Kahoot ASA

OSE:KAHOT

Earnings Call Transcript 2021-Q2

[Operator]

Hello, everyone, and welcome to Kahoot!'s Q2 report webcast. I'm very happy to see that so many of you have joined and are still joining. Your webcast will begin shortly. Hi, again, everyone. I think we are ready to start. And with that, I want to introduce Kahoot!'s CEO, Eilert Hanoa.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you very much, Camilla, and thank you very much, everyone, for attending today, our second quarter webcast and also today, when we have, hopefully, an interesting agenda for everyone, both with our quarterly updates, financial overview from our CFO, Ken, and update on Kahoot! At School from Sean, and also an update on back to work with James. And then we will wrap up with a summary. So thank you for attending, and let's get started.So first of all, I'd like to say that we have maybe more than ever through both a very challenging time and also a very interesting time when it comes to the development of learning and global learning in general, seeing the change in the megatrends that are reshaping education and also the education industry. We think that these trends are very much on our radar in the sense that they are both speaking towards what we try to deliver, but also how we see our customers, both the learners and the teachers. And of course, any presenter around the globe are really taking a different approach towards the importance of both make sure that you can share knowledge, create awareness and also get the engagement around learning. And that's what we're going to talk about today in this presentation.Our vision is to build the leading learning platform in the world. And in the last couple of quarters, that is probably a more important vision than ever before. That's also why we are so proud of the ability we have to spend both time and resources and of course, investment in building and acquiring great tools to make this happen and come to life. And that is everything from localization, from integrations, from making sure that we can onboard new partners and making sure that the total value proposition we present out to both our customers that are using Kahoot! for free and those who are using Kahoot! commercially is better than ever before. And that based on the trends we see in digitalization is truly making us a very interesting position, both from where we're coming from, from a product perspective but also the center of the attention when it comes to what any learner or teacher or tech company with interest in digital learning are currently looking for.The lineup we have with both the units of Kahoot!'s Group, the combination of users, the ecosystem, the content partners, the different offerings we have for every category of learners is also coming together in the sense that it's really providing a symbiosis from a creator perspective, from a learner perspective and from a distribution perspective. And we're going to hear more about that throughout the agenda today. But this is truly an engaging and exciting time for us as we have this platform to build from. And we have really been able to expand our value proposition substantially just through the last couple of quarters. And looking a few years back, this is an amazing richness of features and commercial opportunities that we have that we -- compare to anything we had ever seen before.What we are able to also combine with the growth on the core Kahoot! platform with additional acquisitions we've done is to make sure that the value proposition for teachers, for students, for parents and for corporations is continuing to improve. It's being richer, more extensive, but simply fight in a way that you can instantly take the action and use our services and also get the value from the services without any big investment in training or in any capital expense or for that matter, license cost that is material. And that's why we see the embracing love from the 9 million teachers, from the hundreds of millions of students, from the parents that are using Kahoot! and everyone else in social settings and of course, last but not least, in the corporations that are using Kahoot! as well to really make learning also in a more corporate setting.And the most unique factor in Kahoot!'s value proposition is that we are able to use the product as the main way to truly share the value of Kahoot! as a service. Seeing Kahoot, taking part of Kahoot! is how Kahoot! is promoted. And this is generating millions of sign-ups every month on the platform. And also millions of downloads, which is, again, building on even larger ecosystem and also helping us really focus on every new investment we're doing and helping our user base to continue to grow both from a feature richness and value proposition. This is also why we are determined to continue to invest in the core 4 areas of our company, which is Kahoot! At Home offerings for all individuals, which is starting from free and with, of course, premium subscriptions for those who want to use it even more extensively. Kahoot! At School, which we'll hear more about later from Sean and how we are able to drive that engagement in classroom, at home and with home schooling with teachers coming back to school luckily. And also how we can combine that with our new initiatives from both the DragonBox, the Poio, Whiteboard and Drops, Teams. Kahoot! At Work, which is really about professional training and putting the combined value of our corporate identity into lifelong learning in a very different way than we've ever been able to deliver before. And of course, with a great contribution from Actimo and Motimates to both build the platform Kahoot! At Work, but also to provide both user base examples, customers experience and bandwidth, we have amazing setup for Kahoot! At Work going forward. And we're going to hear more about this from James in a few minutes.And last but not least, Kahoot! Academy. And with an enormous opportunity around connecting the 9 million teachers and other educators on the platform, the amazing opportunity we have around connecting content partners with our ecosystem. And of course, last but not least, the marketplace opportunity that we're also going to hear more about today.In the last quarter, second quarter, we also had a good lineup of great companies. Some of them we've been working with for a while and others are new to the Kahoot! experience. But we're seeing that this value position we are building out is truly resonating with larger corporations. Of course, we would like to have an even faster velocity in bringing out the Kahoot! value proposition to all these great companies and more. And we're definitely working on that, as you can see from the road map and from today's presentation that this is truly a stepping stone into our corporate and enterprise push that will help us even reach into more organizations and further into the current organizations in the future. We are very, very happy that we can work with all these great brands, really getting their input on how we can think about our next generation of services and then at the same time use this as a foundation to continue to grow and continue to invest in great services for all our users.So with that short introduction, I'm happy to hand over to Ken to give us a short summary of the second quarter financial targets. Ken?

