declining at a high tempo. Given our current total cash, we're secure for the time being.Okay. Operator. Next slide, please.
Thank you, Alexander. And it all remains me to wrap this one up, and I want to come back to the strategy and to talk about that we remain focused on the core. And the core is extremely important, following the flywheel of growth where we create the most value. Focus has been on the platform in creating new registered users. And please go to -- we just launched the new updated platform experience for you to go into BIMobject. If you're registered, please go and see it.And more, you can see that the -- the number of registered uses continues to grow at premium market [indiscernible]. The downloads is up as well. It's been good. So that's healthy. Continued focus on the user base. The user base drives the value to the brand. And that's the second thing we focus on. We focus on new brands, and that means creating more revenue from those. We also focus on the average revenue per account to increase that one. And that came along in our price increase that we launched last year.The third thing I want to mention is the ARR, and we have introduced this in this quarter. We are purely looking at ARR. There could be some variance between reported net sales on platform and ARR. But important, we focus on the ARR now that we hopefully. The ARR growth is the most important for us. Further important is also the net revenue retention. With the new customer sales bouncing back, the key priority is really account expansion. We continue to grow our revenue per account here. We need to continue growing it. We need to continue developing our value proposition towards the billing manufacturers. And therefore, also capture more of their marketing spend.Finally, profitability. We have shown that we can take SEK 75 million in cost savings during the year, continued and even increased our sales efficiency. And therefore also we had -- and also improve our EBITDA margin. So we continue down that path. But remember, always balancing growth with profitability. We try to do both at the same time during COVID. And that's been really a transformation over the year.That's it from me. And operator, next slide and over for Q&A, I guess.
[Operator Instructions] And we have a question coming from the line of Fredrik Nilsson from Redeye.
Fredrik Nilsson from Redeye here. One question regarding the growth in the number of brands. I think during Q1 last year, you had almost twice as high intake in number of brands. However, there were some acquisitions contributing as well. So my question is, if you're happy with the figure in the growth in the number of brands for the first quarter.
Fredrik, it's a really good question. If I just go back a little bit and people are always tracking this online than there was asking of the brand. Just to remember that, the number of brands on our platform, you need to really understand what's the number of paying brands. And what they're paying on average. In a mixed bag, when you grow in the market, let's say, a new market for us, that's going to be Thailand. You may be adding brands for free and for trial, et cetera. So the number of brands that we monetize on, it's really important to look at. We are happy and healthy with the number of brands coming on top that and that's paying.In the past, it's been a little bit of an entrepreneurial story where there may be the added brands but they haven't been paying. And we want to now BIMobject should always be a platform where the absolute vast majority of customers are paying customers. And that's, of course, what I'm working on 24/7. I don't know how I can explain this to the market without them overreacting on the brand issue because any company you look for, it's a number of brands paying that is the interesting part of it. It's not that you can add -- we can add tons of brands, but they would be paying. And as we're building a profitable and growing BIMobject SaaS company, this is my main duty. So are we happy with it? Yes, we are happy with the new customers that we see paying coming on to the platform. It's a healthy growth there.
Okay. One more question from me. Could you elaborate a bit on the impact from the downgrades in the U.S.A. and the churn in France, so we could get some kind of idea about the underlying growth elsewhere?
Yes. Underlying growth, we specifically then speaking about net revenue retention, I guess, Fredrik, here in that aspect. We're saying that in France, we had larger churn than we have seen anytime else and much due to that we closed down that one. And it was important to say, in all history that was up to par of how a modern company operates. And that also gain losses in France. So I can't give you the exact details here. We need to probably come out with those ones, and we hope to do that in the Q2 in that case.When it comes to the U.S., since we'll be more transparent on the pricing, which any modeling company should be, we are -- we've seen that companies in the COVID time had opted for some downgrades going from premium to standard. Now we are working hard at work here with the new customer success team of understanding the customers and taking actions, taking actions in remaining on the same price, but also making sure we don't get churn. And I think that's a positive thing. Companies are not leaving us, but they maybe want to have better explanation.In the past, it's been a lot of promises and maybe not delivery. And now it's delivery and gaining the trust of the customers. And it's not that I'm blaming anything on the past, but it's just the fact, and that's what we're seeing in the market. I think I can't be more transparent than that. Is that okay?
There are no further questions at this time. Please go ahead, speakers.
All right. I have nothing further to here. I would like to thank you all for listening in to this quarter report. And I'd also like to take a moment and thank Alexander for his great work of being a part of this transformation we've done. And see you, and thank you very much. All right. Operator, that's it. Thank you.