Bimobject AB

STO:BIM

Earnings Call Transcript 2023-Q1

[Lisa Norlander, executive]

[Audio Gap] Q1 financial results and developments. And after this presentation, we will end the session with a Q&A session to answer any questions. So you can already now send your questions to our e-mail address at [e-mail], and we will try to answer as many of these questions as we can at the end of this call.

So and if we do not have time to answer all the questions, we can get back to you afterwards as well. So questions, send them to [e-mail].

So now it's time to present today's speakers. I'm joined here today by our CEO, Martin Lindh; and our Chairman of the Board for BIMobject, Peter Bang. Welcome, guys.

[Peter Bang, executive]

Thank you, Lisa. First of all, I'm very pleased that we, yesterday, late afternoon, issued a press release that the Board of Directors of BIMobject has appointed Martin as a permanent CEO. Martin has been interim CEO for the last half year, and he has done an excellent job in this period, which we are very thankful about and pleased about in the Board. Martin has deep insight or has gained a deep insight in our industry, and he has taken the organization through a strategic process, preparing BIMobject for our next phase towards a profitable future. The Board of Directors, we are very confident with Martin and his leadership team. And by this appointment of Martin as permanent CEO, we believe we are well suited in BIMobject for the future. So we are happy that Martin being with me here today has taken the challenge. And on behalf of the Board, I would very much like to welcome Martin into his new role, and I'm also personally looking very much forward to work even closer with Martin in this. So congratulations, Martin, and welcome in the new role.

And then I will hand over to you in presenting the Q1 results.

[Martin Lindh, executive]

Thank you, Peter, for the very supportive words. It's great to hear. It's been an interesting and largely fulfilling period to have been working as the interim CEO for the last 6 months. I mean it's been -- it was an intense start in crafting and communicating the strategy. But what I've seen thereafter, and I believe also in Board it is a very strong internal commitment to work and fulfill the strategy, which has been awesome to see. And to have, I think, a management team like that, that keeps such focus makes me quite comfortable in taking this role going forward as well.

And to me, BIMobject is a really exciting company. And we have a super interesting position in the market. I, therefore, believe it is much more up to us and what we can do rather than the market and that will affect the long-term outcome of this company. But enough with that, and let's start with the quarterly presentation instead.

First off, we have the highlights of the quarter. And from a financial standpoint, our first quarter this year was another step in the right direction. We're not fully there yet where we have everything working as we want, but we are certainly improving. Our ARR continued to grow, reaching SEK 124 million at the end of the quarter. The same for net sales, which reached close to SEK 37 million, which could be compared to SEK 32 million in the same quarter last year.

Our EBITDA result continued to improve by 28% versus the same quarter last year, and we also had a very good growth in terms of the number of our downloading users. In terms of cash flow, we have had a quite good improvement, and we're cash positive during the quarter with plus close to SEK 4 million. And this due to an initiative we launched in the quarter that has improved the dunning process quite a bit.

When it comes to the business-related events, we've not had that many press releases sent out during this quarter, which there are some internal reasons for. But it's well worth noting that we have brought on Tom Dixon on the platform. And Tom Dixon is a U.K. interior design brand that has been one of the most searched for brands that we haven't had on the platform so far. And therefore, it is, of course, extra fun to get them on board on the platform. And from an internal perspective, we've had much internal focus on executing on the strategy. And that I will talk more about later.

And we have also cautiously noted and previously also communicated about the sustained demand in the market despite all the external events circulating around us. But we see that it has more and more impact on our metrics resulted from -- resulting in longer selling processes and tighter budgets on our customers that we need to plan for and handle in different ways. But first, let's talk more about BIMobject and what makes us a relevant company to connect and digitalize the different actors in the building industry independent of what roads that lies ahead of us.

First of all, we are a platform company that has more than 3 million accumulated registered users, of which more than 400,000 are being active on a monthly basis. We reached relevant players in the market and have a global reach. We also connect through 3 different platforms, 2 which are focused on BIMobject and one that is focused on sustainability. On our size, we have more than 120,000 product pages and over 2,000 building product brands.

Now why is this relevant? And what do we do with it? I mean first of all, BIMobject, what we do is that we connect different stakeholders in the building industry through our platforms. We help architects, engineers and constructors find digital representations of the products that they like and also that they want to build with. They want to have easy and reliable access to accurate product information.