[Ken Werner Ostreng, Chief Financial Officer]

All right. Thank you, Eilert, and good afternoon, everyone. We are pleased to report strong results for our second quarter, and I'll talk through some of the highlights for the quarter. Please note that for the remainder of the call, I'll discuss key operational metrics as well as non-GAAP financial metrics, excluding pro forma adjustments, unless otherwise noted. These non-GAAP adjustments regards on the stock-based compensation and related payroll tax acquisition and list income and nothing else.We saw strong growth in the Kahoot! platform with 29 million active accounts last 12 months, up 43% year-on-year. The growth in paid subscriptions continued and reached 933,000 in the second quarter, up 173,000 from the first quarter this year. The acquired unit Motimate contributed with 140,000 of the growth. And the net organic growth was 33,000 of 21,000 on the Kahoot! platform, which we're not satisfied with. The year-on-year increase in paid subscriptions, including acquisitions, was 663,000, up 246% year-on-year.Invoiced revenue for the second quarter was $20.6 million, up 114% year-on-year and ARR reached $75 million. Adjusted cash flow from operations in the second quarter reached $5 million, representing 24% cash conversion of billed revenue, and we had a cash balance of $440 million by the end of the quarter. Adjusted EBITDA for the quarter was $4.2 million, representing approximately 23% EBITDA margin. And on the M&A side, we completed the Motimate acquisition. And of course, we announced the acquisition of Clever.Moving on to the next slide. Let's keep in mind, Kahoot! started its commercial journey around 3 years ago. And by the end of 2018, we had north of 40,000 paid subscriptions. During the following 10 quarters, we have increased paid subscriptions to more than 930,000, both through strong organic growth and through acquisitions. We finished the second quarter with 295,000 school subscriptions, 403,000 At Work and 234,000 At Home subscriptions. And following the commercial launch in 2018, we invoiced our clients of $1.7 million in the fourth quarter 2018 which has grown quarter-on-quarter reaching more than $20 million in the second quarter this year.Moving on to the invoiced revenue per region. Kahoot! has true global reach with paying subscribers in more than 150 countries. Europe represents 48% as the biggest invoiced revenue region in the second quarter. We're expecting U.S. and Canada to continue the quarter-on-quarter growth in the third quarter as we have seen in preceding quarters. And also, we expect positive development in other regions. Moving on to some operational metrics on the Kahoot! platform. The user growth from the core Kahoot! platform in the last 12 months continued in the second quarter, reaching 29 million active accounts with more than 300 million hosted games with a total of 1.8 billion participants, and 85% year-on-year growth in terms of number of paid subscriptions. Looking at the development of some of the key financial metrics. We have continued the strong quarterly year-on-year invoiced revenue growth. The year-on-year increase of invoice revenue in the first half of 2021 was approximately $24 million compared to a year-on-year increase of $12 million for the first half year last year. So the nominal invoiced revenue increase has doubled compared to what we saw in the first half a year ago. Cash flow from operations is up more than 100% year-on-year for the first half this year. And we have a scalable business model with increased leverage where infrastructure costs for both free and paid users is included in our operational cost base.So looking at the trailing 12-month period, we have invoiced revenue of close to $69 million versus total cost of $44 million for the corresponding period. So it is important for us to continue to develop the company and at the same time, demonstrating continued financial scalability where the fully loaded second quarter cost base is a starting point for the second half.Moving on to the condensed profit and loss statement. For the second quarter, we had continued strong development in our operating revenue with a year-on-year growth of 230%, an increase of $12.8 million to $18.4 million for the second quarter. For the first half year, operating revenue reached more than $34 million, and we have now exceeded the full year revenue we had in 2020. The low cost on employee benefit expenses in the second quarter is caused by a $5.5 million cost reduction effect from reverse provision for social security taxes on vested share options which will give an operational cost base on employee benefit expenses of approximately $6.5 million in the quarter, excluding the reversal effect. EBITDA before adjustments was $8 million in the quarter compared to a negative EBITDA of $2.8 million in the second quarter a year ago. Second quarter EBITDA adjusted for share-based comp and the commented reduction in related payroll taxes plus acquisition and listing costs was $4.2 million in the quarter, and that's an improvement of more than $5 million year-on-year compared to the second quarter a year ago.Turning to the balance sheet. We ended the second quarter with total assets of approximately $600 million where of current assets of more than $450 million. The increase in goodwill and intangible assets in the first half this year is due to the acquisition of Whiteboard and Motimate. And deferred revenue reached $33.5 million by the end of the first half compared to $11.8 million for the end of the first half a year ago. So there is an increase in deferred revenue of $21.7 million, and that's, of course, a result of increased invoicing compared to last year.So all in all, a very solid balance sheet with no interest bearing debt and an equity ratio of 84%. I've earlier in the presentation I commented on cash flow from operations. So when it comes to cash flow from financing -- from investing activities in the first half, that was $19.5 million in cash outflow from investing activities, and that was regarding the acquisition of Whiteboard and Motimate and payment of earnout considerations for the Actimo and Drops acquisitions. And with the net proceeds from the share issue, we have a cash balance of $440 million for the end of the first half year.And with that, I'll hand over to, Eilert.