Kahoot ASA

OSE:KAHOT

Earnings Call Transcript 2021-Q4

[Amanda Taselaar]

Welcome to the Kahoot! earnings webcast for Q4 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 start by giving you an introduction and then we will proceed to discuss Kahoot!'s financial and operational highlights from Q4 and our long-term ambitions. At the end of our presentation, we will take some questions from the chat. So please feel free to share your questions directly in the chat as we move through. Today, we have with us here, 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, Amanda, and good afternoon, morning, everyone, and thank you for joining us on this call. Kahoot! is all about making learning awesome. And that's really our mission and really goes through everything we do every day in the group. We also have this vision to build a leading learning platform in the world. And of course, that's a very important both stepping stone for us being able to make learning awesome, but also fantastic projects to be able to be engaged in. And we are truly an organization driven to make this happen, both for all the millions -- the hundreds of millions of users around the world, but also because it's really a great way for us to attract top talents, great partners, fantastic customers and millions of teachers who share our vision around making learning even more awesome every day. And now with what we have in the group, we really also have the building blocks to make this come to life in an even bigger way in the future. So let me start off by briefly outline our starting point for today's presentation, which is really the learning awesome aspects across at Work, at School, at Home and, of course, Academy and Clever. And it's quite unique that we have this position and a brand that is relevant across these different segments. And also, of course, from a scalability perspective, based on one platform that truly makes it possible for us to do large investments, but at the same time, give that returnable investment back to our shareholders. And that includes the usage of our platform for free. But more importantly, of course, the commercial aspects of our business. And the combination of the strong brand, the reach to all kinds of users across the globe and a platform that is growing virally is really unique. And that's why the ability to combine learning and audience engagement for professional use, for personal use and for school is really the true essence and key values of Kahoot!. The nature of Kahoot!'s offering across both the educational markets and the personal home market as well as corporate segment gives us this good sense of what's also going on and is fundamentally -- or the fundamental demand. And in Q4, we saw a generally healthy and fundamental strong markets. And -- which I think was the same tendency that we saw the rest of the year with increased adoption of our solutions and also digital tools. And also across all the segments, this continue to develop positively throughout 2021. But particularly, in Q4 2021, and especially in the last couple of weeks, we were somewhat influenced by the end of quarter Omicron pandemic shutdown, which really impacted the end of the school year and also the end of the business year for several companies in several regions around the world. And that, of course, impacted the year-on-year and also the quarter-on-quarter growth in some of the user static -- statistics that we have on our platform. But most importantly, the use of digital tools is more important and also more appreciated than ever. And luckily, as Kahoot! comes from this people meeting physically at work or at school or in social settings, the value of the platform is also the strongest as it's used with a live crowd. If we look at the total markets, it's, of course, a fantastic opportunity for us with our total addressable market, which is far beyond what we've been able to tap into so far. We are in this very unique situation where we can combine our efforts both towards personal use, at academia and on the corporate level in 1 platform and several initiatives that are really giving all these different groups positive and added value in any -- sorry, in every cycle. And the key trends that we are really focusing on, and that are, from a long-term perspective, extremely important is, of course, the combination of lifelong learning, which is something all of us or some focusing on, whether it's personal level or on the professional level. The ability to -- for companies to deliver great training digitally, but also asynchronously, in addition to the engagement in groups, the importance of using gamification elements to both trigger curiosity, engagement and the ability to lean in instead of zone out. And finally, the ability for us to use this as a platform for also enabling the sharing economy and creator economy on our platform for all the great creators of content that today doesn't have a good enough marketplace opportunity on the go platform. So again, strengthening and showing the value of the Kahoot! brand, touching to these very different groups, but with the same purpose, which is about making learning awesome and really being able to use Kahoot! to make that happen.The beauty of Kahoot!'s platform is the same self-sustainable dynamic that we have seen, both when it comes to being able to continue to grow as we are leading in engagement, and this is really the best way to both promote the product and also experience the products that we are able to continuously push out and deliver innovative new solutions, as you have seen us during the last couple of days and weeks with several announcements that we're able to also package the feedback from our customers and