BIMobject AB (BIM) Earnings Call Transcript & Summary

Hello, everyone, and welcome to this audiocast from BIMobject Group where we are going to present our year-end report for 2022. So in this call today, we'll be giving you a short update on a -- as a yearly summary. And we will also dive into looking a little bit at our strategy. If you recall from our previous audiocast we did at our Q3 presentation, we shared with you the strategic directions for 2023. So we will be looking a little bit at what that strategy is about and how we are progressing towards it. We will also look at some industry trends, and we will, of course, share something about the Q4 financials. So at the end of this audiocast, we will have questions -- time for questions. So you can already now submit your questions to [email protected], and I will monitor that inbox during this call. So you can send your questions there, and we'll leave time for them at the end. So I'm joined today by Mr. Peter Bang. Peter has been a member of the Board for BIMobject since 2022 and is currently serving as the Chairman of the Board. So welcome to the call, Peter.

Thank you very much. And I'm very pleased to be here today. This has been a year with a number of changes in BIMobject. But I must say, over the last 6 months, we have defined a strategy, and we are definitely progressing in the right direction towards profitability. So I'm very pleased to hand over to Martin, our interim CEO, to take us through the numbers and the situation we're in right now. Martin?

Thank you, Peter. Yes, wow, this has been an intensive year and perhaps even more during our final quarter with a lot of stuff going on. And thank you, everybody, who are participating and continuously being interested in how we perform as a company. First of all, if we move forward to the next slide. First of all, in 2022 -- has been an eventful year to everyone in the industry. This is for all listed companies and also for us, especially tough thinking about that we started off in an early post-COVID environment subsequently followed by the Ukraine conflict, and we've seen resulting shift in valuation levels, surging inflation and subsequently also changing interest as well as currency rates. Despite this, we at BIMobject have been focused on continuing to grind on and make sure we continuously grow in this environment. Early in the year, we have entered -- we entered the sustainability space by the acquisition of prodikt.com. It is a product-based platform in which architects, engineers, constructors as well as property owners can easily analyze and compare building products based on various sustainability parameters. The Board was slightly modified with Peter Bang stepping in as Chairman of the Board, while Christian Lindfors also entering as a Board member. Later in the year, we outsourced our content production as this market is becoming more and more commoditized, and it no longer needed to remain in-house. Instead, we focus more and more on having technical BIM advisers supporting our clients to guide them on their technical needs where the creation of the BIMobject itself is done externally. In late September, BIMobject had a transition of its previous CEO, Carl Silbersky, leading to me stepping in as the interim CEO. One of my first tasks was to design a sustainable strategy to move BIMobject forward towards profitable growth. From a financial standpoint, our contract portfolio grew with 21% versus the end of last year. That means that our ARR increased from SEK 99 million to SEK 121 million. The development here as well as for our turnover was partially positively affected by the depreciation of the Swedish currency versus both the U.S. dollar as well as the euro. However, if adjusting for the currency rates, we achieved a growth of 9%, which is a clear step in the right direction, especially considering we, in 2021, had a corresponding growth rate of 2%. Our turnover increased by 10% during the year. Inflation adjusted, this represents a mere growth of 2%. And this modest development is due to we have been forced to renegotiate license fees with our partnerships in Japan as well as in Thailand. On the profitability level, EBITDA, we had a quite positive development. Despite having acquired the sustainability platform Prodikt, which burdened us with approximately SEK 10 million during the year, we still reduced EBITDA by 32%, reaching minus SEK 51 million at the year-end. When it comes to our platform performance, we continuously saw an increase of our monthly downloading user, which grew by 22% since the end of last year. And we also passed a total of 3 million accumulated registered users during the year. Finally, at year-end, we are still well funded with approximately SEK 240 million at our disposal, and we see no near-term need of seeking additional funding. So for the next session, we will talk a little bit about our position in the market, how the market is developed -- developing and also a bit about our strategy. First of all, when we look at the market, we can look at BIM adoption. And we can see that the industry was positively affected by COVID and now is reaching a late majority. And this, we believe, is quite important because it makes more and more -- it becomes more and more important for different stakeholders in the industry to participate in the digitization trend that BIM is for the industry. Furthermore, if we go to next slide, we also, through research, know that architects and engineers move more and more to the online space in their search for the right products. And this is even more so for the specifiers who need to discover which products they need to specify online. On the BPM side, we see a lot of actors are following suit. That means that they changed their marketing spend more and more towards architectural platforms and websites and that is, of course, important for us. So we, as a company, have come quite far in many aspects. We have a strong user base with over 3 million accumulated registered users, of which around 400,000 being monthly active, and we're also being widely used across the industry. We also have 3 well-functioning platforms, 2 within BIM and one within sustainability, on