Earnings call transcript: Teneo AI Q2 2025 sees strong ARR growth and stock dip

Teneo AI’s Q2 2025 earnings call on August 19 highlighted significant growth in annual recurring revenue (ARR) and product innovation. The stock fell 4.85% in pre-market trading, closing at $0.58, extending its recent decline of -12.58% over the past week. According to InvestingPro data, the company’s market capitalization stands at $28.34 million, with the stock currently trading below its Fair Value estimate. The company’s ARR reached $89 million, showing a 60% year-over-year increase in its SaaS segment. Despite these gains, the adjusted EBITDA was negative at SEK 3.9 million, and the company’s cash position stood at SEK 49.4 million.

Key Takeaways

• Teneo AI reported a 60% year-over-year growth in SaaS ARR.
• The company’s gross margin reached a record 88%.
• Stock price fell 4.85% in pre-market trading.
• Teneo AI plans to launch Teneo 8 in the coming weeks.

Company Performance

Teneo AI demonstrated robust performance in Q2 2025, driven by strong growth in its SaaS ARR, which increased by 60% year-over-year. The total ARR growth was 21% year-over-year, supported by significant advancements in product innovation and customer migration to the SaaS platform. The company maintained a high gross margin of 88%, reflecting efficient cost control and operational effectiveness.

Financial Highlights

• Annual Recurring Revenue (ARR): $89 million, up 21% year-over-year
• SaaS ARR growth: 60% year-over-year
• Gross margin: 88%
• Adjusted EBITDA: -SEK 3.9 million
• Cash position: SEK 49.4 million

Outlook & Guidance

Teneo AI aims to reach a $20 million ARR target, with expectations to double its ARR through new projects. The company is focusing on expanding its presence in the U.S. market and anticipates closing several major deals in Q4. The upcoming launch of Teneo 8 is expected to enhance their product offerings, particularly in voice automation technology.

Executive Commentary

Parrot Song, CEO of Teneo AI, expressed optimism about the company’s future, stating, "We’re on the cusp of something really great here." The CEO also highlighted the transformation in the contact center AI market, noting that "the phone has had a renaissance."

Risks and Challenges

• Market competition: The AI and SaaS sectors are highly competitive, which may pressure Teneo AI’s market share.
• Economic conditions: Macroeconomic factors could impact customer spending and investment in AI solutions.
• Currency fluctuations: As Teneo AI operates in multiple markets, currency volatility could affect financial performance.
• Dependence on innovation: The company must continue to innovate to maintain its competitive edge.

Q&A

During the Q&A session, analysts inquired about the seasonality in API call volumes and the company’s strategy for the U.S. market. Teneo AI confirmed higher volumes in July and elaborated on their readiness to capture growth opportunities in the U.S. market.

Full transcript - Teneo AI AB (TENEO) Q2 2025:

Parrot Song, CEO, Tenneo AI: Good morning, all. It’s 09:00. I think, we’ll go ahead and start. I want to make you just make sure that you all understand that this is being recorded. So we all we are all aware of that.

And thank you very much for attending our Q2 report at Tenneo This is, marks a year over being Tenneo AI rather than artificial solutions. I’m very excited to present, this report and what’s happening around us as we speak. So my name is Parrot Song. I am the the CEO of the company since about four years back. And Fredrik, the CFO similar, also came in at the same time, and, we’re here to present to you today.

I’ll start, and then Fredrik will dive a bit deeper into the numbers. So, I wanna start with the market update, but here’s, we’ve seen at the NEO another quarter of a great year over year growth. We have a fantastic pipeline development, a great gross margin development. But maybe more importantly is what’s happened in the industry over the summer. So I’m gonna start with that and talk a bit more about that.

We we, at Tenneo, have been preaching the benefits of making it easy for customers to reach your customer care, your support, your, your, customer experience organization, and we believe that that is through the phone. And, what we’ve seen during the summer is that the phone has had a renaissance and has sort of popped up again as being the most important way to provide service to customers. Chat is a great way to talk to, for example, your personal AI agent. I chat with Gemini, chat, TPT, etcetera, all the time, But it’s not a great way to get service from customers. So if I’m a customer of, let’s say, Telia, and I go in and chat, you’ll find that the chat is very limited.

