Earnings call transcript: Teneo AI’s Q4 2024 growth amid stock dip

Teneo AI AB reported strong operational growth in its Q4 2024 earnings call, highlighting a 142% year-over-year increase in SaaS annual recurring revenue (ARR) and achieving its first cash flow positive month in December. Despite these operational successes, Teneo AI’s stock dipped by 0.89% in pre-market trading, reflecting investor uncertainty due to the absence of detailed earnings per share (EPS) and revenue figures. According to InvestingPro data, the company’s market capitalization stands at $19.5M, with the stock showing a remarkable 77.78% return over the past year despite current challenges. InvestingPro analysis indicates the stock is currently overvalued based on its Fair Value calculations.

Key Takeaways

• SaaS ARR grew 142% year-over-year.
• Achieved first cash flow positive month in December.
• Stock decreased by 0.89% in pre-market trading.
• Expanded partnerships with Genesys and AWS Connect.
• High gross margin of 87%, excluding commission.

Company Performance

Teneo AI demonstrated robust performance in Q4 2024, with SaaS ARR growing by 142% year-over-year and total ARR increasing by 65%. The company achieved its first cash flow positive month in December, a significant milestone in its financial journey. Additionally, Teneo AI maintained a high gross margin of 87%, excluding commission, underscoring its efficient operations.

Financial Highlights

• Total (EPA:TTEF) ARR: 65% year-over-year growth
• SaaS ARR: 142% year-over-year growth
• Gross margin: 87% excluding commission
• Net Revenue Retention (NRR): 135%

Outlook & Guidance

Looking ahead, Teneo AI aims to reach $20 million in ARR by 2025, with plans to increase operational costs by approximately 10% in the first half of 2025. The company is focused on expanding its presence in the U.S. market and expects significant results from its partnerships by summer 2025.

Executive Commentary

CEO Per emphasized the company’s cost efficiency, stating, "We don’t have to scale the cost as we scale the revenue." CFO Fredrik highlighted the link between SaaS revenues and variable API calls, noting, "More than 75% of SaaS revenues in Q4 is linked to variable API calls." Per also pointed out Teneo AI’s competitive edge, saying, "We are the only ones who have replaced large scale Nuances already."

Risks and Challenges

• Market saturation in the AI sector could limit growth opportunities.
• Potential macroeconomic pressures may impact customer spending.
• The need to maintain technological superiority in a rapidly evolving field.

Q&A

During the Q&A session, analysts inquired about the sustainability of SaaS ARR growth and the impact of partnerships on future revenue. The management confirmed a strong correlation between subscription and API call revenue, reinforcing the company’s growth strategy.

Full transcript - Teneo AI AB (TENEO) Q4 2024:

Per, CEO/Founder, Tenio AI: I’m really sorry guys. It seems that at least now I have sound. However, Christina, I cannot share the presentation. Could you share the presentation, please, Christina? So can you run the talk, please?

Christina, Presentation Support, Tenio AI: Let me let me do it. Let me do it. One second. Sorry so much.

Per, CEO/Founder, Tenio AI: Thank you. I’m very sorry guys for this. Seems to be a new Teams policy that we haven’t understood yet. But maybe we could ask our own Teneo and call Microsoft (NASDAQ:MSFT) support and check how it works after this call. So, I’m going to go ahead and start right away.

I want to start by, yeah. Sorry, Christina, you need to share the I guess you’re doing that as we speak.

Christina, Presentation Support, Tenio AI: I’m open. I’m open. Yes. Sorry.

Per, CEO/Founder, Tenio AI: Yeah. Brilliant. So there’s really two things that stand out in Q4. We are great. We met a lot of great KPIs.

We had great growth. Everything is ticking the boxes of the right financial KPIs, but there’s really two things that were really, really important in Q4. The first one is that we proved that the Tadeo AI model actually works. When we set this model up in the beginning of twenty twenty one, the presumption was that as customers would use the software more, we would then also make more money and therefore we didn’t have to scale the cost as we scale the volume and we certainly proved this during Q4 where we also had our first our first, cash flow positive month. Yeah, you can stay right there, Christina.

We had our first, cash flow positive month. But also what you saw is that the gross margin increases as the volume increases. So it really shows that we don’t have to scale the cost to scale the revenue. And I think that’s what we’ve been saying and that now we’ve also proven that it actually works. So we’re very, very happy with this and uh-uh this is a key thing.

We don’t have to scale the cost as we scale the revenue. Key thing that we proved during Q4. The second one is that our long march to get the right go to market in The US finally came to fruition during Q4. I’ll dive into a bit deeper into that, but The US is our biggest market. We have the bulk of our revenue there since our our software is most useful for large companies with large volumes of phone calls.

Therefore, also The US is our most important market, So it was very important for us to find a really good way to go to market there and we cracked that during Q4. So very happy with that too. And I’ll go into more into that. But to start off with, some of you might be new and for those shareholders that have been with us for a while. Thank you very much.

Those new ones that contributed during our last rights issue. Also, thank you very much. We’re very proud of what we’ve what what’s happened with this company over the oops, Christina, you’re sharing the wrong screen now. Thank you. Very proud of what we’ve been able to do here in the last, in the last three years since we launched our new SaaS platform.

