Earnings call transcript: Upsales Technology Q3 2025 shows solid growth

Upsales Technology reported its Q3 2025 earnings on October 22, showcasing steady growth in revenue and profitability. The company achieved net sales of €38.2 million, up from €35.7 million in the same quarter last year, and an EBITDA margin improvement to 35.1%. Following these results, Upsales’ stock increased by 5.7% in pre-market trading, reflecting investor confidence in its strategic direction and financial health. According to InvestingPro analysis, the company is currently undervalued, with a market capitalization of $53.24 million and maintains profitability with a healthy gross margin of 56.28%.

Key Takeaways

• Annual Recurring Revenue grew by 6.8% year-over-year, reaching SEK 147.7 million.
• Upsales launched a new AI-driven Agent Platform, enhancing its product offerings.
• The company maintained a strong EBITDA margin of 35.1%, up from 30.8% last year.
• Zero debt and a net cash position of €20.5 million reinforce financial stability.

Company Performance

Upsales Technology demonstrated robust performance in Q3 2025, driven by its strategic pivot towards AI-powered solutions. The company’s focus on recurring subscription revenue, which constituted 95.9% of total net sales, highlights its successful business model in a competitive B2B SaaS market. Upsales continues to outpace local Nordic competitors, leveraging its high-quality data approach to differentiate its AI tools.

Financial Highlights

• Revenue: €38.2 million, up from €35.7 million in Q3 2024.
• EBITDA: €13.4 million, reflecting a 35.1% margin.
• Annual Recurring Revenue: SEK 147.7 million, a 6.8% increase year-over-year.
• Net Cash: €20.5 million, with no debt obligations.

Outlook & Guidance

Upsales aims to reach SEK 1 billion in revenue within the next 3-5 years, prioritizing growth over stringent EBITDA margins. The company plans to continue investing in AI product development and expand its commercial team to drive future growth. With a revenue CAGR of 16% over the past five years and analysts forecasting 4% growth for FY2025, the company’s expansion strategy appears well-grounded. For detailed growth projections and comprehensive analysis, investors can access the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Daniel Wickberg emphasized the importance of AI in the company’s strategy: "I believe that every software company needs to become an AI company to stay relevant." He also highlighted the focus on growth: "Growth is way more important than maintaining a certain percentage of EBITDA."

Risks and Challenges

• Market Competition: Upsales faces stiff competition from global players like Salesforce and Microsoft.
• Economic Conditions: Cautious customer behavior could impact future sales.
• Talent Acquisition: Hiring the right talent is crucial for sustaining growth and innovation.
• Technological Advancements: Keeping pace with AI developments is essential for maintaining competitive advantage.

Q&A

During the earnings call, analysts inquired about the seasonality of Q3 performance and the potential impact of AI on productivity. Upsales addressed these concerns by explaining the seasonal trends and emphasizing AI’s potential to enhance productivity by 2-5 times.

Full transcript - Upsales Technology AB (UPSALE) Q3 2025:

Daniel Wickberg, CEO and Founder, Upsales: Good morning, and welcome to the earnings call for the third quarter for Upsales. My name is Daniel Wickberg. I’m the CEO and Founder of Upsales, and I will be doing this presentation today together with my colleague, Ehle Lundstrom, who is the CFO. If you wish to ask a question, you can do so throughout the presentation by using the Q and A button in the toolbar in your Zoom window, and all questions will be answered during the Q and A section. So I will start by doing a company presentation covering up sales, the product strategy the the growth the growth strategy and a growth update.

And then Ehlen will cover the financial highlights from the third quarter. So let’s get started. So the mission for us at Upsales is to build the best AI agents and AI tools to help CEOs and sales executives create revenue growth in a predictable and effective and automated way. And we are a software as a service company. We’ve been around since 02/2003.

We have a long track record of profitable organic growth. We currently have an annual recurring revenue of around SEK 148,000,000. We have a very scalable business model with more than 95% of revenue being recurring revenue. We are a net cash company with zero debt. The company is management owned by almost 44%.

And we have a trailing twelve months EBITDA margin of around 23%. So we are in the middle of a strategic pivot that has been going on now for around eighteen months. So our legacy is building and delivering CRM solutions, so sales and marketing tools to to b to b companies. And since since almost more than one and a half years ago, we we have been focusing a lot on becoming a AI revenue platform. I believe that every software company needs to become an AI company to to stay relevant.

And we, as as most of the most of the people in the industry, see see a huge upside for for customers using these kinds of tools, applying AI to to to be more effective and to to drive drive more revenue, basically. So how are we doing this? What’s our differentiator when it comes to building AI? So we have a long history of letting customers accessing the data they need inside the AppSales product. So if you have any experience from using CRM tools or from seeing typical CRM implementations, you see that the problem is usually within data.