And there’s many reasons for that. There’s security reasons. There’s the format itself is difficult, and it’s also how much resource has been added to actually building a great chat in terms of connecting it to back end systems, which, again, has to do with security and the the pain of making it secure. So chat is not really the way that, the world is going forward. We’ve been preaching, and this summer has really validated that.

And then you can also say download just download our app, and you’ll get the support through the app. But downloading another app with 99 apps on the on your mobile phone is also not the way to go. So phone is having a big moment right now. And this small Swedish company, Tenio dot ai, with a great team in Spain, in The US, and in Sweden, have built a solution which is the best in the industry when it comes to automating phone calls. So let’s let’s start with what’s happened in the industry.

So we there’s a company that does only does research in the contact center industry. Again, the contact center industry is this industry where you have software that receives the phone calls, routes it to the right person, records, etcetera, and does all this stuff with the phone call itself. And that industry the leader in that industry is Genesys. And the leading conversational analyst in that space is DMG Consulting. And in the latest DMG conversation, I report that Donna Flas publishes.

Donna is the CEO of that company or the president of the DMG consulting company. She says that CAI is replacing legacy IVR at pace. What does that mean? That means that going from press 1, press 2, press 3 to reach invoice, to reach support is something that people are no longer wanting to do. And we’ve been preaching this, of course, for a few years, but what we see now is that there’s real solid interest.

We see it in our pipeline, but we also, of course, see it in in this report where she says that there’s a doubling in the customers. They’re gonna replace keypad with a real IVR, which is conversational AI, so a way to speak. Welcome to Tenneo AI. How can I help you today? She’s seeing a big increase in that.

Also, of course, multimodal voice, so having voice on both sides and being to use voice being able to use voice, but also get the WhatsApp maybe or get a confirmation on the on the iMessage. That’s also quite important, also something we’ve been preaching and using for the last few years. So very excited to see that. DMG Consulting was rated the best independent research and audit firm in this small niche called the contact center. This is obviously not the Gartner’s, the Forresters.

These are focused only on one thing. They’re focused on the contact center. So very, very great great somebody that a great amount of people listen to in the contact center industry. What they also did during the summer, which then again supports the fact that I say we’re leading in the space, is that they did a report on CAI companies and rated the companies. And one of the companies that rated is a company called Tenneo.

And in Tenneo AI, we won in all categories. So we were the best vendor in all categories. This research is a technical deep dive together with our team, but it’s also interviews, deep interviews with five of our customers. And she’s done the same. So her team has done the same across many different vendors.

There’s vendors like Cognigy, which we’re gonna talk a bit more about, vendors like Google, Microsoft, Amazon, etcetera in that, and we ranked number one. We had a perfect five in all these different categories that you see here. So very, very proud of that, but, of course, very strong testament to what we do. This is a researcher that is used by companies like Genesys, which is the leader in the contact center industry and also frequently cited by them in their in their market communication. I missed putting this in the in the presentation, which is on the web, but we do have a webinar with Donna on September 3 for those who are interested in hearing more and also hearing how you can deliver real return on investment with conversational AI, so with deploying Tenneo technology.

It’s a bit of a longer URL there, but you could just Google Tenneo DMG and webinar, and you will find it on the web as well. So I can really recommend you to to tune in to that. So that’s very something that’s very key to us. Now the second key thing is that Genesys that we started partnering with at the tail end of q four has really developed into a strong partnership together with us. So Genesys is the biggest contact center provider.

Number two in this space is NICE NICE and CONTACT. And then number three is, in our space, the enterprise space is AWS Connect. We work with Genesys and AWS Connect. There’s good reasons for that because we have a very I just see your lady shared an easy link in the chat if you wanna click and join that webinar on September 3. So we, Genesys is the biggest.

AWS Connect is number three. We work intentionally with those two because we complement their offering. So if you look at Genesys, we have a synergistic integration. Our technology integrates with their technology without taking the call out of their platform, and that’s key. Everybody else is trying to move the call out of their platform, and that leaves the customer without statistics, without all the analytics, etcetera, and it’s not a good solution for the customer, obviously, also not a good solution for Genesys.