Kineo AI is our new name. That’s since December we did change from artificial solutions because our product is Teneo. Our customers know us as Teneo and it’s of course a lot easier to in that big World Wide Web to brand us if we if we have the same name as our product. So we only brand one name. So very happy with Teneo AI.

That’s had great success for us as well in terms of rankings on Google (NASDAQ:GOOGL) on GPT on Gemini and other search engines as well. What I’m showing here is the area that we are in. It’s customer operations and this chart is from McKinsey. It was published during the summer and it shows that they think the customer operations is is going to be the big impact of generative AI. You see that is a blue dot.

That means that 75% of total impact of generative AI is going to be in those blue dots, but it also has a high impact as percentage of the spend that that goes into that operation. That’s the 40% on the right. Okay. My sound is not good. Let me see if I simply remove my AirPods.

Thank you, Stefan, for pointing that out. Let’s see. Is the sound better now?

Christina, Presentation Support, Tenio AI: Yes, it works fine.

Per, CEO/Founder, Tenio AI: Okay. Thank you. So what you see is the customer operations. That’s where we are in. That’s gonna have a big impact with the latest technologies as well, which of course we use and have used for the last three, four years.

So we are an orchestration layer that uses all sorts of AI technologies to be able to receive a phone call, understand why somebody’s calling and automate that phone call. That’s what we do. So I will move on to oh, sorry. I won’t. Christina, will you move on to the next slide, please?

Thank you. So the big thing in, 2025, which we are all about, is agents. This used to be called, in our case, conversational bots or voice bots. But nowadays, the new terminology because of the, generative AI, influence on our market, It’s called agents. Now everybody wants to build agents, and you see that Motley Fool says that that’s the big thing.

Real world autonomous capabilities in agents is a big thing in 2025. You see that Microsoft is moving into Agentic, launching 10 pre built agents and computer world. Everybody’s talking about agents and Agentic AI. And the interesting thing with that is that we are way ahead of the curve. And if we move to the next slide, Christina, you will see that we already have 17,000 agents.

So we have code snippets that do autonomous things. So you would converse, you talk to it, it might go to Salesforce (NYSE:CRM), update the record, it might find an invoice, it might open a support case, it might send you a new license key, but that’s an agent. That piece of software that does that is an agent. We have 17,000 such agents already live built inside of Tenille. These agents do 25 agent interactions per second.

So this is the biggest agent AI platform right now in the world, because everybody’s starting to build these. We’ve been building them for a long, long time. Of course, the big thing that changed is with LLMs, the agents became much more effective, and we’ve also raised the automation levels in our customers, thanks to to, generative AI from 40%, which was best in class a year ago to 60% in 2024. Our agents do billion interactions per year, and that’s something that we had as a target. That’s the 1,000,000,000 API call target that we had, which we also broke through in Q4 of twenty twenty four.

So Christina with the next slide, please. Here’s, here’s what we do in a nutshell. So this is from one of our customers. This customer has 6,000,000 phone calls per month. The customer is Microsoft.

And out of those 6,000,000 phone calls, 60% of them are automatically resolved. So if you look at the first left slide here, the system Tennio picks up the phone, understands why you’re calling. Hi, welcome to Microsoft. How can I help you today? And you say, well, my teams is muted for everybody, including the presenters.

What should I do? And then, the Microsoft support, agent will go out and find the answer and come back and talk to you in natural language and and solve this issue for you. 60% of the time that’s solved automatically. 40% of the time the agent just collects information and sends that information back into an agent. So the agent now gets into their agent assist platform.

They get all that information about what the call is about, who’s calling, what are they talking about, what product services from us do they have, etcetera. And of course, it results in 100% happy customers. It is very profitable for us with more phone calls, but it’s also very profitable for the for the customer with more phone calls. As you see, a phone call that’s actually picked up by human agent is an average cost of $6 whereas a phone call picked up by, the agent, the AI agent, so not the human agent, is 40¢. So if you then do the math, 6,000,000 times 60%, three point six million a month are now $5.60 cheaper.

That is a big, big saving for the customer, but also it is revenue for us because every single phone call now is about 98% gross margin in these customers. So that’s what we’ve been focused a lot on growing our existing customer base. Christina, if we go to the next the next slide. And the reason that this works for us better than it works for anybody else is the accuracy. We have tested this together with Sierra, which is an external testing company, which is the biggest in testing natural language agentic AI platforms.

They are they basically acquired all the others. So now they are the world leader by far, and they took it upon themselves to test our system against a set dataset called Banking 77, which you can find in Hugging Face. It’s natural conversations between a bank employee and a bank customer. Those have been described, transcribed by people and the meaning has then been taken out of those transcriptions by humans. And that’s that’s what’s 100%.

And then we tested this with Google Dialogflow, which is the closest competitor today in these large accounts. That’s usually the incumbent together with a company called Nuance. I’ll come back to that a bit. So 74% Google Dialogflow, something like Microsoft CLU, which we also use in our system, but we enhance that 70%. Amazon (NASDAQ:AMZN) Lex, which you might have in a speaker at home, for example, point eight nine, also used in Amazon Connect.