partners and productify that into new features and more value on the platform. And of course, the ability to continuously improve and expand our commercial offerings, both in addition to the free offerings, but also to reach new segments that weren't necessarily aware of the value of Kahoot! to begin with. And as we are doing this, we are also able to have a scalable financial growth, which means that we can have a solid free cash flow to support future investments and more new initiatives together with our partners. So all these, in sum, is really showing the value of the innovative DNA of the company. The ability we have to continue to drive engagement, the strength of the financial structure and of course, that we are also well known brand-wise across the different segments. And of course, this comes really to life when we look at some of the customers that we were able to engage with in the last quarter, both school districts, universities, larger corporations that are using Kahoot! globally and those who are using it in a local or in smaller settings. And again, this platform where we can package the features for these particular purpose needs and segments, is also why we have the scalability, whether it's for small companies or for larger corporations, as you have seen on this slide. And that is both, of course, the Kahoot! 360 for all kinds of training, for engagement, for compliance training, for customer events or for pure sales, repetitive meetings. And similarly, the Kahoot! EDU which is really giving schools and school districts ability to both share licenses, structure content and using Kahoot! as a platform for consistent learning. And to put it in perspective, the 5 biggest school districts did have over 15 million sessions last year, using Kahoot! across their schools and educational institutions to really put some structure into how they can both build engagement and share knowledge in new ways. And we really see that these engagement deals, whether they come from schools or from businesses, is continuing to grow both, in size, but more importantly for us, also in depth and how they consume the products and services that we are providing. And of course, we grow with our customers, both when it comes to developing new features based on requests, but more importantly, being able to combine the different views of training and learning and engagement and package that back to the customer in ways they probably wouldn't be able to order straight from our initial offering to the companies. So this is why we are very excited about our continuously investment and growth around Kahoot! 360, but also Kahoot! EDU to really address this need for more sophisticated learning and training going forward. So the highlights of Q4, which, of course, is, for us, a very important quarter from a seasonality perspective. We saw a strong growth, both when it comes to invest revenue versus last year. And Q3 as we had Clever fall in the quarter, we had good growth in the commercial development, reaching 1.1 million paying subscribers, which also was a great growth of the year when it comes to subscriptions. We had all-time high adjusted cash flow from operations, which also really shows that we can build and have a financially strong business going forward. We had a great viral adoption of the Kahoot! platform, which is, of course, an important part of our total offering and also where we are building the most of the new features and extensions, both organically and through acquisitions of, for example, Actimo and Motimate. We had solid performance by Clever in the quarter with positive cash contribution, and we continued our high gross margin of over 90% for the group as a whole. And of course, as already outlined, we continue to also expand with new services, new tracks from a commercial perspective, and also more value to existing customers across the different plans and the different segments. We had record high invoice revenue from Kahoot! at Work, almost $50 million for the year of '21, which, of course, is -- it's truly showing the need we have to continue to build this part of the business when it comes to adding more value for our customers going forward. And last but not least, we launched our first initiative around content with Kahoot!+ AccessPass, which is really also showing the way of Academy and the Marketplace initiatives that are launched every quarter this year to really embrace that opportunity in the markets. So all in all, very interesting quarter for us. And also, again, laying the foundation for 2022, where we have some great priorities, we're going to focus and concentrate on when it comes to continue to build out the company. And this is about the 5 business areas, of course. And the initiatives we have that are specific for each of them, we'll get back to later. But what is really important for us is to never rest when it comes to improve our commercial way of providing our services, continue to invest heavily in product and R&D, making sure that what we have tomorrow is better than what we have today across all segments, continue to do the Kahoot!+ at Work, integration with the great teams of Motimate and Actimo to really make sure we have the best offering for Kahoot! at Work customers going forward, have a full development and rollout of the Kahoot! Academy Marketplace with all the services that will be aligned to that. And of course, last but not least, to get with Clever, build joint plans for both the '22, but also the way forward, taking the best of the Clever assets and package that together with Kahoot! services both for K-12 U.S. and for international expansion. So with that, I'm happy to hand over to Ken to look at the financial highlights of Q4.