Data quality is low. It’s dependent on people putting in data manually. So for more than ten years, Upsell has had a strategy of working with third party partners, buying data, letting our customers access the company and financial data they need without the need for adding it manually. And what this means now with AI is that if you want to build AI agents, if you want to build AI automations, they simply do not work if you don’t have a 100% high quality data. So I think AppSys is very well positioned to solve the the the use cases and problems that customers have now when it comes to AI because of this data approach.

So it’s a very exciting time for for for, yeah, for everyone in the company and and for our customers as well. So let’s talk a little bit about the growth from the last quarter. So both ARR and revenue growth rate continued to increase in Q3. We still have a higher ambition. So we want to grow faster than we are currently doing, but it’s positive to see that the positive trend we’ve had for many quarters now continues.

Looking at the niche and the positioning we’ve had for the last twelve months in our new sales team continues to show very good progress in terms of new customers. And of course, we are building the team. We need to invest in building the organization. So we added several new members to the commercial team in the last quarter, and we continue to have a very ambitious hiring plan going forward. And what we see is that the in the short term, at least, the biggest opportunity to take up sales from where we are now to 102030% annual growth is tapping into the potential in the existing customer base.

What I hear when I’m talking to my colleagues in the sales team is that when we are meeting our existing clients, they have a lot of things they need to solve, a lot of problems they need help solving to support their growth. And we are very well positioned when it comes to the product and what we can deliver to solve these problems for our clients. And almost all of our clients we meet have AI and automation in general on the agenda. They want to do these kind of things. They want to invest in these kind of things.

So that is my main focus when it comes to increasing growth is to find ways to improve how we continue to support our existing customers. Okay, let’s talk a little bit about the product. I mentioned this in my previous earnings call. So we released the up sales agent platform a while back. So it’s now live, it’s being used by customers and more and more customers are signing up every week to start using these tools.

And I’ll share some examples of what you can do with these agents. So we we’ve invested a lot of time and money into to building the the agent platform, which consists of of two sections. So we have the prebuilt agents, which which is kind of like an app store where customers can can can buy and activate prebuilt agents. For example, there’s a notetaker agent that joins your calls and transcribes your your meetings. There’s meeting research agent that does research for you before your your next customer meeting and so on.

And the second part is building your own agents. So customers are able to create custom agents for for the specific use cases they have in in their company. So here are some examples of things you can do with with the agents. So the first area is sales related. So streamlining sales operations, helping the sales rep save time and not spend too much time on administration.

The second area is the agent that helps the finance team in terms of reviewing contracts, making sure invoices go to the right place and so on. So we see a big upside in helping clients to streamline their entire finance team. And the business upside for customers by doing this is that you could basically double your company size without adding more people to the finance team. The third example is within marketing, where customers can use AI to generate leads. You can use AI to run very personalized outreach to your clients, making your communication more relevant.

And the final area is in customer service, where you can use the agents in up sales to automate your customer support. You can have agents assisting you in solving customer problems and so on. And again, we are now live with these features, customers to build their own agents. And it’s very exciting to see the use cases our customers are talking about and thinking about. And yeah, this is an important area.

We will just continue to invest more time and money to stay relevant and support our customers. All right. So that was it from the third quarter and the product update. I’ll hand over to Eelen for the financials.

Ehle Lundstrom, CFO, Upsales: Thank you, Daniel, and good morning, everyone. So let’s start with looking at ARR and revenue. So annual recurring revenue grew by SEK1 million in Q3 and was SEK147.7 million at the end of the quarter. This compared to SEK138.4 million during Q3 twenty twenty four. So this corresponds to a growth year on year of 6.8%.

And net sales grew to €38,200,000 compared to €35,700,000 in Q3 twenty twenty four. And looking at revenue, we divide our revenue between the recurring revenue from subscriptions and one off revenue such as onboarding and consulting. And in Q3, recurring subscription revenue accounted for 95.9% of total net sales. Looking at profitability, our EBITDA increased to €13,400,000 compared to €11,000,000 in Q3 twenty twenty four. And this corresponds to an EBITDA margin of 35.1% compared to 30.8% during the same period in 2024.

We had an EBIT of $10,900,000 compared to EUR 8,800,000.0 in Q3 twenty twenty four. And net income of this quarter was EUR 8,800,000.0. Looking at cash flow. We had an operating cash flow of $2,100,000 compared to negative $1,900,000 during the same period in 2024. And net cash as of the end of the quarter was 20,500,000.0.

That was all of the financial highlights. Let’s continue to the Q and A section.