So we are at point nine five. Now the difference between point nine and all the ones below point nine is the point nine is where an outsourced human call center would be 0.9, zero point nine one and we’re at 0.95. So it’s even better. It’s cheaper, of course, but also better than outsourcing to a call center in, let’s say, Malaysia or India, which is quite popular as well. So, Kristina, next slide, please.

So we had a record quarter in Q4. I’ve really, really the big number to me that’s important is the 135% NRR. So many software SaaS companies have had a reduction in NRRs. That’s net revenue retention. Basically shows that customers like us and grow.

And most SaaS companies have not been growing last year in their NRR, and they’ve been below the 100% mark because they focus the parameters that they use are employees or seats or something akin to that, like Salesforce, for example, how many salespeople do you have? If you have less salespeople, then obviously, you’re you’re you’re gonna get less revenue. Our model is all about having less people. So obviously, we do not charge for that. We charge in the instead for these API calls.

So the the fewer people that are in the call center, the more revenue we get, essentially. So very happy with 135%. That means that our strategy of focusing on these large accounts has worked, and, it it continues to deliver. We broke what I call the $10,000,000 ARR mark. Now dollars, of course, it’s just about $10,000,000 It might be 9.9 today, but 104,000,000 sec ARR in Q4 twenty twenty four.

Also very proud of that. That was one of our prime targets and we were cash flow positive. So, really, really happy with, the Q4 results. Christina, if we go to the, the next slide. This is though the biggest thing that happened in Q4.

This is the thing that really changes where we’re going. So, we’ve been working on top of Genesys in all these large accounts. So all the really large implementations have Genesys as a contact center. So what’s a contact center? It is all these phone lines.

So it’s, you have lots of phone numbers that are connected to a central central system, which is cloud based nowadays. So it’s in the cloud. And then that system can route to Frederick, to Christina, to Johan, etcetera. And it can reroute, and it can have voice mails, and it can do things that put people in queues. It can also have some intelligence about which queues to use, etcetera.

That’s called a contact center platform or or CCaaS, contact center as a service, which is the big thing today. The biggest player in that market by far is Genesys. So most of our large implementations are on top of Genesys. Therefore, we’ve been working quite hard to get Genesys to realize that, hey, we can have a better customer experience if we also work together with Tennille. And that we had a big breakthrough in that during Q4 and are now going mostly to market this year.

In 2025, we’ll focus mostly on Genesys. We’re going together with them to their largest account. So we have an account list from them, which is their large accounts that we are working with them. We’re at their kickoff in, in, about a week and a half in The US at presenting our us to their salespeople. But more importantly is that their biggest reseller, MWM, Carousel, we’ve also signed up with, and we’re also at their kickoff in Vegas, next week.

So very, very happy with what we achieved in q four together with Genesys. A Genesys implementation is much better together with us. Genesys used to sell a product called Nuance, which is the one that Microsoft had, which Microsoft has had taken end of life. So it’s a Microsoft product, which is now end of life. You can still buy support until end of twenty twenty seven, but it’s very expensive.

So basically what we do together with on the Genesys accounts is we go there and say, you need to replace Nuance. You can replace it within the cost envelope. You have a new budget. You can now move in with Tenille, and we have a package for that that we launched during Q4 as well. So this is the global leader.

Lots of customers across the world. They are a $6,000,000,000 ARR company, and they’re also going public during this year. So very, very happy with the development there. Also, we press released that was in Q1 though, but we press released recently that we have, a, employee to run the relationship. And he used to be the general manager of Genesys Cloud, which is the product that we’re talking about here.

So he used to work there at Genesys, and obviously that helps us tremendously as well. So very happy with the the breakthrough in road to market in The US. This is gonna help the salespeople tremendously because we’re obviously a small company. Genesys is not a small company. So, very happy with that.

Yeah. Sorry, Christina. You need to click again. I keep clicking on my PC here, but doesn’t work. So, if you break this down, there’s really two companies that we started working a lot with during q, ’4.

It’s AWS Connect, which we had a relationship with since before, and Genesys. And we did a few proposals together with AWS Connect being part of their, marketplace that you see here, but also on the Genesys AppFoundry, which you also see here. So those are the the two big, pictures. Now in the Genesys part, we have two customers we’re working as our partners we’re working, that we’re focused on. It’s Kenway and NW and Carousel.

Both of those also signed up during Q4. And in the AWS Connect ecosystem, we also have two partners at Direct and InteVision. We’re doing slightly less on the AWS Connect in 2025 simply because the opportunity on the left side, the Genesys side here is very, very big. But, that’s totally going to be our focus for 2025, working together with these large Genesys accounts, and helping them to, to take, take both cost savings and the customer experience to new levels. So very, very happy with this as we move into 2025.

This is what we’re focused on. This is where we’re moving to, and that’s how we’re gonna really increase the footprint in The US. Also in Europe, but, again, primarily The US. So Christina, next slide, please. And hit one more key there, please, Christina, as I get the next, thing at the top.

