Teneo AI AB (publ) (TENEO) Earnings Call Transcript & Summary

Okay. Let's go ahead and kick off. Fredrik, can you just do a thumbs up if you hear me well and see me well, so that I know that it's working?

Working perfect.

Thank you very much. So good morning, all and welcome to this first presentation of a company called Teneo AI. It's actually our first quarterly report where we are now Teneo AI, a fresh start that we did during the summer, and very well executed by the team. It's now all done. And everywhere we are, online presence, LinkedIn, customer email, et cetera, we are Teneo.ai as a company. Our product is, of course, Teneo. So this is a great start for us to be able to get great -- get more recognition, better rankings in search engines, et cetera. Very happy with that. Very happy with the team execution on that. Also, very happy with this quarter. Another stunning exceptional quarter delivered by the team at Teneo.ai. It's going to be Per and Fredrik talking today. Fredrik, of course, our CFO, and I am the CEO of the ticker TENEO. TENEO, the ticker, is Sweden's only publicly traded AI company. So some of the highlights, except for that, is that we also had a record quarter, 90% revenue growth year-over-year. That is astounding what the product and the team is achieving here. We have 3 new customers so far this year. We're also closing on new partners to cover a larger part of our TAM. We're just about done with that. I've been releasing press releases on this in the next few weeks, but that is partners to cover larger part of the TAM in the U.S. We already have partners in Europe doing that, but we needed to do the same in the U.S. so very happy with that too that we're moving on the right cylinders there. But this last one is really, really tremendous. So the growth in our traffic, we have now 700 million API calls as an annualized value into the platform. And I think that's a Swedish record. I just can't imagine that there's any software as a service platform out there that has anything close to this type of volume. That means that we're going to be doing about a 100 million phone calls this year in the platform. It is -- I mean, it's mind boggling and start to think about the amount of people that would have been engaged in those 100 million phone calls across our customer base. It is truly astounding what's been accomplished with this platform and how it scales and how it manages that traffic. Extremely, extremely happy with that. You see some of our logos on the right side that we're very proud of. Of course, Valcon is the one that came in during this quarter. Slightly different tack on those. It's a partner, but they're also going to be a consolidation partner, meaning they're going to use one Teneo to deliver to several customers, and I'll come back to why that's important. This one you've seen before, it's our SaaS journey that started in 2021. I'm not going to bore you with all the different boxes here, but essentially, where we are right now is we've sold to large customers during '21, '22. We understand what they're using the platform for. We understand our unique selling points, our unique capabilities, and we build stories around that. We're taking that to market primarily in the U.S. and UK because that's where we find that our strengths come to the best to the forefront. And, therefore, we also hired quite a senior team in the U.S. and also in the UK to attack these really large accounts that we're talking about now, the types of let's take an example, American Airlines, these type of accounts that have huge contact centers in the U.S. and the UK. So the road to 1 billion. Let's talk a bit about how this works and why that's very important. We aim to get to 1 billion API calls, which sounded a bit outrageous when we put the goal forward. At the time, we had 24 million API calls on an annualized basis, and it sounded a bit outrageous. And, of course, it requires a lot of phone calls to come into the platform. Why is that important? So we have 2 ways we make money. And, yes, I see it's USD and euro on the second row there. So different on the 2. But it is because we charge customers either in euro or U.S. dollars depending on where they are. We also do Great British pounds in the UK. So this -- that number is the same, the currency changes. So we have 2 sources of revenue. We have 5 sources of revenue, about 99% of our revenue comes from these 2 sources. One is the subscription, what you need to start developing your platform. This is Teneo Studio. Here, you get a subscription for 5 people to work and build solutions on top of the platform. We now are launching also a new one here, which is going to be more expensive for the really large customers that need more than 5 seats. But EUR 10,000 is our standard pricing for a platform with 5 seats. Here you can start building your use cases. So typically, the first 60 days, you're probably transitioning an old keypad IVR like a Nuance. You're now transitioning that into us and then you start using the platform for calls. That's when you start generating API calls. API calls are just -- so a few 6 to 7 API calls make up a phone call, and that's just our measure the way that we measure, the way most cloud companies measure consumption is API calls. And we charge a small amount per API call, but, of course, when it gets large numbers, that amount gets high. The interesting thing with the API calls is that that's where we make big margins. That's where the real big margins come. So on the studio, that is more or less an investment for the first year. The payback starts on the studio license only after 1 year or 2. However, the guy calls, they start making money for us from day 1. And the customers that are above 1 million API calls per month, that's where the 96%-plus gross margin kicks in, which is helping our gross margin to, of course, be improving quarter-after-quarter as well. So that's why billing is important. And this is what it looks like for our total customer base. This includes our legacy customers, which are -- I won't go and dive too much into that, but we have a few customers who are still on legacy pricing models, legacy delivery models. This chart actually goes all the way to September. The September fell away when I cut it into PowerPoint I see. So the last date there is September, and the number in September is 700 million API calls if you annualize it. So September times 12. And we started out in 2021 with less than 200 million. Gets even more interesting when you look at the platform that we launched in 