Bimobject AB

STO:BIM

Earnings Call Transcript 2020-Q1

[Carl Silbersky, Chief Executive Officer]

Good afternoon and welcome to this Q1 2020 financial report.I'm Carl Silbersky, CEO of BIMobject. And with me today, I have Alexander Dahlquist, CFO. We will take you through this audiocast and through the numbers of our Q1. Operator, please, next slide.I want to kick off this audiocast with a great quote. BIM is to the construction like HTML is to the Internet. And with this picture, as you can see, you see the new Santiago Bernabéu stadium, which is the home arena to Real Madrid. This is done by the renowned architecture firm called L35. They came, and this is a BIM LIVE here in Malmö in March, early March, and presented to us how important BIM was -- in doing, in carrying out this project is. For us, this is really a landmark. And of course, it also establishes how important BIM is, but just want to remind us of the BIMobject industry and what we operate in. It's a massive industry we operate in. It's an $11 trillion size market. And there is a massive need of digitalization in this industry. Approximately 1% average productivity growth per annum is done in the construction industry. So here is a massive uplift needed and BIM plays a vital part in that.Thirdly, I want to point and remind us all about that government is across the world now prioritizing BIM and making it mandatory. To date, 26 countries have implemented or plan to implement mandatory BIM for all constructions carried out by governments. Now where is BIMobject in all of this? Let's look at our platform. Operator, please, next slide.So looking at our platform, which is the core of BIMobject, we have, to date, 1.9 million registered users. The cumulative number of users increased by 32% approximately from 1.5 million and now we are counting down towards 2 million registered users on our platform. We have seen a significant growth in the number of brands on the platform. Today, it's 1,824 brands. The cumulative number of downloads amounted to 54.2 million, with a record amount of downloads in March, and I want to come back to that a little bit later in the call. And lastly, I want to point that we have more than 500,000 objects on the platform today.A couple of more updates on the platform that happened in Q1. Our R&D focus on value creation is already producing results in the quarter. We announced several major product news here, if you've been in tune with BIMobject: a smart search engine on bimobject.com. This one opens up an avenue for new revenue streams. And I want to talk more about that later on in the year. We're probably going to come back to that. Secondly, BIMobject Insights, the next-generation analytics platform for our customers, extremely exciting, and we will talk more about that also further on. There is multi changes to make it easier and faster to publish new product catalogs on our platform, and there is more to come. This was just some of the things we've done in Q1. Operator, please go to next slide.Key highlights in the Q1. BIMobject has an international footprint. Since early March, COVID-19 hit virtually all of our main markets harder. Closing offices and delaying decisions making our -- at our customers made it hard for us to predict going forward here. But the key strength in our business model has always been that we are -- it's always been the annual recurring revenue. And we continue to drive growth in the quarter. And total growth was approximately 10%. So despite this difficult market, we can see that our customers are accelerating the digitalization.As exhibitions around the world are canceled, building product manufacturers turn to us, and they see us as the largest exhibition in the world, with over 2 million professional architects and engineers on our platform. Our exhibition compared to others is open 24/7, and the return on investment from being on BIMobject beats any physical exhibition or advertisement for that matter by a factor 3 to 10x, extremely efficient. Our Platform business, previously reported as Web Services, it's using a new terminology here continue to grow the -- and grow. Then the important ARR here grew by 22%. And churn remained low.We've been working hard to strengthen the control of our customer base and working capital. Our total cost in Q1 compared to Q4 declined by 11%. And I think Alexander wants to comment and do more on this next section. In the beginning of April, we also announced a cost-saving programs of SEK 50 million in annualized costs savings, and this should be seen in the light of the commercial transformation we're doing. We're implementing a whole new digital-first marketing and sales model. We are automating administrative tasks. We are simplifying our pricing model, and we're rolling out a customer success program. This, in the combination of reducing head count at central administration and regional subsidiaries as well as external spend, makes us cost efficient and growth effective.So it's been an extremely interesting Q1. For more on the financials, I want to hand over to you, Alexander.

[Alexander Dahlquist, Chief Financial Officer]