There we go. So how what how’s our revenue model working? Well, we do charge for seats, and that’s for the development platform. So typically a customer that has a lot of automation and has millions of phone calls, they will long term, they will have three people working in the platform. So three FTEs working in the platform.

But in the beginning, they might have 15 because they they have lots of people to work on setting up the the conversational flows. So, in the beginning, they might need a lot more seats so that we charge them for the seats as they’re building the solution. That’s the 10,000. It’s actually €9,900 USD or GBP that we charge per month for this. As they develop the system, which takes roughly sixty to ninety days, They then take that live.

When they take it live, they start paying per API call. This is when we deploy what’s called our endpoints. And there, we charge 0.009 USD per API call on average. That’s what the average revenue that we get for these API calls. And if you look at the bottom, you see the analyzed API calls and you see this is, this is a, this is a accruing, this is it adds up in this in this chart.

Right? So the the API calls that you see here in Q4 twenty twenty four, that reaches just about a billion on the left side. That’s our total. And then the SaaS API call volume has really grown, over doubling year over year. So it’s actually even more than it’s 234% up year over year, which is here in the right graph.

So let’s take that to the next. And this is our most important metric. Let’s go to the next slide, Christina. So one thing I promised when we delivered the Q3 report, since we’re doing a lot of investment into sales, it’s costing the shareholders a lot of money. We want to share how we’re doing in that.

The sales cycles are quite long. They will be shortened by the breakthroughs that we had in Q4, but there’s still quite long sales cycles. So what we’re showing here is that the pipeline is growing. So the pipeline that we have is only with large, we’re aiming only for large customers. So customers that are like the customers we already have.

A customer today that we already have might have a total potential of $33.5 4,000,000 a year when they’re fully built out. So when they’re at the 100% using our system for all voice calls, probably also for chat, they’re probably $3,540,000 a year of revenue to us. What I’m showing here is

Christina, Presentation Support, Tenio AI: only the subscription part. So only that

Per, CEO/Founder, Tenio AI: 9,000, 9 thousand and 10,000 that they pay per that they pay per month for the five seats. That’s what we forecast in our system because that’s what we measure the new salespeople on. And then the API calls, we measure the what we call our, customer engagement team on. So then we put the other team on. Once we sold it, we put them on to increase the API calls as quickly as possible.

So therefore, from a sales perspective, what you see in our pipeline is only those 10,000 times twelve, one hundred and twenty thousand. Essentially, it’s actually 9,900. So €118,800 it would be a deal that we do. That’s how we would mark that in our sales system. So even if the customer has a potential of 4,000,000 a year, we still market as €118,800 USD in our system.

So if you then take the pipeline stages, let’s take the first pipeline stage, which is a qualified. That means we know the customer has a problem. We know they have a budget, etcetera. And there is a willingness for the customer to do something here. We still haven’t proven it’s our right solution.

Then it’s a 20% waiting. So 118,000 times 20%, that’s €24,000 That’s how what that would show in our pipeline. Customer we’re engaged with, we know they have a budget, they have a problem. We still haven’t proven as our problem. That would be worth €24,000 So if we then look at our twelve month pipeline, it’s again only the subscription part €461,000 that’s grown 72% since September 2024.

So it’s €461,000 of weighted pipeline for just the subscription part, not the API call. So very, very happy with this. I mean, this means that we are touching the really large customers. We have seen the ones that problem. A lot of them have the problem of needing to replace Nuance.

Very, very happy with where we’re moving in, in this space. So, oh, sorry, Kristina. Can you hit the next? So some operational highlights before I move over to, to Frederick. We met two of our financial targets that we set in the beginning of, of ’20 end of twenty twenty one, beginning of ’20 ’20 ’2.

We needed to reach an analyzed volume of 1,000,000,000 API calls. So that means one month times 12 is a billion. And we’ve reached that during 2024. We also showed that we can be built positive from a cash flow from operations during 2024. Again, adding new customers, adding more revenue is just going to increase that profitability.

So we’re very happy that the model works that way that we, that we forecasted or rather that we hoped maybe in the when we set the model into place in 2021. So we had a 300% almost year over year growth in the SaaS API called revenues. So that’s the revenue that has a really high margin and 142% SaaS ARR growth in total. So that’s a total revenue. We also took one new logo in q four, totaling four then over, the the last few, over 2024.

That’s a company that’s gonna use our product as an OEM. And, that means that they basically build a service, which they’ll sell to many customers. That’s a way to also offer this opportunity to save all this money and make a better customer experience to smaller customers than just a very large enterprises. We signed renewal agreements with BPM, with Diba and the TIAA. TIAA is a fairly large bank that has a very good implementation of, of our voice capabilities, for banking.

So it’s a very interesting use case. BPM Vodimba are now gonna be building the same, actually. Those are, of course, two banks in Italy. So, maybe 2026 will be the, the year when we start marketing bank as one of our big, verticals as well. We also then and thank you very much again to you on the call that participated in this.

And and, of course, you see also that the the share price has held steady after this, meaning that, this was beneficial for our shareholders. Also for for me, of course, who could not participate in this. It’s a we we brought in a total of 60,000,000. There’s several reasons for this, why this is important, but the most important reason is, of course, the investments we’re doing in The US. And since then, we have already signed up for sales and presalespeople, one presale, three salespeople in The U.