[Ken Werner Ostreng, Chief Financial Officer]

Thanks, Eilert, and good afternoon, everyone. We saw strong organic user growth on the Kahoot! platform in the fourth quarter with 30.9 million active accounts last 12 months, up 25% year-on-year. The growth in paid subscriptions continued and reached $1.1 million in the fourth quarter, up 64% year-on-year. The organic increase in paid subscriptions from the third quarter was 95,000. Another of our key indicators is invoiced revenue, which reached $39.7 million in the fourth quarter, up 126% year-on-year, including Clever, which contributed $12.8 million in the quarter. Looking at invoice revenue, excluding Clever in the fourth quarter, we came in at $26.9 million, and that's up 53% year-on-year. And for the full year 2021, invoiced revenue grew $61.9 million to $107.2 million, and that's up 137% year-on-year. Total revenue and other operating income for the fourth quarter ever up 193% to $33 million. And for the full year, total revenue and other operating income grew $61.9 million year-on-year to $91.3 million, and that's up 211% year-on-year. Deriving from Kahoot!'s recurring revenue business model, annual recurring revenue increased to $133 million by the end of the fourth quarter, whereof Clever contributed $47 million from its U.S. ecosystem partners. That scalability in the Kahoot! business model is visualized by the positive development on adjusted EBITDA with continued year-on-year increase. For the full year 2021, adjusted EBITDA grew $18.6 million to $19.3 million, representing a 21% adjusted EBITDA margin. And talking about scalability, let's keep in mind that our operational cost base include infrastructure costs for both free and paid users. So the cost for converting free to paid users is marginal. Another aspect is that half of our global team are within product and engineering, continually improving the Kahoot! platform products and user experience and included in our operating cost base. Our CapEx is marginal and not eating our operational cash flow. And in the fourth quarter, we saw continued solid development in adjusted cash flow from operations of $13.4 million, and that's up 92% year-on-year, and $31.3 million for the full year, up, 80% year-on-year. Fourth quarter adjusted cash flow from operations represented 41% of operating revenue for the quarter and 34% for the year. And by the end of the year, we had a cash balance exceeding $107 million. As a reminder, let's keep in mind that 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 12 quarters, we have increased paid subscriptions to 1.1 million, both through strong organic growth and grew acquisitions. We finished the fourth quarter with 490,000 at Work paid subscriptions, 365,000 at School and 255,000 at Home & Study paid subscriptions. And following the commercial launch in 2018, we invoiced clients for $1.7 million in the fourth quarter which has grown quarter-on-quarter to $39.7 million in the fourth quarter of 2021, including the $12.8 million from Clever. Moving on to some operational metrics on the Kahoot! platform. The user growth on the Kahoot! platform continued in 2021, reaching 30.9 million active accounts. That's up 6 million year-on-year. We had 310 million hosted sessions. That's up 60 million year-on-year. And approximately 2 billion participants globally, and that's up 500 million year-on-year. And we had an increase of 172,000 core Kahoot! paid subscription. And that was driven by automated, no-touch sales fueling the 60% invoiced revenue growth we saw on the core Kahoot! subscriptions in 2021. Moving on to the full year 2022 outlook. The Kahoot! Group reiterates the ambition to exceed $190 million in invoiced revenue for 2022 with recognized revenues exceeding $155 million and adjusted cash flow from operations of approximately 35% of recognized revenue. For comparison, we achieved in 2021 a higher pro forma growth rate than what is required to get to the $190 million plus in 2022. And we achieved in 2021 and adjusted cash flow margin of recognized revenue, in line with the guidance for 2022. The Kahoot! Group's annual invoiced revenue cycle is influenced by natural seasonality and market dynamics of key business areas, with the main driver being at the back-to-school season for Kahoot! and for Clever in the second half of the year. We expect invoice revenue split of approx 40-60 between the first half and the second half of the year, and that's in line with previous years. And visualize Clever is paying app providers, are further aligning their annual renewal cycle with the back-to-school season, driven by their selected cycle as with their clients. The vast majority of our revenue derives from annual subscriptions. And as the billing cycle have seasonality variations, that will impact the revenue recognition schedule. For the first quarter 2022, invoiced revenue is expected at $34 million to $35 million, representing approx 80% year-on-year growth with solid cash flow from operations. For the financial year 2022, the company will disclose quarterly financial information in accordance with the published financial calendar. Previously, we had trading updates, and we will now align for quarterly reports only. And by that, I'll hand over to you, Eilert, again.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, Ken. What's interesting when we see our strategic priorities is that Kahoot! is still in, all in all, as a company in an early phase and really a formative one. For us, '21 was a critical year, both when it comes to building the foundation strategically with important acquisitions and building out our organic platform. But also to show financially that we're able to grow and have a solid bottom line as we're doing so, they're showing the scalability of the platform. And with new product services and also new units onboarding, we have really laid the foundation for the years to come when it comes to solid growth and more importantly, better value for all our customers which is, in the end of the day, an absolute requirement in order to have successful growth. And that is, of course, our main focus as well to be able to continue to have long-term sustainable growth. And in order to achieve that, we have 4 main priorities: which is about creating the awesome experiences, both at home, school, work, for every user together with our partner and really continue to invest in this area, which is so important to both stay relevant but also to give all our customers what they really need. Make sure that we can enable the creator economy, which is a fantastic opportunity for