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, Ken. Let's switch gears to Clever. So we are very excited, as you all know, about the opportunity we have together with Clever. Unfortunately, we still have not been able to close the transaction as we are still waiting for CFIUS to make sure that they are doing their regulatory approval. And we hope, as we have communicated before to the market, that we will be able to complete the transaction by the end of this current quarter. That said, Kahoot! together with Clever is more important than ever as an opportunity for us as a Kahoot! Group to really deliver a fantastic value proposition both to teachers, to students, to parents and to all the schools and school districts that both Kahoot! and Clever are able to work with. The unique position of Clever is truly amazing and what they've been able to achieve and the value proposition they have been able to deliver to schools in the K-12 segment from kindergarten up to 12th grade in the last couple of years. The journey has been phenomenal, and we have been running side by side with Clever since the foundation of Kahoot! back in 2012 and when we met with Clever in '13. And what is very interesting, and we are very excited about to talk about today is the update for Clever this fall. They have launched a whole new experience for parents, which is Clever Messaging, which is truly a great app to connect all the parents that are having kids in schools using Clever with their teachers and the school in a seamless way, just how you want it on your mobile device. They also have launched for the first time an offering -- commercial offering to schools, which is a commercial product, opening the first door and step into monetizing from the great user base they have on schools and school districts. They also launched a commercial partnership with Google with the Google Classroom integration, which is just released for back-to-school, which is also an amazing opportunity, hopefully, both for Google and for Clever, of course.And last but not least, they are also tracking good on their annual plan and just reached the $40 million mark this summer on the ARR. So that is before the back-to-school, and it's very amazing to see how they are able to both build out the platform, increase their revenue opportunity and also making sure that the users are truly getting the value from the Clever platform in their hands. And the Clever Parents app, which I think we will see some great examples of throughout this fall is also, of course, a great segue for us to connect home with school with learning. And this is where the obvious connection between the network or the value of the network as we have named it here, where you connect the partners on the Clever platform, the 400 companies delivering 600 apps for learning into schools with over 90,000 schools with 1 million teachers a month with over 20 million students and of course, their parents that can now connect which also makes the foundation for a marketplace with a new upcoming app store functionality truly amazing in the next round.So we cannot wait to come back to you and talk about the closing of Clever and all the opportunities that we can do hand-in-hand in the future. Switching over to the Kahoot! side of business, Kahoot! At Home, I will do a very brief walk-through here with one great new announcement, which we're really excited about this fall for holiday season. Of course, the core Kahoot! offering with free forever for parents and with premium offerings with both DragonBox development on features and on translations of Poio, translations of the Kahoot! app. And also, of course, the opportunity we have now to combine these different assets into the Kahoot! Plus subscription is a great opportunity. But we have been missing one little piece and that's the Kahoot! Kids app, which we are really excited about being able to announce and launch for the fourth quarter, which is giving all the younger kids, fantastic app optimized for their use, whether you are able to read or not and truly consuming all the assets that is available and also right for you on the Kahoot! platform. And this also opens the door for us to be able to provide assets for purchasing for younger customers, which is obviously true educating not possible in today's Kahoot! app. So this is both a great opportunity for us to deliver a better value proposition to younger users, but also an opportunity for us to deliver a premium subscription opportunity and purchase opportunity to the same audience. So this is something we really look forward to come back and talk about both the partners we will work with, how we can distribute the translation of this and of course, the opportunities for rolling this out in addition to the more traditional Kahoot! experience. On the Academy side, we're also continually investing, both building out the ecosystem of partners from a tech perspective as we are all well aware of, but also some great new partners on the content side, where GIPHY has been super popular from day 1. We just launched the Worldwide Life Foundation in a few days ago, working with Disney on the Imagination Campus, PBS NewsHour and many others, including Angry Birds. And all these great partners are not only providing fantastic content and their resources and really investing in the Kahoot! platform to offer a great experience for all their users, but they also see the potential for the marketplace and the academy combination in the future. That combined with the 3,000 teachers we now have as verified educators on the platform, covering the most used languages on the platform, covering all kinds of topics, grades, and schools that can also contribute both building out great content collections, showing best practice and, of course, it really make a difference in the classroom as the most important. But what's really, really engaging is the drive we see for the ability to offer also their content towards a commercial model. And we are very excited about launching the marketplace initiatives throughout the fall and into '22 with both the opportunity for teachers and for educators to offer their collections towards either subscription or a onetime fee, but also for great content partners to do the same in a more structured way. And all these are a fantastic foundation both for Kahoot! At School, for Kahoot! At Work and, of course, for Kahoot! At Home. So with that, I'm very happy to switch over to Kahoot! At School. And Sean, if you can give us the back-to-school updates.