S. Who are working under Michael Kenny that now runs the U. S. News Sales. Michael is ex Dropbox (NASDAQ:DBX), ex Symantec (NASDAQ:GEN), very successful in building markets for those companies.

And of course, with Lee Cain then, who came from Genesys, this is going to be a very powerful team hitting The U. S. During this year. So, very happy with the development. Europe, of course, we already have a mature pipeline, so there we’re in negotiations with customers, which at least in the next few months are going to come to fruition.

A bit longer in The U. S, but in the summer, we’re definitely going to see the first deals coming out of this pipeline development. So very happy with Q4 again, very happy with 2024. Most happy with the breakthrough together with Genesis and NW and Carousel, etcetera, Kennewick. So with that, I’ll hand it over to Frederick.

And Frederick is muted. Christina, you

Christina, Presentation Support, Tenio AI: need to mute. I mute him. Yes. One second, please.

Per, CEO/Founder, Tenio AI: Of course. You need to go back into We’re very sorry for this, guys. We will call the Microsoft Tenere bot and ask why this is afterwards.

Christina, Presentation Support, Tenio AI: And you drive, Edric or not?

Per, CEO/Founder, Tenio AI: Yeah. Now Fredrick cannot mute himself. No. We couldn’t.

Christina, Presentation Support, Tenio AI: Okay. Now he he should be able to. Sorry.

Per, CEO/Founder, Tenio AI: There we go.

Fredrik, CFO, Tenio AI: Oh, yeah. Perfect. Thank you. Thank you, Christina. We can move to the next slide, Christina.

Thank you.

Christina, Presentation Support, Tenio AI: One second, please. Sorry. Sorry. Sorry. Sorry.

Sorry. Sorry. One second, please. This is first time I do this, so I’m trying my best. Okay.

Now.

Fredrik, CFO, Tenio AI: Thank you, Christina. I think we’ve already seen the numbers a bit on Per’s previous slides, so I will not talk too much about that. I will also come back to the numbers in the coming slides. But I think we can summarize in a very strong quarter in Q4. Year over year, obviously, very, very strong growth in all metrics.

Also, if we also look quarter over quarter, a very strong performance as well versus Q3. I mentioned a couple of metrics that we are very happy to meet. One of them is obviously that we are cash flow positive on a monthly basis in December, which was also one of the financial targets we set up a couple of years ago and also towards the direction of the company and the strategy that we have been driving to get to that position. Very pleased with that. Obviously, also gross margin excluding commission at 87% and that also showcases the operational leverage in our model and also the fact that we also see the impact trickling down to bottom line from getting a very solid contribution from the growth that we’re experiencing in Q4.

So the difference versus Q3 this year is very visible in the numbers as you can see in the report as well. We can move to the next slide, Christina, please. On this slide, lots of metrics and all covered in the quarter report as well. I will just conclude that as I already said, we experienced a fantastic growth in our SaaS revenues and significantly improved the EBITDA. So all sales metrics are at record numbers, so a very strong development in the quarter.

The shareholders on the line here and the stakeholders on the line that have been with us for a longer period of time knows that if we look on the graphs to the right hand side, we can see that we are experiencing 72% SaaS revenues. We started this journey beginning of twenty twenty one where we had zero revenues more or less in this space. We have grown from 0% to 72%. Also during the year, we have increased quite significantly on the proportion coming from SaaS and basically because of growing our existing customers. The same goes also with recurring revenues.

When we started this journey in 2021, we had a hybrid model with professional services and an old software model basically. Now we are a pure software company’s evidenced by ninety nine percent recurring revenues that we keep for the next month, for the next quarter and try to grow them consistently. Then also just to mention a few numbers here, obviously, SaaS ARR growing 142% year over year. Total ARR also then including non SaaS business also growing 65% year over year. So very, very solid performance, I would say.

And we will come back to NRR. But obviously, as Parrot already mentioned, this is driven by our focus on existing account and growing them and also showcases the operational leverage from our business and revenue model and also the benefit for our large customers. Already mentioned gross margin excluding commission increased from 75% last year in Q4 to 87% this year. And also with the increased volumes on sales, we also keep control of costs and that also trick us down to that we have a very much stronger EBITDA this year minus 1.7 versus 5.8 last year in Q4. So very pleased overall with the numbers and we’ll also come back on the cash position, which is very strong here also following the directed share issue that we executed in the beginning of Q1.

Coming back just shortly on net revenue retention during 2023, ’20 ’20 ’4, the strategy has been to grow relatively cost efficient and focusing on existing accounts. We also see that materializing in having customers that benefit and see a value in what we provide. So the more they use us, the more they usually also save and also get a much more better customer experiences. For those that are not really familiar with the NRR KPI, you can basically say that it shows how well we managed to grow our existing accounts. So a number at 100% plus means that we are growing in this aspect.

