Kahoot ASA

OSE:KAHOT

Earnings Call Transcript 2021-Q3

[Amanda Taselaar]

Welcome to the Kahoot! Earnings Webcast for Q3 2021. I'm Amanda Taselaar from Kahoot!, and I will be your moderator today. We are excited to be here with you to give you updates on our progress here at Kahoot!. We will discuss the financial and operational highlights, strategic and business highlights as well as the outlook for the rest of the year. Today, we have with us Eilert Hanoa, CEO of Kahoot!; and Ken Ostreng, CFO of Kahoot!.I will now pass it off to Eilert to get us started. Off to you, Eilert.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you very much, Amanda, and thank you very much, everyone, for attending this session of our Q3 numbers. So first, let's start with the market environments. We, as you know, the nature of Kahoot! offering, which is all about making learning awesome, both for education sector, for personal use and in the home market and, of course, for corporations. So it gives us a fairly good understanding of what's happening in the marketplace and the demand for at least our services. And we see a fairly good development through the third quarter. A growth in all of these very important areas for us when it comes to the interest for the product, when it comes to the total use of the Kahoot! platform versus last year. And also, of course, with Clever coming onboard and having their own very thorough and in-depth view on especially the U.S. K-12 markets, where they can really see how the back-to-school is happening across all classes and with all tools that are used on their platform.And when we see that they have this great growth close to 20% year-on-year of the top 100 apps on their own platform in the back-to-school this year, this also shows us that the total transition to digital learning tools that has happened faster because of the pandemic, truly is something that we have all learned from, and we will continue to use as a new strength in how to become more efficient and use digital tools more efficiently, even if we are luckily back to something more of a normal situation. And ultimately, our platform, which is really helping our companies to become more efficient and very much in addition to schools and through a new social use making learning more which is also the mission of Kahoot!, of course, helping us building our leading learning platform going forward. But the momentum around our platform and also the way we can continue to thrive through developing great new service, more value, great onboarding of new users in all categories and of course, as always, try to improve a little bit in every aspect of how we are conducting our operation. And this combined is what builds the relevance of the Kahoot! brands, the relevance, more importantly, of the Kahoot! services, and of course, in the end of the day, making learning more efficient, which is what and why anyone would using time and energy and money on the Kahoot! platform. And that's what we have also been experiencing through the Q3 highlights, as I'm sure you can see out of this slide, we have had good growth on the top line, both, of course, on the core Kahoot! group, but also with great contribution from Clever into the last month of the third quarter, which also goes to and show the scale of the usage and the commercial dimension of the company, reaching $27.8 million in invoiced revenue. The scalability also that we are continuously building upon when it comes to how to use the resources and making sure that we also can show for our financial scalability as we are growing both the organization, but more importantly, offering great services to our customers. And having a strong operational cash flow this quarter is a good way to see that that's something we are continuously focusing on. We also see that the growth we've had are now helping us reach our 1 million paying seats milestone, which, of course, is truly a great milestone for us as we started this journey of commercial seats back in '18 and also giving us a great uplift from last year, both through acquisitions and through, of course, organic growth. And we also see and we will talk more about that later, larger corporations using Kahoot! more structurally and the way they are making learning assets available internally. We also see the viral adoption continuing reaching 1.9 billion participating players last 12 months and also over 30 million active accounts. And also the usage of the platform now reaching 300 million sessions in the last 12 months on the platform. And of course, on top of all the operational both achievements and initiatives we have, we're very happy that we've been able to complete the transaction with Clever of the 1st of September, and that we have now been able to work closely with the Clever team for the last 2 months on how we together can build out something that's really going to make a difference going forward based on the 95,000 schools that are using the Clever platform and of course, the 175 new team members that are joining the Kahoot! group. So all in all, a very interesting and busy quarter with a lot of new initiatives that will pave the way for us to continue to deliver great new initiatives again in Q4 and in '22. So we have a very strong, I would say, lineup of companies and organizations, including schools that have been onboarded and also renewing with us this quarter. So it's great to see that Kahoot! is not just an engaging and exciting solution that you will use at home or in the class or to study, but also a tool that is really resonating professionally. And I think the lineup for this quarter shows that this is something we continue to build out. And of course, these great companies are providing us with also good insight in end use case, in how this is really making a difference for corporations around the world.So with all the initiatives and all the products and all the services we have on the Kahoot! platform because there is a good variation in assets, we have very interesting total addressable markets that we can try to reach with our initiatives. And we have good strategies around 5 main initiatives going forward. That is also where we are to streamline our operations, both the Kahoot! offerings, but also the acquisitions we've done for the last 12 months, which includes over 5 companies in addition to Clever. And the funding businesses areas, work, school, home, academy with a great marketplace and area of premium collections of content, and of course, last but not least, the Clever platform with all the opportunities that resides inside the Clever family. And we will really work through all these in the briefing after the financial readthrough. But the most important is the fundamental commercial dynamic across these different categories, that are positive, and they are driven by the growth engine of Kahoot!, which is all about the viral growth. That we have all these users on free plans and paid plans at home, at school, work that are using Kahoot! to truly spread the word, to make learning awesome and seeing is believing. We have the brand. We have the community with 9 million teachers on the Kahoot! platform that can not only consume Kahoot!, but also create and share knowledge on our platform. And of course, the content created by our users, making Kahoot! truly a platform company and really making sure that the quality of the assets, whether it's made by teachers, by partners or by the user, is available and able to access for everyone on the platform soon to be over 100 million public Kahoot!s available on the platform.And all this combined is what really drives the growth of Kahoot!, and which is also giving us the opportunity to focus on innovation with fantastic feedback, both positive and less positive, of course, in this very interesting and dynamic environment to continuously improve and make a better offering for all our users. And I think this is a great segue over to you, Ken to talk about the numbers behind what we're doing in the third quarter.