2021, which is the only platform we're selling since the beginning of 2021. It's the SaaS platform or software as a service platform. That's the one that also makes the most margin for us. And if you look at this, we've actually done looking 36 months back, we've done 59x the API call volume. So in September here, you can see we're above 500 million and slightly above 500 million and that, of course, keeps growing. You see the plateaus in this? That's what customers go from, let's say, that they're using -- if they're developing a new country, they're developing a new language, or they're developing a new channel, then nothing happens, then they turn it on, and then it peaks again. So that's why we get a few peaks along the way. But in general, the trend is, of course, very positive up, like I said, 59x up. This is what we're taking to market. So what we found also in the first few months of this year is that our unique selling points really, really resonate with the really largest customers. And they take a bit longer to sell to. They're a bit more stakeholders in these customers, but this is where our sweet spot is. When we launched is a program we call accelerate. This is internal. I'm showing this to you as investors. This is not how we show it to our customers since it might be controversial. But accelerate means agentless contact center, and of course, accelerate is just to make it into a nice name internally as well. And what it is, is we're aiming to be the company that within the next 3 years, and I'll tell you a bit more about this quarter why it might be even shorter than that. But within the next 3 years, we want to be the first agentless contact center in a top 500 enterprise. So agentless contact center here means that we no longer need Level 1 support or Tier 1 support or support Level 1 agents. These are the people that take the first phone call. And if you have a more complex question, they'll send you off to Level 2 or potentially even Level 3. These are the people that will answer questions like, what's my account statement? Where's that bill? Why didn't I pay the bill? Did I pay the bill? The more simple stuff that most phone calls are about. We see a way now to take that out completely. So we see we're using LLMs, ML, and our TLML, which is our own proprietary product in Teneo, we see a way to eliminate that whole layer in contact centers. So if you look at a large contact center, let's say a few of the of those really top customers we're addressing, we're talking tens of thousands of people in their every customer. So incredibly powerful thing that we see we can achieve here. These things need to be sold to customers that are sophisticated buyers. Sophisticated buyers say that they know that they can't just use OpenAI straightaway. They understand that the hallucinations come with LLMs. They understand that everything needs to be integrated. You need to have ISO. You need to have SOC. You need to have compliance. You need to have encryption. You need to have an enterprise grade application managing all of this. They also understand the pitfalls of modern AI, which are it's very quick to do something quick and dirty and get 80% right. It's very difficult to do the last 20%. And they need that platform that's going to help to mitigate the risks, both compliance risks, security risks, risk of misdeveloping or risk of miscommunicating to customers while still harnessing the powers of LLMs, ML, and all the new things coming out of AI today. So this is our vision. We're going to be the ones that provide the first agentless contact center in the next 3 years, but I'll share a bit more of what happened during Q3, which might mean that this is even going to move even faster than that. Here's how we go to market. So this is our focus since Teneo AI was launched. We have 30 strategic accounts at the top of the pyramid, 200 accounts in the middle, and then our total addressable market, which are where we have 500 agents roughly in customers. The target 200. The 200 is 5,000 to 10,000 agents, and the 30 strategic is where we have 10,000 or more agents. So could be, I think, the largest we've seen so far is 7,000, 8,000 agents, and that's, of course, in the strategic realm then. The strategic accounts we go after with a direct focus. So those -- that's our account managers, the 3 new people we hired here during the summer, very, very senior people that go after these people with what we say in the U.S. Rolodexes, but also, of course, very senior knowledge of our market. We also do ABM campaigns in here. That means account-based marketing, meaning that when the people we need to talk to in these customers, which is 20 to 50 people depending on some different personas, but 20 to 50 people in these accounts. We have them targeted with ads, with personalized letters, with Google Ads, with Google generic links, et cetera. We also in the U.S., we have a tool which manage -- which helps us to see that if we send the physical letter, for example, to somebody and they then go to our website, we'll actually be able to see that they've done that. That's not allowed in Europe, but a great tool in the U.S. to see that our campaign is also working. And they are. So we're very happy with the focus of those 30. The account managers, the account directors then, they also nurse another 200 accounts. These are primarily they do LinkedIn retail outreaches, email outreaches, mostly automated, but also some personal outreaches in that space. And here we have lots of marketing campaigns happening. We're also doing lead management together with partners, so we're mapping these out with partners. This is to make sure that if one of those 200 are going to replace their IVR, like their newest IVR now or they're going to -- they need to go conversational or they need to cut costs, then we will be able to push them up into the strategic layer and start working them with the full power of the organization. Whole website has been rebuilt to support the buyer journey in these lower parts of the pyramid, the blue and the yellow. Of course, that also helps in the top part, but the blue and the yellow primarily. So if you look at our website now, it's very much tailored to people that find I need to do something. They go out and search. They go to Google. We're top of most Google searches, and they come into our website. That is generating now about 30% of the pipeline in that top -- the top 2 parts of the pyramid. Bottom part of the pyramid, that's where we go after with channels primarily. That's why we need 3 new