And as Par mentioned, a number of customers in the SaaS space have been showing declining numbers in this respect. So to keep and also improving here during 2024 on this metric is very strong, I would say. And I know Redeye, I think Frederic as analyst that this is covering our stock with Redeye, they also have this SaaS universe for SaaS companies. And I think in Q3 twenty twenty four, Tenea ranked us the number one in this metric. I would actually be quite surprised if we’re not number one when they also measure Q4 twenty four.

A very strong development on existing accounts, basically. We can move to the next slide, Christina. API call volumes, and then especially on SaaS, since that’s where we are driving the business, is also showing a very strong growth. This is basically an indicating on how our customer applications and the usage of them are growing. The more applications, solutions, covered regions, languages, etc.

The higher API call volumes basically. As you can see here, comparing Q4 twenty three versus Q4 twenty four, we grew this three times and we also experienced 47% quarter over quarter growth versus Q3 twenty twenty four. So very pleased with that. Also, as Par mentioned, this line only showcases the SaaS IPI call volumes, but combined then also with our non SaaS customers, we met our financial targets of a billion annualized in API call volumes in one month. Very pleased with that also that we could meet that target as well.

And we expect existing accounts to continue to grow. And we also have a number of very interesting discussions, with some of our high potential accounts for future expansions on our existing accounts as well and couple then obviously then also with what Paro also mentioned on our reinvestments in new sales, especially in The U. S. So in short, very good and solid numbers. We can move to the next slide, please, Cristina.

Briefly, I think SaaS ARR, obviously, as we said, 142% year over year growth, but also similar direction as with API call volumes. So we’re increasing quite a lot from Q4 and then continuously over the year with a relatively high spike than in Q4. So very pleased with showcasing this growth on ARR. Can move to the next slide, Kristina. This is actually one of my favorite slides.

I know it can be a bit crowded, but I think this summarizes a bit a number of things on our business model and revenue model. So this basically showcases the breakdown of our recurring revenues. And it also showcases that the evidence of our execution of the strategy. And I think that is what we work with every day in the company to drive in this direction and push for even more growth ahead. It essentially showcases that we are significantly growing our SaaS business.

It also shows the scalability in our revenue model. As you can see to the right hand side in the dotted area, it showcases that our variable API calls is the key growth driver. So you can see the purple or dark blue that one has increased, if you look year over year. And that is showcasing a year over year growth of 294%, which is a fantastic number, I would say. It also showcased that we are aligning with our strategy that we are focusing on growth on existing accounts.

And that’s also why you see that the subscription or license revenues have less growth than the variable part. And also coming back then finally on operational leverage in the model, you can also see that more than 75% of SaaS revenues in Q4 is linked to variable API calls. So very much what we are focused on, what we have been focusing on is also materializing. So I think from a management perspective, I think this is very satisfying to see and hopefully also in agreement with our shareholders as well. Quickly on gross margin, solid performance also on the gross margin.

And as you can see, we show stable but growing gross margins in Q4 versus the previous quarters, I would say. And as Par mentioned also on pipeline, so when we acquire a new customer, the contribution is relatively low because we also have sales commission that will materialize at that stage. And that’s why we also showcase the gross margin excluding commission because it can have a significant impact in one single quarter. But also as you can see, it’s not a super significant deviation, and this will also decline as we’re growing the sales volumes obviously as well. But important that we showcase that we get bang for the buck on our investments in our existing accounts.

So a very solid gross margin also here in Q4. We can move to the next slide, please, Kristina. On this slide, you see the OpEx run rate. So Q3 versus Q4 twenty twenty four. And this is a bit how we measure and follow-up on our investments.

And as already said, we improved EBITDA quite significantly year over year. And we have costs under control. And I think also for some of you that also have been on some of the investor calls for the directed share issue. We also explained that because we are at the inflection point where we are close to breakeven and we can also take decisions whether to not go for growth. But I think now the intention now with the strategy that Para also communicated ongoing after Genesis, etcetera, that will drive some costs in the first half of this year.

As Per mentioned, we have started to recruit people and that is basically to invest in further sales and marketing activities since we also see that we have such a unique position now to benefit from actually growing even faster with more focus on new sales. So that’s why we also want to guide somewhat. I think in their earnings release, we said we’re slightly going to increase, but to be more specific, this will roughly mean that we plan to increase costs with approximately 10% on run rate basis to go for new accounts during the first half of twenty twenty five. So there will be an increase in costs, but that is also intentional investments since we also see that we have a strong development on our existing accounts and also them to capture the market opportunity we actually see now in The US. Cash position, so we had reported cash position December 2024 of a bit more than 18,000,000.

Since we are working with quite large customers, they tend to sometimes push payments over the quarter ends and that also happened for us now in Q4 and nothing really strange about that. That’s what most large customers or companies do. We have collected 7,300,000.0 of those receivables early in Q1. We have then added the 7.3 to this cash position and then coupled with that we also brought in gross proceeds of 60,000,000 from the directed share issue that was communicated here at the February. So adjusted cash position with these adjustments, we had close to 86,000,000 in the cash and bank.

So with that, I think we feel very confident for the coming year and also looking forward to pursue and continue on the strategy that we have, basically. With that, I’d like to hand over to Per again.