Kahoot! as all the content today has been for free by or creators that we have this opportunity to also build a fantastic marketplace opportunity. For teachers, for domain experts for everyone who want to have great content and do any kind of awesome learning. We have the opportunity to continue to show the scalability on every aspect of the Kahoot! operating model, both when it comes to the scalable platform, but also how we organize ourselves. And we will hopefully show that in all the quarters to come as well in the same way. And last but not least, we had the strong organic growth with the gravity around the brand, with a huge volume of users on the platform that are using Kahoot! for all kinds of training and engagement. And also that we see that we have so much undone and untapped potential ahead of us as we are continuing to evolve as a set of services and as a company. So all this -- and these '22 key priorities have, of course, been the foundation for our ambition for the years to come. And on this basis, we've been working to make sure that we have an achievable target for 2025, which is about reaching $500 million in invoiced revenue based on, of course, also or combined with, of course, also continuous improvement on the cash conversion. We really believe that we can imply another 40% annual growth going forward and continue to improve the cash conversion up to approximately 40% of invoice revenue by 2025. And of course, this is building on both the solid foundation from a financial perspective that we have seen as we have shown the scalability but more importantly, on the building blocks, which is about giving great products and services to all the core segments. And in our 2025 scenario, it's about 1/3 of our business in the Kahoot! at Work segment, another 1/3 in School, including the Clever units and 1/3 from Home Study, including Academy and Marketplace. So this also shows very well how important all these 3 main tracks are in order to achieve our opportunities going forward. And again, the value of the scalability as we are investing in 1 platform but are able to reuse these services and package these services for each of the segments going forward. And this plan, of course, is based on organic development and does not rely on any material acquisition in the period in order to reach those numbers. Of course, smaller bolt-on acquisitions might be a part of this. We will not exclude that opportunity. But all in all, this will be about really building out the platform and all the great assets we already have in Kahoot! Group today. And last but not least, as also previously communicated, the company is exploring the opportunity for a secondary listing. And after concluding the initial assessment, we will have decided that we will continue to explore preparations for that potential secondary listing in the U.S. And of course, the company will update the markets in line with applicable regulatory requirements. All right. To wrap this off, just like to reiterate our main growth initiatives for '22. And these are, of course, again, based on the 5 pillars, which is Work, School, Home, Academy and Clever. And when it comes to Kahoot! at Work, we will continue to both build out better professional offerings for learning, but also the enterprise dimension and the branded experience has 2 main drivers for what you will see from us being launched in the coming months and quarters. And we really look forward to show the depth of this offering on our Investor Day. We have Kahoot! at School, where the EDU offering, giving admins and school owners a fantastic opportunity to really roll out and admin the Kahoot! licenses and assets in addition to, of course, creating the engagement in the classroom. And that is, of course, in the end of the day, what really matters for the 9 million teachers using Kahoot! to create a great learning environment. Continue to invest in Kahoot! at Home with today's announcement of the Multiplication app with all the great assets we have launched in the last couple of quarters, both for kids and study and, of course, adding new languages as well, making sure that we reach out to new groups of users across the globe. And last but not least, the Academy part, which is about building the marketplace, both for professional use and for personal use, but also giving the whole ecosystem of partners and creators an opportunity to have a marketplace with their great assets and IP towards our hundreds of millions of users on the Kahoot! platform in the quarters to come. And these, combined with Clever, which has this fantastic position in the U.S. as a leading learning platform for U.S. K-12, where we continue to improve the core Clever platform together with the Clever team, but also together build out the value proposition outside of U.S., both when it comes to schools and teachers, but also initiatives around Marketplace and App Store, where we have some great opportunities, both from a partner perspective, from a teacher perspective and, of course, more importantly, from a platform perspective going forward. So with that, I think we can wrap up on my final slide before we go to Q&A. And this is really summing up the highlights of the Kahoot! Group. We're the global recognized brand that is truly strong and established across segment -- all the sectors and segments that are relevant for us, which is, of course, a huge asset for us to continue to build on. The scalability of the cloud platform, which we have shown both from a business perspective, but also from a user scalability perspective. The fantastic experience organization we have, both in the organic -- sorry, in the core Kahoot! team in addition to the acquired units, with a great track record from the industry. The proven path to profitability and strong growth financially, including positive cash flow from operations. And of course, for me personally, most importantly, that we're able to continuously improve all services for all segments and user groups, both free and pay every quarter in order to make sure that we stay relevant and more importantly, are relevant for our users. And last but not least, the solid funding, which means that we can continue to invest in partnerships and also nonorganic growth opportunities down the road. So very happy to be able to host a virtual Investor Day in May. We look forward to provide more information about that. I really hope that you have the opportunity to join us then. And see how all these different initiatives comes to life and really makes a difference for all our customer groups going forward.

