Artificial Solutions International AB

STO:ASAI

Earnings Call Transcript

[Per Ottosson, executive]

I think I'm going to go ahead and kick off. I think you've seen us before. It's Fredrik, our CFO, that you see on the screen and I, presenting this. Now this, of course, expresses what we did before we arrived here. But at this point, we're did it for about 2.5 years. So, now it's probably more relevant to speak about what we're accomplishing here. And in February of 2021, we launched a completely new platform. It was a cloud-based platform, multi-tenant, is based on Microsoft Azure and it's a real Software as a Service platform. So what I mean by that real software as a service means that you don't install one platform per customer, you have one platform that you run all the customers in, meaning that you reach a state where everybody has the same code base, which is a very important step in making sure that you can have an increase in gross margins as we grow. So it's a very important step for us to be a pure SaaS company. Two years later, so today, in 2023 and in March of this year, there were 7.3 API calls per second into this platform. So, 7.3x per second. This is a platform that didn't exist in 2020. We launched it in February in 2021, but the first customers on it in April, May of 2021 and now 7.3x per second API call happens to this platform. And it's B2B enterprises, professional users that are putting these systems into place. So, it's not consumers. It's not gaming, it's really business processes they're running on the business platform. I do think it's an astounding and amazing accomplishment by the team of engineers that we have here at artificial solutions. It's not a big team, but it really is world-leading. What I know in my experience, I have no concept of any platform in the AI space, which is B2B with this type of volume. Now there's, of course, lots of gaming-type and chat-type applications out there. But this type of volume for real business processes is 7.3x per second is just absolutely astounding. So, very happy with our accomplishments. And if we then translate that into kroner, which is also quite important, we see that our growth in ARR is 134% year-over-year. So, the ARO went from SEK 2.9 billion to SEK 3.2 million. Now, we're just talking about the new SaaS, right, the platform that we launched in 2021. So, something that exist in February 2021, it was launched at the tail end in 2021 is today at SEK 30.2 million ARR business. On the API cost side, even more stones growth, so from 5.4% to 18.9%. And that means that the growth rate in using this massively outperforms the market. As you probably -- or some of you may know, we were already at 15% of the technical side of the market. So the amount of transactions in Gartner's projections for this virtual assistant market in the contact center. And since we're growing with 243% in these last 12 months, obviously, we're also taking more and more market share in there, although we don't have any updated numbers from Gartner in there. So, that said, astonishing by the team are really -- customers really now using our platforms as they're growing their usage. It is a small team of B2B customers that are really more and more embedding this into their business processes, which we really, really like, and that builds the foundation for us going forward. We're going to quickly touch base on what is conversational AI for those of you who are new shareholders. Of course, we have some new shareholders this quarter. Also very happy with that, and welcome to the team. Conversational AI is you have a piece of software where a person comes in and asks for something. It's a service request, it's a quest for information or can you help you get something done. And then the software orchestrates understanding what the customer is talking about, finding the information, connecting information, and maybe also doing something like, for example, reconfiguring the person's router or ordering an iPhone for them or sending them a box to send their iPhone back in. So, an action needs to be taken. So the system needs to understand what the person is talking about, but then also coordinate the business process throughout this what you get is you're going to get better Net Promoter Scores and cost savings if you implement this in the right way. An example is AT&T today has more than 300,000 support calls per month that are managed it totally by the system. So, no human even gets involved in that. And those are the portals about routers in the home, what they call smart home solutions. So very, very powerful cost savings if you implement this in the right way. And we'll come to a bit how we think customers should be implementing this going forward. The market we are in is called the contact center software market. We are a part of that, which is the virtual system market. I'll come to that in the next slide. But the global contact center software market was worth NOK 29.5 billion in '21, and it's grown with a CAGR 21% to SEK 165 billion in 2030. So, this is relevant because of the size of this market, a lot of new players are coming into the market. But probably most important is that today, it's the large hyper-scalers, which are taking these markets. It's the Microsoft, Google, Amazon that are taking a large portion of this