Daniel Wickberg, CEO and Founder, Upsales: All right. So again, if you wish to ask a question, just use the Zoom toolbar, and we will answer these questions. Okay. So first questions first question about the ARR growth in Q3, which increased by SEK 1,000,000. So what concrete initiatives will bring us to SEK 5,000,000 plus levels.

So I think Q3 is there’s some seasonality. So Q3 is usually lower, if you look historically also. And I mean, the initiatives we’re doing is basically we’re investing in the product to make sure that we can address the use cases that both existing and new customers have. And then it’s a question of go to market. So to build the sales team, to find the right talent and to make sure that the sales team has the best possible, opportunities to hit their targets basically.

Okay. The next question about EBITDA margin hit 35%, which elements are structural versus temporary? Is 30% plus sustainable into 2026 and beyond. So there is some seasonality in profitability, specifically for Q3 being the summer and vacation quarter. So the if you look into the financial, you see that personnel costs are typically slightly lower in Q3, which always gives a boost to profitability.

I think that, I mean, we are in a good place with our cost base. But number one priority for me and the feedback I get from when I meet all of our investors is that growth is way more important than maintaining a certain percentage of EBITDA. So I mean, we are a profitable company. We’ve always been a profitable company. We have been growing ARR by 30% per year and then showing 20%, 30% EBITDA at the same time.

So that opportunity still exists. But having said that, always prioritize growth. So if we see an opportunity for a specific quarter to do some investments or something that we believe will create long term value, we will not wait to do such initiatives in the interest of short term margins. So that’s how I view the balance between profitability and growth. Okay.

So next question. If your product is as good as you say, why is your market share still quite small and its growth practically stagnant? So the low growth rate is not because of the product, it’s because of go to market. And this is a question of go to market and building the team, finding more people to the team. And looking at the if you look if you zoom out and look on a five year perspective and you compare the numbers when Opsys was growing 30%, 20%, 30%, our churn is not higher now than when we were growing 30%.

So that tells me that it’s not a positioning problem. It’s not a churn problem. It’s not a product problem. It’s a go to market issue. And I think we have been seeing improvements every quarter now, five quarters in a row.

So maybe I’m not happy with the current growth rate, but I’m happy with the progress. Okay. Then we have a question about our selling cycles, how quickly how long time it takes for us to go from first contact to a signed contract. So and and also a question about how we recognize revenue. So basically, we have quite a short selling cycle.

Typically, it’s two to three months from the first contact with the customer. And when the customer signs, that’s when when we when the contract is activated, that’s when we we we recognize the ARR. So the ARR, we we get the ARR the same day as the customer signs the contract. But the ARR is, of course, recognized over the period. So a customer paying an invoice for a one year contract, that one year will be spread out during twelve months in terms of revenue.

And the cycle to do the implementation is also quite short. I think that’s one of the things that’s very appreciated by customers that it only takes a few weeks to get started with up sales. Okay. Next question about the competition. So when we win or lose, who do we typically win and who do we lose to?

And what are the main reasons behind those outcomes? So I would say there’s no there’s no clear answer to, like, okay, if we go up against competitor x, we typically lose more often than we win. I mean, looking at our our biggest competitors who are the typical competitors we meet are HubSpot and Salesforce and Microsoft. And we tend to have we tend to win more often than we lose when we go head to head. There are also, like, local Nordic players.

I think our win rates are slightly higher when we compete with them because the competition from the local providers are not as tough as the international ones. Okay. Then we have a question about the long term. So by 02/1930, what scale and margin profile would define success for up sales? What would need to happen?

So I mean, I will answer from a personal perspective how I see the company as as the founder and the main shareholder. So these are not financial targets communicated to to to the stock market. So I mean, I want to take this business to beyond SEK 1,000,000,000 in revenue. I think we have an opportunity to do that. I think we can do it in three to five years.

The market is definitely there and the positioning, the product we have is definitely there as well. Again, it’s a question of go to market. So we need to continue building the team, finding the right talent to make this happen. And I also expect with AI in terms of product development and go to market, I expect this to be more effective in the future. So I mean, I don’t see costs increasing in general for SaaS companies.

It’s all about finding the right way forward and finding the right go to market. Okay, next question. Your product has received critical public reviews in recent year, perhaps most often related to invoicing. How have you responded to this feedback? And has have you made any changes to improve customer satisfaction?

Okay, this is an interesting question. So again, when I look at the churn KPIs and net promoter score and all the other ways which we measure customer satisfaction, I I see a very positive and strong trend if I look in the if I look like from a five year perspective. So I absolutely don’t see that we have a problem with dissatisfied customers. On the contrary, we have very good customer relationships. However, we have a long tail of customers, which we which are using up sales from the previous partnership we have with Fort Knox.

