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Good morning, everyone, and welcome to Lime Technologies Q1 update. My name is Nils Olsson, Lime's CEO. I've been at Lime since 2006.
And good morning. My name is Magnus, I'm the CFO. I've been with Lime since 2015.
Great. So what do we do at Lime? We start -- We focus 100% of CRM, customer relationship management, and we have done that for more than 30 years. We have a history of great performance in Sweden, with a market-leading position since 2015. Over the years, we have transferred that knowledge into the Nordics starting in 2010 with Norway and Finland, open up Denmark in 2015, and now we are focusing on scaling the success to the rest of Europe. Entering Netherlands in 2020 and Germany in 2021. So at Lime, we focus as a one-stop shop. We do everything by ourselves. We develop the software. We sell the software. We deliver the software. And we take care of the support. And we do that hundreds of times every year. So our goal at Lime is to help companies to become really, really strong in sales and customer care, so they can help their customers in a good way. So when we see that our customers, like Volvofinans Bank, Mälarenergi, winning prices for the best customer service, that is exactly in line with our ambition. So customer care, that has always been an important topic. But as we can see in the global economy, we can see price pressure, we can see that products and services are getting more and more similar to each other, that having really good customer care is one way to stand out. So if we succeed and help our customers with that, we are not only making our customers successful. We are also making the life as an end customer much easier. So before we jump in to the numbers here, let me give you a brief sum up of Q1. And first of all, I'm very glad. You can see that I'm happy on the picture and so I am today as well that we deliver a good start of the year. 26% sales growth. We have 26% EBITDA margin and an ARR growth of 38%. Besides that, a really strong cash flow. So in Q1, we get the effect of our long-term and persistent work in the rest of Europe. We doubled the revenue in that segment. And of course, that is an effect of the Userlike acquisition, but also that we performed better organically.
We can also see that we continue to be an attractive employer. In Q1, we onboarded more than 30 employees and we have continued to have great pace in our recruitment. And I really hope that when we sum up the recruitment before summer, that we have an all-time high of employees starting in our trainee program in August. So it is important to continue to invest, and that's something that we will do, to continue to invest in our employees and into our company culture. One news that also has happened now in Q1 is that we made a decision to move Lime Go into a separate business area. Lime Go is a fantastic product, and it supports both inbound and outbound sales. We haven't really been satisfied with the growth and how we have developed the last couple of years. So to try to really get a new and better result, we need to do a change. So setting up Lime Go as an own business area will help us to get a better focus. I hope it will get a better clear ownership, higher engagement and then a possibility to scale in a different way. And I would say in Q1, we did a good start of -- with Lime Go. We could see that the order intake was good, and also that we had higher speed in our recruitment compared to previous quarters. So the agenda going forward, we take a quick look at the order intake for the period, the revenue, profit and then we sum everything up at the end. So looking at the order intake. As we have communicated before, we have a low customer concentration and it continues to decrease. So today, our top 10 customer stands for 6.3% and our biggest customer for only 0.9%, meaning that we are not depending on 1 customer. We are doing deals with many customers, and we can see that we continue this pattern in Q1 again. Slight improvements in the new sales as well. That has been the most part that has been affected during the pandemic, which is a positive sign right now. And looking at some of the companies, we can see that we closed deals with the big consultancy firms, Semcon in Gothenburg. We have a great wholesale company, Malux, up in the north. Utility companies in Norway, Gudbrandsdal Energi. And also that we closed deals in Denmark with Provinord. We closed deals in Netherlands, WATERMAN as an example. And I'm happy to announce Lindab, we have had them as customers in Sweden, but now they're also choosing as a vendor in their Norwegian -- in Norway. So looking at the revenue and as we communicate, ARR is very important for us as a product company, and it's important to look at the subscription growth. And in Q1, we have a subscription growth of 49%, which is very strong. We can see that we have a little decrease in our old service agreements, but in line with what our goal is to transfer those -- transform those customers into a subscription model, and that we can see that our ARR is growing 38%. So the old service agreement, we have initiated that project and the transformation from upfront and service agreements into subscription, and it's going in line with our plan. If we look at our different revenue streams and we see the development here since 2015, the subscription last 12 months is growing the fastest with 44%. And today, it stands for 53% of our revenue. Service agreement stands for 9%. As you can see, it's more or less, we don't sell any upfront licenses, so it's less than 1%. And we can see that our expert services is growing with 37%. And we will have growth in expert services. But as a part of the total, that will go down going forward. Looking at the revenue. In Q1, 26% growth. And the last 12 months, 23%. And if we look at the split between our segments, we can see that Sweden is growing by 9% and the rest of Europe is 100% during Q1. And of course, we get a good effect from the Userlike acquisition, but I would also say that we can see improvements organically compared to previous quarters, which I'm very happy about. So last 12 months, 9% in Sweden and 85% in the rest of Europe. And for us at Lime, one big focus here for '22 is to continue to grow and get all markets, especially rest of Europe to perform. Of course, I'm still not really satisfied with the growth in Sweden, 9% is too low. And we can see that our subscription in Sweden is growing good, but we are still suffering from less growth in expert services in Sweden due to the staffing situation, which I mentioned both in Q3 and Q4 in 2021. So we are going in the right direction, and I expect gradually improvements in Sweden going forward. So Magnus, what about the profit?