[Ken Werner Ostreng, Chief Financial Officer]

All right. Thank you, Eilert, and good afternoon, everyone. We are pleased to report strong results for our third quarter, and I'll talk through some of the financial highlights for the quarter. We saw strong organic user growth on the Kahoot! platform in the third quarter, with more than 30 million active accounts the last 12 months, and that's up more than 40% year-on-year. The growth in paid subscriptions continued and reached 1 million in the third quarter, up 180% year-on-year. The organic increase in paid subscriptions from the second quarter was more than 80,000. Our key metric, invoice revenue reached $27.8 million in the third quarter, up 139% year-on-year and Clever contributed $5.7 million for the month of September as part of the Kahoot! Group. Invoiced revenue, excluding Clever in the third quarter, came in at $22.1 million, which is up 90% year-on-year. And for the first 9 months, invoiced revenue was $67.5 million, and that is up 143% year-on-year. Deriving from Kahoot!'s recurring revenue business model, annual recurring revenue increased to $124 million by the end of the third quarter. Whereof, Clever contributed with $44 million. The scalability in the Kahoot! business model is visualized by the positive development on adjusted EBITDA with continued increase both year-on-year and quarter-on-quarter. For the third quarter, adjusted EBITDA was $6 million, representing 25% EBITDA margin. For the first 9 months, adjusted EBITDA grew by $13.3 million year-on-year to $13.8 million. And we have a scalable business model with increased leverage where infrastructure cost for both free and paid users is included in our operational cost base. It's important for us to continue to develop the company, demonstrating continued financial scalability translating into strong cash flow from operations. In the third quarter, we saw continued solid development in adjusted cash flow from operations of $7.4 million and $17.8 million year-to-date, and that's up more than 70% year-on-year. Third quarter cash flow from operations represented 31% margin of operating revenue. By the end of the quarter, we had a cash balance exceeding $200 million. And of course, on the M&A side, the main event in the quarter was the completion of the Clever acquisition in the beginning of September. Moving on to the next slide. As a reminder, let's keep in mind, Kahoot! started its commercial journey a bit more than 3 years ago. And by the end of 2018, we had north of 40,000 paid subscriptions. And during the following 11 quarters, we've increased paid subscriptions to more than 1 million, both through strong organic growth and through acquisitions. We initiated third quarter with more than 335,000 paid at school subscriptions, 435,000 at work and 245,000 at home paid subscriptions. Following the commercial launch in 2018, we invoiced clients for $1.7 million during the fourth quarter 2018, which has grown quarter-on-quarter to $27.8 million in the third quarter this year. Moving on to some operational metrics on the Kahoot! platform. The user growth of the Kahoot! platform the last 12 months continued in the third quarter, reaching 30 million active accounts with more than 300 million hosted games with a total of 1.9 billion participants and 64% year-on-year growth in number of paid subscriptions.Moving on to the full year 2021 outlook. As mentioned, we started our commercial journey in 2018 with a small invoiced revenue number, growing that to $13 million in 2019 and to $45 million in 2020. For the full year of '21, the Kahoot! Group expects to exceed $107 million in invoiced revenue, up from the $45 million last year, with continued solid positive cash flow from operations and to reach 1.1 million paid subscriptions. The invoiced revenue contribution from Clever is included in the full year of '21 invoiced revenue expectation and expected to exceed $16 million for the 4-month period from September till December this year. Clever is expected to exceed $47 million in invoiced revenue for the full year, implicating a 29% year-on-year growth. And for the fourth quarter this year, the Kahoot! Group expects invoiced revenue to exceed $40 million with more than $29 million from the Kahoot! Group, excluding Clever and more than $11 million from Clever with continued solid positive cash flow from operations. And as previously communicated and following the completed Clever transaction and the company is exploring the opportunity for a secondary listing and expecting to conclude the assessment before the end of the first quarter next year.So let's move on to our 2022 ambitions. As per the previous slide, reported invoiced revenue for this year is estimated to exceed $107 million, which imply a pro forma invoiced revenue in '21 exceeding $138 million. For 2022, the current ambition for the Kahoot! Group, including Clever is to reach $190 million to $200 million in invoiced revenue. The operational cost base is expected to represent approx 70% of invoiced revenue, which indicates approx 30% cash conversion of invoiced revenue. The long-term ambitions for the Kahoot! Group will be disclosed with the fourth quarter '21 report.And with that, I'll hand over to Eilert again.