Earnings call transcript: Risk Intelligence sees ARR growth, positive EBITDA in Q1 2025

Risk Intelligence reported its financial performance for the first quarter of 2025, showcasing significant growth in revenue and a notable achievement of positive EBITDA for the first time since 2018. The company’s stock remained stable following the announcement, with no change in its closing price. According to InvestingPro data, the company has maintained strong revenue growth of 27.65% over the last twelve months, though it operates with a significant debt burden. The company’s market capitalization stands at $4.33 million.

Key Takeaways

• Revenue increased by 11% compared to Q1 2024.
• Positive EBITDA achieved for the first time since February 2018.
• Total Annual Recurring Revenue (ARR) grew by 18%.
• No client churn observed, with three new clients added.

Company Performance

Risk Intelligence demonstrated robust performance in Q1 2025, marked by an 11% increase in revenue compared to the same period last year. The company also reported a decrease in costs by 8%, which contributed to achieving positive EBITDA—a significant milestone since February 2018. The company’s strategic focus on developing five distinct business segments is beginning to pay dividends, particularly in the areas of commercial maritime and defense.

Financial Highlights

• Revenue: Increased by 11% YoY.
• Costs: Decreased by 8%.
• EBITDA: Positive for the first time since February 2018.
• Total ARR: Grew by 18%.
• System ARR: Increased by 17%.
• Net Revenue Retention (NRR): 120%.

Outlook & Guidance

For 2025, Risk Intelligence has set ambitious targets, including ARR growth between 15-30% and maintaining a positive net cash flow. The company plans to drive growth across all five business segments and is considering expanding its commercial department to support this strategy.

Executive Commentary

Hans, CEO of Risk Intelligence, highlighted the company’s strategic segmentation approach: "The segmentation will ultimately lead to more specialized products that are still provided on the same platform." He also noted the resilience of their operations despite geopolitical uncertainties: "We have seen no immediate impact on operations in energy or commercial maritime segments."

Risks and Challenges

• Geopolitical factors, such as oil price fluctuations and US dollar volatility, could impact future investments.
• The ongoing situation in the Red Sea has led to lower advisory services activity.
• The expansion into multiple segments may require additional resources and strategic alignment.

Risk Intelligence’s performance in Q1 2025 reflects a strong start to the year, with promising growth prospects and strategic initiatives in place to sustain momentum.

Full transcript - Risk Intelligence A/S (RISK) Q1 2025:

Anders, Moderator/Host: Good afternoon, and welcome to the Risk Intelligence Q1 twenty twenty five Earnings Call. Today’s call will be presented by the CEO and CFO of Risk Intelligence. We will begin with a presentation followed by a Q and A session. During the Q and A, the CEO and CFO will address both pre submitted questions and those received live during the call. If you would like to submit a question, the Q and A remains open throughout the presentation.

With that, I will now hand over the call to Risk Intelligence to begin the presentation. So Jens and Hans, your lines are now open.

Hans, CEO, Risk Intelligence: Thank you very much, Anders. And it’s a pleasure to be with you all here today to present the main findings from our q one report and to answer some of the questions that have been submitted. We’ll start with the usual text. And then the the agenda for today is q one main activities and then q one report highlights by Jens, something on the 2025 outlook and then the q and a session. First of all, the main activities during q one has been work on refining and further developing all five business segments as I think I mentioned previously and also in in in the text.

These segments are already existing and there’s already business in these segments. Some of them have been there for many years, but now they are being kind of divided into its own segment. And I’ll get back to that a bit later. We had a good renewal process with no churn and with upsell in Q1. We had three new clients for the maritime system of the risk intelligence system.

We had lower activity level on advisory services, which was expected and also as per our budget because of the Red Sea in the q one last year. And we expect that when the situation will change the other way in the Red Sea, we will get a quarter or at least a couple of months with a lot of activity again. The thing is that at the time, q one last year, everybody were looking into risk assessments for the Red Sea because they wanted to make sure that they would go around the Cape, so going South Of Africa. And, obviously, when the situation changes at some point, then everyone will secure voice risk assessments for entering transit through the Red Sea again. Then from March, we have also started that development process of the commercial department.

We’ll get back to that. With that, I’ll hand over to Jens.

Jens, CFO, Risk Intelligence: Yeah. Thank you. Thank you for listening in. We’ll kind of boil down the plus 20 pages of our quarterly report into a few slides. Main four highlights is our recognized revenue increased by 11% compared to to first quarter of twenty four.