[Sean D’Arcy, Senior Vice President of Marketing]

Yes, I can do that, Eilert. Thank you, and hello, everyone. My name is Sean D’Arcy, I head up the Kahoot! At School and Home business areas. And as Eilert pointed out today, I would like to give you an update about Kahoot! At School and give you a snapshot about what we have planned for this back-to-school season.So on the next slide, you'll see that the Kahoot! At School platform is all about making, learning awesome for students with a portfolio of world-class learning products. And the Kahoot! At School platform is loved and trusted by teachers, school admins and parents everywhere to deliver engaging learning. Not only is Kahoot! a powerhouse in kindergartens. On the next slide, you'll see that it's also used predominantly in higher education institutions globally. So let's have a look at some of the key figures on the next slide. So today, Kahoot! powers up engaging learning across institutions around the world. And in the last 12 months, we've seen 9 million teachers on the platform, and they've hosted 117 million Kahoot!s with their nearly 1.2 billion learners. And what's more is that 60% of these educators are in the U.S. were active on our platform in the last 12 months. Now many teachers are already back to school. And those that are not actually in back-to-school are preparing right now. As you can see from this Gif on the side here, this is the -- some educators from Libertyville, Illinois who are using Kahoot! not only to break the ice, but are also using Kahoot! to do professional development. So let's see what teachers are saying about that back-to-school on the next slide. So interestingly, of course, at the end of the last school year, most teachers were doing instruction through either hybrid or completely remote. And we actually did a poll recently with over 10,000 teachers, and we found that 62% said that this was the case and maybe that's not so surprising. What's more surprising, I think, is that in the next slide, you'll see that this back-to-school, 4 out of 5 so that they will be back in the classroom, full-time instructing students in person with only 6% saying that they would be fully remote. What's more is that when turning to the classroom, we see that teachers are saying on the next slide is that their concern, of course, with the health and safety of the students with regards to COVID-19. Importantly, closing any learning gaps leftover from the last year. And also, of course, a very important to Kahoot! is that 1/3 of them are saying that student engagement is very important for them as well as focusing their students and motivating as they transition from a fully remote or hybrid back into the classroom. And I think that's why we are so excited for this back-to-school because we can play a really important role.So let's have a look at some of that classroom engagement. And of course, we have a short video for you guys here. So over the last -- since 2013, essentially, we've been very focused on the classroom. And over the last 1.5 years, actually, we really spent some time in building out an excellent product for virtual learners. But we're really, again, happy to be back in the classroom as that's our sort of starting point. And we think that's going to be so important in this back-to-school. And we're already seeing that teachers and students are returning into the classroom, playing huge, breaking the ice building relationships and really kicking off a new school year in a fun and engaging way. So moving on to the next slide, you can see that we are prepared a really awesome back-to-school toolkit that really supports either a virtual or an in-class learning environment this year, and it really revolves around 4 key themes. The first is around improving accessibility for more students, especially the younger students. The second is enabling teachers to really do interactive lessons. So of course, Kahoot! is famous for doing the review. We also want teachers to use it for doing instruction. So we're building out functionality for that. We really want to level up the engagement with students with rich media, which is audio, video and gifs. And also, we have some exciting new ways to play game modes coming up this fall. And last but not least, we want to elevate the learning outcomes with our school and district commercial product called Kahoot! EDU, which I'm going to come back to in a couple of minutes. Now just over a year ago, our platform was in English only. And what's amazing is that if you fast forward to today, we've actually localized the Kahoot! app and many of the learning apps that we have as well as well as the Kahoot! Academy content into 11 different languages. And as part of this journey, we really had amazing feedback from our teachers, students and even parents from all around the world who've been now been able to enjoy the platform more and learn more as a consequence. And so for us, localizing is not only a cornerstone in our growth strategy but it's also about making the platform more inclusive and accessible for more learners around the world.So next up, I would like to dig a bit more into our commercial addition we have for schools, districts and higher ed called Kahoot! EDU, which we launched just under a year ago. And now we're going through our sort of our first back-to-school season. Let's just take a minute to see kind of why education institutions are really upgrading to Kahoot! EDU. And firstly, as you might expect, Kahoot! EDU equips teachers and students with absolutely our full suite of features and features that are not included anywhere else, including Word Cloud, for example, is a question type and different types of rich media. But what you might not know is Kahoot! EDU also supports IT admins to really deploy and scale Kahoot! across teams, departments, schools and higher ed faculties. And they're doing this by leveraging single sign on with partners such as Clever. And they're also really setting up, for example, school libraries that educators can pool their Kahoot!s and collaborate around those Kahoot!s. Kahoot! EDU also supports school leaders to create school spirit and measure learning