Per, CEO/Founder, Tenio AI: Thank you, Fredrik. So, Kristina, Just as a summary, same slide I showed at the beginning. The two biggest things, we’ve proven that the model works, focusing on large and existing customers has given us the possibility to be cash flow positive. So that means if we add a few more of these really large customers, that’s obviously going to impact the revenue a lot. We don’t need to scale the cost with the revenue.

That’s really what we proved in 2024 and especially in Q4. We also approved that or we also broke through in the the go to market in The US. For those of you who have been with us for a while, we did try initially and quite successfully made a partnership with Microsoft. However, Microsoft was not successful in the contact center space. It was very good for our product team, but not very good for our sales team, the Microsoft partnership.

Remember, me and me remember, we were partner of the year in 2022 since we were driving a lot of the AI revenue within Microsoft. However, Genesys is the leader in this market. They’re the winner, and aligning with them now in 2025 is is really, really important. Amazon Connect is the runner-up, and that might still give us a lot of, a lot, especially I think in ’26, that that relationship is gonna mean a lot too. So basically with that, like to open it up for questions.

I’m really sorry that we lost ten minutes at the beginning. Obviously, we can stay on for those who have, if there’s more questions. Christina, when they raise their hand, you’re gonna need to unmute them you first and then they can unmute themselves. So I have a question for Fredrik. Christina, we’ll there you go.

Now, Fredrik, now you can there you go.

Analyst, Unknown, Unknown: Thank you, Per and Friedrich. Yeah. I want to start with the SaaS ARR growth, which has accelerated substantially in the two last quarters. So could you perhaps elaborate a bit on the drivers behind to help us understand if it’s sustainable?

Per, CEO/Founder, Tenio AI: Right. So the SAS ARR growth is all about, when a customer’s built the first sort of foundation, they add on languages, they add on new channels. So maybe they start in support, then they add customer service, etcetera, etcetera. So it’s all about how they grow in the existing customers. So the what you see in the AR growth in SaaS is pretty much just existing customers that have been with us for at least two quarters.

Those are the ones that are impacting that. So we add new customers, then we will get more ARR growth, of course. But we have two really large customers where we still have very large potential to grow, and we’re those are the ones we’re focused the most on this year. But we do expect continuing to ARR growth. Yes.

Definitely. On the SAS on the SAS platform, maybe also to comment on that, the customers on our legacy platforms are mostly customers in Europe, where there is still, some issues regarding the European AI Act, where large customers are moving that, trying to move the responsibility for that onto vendors such as us and saying that if we breach the AI act, you take the penalties. And of course, the penalties being percentage of the revenue of the target. So let’s say a large telco in Europe, that’s quite difficult for us to swallow. So, our focus is SaaS ARR, our focus is the SaaS and then our focus is UK, U.

S. Really for that growth.

Analyst, Unknown, Unknown: Okay, great. And regarding the pipeline, that as far as I understand is only the subscription revenue. Is there typical a strong correlation between the subscription revenue and the potential revenue from API calls down the road?

Per, CEO/Founder, Tenio AI: Yes. There is. So, the the salespeople, and also the channels, the partners, they, they make more money on the customer that has the 1,000,000 phone call, threshold per month that we use, which is also a thousand agents, essentially. But those are also our only target accounts, that those are where Genesys are present. Right?

The 1,000 Genesys doesn’t really sell to smaller customers. They are the enterprise solution. So yes, there is, you would expect the deals in the pipeline, you would expect all of them to be able to generate at least 5,000,000 API calls per month. When they but that takes, you know, six to twelve months, right, for from from deal to fruition that takes six to twelve months.

Analyst, Unknown, Unknown: Okay. Great. And, finally, from my side, a lot of new partnerships during the quarter as you have talked about a lot, of course. But what are your expectations on those for this year and for the mid and long run?

Per, CEO/Founder, Tenio AI: Already now, we have a very large pipeline together with these. So basically, three or four accounts with each of these partners that we’re highly focused on already now. So it’s I expect that during the summer, we’re gonna see real results, where partners actually are doing the deals. And they may be through AppFoundry. That’s the Genesys marketplace platform.

They may do through Microsoft transact, but we’re also present. But, we’re definitely gonna see partners do those deals. So sell those implementations. We did have a partner sell already in q four, which is the first right. That’s BSL that their first customer.

Analyst, Unknown, Unknown: Great. Thank you very much. That’s all from me.

Per, CEO/Founder, Tenio AI: Maybe, Kristina, I’ll just grab from, from the chat here, Stircher. Given you reached analyzed eight one billion API calls in ’24, do you have a new target for 2025? We don’t on the API call side. We’re we’re we’re setting ourselves an internal target as we speak that I don’t think we’re ready to communicate until the board also has approved that. But, we’re basically looking very at at growing the ARR quite a lot this year, and that’s gonna be the focus for this year.

So it’s not gonna be on the API call side. It’s gonna be on the ARR side, which basically are the same thing, but still, that’s that’s the target we’re looking at. And the the competitive landscape, there’s more and more. So some of the what we call traditional CAI competitors, conversational AI competitors, those would be the cognigis, the, the cores, etcetera. We’ve seen that they they are losing share.