Cost decreased by 8%. I’ll get back to that, and I think as well. Our total AI grew by 18%. And for the first time, our q one actually gave a positive EBITDA for the first time, at least as a listed company since 02/2018. So we think that’s kind of a milestone in our in our strategy process or growth process.

In terms of of metrics, again, total AR growth of 18%, system AR growth 17%, our our NRR 120% versus the upsell for the or selling more for the clients we had at the same time last year. So you can see on the on the right side of the page the the kind of trend in in our a a r growth both in quarter to quarter and and quarters compared. So that was quickly done. Yeah. Maybe too quickly, but I can we’ll come back to many of the the numbers, actually.

Hans, CEO, Risk Intelligence: Yeah. And the outlook for 2025 is as it is. We will derive growth from all five business segments. We’ll get back to that later. And we have the guidance of an AR growth between 1530%.

And then positive EBITDA around zero in net result and net cash flow which is positive. And that takes us to the questions and then the q and r session. We will divide them into three areas, financial results, sales and growth, and the geopolitical situation. Over to you, Anders.

Anders, Moderator/Host: Thank you for that. Let’s start with the category within financial results. And the first question here is, you maintain your guidance of a net result of zero for 2025. That seems very ambitious. Explain why you still believe it is realistic?

Hans, CEO, Risk Intelligence: As I put into the text in the Q4 end of the year report and also in the annual report, then the spread between growth in revenue versus the growth in cost is the most important indicator. And we experienced 23% in spread in ’24 where we had 30% growth in revenue and 7% growth in costs. And in Q1, we had 19%. And this means that inevitably in due time, this will result in a positive net result. With recognized revenue where you have recurring revenue divided over a license period and some of the major advisory service projects, timing is of essence when it comes to new sales.

Our assessment is that we will reach our budget and subsequently a result as per the guidance.

Anders, Moderator/Host: On your homepage, it is mentioned that each new license improves future cash flow with an average recurring revenue value of about 1,100,000.0. However, in your report, you give an ARPU of 148,000. Does that mean that the value mentioned on the homepage is an attempt to put a value on an extra ARR of DKK 148,000, e. G, discounted future cash flow in the lifetime of a customer?

Hans, CEO, Risk Intelligence: Yeah. First of all, the ARPU report in the q one report was DKK 165,000. So that’s the average revenue per unit or client. And the lifetime value based on license average lifetime 2024 ARPU and license based price increases was DKK1.58 million. We have corrected since we got the question, the LTV on the web page from 1.1 to 1.5.

But the the lifetime value is also described on page seven or is depicted on page seven in in the report.

Anders, Moderator/Host: And that takes us to the next category, sales and growth. So the question here is during the transition your CCO position and with a new profile in charge, it would be interesting to hear more about scaling up your market activity and building of pipeline, not only to meet the targets, but also to provide a bigger spread of risk when key accounts drop out or will be delayed with their renewals. Could you elaborate a bit here?

Hans, CEO, Risk Intelligence: Yeah. I have, since the March launch, a process of reorganizing and optimizing the whole commercial department to change the way that we do communication, marketing, lead generation, and ultimately how we grow the pipeline as well as how we manage client relations ships over the client lifetime, what we call from cradle to grave even if that’s a little bit negative way to put it. But, of course, we do have clients that churn all merge by each other and and similar. Part of that process is to improve how we communicate with our clients and doing their renewals. This should all lead to timely renewals and upsell and ultimately even higher client satisfaction.

So it’s not that we actually do not manage our renewals now. We just need to get better at it, and we need to increase the the upsell and the the the client satisfaction. That is actually the ultimate goals. And that will obviously impact on growth as well. The spread of risk comes from the business segmentation strategy, and we’ll come to that in a moment.

Anders, Moderator/Host: The next question. From your Q1 comments, we can read that during 2025, we are working on further developing and implementing the new commercial strategy with well defined business segmentation of commercial maritime, energy, insurance, government and defense and land based logistics, which will drive growth, new clients and client satisfaction during 2025 and onwards. But will this not lead to higher OpEx, etcetera, not the least from scaling up the obvious and necessary market activities, building a broader and bigger pipeline?

Hans, CEO, Risk Intelligence: We already have a pipeline for all five segments, which has been part of the development. But this pipeline has been developed, you can say, not from a strategic point of view, so not from a safety generation strategy. They have just been created over time. Now we we are developing each business segment and and the the work is help with the current staff and current budgets, meaning that it won’t impact on the OpEx at least in the short to medium term. It is a focused exercise in communicating to each business segment’s own language with an emphasis on their exact challenges, which are very different, obviously, as as you can see from the the the areas above, and how we can assist them to further grow our pipeline.