impact. School leaders can play large branded games up to 2,000 players, kind of like the one we just saw from Libertyville. And they can also, coming this fall, start to do student level assessment, something we've not been able to do up until now. So on the next slide, you'll find out what we have coming up for back-to-school for Kahoot! EDU specifically. And with classes, and I must say all of these features here are requests that we've had from our elite customers over the last few months. So the first thing they've asked for is really classes and classes really will help set a platform for teachers to really communicate with their students and really assign Kahoot! to their students. And they can also import class rosters from, for example, Clever and also create classes that they like. Next is lessons, which will enable teachers to not only combine to use Kahoot!, but actually can combine it with more activities to add more variety such as the upcoming math labs by DragonBox.Students will also get access to all creation features to really deepen their learnings, showcase what they're learning and really also sharpen their presentation skills and teachers and students alike will be able to, as I mentioned, follow the student learning progress over time to assess or even just in higher ed, it's very popular to take attendance with Kahoot. So this back-to-school, we will be introducing a commercial -- a new commercial upsell called Student Licensing that will enable not only student creation, but also enable student level assessment and attendance. And we feel by focusing on student licensing and focusing on specifically on assessment we feel we're going to be able to tap into even larger district and higher ad spends. All right. So on the next slide, I just wanted to point out that we have a wide variety. We try to make -- we have a wide variety of price points, entry points for Kahoot! EDU so that there's basically something for everyone in terms of getting either started or building out with a more robust product portfolio. On the next slide, I just want to have -- make one last point is that we -- as Eilert sort of already covered. A very exciting development. We're very excited to join forces with Clever this back-to-school. Together, I know we're really going to be able to enhance the overall value that Kahoot! EDU experience and make it really more accessible for teachers and students, school and also parents. So thank you very much for your time, and happy Kahoot!ing to everyone this back-to-school. And with that, I would like to pass it over to my good colleague, James, who will tell you a bit more about Kahoot! At Work.

[James Micklethwait, Vice President of Products]

Thanks very much, Sean, and hello, everybody. Great to be with you here today. So switching gears to Kahoot! At Work. Let's jump straight in. First of all, for those of you not yet familiar with Kahoot! At Work, just a bit of an overview of this business area within Kahoot!. So we're fortunate to have fantastic reach already with 97% of the Fortune 500 already using the product today. And Kahoot! is using a variety of contexts at work, ranging from presentations and meetings to training and development and also crucially involving use cases like company culture as well. What we find when we talk to our customers consistently is that just the process of using Kahoot! has a team building effect in itself, and that's very powerful for building company culture and employee engagement overall. One of the other unique things about Kahoot! compared to other products in the marketplace is that Kahoot! is loved by every type of individual who encounters the product, whether they are trainers and HR professionals, whether they're presenters actually delivering the presentation using Kahoot! or whether they're employees or learners participating in a session initiated by someone else. That is very unusual, and we believe this is core to what drives the viral growth of Kahoot!.If we move to the next slide. Yes, I'd like to just cover a couple of trends that we see in the marketplace in work specifically. Eilert touched on sort of the high-level trends overall in education, but there are 3 that we think are particularly salient to the work market right now. We hear about these a lot from our customers. And as a result, we think these are going to be very significant for growth in the Kahoot! At Work segment going forward. The first is that we see and hear that large organizations are increasingly seeing value in consistent learning and reskilling. This is a trend that was there before the pandemic that has been made much more urgent by the pandemic. And so what becomes very important for organizations is they're looking for solutions that not only are equipping their teams with the right tools to deliver learning, but also crucially create a culture of learning that really scales way beyond the learning and development departments that have traditionally been the home of corporate learning. I'll cover more on this later. The second trend that we see is around the employee experience market. We see HR and IT teams investing very significantly in this very buoyant market. And for us, particularly, we see that the HR buying segment is going to become more important over time. Thirdly, to state the obvious, the world is starting to come back to work as offices open up, which implies a shift to what everyone is now calling hybrid working. This in itself creates a bunch of issues around inclusiveness and involving all employees. But the takeout for Kahoot! is that we have a great solution that solves many of these issues I think inclusion. And so we expect and are seeing increased demand for solutions like Kahoot! which engage employees wherever they are. So moving on, I'd just like to dive into that third trend, hybrid, a little bit more, and very much in the same spirit as Sean covered earlier, our children are all going back to school right now, and we have finished our vacations and heading back to work. But the question on everyone's mind is, are we all heading back to the office? So back in January of this year, we commissioned a survey amongst our