LeadDesk Oyj (LEADD) Earnings Call Transcript & Summary

Hello, everyone, and welcome to our First Half Results Earnings Call. It's great to be here able to present you how we progressed on our efforts to internationalize LeadDesk and how those investments are paying off, and also on our successes in our home market in the Nordics. On the agenda today, we will first go through the key takeaways for the first half very briefly. Then we'll jump on to the financials, and we'll have our CFO, Kaisa Ronkko, presenting our first-half results. Then I'll be continuing updating you how we're doing on our strategy and progressing on our targets. We'll briefly look at the market outlook. And then finally, we'll have a fireside chat and a possibility for you to ask questions right at the end. So, a big first half now behind us in 2024. And the key takeaways from that period; firstly, our profitable growth. We continue on our profitable growth track. We've been growing since we've been established in 2009. Every quarter, we've been growing and we continue on that track. And we are doing it profitably and raising that par as we go as well. Particularly well, we did in Continental Europe, where we managed the most growth. So we managed double digits -- created that double-digit growth in the Continental Europe, where also the market and the general market at the moment is in a very positive state talking about macroeconomics. And then by this, we also managed to increase our share of the recurring revenues to 65% from outside of Finland. So, a big thanks to all our international and Finnish employees, who have been able to really take LeadDesk abroad. Then also, we progressed on our acquisition track. So, M&A, consolidating the market, and we acquired Telemagic in the first half, now been part of the company for 2.5 months, and it's been progressing as planned and very happy to be able to execute on also our acquisition strategy steadily going forward. On that, Länsilinkki, an acquisition we did last summer. The integration, as I said, is finalized and we're getting good results from the synergies, both then on the upside, so getting more opportunities to sell our fantastic core products, but at the same time then being able to execute on our profitability track and scale our CPaaS platform there. Then on the AI side, we continued investments and there are some highlights going forward in the presentation, which I'll dive more deeply into them. Lastly, there are uncertainties, especially in the Nordic market and especially in Finland, where the macroeconomics are also, at the moment, a bit harder than in Continental Europe. But then again, on the other markets, there's a lot of market there and we can really focus on where we see the most growth happening at this moment. That's it for the key takeaways. I'll give it off then for the financial highlights and introduce Kaisa here. Go ahead, Kaisa.

Thanks, Olli, and good morning on my behalf as well. Great to be here today. I will walk you through the key financials for the review period. Now for this review period, we are most satisfied with the steadily growing ARR contract base, our revenue growth in the Continental Europe and our profitability development. But now let's first have a closer look at the revenue side. For the review period, our revenue totaled EUR 15.5 million, which is 7.2% growth compared to previous year in corresponding currencies. And as you can notice here, currencies haven't played that big of a role this year compared to last year. So, only a small difference in these numbers. As mentioned previously, our growth was strongest, relatively in the Continental Europe, where we reached double-digit growth. And there, the growth was strongest in Spain, Netherlands and Denmark, which we actually count into the Continental figures. Then another thing to notice about our revenue is that we have now reached the EUR 30 million milestone in our last 12 months revenue. So, that's a nice milestone for us. Then looking at the ARR. Very stable growth, reaching almost 10% growth in comparable currencies. And as Olli mentioned, already almost 65% of the annual recurring revenue comes from outside of Finland. Now on the profitability side, our EBITDA continued to improve and EBITDA percentage was 13.4% for the review period. And the profitability improvement is due to 3 factors, mainly, firstly, our efficiency improvement actions, meaning that we are very careful when increasing costs and the major costs come from personnel. So, very targeted recruitments to places where we think that we can achieve fastest return on this investment. Then secondly, general cost control, so making sure that we benefit from the scalability of our business, so not increasing costs, the overhead costs while we grow. And last but not least, making sure that our integrations in the acquisitions are successful as now we have been able to successfully integrate Länsilinkki into our operations, and the measures or the actions that we took last year are now paying off as the profitability of Länsilinkki is improving. Then if we look at the cash flow, the operative (sic) [ operating ] cash flow for the review period, we can notice that there's quite a big leap, almost EUR 900,000. But this is mostly due to temporary change in the invoicing cycle of one of our major customers. So, I wouldn't look at this number that closely for this review period now. Now, last but not least, our outlook for this year, our guidance remains unchanged and the outlook is that we will reach 5% to 15% annual revenue growth and 10% to 15% profitability as measured by EBITDA margin. And the revenue growth is measured in comparable currencies and the outlook does not consider the impact of significant acquisitions. So, yes, that's all from me today for this part. I will let Olli to continue with the strategy.