ones in the U.S., 3 instrumental ones in the U.S. in Q4. Very close to that. I'll announce that soon. And then we have marketing campaigns running here and then targeting campaigns like, for example, the Nuance replacement that's coming out now. Nuance, which is a company that was acquired by Microsoft, they have a system that picks up the phone with voice or with keypad. The keypad version of that is in 90% of our target accounts. Nuance is has been communicated 2 weeks ago that it's end of life in the midsummer next year, which means the companies need to find a replacement. And we're obviously going to be there for them and help them replace this. We've done a few of those replacements already, and it takes us about 60 days to help a customer do that -- to help a customer and a partner do that. We have the methods for it. So that's how we go to market. We're addressing the full market. We're very highly focused on the top since those are the ones that can generate the most API calls. Those are the ones that are going to get us the next 1 billion API calls. So what happened here during the summer, which I want to -- which I touched a bit on during the presentation, now I really want to step into. One of our large customers, they use the latest functions that we launched during Q2, which is called, Copilot. It is where we have access to OpenAI or other LLMs, but most use OpenAI. Use OpenAI to make the process, but also translate processes. So if you think of a customer journey, you can now translate that customer journey from, welcome, why are you calling us today, to customer being happy on the other side. If you have that in, let's say, English, you can now translate that into other languages. One of our large customers tried that, and they found it good enough to, in 48 hours, deploy 42 languages and 89 countries. So in over a weekend they expanded from English only into all these countries and geographies. That means that all their channels, the plain old telephony, IPT, so IP telephony, WhatsApp channels, their chat, et cetera, all those channels, both for support and for new sales were now in other languages and in other countries. Now, we have something which is I'm going to be get a bit technical. So but I'd still want to mention this. One of our core competencies is we do deterministic pre and post processing. So we decide what the customer said deterministically, not statistically, probabilistically, which is what ML and LLMs do. So machine learning and large language models we do deterministically. We first use LLMs and MLs, but then we have our own patented language which we parse with and that lifts the accuracy. So we know what the customer is talking about. And then we also know what the answer is going to be to the customer. So instead of having well, let's stick some glue on the cheese on the pizza, we're going to tell you exactly what to do in the right language. So once you have that set up in English, you now convert that to other languages. It just works. Incredibly powerful. It shows the performance, so we scale. It shows that we have that deterministic working since the customer's satisfaction in this solution is better, but also shows that any customer that has a large home base and needs to manage 24/7 in other countries, this is a perfect choice. So with that, I'm going to go into very quickly exactly the economics of this for a customer, and I'm going to show you the last thing that happened here in -- during this quarter as well. So it was a language piece, the country geographic piece, but then the other one. So we have a system which picks up the phone and lets customers build a system that picks up the phone, understands why somebody's calling with 98%, 99% accuracy far better than a human would. And on top of that now this quarter we saw 2 customers go from 40% which was best before to 60% of cases on the phone automatically resolved. Taking us even closer to that agentless contact center vision. Those calls cost about $0.40. A call that goes through and that gets routed to human cost about $6. So if you move more from the right side to the left side, you're obviously making big money if you have millions of calls per month, which these large customers do. So the 200 -- so the blue part of the pyramid and up, these are really, really big cost cutting numbers as well. So that's something that we're taking to market selectively. Cost cutting is not something you want to bring out everywhere, but definitely very, very, important to customers. We're talking millions potentially per month that you could be saving in cost here. Most of the time, the level -- also support Level 1 is outsourced in the U.S. and UK. Another reason to do this in the U.S. and UK seldomly is that employees of the customer. It's employees of business or business process providers, business process service providers, outsourcers. Also, you get happier customers because you resolve something right away. You call in, the system understands you. There's no queue, and you get your -- the reason you called, you get that result. The real reason behind this is we've done real tests. We use this extensively in our selling. We've done real tests with real data together with a real testing company, Cyara. We have much higher accuracy than anybody else. So I've said anybody else and says, well, obviously, there's no doubt that Google is better than everybody else. Well, as you can see here, not in this particular case. So if you were to use Dialogflow today, you would have problems understanding the customer and problem delivering the right answer at the end, which is why those solutions do not scale to millions of calls. So again, just, summarizing my part of this presentation before we go to Fredrik's more deep dive into the numbers. It is Sweden's only public and traded AI company, Teneo. So if you want to bet on AI, this is the bet. A record quarter, 90% revenue growth year-over-year. Really, really proud of the team. Done great work here. 3 new customers so far this year. Existing customers growing like crazy. And we're also closing in the partners to cover a larger portion of the -- and build more pipe in the U.S., and tremendous growth. I mean, 700 million API calls, again, I'm going to start asking around in my community of LinkedIn and so forth. Does anybody have this type of -- does anybody have a SaaS application with this type of traffic today? I seriously doubt it, but it is a tremendous feat of performance optimization by the product team. So with that, I'm giving it over to Mr. Torgren.