customers to find out exactly how they were using the Kahoot! experience. And not surprisingly, more than 3/4 of our customers reported that they were presenting Kahoot! over video conference like we're doing now. So not in person, but remotely via video conference. So essentially, our entire model had completely pivoted from being almost overwhelmingly in-person and live to almost the opposite. So we were live but remote through video conferencing. So what's happening now? We've commissioned a fresh survey with our customers just in the last week or so. And what we found with regards to this hybrid trend is 30% of Kahoot! At Work customers tell us that they expect to be working hybrid throughout Q3, the rest of Q3. So this is quite near term but we wanted to find out how quickly this hybrid trend is changing. That means, of course, that a large proportion of customers are still working 100% remotely. So half to be precise report that they will still be working 100% remotely. And that's because while many offices are opening up right now, what we hear is that the majority of those are still open for a limited capacity.Finally, outside of our survey, this is a McKinsey statistic, but very importantly, there is a lot of uncertainty out there. And I'm sure everyone on this call can relate to that from their own working lives. McKinsey, a recent survey showed that over 2/3 of the organizations still don't have a clear and agreed plan for the return to office -- the office. And this is for very good reasons, not least safety, but also the ever-changing situation with the pandemic. So there's a lot of uncertainty out there. And we noticed that this is definitely affecting IT purchases and major commitments when there's so much uncertainty right now around the return to the office. So hybrid is coming, in our view, but it's coming gradually. That's the status this fall. Why does this matter for Kahoot!? It's because, as I mentioned earlier, Kahoot! 360, our offering for businesses is uniquely placed to give customers that flexibility in this unprecedented time of uncertainty. Imagine you are in an HR team and you're responsible for onboarding new employees. It's been very tough for the last 12 months or so onboarding employees when there has been no office that's open. Now arguably, it's getting even more complicated because the office is partially open, some people are in, some people are not in. So what you need is a solution that not only you can deliver knowledge and onboarding training in this case, any way you like. So in this case, it could be in-person. It could be live and remote. It might be self-paced and remote, all with our latest offering, which I'll talk about later, 360 Spirit. It could be self-directed, meaning that the employee can log into the Kahoot! platform, browse a library of content and consume the content that they want to, whenever they like. So it's complete flexibility for delivering training content in this example, wherever the employees are. And that is something that we believe is going to be very significant in the second half of this year. I'd now just like to talk about the transition, first of all, thank you, the transition from being presenter-centric to including everyone in the organization. Many of you will have seen this slide before. We've talked about this a lot because it guides our product direction. What we mean here is that traditionally, Kahoot! engagement has been driven by the presenter on the left. That's the person contributing to the learning in an organization, and the participants have a fantastically engaging experience but they're not contributing to driving the learning outcomes themselves. They're participating. Our vision is to create an ecosystem where many more members of an organization in the case of Kahoot! At Work are contributing to learning throughout the organization. So on the next slide, I'll explain to you why this is so significant commercially. This slide describes a customer evolution for Kahoot!, how a customer relationship or account develops over time. So on the left-hand side, what we see is viral growth, which Eilert talked about earlier, generating lots of individual plans, accounts. So individual licenses, one individual purchasing a Kahoot! license so they can present and/or share knowledge in the way that they wish. Typical use cases, presentations and meetings with a low value per license for that. Then what happens over time is the individual finds that Kahoot! is very successful. And if they're in the right kind of team, they have a need for a team plan. We've relaunched a new set of team plans in quarter 2 for Kahoot! At Work, which you can see on our website, but they are characterized by more regular and crucially collaborative usage. There are many creators and many presenters, all as part of one team who want to deliver a single outcome. Onboarding that I mentioned earlier, is a classic use case for this, but as is training really of any kind. These plans are high ticket, as you'd expect, and cost north of $1,000 per annum. And then the final stage of the customer evolution. And again, this happens organically the way things are in the Kahoot! system right now in the form of inbound leads is that these teams will contact Kahoot! asking for help from our assisted sales team with a more systematic and widespread deployment across that organization.Up until this point, all contact has either been 0 touch or extremely light touch from the sales team. But at this point, this is where the sales team get them involved, and it goes without saying that the leads are exceptionally well qualified at this point. There is intent to purchase from the first contact. The use cases in this scenario are much more varied. They are more interesting and they are more complex, and I have some examples I'm going to take you through later. But they are in the employee engagement space, one of the trends I identified early. And often, this topic of company culture as an outcome using the engagement Kahoot! creates to build larger team building or company culture outcomes is central to the reason why the customers want to hire our product. Account sizes