Thank you, Kaisa. And I'm going to be now focusing on the strategic progress we've done in 2024 so far. And as you know, our goals have remained largely the same for the years. Firstly, we need to focus on organic growth. We need to show good organic growth. We need to maintain and improve our profitability. Thirdly, AI, the tighter integration and the feature sets relating to AI, and fourthly, then the non-organic growth and executing on that track as the market we are in is consolidating fast. And we are one of the consolidators, and we need to keep up on our track there and really take over that European market. And when we succeed here, we'll be in a great position on the European market, owning that market. So the organic growth first, and then focusing on the areas of growth and how we've succeeded there. So on the Nordic core, so our markets, firstly, we have the Nordic core, that's our home market; Finland, Sweden, Norway, where we have a good market share. We're well established, and we have both SME and Enterprise segments, which we serve. So that's our home market, firstly. Secondly, then we have the Continental market, which we also call our growth market, where we need to be growing faster, way faster than the market, and we need to be gaining market share rapidly in order then to succeed in this market. And here, we are really focusing on certain segments, really narrowing down on the customers we can service the best and where the sales is the fastest in order to have that traction. Thirdly, it's all about efficiency and we need to execute on our growth plan efficiently, and we need to drive performance. And this is the third pillar in our growth plan. And then where we are here on the first half, so the large projects in the Nordics. So, we had announced large projects at the end of the year and we said that there's others as well, and these have been progressing well. And they've gone live and are becoming live now after summer and so on. So, there's a good progress happening there and we see that the enterprise pipeline is on a good level. So, things seem to be normalized in 2024. Here we also acquired Telemagic in Norway to support our -- especially the SME segment growth. And by this acquisition, now we are a good-sized player in all the Nordic countries, both on the SME and on the Enterprise side. On the Continental side, so our growth market, our growth investments are really paying off, as you can see in the numbers. And here, we see that we must push the pedal to the metal, as they say, and we get good returns on the investments we make into our go-to-market activities. And certainly then the efficiency side, as you saw, good profitability progress. And that really speaks for the -- also the growth efficiency we can bring and we can show going forward. So, that was the number one. Then number two, looking at the AI. AI, as in the last call, for the last year's results, I opened up quite a bit. AI is crucial for the customer service industry as it is very much labor driven. And any efficiency gains done there are then greatly helping out our customers work on their profitability. With us, we introduced a lot of new features. We also highlighted some of these. Our AI Bot, our conversational AI, the AI Writer, both of which can then interact with customers either automatically or semi-automatically, either automatically answering questions or then semi automatically, helping and suggesting the agent to give answers. AI Dialer helping out, then contacting when you need to contact your customers or prospects. AI Analyst, helping you run your contact center most efficiently. And AI Transcriber, which we see as a fundamental enabler going forward, where we've now increased the share of the calls being transcribed. And this is something we're going to be offering to our customers, that they get all their calls transcribed and then using that, they can do other automatic things and other AI functionality on top of that. So, we're progressing well on AI. It's a big topic for us and a big investment, and I'm very happy with the progress we've seen so far. Then lastly, on the acquisition side. So, Telemagic, we acquired Telemagic in beginning of June. And now with 2.5 months behind, we are, of course, still in progress of integrating Telemagic. We see that the integration will be pretty much finalized by the end of this quarter, at the start of next quarter. So, we're progressing. We've got a playbook we're doing. This is not the first acquisition we've made. This is a string of acquisitions, and we've got a playbook that we run on. And by the end of this quarter, we should be done with the majority of the integration. And we already see that it's performing to expectations and we are able to proceed there. Here, we see that there's clear synergies, especially with the Nordic business, but there are also certain verticals where we can leverage, especially leverage their knowledge and know-how and the product. Then addressing certain verticals in other markets as well and then bringing some of those key functionality then to all our cloud customers as well, for example, things relating to data management and reporting. So, that's the progress on the strategy. Organic growth progressing, especially Continental Europe. Then we've been able to execute on the efficiency, AI and M&A. So, we can be quite happy with that -- with the half from that point of view. Then looking at the market outlook. So the short-term outlook on the market is that we've been -- what we are seeing on the market is that there's a lot of enterprise investment debt left from 2023 and earlier when, what we saw was the enterprise market was really frozen. Now it's opened up, and there's the normal string of procurements going on, RFPs and discussions with customers on the enterprise side. So, we see that this is a very good and positive view on the market that things are moving, although then economic uncertainties do hinder this a bit and this is most evident, I would say, in Finland, where we see that the economics are the most problematic for our customers. Then big Finnish companies and especially big consumer companies are not doing too well. And then comparing those performances to Central Europe and other Nordic countries, we see that we need to focus on the Nordic countries and on the Continental where the market is really going forward fast. And secondly, then there's a need for operational efficiency in the market, as said, and this is relating to the former. And here, then customers are keeping costs at bay. But then, again, we are mission-critical software. So, we are able to maintain our level and the costs are not cut from the mission-critical software such as us, but then others. And then lastly AI adoption, big topic and especially the enterprise customers are looking at AI and even the mid-sized customers now are looking for efficiency case in AI. And this is something that we are able to answer well. And I'm very happy that we are progressing on the AI tools. And the thing is that basically AI tools are being normalized now and it's becoming normal part of the product. Summarizing before then going to the fireside, good progress in the first half. So, Continental Europe grew double digits and good progress also in the Nordic. Of course, there was hunger left on the table for more growth. But still in this situation, we are happy with the progress, especially in Continental Europe and then the potential in AI. That is a significant factor going forward in the coming years, both expanding our share of wallet and expanding the opportunities where we can help our customers, as well as then competition towards other smaller players who can't compete and can't invest in AI. This is a big thing going forward as well. That's it for the more official part of the earnings call. I'd like to thank you for listening in so far. And next up, we have a fireside chat together with Henri from Sijoittaja.fi.