market. We have the largest references in building a virtual assistant in this market in the world. So, we have official very large references that nobody else has in this market, and that includes the hyperscalers and other associated companies along there. So, very proud of the achievements we've done in the last few years in getting these references. For example, Swisscom recently became the third highest valued brand in the world according to markets of brands and partially because of the high customer satisfaction they have, which the COO has been out commenting depends on this, is born on this solution that we have. So, a very interesting market. It's growing. And in that, there's a submarket that we call virtual assistance in the contact center. That's the one I mentioned in Gartner that's growing 48%. We have roughly 15% of this market today from a tech perspective. And as customers grow their usage, we will also get more and more revenue. Today, this market is largely a services market. Most of our sort of legacy competitors, they build services for their customers. So, they have a lot of professional services they installed on the virtual server and then they maintain that for the customer on-prem. We, of course, have a different model. So, we have less revenue in the beginning, but more as we grow. But 15% of the total transactions in this market today. Obviously, open AI has changed the trajectory of this market. So, I think this forecast is probably going to need to be rewritten. What happened for the last 2, 3 quarters is that all of a sudden, CEOs are talking AI. That was not the case 4, 5 quarters ago. But since, let's say, December time frame, the kids of CEOs have been coming home and saying, "Oh, I use this scrip product called Chat GPT". And now everybody talks AI. Of course, different strands but also, I'm very happy to say that we're part of the Microsoft inner circle. So, when we made the bet in 2021, which hyperscale, we had no idea that Microsoft would be the lead investor in open AI. But that also means that we get versions of everything that comes out from there. And we are leveraging today GPT4, which is the model that is not the one you would normally have a small in open AI, leveraging that through Azure in beta still, not going to advertise use, but several of our customers are trying what they can do to enhance the platform effectivity even more using the open platform. So, it's a very interesting space, lots of stuff happening with open AI, even more interest and specifically, I would say, from investors in the U.S. and CXOs in the U.S. and Europe. So, that fits us very well from a customer perspective. I'm not going to read all of this. I want to point to the graph at the bottom. The SaaS ARR is 30.2%. You also see we still have a sizable legacy business that's also growing. That means our legacy customers are also growing their usage, quite happy and proud of that as well, of course. We are trying to move everybody over to SaaS because that reduces our cost of maintaining them. And we definitely hope that our customers will follow us into the SaaS world as well. Now that they see that very large customers are using this. So, O2 Telefonica official reference, they spoke in June about having about 1 million calls per month into the platform. I may likely that they have a lot more now without officially -- without -- of course, we know how many they have, but they have really officially spoken about that since actually July last year. But with O2-Telefonica a highly regulated market is Germany, and they're using this platform. That means that pretty much anybody could be using this platform. It's being used in health care. So also a very highly regulated environment, HRSA public sector in the U.S. So we see that customers are really able to use this platform even if they are a highly regulated industries, which means most customers should be able to move over as well to our SaaS platform. So that also, of course, increases the growth in the SaaS platform. We will, of course, also gradually move the legacy out. But as you see, our total revenue is also growing. So, we're quite sure that we're going to keep growing that total revenue. Partners, we've been working quite hard to sign up new partners because partners are implementing our solution. And with the momentum in AI and with the momentum in our growth and seeing that we're closing the gap in our cash flow, we're also investing now in getting new customers. And the first one is an interesting one. it's AVH. AVH signed with us in, I think, it's February and March of this year, maybe January, at least it was in Q1. AVH is a partner and a customer. So they're going to be building for themselves, but also going to market with the solution. And the interesting thing is they're using the solution in reverse of what all the other customers are doing. So, in the U.S., if you have affiliate networks, you get a lot of leads, and those leads you are allowed to call. In Europe, this is not a business that's very appreciated, but you can then call these customers or prospects and ask them some qualifying questions and then put them in with an account management. That today is done by call centers, primarily in Mexico, but they're now looking to replace those with technology. So, having Teneo our solution, call