[Amanda Taselaar]

Thank you, Ken and Eilert. We will now move to the Q&A section where we will answer questions from the chat. Thank you all for your questions, and please feel free to continue to submit them for Ken and Eilert to answer. So our first question is for you, Eilert, and it's from Katherine Tait from Goldman Sachs. What are the building blocks behind your 2025 targets? And what is giving you the confidence to get there? And part two, can you outline how you anticipate the revenue trajectory for Clever to trend over the next few years?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Okay. So let's start with the last first. We expect Clever to continue to grow in the range of the 25% plus growth rate, as they have historically also been able to do. And we believe that the opportunity we have together with Clever, not only to continue to grow the core Clever business, but also look into new business opportunities that can accelerate that growth such as Marketplace and in international development of the platform is, of course, also strengthening that view. When it comes to the group ambition for 2025, and as outlined, we envision that it will be probably 1/3 of the business coming from each of the main areas of operations today, meaning 1/3 from Work and similar from School, including Clever and Home, including Marketplace. Of course, then the Marketplace will be important for us to be both be able to engage the volume of users, the content on the platform and building that out not only for home use, but also for school and work. It will be important for us to show the investments that we have done in critical work, then they -- that will continue to grow both organically and virally but also through partnerships and opportunities for us to scale into new and larger corporations. It's important to remember that Kahoot! hasn't been selling corporate or solutions for larger corporations or for larger schools, districts for more than 18 months. So we have a lot of untapped potential and opportunities to refine and scale and increase the offerings we already have in the market. And last but not least, of course, building out the Kahoot! at School, both when it comes to the licenses for teachers individually, the EDU platform for schools and school admins, together with the Clever integrations and the opportunities that arise from the 9 million teachers on the platform. We have also a long list of opportunities ahead of us that we haven't really been able to maximize so far. So all in all, we feel very confident that for all these 3 main tracks. The biggest hurdle and the most important journey, which I think everyone that has been through such a journey will agree upon is to go from the foundation and the initiative of building out our franchise and really showing that there is a financial and scalability dimension to it. And that journey, I think we have well established across home, work and school in Kahoot!.