Thank you, Per. So let's continue a bit on what Per started sharing with all of you. I mean, this quarter was fantastic in terms of sales growth. And as evidenced on this summary slide, I think I mean, let's just focus on a few of them, but 90% revenue growth on SaaS API calls year-over-year is a fantastic number obviously, and also evidenced by the fact that we are showcasing our scalability in our revenue model, which is very much based on API call growth and driving growth with our existing customers and adding more use cases. So I think there are lots of proof points in this slide, which summarize a bit high level what has happened during the quarter. I think we can go to the next slide, Per. A bit on the same theme. I mean, the third quarter 2024 was a quarter of fantastic growth, especially in our SaaS revenues and also the fact that we also maintain and keep a stable gross margin and also improve our EBITDA. So, basically shrinking the gap in terms of inflows and outflows in the business. And all -- I mean, essentially all sales metrics are record numbers in this quarter, so a very strong development in the quarter. As already mentioned, I think, I mean, 90% growth year-over-year in SaaS API call revenues is astonishing, I would say. Also, linked to that one is obviously also that we are growing SaaS ARR with 58%, and also that we continue to deliver strong growth on our recurring revenues, so both on the SaaS side but also then obviously on the non-SaaS side as well. Also, if we look on the graphs to the right, I think, worth mentioning here is obviously our 100% recurring revenues. So basically, we are very much a pure software company relying on recurring revenues only. And that's -- I mean, we have had high numbers on this for a number of quarters now. But I think this is evidencing, I mean, that we are a pure software company, truly. Also, the 63% share coming from SaaS, for those of you that have been with us since we started this transformation journey into going SaaS have seen this number increasing continuously over the quarters, and this is the highest number we have experienced so far. So a clear majority of the revenue is coming from SaaS and basically evidencing that we are growing in the areas we want to grow in. And I think that's also very important as an organization that we also showcase what we are focusing on internally. NRR, we already mentioned. I think that is evidencing also that we are driving growth with our existing accounts, which is less costly than acquiring new customers and also the fact that we have a scalable model and which also translates into increased volumes and adding more use cases. So very comforting to see these numbers. Gross margin stable 79% despite some commission costs this quarter, and also that we have experienced new customers joining us, and that also puts a bit of pressure short-term on the gross margin. So a very stable development also on the gross margin side. EBITDA improving, thanks to higher sales numbers and this stable gross margin. Cash position, SEK 32 million in the quarter, we'll come back to that. In reality, the number we had in cash in bank is somewhat higher. As you can see, the adjusted number was SEK 37 million but we'll come back to that on the cash slide we have later in the presentation. So very solid quarter, I would say, summarized things. We can go to the next slide, Per, please. NRR, key KPI that we are focusing and putting a lot of attention to. And during 2023, '24, our strategy has been to grow on existing account. And basically, our organization helped them to grow on existing use cases and also helping them to add new use cases. And as Per mentioned, what we have done here in the recent time is also something we will benefit in the long run as well to make it even easier for large customers to scale across new languages and new geographies, basically. And for those of you guys that are not familiar with NRR, I mean, it's basically a KPI that measures how well we manage to grow on existing account. And a number exceeding 100 means we are growing in this respect. And we also usually put some reference to the number that we record in NRR. And in Redeye's SaaS Universe for Q2 '24, we were Teneo.ai was ranked #1 in this regard, and I think we have a fair chance to be #1 here in the Q3 edition as well. Let's see. But a very solid and strong development, I would say. Next slide, Per. ARR growth, we're growing as SaaS ARR with 58% year-over-year and total ARR with 30% year-over-year, so very strong development here. And, yes, also, I mean, growing quarter-over-quarter as well, so a very strong performance overall, I would say. We can go to the next slide, Per. This one, I think, I want to spend some time on, but coming back a bit to the key underlying driver for our revenue growth. And this is a breakdown of our recurring revenues, both on SaaS and non-SaaS. And as you can see to the right-hand side, it's the API call revenues coming from SaaS and non-SaaS. And obviously, what we can see here is evidence of our execution of our strategy. So basically, we are growing a lot on our SaaS business. So the purple part of the graph, you can see that is growing, so SEK 9.3 million in the quarter in API call revenues. And also, what it shows is the scalability in our revenue model. So variable API calls is a key driver for the growth there, so 90% year-over-year