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, Ken. Let's see how we are doing on the business areas, which is, of course, the core of our operation. So before we start on the individual areas, I think taking into the consideration that we've been able to just through the last 12 months, do both the acquisitions of Drops, Actimo, Motimate and of course, Whiteboard in addition to the main acquisition of Clever, we've been able to also build out these areas of business in a very different way than what we had just 12 months ago. And this has been a very interesting and transformational journey for the company not only because of the pandemic, but also because it has helped us sharpen exactly what to develop, how to package our services and also how to deliver more value to each of these customer segments. And there is no doubt that with the new lineup that we've presented in this presentation, at the beginning of this presentation, we also have a much richer offering that we can continue to build on in order to both convert better from free to pay, but also to increase spending with our customers from basically pay to pay more. So with this platform, with the great partners we have and with the acquisitions and our organic growth and development, we believe that we have the perfect setup for '22 and beyond.So let's start out with Kahoot! At Work. So in Kahoot! At Work -- and Kahoot! At Work of course, is about how can you use Kahoot! in a professional setting, in a corporation, whether it's for training of new employees or existing staff, for partners, for customers, for engagement, for training of more boring topics and even for continuous personal development. And of course, in the interactive presentation to spice up our already existing presentation in PowerPoint or in Google Slides. And this is what really Kahoot! all about. And this is also why and how Kahoot! is consumed by all our customers around the world using Kahoot! At Work. And during Q3, we saw larger corporations starting to be more engaged and interesting in Kahoot! going forward. We, as you know, come from individual plans, which is what Ken referred to when we started back in 2018, where it was possible to buy a $10 per month plan for any professional users, bringing your own service to work. Through the transition into team plans and smaller organizations and now as we can cover all these 3 main areas from the individual plans from $10 and up to enterprise plans, which can be up to $100,000 a year on logo customers. And of course, having this flexibility built into the Kahoot! At Work offering, and from selling the same services structured for each of these user groups with different price points and different attributes, obviously, gives us a huge advantage in how we can scale with the customer as the customer grows the usage of Kahoot! or grows the organization using Kahoot.And this is across different industries, it's across the way, it's used in companies. This -- or from ways it's kind of added to the organization, whether it's bought to by an employee, bought by a department or through the more traditional purchasing routes and it's definitely showing that Kahoot! is not just consumed in one particular way or area, but across the different spaces that any company will use for learning. And I think on this slide, you see great companies that really are helping us not only to use Kahoot! and expand their internal reach, but also are helping us with great feedback on how they want to see the product evolve in the future. And what's really interesting is that on this slide, that not only have been able to work with these companies over time to -- like Facebook starting out with a single license from 1 employee and now using it structurally for sales training. But if we look across our different companies and our top-logo customers, we see that just during the last 12 months, they were running sessions with more than 1.5 million participants in the top 5 customers combined. We also saw that they had over 150,000 sessions launched just 12 months -- the last 12 months combined in the live setting, which is either a Zoom or in a meeting, in a town hall, in a training session. But in addition to that, the same amount of sessions they were using for remote training and asychronous training. So all this speaks to the importance of the investments we've done in the product, in the services, in the ability to flex between a live audience or a remote audience using Zoom, using the Town Hall and be able to have a consistent learning platform like Kahoot! to deploy the information and create engagement and making sure that everyone really pays attention as this is happening in companies, which has been a huge challenge for any organization in the last 18 months.And of course, this also brings us into what's -- really what we're focused on to try to build out the functionality in the Kahoot! offering. So with courses for Kahoot! 360, which we just launched now and is very excited about what this really means of change for our customers, you can not only do a traditional nice-to-have Kahoot! session at the end of the meeting or to create engagement instantly, but you can package the whole training day or the whole course for the week on the Kahoot! platform. You can deploy it as a homework or a self-study or you can run it as a way to manage your seminars or the work sessions throughout the days from various speakers, for various trainers, for different departments, for asychronous whether it's different time zones or even different audiences at different points in time, but still getting this live engagement aspect of the training. And this is something we really believe will make a difference when it comes to how these great companies can use the Kahoot! platform going forward. And a great example to extend this experience is to just look at the integration we did with the just launched iPad OS iOS, 15.1 that includes Apple share play, which means that you can actually share the whole Kahoot! experience on a face time like session and use 1 device to both interact with your trainer or with up to 30 colleagues and you can have a live game interaction, whether it's brainstorming or two-way sharing of information or, of course, the more traditional quiz in addition to self-study, all while you are distributed, whether it's on the workplace workstation or in a lockdown at home. And this is a great way to see standard technology delivered from world-class companies like Apple, combined with available functionality in the operating system and using Kahoot! to have a full delivered platform for training in marginal cost and 0 IT management cost to make it happen.And of course, this brings us over to school because the same applies, of course, for any teacher or any school or educational institution, how can they package our courses, how can we use the course functionality to not