Strong Revenue Growth of 22%
KEY FIGURES (For definitions please see page 17)
MSEK APR-JUN APR-JUN JAN-JUN JAN-JUN FULL YEAR
2020 2019 2020 2019 2019
Order Intake 6.5 22.8 26.0 39.6 62.7
Order Backlog 44.6 50.7 44.6 50.7 49.9
Net Sales 15.4 12.6 30.7 25.3 49.1
Gross Margin % 69% 60% 65% 55% 61%
Adjusted EBITDA -19.8 -27.7 -44.9 -55.3 -112.8
Partner Revenue % 53% 34% 49% 42% 45%
Earnings per share, SEK -0.9 -2.0 -1.6 -4.7 -7.4
Cashflow from Operations -10.9 -51.9 -29.2 -84.6 -144.4
I am pleased to report that our second quarter results provide a very good indication of the robust nature of our business model.
Growing usage is a key part of our strategy, and during the crisis we have seen a number of our customers increase the volumes of transactions with their own customers, conducted through the Teneo Platform. Additionally, we have also seen our customers continue to increase volumes of usage as their solutions develop and deploy further. The revenues associated with usage depend on the individual agreement, but the continuing significant upward trend in usage in the second quarter of 2020 of 5.6 MSEK ( 3.1 MSEK) and 9.6 MSEK in the first half of the year (4.5 MSEK) increases of 84% and 113% compared to the same period last year is further endorsement of our business model and the robust nature of the Teneo Platform.
Despite the obvious challenges of the Covid-19 impact which delayed closing of transactions from an Order Intake perspective, revenues are up on both the quarter 15.4 MSEK (12.6 MSEK) and half-year 30.7 MSEK (25.3 MSEK), a 22% increase on the quarter and 21% to last year.
Throughout the Covid-19 pandemic we, and many of our customers have been able to continue to work remotely, delivering projects and supporting their customers using sophisticated solutions based on our Teneo platform. As a result, we have been able to continue to deliver license, usage and professional services revenue from the Backlog of agreements we have already signed.
STRONG BUSINESS MODEL
We have continued to increase the proportion of revenue delivered via our Partners, a key part of our business strategy, that enables us to focus on the much higher margin License and Usage revenue, and thus increased our Gross Margin in the quarter to 69%. Our full year target of 70% is demonstrably achievable.
We have also seen a significant reduction in our expense run rate. Various actions have resulted in a reduction of expenses of 3.9 MSEK during the quarter, including: reduced payroll for two months, travel, marketing etc. We took the decision in April to place staff on furlough, reduced working hours where it made sense to do so and utilised Government support schemes without materially impacting our ability to operate the business given the current circumstances. As a distributed organisation, we were already well used to operating remotely. We have been able to adapt very quickly to the new normal.
Our Order Intake for the quarter of 6.5 MSEK is below our expectations, last quarter 19.5 MSEK and prior year 16.8 MSEK. I believe this decrease is principally because of the extra time it is taking to close agreements with customers and partners as many remain in lock-down, or at least continued distributed working. Despite the challenges of the Pandemic I am delighted to confirm the closure of a further new name customer account, one of the world's largest fresh food delivery companies operating across fourteen countries. Similarly, we secured the closure of a new Partner agreement with Tech Mahindra another leading global Systems Integrator and infrastructure provider.
As noted in our Annual Report, we are seeing signs of companies looking for ways to significantly increase their digital engagement with stakeholders. Thus, we are seeing an increase in our pipeline of new opportunities from companies who recognise the significant benefits that can be achieved using an advanced Conversational AI platform.
FUNDING & GUIDANCE
During the Quarter we also continued to work to secure the financing of the business. We completed a directed share issue in June raising 26.9 MSEK and I would like to both welcome and thank the new investors who participated in the new issue. In order to facilitate a transfer between holders, the company bought and sold 6.3 MSEK of Bonds at Par value in July.
The Covid-19 pandemic is proving more persistent than any of us had hoped. As I write, the crisis is still not under control in the USA and elsewhere. However, I continue to believe that the Covid19 pandemic will have a positive "accelerator" impact on Artificial Solutions market, and, as stated earlier, we are seeing some early evidence of that.
We carefully review all of the guidance provided to the Market on a quarterly basis, particularly in the light of the Covid-19 pandemic. The result of which is that guidance is unchanged from the end of Quarter 1.
The second quarter has delivered strong Revenue and EBITDA numbers. In very challenging times we have remained very effective as a business, increased revenues and usage, and signed new name customers and partners. The nature and timing of outcomes, as the Covid-19 pandemic extends, remains very difficult to predict. However, I am of the firm belief that Conversational AI will reinforce its position as a key component of the Enterprise road map, as our customers and prospects navigate their way out of the crisis, and we are well prepared to capture what is building up to be a substantial opportunity.
Artificial Solutions financial reports are available at the corporate website, https://www.artificial-solutions.com/investor-relations/as-financial-reports
For more information:
Lawrence Flynn, CEO, Artificial Solutions
Tel: +44 (0)1635 523267Email: email@example.com
This information is such that Artificial Solutions International AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 7.30 a.m. CET on July 30, 2020.
Artificial Solutions International is listed on Nasdaq First North Growth Market in Stockholm with short name ASAI. Erik Penser Bank is the Company's Certified Adviser (www.penser.se, tfn +46 (0) 8-463 83 00, e-post firstname.lastname@example.org).
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