We don’t. We keep the call within the platform. We also are aligned in terms of the commercial model and how this grows for their salespeople. So we drive what’s called Genesys AI experience tokens when when we when they sell us through their AppFoundry, which is their marketplace. We’re collaborating now with the keep keep regional leaders, but also the CSMs of the customer service managers, the people that make sure that the customers are happy, but also with the account executives, of course.

And we have several campaigns ongoing, but we have a 162 customers that we have started working on together with them. So we’re looking at their biggest customers, the ones that have more than a million phone calls a month, and I’m working together with them to to make give those customers the experience that they deserve as well. So very happy with that. And the real crown jewel that happened in the in the last few weeks is that we were invited to speak at the Genesis Experience event in Nashville, which is their big customer event. And we’re invited to speak on stage there, which is quite key for us as an app found important to be able to do that.

So very, happy with what’s the development within Genesys in the in the last few in in future, but also during the summer. Now in this space, the other thing that happened is that there was a big acquisition. There was an acquisition of Cognigy. Now Cognigy is a company that is building technology the same way that we build technology. And this is a validation that you’re not gonna be able to just take OpenAI, ChatGPT, Gemini, or Amazon Bedrock and just put an interface to that and hope that it’s gonna provide the right answers too.

It’s incredibly difficult to teach chatty piti in in your own model to recommend buying a meal instead of buying an individual hamburger and a french fries. It’s incredibly difficult to teach an LLM to do things like that, whereas in our space, it’s not. So we call this the hybrid model. Congengee has a very similar technology to ours. They also have been copying our website for quite some time.

They are a company that is primarily in Germany, which is part of the reason why this was acquired by by NICE. They have a very strong presence in Germany, but have gone more in the in the many, many customers are not the really large implementations, but very similar in the space. And they were a partner of NICE. Now NICE went ahead and acquired them for a billion dollars, which is 26 times sales, and that sales includes professional services, which, of course, we don’t have. So it’s a very interesting both valuation of our type of technology, but also the fact that, like, Cain Sims, who is an influencer in the space, says that the AI was raised in CX has now begun.

And I think that really strengthens our position together with Amazon Connect and so AWS and together with Genesys because they also need to now counter this and make sure that they have a great offering on voice automation. So very, very, interesting development. It shows that pure LLM together with an interface is not gonna work because then NICE would not have paid this type of money for for the company. There’s plenty of those where you take an LLM and just slap an interface on top of it. I call that putting lipstick on a pig.

But instead, it requires a real platform, and that’s why NICE plucked down a billion dollars. What also happened during q two is that we got word from one of our customers about the accuracy that they’re now seeing with their multimillion calls a month implementation of Tenneo. What you see here is that it started out a year ago with 40% of cases automatically resolved. So people calling in and getting an experience where they talk and they solve what they called about, which could be support question. It could be a question of invoicing, etcetera, etcetera.

This is in a large magnificent seven customer. So very large volumes, and 91% were sold automatically. 9% were transferred to an agent, but then it gets transferred together with a string which shows what the customer is calling about. So it’s a much faster you would transfer to the right person, but it’s also a much faster way to to meet the customer need. And, of course, this provides happier customers.

The cost difference between a person answering and, in in this case, and the automation answering is $5.60. And this is 10,000,000 calls a month. So 9,100,000 calls per month or $5.60 cheaper than working with a human. So it gets better service. You answer much quicker.

Customers are happy because they get instant service, but also very, very big savings. So another update going for forty and sixty in the in the fall, and now we’re at 91% with this customer. So very interesting development. Now what’s the reason for all of this? For those of you who haven’t seen these presentations before, it is because we have a higher accuracy in understanding.

That same customer says that we have 99% accuracy in understanding, and that’s something you reach after fine tuning the model in a few hours or or well, we just had a case where we did it in six hours and reached 99%. This is done by an external company. The table you see was done by an external company, and that company is called Sierra. They are the biggest testing company for voice solutions, so, again, within this niche, which is contact center. And what you see here is us compared to some of the other ones.

And we just heard a very interesting thing from a a large customer. We’re working in a pilot, sorry, in the proof of concept where Google Dialogflow that they currently have cannot discern between yes and no. So in 48% of the cases, when you say no, it actually thinks you said yes. And that’s because one syllable words are very, very difficult to discern for traditional AI models, which are not hybrid like ours, the TLML model that we use. So with that market update, so in summary, big things happening, big acquisition happening showing that this is the right route to have a platform that has this hybrid type of technology.