only having a Kahoot! in class, but add the documents, whether it's a PDF, the videos, instruction videos or learning videos together with questions, feedback loops and ways to share this with the students, whether it's at homework or prep for exam or in the middle of a workshop in class. And not only that, we have also added the Kahoot! Math Labs, which is our first really interesting activity you can introduce into a course, which makes the course concept even coming more to life. And we're super excited about showing you more of the activity aspects of the courses in later presentations as well. But this is truly a game changer. And again, following with our customers in the same way as we have evolved in business, we have been evolving our way to package our services for educational institutions from the initial teachers bring their own Kahoot! license at work, up to the school and campus level and now also into school districts in the U.S. and North America and around the world. And we see this great feedback. Of course, everything from need for handling privacy, compliance to GDPR or COPPA, FERPA rules and ways to deploy content that is either district-specific or school-specific, that is also something that has a huge value to be able to share across the platform. And again, integration with Clever obviously helps us deploy this and also use their already current infrastructure available for the schools.And if you look at the next slide, we see all these great schools, institutions and districts that's been onboarding and really seeing a great new thrive around using Kahoot! structurally in larger settings. And this is both due to better functionality from us as we launched our first EU addition back in December last year, less than 9 months ago, and then as we have been building out this with great feedback for the last 9 months and have this fantastic back-to-school energy in the whole e-system of K-12 and universities, we were also able to deliver better functionality from class rosters, from the upcoming features for students and of course, more importantly, the courses packaged that also brings this to life for all the teachers around the world. And with 9 million teachers already used to Kahoot!, this is a fantastic opportunity. And last but not least, using Kahoot! as an individual at home, whether it's with your family, whether it's as a student or as a kid or in any social setting, this is also something that we are truly amazing to be able to work with because with our upcoming new initiatives, this is also really where -- and we see the most of the usage today but also where all the recruitment into both professional use and more great content is coming from. And -- let's just start off with our newest member to the Kahoot!+ family, which is the Kahoot! kids app, which we presented to you before, which will be launched before the holidays. And we are super excited about this because it gives a fantastic value proposition to either kids in the younger stage or those who need to have images to -- as answering alternatives to learn. And with the great readout loud technology that we're using from the Azure platform from Microsoft, we are able to also provide these in native languages for our users. And this app will be available in 13 languages now by the end of this year. And not only that, we're also today having our first initial launch of Kahoot! Study, which is the first time we have a specific offer for higher-end students, which we believe is a perfect companion for students to use Kahoot!, whether it's for social study, together with others or at home to ground for exam. And with the upcoming courses functionality that will provide great content packages for students, this is also opening up a new opportunity for us in the next year and the time to come.So again, very excited about what's happening on the social and personal views upfront as well. And of course, this ties nicely into Academy and more importantly, into the Academy marketplace, which is really the strength of the Academy platform, where we have great partners, we have a portal for knowledge. We have the ability for teachers to connect on the academy platform, and we will continue to invest and build out all these functionalities to build this ecosystem out really making it a true platform for all teachers and educators and other domain experts to provide their courses in the future. And with the marketplace, not only can teachers continue to both use for free, consume great courses that are there, but they can also now create and provide commercially courses going forward. And in a few months, we will really open the doors to this alternative and not only for teachers, but for any creator, any domain expert, whether you're a driving instructor or you have the best [ Barista ] in town, or you just have your specific areas of expertise that you would like to share with others for free or through a commercial structure. And this, again, will open a new dimension to the usage of 98% of users on the Kahoot! platform that are not paying for a software license in addition to, of course, the hundreds of thousands of paying customers that we have in the personal use space on Kahoot! as well.So all in all, a fantastic lineup of initiatives that combined will deliver what we believe is a great platform for 2022. And this is, of course -- this wouldn't be possible if it wasn't for our partners. Both those partners who are using Kahoot! to distribute their content in a great way as you've seen on the Academy and on the Kahoot! Discovery page, but also with our technology partners such as Apple, Microsoft and Google and Amazon, where we are doing great integration, joint initiatives, great way to package content, which we wouldn't be able to do alone without this very important infrastructure and the competency hubs in our industry. And last but not least, we have Clever. And of course, all these ties together, but having the Kahoot! marketplace, the EDU, the apps the engagement from kids and be able to also provide this on the Clever