Welcome to LeadDesk's fireside chat also on my behalf. My name is Henri Palomaki and I'm from Sijoittaja.fi, which is an information service for private investors. We had some technical problems previously. We are sorry for that. But the recording will be on YouTube after the fireside chat, so you can watch it from there. And now it should be on air. Next, we will go through some questions from the earnings report, freshly published earnings report with Olli and Kaisa. And if you have any questions, you can write them down in the chat and we will go through them with Olli and Kaisa. So, thanks for the presentation. I also went through the earnings report in the morning. And in my opinion, it was quite decent overall. Not so many surprises. And Olli, as the CEO, how satisfied you are with the overall performance of LeadDesk in the first half?

Thanks, Henri. Yes. So, I think that you put it well. Wasn't much surprises. Pretty as expected on my behalf. Of course, as a growth company, there's always growth left on the table and hunger left. But then looking at where we succeeded, well, that is, I think the best thing is that we succeeded where strategically we want to succeed the most. And to that end, I'm happy. And also I'm happy for the Telemagic and the integration and the presence in the Nordics that we've been able to really build up now, being a very big player here.

Yes. So it seems you are following the guidelines. You are on the path you have been going before also. So, let's talk a bit about the growth and the revenue. So, your growth was 7.2% on a comparable currency basis and your ARR grew even more and was slightly better, 9.7% growth. Also, you mentioned that large enterprise deals were signed in the first half and they will show off more revenue in the second half. So knowing all this, can we expect accelerated growth in the second half?

So looking at the market, so where we are growing is, of course, the Nordic. And here in the Nordic, especially the Enterprise segment is our focus area. And for the Enterprise Nordic, we've been able to now onboard those customers. We are onboarding and we've signed, and now we need to focus on signing again to the next year and here. So there is, of course, more revenue that is coming then in the second half from this than in the first. But then, again, of course, there's new sales to be done also for next year. And I think that is something to follow-up on also that how can we close then at the end of the year on the enterprise side when those deals are typically done. On the other hand then in Continental Europe, we see that Continental Europe has a totally different macroeconomic situation than especially Finland, where it's like -- the markets are really booming compared to us here, which we see that we should then invest, of course, more there and get even more growth where then we have the possibilities. And that's, I think something also to watch out for is that how are we performing in Continental Europe going forward. It's a massive total addressable market. And, of course, there we are addressing just a small part.