That’s a nice acquisition. Rated number one by the biggest the the most trusted analyst firm in our space, And the partnership with Genesys is really moving along very, very well as as well as with AWS Connect. But our main focus is is right now is still Genesys with only one case going on with AWS Connect, whereas most of our pipeline is together with Genesys. So moving on to a business update, which is more numbers like. We had a 129 net revenue retention, still very proud of same store sales of what our customers are achieving.

Very, very happy with this. ARR, 89,000,000 in constant currency. The dollar impact is quite large. Also, what you see now is seasonality in our numbers, meaning that and since we’re at capacity at both of these customers, like I said, in q four and q one, they we have the projects we have, we’re now doing a 100% of the calls. That means that now we see, impact of seasonality.

So the way we calculate the ARR is we take the last three months, and we take that times four, the average of last three months, times 12. Average of the last three months divided by so one month and then times 12. That’s how we calculate it. And then you see an effect where it actually looks a bit softish, but I believe that we’re still tracking to our goal, which is, I sometimes say, $20,000,000, sometimes 200,000,000 SEK. We have, of course, calculated goal on large US customers in dollars.

And the dollar, we’re not really sure what’s happening with the dollar, if it’s up or down. It hasn’t been this low since 2021. But in concept dollars, 89,000,000, and we believe that we’re all gonna we’re definitely on track to doubling that with the new projects coming in. So that’s still our goal, and that’s still what we’re working for. So the growth in SaaS ARR year over year, 60%.

In that total ARR, we did have some customers that we have removed and some chat customers that has to do with our upgrade to the latest version of Tenio, which is coming where, basically, we’re gonna be maintaining one code base, and we’ve been sort of forcing customers to lift to the code base that’s now because we can’t maintain several versions backwards. That just costs us too much money for chat customers, which typically have quite low revenue as well. So bit of movement in the ARR, on track for the goal, which is our 200,000,000 SEK, $20,000,000 goal, and, to reach that in q one with the pipeline ramp. 88% gross margin, very, very proud of that. That means also that our EBITDA is actually in line, although we’re slightly softer on the revenue line having to do with the dollar as well.

And then revenue growth on SaaS API calls is 81% year over year. So still growing very, very rapidly year over year with some seasonality seeing from q four and q one. So how are we doing the investment in new sales? Probably also seen that our cash burn is lower, but we did invest in new sales. We are slightly, we’re moderating the investment a bit, pending getting those first customers in, which out of the pipeline.

But if you look at our pipeline development, it is kind of difficult to follow if you’re from the outside. But maybe it’s just best to say that it’s doubled almost from q one into June. And the reason for that is primarily that we’re moving our into the sales stages, the later sales stages. So it’s not adding too much from q one since we added quite a lot in q one in terms of qualified leads. Now we’re more in the later phases, which is where we’re defining the project or we have a pilot or a POC or even in negotiations.

So our pipeline is only measuring the license or the the subscription. We never we never use the API calls in our, pipeline. Has to do with many things, but the most important part of that is that it’s very difficult to estimate that. So that’s why we have that as a target, and we don’t put that in the pipeline. Several interesting developments here.

Cloudhesive is an AWS connect implementation partner that we signed up with. I think that was q one, but we’ve been working with them for for a short while. And we have our first proof of concept sorry, pilot together with them, where Club Adhesive is gonna be building that out for a PE owned company that where the PE owns many similar companies, and they’re gonna be used that solution for all of them. And interesting is AWS Connect has decided to participate in that and are very interested in this. So that’s our first case also together with AWS Connect.

Genesys, I already mentioned. Azure, we have, in the pipeline two cases that where Microsoft has come to us, so we’re quite happy with that too. But, again, the strongest that we see right now is Genesys and AWS. Ebo is our second second way to work together with the NHS. Actually, third.

CGI, which is renewed together with them, our contract with the the National Health Service. But EBO delivers AI solutions into the National Health Service, and we’re now collaborating together with a proof of concept, actually, in Qatar, so not to relate not in the NHS, but to show and it’s also an English speaking hospital, to show them, to be able to showcase, real live usage of, this solution to Neo into the NHS as well. So EVO, very happy with that partnership. Very interesting company as well. The others well, the other new one is FGS.