The price sensitivity decision making level that we are addressing and budgets as well as ARPU for the system is quite significantly different from segment to segment will also drive a targeted approach to each segment. Down the road, we will increase the commercial department with more people as we aim to have more power on the sales side for the relevant segments, not necessarily for all five segments, but for the

Anders, Moderator/Host: I think we shortly lost connection there. Hans, can you just repeat the last thing that you said?

Hans, CEO, Risk Intelligence: Yeah. What what I said is that while I started saying that we won’t have higher o OpEx, then we will over time because we are looking to increase the commercial department with more people as we will have aim to have more power on the sales side for relevant segments.

Anders, Moderator/Host: And that leads us to the next question. After successfully increasing your pricing structure leading to zero or very little churn, do you now see any other relevant optimization of your current activities chasing profitability? Better segmentation slash pricing on sales activities and or adding pricing to relevant features previously handed out as free services, etcetera.

Hans, CEO, Risk Intelligence: First of all, we have very few few free services. We do have some white papers and we do have some briefings that we do for free to clients and other interested parties. That’s part of the lead the sales lead generation process where we gain contacts in that respect. But the segmentation will ultimately lead to more specialized products that are still provided on the same platform, which means that it will have the same scalability. So ultimately, while you can say that Landry’s Logistics is already a product for its own segment and has very little to do with the others.

There will be more tailored versions of the risk intelligence system for the other different segments over time. But the relevance to the end user and thereby the client will increase. So instead of having a general product, which is mainly made for maritime, you can say segments wise as the commercial maritime, we will have a version for each going forward. But 90% will be the same, And thereby, we are securing the scalability. And this will in combination with the above mentioned different profiles lead to price differentiation as well.

Because as I mentioned before, there is a different price sensitivity, different budget levels, and with different decision making levels in the different segments. One example is the higher demand for API integration. So in integration of our data into client platforms instead of the web based solution with and that is primarily large commercial organizations and not least government organizations, and this comes at a higher price. So that’s one of them.

Anders, Moderator/Host: And then we move on to the last category, geopolitical situation. The first question here is, do we see any impact of the uncertainty caused by the trade war initiated by the Trump administration, e. G. Companies withholding their investments until they have more clarity?

Hans, CEO, Risk Intelligence: Yes and no. It is clear that investments connected to the dollar, the US dollar, and the oil price such as, obviously, oil and gas are impacted in the short to medium run. Because when the oil price goes down to $60, then investments almost end. If the same time the dollar goes down as it has, then you have like a double situation that impacts investment models while investments in other parts of our business segments seem to continue. Importantly, we have seen no immediate impact on operations in energy or commercial maritime segments, and this is where our core product, the risk intelligence system is used.

When we do work on investment projects, so future projects, that is mainly in advisory service or it is in advisory service where we do risk assessments for future infrastructure projects or oil and gas projects or offshore wind parks or or similar. So the sit the system is for operations. That is for the already existing operations for the various segments. When it comes to government and defense segment, obviously, as everybody knows, we see a lot very large increase in investments in all areas. They they cannot have enough production facilities.

They cannot have enough products. Everyone is kind of almost fully up in the order books in the defense industry.

Anders, Moderator/Host: And that leads us to the last question. Despite popular focus on the Trump factor across much of the worldwide investment spectrum, please also address and compare the European area security through planning and development factors, public and or private, reflected in real commitment terms that you believe impact on or influence risk intelligence own PNS range present or future?

Hans, CEO, Risk Intelligence: Yeah. The main impact from the public side would be on defense and on infrastructure projects. In terms of defense, we already experienced an increase in demand from both the public side and the defense industry side. The same applies to infrastructure projects where we are discussing and analyzing the military and security implications of these projects similar to some of the reports that we did last year that way that that are actually public. As an example, in Finland yesterday, we gave a briefing to a naval shipbuilding company.

And today, we are providing a presentation on the military and security implications of a large infrastructure project. In addition, we are doing more work on the protection of critical maritime infrastructure, which is relevant both to the energy as well as the government defense business segments.

Anders, Moderator/Host: And that was all the questions. So that finalizes the Q and A. But before we end the webcast, I will just hand over the word for you for your final remarks.

Hans, CEO, Risk Intelligence: Yeah. First of all, thank you for listening in, and thank you for some really good questions. It is sometimes questions like these that get you to think about how you address these questions in communication. So it is also a learning process and very helpful for us. But thank you very much for joining in today.

Over to you, Jens.

Jens, CFO, Risk Intelligence: Yeah. Well, I can just say the same, and and thank you in my own words. Thank you.

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