platform with over 1.4 million active teachers, 22 million active students every month. And now with 95,000 schools using Clever is truly also opening the door for another ecosystem and even a more, I would say, efficient and interesting distribution of the Kahoot! assets and also enriching the Kahoot! offering by plugging into the Clever API and using the functionality of the Clever platform going forward. And of course, with Clever's massive reach an impressive efficiency for teachers and schools and school owners, this is also something we will continue to invest in and making sure that we can maximize going forward from a user perspective and from any aspect of the usage of the Clever platform. Because our motto, as we were so lucky to have Clever as a part of our family is to make learning awesome together. This is about extending our U.S. reach, which is already very strong with Kahoot! and Clever together. But also seeing that we can thrive even more with Kahoot! as a first-class citizen from using the platform of Clever as good as possible. That goes both for EDU, it goes for the individual teacher, and it will also be relevant for students in the future using students apps. We see that the opportunity to go international together is great, both with the functionality on the Clever platform that package consistently to the U.S. experience in some markets, and we can use parts of the stack in other markets. We see that we can do vertical integrations going forward, where we have this deep integration and where the Kahoot! service can rely on the pipelines, which already are provided by Clever instead of building it from scratch. And of course, we have the operational scale, where us as a one family can use the best of both teams to do better product development, better road maps. And of course, the go-to-market part of this can also be aligned even further going forward in the U.S. So we're super excited about everything we can do better for the back-to-school next year, both with the Clever team's experience, bandwidth and reach and adding to that, the Kahoot! ecosystem and organization and truly showing that it's possible to deliver a fantastic value proposition for the students, for the teachers and for the school admins on the Clever platform next year in the U.S. and outside. So all in all, very interesting and a good dimension to the Kahoot! story with Clever onboard.So with that, let's do a short summary before we go into the Q&A session. We have this very good ecosystem platform, as you have seen now from different views, both covering school, home and work and academy, which is really a scalable platform for us with viral growth with a very efficient way for us to continue to develop new functionality and better value propositions for all user groups. As courses is a great example of we have a good partner ecosystem, both on the tech side, but also on the content side, which will help us also to not only provide their great insight and IP, but also force us to build an even better value proposition for our users going forward. We have all this summed up in basically 5 main initiatives that we will push for in the coming quarters, both when it comes to the investments in products and features, but also on how we will position Kahoot! in the marketplace, both with the Kahoot! 360 spirit in the professional market, and of course, the Kahoot! At Work in general, how we will work with Kahoot! EDU as the educational institution licensing in addition to the teacher licenses and everything that goes with the school platform. We will have the Kahoot!+, including also the upcoming study and kids in addition to the family subscription, of course, and we have the marketplace, which is tying nicely into all these 4 of the boxes, being able to both provide a great marketplace for creators, for consumers, for teachers, for parents, going forward in addition to, of course, any other domain expert also in the professional space.And last but not least, we have Clever and the leading learning platform they provide, which we'll continue to build out and really expand with the flavors from the rest of the Kahoot! stack in addition to the 400 other partners that are working with us in Clever to distribute their assets on the Clever platform both in the U.S. and are really eager to get started on the international distribution as well. So that's on Clever, together with their upcoming App Store is also a another amazing opportunity for us that we can align with the initiatives we just talked about. So all in all, in Q3, we saw a strong growth continuing. We had a healthy back to market -- I would say, back to school and back to work season which is showing also that we get traction on the initiatives we have started on, and we can definitely continue to build out both on what we see in the marketplace, but also what we hear from our customers directly. The scalability is, of course, that's always important for us because it's a proof of concept that what we do for -- from an investment perspective also will be relevant in the next cycle. We will continue to work on the commercialization routines and also the commercialization rollout of both existing services but also alignment of the acquisitions and new initiatives that we are getting from our acquired units.We will never stop to develop new and great services inside the main initiatives that we just talked about, to make sure that anyone onboarding the Kahoot! train will have a better experience every time they revert to the platform because that's the only way to get a consistent and sustainable customer base over time. And we will continue to launch initiatives around that, both on the product side but also on the commercial side of course. And last but not least, getting Clever onboard with a great performances in the last part of Q3 and also with their forecast for fourth quarter is, of course, great for us, especially when it comes to the opportunities they open together with us for the next cycle. So with that, thank you very much. I'll hand back to Amanda.