FGS is a division within the Vodafone company. It’s a tech implementer. So it’s an ICE. Let’s call it an well, it’s an implementation specialist for technology that is owned by Vodafone in Turkey, and Turkey has sailed up as a very important part of our pipeline. Of course, Turkey has a large in house sorry, in country population, which means that companies have a lot of inbound phone calls, and it’s also quite a strong space for Genesys.

So that’s how it’s sailed up. And FGS established partner that is helping us, in these cases as well is gonna be participating in implementing them. So very happy with that development too. In the investment in new sales, the the drivers, the big investment this year is, of course, The US, and the big drivers are Michael and Lee. Lee having come from Genesys and then worked in adjacent spaces to Genesis, is our key is our key liaison with Genesis, of course, being very well known within the Genesis community, also within the partners.

And then Michael Kenny, has been the

Forbes, Analyst: head

Parrot Song, CEO, Tenneo AI: of business development for companies like Ingram, Dropbox, and Symantec, is leading the charge in The US. So very happy with our progress there in terms of building pipeline. We’re gonna see start seeing deals in q four in The US. And in the meantime, of course, Europe is delivering in q three as well. So one thing I get quite a lot of questions about apart from that, are LNM’s gonna eat your lunch?

Which, of course, nice answered by plunking down a billion dollars on a company that uses the same type of hybrid technology as ours. The second question I get quite a lot is what’s the impact on on the tariffs, and other things happening in The US? And I added the point from q one, which is the fourth one. We do see a lot of uncertainty in making decisions, in Europe primarily at this point because that’s where we’re in the negotiation phase with several customers. But, we’re seeing that this that there’s more hesitancy in, in actually committing.

So what we added during the quarter is we build out pilots or POCs for the customer to show that it works very, very quickly and easy to implement. And that’s, of course, because of our great solution architect team that are able to do that as well as being solution architects and presenting the solutions. Otherwise, the dollar impact is, of course, quite large to us as you you see in the constant dollar versus the the other reporting. Cost savings are in focus in The US. That is positive for us, especially when we are on the voice customer because that delivers a lot of cost saving.

And, of course, we have local US deliveries, so we’re not really impacted by by tariffs, at least at this point, and I don’t see any real way of of doing that either. So that’s the impact from what’s happening in The US. Operational highlights before we move into financials. So some interesting renewals, that have happened, of course, like CGI and MedHelp. We also have moved BPM, which is an Italian bank to a SaaS offering.

We’re very happy with that. That means that we now have a a bank in the European, Union that is using the software as a service solution. That means that the software as a service solution can be used by pretty much anybody. So we meet all the security demands with also the new ones, DORA, d o r a, that have been, applied to banks. That means that anybody could use our our SaaS offering.

It’s very highly secure. The most secure I was looking at a picture. Donald Trump’s gonna say, the most secure and beautiful in the world, but it is the most secure, the most certified ISO sock, etcetera, that we have that we’ve implemented during the last few years. Obviously, the 81% year over year growth, very happy with the SACE API call growth, volume growth, and improving profitability is quite important to us. Of course, that gross margin is what pushed us to cash flow profitability end of last year, and that’s something that we see that with adding these new customers in the pipeline, we’re gonna get back to that as well.

Q three, q four are gonna be strong with that high gross margin. So very happy with that. And with that, I’m gonna move over to Fredrik to give us the financials in a bit more of a deep dive.

Fredrik, CFO, Tenneo AI: Thank you, Per. I think we can jump to the next slide there.

Forbes, Analyst: Thank

Fredrik, CFO, Tenneo AI: you. You’ve seen this slide before, shown by Per. So I just wanted to emphasize, I mean, that we are reporting a very strong year, year over year. We continue to see a very strong NRR. And also quite important, also if we look a bit for the future also that our revenue model really scales.

And I think we have also mentioned that we are working quite a bit to lower our delivery costs, etcetera, in the past quarters, and we also see impact from that. So in essence, I mean, the significant volume impact from higher API call volumes show that we actually have a very high degree of operational leverage in our revenue model, and that is also emphasized there in our strong and record gross margin of 88% in the quarter. And for us, driving the business on a daily basis, I think this is key that we can see that adding more volumes will further improve our profitability and also our gross margin, and that is what we see in the quarter, I would say. We can move to the next slide, Per, please. Again, we experienced a very strong growth rate year over year in all our sales numbers.