out and do that. prequalification and then connecting our scheduling with an account manager or a salesperson. The volumes here are very, very big. So this is a very interesting area. AVH is an investment company that has lots of these types of companies underneath and very interesting to see. We just started the implementation there about a week ago. So, it's probably going to be done somewhere in the range of two. Azure, of course, still a very RA, what they call key ISV, independent software vendor in the cognitive space, which, of course, is also all the open solutions are in. But we were also eye via the year for Microsoft here in Sweden, of course, our contract with Microsoft sits in Sweden since we're a Swedish company. So very much, we are using Microsoft to help us appear a lot larger than we are. Well, of course, large from a tech perspective, but not from a company perspective. So, that's very important for us in the U.S. market primarily. TechMahindra some beautiful implementation in Germany and are working now with several new prospects. CGI as well. We're doing events together, CSG growing healthily as well. So very interesting partner base growing quite a lot. I need to just highlight this as well. I know we said in the Q4 report because it was delayed, but it's quite important. We have also ISO certified this new platform, also that in record time. So very happy with the team in this. So, let's move to the thing that happened during Q1. I touched on this during the Q4 call, as well as some of you, might have noticed this on the website. So, we've moved to using keneo.ai as the brand that we take to market. And in that brand, we have a solution, and that's made possible by the advancements in AI in the last few quarters, maybe even months. So, this really came to us when we were talking to Swisscom and Telefonica that are using our technology for many things. And what this executive layer of those 2 companies said was the thing that has really transformed how we work is that we no longer force our customers to listen for 200 seconds to different choices, and they choose with a keypad or with a keyword where they want to come to when they call us. So, the key patent navigation or the old IVR or the old phone system, why everybody still has that is that it's been incredibly difficult to implement an IVR type system in the world with so getting some here in Sweden, that's very uncommon. So, I need to just move around a bit. So, instead of having key pad navigation when they come in. So press-1 for Press-2, press-3 for, what Swisscom and Telefonica were talking about, the executive management we're talking about is, we really like that we got rid of that because now they greet the customer with, why are you calling us today. Please stay on a full sentence why you are calling us today. And if the customer can't clearly state why they're calling, the system will ask these invigoration questions. I will ask questions to understand what you're calling. And this is made possible by Teneo. Many have said that they do this before, but nobody has really succeeded, which means that today, a large portion of the world, when you call a large company, it's going to be key patent aggregation, and that's something that we can get rid of thanks to the new development. So, on Teneo or AI, which is a platform, which lots of customers are using and building new solutions, we built a solution, which cannot be implemented in 90 days. And that is also a much easier way for us to go to market. We don't need to sell to AI people necessarily. We sell the end product. So, the use of the AI. So, getting rid of press 1, press 2, and all the way to 10 is something that's really going to impact customer experience. And we've already seen that. And Contactable, which does research on English-speaking companies in this sector, they say that 82% of the enterprise world still has keypad navigation. A further 9% has keyword navigation, but the type of open question that we have implemented, they are not aware of any such references. And we have them and a boy are they big. Swisscom, for example, every time you call their hot line, you will be talking to Teneo and you will be doing that in 5 languages. So, if you happen to be speaking French, which people, of course, do in Switzerland, then you will be able to speak French to it. If you're speaking English, it will speak English to you. So it switches this automatically. And you see here that Christophe, who is the CEO of Swisscom, he talks about this as he's out talking to customers and to investors about how this really changed the hot plan experience for them. And here, there's a video, I encourage you to look at that on YouTube or lime, which is Roedel, who implemented that at Swisscom, is a Swisscom employee. And he talks about how this was implemented in 90 days. So, it's a new solution where you utilize all the latest technology, ChatGPT, open AI, CLU for Microsoft, which is also a revolutionary new product that arrived in Q1. All of this you can utilize and build a fantastic experience in the contact center by just picking up the phone and routing to the right person to getting rid of the keypad. If you don't have to force your customers to pay attention, you don't have to force your customers to listen in and understand your