[Amanda Taselaar]

Thank you, Eilert. We have lots of exciting plans coming up. This next question is for you as well, and it's from Elton Lodgaard from ABG Sundal Collier. Are you also actively looking for more M&A? And are there any areas that you think lack some key features or functionality? And could benefit from an acquisition?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. I mean I still wake up at nights thinking of all the features we should have launched long time ago. That's an internal nightmare or lack of great features for so many segments of our customers. But it also is, of course, inspirational. And I think when we look at other companies, and we have great dialogue both with what you would consider as competitors or peers, or others that are also engaging in the same ecosystem. In addition to, of course, our integrations and partnerships with larger corporations like Microsoft, Google, Apple and the likes, I think we are in a combination of very intrigued and inspired by great work done elsewhere. And we also, with this setup, where we have now over 200 FTEs working on product development, we also see that we can actually turn around and in very short time, add consistency of features and value propositions that enables us to also increase sales and engagement on the current platform. So the scalability of the platform and the scalability of or, if you will, investment in 1 area to reuse for other areas is, I would say, bar none at this point. So yes, there are still great tools, great teams, great customer base and great technologies that we really want to see on our platform. And I think we will be able to do so. But I also do believe that 9 out of 10 opportunities, short term, are about scaling and extending the platform we already have.

[Amanda Taselaar]

Great. Thank you, Eilert. This next question is from Lars Devold from Kepler Cheuvreux. Eilert, can you give some color on the development of the Kahoot! Marketplace so far? What kind of revenues can we expect in 2022 from the monetization of this particular platform?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. So thank you, Lars. That's a great question. And it's really about what we look forward to share with you on the Investor Day in May. It is, as mentioned, and you can -- everyone can see that by logging in, a fantastic engagement from the verified content creators that we have on the platform that are making thousands of Kahoot!s and courses already for free. And with the dialogue and with the prework we've done with the most active and the most, I would say, resourceful, will have some great collections that really will pave the way and also show the scalability of the platform in the near future. So we really look forward to show more of this in May and also, of course, announce progress in the meantime. So let's revert to that when we meet up in May.

[Amanda Taselaar]

Awesome. Thank you. So Eilert, this next one is from Hakon Fuglu from SEB. It's a two-part question about our corporate clients as well as Clever. Previously, you talked about large corporate clients putting sign-on, on hold due to the lockdowns. Are you seeing activity picking up in Q1 for corporates and Kahoot! 360? And then the second part is, can you give some guidance on revenues for Clever in H1? And also, will you launch Clever before kids or -- kids and students return to school after the summer?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. So first question first. We did definitely see increased uncertainty among bigger customers when the pandemic hit back in spring of 2020. And what happened, and again, maybe the luck or at least the flexibility of our business model where we have this opportunity to sell individual license for businesses, team licenses and also organization or corporate-wide licenses, we were able to compensate some of the shortcomings in the larger corporations with more of smaller license sales, which was great for us. To your point, we see now and especially after Omicron has been cleared out, I would say, that larger corporations are coming back with larger tickets, larger deal sizes, and also with, I would say, more appetite on how to use Kahoot! structurally across the organizations for both corporate development for, of course, the traditional engagement and events and meeting use, and also requesting more sophisticated features. And luckily, we've been spending the last couple of quarters to build this out. So we think that we can answer to that, both from a security compliance perspective, from a feature perspective and from a user value perspective. So also something we will touch more on the Investor Day, obviously. But in short, there is a more positive sentiment among larger corporations that we have seen at the start of this year, which is very encouraging for us. And also we have a better product than ever before. which also gives that engagement, a better opportunity for us to convert into business. When it comes to guidance on revenue for Clever, I think you refer to what Ken said earlier with approximately 1/3 of the revenue for this year in the first half and 2/3 in the second half. Not 100% sure when it comes to the question of launch Clever before kids, students return to school as Clever is a platform which is used every day around the world and, of course, are used also as we speak in, as we can see here, over 90,000 schools in the U.S., actually, 1.4 million active teachers on the platform every month, and over 20 million students. So every back-to-school, we have a lot of new schools added to the Clever platform in addition to teachers and students and of course, also new apps. And hopefully, also this year, great new features that makes it more valuable, both for the school owner and for the teacher and student and parents as well.