And in the second quarter, the internal focus has been very much on securing renewals with our existing customers. But also, as Per have mentioned, that we are we have been qualifying the pipeline that we have created in the first quarter twenty twenty five and also building further for our long term growth very much in the quarter. As has been apparent in our revenues, currency has had a significant impact on our ARR and revenues during the 2025. We have been guiding for our currency exposure, I think, during the 2024 and also the first quarter twenty twenty five. And it’s apparent with close to 70% of our revenues in U.

S. Dollars. The appreciation of the SEK in 2025 has had a negative impact, obviously. Currency adjusted, our SaaS ARR still grew with 60% year over year, which is a very strong number, I would say. We also see continued growth on our SaaS API call volumes and revenues growing 6981%, respectively, year over year.

And as said, in the quarter, we have renewed with existing customers and also focused very much on our pipeline and also maturing the pipeline, coupled with also then continuously trying to drive price increases with our existing customers as well. Also, is important for us working in the company and have been part of the company for five years, it’s key that we also continue to increase SaaS revenues as a proportion of total revenues. And in this quarter, we had 6373% of totals coming from SaaS revenues, so very important there. And also, we continue to only have recurring revenues. And we think that is quite important.

And also then looking at a bit on the company that was acquired that had a significant part being professional services at a much lower gross margin, usually, we see having pure software revenues is key for long term value creation. So that is something we will continue working with. Gross margin, as said, growing steadily and at 88% this quarter, which is a record level. We also invest in sales and marketing as communicated in Q4 and Q1, but we also keep a strong cost control. And we can also see that we have improved our adjusted EBITDA versus previous year, amounting to minus SEK 3,900,000.0 in the quarter.

And we also see a strengthening or improvement in our cash flow generation as well versus prior periods, which is also very positive, I would say. Also, we talked about the impact on our revenues from especially U. S. Dollars, but also euro. We can also conclude that we have a lot of staff outside Sweden as well and also other costs denominated in USD and euro.

So we also get a kind of a natural hedge here also from having costs as well, not just revenues in those currencies. So I think that’s important to stress as well. We can continue to the next slide, Pern, please. Our NRR basically measures how well we manage to grow our existing accounts. And a number exceeding 100% means we are growing in this aspect.

And in the quarter, we had an NRR of 129%, which I think in the B2B enterprise software space is a very, very strong number. And yes, we’re very pleased with continue to show that kind of high level on our NRO numbers. Next slide, Per. For those of you that have been with us on these calls for a period of time, you’re well aware of this, but I’ll reiterate still because I think it’s an important thing to consider. So API call volumes on SaaS, I mean, that’s a key indicator of how our business grows.

So this is a key KPI is an indicator of how our customers’ application and usage of them are growing. And the more applications, solutions, covered regions, the higher API call volumes. And we grew the volumes versus Q2 twenty twenty four with 69%. But we also experienced a slight decrease versus Q1 twenty twenty five. And the decline in SaaS API call volumes during the second quarter is related to seasonality of built out solutions mentioned by Per already.

And we see higher volumes also in the beginning of the third quarter. So we can already now see that when we look at the year line numbers, they are higher than the numbers we have reported in the second quarter. Also important to stress, new volumes are underway, as we can see from our pipeline development and volumes, I mean, coming as we close new customers, obviously, but also new projects with existing customers. So I think very hopeful for the future. And we also expect existing accounts to continue to build out, as said, and also that we will be able to really deliver on our pipeline shortly.

So we see a lot of potential for the future basically. Next slide, Pare, please. ARR, as said, currency had a negative impact on our ARR in the second quarter. Therefore, it is important to show the currency adjusted growth rates And the sales ARR in constant currency versus Q2 twenty twenty four grew with 60% year over year. And the total ARR grew with 21% year over year Q2 twenty four percent versus Q2 25%.

So overall, very solid numbers, I would say. We can move to the next slide, Per. Basically, the same slide as the previous slide, but with unadjusted currency. And obviously, the growth rate in actual exchange rate amounted to 49% year over year for SAS ARR and 13% for our total ARR. So a bit softer numbers when looking at actual reported numbers versus currency adjusted numbers.