are much larger, ranging from $30,000 up to north of $100,000 per annum for one of these implementations. And what's very exciting right now is that our product offering is both broader and deeper, thanks to the new additions to the Kahoot! family of Motimate, which is a fantastic learning platform and Actimo, a fantastic employee engagement, communication and learning platform for frontline workers specifically. So what you can see in this customer evolution that is happening every day to day at Kahoot! is user value generated growth. The user sees the value in the product by using it and changes and adapts their usage to get more value for their product and therefore, of course, the revenue flows from that. It's an incredibly scalable model that we're very excited about taking forward together with a more powerful Kahoot! group and product proposition over the coming months and years. If that sounds perhaps a little bit conceptual, let me give you a very concrete example of one project that we delivered in Q2 of this year over the summer. It was with a global financial institution and it was effectively a change management project. You might -- others -- some might call this an internal communications project. But in reality, it was much more than that. And I'll explain briefly why that was. This multinational organization had a fairly significant problem. They had a brand-new strategy, corporate strategy that they wanted to engage their employees with. And the challenge was that the traditional channels through which they engage their employees, but of course, somewhere in the office and some were distributed due to the pandemic, most were remote, were not very effective. Open rates for e-mails were low, usage of the Internet also very low. So how do you engage your employees with a subject like this? So we work with them to develop a Kahoot! Wave. This is something we call Kahoot! Wave. And we created content together with the client about the strategy, a single Kahoot! about the strategy and then helps them orchestrate 2,700 sessions in teams where each of the managers of the teams hosted the Kahoot! about the strategy with their teams and facilitated a fun, engaging but extremely informative conversation about the strategy, whilst also involving the employees and gathering their input on how the strategy could be made relevant to them. And of course, being Kahoot!, this was not only competitive inside each of those sessions, but we also helped the customer roll up all of the scores from all of those sessions to create global, regional and team leaderboards and the winning team was awarded a fantastic prize with a very famous Olympian to help them build their team spirit after the event. The results you can see on the right-hand side, the customer was extremely happy with. They reached 32,000 employees over a period of only less than 14 days. And crucially because Kahoot! is an assessment product, we were able to help them measure the uplift in understanding of the strategy content throughout this process. And furthermore, as I mentioned, employees could not just participate, they could contribute. So we collected 26,000 brainstorm ideas in each of these sessions, which were all aggregated and then shared back to the client. So this is one example of how these more complex and interesting use cases that we see with the more mature customers of Kahoot! really brings it to life. So the product that we have right now for enterprises is Kahoot! 360 Spirit, and it's an employee engagement solution. Many of you will have heard us talk about this before. However, it was available for general availability in Q2 of this year. So we're just starting to get this into the hands of customers. And what's exciting about the project I just mentioned to you over the summer is that everything we learn from that project all goes back into the ongoing evolution of Kahoot! 360 Spirit. Next slide, please. As the name suggests with Spirit, it's about much more than learning. It's about building team spirit and company culture as well. The proposition -- there is a value proposition for every employee and so uniquely for Kahoot! the licensing is per employee rather than per presenter or per trainer. So we're very excited that Kahoot! 360 Spirit is getting started. Next slide, please. I'd now like to talk a little bit more about on the training side, how 360 Spirit can help organizations build a culture of learning. This talks directly to the first trend that I mentioned upfront about organizations seeing a growing need for ongoing learning and skills development. What we're building with Kahoot! 360 Spirit is this wheel effectively that creates the right environment for users all around an organization to create, curate, discover and learn with their colleagues or individually. And crucially, the missing piece as well is recognition. So whilst Kahoot! is fantastic in an individual session, recognizing those who have been successful in a Kahoot!, what we've now done is extended that recognition to be organization-wide with team leaderboards and company leaderboards, so that anybody who creates or learns or presents is recognized on this company leaderboards, and that is what makes this wheel go around. And that is how we will help our customers build a culture of learning going forward. To make that a little bit more concrete, this is a very exciting development that's coming to Kahoot! 