So there's a lot of room for growing still. And then on the other hand -- so there was acquisition in this period. There was price revisions, you said, but the organic growth may be a bit less, though. How do you see it? Does the growth rely heavily on M&A and price revisions?

Yes. So then looking at -- if we look at the market yet again, like in the Nordic, Continental view. So we rely on the -- if you look at the growth, organic growth in Continental Europe, that has been the driver. So, we are growing organically. Then again, in the Nordics, where we have more market share already. We know the market well. We know the competitors well. We are a good player there. We can consolidate the market. And we find that when we approach the market, it's much more efficient to actually acquire competitors than to acquire customers directly. So it's just a good return on investment then for our shareholders as well, that we'd rather acquire competitors than go after their customers. And that's the dynamic. I think it's working very well. And to that end, then I think we are going to be doing acquisitions also going forward when we see the fit.

Yes. Okay. Then about the revenue share. You published that you had license revenues, 72% of the revenue. 24% was telecom operator revenue and then 4% service revenue. Is this like a normal share for LeadDesk and how do you see the future? Or if this is just a normal proportion?

Yes. Looking historically, we've been growing on the license portion, which did come down after the Länsilinkki acquisition because that was, of course, then an acquisition putting more effort on the CPaaS, our telecom's infrastructure side. So through that, of course, that share climbed a bit. But historically, we see that it's been most on the license part that has been growing as a percentage-wise there. And also then part of our telecoms revenue is actually also recurring, such as, for example, if you host a -- probably if you use our telecom services, you have a phone number. So, phone numbers are, of course, monthly billable items. It's not a big factor, but it also plays some role there on the recurring side. But for a growth company and a software company, recurring revenues is just like that. We have an infinite house where we can have as many, many people on rent as possible, and then it's just about like getting those rental agreements. So, that's the ARR.

Exactly. Yes. That's valuable cash flow. Yes. And then also you mentioned 65% of the revenue was from international operations. And I assume this number is also going to grow in the future?

Yes. So the recurring revenues -- so of these, like, that we bill annually and that's basically -- that's the #1 factor, right. For a software company, you are all about those rental contracts. And so 65% of our -- basically, the rent comes from outside of Finland, which I think sets us apart from many of the other software companies that are being followed. It's only 35%. Reversely, 35% is Finland. And we really are a European company first. And that's a fundamental factor in LeadDesk that we are Europe-first company.

Okay. And then let's go to the profitability, Kaisa. So the EBITDA margin was 13.4%, which was improved from last year from -- when comparing last year first half. Was there any major things affecting this? What was the key driver behind the EBITDA, for example, the M&A? How did these integrations affect the profitability?

I will start with the M&A side. Last, we acquired Länsilinkki roughly 1 year ago. We had some costs that we knew that we can get rid of. So, we did those actions during the latter part of last year and early this year, and now we are benefiting from the fact that Länsilinkki is starting to be profitable. So, of course, that has an impact on those numbers. Then while we grow, we are making sure that we utilize the scalable business model that we have. So, taking care that our overhead costs are not increasing while we grow. That's very important. And then part of that, also making sure that we are efficient. So, making recruitments in those regions that are actually growing. So, making sure that we get return on that investment as fast as possible. Nothing major, I would say. Of course, there are some timing differences. If you just look at the Q2 for this year, it's better than last year, but there are -- that's mainly timing differences. So I wouldn't concentrate on 1 quarter alone.

Yes. And I don't see any questions here yet. So if you want to ask something, write them please down here in the chat and I will go through them. Just a reminder at this point. Okay. So let's talk a bit more about M&A. So, you stated that like -- you have been seeing clearly visible positive effects of Länsilinkki acquisition, and also that there's clear synergies with Telemagic acquisition. Kaisa, first, is there -- like, are these profitability-wise, remarkable or clear? Or do you have in -- like, in profitability-wise, is there something?