growth. And also, the fact that we are growing on existing accounts, as you can also see there the impact from subscription and license revenue has been relatively limited year-over-year in terms of growth. So the key driver has been building out API call revenues on existing accounts for this period. And also, if we finally then close on this slide, I would say we are also showcasing that close to 70% of our SaaS revenues in Q3 is linked to variable API calls. So really, coming back again on scalability in our revenue model. So volume pays off, and that's -- it's a bit backwards heavy revenue model, but once that kicks in it's a very strong model. Next slide, Per, please. SaaS API calls is also a key metric, and it's very much linked to also what we have showcased on our SaaS API call revenues, obviously, as it's a volume times unit price exercise. But basically, I mean, this KPI is a true indicator of how our customers' application and usage of them are growing. So the more applications, solutions, covered regions, languages, et cetera, the higher API call volumes. So that comes back to what Per showcased in the earlier slides, right, on how we can scale on an existing account once we have them onboarded. And also, what we can see here is also that we have had a positive trajectory on SaaS volume since basically inception. So we have grown 59x the last 3 years. And also, if we look short-term, our growth quarter-over-quarter was 32% between Q2 and Q3 this year. So a very solid performance in terms of growth there. Next slide, Per. Even more here on SaaS. So just showcasing, again, we grow in the areas we want to grow, so in SaaS. We also show that we have significant growth on SaaS API call revenues, 90% growth, again, showcasing the scalability in our revenue model. And also, as already said, I mean, close to 70% of revenues is linked to variable API call volumes and revenues. And also then, overall, 58% growth on SaaS. And if we then add to this, when we add even more new customers, the growth opportunity obviously will become even greater. And we also see, I mean, on our existing account as outlined by Per, there is a pattern in how you add use cases. But what we also see in these large organizations that we have as customers is that there is still plenty room of further growth in new areas and so on. So time is to our advantage, I would say. Next slide, Per. We are constantly improving our gross margin, and that is obviously linked to our higher API call volumes on SaaS. This quarter, we report stable somewhat growing gross margins in Q3 versus previous quarters. And as we have also showcased, I mean, that when we acquire a new customer, the commission costs is relatively burdensome. So the contribution short-term is relatively low versus a more mature customer delivering high API call volume volumes, obviously. And also, we have excluded the reporting of including and excluding commissions due to this reason, so that we are also showcasing the gross margin underlying, excluding commission costs, when that is -- when that can actually have a significant impact. And there has been some impact in this quarter from commission, obviously. But also then, I mean, on existing customers, the gross margins are strong, and will continue to improve from current levels as we also continue to grow the API call volumes. So very solid gross margin development despite some commission costs in the quarter. Next slide, Per. And down a bit on our OpEx run rate. We had monthly adjusted OpEx of a bit less than SEK 10 million in Q3. And I think we also guided for that we are looking at increasing somewhat on marketing and sales already in Q2, and that has continued to invest in those areas for obvious reasons that we are also showcasing this growth and get more proof point and evidence on our model and that we deliver a lot of value to customers. From this level then, SEK 116 million in run rate annualized costs. We see a slight increase the next quarter, not anything super material, but a slight increase to this level. And also, as we showcase in the earnings release, we have taken some one-off costs, in the quarter, and that's basically to do the organization more fit to our go to market strategy. And that has resulted in some one-off cost and obviously, also some cash impact from that short-term as well. And part of the cost that we free up from this exercise will obviously be used for also then doing further investment in marketing and sales. And that's also why we're guiding on a slight increase in cost versus the run rate here. Next slide, Per, please. Cash position. We had an adjusted cash position end of quarter of SEK 37 million. So that is SEK 32 million in actual cash position end of month. But then we have also added a bit more than SEK 5 million of receivables that were due end of -- and was supposed to be paid end of quarter. But these are large customers, and sometimes there are some slight delays in payments, nothing unusual. And we have received them in the beginning of October, so that's why we are highlighting the SEK 37 million. And on top of that, we also have some additional receivables that we have not yet collected, but will add even SEK 2.5 million to this SEK 37 million. So you can summarize that, adjusted, really, the cash position was a strong SEK 40 million end of quarter. So with that, Per, I'm leaving the word for you.