divisions. You could just have them quickly say why they're calling. So, you see that compact Label says the 42% of your customers are irritated before they even come to stating the question. So, arriving at the right person, arriving at the right queue is something that already irritates customers. So, it really is a problem. Customers are frustrated if you reroute so if I now, let's say, I called this morning, for example, Danderim to ask about, if I have to submit a change request for changing the color of my house, apparently I had to. But before I call have to listen, and I chose to long one because there were 5 choices, and none of the choices was really what I was looking for, it was how they're organized. So, it's always outside, inside out, instead with open question is outside in. So the customer states what they want to do. And again, it's something we implement in 90 days. The total cost of ownership here is very low. So, we're talking that routing is going to cost you very little. It's going to cost you a few cents on the dollar. However, rerouting customers is going to cost you a few dollars. So when I now arrived at the wrong person, I had to speak to that person and they had to reroute so recollect it to somebody else, and that costs a lot of money. So, we launched Open question, which is a solution. It sits on the platform to teneo.ai. That's now our main website. That's our main go-to-market. That's our brand. It's a registered brand as many years back and artificial solutions.com, which is a bit longer of a name, is now where our investor collateral sits. So when you as an investor want to find that, you're going to investors.aolutions.com. But if you want to look at our platform, our solutions, it's in teneo.ai. So, with that, I want to give over the presentation now to Fredrik, actually, no, I'm going to do the first one Fredrik, if that's okay because there's still some long number stuff there that I would really like to. So, Q1 operational highlights. First one, we just discussed launch of open question. It is what we're taking to market. We're really, really pumping this in the market space today, and lots of e-mails going out, lots of meetings happening as we speak. And this is how we're going to be attracting new customers because with the revenue base, seeing the growth in customers, we're now comfortable with also going out and recruiting new customers. Although we do know that it takes a little time to start making cash on new customers. We believe that this is really the time, especially with what's happened with ChatGPT. And the integration that we've done through Microsoft as or cognitive services is going to be something that our customers are going to be able to use in real production usage probably at the end of Q3. And this has to do, of course, with data protection with who owns the data, who processes the data but also it's a bit of legal ramifications right now around this. But we believe at the end of Q3, they'll be able to use this in Teneo. So, Teneo is the process layer that manages the dialogue with the customer, manages your processes, and then calls the different AI solutions that are needed to fulfill the request of that customer. It also calls the more mundane things like your inventory system, your CRM system, your invoicing system, et cetera. So, we are the orchestration layer for that, and that's where we excel. We loaned AI, the new offering website, I encourage you to go and look at that, too. We're really working on the search engine optimization of this. Our marketing department has been working overtime. And we're now at #3 in generic search. Generic search is really what drives traffic and the search is not that affected. But generic search, we're now #3 in Google and the U.S. for the sort of question solutions. So, if you start for a conversation on IBR. Of course, this depends a bit on the time of day and so forth. But in general, when we test it, we are on the third place. So we also, of course, successfully closed the rights issue, SEK 96 million, very thankful for investors and very much for new investors. Welcome, Fantastic to have you with us in these times of AI. The first Alboncalls trials initiated when I spoke about AVH also very interesting, that could open up a whole new revenue like a new solutions, open question, not sure what that will be called, but outbound calling could be something in the same space. Of course, SaaS ARR, very high growth, 134% year-over-year, March to March. And again, in a product that really was launched in February, March of 2021, first customers sold in April and brilliant results. Growth in San API coal volumes, 243% year-over-year. This is really something that customers like and customers are really, really using this. So very happy with that. We also made some simplification measures. We found that our organization was set up more maybe according to what it was before, we took the 25% cost down in 2021, 2020, 2021. So, we also simplified the organization further which leads to some cost reductions as well. But really, the point was to just make decision-making faster and less focused on anything else than building and selling at this point, which is really the most important thing to drive, of course, our revenue and cash flow. So with that, I'm handing over to Fredrik, our CFO.