which there are over 120,000 product pages connected to over 2,000 brands. This is, of course, a good starting position, but we want to be even better at transforming the industry, meaning we want to grow faster, we want to reach profitability, and we want to achieve success within certain strategic areas. And to do this, we need to have a clear goal as well as a clear direction to follow. As such, we launched -- and what we referred to our revitalization program during Q4 last year. In this program, which we see ourselves as solidifying our position as being a world-leading provider of building product information preferred by architects, engineers, contractors and property owners, and to do this, we need to get our stuff in order. It is actually not uncommon for SaaS companies to face certain barriers in their growth journeys. And if processes are not accurately in place, the companies will have difficulties to scale appropriately. And therefore, we designed the program to correct these barriers for which the first area repositioning is all about. It includes building a clear and aligned view of our identity and purpose from a group perspective. Furthermore, it also included a cost program of SEK 20 million as well as several reorganizations and process improvements to improve roles and responsibilities within our organization. The second area creates growth is about ramping up sales and improving our local competitiveness. It also focuses on supporting Prodikt to accelerate our growth within the sustainability space. The third area, the revitalization program covers new initiatives and relates to increased focus in generating additional income from our user base as well as enabling tech integrations with other platforms to further improve the amount of data we can connect to our objects. Overall, we are quite well underway in getting our strategy in motion. The cost program of a total of SEK 20 million was silently started earlier during the year by not rehiring for certain positions. And by year-end, we have managed to capture most of the costs. Still, there are a couple of resources about to depart in Q1 this year, and some of the costs are not able to be reduced until subscriptions end later this year. Within repositioning, we have worked quite a lot to make adjustments and clarifications for role and responsibilities. First of all, our marketing team has been centralized, so has our remaining content advisory team. Our development organization has been streamlined into AEC and BPM segments and also been awarded more and more mandate to influence the way we sell our products. We have further deployed a new structure of our management team with split responsibility in implementing the strategy. And boy, we have really, really a great management team at BIMobject, which is working diligently on getting us geared up for the journey ahead. And basically, all areas are now moving forward in different ways. Currently, there is a lot of focus on accelerating sales and onboarding by rolling out a POD strategy, which we know our local teams look forward to. Other progressions worthwhile mentioning is Prodikt, which gained increasing traction during the fourth quarter. And especially on the AEC side, which has resulted in our first AEC-related ARR being built up. In addition, Prodikt secured several key partnerships. They signed a partnership with CCBuild within recycled materials as well as with several key distributors, and they now are serving more than 50% of the distributor market in Sweden. In addition, BIMobject entered a partnership with Eurovent, a European association within HVAC for which we aim to support their members in their digital journey through BIM-ifying the products. Now let's go over to some quarterly financials. During the fourth quarter, we saw a positive continued development. As earlier mentioned, we reached SEK 121 million ARR in the fourth quarter, and it was also the fifth consecutive growth quarter we had and reaching a 9% currency-adjusted growth. Net sales continued to increase as well. And here, we both have an increase in the recurring revenue contribution as well as from services. And -- but when it comes to the other platform revenue that is from our partnerships in Japan and Thailand, we unfortunately had to renegotiate agreements there and receive just contributions. Our operating cost remained fairly stable, and we do have some severance costs related to the cost program. But we feel that we are on a stable and good projection in this area along with the strategy plan. On the P&L side, we had 11% increase year-over-year in net sales. Other operating income was lower in the quarter due to the low contribution levels from our partners in Asia. Personnel costs in the quarter included approximately SEK 2 million in severance payments. And on EBITDA, we improved 15% versus the same quarter last year. On the balance sheet, we remain in a strong position. At the year-end, we had SEK 240 million cash or cash-like items. The reason for why we only have SEK 101 million at our cash and cash equivalents in the balance sheet is because we have transferred SEK 139 million to quite liquid fixed income funds. And therefore, those should be seen as cash as well in terms of understanding potential future funding needs. At this point, we don't see a need of any further cash to succeed with our strategic ambitions. Furthermore, we have a higher-than-normal accounts receivable position that we're working on getting down. This due to a change we have made in the financial operations in the U.S. And we are now having qualified resources in place that are working hard to get these receivables down to normal levels. In summary, the year of 2022 was a year of progress. We increased our ARR by 21% or 9% if adjusting for currency effects. Further BIMobject entered into the sustainability space with this acquisition of the platform Prodikt which is now being deployed in Sweden and will in the future be rolled out to other markets in Europe. We have also a clear strategy leading us towards profitable growth, and we are doing well on this implementation. Thank you, everybody, for listening. And by that, let's open up for questions.