Next slide, please. Very pleasing, again, with our gross margin. We continue to improve our gross margins in Q2 twenty twenty five. 88% is a record gross margin for us and show that basically that we can scale with higher API call volumes. We also show this including and excluding commission costs since the commission costs can have a significant impact on us and the gross margin in a short period perspective.

But in this quarter, we did not acquire any new customers, and therefore, the gross margins are the same, but as you can see, at a higher level than before. So a very solid gross margin in the quarter, I would say. Next slide, Pern, please. OpEx in Q1 twenty twenty five, we guided for increased costs as continue to invest in sales and marketing activities. That is still the case.

But despite our guidance there, we have flattish OpEx run rate Q2 twenty twenty five versus Q1 twenty twenty five. So in essence, we still keep a lot of cost control, as Per already also mentioned in his earlier here during the call. And we will continue to invest in sales and marketing, but we will carefully steer investments a bit based also on our new customer wins. So cautious approach and on investments, but invest in the right things. That will be key going forward in H2 twenty twenty five.

Next slide, please. Cash position, looking strong as we started Q3. Cash included including collected receivables end of quarter amounted to SEK 49,400,000.0. So we in essence, we start the quarter with a very strong cash position for capturing the opportunities here in Q3, Q4, and it’s going to be very interesting to see the execution of our pipeline here in the next quarters. Next slide and over to you, Per.

Parrot Song, CEO, Tenneo AI: Well, thank you very much, Fredrik. I’m just going to reiterate a bit on and add one more thing. So we have very strong growth year over year, as we said. Very interesting to see what’s happening with our Tenneo eight, which we’re launching actually in six or seven weeks, but we’re already using this in in some customers. And, of course, that’s one of the reasons why Banco BPM can move to software as a service.

So we hope that that’s a trend that we can push more customers over to to software as a service, especially those that are willing to use voice because that’s really where the future is. But the last point here is something that I added in in this operational highlights. So we have three opportunities right now in pilot POC, at least a large opportunities and one in negotiation. What does that mean? Well, if it’s a negotiation, they’ve already made the decision to buy.

It’s just a question of getting the contracts together. So this one should be announced very shortly. And if it’s in pilot and pop, there’s an evaluation period, but also all of those three are within within this quarter. So very strong pipeline. And the reason that the pipeline has doubled is primarily because we’re moving those opportunities forward towards a closing.

To get to that $200,000,000.20000000 dollars target. What we’ve said is we need essentially three of of the size of our largest customer or five of the of our midsize customer to reach that, and that’s definitely what we have in the pipeline. So very happy with our development of our pipeline. Very happy, of course, with the results and the fact that our technology has achieved great results with Donna in, DMG Consulting. So with that, I’m gonna leave it over to q and a.

And as always, we you have to raise your hand. I unmute you, and then you get unmuted as well. And the reason I hesitate is because I don’t see that on my screen, but let’s see what happens. Let’s see. Forbes, if I can unmute you, I can.

There we go. And now you can unmute yourself, Forbes.

Forbes, Analyst: Great. Thank you. Good morning, Panj and Frederic. Yes. Just one question to start here on the outlook.

You mentioned seeing higher volumes so far in July and Q3. Could you give a little more color on what you’re seeing? Is it a broad based recovery? Or is it a small amount of customers that are pursuing projects and perhaps regionally? Some more color would be nice.

Thanks.

Parrot Song, CEO, Tenneo AI: Well, I think what Fredrik was referring to, that’s seasonality. So that’s the same customers as in Q2. It’s just that from a seasonality perspective. We’ve asked the customers because you could sit you could think why would it be seasonality calling to customer care? Why would that be lower volumes in May and June?

But it is, and that’s what the customers are telling us. So in July, that picks up again. I don’t know how that works if it’s vacations or not, but we’re not we’re not sure about the mechanisms. But then the other thing is adding new volume and new projects, and that’s, of course, the big focus that we’ve had this year. We know that we’re not gonna grow with existing projects because we have capacity on those.

Now we need to add new ones, and that’s where the real development is happening in q three. In terms of guidance, how we’re getting to that 20,000,000 or 200,000,000 SEK, not really sure if we could provide that because that’s very dependent on many factors, but that is definitely our goal to be there in the ’1. So, yes, I’m not sure, Frederic, if you can give any more color to that.