For those individual companies, yes, we are able to make synergies. But if you look at the entire group, they are still quite a small part of the big picture. So, I wouldn't expect huge, huge impacts on our profitability numbers, for example.

Okay. How about otherwise?

Yes. So looking at, for example, Länsilinkki, we are a significant telecoms operator now in Finland, for example, and we've got our international operations. We've got the deep knowledge now also how to run this kind of a business. And it's like direct -- of course, the direct impact on profitability that we acquired a loss-making business and we turned it into a profit-making business, right? So that's the first impact. But the bigger impact is through sales that we can actually offer things that we haven't previously been able to offer, for example, in the toll number space or the premium numbers. So 0-800s and 0-600s and so and 0-900s nowadays. So, we've been able to expand our offering clearly here, so that it's like a -- we get more sales also on the license part, and better margins. And then on the Telemagic side, that's all about market share and getting the market position in Norway and then, like, heightening our organic growth. Then again, of course, there are synergies, like direct synergies. So, we integrate these companies. We have a playbook that we follow and we integrate these companies into our organization. The products we integrate, we get to the place where these businesses are both profitable, but they also support our growth on top of that than our other products. So from that point of view, there are a lot of synergies.

Okay. Good. And now there's questions in the chat. You can please write them in this, where you now have written them, because I can't, for some reason, access the Q&A chat here. So the first question from Jaakko also is about this Länsilinkki. So the gross margin improved significantly. Where does this come from? There was some answer for that already. And the other question, is it thanks to Länsilinkki integration or is there some other measures?

Also again, the scalability. So, for example, we have the hosting costs in our gross margin and those are not growing in proportionally to the revenue growth. So the gross margin will improve over time.

Okay. And then there's another one. What was the impact on Telemagic in your end to ARR? So does Telemagic have similar recurring revenue share of total sales than LeadDesk?

It is very similar. So, you can basically calculate it out of the estimated impact for this year's revenue.

Okay. And then Antti asks, can you walk us through any special effects in your second quarter margins and organic revenue development compared to first quarter?

Compared to first quarter? So on the EBITDA side, I guess, there's not a...

Yes. Well, maybe I can start with that. Usually, the summer months are the best -- most profitable months as this year as well, when we can actually reverse the holiday pay accruals. Then if you look at the personnel expenses, especially the social security costs, you may notice that they are now lower compared to the salaries as we have been more careful with the accruals related to those costs. So, that creates a somewhat difference compared to last year. But yes, compared to the first quarter, it's mainly timing differences. And the summer months are usually our most profitable months in terms of our EBIT.

And on the other hand, we've been maintaining quite stable employee count, which then, of course, brings much of the revenue that we generate, that part of that always then goes to the bottom line as well as we are not growing our costs. As Kaisa said, we're not growing our costs directly proportional to the revenue growth, which have had an effect. And then growth factors on the second quarter. On the second quarter, I see that it was quite a bit of the same story that first quarter. Not big changes there. Some of changes that happened were then the onboardings of these large customers as those are like being put into revenue and those contracts as the rollouts progress, which is something that was not really that much seen in the first quarter, whereas then now going to second quarter, they are more seen there. But those are the main factors.

Okay. And then about Telemagic synergies, again. What are the plans for technological integration? And are you planning to acquire the customers of Telemagic to LeadDesk platform?

Yes. So, we see that there's big merits to Telemagic platform, especially in certain use cases where we see they have a very strong offering there. So, how the integration playbook works is that we first integrate the CPaaS platform, which is technically already implemented. But there's some things that we need to do on the invoicing interpretation still then to really take use of that. But firstly, we take the CPaaS platform into use. So, all our products use the same CPaaS network, which allows then us to handle and take control of each message and call that passes through the systems. So the CPaaS network that then takes all together. And then we have this, in the LeadDesk platform, we have different use cases such as, for example the omni for customer service, for more of the sales use case, talk, mobile. And then we have Telemagic here as well helping out in certain use cases. And we are going to integrate certain parts then to get all our customers to use. For example, on the data and reporting side, there is very good innovation there that we should utilize. But that's the second phase because it doesn't add as much value as the CPaaS network. So the CPaaS network is the #1 thing we do in the first 3 months of the project. And then going forward after 3 months, we look at these others as those are then like longer-term value drivers. But the CPaaS network is the short term and [ creates ] the most value.