They’re losing customers, but and then nuance is going end of life. So that impacts quite a lot because if you call somebody and it says press 14, press 2 and 34, on the phone call, then they’re most likely using nuance. So 95% of them would be using Nuance in the large customer space. So that changed a lot. But if you look now, who’s the incumbent that we have to prove we are better at, than than they, it’s either Nuance, which is quite easy, or it’s general Google Dialogflow, which typically is a bit more time consuming to prove.

But with these benchmarks we did with Sierra, we can prove those as well. So we don’t really see all these, LLM based startups. I call them lipstick on a pig, for a very good reason. So you put a thin layer of CX or customer experience on top of an LLM. You’re still gonna have hallucinations.

You’re still gonna have the data security problem. You can have all the issues with LLMs. But there’s a lot of money going into that. A lot of companies coming there and waving their marketing dollars at us. But, we don’t really we don’t really think that that’s a that’s something that we compete with at this point.

So primarily Google Dialogflow. And the 200,000,000 ARR target for fiscal twenty five, is this still achievable? Yes, we’re still on that target as well, Albin. So definitely the, during 2025, we’re gonna have a month where we, reach that $200,000,000 ARR. Sorry, sorry, not dollars.

Sorry, sec. But, dollars 20,000,000 ARR. That’s definitely our aim for this year. Yes. Any other questions?

I don’t really see the hands. Christina, I think you see if there’s any hands.

Christina, Presentation Support, Tenio AI: See any others, but it’s been in the chat if there is someone that is not seen. I don’t see anyone’s hand raised.

Per, CEO/Founder, Tenio AI: And you answered here’s another one about, about accuracy. How big big is the risk of competitors catching up? It’s actually, it’s actually quite amazing. The two things are quite amazing is we deliver those API calls with a very high gross margin because we use it, don’t use a lot of compute, very efficient, in what we call the endpoint, where we deploy the solution. That’s one thing that’s fascinating.

The other one is this TLML, which is a patent of ours as well, The Neo linguistic management, markup language. The TLML has been trained on all the conversations we had in the early days of this company. So think 2010 to 2020, and the way we broke that up, so we don’t take the text, we take the understanding of the text and break that into our database. And we’re the only ones doing it that way. And that’s what delivers this accuracy.

So Google has tried, the two biggest implementations they have over Verizon (NYSE:VZ) and AT and T. In AT and T, we do one part, they do one part, they failed, we succeeded. In Verizon, they now do 10,000 calls a month, so we don’t really see that they’re catching up on that either because of the accuracy. So we think that accuracy is something we’re still putting a lot of focus on that, making sure that we develop that all the time. And we don’t think there’s a competitor in the weeds quite yet.

Nuance customers, would you say there’s any other provider apart from yourself that’s competing for them? Yes, definitely. Pretty much everybody is trying to replace Nuance. Many of those are Google Dialogflow derivatives. So you built a product.

Google Dialogflow is often, sold as a white label. So it’s a component of another solution. And we see a lot of companies going after that, but not in the large enterprise space. In the large enterprise space, we pretty much only see Dialogflow, which is what Genesys presented to customers during 2024. So, we, we already have one joint proposal with Genesys and the large account.

The sales guys realize that they get a better bang for the buck with us because they get with TLL. They also get a stickiness they don’t get with Dialogflow. So, I think that there are others aiming for it, but I think we have a real edge. By the way, we also are the only ones who have replaced large scales nuances already. The first one was telephonic in Germany, but we’ve done several of these large implementations since that.

So taking Nuance and Genesis and building something great is something we already have done quite a few times. Okay. And then maybe I’m missing some new comment earlier, but could you clarify what you meant by saying ARR growth won’t come from the API call side? No, no, sorry. AR growth will definitely come from the API call side.

Definitely. So maybe what I was trying to say is that there’s two customers we have that very big potential on the API call side where we are closing in on getting them activated to use it in a much larger sense than before. But then the rest is going to come from new customers. So new customers will sign up and start using the API calls. So stay of jazz about growth momentum in Q1 twenty five.

There’s been so many restrictions on what I’ve been allowed to see and say, but I know Frederick has some views on January. Do you want to comment anything on that? Frederick?

Fredrik, CFO, Tenio AI: Yeah, I think we were not really guiding, but I think, I think we also said that, you know, during this call, I mean, we don’t really see anything that. Say that, that we will not continue to grow. And I think still, existing accounts will be the key here in Q1 as well. So linking a bit to Albin’s questions as well. So API call growth and ARR and linked ARR growth will be the key driver for Q1, coupled with obviously also additions from new customers.

But essentially, we are very positive, let’s put it like that, for 2025. And and that also includes ’20, the q q one twenty twenty five, basically.

Per, CEO/Founder, Tenio AI: Okay. Again, I apologize for this, but a very good quarter. Great momentum in partnerships, which is what we’ve been striving for. And of course, we’ve proven that the model works. So we now just need to add a ton of API calls.

I’ll be in to reach that 200,000,000. And as we do that, the gross margin will also deliver good results. And Steve, thank you very much. So, thanks all again. Sorry for the technology issues.

We’ll sort it out by calling ArtONEo and asking how it should be sorted out. Thanks all.

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