[Fredrik Torgren, executive]

Thank you, Per. Thank you. Let's move to the next slide here. So, a bit of a continuation of growth and ramping up, but we are, as Per already said. I mean, we are very excited about the development we have on our platform and also the revenues and an API coal volumes generated there. So, I think it's a key message in this report, which we are also very satisfied with as you can probably imagine. On this slide, you see the SaaS ARR development quarter-by-quarter. And we can just see that the 2 KPIs that we are tracking is SaaS API call volumes. That's the key operational measure that will drive the business on. And we will also showcase in this presentation a bit more on why this is important and so on. But we also then see that our SaaS ARR has grown to EK30.2 million in March 2023. So, that is kind of year-over-year growth of 134% and also quarter-over-quarter. So, Q4 '22 versus Q1 '23, with 21%. So, continued strong growth on SaaS ARR. And if we then also look on the slide there, we also showcased that actually our SaaS API call, ARR revenues have grown with 46%. So, that basically means that our volume-linked revenue base is growing faster than our subscription piece on SaaS, which is also very much linked to what we have driven the business against. So, we can just conclude that overall, I mean, very strong growth, and it's also looking very promising going forward with significant volume potential on our existing customer. I think we can go to the next one there. Continuation of growth and graphs. But with this slide, we just want to showcase, as I already said, I mean, API call volume is a key KPI that we track and follow monthly and over time. And here, we can just conclude that we grew volumes with 243% year-over-year and 36% quarter-over-quarter. So, a very strong growth on the usage of our platform. We can go to the next slide, there. Here also, showcasing, I mean, what I already said in the initial slide, it's basically to showcase that a key driver of our SaaS ARR the last year and also quarter-over-quarter has been API call growth. And as you can also see then, we have less growth in the other piece, which is basically, I mean, the revenues that are not linked to API calls, so subscriptions, data, et cetera. And that is also, I mean, an effect of the fact that we have focused the organization on driving growth on our existing customers. And the reason for that is also, I mean, that it costs less for us as an organization to drive that type of growth. So, also a kind of evidence that what we have driven the business against or towards is also materializing in results that we wanted to achieve. So, very positive with this development. And also, I mean, coming back a bit to where Per started, I think, I mean, we have close to 600% growth on API call SaaS API called revenues year-over-year and 46% quarter-over-quarter. And this is also, I mean, an evidence of what we have communicated. I mean the last 2 years, I would say, that we have some really interesting blue-chip customers that can on their own behalf, continue to grow and scale dramatically from the levels that we have seen in the past and also from the current levels. So, this is clearly, I mean, an evidence of the scalability in our model. And also what is interesting is also that we now have one large SaaS customers generating plus 90% gross margin at the current API called volumes. And for those of you that have been on similar calls, previous quarters, also recall that we have showcased these hypothesis, and it's very satisfying that we now can showcase in with actual numbers that we also reached this plus 90% gross margin on a customer level. So, yes, this showcases our hypothesis and that we also will reach those gross margins on our existing organizational levels with our customers. So, very pleased with this number as a CFO, I would say. Next slide, please, Per. This slide is a bit crowded slide, but also, I mean, what is important here is, of course, I mean, we are growing the valuable revenues. We are growing recurring revenues with 53% year-over-year. We are also then more importantly, also with our, I mean, ARR metrics and SaaS metrics. We are growing total ARR 70% year-over-year. So, that also means that our legacy customers are also growing quite a bit, which is also very pleasing. But of course, I mean, the key metric here is, of course, our SaaS ARR growth of 134%. So, also then, looking forward, I think the ARR metrics are, of course, essential because it also then trajects into our installed base of customers and the levels that they use our platform and we also see in April going forward that the month has started in a very positive way. So, all in all, very pleasing numbers, and we look forward to drive the growth further. Next slide, Per. Lots of text in this number, but I'll start off with the graphical parts of the slide. What I'm very pleased with this also now if we look at the lower right-hand side, where we have recurring revenues as a percentage of net sales. This is a metric that we have used when we have a bit kind of transformed the business from a hybrid software professional services company. And now we are truly, I would say, a software-as-a-service software company when we also generate 98% of our revenues from valuable recurring revenues. So, very pleased with this metric. And we can also conclude that the SaaS portion of our recurring revenues are also continuing to increase, even if also the legacy leg is also growing. We already mentioned the AR growth, 134% year-over-year and also the total ARR, plus 70% year-over-year and recurring revenues, plus 53% year-over-year. Then also, as you can see, I mean, net sales is not growing as much, but that's also a part of that we are no longer generating professional services that we have done in the past. So, that's just a result from that. And as we already mentioned, I mean, we have growth in basic all relevant revenue metrics on high 2 and 3 digit numbers. So, very pleased on that one. Gross margin-wise, we reported a gross margin of 56%, a bit lower than last year. And here, I just want to touch up on why this is the case. I think in our Q1 report, if you read the more detailed tax in the report, we also showcased that we have initiated a new compensation plan for sales, which is very much linked to the SaaS ARR growth. And basically, a sales guy has to deliver 1% growth on a quarterly basis in order to get commission. And that is hitting us a bit in Q1. But that also means that when we look into the next quarters, our SaaS ARR level is also at a higher level. So, a lot of commission also means that we are creating a lot of long-term value when we are also increasing the base of our SaaS ARR. And you can mention there means if we would have had the same commission levels as in Q1 2022, our gross margin would have been 65% instead of 56%. So, this has a big impact on our gross margin. EBITDA adjusted, relatively flat versus last year. But here also, we see the impact on our adjusted cost base and the initiatives that we have initiated during Q1 and which will also, to some extent, continue in Q2 as well. Then lastly, I think we can just kind of close this slide with, I mean we have a solid cash position, SEK 83 million in the bank when we ended the quarter. And, yes, I feel very confident with that cash position going forward.Next slide, Per. Yes, briefly on costs. As Per mentioned, I mean, we are simplifying our activities and focus on what is essential to drive shareholder value ultimately. And that is also, I mean, a bit kind of streamlining our organization to be better fit for purpose. And this means that we have reduced the cost base on a run rate basis, SEK 121 million versus SEK 160 million in Q1, EUR 23 million. And this will also start to be visible in the reported numbers in Q2. And potentially, we can also see some further cost reductions from this level as well. But mainly, it's very much, I mean, to drive the business in the best possible way to ultimately create shareholder value. I think that's the key here. Next, then over to you Per.