Thank you, Martin, for that. So let's set over and see if we had any questions coming in. We had a first one here. It was about the numbers on platform revenue, where we had a minus post for SEK 1.3 million. So the question here was if that is the correct way to interpret it. And if so, why is this post negative?

Yes. It's correctly reported in the report. I think is it under platform income or something like that. And the reason for this is that the renegotiation was about the second half of the year 2022. And since we already had recognized revenue there in the third quarter, we had to reimburse it in the fourth. So that's why you have a minus post in the fourth quarter for that post. And we are in continuous dialogue with our partners and to make sure that we have some types of agreements also to rely on going forward for this year.

Great. And then we had another question here that was more related to the strategy that you presented. You mentioned that we roll out this POD structure. So the question is here, what do we want to try to achieve with this that we weren't able to do before.

Yes. And that's a really good question. And actually, that is, I guess, something for you, Lisa, that you might be able to answer since you not only are a host on these talks, but also our revenue operations manager heavily working with the Board.

Yes, sure. Yes, sure. So this is one of the things that we are rolling out with the strategy. And I think we've always seen that we have very strong commercial teams. But what we saw was that we needed even to -- like further foster the sense of collaboration and alignment with these teams. So we're moving to this cross-functionality model. And basically, what we're going to do is we're going to set up teams to be focused on a specific market or geography. And basically, what we're trying to do with this is it's a way to internally clarify the targets and metrics and also really make sure that we run each of our markets that we operate in, in a very optimal way from a commercial perspective. So we really have that alignment. And then there's also a dimension of having a very strong local presence, which we seen as really important for local partnerships and networks, especially in some of the markets we operate in. So that's also something that we really try to achieve with this. So it's -- yes, we're really excited about this. We think it's going to be a great model that we're going to come back to and collaborate or align on during the year. So it's going to be great.

And then a follow-up question for me. Does it feel like a complete reorganization or a sales organization or does it feel like a calibration. Or how do you view it?

No, it's more of a calibration. I think we do feel like we have a strong commercial team, and a good organizational setting. So this is more calibration where we also try to capture that market or geography dimension to it. So, yes...

A slight adjustment to increase market fit.

Exactly. So I think that's actually the questions that we had for today that's been sent to our e-mail anyway. So with that, we'll conclude this audiocast. Thank you, Martin.

Yes. Thank you. And maybe we should say also that you're always welcome also to continuously write questions to the IR e-mail, and we will revert to you when we can or capture it in these types of settings.

Yes. So that is [email protected] if you have more questions after the call. All right.

All right. Thank you very much, everybody.