Yes. Thank you very much, Fredrik. I would just open up for Q&A. I'm going to try to hit the right button here so I can see all the people. If you do want to ask any questions about this brilliant AI company, which is the only publicly traded, so you have to buy stock today. The first one who wants to ask a question is, Marcus, I'm going to unmute you now, and then you need to unmute yourself as well. Go ahead, Marcus.

Congratulations on strong growth yet for another quarter. I have a question regarding the NRR. I mean, can you elaborate some on the distribution of the NRR among your current clients? I mean, is it very -- are you seeing increases...

So we don't break out -- yes. So, Marcus, we don't break out individual clients for competitive reasons. So since we have quite few very large clients, we don't really want to sort of get somebody thinking that they should target one of our customers. So we don't really break that out. So I don't know, Fredrik, if you could say something general about that, but.

No. I don't know. Maybe, Marcus, we can take this also offline a bit, but not really sure exactly what you are after if a number...

Well, essentially, I would say, Marcus is saying, can you tell us which customers are growing? Would that be...

No. But what I'm actually asking is, I mean, is the growth very concentrated to one single customer, or are you seeing all clients growing? Or how is that?

Is it the SaaS? So maybe the way to put it, it's the SaaS customers are growing. The legacy customers are not really adding new use cases in the same pace, right? So not a lot of growth on the legacy side. So legacy being the ones who are have a different payment model, a different delivery model, still that we haven't been able to convert.

And, overall, I would say we see growth in, if not all, but most of our SaaS customers, so.