[Per Ottosson, executive]

Thank you, Fredrik. So, just some highlights to end this call before we go to Q&A. And remember, if you do want to ask a question, raise hand and I unmute you and then you unmute yourself as well. It works and teams when you are a large crowd. So, artificial solutions is a prominent player in this market. It's growing 48% CAGR. We are growing at 14%. Our ARR growing 134% year-over-year. We are doing a lot of transactions per second. So 7.3x per second and API calls made in our platform and is with very large customers and large usage. So it's very much a professional platform for B2B us. Gross margin, as Fredrik showed, fully onboarded customers are going to approach 95%. We already hit over 90% of one of our customers this quarter, and that's just going to continue. And of course, that's quite key for us to hit our cash flow targets as well our cash neutral targets as well. Technology that we have is made for enterprise solutions, and it's for V-chip customers. We did sign the partnership contract with Swisscom in Q1. And that means that Swisscom is going to start selling this and they'll probably sell it. Will they make one solution for many customers? So, from our perspective, it's still for a large entity. But of course, they can sell it to many smaller banks, for example, in in Switzerland. So it is a blue-chip customer enterprise solution, but it has potential to go down if we find the right partners. And hopefully, Swisscom can make this happen in Switzerland. The way that our system is built up. So, we have -- we lost a customer during Q1. This customer is somebody that had an area of business which they shut down. So they were using this for a sort of automated insurance trading type thing where they were trying to have people change their insurance plans, have for insurance plans without speaking to a person. They shut down that business because they couldn't really attract customers to come into it. But once somebody is built out like the one the customer we saw here, which is approaching our fully on more than 95% margin, that type of customer once you're there because of our approach. If you look at all other AI approaches, they require lots of data. And this has become even more apparent now with Open AI, which, of course, has a huge statement that they're trading on. So, first of all, as machine learning, deep learning, and now we're talking about transformers, you stack transformers on top of each other, and that requires even more data. And so with our approach to this, you have much less data to train on to build a solution like this, which means, first of all, it's faster. The second one also, once you started using this, you're not really -- you're not going to be able to just replace it with one of those data hugging solutions because it's going to be quite costly to do that. So, since you make money on every session, when would you actually take that step? So we believe that our revenue retention is very high, which is also how we arrive at saying that we have a growing ARR and the recurring revenue is going to keep growing. We don't foresee that somebody would switch this out because there's just no point. So, we are the main enterprise virtual system in the ASH ecosystem, ISV of the Year, et cetera. What this means is that we get credibility in the enterprise segment. It also means account managers for Microsoft can make money when they sell together with us and watch this space as we work to get even more ecosystems involved here during this quarter. But this is really the way for a smaller company like us to do this. It was a bit of a, I have to say, lucky guess, maybe from our perspective, to choose Microsoft turning out that they now have something that's way ahead of the others. Of course, Bard for Google is still not launched. Amazon is coming with our own solution as well. But Microsoft is already out there with the open AI partnership. So, very happy with that, orchestrating, running processes on top of these AI solutions in the Microsoft space really turned out to be a great bet for our customers and for us. Again, 7.3 tons per second and APICO's made. So let's see if we can get some questions out here as well. Any questions today.

[Fredrik Torgren, executive]

I have a question here from Forbes.