[Amanda Taselaar]

Thank you, Eilert, and thank you, Ken. We will now move to the Q&A section. [Operator Instructions] We will start with a question from our analyst from DNB, Frank Maaø. And you can unmute yourself so that you can ask your question out loud.

[Frank Maaø, Analyst]

Yes. Can you hear me?

[Operator]

Yes, we can hear you.

[Frank Maaø, Analyst]

That's great. So yes, and I would like to just ask you Eilert about some of the trends on the subscription side as we now have 1 month of Q4 behind us. You raised the Q4 guidance today mainly based on the performance of Clever, but also confirmed the non-Clever part, all Kahoot! And could you talk a little bit about how you have seen now since April, May, the churn trends developing and also kind of more the gross additions of onboarding of new clients and renewals as you go into a very important quarter, especially for the business part of that work segment?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you. And so yes, I mean, of course, as you know, we have a very diverse business when it comes to user base from students using Kahoot! for free forever and not 2 corporations using Kahoot! more structurally for their processes as we just covered. And of course, the similar renewal pattern, whether it's family using Kahoot! for 1 month or it's business using Kahoot! for a more of a programmatic way deployed in their organization is, of course, also very different. But the short version, I think is -- and that's very important is that the way that consumers -- and that also includes businesses as any businesses conducted by, I would say, a consumer-ish way to purchase services these days, needs to be continuously impressed by features, by value and by real use in order to continue to subscribe to any service business these days. And I think that cycle has been accelerating. Meaning that what you used to expect from a provider maybe now is at least twice the speed, which means, again, that the need for us and for anyone else to invest in, in order to keep those customers is more functionality and faster delivery of that functionality. And that is, of course, again, why and one of the most important reasons for 3 of the initiatives we talked about today, the courses, the marketplace, and the new plans for both personal and of course, on the business side with Spirit.So having not only kind of a same lineup as last year and renewing customers on the -- equal the same value proposition, but constantly making sure that we can provide an upgrade from a user experience or from a premium experience is absolutely important. And to that point, we continue to evolve on that. And as we covered on our Q2 presentation, we were not smart enough on pacing ourselves on this during the second quarter and the first quarter this year. And that's why, and hopefully, that will also be reflected in what we presented today and going forward, gearing up our initiatives and doing that slightly different going forward. So I believe that we will be -- it will be possible for us to both increase the average spending with customer, but also the way or the number of services -- maybe a better way to say it, the number of services that the customer can consume from us, whether you're using Kahoot! free and buying a course, for example, on the marketplace or you're having a premium subscription with us and so forth. So making sure that we have all these initiatives in place and ready for '22 is definitely an important part of our execution.

[Frank Maaø, Analyst]

But so far, have you actually seen these trends as we have gone into the fall and through October kind of materialize in the consumer sign-up trends or subscription trends?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes, I would say slightly. It's maybe -- I mean consumers, in general, I guess, will be more interested in buying services during winter, at least in the Northern Hemisphere. So it's kind of a high season from us from starting out with Halloween and through the spring time. So yes, we have the seasonality also working for us. But more importantly is, of course, that the services we provide and the content we provide are both relevant and valuable. And we see the trend that it is going in the right direction, but we are, as mentioned, launching just in the coming days and weeks, several new initiatives that will hopefully also broaden out or giving us an even better platform for this going forward.

[Amanda Taselaar]

Thank you for your questions, Frank. Thank you, Eilert. We will move on to our next analyst question, and we would love to hear from Katherine Tait from Goldman Sachs.

[Katherine Tait, Associate]

Can you hear me now?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes, hello.

[Katherine Tait, Associate]

Fantastic. Just wanted to get a sense, you've obviously continued to be successful in gaining -- growing about paid subscription base. But as you sort of think about the revenue progression and I suppose the implied ARPU as a result of that, can you just talk us through -- my impression was that the I suppose implied ARPU for your corporate business customers was clearly a lot higher than to your other segments. And with that sort of segment growing more quickly, I'm just keen to understand the mechanics of how we should expect that ARPU to kind of progress over the development for the next few quarters as well?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Katherine, so I think yes there are 2 dimensions to that. Obviously, so the average customer buying a license on -- to us and upgrading to Pro or buying Pro and upgrading to Premium that's kind of an average positive development on ARPU that you would expect. And we try to trigger that, of course, through adding more great features in all plans, but of course, the best features in the premium plans. What is also impacting on the ARPU development as a whole for the business space is, of course, that we also introduced new plans, which are on the lower price points and Spirit is a good example where let's say, that you onboard a company with 100 employees on the Spirit plan, the average price per user will be lower whether -- versus if that company buys a handful of presenter licenses for -- one for HR and for event department as an example. So I think that those 2 effects will probably offset each other in the -- at least in the short term and be more of a neutral to slightly positive of ARPU development than a major changes. But we will, of course, try to maximize the number of paid seats through basically the usage of Kahoot! more than trying to optimize the ARPU on the existing presenter out-license only going forward. So probably that is something we need to spend more time on in the coming quarter presentations how that's going to play out as it will be, over time, more and more 2 separate tracks to reach out to do these 2 ways of selling to corporations.