Operator, next slide, please. Good afternoon, everybody.Before I proceed, for those of you who downloaded the report this morning, I hope you can see that it's a bit of a different flavor from previously. We're trying to make it easier for you as a reader to understand our business offering and what it is we are looking at from our point of view. As such, invoicing -- the focus on invoicing has been reduced. We still have it as a key ratio. We believe it to be important. But moving forward, we will focus more on net sales growth and net sales development and comparisons towards net sales.Regarding invoicing, we did see a decline in Q1 by 3% versus Q1 last year. However, as Carl mentioned already, our Platform growth was 22%, which was exactly what we've been trying to achieve the last couple of quarters to become more and more of a platform company and not so dependent on the Services aspect of our business. This is visible, if you look at the graph, with our net sales, the top left graph here. We see the rolling 12 months development of our net sales. It did take a slowdown in Q4, but again, we gained momentum in Q1, which is positive. If we look at the development by segment or in the different countries, we can see that North America in the quarter grew by 2%, the Nordics by 1%, whilst EMEA grew by 21%, which is a strong development where we have had markets before which have had difficulties. I want to especially point out France in Q1, which had a very strong development.If we look at the mix or the categories then between Platform and Services. We are now at 66% of net sales which is Platform sales, which is exactly comparable to Q1 last year. Services was at 34% then, and this is attributed to, with COVID-19 hitting, a lot of our customers which had projects ongoing available to answer a lot more questions and give us the information that we needed to close projects, which is -- of course, was very good because we had a backlog there.Also, in the bottom right, we see the development of our recurring revenue, which is a stable growth. And of course, we hope that will further continue moving forward. Operator, please, next slide.Cost has been a focus area for us. And obviously, with the program we have launched, it will continue to be so. We are very happy to see the decline towards Q4, especially on our personnel costs. We did start some actions Q3 last year. We were a total of 218 employees then. We now, after Q1, are down to 200, and that figure will, of course, continue to go down in the coming quarters. Our other expenses remained flat both, I would say, against Q4. They're down versus Q1 last year. So actions here on finding things is beginning to show fruit and will further do so in the coming periods. But as total, as Carl has already mentioned, total cost was down 11% versus Q4. Operator, next slide, please.Just then to reinforce, looking at the -- more of a P&L aspect of it. Several large projects were finalized, driving up net sales in the period. We had strong Platform sales in Q4. We invoice most of our customers on a yearly basis, and then that is spread out throughout the following year's net sales. And with that being high in Q4 will, of course, have a good impact this year. And especially important is that we've had very low churn in Q1 despite COVID-19, which is promising. And costs, already mentioned, is at the same level as Q1 last year, but that now will gradually come down in the coming quarters of this year. Operator, please, next slide.I think this one -- this slide is one of the one more important for us. The cash burn -- or the cash flow from operations this quarter, we were down to roughly SEK 14 million or SEK 13.6 million to be exact. And this is very promising. We've made immense improvements on working capital. We've focused for a few quarters now on debt collection, worked a lot with our payment terms and see that this is going to help us moving forward in the coming periods as well. It's a huge difference towards Q4 and Q3 last year, and it's also SEK 11 million better than Q1 last year. For the coming periods, maybe this is a very low level, but we do not expect it to be a lot higher than this moving forward as we see the savings from the program kick in, and also we will continue our focus on the collections side.That was very short and quick, but that was the figures. So Carl, I'll leave it back to you. Operator, next slide, please.

[Carl Silbersky, Chief Executive Officer]

Thanks.BIM is growing, and we are leading it. I think it's safe to say that BIMobject has established itself as the default platform for architects and engineers across the world. Looking at the picture here, in amongst the top 100 architect firms in the world, all of them use BIMobject's platform for reading up on products, downloading objects to be used in construction. That's an extremely important sign, and it also creates stickiness and that establish us to further growth. But looking at the amount of downloads, we see a clear trend in this. Operator, if you please go to the next slide. As visualized in this graph, we see extremely strong growth in downloads. In the first quarter, we hit the all-time high in numbers here with 1.75 million downloads. That represents a year-over-year growth of 39%. And the looks -- and by the looks of it, the growth continues onwards.So to end this audiocast, let's look at the growth levers we're pulling to secure efficient growth going forward. Operator, please, next slide.Worth saying again we are continuing to pull levers here on our plan for a more efficient BIMobject. With the COVID-19, the execution has, of course, accelerated, but what we're doing here is you can build into perhaps 2 areas and main areas. One is being the most attractive platform; and secondly, strong execution.Let me take you through the attractive platform side. As I mentioned earlier, we have released some great updates on our platform, and there is more to come here. From this, we are already seeing a lot of effects. We're seeing the download increasing, we are seeing user registration increasing, and we are seeing more brands make it easier to come onto our platform. And that's just the beginning. When it comes to second -- and secondly, lower the threshold to join the platform for new manufacturers. We will make it easier and simplify the process here to get onto the BIMobject platform. And a lot of things has already started and some things has already been released. And this, we'll expect, is to have a positive impact on the number of brands on our platform. Thirdly, as communicated, we're set to launch a new pricing model. We talked about this earlier in the last call and with something of we're moving towards a value-based pricing model. Please note that last time BIMobject made any adjustment to the pricing model was over 3 years ago. And today, the platform is probably 6x larger with more registered professional users than it was 3 years ago. So we look forward to this one. And it's going to be very exciting moving our customers onto the value-based pricing model, also expect to have positive impact.On the other side, when it comes to strong execution, we're pulling the lever here on cost control and accountability, as we talked about in this call. We've launched a cost-saving programs of SEK 50 million on annualized costs. And we are following through here and keeping up -- and keeping people accountable across the company. On the -- another note, when it comes to increased sales effectiveness, we put a lot of activity in motion here on the sales and marketing side, digital lead generation and brand building as well as trimming the nonperforming sales components. This is done in order to increase efficiency. Focus here is increasing the customer base with new ARR. Very important to say that we are very focused on the new ARR bit as we see that drive the value of the company and for our shareholders. And finally, increased share of wallet driving account expansions. Several things is ongoing here, but the major thing I can point towards is the new customer success team that is driving this. And I think that we will come back and talk more about that later on in the next coming quarters.That is it, folks. I have nothing more to say. So now over to the operator...

[Alexander Dahlquist, Chief Financial Officer]

Next slide.

[Carl Silbersky, Chief Executive Officer]

For the next slide and Q&A.

[Operator]

[Operator Instructions] And there seems to be no audio questions. So I will hand our word back to our speakers. Please go ahead.

[Alexander Dahlquist, Chief Financial Officer]

We don't have anything else here. So thank you from our side, I guess, today.

[Carl Silbersky, Chief Executive Officer]

All right. The interaction is not fantastic here in this, but we hopefully need to improve that going forward so we can receive and accept a lot of questions and chatting with our shareholders.

[Alexander Dahlquist, Chief Financial Officer]

Of course.

[Carl Silbersky, Chief Executive Officer]

All right. That's it from our side. Thank you.