360 Spirit in the coming months. Courses, we have launched it before, but this is the next iteration of courses that's much, much more powerful. What you see on the screen here is the ability for anyone inside an organization, they don't have to be a learning specialist, to build really powerful learning experiences that are more flexible than ever before. You can see on the top that you can include in a learning experience, Kahoot!'s documents that could be slides, for example, PDFs of any kind and also videos. You can combine them into a course or a learning path like this, around coffee, for example, to train barristers inside an organization. What you can also do is choose, as I mentioned before, how the learners experience this content. Some of it can be experienced in their own time, some of it can be experienced in the classroom live with a presenter. So this is a truly powerful blended learning experience that is better than ever before. And what's clear also is this opens up new commercial opportunities. What this slide here shows is the Academy Marketplace. Eilert mentioned this before. The Academy Marketplace is coming soon, and it's also coming to Kahoot! At Work. This allows anyone with the tools in the previous slide that I just described before to create amazing learning experiences and then showcase them to others on the Kahoot! network and crucially generate revenue. For the creators, of course, there's a revenue stream. For the end users, this becomes a library of premium ready-made content that is useful to them that saves them having to make content for themselves. So this is perfect, for example, for consultants and trainers who make a profession out of delivering training services and also have a lot of IP that they may want to showcase and sell to a wider audience. So to wrap it up, on the final slide, I'd just like to summarize the key takeaways today. First, we see an increasing demand for continuous learning amongst larger organizations, in particular. Second, we have a unique growth engine, which sees our customer evolution from individual license to these larger, more complex and higher-value enterprise use cases that I talked about today. And thirdly, we now have a very exciting breadth and depth of enterprise product offerings, which are on this slide right here. As well as Kahoot! we have Actimo, we have Motimate and also Drops, a language learning offering with a business-to-business facing offering as well, that's all available for our customers. We're working very hard internally to integrate all of these into a coherent whole. And I very much look forward to telling you more about these at the next time. Thank you very much.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, James. And with that, we're going to wrap this up. So I think we've seen today, both through what we do at Kahoot! At Home and Academy and School and At Work, we really have a powerful platform with amazing value propositions for all the different groups of learners and presenters and teachers. Together with our partners on the content side and on the tech side, and also with great new initiatives we are planning, we think that the road map we have ahead of us, both commercially and customer value perspective is amazing. And that is truly what -- it's going to be all on our focus in the coming quarters to really make sure that we come across with all these value propositions that we come across with the value of the commercial opportunities we have and that we're able to open the new tracks of opportunities together with our partners, whether it's the Academy Marketplace, Kahoot! Spirit or just general engagement, both in school and at home. So we're very excited about being able to talk more about all these great opportunities on our next presentation. To finalize this presentation, we also want to look on the forward-looking statements. We are reiterating our full year ambition, as you know, from our Q2 report today. And also saying that for the third quarter, we will expect to invoice for $22 million which is a 90% growth year-on-year and also to reach 1 million paid subscriptions across our different offerings and services. And this, of course, is due to both the seasonality where we have the summer holidays during the third quarter. And also, as normal when we have the strongest 4 last month of the year into Q3 and Q4 and a good road map, combined with all the products and services already in the market in addition to the new initiatives that really can drive from the momentum, from the engagement we see and also from the user base that is already on the Kahoot! platform. We will, of course, come back to the market as soon as we have a closing on Clever and update also our forecasts, including the Clever numbers when that is completed. And we will continue to work with exploring the opportunity for a secondary listing, of course, as a function after the Clever transaction is concluded. So we also -- and I hope this has come across both from Ken's presentation of the numbers and also from the initiatives we do on the product side that we are very engaged in doing as much investment as we can, but at the same time, being able to show the scale and the leverage of the operations we are managing. We want to really make sure that we are building foundation for growth that we show the scalable element in a platform company and that we are also able to continue to invest in value that really makes a difference for our customers. And all this coming together, and of course, again, with the update when the Clever numbers are included, we believe that we have a strong value proposition, both for the remaining parts of the '21, but also for the years to come with a richer platform than ever before with a more engaged customer base than ever before and also with partner opportunities that really can drive, make a difference for us as they are providing both distribution and content to the ecosystem. So with that, we have a global recognized brand, which is really making a difference being recognized across the segments, a scalable cloud platform, very experienced organization with a growth tracker from the IT industry and other industries as well. We have showed our financial and operational scalability. We are continuously and hell bent on improving all services for all segments and user groups in every cycle. And last but not least, we have our very strong foundation, both financially and network-wise, to do strategic partnerships, joint ventures and other nonorganic growth opportunities in the future. So with that, thank you very much for listening in. Please do not hesitate to connect with us, either as a teacher, student, parent, professional or investor. We are very much available at your disposal. And thank you for taking the time to listening in today, and we look forward to see you again for the third quarter presentation, if not before. Thank you.