[Forbes Goldman, analyst]

Good morning. So, congrats on the very nice ARR growth in the quarter. I assume that a lot of this stems from the increased volumes with your large undisclosed software customer. So, could you please tell us a bit more about what this customer has done in the quarter? And also provide some color on what you think this customer can go on to achieve in the coming 1 or 2 years?

[Per Ottosson, executive]

Right. Yes. So, what they did was they started a solution. So they keep building solutions, and they started with just pure routing only in the U.S. and for a specific set of customers. So, when a specific set of customers call in, they would be routed. So that's the open question type solution that we call it now, which we productized. And then in the end of last year, they started building out and testing to use this for support purposes. And so if you have a product from them, then you will call into a support number of 1,800 number and then the customer will talk in natural language about their support issue. So it could be, my keyboard is not working on my computer or that phone is not working whatever that might be, and all piece of software. It's actually only implemented for hardware right now. But that customer then calls in and can also now get solutions and resolutions. That means the call is longer and it opens up a new volume. So, that's how that growth comes about. And there's other areas where they also provide support. So, I would say that from a support perspective, U.S., this is probably 10%, 15%. So that's one portion of the increase that they can do going forward. And then the other one is that they do have an okay to roll this out to other countries, and they are in 130 geographies. So, that could also provide a healthy growth once they start that project. Usually, these projects are hindered by availability of resource. So, availability of resources to roll them out and test them. And that's usually the way it comes step-by-step. From a quality perspective, I would say they've already established that, that's so good that that it's just to roll it out.

[Forbes Goldman, analyst]

Okay. Very interesting. But now like concrete forecast for API calls or sessions in the coming 1 or 2 years.

[Per Ottosson, executive]

I think on a customer-by-customer basis, this is difficult. So, if we take, for example, the health care customer we have in the U.K. They have a solution that's built and been tested, but the solution needs a new contact center platform from another vendor, we, of course, don't provide that. And that contact center platform keeps having problems, which means they keep rolling back and going back to the old way of working, which just takes time to get it up and running. And once it gets super running, it's going to ramp, of course. So, it's always difficult to say at a customer-by-customer basis. It's much easier to look at the sort of all the customers and realize that they are definitely going to keep growing. So, if one grew this quarter, I'm pretty sure somebody else is going to be growing a lot next quarter. And we do know that one of our customers is just deploying every solution. We've had a chat-only solution, and they're now deploying open question together with the company 59 that we never worked with before. So, it's also quite interesting. And also together with Google Cloud, and they're basing this on Teneo. So, that's another one. One of our customers going in voice and that will also open up new volume. So, we don't know who is going to grow, but we do know it's going to grow.

[Forbes Goldman, analyst]

All right. Excellent. And yes, so looking at open question a bit. So, obviously, you're investing a lot in the sales organization. And previously, I guess you spoke a bit about adding a handful of customers each year, but what are your expectations now for this year?

[Per Ottosson, executive]

So, with open question and with the development in AI, we want to bring in more customers, and we do need to monitor this from a cash flow perspective, but we do want to bring in more, and we do see that there's much more demand now over than there was a year ago. So, it's really a changed market. Now, that's probably driven by the fact that customers need to cut cost, and we do that cost with open question, but it's also driven by this that the CEOs are saying, AI. I heard that just yesterday that it's the CEO of a very large manufacturing company in Europe who said, "I want a solution based on ChatGPT". So, it's not like I want a business solution. It was just making sure it's based on ChatGPT. So, this is really driving demand right now. And of course, those open APIs -- those APIs that we have to open AI to Azure are quite interesting for customers.

[Forbes Goldman, analyst]

Great. And another question on open question is, how has the competitive landscape changed now that this is your main like offering because there are, I guess, simple versions where it uses keyword navigation. So, could you please provide with some comments about what the competition looks like now compared to perhaps a year ago?

[Per Ottosson, executive]

What we do see is that a lot of companies are talking about doing this, what they call conversation IVR, and they have websites that look quite professional, but they don't have the references. So, if you look at us, we come into this market with references in the millions. And for example, Amazon, which has the Connect platform had a component in there that was select, which also looks like it could provide this, but we're not seeing that deployed in any customers that have millions of calls. So, the ones that deploy sort of what I would call the other solutions to do open question-like solutions are the smaller companies, tens of thousands of calls per month. But when you get to these type of levels, like 7.3x per second, then there's only one out there right now. So, it is a landscape where we see people talk more about it since we started talking about it, but it's also a landscape where we have really, really strong references, and that's what we're pushing. So, if you look at our website, there's lots of customer testimonials and stories, which we believe is the way forward.