Fredrik, CFO, Tenneo AI: No. I think the question was perhaps more related to the July volumes. I mean, it’s very much what Per said. What we can experience also number wise is that there is a higher number in July, and we thought it was very good also since we had this decline in Q2 to also emphasize that we see a pickup in the rates, but we don’t really want to be explicit in how much more higher, but it’s higher definitely.

Parrot Song, CEO, Tenneo AI: So that makes life difficult if you want to forecast our revenues, but it’s difficult for us too.

Forbes, Analyst: Yes. I see. Thank you. So one question on the ARR here in the quarter and the decline sequentially. And you mentioned these legacy customers that are not sort of moving into the new model.

Just to clarify, did you make a negative adjustment here compared to Q1 for those customers that are not moving into the new model? Or is that an adjustment that you will perhaps make in the future?

Fredrik, CFO, Tenneo AI: No, mean, that’s included in NRR and ARR calculations. So And how big of an effect was that then in Q2? No, I don’t have that one. I mean, you can see that a bit, especially on the legacy side, I would say, where we also put that into so I think on revenue wise, not NRR wise or ARR wise, we had a decline in the revenues, as you can see, in the quarter, and that was like SEK 2,500,000.0 ish coming from that part. So and I think that that is also, you know, part of what Par mentioned that we are steering also to to new eight.

And I think we also communicated that earlier, right, that the on the low volume customers, it’s quite costly also to have them on old versions. And this is a way to also drive efficiency in what we deliver from a support and maintenance perspective as well.

Forbes, Analyst: Okay. Thank you. Yes, perhaps one final one for me on The U. S. And I think Par mentioned that you hope to win some new deals here from Q4.

So would you say that everything is in place now in terms of partnerships, salespeople in The US to to start doing this, or are we missing a a couple of final pieces here? How how do you see

Parrot Song, CEO, Tenneo AI: that in the road map? Yeah. Very very much so that we are now we now have the target accounts. We have the partners that work with us on those. Now Genesys being a bit of an influencing partner, but then we have other partners that are also gonna be part of the implementation process.

So, yeah, very much everything in place to be able to execute in q four in The US. So yeah. Also, very strong push for cost saving in The US. In Europe, people are still talking experience and customer satisfaction. In The US, it seems to be much more, can you get rid of people, please?

So different different markets. But, yeah, very, very it’s all in place. And the the presentations that we’re doing at Genesys, big customer event in Nashville is gonna be really key as well to finding those customers who are just on their way to replace Nuance. Nuance is this system that’s end of life that powers most of press one, two, three, four, IDRs out there.

Forbes, Analyst: Alright. Great. Thank you.

Parrot Song, CEO, Tenneo AI: Let’s see if there’s any other questions. I need to see some hands. And here we go. Lancelot, I am what happened now? Hang on.

I lost Lancelot on my screen. Let’s just see. Okay. He’s on screen two. There we go.

I am unmuting you now, I hope. There we go. Now you can unmute yourself, Lancelot. If you just push unmute now, Lancelot. Okay.

You could also put your question in the chat maybe if if you can’t unmute. Okay. Yeah. Let’s see if there’s any other hands. I got into view now.

Let’s see. I have to there’s no other questions at this point. Now, Anslop, you’re, of course, free to email the question as well or just give a call to Fredrik or I. Yeah. I don’t think he’s managing to unmute.

It’s all these differences. He will do he will do that. Great. No other questions. Just in a summary, it is strong year over year growth, bit of a seasonality impacting ARR.

But the most important thing, I think, right now is that the acquisition that NICE did of Cognigy, which, again, very similar technology to ours, did not have any anywhere near the type of size of customers we have, but they had other other things that NICE were after as well in that. Very interesting because it shows that the hybrid model, which is what we’ve been talking about, and that voice is really coming strong into the customer’s care center. And, of course, DMG Consulting rating us as number one. So very happy with that. Great work on the on the team.

Thank you, investors. Thank you for supporting us on this journey. I think we’re on the cusp of something really great here. Thank you all, and have a great Tuesday.

Fredrik, CFO, Tenneo AI: Thank you.

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