[Katherine Tait, Associate]

Great. And maybe just 1 follow-up. I think previously, you had said that the work segment was around 2/3 of your revenue. Can you give us a sort of updated breakdown post Clever, like how the revenue breaks down between work, school, home and I guess, academy as well, which I presume is small today, but yes, just the breakdown would be really helpful.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. So I think excluding Clever, it will be fairly similar split between work and school and home slightly increasing on the school side actually, which is good, of course. And of course, with Clever that changes substantially next year. So we will look into that breakdown when we get into the next calendar year. When it comes to academy of course, that's not generating any material revenue as of now, but we will see also how we will report out on the marketplace revenue as that's, of course, a slightly different way of doing a transaction than selling software licenses in the next year.

[Amanda Taselaar]

Thank you, Katherine. We will now move on to a question from our next analyst from ABG, Øystein Lodgaard.

[Øystein Elton Lodgaard, Research Analyst]

I had a couple of questions on the business segment. First of all, you have previously talked about partners as an additional distribution channel for your business products. So are there any updates you can give here, some partners you've signed or something or some news you can give here?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you for that, Øystein, I think in short, we can say that we'll continue to work with partners to see how we can expand our distribution of reaching out to Kahoot! customers in the future. We already have partners that are helping us distribute the Kahoot! licenses to specific customers more on a deal-by-deal perspective. But that's something we see that especially with the new functionality that we have talked about earlier today is becoming more relevant. So we really look forward to be able to announce something around that in the not too distant future.

[Øystein Elton Lodgaard, Research Analyst]

Great to hear. And second question on the viral distribution model for the business product. Of course, you have a lot of business summits, events you do, the other ways to market your products. Are you seeing a lot of inbound requests from businesses that wants to try Kahoot! 360 and 360 Spirit?

[Eilert Giertsen Hanoa, Chief Executive Officer]

I mean we see a lot of inbound interest. We obviously always want to have more. And we do believe that some of the changes, meaning the in extensions we do, especially around the courses functionality will help us with that in the coming months and quarters. So we have some great stuff. We will talk more about that, and we are planning to have a specific Kahoot! At Work events for investors or for the financial market later this quarter, where we will go more into detail on how the ecosystem around Kahoot! Work will probably develop as well.

[Øystein Elton Lodgaard, Research Analyst]

Looking forward to it.

[Amanda Taselaar]

Thank you for your question. We will move on to the next question from our next analyst from Arctic, Kristian Spetalen.

[Kristian Mørk Spetalen, Analyst]

Can you hear me?

[Amanda Taselaar]

Yes.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes.

[Kristian Mørk Spetalen, Analyst]

Perfect. So I also have a question around Kahoot! 360 and 360 Spirit. I was wondering how long is the typical implementation cycle for the Kahoot! 360 Spirit and how many employees are actively working with implementation and sales here?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Okay. So I mean, Kahoot! Spirit can be used without any the traditional implementation per se. We do provide single sign-on for those companies who want to have a more efficient way to log in if it's a larger usage of employees across the organization, but it doesn't really require any traditional deployment per se, in the sense that you can onboard, let's say, 100 or 500 employees whereby sending out an e-mail with a link that will automatically activate and in the sense, generate accounts on your company workspace. So there are several ways of using that mechanism that can be used to deploy Kahoot! Spirit across an organization. And that's some of the elements we will also talk about more in the workshop I referred to. When it comes to the sales organization across Kahoot!, if we exclude the Clever part of the organization approximately 50 or -- yes, 40-something employees are focusing on sales across Actimo, Motimate, Kahoot! and, of course, handling any kind of feedback or the account management follow-up. So we already have a sales force that we -- and then back to my last point on the summary slide are also seeing how we can orchestrate to get more leverage and more structured forward-looking effect of that resources in 2022 into our enterprise and larger customer accounts, both in schools, school districts across the world, but of course, most importantly, for commercial and larger-organization customers.

[Kristian Mørk Spetalen, Analyst]

Okay. And can you say anything about how many deals you aim at closing per month? Or how many enterprises you think are serviceable within the next 3 to 4 years?

[Eilert Giertsen Hanoa, Chief Executive Officer]

I don't think I have a good number answer to that. But I think yes, we will be definitely able to scale our capacity if and when any volume of customers are to be, let's say, handled to be using the Kahoot! platform. It's not going to be a limitation to our organization to manage that for sure.