[Amanda Taselaar]

Thank you, Eilert. And this is a similar question to the last one. It's from Henriette Trondsen from Arctic Securities. So this is related to the 2022 guidance. Can you quantify how much of this is expected to be from Clever versus the core Kahoot! platform? And which segments, School, Work, Home, are you mostly excited about in the first half of 2022 in relation to the expected revenue?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. I mean this is probably a question for you, Ken. But I maybe can start out and then Ken you can add in. So first of all, I think we are very excited about what we do on Kahoot! at Work in the first half this year, both because of the products that we have. And also, as we just talked about, the engagement and feedback from larger corporations, sometimes lead time is not the same as when you do the day-to-day sales. So we still believe that the single license and smaller license deals will be very important for us, both in School, Home and Work. But we do believe that this first half, the combination of a better Kahoot!+ offering for families. For the first time, they have Kids and Study for younger users as well. And we have the upcoming Marketplace, which will be positive for all user groups. And we have also the launches of new features that are in the heart of what corporations are asking for, such as better branding and teaming experiences. We hope really to show some great, let's say, use case value around this when we meet for the virtual Investor Day. And then, Ken, I hand over to you when it comes to the questions on the revenue side.

[Ken Werner Ostreng, Chief Financial Officer]

Yes. So in terms of the organic growth, I guess that was the unanswered question here. So basically, as you alluded to, we have 46, 47 pro forma growth in 2021 over '22. And obviously, what we're factoring in is to kind of continue the current organic and pro forma growth as we have demonstrated over 2021. There will be various kind of initiatives fueling that growth, of course. But the -- there is no big intention for us to kind of aggressively ramp up our marketing spending to kind of achieve our billings targets for this year. I'm not sure if that answered the question here, but yes.

[Amanda Taselaar]

Thank you, Eilert. Thank you, Ken. Ken, we're going to stick with you for this next question from the chat. One question on EBITDA margin. On the EBITDA margin with Clever now consolidated for a whole quarter, adjusted EBITDA margin contracted from 25% in Q3 to 17% in Q4. Was this Clever's impact or something else, do you think?

[Ken Werner Ostreng, Chief Financial Officer]

It is correct. We had a lower margin in Q4 compared to what we had in the previous quarter. And it's correct that we've consolidated Clever for the first full quarter in Q4. And as we have previously communicated is that, Clever are, of course, having a strong billing development. But obviously, they're not able to recognize the revenue in the same pace as their billings, which implicates that their EBITDA margin contribution in Q4 was lower than the Kahoot! Group in general.

[Amanda Taselaar]

Okay. Great. Thank you, Ken. Eilert, we're going to move back over to you. This next question is from Frank Maaø from DNB. He messaged in the chat that according to his calculations, organic ARR growth has averaged in the 20s over the last 3 quarters, while pro forma billings implied by our Q1 guidance, is CA 23% year-over-year. Still, our annual 2022 invoiced revenue guidance suggested CA 40% being; billed in the first half imply that pro forma billings need to grow to 46% in Q2 and stay around 40% for the rest of the year. So the question is, exactly what will drive the billings growth acceleration in Q2?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. I mean, on a high level, I think it's back to what we have discussed earlier, that we have a seasonality between first half and second half with approximately the 40-60 split, both due to as we have 12 months contracts that are renewed and also that, of course, Clever is heavily leaning towards the second half in their billing cycle. So all in all, and this is a pattern we have seen not exactly on the same percentage every half year, of course, for the last couple of years. But on average for '19, '20 and '21, it's fairly 40-60, if you adjust for acquisitions. So we definitely see the same seasonality pattern this year, and we believe that when the renewal of 12-month contracts is something that, of course, no changes overnight for our users. So we are very confident that the same seasonality pattern will be present this year as well.