And I think in the last two years, when I talked to other CEOs in the industry, people are a little bit more concerned about cost. And you see interesting reactions when have signed contracts that they, for some reason, want want to to to get out of. And and we we see people are are using more loud voices in the last two years compared to to to the years before. So I mean, we always try to improve the ways we are working with our customers, but I don’t see this to be like a systemic or big problem. Okay.

Next question about the Accelerate, our new product and our new packaging. Are you seeing clear signs of growing interest in Accelerate among existing customers. When do you expect the impact from the existing customer base to start becoming more noticeable? So this is a very good question. And what we did is that we used to have another pricing model where you you buy the license.

You buy one license per per user that’s using the product, and then you add modules. So we had almost 20 different add ons. And this created a lot of confusion for for customers, both new and existing, because it was really hard to figure out, okay, what do I actually need? So we we changed this a year ago to to a more all inclusive package, if you will, and this is called Accelerate. And the Accelerate packages, that’s where you find all of the AI features.

So if you’re an existing customer and you want to build agents, you want to use AI, you have to upgrade to Accelerate. And it’s a very generous packaging. So compared to buying all the add ons we had before, it it it’s a lot it’s a it’s a much better deal for for our clients. And, yeah, I mean, we we’re out there meeting all all customers every week, every month. So we are I mean, it’s hard to give a forecast of like which quarter will what happen.

But the overall trend and the signals I hear are very positive. Okay. So next question is about how we are using AI internally and what impact it’s having on the organization. So yes, very good question. And I think we I talked to my CTO who who joins this CTO forum, which is like a monthly CTO gathering.

And I think upsells has been very good in using AI tools in product development to to speed up time to market. I still think there’s there’s a big upside. I think there’s yeah. We’re not talking ten, twenty, 30% upside. We’re probably talking two, three, four, five x in terms of productivity.

If you really, really use AI tools, if you maximize the use of them, very few companies do. But but I I absolutely believe that the potential is there. So and of course, we’re also using all kinds of AI tools to to go to drive go to market in a more effective way as well. Okay. So next question, you have been able to replace the drop of employees partly during the quarter.

How do you see the need to further increase the number of employees short term? So I think it’s in a way, it’s a numbers game. In a way, it’s not. Because when when building the team, when you’re a company, like, we’re we’re around 70 employees at upsales. And I think it’s all about finding the right people, and that goes for engineers in the product team.

It it it goes for sales salespeople in the sales team. So we are trying to find ways of investing smarter in specific roles. We added a few roles like that to just make everything go work smoother in Q3. And I think we’re already seeing the effects of that. But I mean, we have to continue growing the consulting team to support all new customers onboarding.

We need to increase the size of the sales team. And the question I usually get is like, okay, how will this affect margins? And I think since our cycles are quite short, I mean, we expect the right kind of salespeople to be up and running within a few months, and the selling cycles are also just a few months. So it’s kind of self regulatory, if you will, because if we hire the right kind of salesperson, they will contribute to the growth, revenue and profits quite quickly. And if we hire the wrong person, they will not be in the company six months later.

So, yeah, that’s my that’s my view on that. Okay. We have a question about capitalized development cost in the quarter. Maybe Ehren can comment on the numbers. But my view is that we have been very modest historically in terms of how we book engineering costs compared to all of our peers, if you look at the numbers out there in similar companies.

And we have been doing a lot of investments in the product lately. Is there anything else to say about the actual number?

Ehle Lundstrom, CFO, Upsales: No, it’s exactly like that. We’ve been increasing investments. But if you look at the numbers, the numbers aren’t that big. We went from 1,400,000.0 to $1.52500000.0. Okay.

It’s a large increase in percent, but we’re investing in product.

Daniel Wickberg, CEO and Founder, Upsales: Yes, exactly. All right. So last question. You always claim that it’s your strategy and not the market that stopped you from growing. Have you not also experienced headwind in the current market conditions?

Yes and no would be my answer. I mean, I think the performance we have seen in the new sales team working with new clients, that has actually been higher than the period where we were growing 30% per year. And I don’t think that would have been possible if the market would have been dead. The same thing goes for churn. If this would have been a market problem, I think we would have seen a lot higher churn numbers, which we are not seeing.

So I think mostly a sales effort in the team that’s working with existing clients. That that that’s still my my my view. But, of course, I mean, you can see of course, there’s a change in customers’ behavior compared to three years ago. I mean, people and companies are a little bit more careful when it comes to costs. But I think for upsells, it’s on the margin.

It’s not a major impact. So I think still believe that the results are in our hands, within our circle of influence. All right. That was the last question. If you have any further question, we have a few more minutes.

Just add it to the Q and A section. All right. So that concludes the presentation and the earnings call for the third quarter. Thank you very much for joining us today, and see you next time.

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