Turning to profit, yes. And can I also add, if you have any questions, please write them in the tool -- in the webinar tool. So turning to profit. So EBITDA in the first quarter reached 26% compared to 28% in the first quarter last year. Of course, when we compare it to the last quarter, the same quarter last year, we have now been able to have fiscal sales activities, travel to new and existing customers and also hold employee events. So we're quite happy to see that we can go back to more normal sales activities during the first quarter. And looking at the right-hand side, you can see the rolling 12 months EBITDA and margin development. And as you can see, we've had a quite stable margin of around 22%, 23%. And then in the last quarter of 2019, the increase in recurring revenue started to show effect. And we saw an upward pressure on the margin. And then during 2020 and 2021, we had a positive effect of COVID, improving the margin, reaching around 29% at the best. And now we're back to more normal levels, again, focusing more on growth than on the EBITDA margin. And looking at personnel expenses, that is, of course, the largest item in our P&L with expenses. As you can see, the personnel expenses grew by 25% in the first quarter compared to the same quarter last year. And that is, of course, an effect of the recruitments we've made, both in August last year, but also in January of this year. And also, of course, the acquisition of Userlike. But as a function of sales, it's quite stable and also decreasing somewhat. And then looking at the right-hand side, our other operating expenses. You can see that other operating expenses grew by 54% compared to the same quarter last year. Again, a consequence of the Userlike acquisition. But also, as I mentioned, the possibility to now visit our customers to have physical sales events and increase marketing in our -- other countries outside Sweden.
Thanks for that, Magnus. So let's look at the summary. As we started with in the beginning of this session, I'm proud of our performance here in Q1, and we continue to deliver strong numbers. 26% growth, EBITDA margin of 26% and ARR growth of 38%. And on top of that, I would say that we doubled the revenue in the rest of Europe, and we continue to close many deals in our verticals and have high speed in our recruitment.
So looking at the financial targets.
Yes, as you can see, the last 12 months, we've reached a growth of 23% compared to the target of 18%. We've had an EBITDA margin of 26% compared to the 25% target. And the net debt in relation to EBITDA is at 1.4x by the end of this quarter. And our Board suggested a dividend of SEK 2.6 per share. That's 59% of the profit for 2021 compared to the expected 50%.
Thanks for that, Magnus. So let's see if we have any questions here.
Yes. Let's see. So we have some questions from [ Peru ]. So we have a good organic growth in the quarter. Can you talk about the drivers behind the 14% organic? What has changed since Q4 '21 to boost this?
As -- when we have -- during the quarters, we -- when we have presented both, I would say, Q3 and Q4 in '21, we've been talking about that we are not satisfied. And I mean, the one main thing is that we've been lacking resources in expert services. And gradually, that has improved. So we did a fantastic year in '21 when it comes to recruitment that we hired more than 100 new employees. So to get that kind of effect, it takes a while before you actually see the effect of that kind of recruitment.
On top of that, I would say that we deliver a strong growth in our subscription, 49%, which, of course, helps out in the organic growth as well. And the third part is that we can see that all countries in the rest of Europe performs better now when the market has been opening up, and the long-term and persistent job that it actually requires to close deals in those countries.
Can you talk about the increase in operating expenses? Are these growth investments or mainly wages increases?
So perhaps, I can answer that. Of course, the main part of the increase is related to personnel. It's more related to an increase in number of employees than wage increases. And it's also related to the acquisition of Userlike. And as I mentioned, we announced -- as the -- all markets have been relieved of their restrictions, COVID restrictions, we can travel to our customers, new and existing. We can hold the fiscal sales events, and we can also invest in culture events for the employees.
And we have some more questions. How do you perceive demand for Lime Chat? Is there any interesting data points? Or how much share of wallet can you increase with customers on average, for instance? You have added net 13 FTEs in Q1 from Q4 '21, but at the same time added -- it's several questions in that. So let's start with Lime Chat.
Yes. Yes, we have -- so we launched our Lime Chat here in Q1, and we have closed the first couple of deals here, which I'm very happy about. And now we are doing campaigns, and we are working with the cross-selling together with Userlike and to see -- yes, to boost the effect of that add-on. And as all add-ons, it's important, as the question points out, to increase the share of wallet and that we can help our customers to solve more of their needs. It also creates a stickiness in the product with the add-on. The more add-ons the customer have, the more sticky Lime CRM becomes. So we are just now implementing the first customers here with Lime Chat in the Nordic markets. So hopefully, I can tell you more about this in the Q2 update.
So next question. You have added a net of 13 FTEs in Q1 from Q4 '21, but at the same time, added 30 trainees. This seems like employee churn is still somewhat elevated. Same figure last year was 18%. Do you share this view?
I would say that the employee churn is more today on a normal level what we can expect. Of course, we can see that it's still -- the labor market, there is a high movement in the labor market, of course. But if we compare when the churn hit us last year, it was more in Q2 and Q3, and we could see that we had very low churn, both in 2020 and in Q1 2021. So I would say the churn that we have had this quarter is more in -- more normal churn compared to previous quarter in Q1 2021.
Is the impact from wage inflation reflected in Q1? Or should we expect an uptick in Q2?
So perhaps, I can answer. We do our salary review in the first quarter, so it's from January. So it's reflected in the first quarter. Short answer.
Yes.
It should be reflected.
Yes.
Ballpark, how much growth comes from new customer versus upselling? Would be interesting even if you can split between Sweden and rest of Europe. So we usually don't disclose numbers on how much is new sales and how much is upselling. What we've said in the past is that during COVID, upselling has been really important for us. We've had a good traction on upselling during these 2 years. And since the second quarter of 2021, we've seen an improvement in new sales, and it's still improving.
Yes. But I would say, to add to that, we are not at the level that we were before the pandemic. So I think that, that's something that we expect going forward to increase and to get up to that kind of speed that we had there in Q4.
With regards to new sales.
Yes, regarding new sales in 2019.
Okay. That was the last question.
Perfect. So thanks a lot for listening in, and thanks for asking questions. If you want to get in touch with us, just give us a call. So thanks for today. Bye-bye.
Thank you.