[Amanda Taselaar]

Thank you, Kristian. We will go to our next analyst question from JPMorgan, Marcus Diebel.

[Marcus Diebel, Research Analyst]

Yes, it's Marcus. Just a question on work. And the question also in regards to the sales force here. I mean, clearly, it looks pretty promising. In the past, you commented on relatively low requirements on a sales force to roll out this business. Has this changed? And can we assume kind of like the high operational gearing in the business that you were talking about in the past? Or has anything changed in this regard?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you. So I think that it hasn't really changed. But of course, we got some additional sales force with the acquisition of Actimo and Motimate. So what we talked about now was the aggregated sales force across the organization. So in the core Kahoot!, it hasn't had changed that much. But that said, of course, when we have a great experienced team, we want to use that even more efficient across the group. And that's, of course, what we will also do as we align Actimo, Motimate and Kahoot! Work and the Kahoot! Spirit initiatives in the coming quarters. And there are some great opportunities, both for cross-sales, upsales and of course, extending the usage of the platform with these different customers that already are using one or in future, hopefully, several of these platforms we can provide. And last but not least, we also see that being able to combine these great features into one solution is what really is the top of the list for the customers that see the value of this. So that's something we're going to continue to work on and align our initiatives and also align the services. So it's the more of a comprehensive, complete offering and complete use to experience for all employees in the current customer bases we already have in the group.

[Marcus Diebel, Research Analyst]

Perfect. Maybe in this regard, I mean, going forward, maybe if you think about the fourth quarter and the full year presentation, can you maybe share with us a little bit more in terms of type of guidance you're considering in this regard? I mean, will we get like detailed views on marketing spend maybe going forward? And also, one of the questions was that the organic revenue growth that you obviously highlighted now. Is that something that we can maybe assume to receive every single quarter? Or how shall we think about this?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Well, I think you're addressing an important point. We really need to see how we will present the group going forward for '22, both due to, of course, getting Clever onboard, but also because of the main initiatives that we talked about, what we're doing around Kahoot! Work, EDU and Home with Kahoot!+ and how we can align both internally our resources, but also how this best can be reflected in our reporting out to the financial market. And that's something we'll spend in the coming months on making sure that we have in place for the next year. And we really welcome your input on that, of course, as always.

[Amanda Taselaar]

Thank you for your questions, Marcus. We will now move to answering some of the questions from the Q&A chat. Many of them have already been answered from these previous questions. We don't have much time left, so we will be brief. The first question, Eilert, from one of our attendees is -- actually from many of our attendees is, is there an update on plans for the potential U.S. NASDAQ listing?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Okay. Thank you. So I would say that -- and Ken covered this briefly in his presentation today that we need to close the year on -- as we have now had Clever as a part of the group for 1 month, and we will have 1 quarter with Clever onboard in the group during the fourth quarter this year and then being able to hold it and prepare the full group for any secondary listing opportunity after that, and therefore, also we will come back from the Board of Directors and of course, management to the markets after end of the year and during Q1 on what the plans -- definitive plans will be and how they will be outlined. So that's very much in accordance to what we also have on our slides, and that's consistent from our last presentation as well.

[Amanda Taselaar]

Thank you, Eilert. We have time for 1 more question, and I will ask you to be very brief in your answer. Another question is, could you please talk a bit about how Clever makes money? What portion of revenue is generated from subscriptions or transaction fees, if any? And where is the potential for revenue growth here?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Great, so that's -- thank you. So that's a great question. I'll again try to be brief. So in short today, the majority of that -- more than 90% of revenue is coming from the app partners that Clever has that are basically using Clever to distribute their great assets to schools and teachers and students around the U.S. So that -- think of it as an app store where you pay for the distribution and the integration to the Clever API, which basically means that your offerings comes to life in a secure platform and a easy to single-click access repository, which is a great way for anyone, and maybe without the muscles of the biggest companies in the world to do that. But even Google are using Clever for this particular purpose to distribute Google Classroom. And last point is, going forward, of course, in addition to the distribution of apps, there will also be opportunities for the revenue share on the app store that Clever will provide for both schools and individuals going forward. So we definitely believe that there are opportunities in addition to international distribution to use Clever's great platform, to add new commercial streams on top of the existing business model that we already have well-established today.

[Amanda Taselaar]

Thank you, Eilert. Thank you for all your questions. If we didn't get to your question, please feel free to reach out to the Kahoot! team. I will pass it to you, Eilert for the final word.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, Amanda, and thank you very much, everyone, for listening in. Hopefully, we'll be able to cover the majority of the questions out there. Do not hesitate to connect with us. Very happy to follow up off-line. And thank you very much for attending, and we look forward to reconnect with you in the next presentation.