Okay. And let's go one more through now. Are you growing in each of the Nordic markets as well and what levels of churn are you experiencing there?

I don't have the country level. We follow on the regional level more. So on the Nordic side, we clearly see that Enterprise is growing better than SME. That is something that we've already said quite many times that the Enterprise side there we see. But the Nordic SME side, it's performing and it's growing, but I think there's lot more hunger there, especially in Finland where we both have our large market share. And at the same time then, of course, the macro situation is harder, but I will say it's significant.

Okay. Okay. Let's talk about AI then. So, you mentioned a lot of different tools in the report. AI Transcriber tool, AI Bot, AI Writer, et cetera. And you also stated that your goal is to integrate all your customers to AI Transcriber tool by the end of the year. How is this project going on, and what has been the feedback from the clients?

Yes. So, AI Transcriber is one of the fundamentals we're bringing. So, all these are at the hands of our customers at the moment. But AI Transcriber is the one that has the most impact, especially towards the small competition, who can't really invest in this and who can't -- who have a hard time, like, competing when we have such a great offering here. And under AI Transcriber, which is -- our target is to transcribe 100% of the meaningful calls by end of year. And here, we've now gone over somewhat 50%. And now we've trained the models. We've invested in the software side, of course, also the hardware, but now we've done the last investments on the hardware side and waiting for the hardware, then to be able to reach our target by the end of the year. As we all know, there's long waiting queues for GPUs nowadays, but we should have them by end of this month or early next month. So, we are bang on track for end of the year.

Okay. What about the competitors in this field? How closely you follow your competitors and how they exploit AI?

Yes. Yes, we follow very closely and we see that it's a topic that everybody somehow -- some people, some companies don't speak about it, some actually do. And we do see that it's like a topic that also customers want to hear about. However, what we see now is that the AI talk is moving from AI to actually, like, the value add and the functionality. So prospects and customers no longer want to hear AI. They want to hear the gain they are getting through AI. So the hype curve is a bit then turning, which is, of course, perfect for us because we can then [ train that ] okay, for example, the easiest to measure, for example, is the AI Dialer, where we've got great metrics and we've got great metrics towards, for example, competitors as well and the U.S. competitors. So, those kind of, like, things are then great for us because we can say, okay, we've got these features in the hands of our customers already, and here are the numbers. And then the transliteration. So getting that [ auto speed, everything that's said ] on also to text, then it's a great value add, which we can build new functionality on top, but it also directly impacts the work of the team leaders and managers who really have to go through a lot of audio every day for quality assurance purposes. So in a contact center of 50 people -- 50 agents, you might have from 3 to 5 people only listening to recordings or live calls or looking at emails mostly. It takes us so long time to listen to those calls. That's already like nearly 10 percentage increase if you can somehow automize that work.

That's one good example of that. What about the monetization of AI products? Is it like -- has it become clearer now? So is it going to be price revisions or additional services or how do you see it?

Yes. So, I think it's like this AI Transcriber base, may be the easiest example to explain as well. So, all our customers will get these transcriptions for -- with certain quality. We have certain quality metrics. They get certain quality next day. Okay, you want to have better quality, you want to get it earlier, you want diarization, so the speaker detection, who's speaking, what speaking -- like who's speaking and who's saying, or is it just one and so on and so forth. So it's like -- it's the upgrade paths then. I see that, like -- AI needs to be, like, built into all products and you need to have AI from the get-go. But then if you want to have, like, for example, AI Analyst, you get certain -- you compute your reports, okay? You want visualizations, you want more data, et cetera, et cetera, then there's the upgrade path again. And that's kind of like a PLG product-led growth approach we are taking to these AI features.

Okay. Sounds reasonable. Then there's a question from Jaakko. So, we have seen some big companies reporting significant efficiencies, for example, reduced need for contact center workers, thanks to new AI-powered solutions. So could you talk about the risk more? Have you seen LeadDesk clients reducing contact center workers, thanks to AI? And are you able to position as the AI solution provider for your clients instead then trusting own solution development?