And regarding the one-offs that you've been taking, can you elaborate on all that? And what can we expect in terms of one-offs going forward? I mean, the Q4...

Like I said, we don't expect them going forward, but I'll let Fredrik elaborate, but.

Yes. So I mean, on we have taken some one-off costs, and to a large extent, I think, we also showcase that in our slide here on OpEx, right? So a large portion of the one-off cost is related to staff. So we have basically taken out people to as we also communicate. So we have taken out staff, and that's roughly SEK 7 million of the costs. And then we have some other parts related to recruitments and, yes, linked professional fees to doing this exercise, I would say. And on top of that, also, we have, as we mentioned in the earnings release, also cost related to Gecholog as well. So those are the key components of the one-off costs.

Okay. I'm going to open up the floor to Forbes. You need to unmute yourself as well, Forbes.

And well done on strong ARR growth. One question on the financial targets. How should we think about those, especially the cash flow target now that you write in the report that the new strategy will require some more upfront investments with likely delayed cash flow? Just some comments on that to start with, please.

Yes. Fredrik, do you want to comment a bit on that, or?

Yes. So I mean, we highlighted in this quarter, right, I mean, we had this a 1 billion target, which we are relatively close to reaching. And also, if we are performing well, and we don't really see any reasons not to continue on the growth path that we see in this quarter for the coming quarters as well. So I think that is one side of that. And then we have also the 200 million ARR goal target that we have for 2025. And I would say that is still achievable both of those targets. And also, from a cash flow perspective, I think what we have communicated there is that we're aiming to have 1 month of cash flow positive from operations during 2024. I would not rule that out, but I think also if we look on EBITDA level, which is which is a good proxy of the cash flow from operations, we can also see that we need a bit more volume, and that's also why we put a bit of emphasis on showcasing the volumes and that we are very close, right? So -- but we don't really want to give any guidance on -- more detailed guidance. But I think, from an analyst perspective, I think if you look on the -- our OpEx costs and gross margin levels, you can see a bit where the inflection point from EBITDA level is at the moment. And there is a bit to go to be cash flow from operations. Yes.

And I'll ask one more question on your visibility on customer rollout plans. On the one hand, your existing customers, we've seen really accelerating sequential growth now for, yes, the most recent quarters. And then what your visibility is through those customers that you hope to get with partners if that's a bit more unclear and how involved you are in those talks?

Right. So on if we start with the existing customer base, the thing that we're pushing now across the base is this geography and language, the way to deploy more languages. Even somebody like a Telefonica Germany also has to cover 5 or 6 languages. Germany has -- Turkish is one of the big languages in Germany, for example. And so even local companies have that of course. And not the least, the healthcare system in the UK have a lot of different language needs, which today have been done by interpreters. So that's something we're pushing quite a lot to include that in the rollout plans. Another interesting thing is that one of the large potentials in the UK has now decided that, that contact center that never really got deployed that they are instead to continue with their old contact center, which we are integrating to as we speak. So that's also good news to us that we be -- that we have a potential real bump and roll out on there. But otherwise, the -- there's still other use cases, other phone numbers, other entry points to in all these customers still, right? So I don't think we're penetrating more than 60% in any one of the accounts. So we still put a lot of our resource to that because that is, of course, the easiest way to get gross margin. On the new customer base, there's -- the channels are not really -- the pipeline we have from channels right now is probably 6, 7 cases, whereas on the direct side we have at least 15 that are in advanced stages. So we have 5 sales stages that are in stage 3 or higher. So we have several direct engagements still. The channel is something that we're really, really kicking off now in the U.S. primarily, which is where we think that's going to have the most impact. In the U.S., when you go with 1,000 call center agents and above, you actually have a very large universe. You even get to things like HVAC companies that we found yesterday. So people that sell air condition, even they have call centers of that size because -- well, just because of the size of the market, of course, so. So we are also going forward, we're going to start disclosing pipeline numbers. So as we present the Q4 report, we're going to disclose pipeline as well using the both weighted pipeline and also the amount of deals in the different parts of the pyramid that are in the pipeline. I don't see, any other hands raised here. So there's one. Nicolas, let me see. I'll unmute you here, and now you can unmute yourself, and welcome.