[Forbes Goldman, analyst]

All right. Great. Well, that's all from me for now. Thank you.

[Per Ottosson, executive]

Thank you, Forbes. Now we have Victor. I am allowing you and now you need to unmute yourself.

[Viktor Lindström, analyst]

Thank you. So, I'll start with one here. Previously, you have primarily focused to grow with your existing customers. And now you mentioned in the report that you have increased the focus on signing new customers. So, have you changed as strategy a bit since the higher adoption rate for AI solutions? Or how should we think?

[Per Ottosson, executive]

Yes. We have changed strategy a bit. So we need to monitor this. We're not really sure how many customers we can bring in and still balance on the cash here. But so, setting up a new customer is quite costly and it will really start making money for us once they go live. But we want to try the first open-question customers now and see if they're live in 90 days, that should also mean that our cash positive in, let's say, 120 days. So that's what we want to try to see if we have that traction and then gradually increase. So, definitely opening up now and building a pipe to close out some, let's say, Q2, Q3 and then testing that out and see how that works from a cash flow perspective. But we do want to be cautious and not taking so much that we negatively impact this trend we have now on the cash flow side.

[Viktor Lindström, analyst]

Yes. Great. And then on your financial targets of reaching an ARR of SEK 200 million, how much do you expect to come from volume versus pricing, and signing new potential customers?

[Per Ottosson, executive]

It is probably going to be so felicity's like 60% volume. Or is it even more volume.

[Fredrik Torgren, executive]

I think, I mean, we are increasing prices on the subscription in 2023, and that's something that will gradually impact, of course, on the subscription parts. On the variable parts, we have decided not to increase prices from the USD 0.08 the euro rate. So in 2023, we will see price increases, but they will come really. And in Q1, I think we didn't really see any material impact from the price increases, I would say. Then on the other hand, as Per also said, I mean, we are cautious in how we drive, I mean, the acquisition of new customers in the way that we want to have high-volume customer because that fits our model the best. And also, as Per also mentioned, I mean, on our health care provider, for instance, I mean, we don't rarely see any volumes on the API call side there yet. But that is also, I mean, a customer where we see it has the potential to become, I mean, the biggest customer for us in 1 to 3 years' time. So, I think to a large extent, I would still say that the main driver of us reaching this is also to continue to grow on existing customers and obviously then also adding new customers who will also contribute as kind of growing volumes. But setting a percentage, I think, is a bit tough at this stage. And also considering that we have launched open question quite recently and don't have the same visibility when it comes to the actual outcome on those customers yet.

[Per Ottosson, executive]

Maybe just add one thing here. So we also see our price model, of course, drives behavior. And what we also saw this quarter is that we have primarily one customer that deploys endpoints, which we did not charge for before with low volume. So, the biggest customer when we're talking about today, they have 5 endpoints and this customer has the 3 endpoints. And endpoint is a cost driver for us and indeed sell a certain volume. And we just didn't think anybody would do it the way they've done it. So that means we charge for endpoints now. So that hurt our margin in this quarter. But now in the new contract with that customer, we charge for endpoints if they don't have a certain volume on the endpoint. So, it's also a bit of tweaking and made some point that actually would be a revenue driver. We don't think so. We think we want to drive the behavior for volume, but for those. So that could maybe also have a bit of an impact. It's a new thing to charge for. We did just and we thought that, that would be interesting to customers.

[Viktor Lindström, analyst]

Right. Great. Thanks for clarifying. That was all for me.

[Per Ottosson, executive]

Okay. Any other questions -- Then I -- thank you very much. So, as we've been doing this call, there's probably been about 250,000 API calls going on as well. So, it's very, very happy to see this technology being used as much. It's really, really fantastic old patents, new code, fantastic technical team. So, very happy with the results. Thank you all for joining. And for those of you who invested thank you very much and for our current shareholders. Thanks for sticking out with us. Thank you all.

[Fredrik Torgren, executive]

Thank you.