Yes. So, there's a few factors here involved. So, firstly -- so contact center work has been like -- contact center work, there's always been a competition, like, with digitalization. So, do I build this feature into my online service or does my contact center do it? So there's always been this competition and now it's just a question, like, there's more tools for digitalization. But what digitalization has enabled and what is happening and has been happening for years already before AI is that the more -- like the more menial work in contact centers is coming down. But there's more work you can actually do in a service center or contact center like remote nursing, remote doctor work, even forestry. We see the forestry is being done in a service center nowadays, and that is like then bringing more skilled workers into the contact center setup or service center. They typically talk about them with different words, but basically, that's why our software is used in a service center setup, contact center setup. And this is not a factor turning the other way, and then this is, like, helping us. When we look at then AI efficiency, so those menial tasks, typically the numbers also that we see is that, for example, from web chats, you get 80% of the web chats handled by AI. And that was with some customers already before the advent of the large language models. So, 80%, but okay. So how does that translate to the agent count? It typically is reversal, about 20% of the agents. Then you can reduce the staff by 20%. And here, the thing is that contact centers have always been very people-centric and they have a lot of costs related to basically employment. And it's been the #1 thing in contact centers always to trim that down. And those menial tasks have already been automated quite far, so it's not a big reduction. So what is the time like? What takes time in the contact center is then the more things that need more like judgment calls and so on, who need the personal touch. So from 80% of web chats that are handled by automation, that ends up reducing the need for -- with 20%.

Okay. Okay. Then there's one more question from Jaakko and we are changing the topic a bit. So, you're seeing double-digit growth in the European market. Could you accelerate this even further by investing more in sales?

That is a good question that we also now -- working now a lot of with the Board as well on the efficiency metrics and the right efficiency metrics to do exactly this. So where should we -- like, where do we get the best bang for the buck? So is it like a -- is it M&A? Is it organic growth in the Nordics? Should we focus on SME, Enterprise? What about Continental Europe? So now we've got a great framework that Kaisa and the team has built around us seeing very -- well, like, where should we put the bets in? And that is something that I see, like, supporting our growth going forward, that we really know now where we can efficiently grow the most. And I think this is going to impact also, like, how we can invest in Continental Europe as we see that it's growing fast and the costs are on a good level. So it's a good equation going forward.

Okay. Can we hear the results already or we have to wait a little bit?

Let's wait for it. If we have a Capital Markets Day or something going forward.

Okay. Perfect. Okay. So, what about the outlook then for this year and beyond? What's your main targets for this year when we meet, hopefully, here in half a year again? Yes. What you want to achieve or what do you want as LeadDesk achieving?

Yes. So it's all about those 4 factors. So, of course, we need to show good organic growth and we need to show that we perform organically. Then, of course, there's the efficiency, so that we've got now good efficiency track for this year. So, we continue on that for the rest of the year. Super important, we need to show progress on AI and we need to show that we're delivering what we're promising. And then lastly, then we need to look at the M&A market. And that is something that hopefully -- it's, of course, always more fluctuant, but there's also activity on the M&A side. At least we have a strong pipeline. I think those are the things that I should be commenting on then.

And what about the M&A side? How do you see that market now?

There's a lot of companies on the market. So 1.5 years ago, the valuations were just too high. But now the same companies are coming back. And now we just have to say, okay, but we can't even pay what we promised earlier because it's a bankrupt credit company because [ they've run ] it to the ground. Now the thing is that, like, many companies who haven't understood like a year ago, 2 years ago that the market has changed. They are now like -- completely like -- they are struggling, they're going out of business. So then, like, we have to pick those ones that we really see where there's good possibilities for further growth and for profitability. That's all the market nowadays. You need to be, and you need to get the businesses growing and profitable. It's no longer good to just have profitable companies making a loss. Nobody's going to fund that anymore.

Yes. That's true. So, you are probably shopping, keeping your eyes open at least.

Yes. We've got a nice long shopping list.

Perfect. I think now it's time to end the fireside chat. Again, apologies for the slight technical problems, but you will find this recording in YouTube and in LeadDesk's investor website. Thank you, Olli and Kaisa. And yes, do you have anything else to add in the end?

Thanks, Henri, and thanks everybody for listening in.

Thank you.

Yes. Thank you.