[Amanda Taselaar]

Thank you, Eilert. Another question from the chat for you. APAC still contributes relatively little to revenues, have you recently launched new Asian languages? And what other initiatives are you doing to boost growth in the APAC region?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. Thank you for that. So yes, we just launched 2 weeks ago, both simplified and traditional Chinese. And yesterday, we have launched Arabic, which is also relevant for both EMEA and APAC. And as always, and we saw that with Spanish that we launched 18 months ago and with German and with Japanese. But it takes, of course, some time when you launch the language until that impacts both usage and more importantly, also the opportunity for more revenue. But what's, of course, very good for us to see that instantly after launching, for example, simplified and traditional Chinese, we see strong growth in usage using that translation of the Chinese population across the different markets. Of course, not so much from Mainland China for obvious reasons, but both from Hong Kong, Taiwan, Singapore, U.S. and other areas where you have a large group of Chinese-speaking users who really enjoy having a native experience on the platform. And as we are continuing to invest both in the app, in add-ons, like today's Multiplication app, which you should really test out, I think we have a great image of that here as well. That you can instantly test in 11 different languages as you install it on your mobile phone. If you're either Japanese or Polish or also in, of course, Nordic languages. So combining new products and services with translation is something we really see the difference and impacting positively. And of course, that's something we will continue to build out. So that as a foundation opens up some other opportunities for us in APAC as well.

[Amanda Taselaar]

These are very exciting launches. Thank you, Eilert. To continue, when do you expect to complete the work on integrating Motimate and Actimo into one unified platform for Kahoot! at Work?

[Eilert Giertsen Hanoa, Chief Executive Officer]

We expect the majority of that work to happen this year, and we really look forward to also show existing customers, whether they come from Motimate or Kahoot! or Actimo or use a combination of our services, the value of these initiatives, and again, it will be a topic, of course, on our virtual Investor Day.

[Amanda Taselaar]

Thank you. Ken, the next question will be for you, and it's from Henriette Trondsen from Arctic Securities. And this is, when will you continue to report trading updates in 2022?

[Ken Werner Ostreng, Chief Financial Officer]

So we will disclose financial information based on the financial calendar and announced through the stock exchange. So previously and historically, we've had trading updates, but now we're aiming to consolidate into one quarterly reporting going forward each quarter.

[Amanda Taselaar]

Great. Thank you for that information, Ken. Eilert, jumping back to you. This question is from Kristoffer Pedersen from Nordea. Does your sales target for 2022 include any meaningful revenue from the Academy Marketplace?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. So I mean, it will be the first part of launch. We wouldn't say that it's material for our forecasting for this year, so it will be on the upside of things. And that's, of course, very exciting for us. And we will continue to build out the marketplace, but not depending on that. We're still a software company from both the dynamics and ambitions you have seen for us in '22. And then we will, throughout '22 and beyond, establish Marketplace and also show the value of that financially, but of course, for our customers as well.

[Amanda Taselaar]

Thank you so much, Eilert. So we appreciate everyone's questions and we have time for just one last question for you, Eilert. Can you please elaborate on your plans to secondary list the company in the U.S.?

[Eilert Giertsen Hanoa, Chief Executive Officer]

Yes. So we do not have so much more information than the paragraph we have included in our presentations today. So we will need to revert to the market with additional information regarding that. But most important is that we will continue the effort as outlined and beat that slowly moving forward.

[Amanda Taselaar]

Great. Thank you, Eilert. Well, we appreciate all of the questions that have been asked in the chat, and we appreciate everyone's time today. Eilert, I'm going to pass it off to you just to close us out one final time.

[Eilert Giertsen Hanoa, Chief Executive Officer]

Thank you, Amanda. Okay. Thank you very much, everyone, for spending this hour with us. If there are any additional follow-up comments or questions, we are very happy to engage both directly, of course, and also through our analysts, which I'm sure will be also engaging going forward. So please do not hesitate to connect. And also, we really look forward to see you all again at our virtual Investor Day and also, of course, on the coming quarterly presentations. So with that, have a great day, everyone, and we will see you soon.