First of all, then well, congratulations, as earlier said on spearheading and building this challenging market, at least, reaching sort of some form of cash flow break-even. Sort of alluding to what Forbes was talking about in the cash flow situation, it seems to me at least that we're heading into another rights offering, perhaps Q1 something like that, the next year. Any comments?

That would be a Board question. I'm not really sure that I would say that that's in the trajectory of the cash, but that would be a Board decision. And I think the Board would take that decision based on the pipeline development rather than anything else in that case.

And also to add to that, I think also worth mentioning there is also that we have, historically, I think that is evening out as we add more volumes on SaaS where we get more recurring, I mean, on a monthly and quarterly basis cash in from those revenues. But we still have a lot of contracts that we get paid upfront for when there are renewals. And we still have a lot of them coming in the first half of the year. So I think that is also something to take into account when doing individual forecasting of cash, I would say.

I -- just briefly, if you allow me, obviously, then realizing you're putting tremendous focus into the U.S. right now, where the competitive landscape is increasingly -- well, it's getting increasingly competitive to say the least, and especially given the amounts that some of these companies that you're competing with, albeit, they might not have the same platform as Teneo. They're raising substantial amounts of money in the, I guess, at least tens of millions potentially hundreds and millions of dollars. Could you describe your thoughts or just talk a little bit about what's happening in the U.S.?

So I'll take that...

From a competitive point of view, what are you seeing?

Yes. I'll take that. So the way to raise money in the U.S. right now is to put lipstick on the pig. So you do a small application laying on top of the LLM. That is a path that's not going to work. We saw one now with pets raising enormous amounts of money, and they've done the virtual assistant at Sonos. I happen to be in this office I'm sitting now. There's 2 Sonos stations. I have a Sonos subscription. I VPN into U.S. and tried it. It is absolute shite. And the reason for that is that everybody's trying only with LLMs. And I mean, our CTO, very much me, myself as well, and also what we saw with Gecholog with the cases we were engaged with, there's no way to get around the hallucinations. I don't know if you saw. I reposted look at my flow. I reposted a research where they took the same 40 queries -- the same query 40 times a day to GPT, to Claude, and to Perplexity. And they got hallucinations varied between 8% and 25%. And it's not -- it's my design because transformers are probabilistic. They are not deterministic. The only ones that are doing deterministic is us. So even with Google and HelloFresh, we then had to build on top of Google Dialogflow because the Google Dialogflow was just spewing out 72% accuracy on both sides of the equation, both the input and output. And we then had to put our [ play ] on top of it. So would it be good to have $4 billion in marketing? Yes. But with this strategy, I'm not sure it's needed because we go direct to the customers and show them that we have a solution that works today. We can cut your cost today. You can play around with all sorts of other stuff for HR and -- but this is something that works today. So we're trying to downplay the whole AI MLM thing. And then just on a very general note, we're still not there where, I saw that, some of the fund managers on LinkedIn were saying now is the time to invest above the infrastructure layer. So above NVIDIA. I don't think so. That LLM thing is with lipstick on is not going to work. You need to be in much, much deeper application layer, so, and that's why we say sophisticated buyers.

Right. And the lipstick, would that -- well, I wouldn't give -- like, would it sort of be related to a company called for instance, Maven AGI, recently kind of formed 2 years ago.

Absolutely.

Do you meet them in the U.S.?

No. We don't meet them. So in the U.S., our competition today is Google Dialogflow and to a certain extent, Amazon Lex, but they're now more what do you say in English? But they're now competitors and friends at the same time, so it's -- we're actually also partnering up with them. So we don't see any of those. So for the large scale compact centers, we don't see any of the new entrants at all. The only one we see that says they can do something similar is Sprinklr. But Sprinklr is a company that says they can do absolutely everything, and then they send it to their thousands of Indians to build it. We've seen that not work for large companies before, so I'm not sure it's going to work here either. But we don't see the new entrants in this. What the new entrants are used for mostly is HR internal bots or a chatbot. That's where we see them. Any other hands raised? I don't see any other hands raised. So with that then, Teneo, the only AI company that's publicly traded in Sweden is shutting down the this 90% revenue growth Q3 report. So thank you all very much for attending and have a fantastic day. All right.

Thank you.