Building product manufacturers, they understand that they also need to be part of the digital world where decisions and specifications are made on based on products that are not only what is physically available, but to a larger and larger extent, what is available in the digital space. The same goes for the distributors who are selling their own white label or private label products. They don't want -- they miss out on being relevant if they're not where digital decisions are made. So how does it work?

Well, BIM has reached a late majority in terms of adoption in the Western world, meaning that the sign models are created with the help of BIMobject. We also see an increasing trend that architects and specifiers are incorporating specific manufacturer-based objects into their models to improve the likelihood of those digital products will also be the physical ones that end up in constructions once they are completed.

So what then does the building product manufacturers miss out on, if they're not part of the digital world of BIM?

Well, they miss out on having access to one of the most important, specifying marketing channels there is. Of course, they need to have the products available where the choices are made. They should also make sure that they have direct connection with the AECs and the specifiers. And they would also miss out on the opportunity to be supportive and help the AEC community through our marketing services.

Secondly, they would miss out on a quite good market intelligence platform. Especially in times of uncertainties, it is quite important to understand how changes in demand shifts between markets and between brands, which we can provide based on daily data updates.

Finally, and perhaps most important, BIM is an enabler of building a more competitive strength versus competitors in the market. By communicating directly to users through our platform, they can lift up the relevant arguments that are not easily communicated by resellers and distributors, meaning they can compete on different factors than just price. They can also make sure that they have an optimal product portfolio that covers the most relevant markets with accurate product information.

It is also an enabler of going into more complex areas like developing configurators for more complex products or engaging in advanced production and delivery methods like prefab. But let's get back to our strategy, where we are and what we are focusing on as a company going forward. Our strategy has several components, but it's designed to move us forward to be the world-leading provider of building product information, which is preferred by architects, engineers, constructors and property owners. This we aim to achieve while at the same time moving towards profitable growth, meaning we want to be continuously a growing company but with a profitable operational results.

The strategy contains of 3 main pillars, which -- and was launched in the last quarter of last year. In the first pillar, we have repositioning, which includes both communication as well as operational initiatives. And this initiative, we are moving forward quite well, except for some unexpected staffing challenges within the marketing organization that we're currently working on.

When it comes to the cost program, we implemented that quite swiftly and had also had some time to prepare and take out some costs even before the product was even launched. We are having quite good traction and have clarified roles and responsibilities in the organization, which has improved focus and execution internally as well.

In the second pillar, create growth. We are well underway of implementing our Prodikt program that will improve the local agility of our sales team. We do see some remaining challenges in how we operate in our customer success team and our content team, but we will launch separate initiatives to address those areas. Simultaneously, we are also moving forward in establishing more and more partnerships, and we see better and better traction from the Prodikt platform.

In the third pillar, new initiatives, we started off by doing quite some research and to evaluate different approaches, to start monetizing on our users, which now have been concluded, and we will, as of June, have a dedicated development team focusing on these initiatives.

The last initiative, we are working quite hard at rebuilding our platform to enable us to connect more and more with other types of software platforms in the market.

And now let's talk more about the financial development in the company. As mentioned in the beginning of the call, the first quarter was another positive quarter for BIMobject. We continue to grow our ARR also our net sales as well as having control on our cost base. The sales as well as the costs have been affected by a weak SEK currency but we still see that we are on track in regard to our strategic direction.

When looking at the income statement, we see that -- I mean, the net sales has increased by 15% since the same quarter last year and also the EBITDA has improved by 28%. This is, of course, a very good step in the right direction, but also a bit positively affected by changes in currency rates. Also, what is affecting us in this quarter is that we have renegotiated terms with our joint venture partners in Japan and in Thailand which negatively affects the sales in this quarter, but we are still moving forward with growth, which I'm quite happy about. Also worth noting is that Prodikt, our sustainability platform and its company, Carbonzero AB, was acquired and first incorporated into the financials of March 2022.

Looking at the balance sheet. I think the most important improvement we've had here is on the cash and cash equivalents where we ended quarter at a positive cash flow of close to SEK 4 million. And we mentioned earlier that this was due to the dunning process, and this is quite good to see. We had that as a bit of a concern part of last year, where we saw that we were going in the wrong direction, but that we now have managed to take care of in a very, very good and efficient way.

Yes. And let's move to the concluding remarks. So for me, the first quarter could be concluded as it was another positive quarter, which we're quite happy about. We see that the strategic implementation is progressing and moving in the right direction, but a bit cautious about the future indicators, which we see are starting to affect our operations that we, of course, need to plan and create some mitigating actions for.

And by that, I would like to thank you for listening in, and we are ready, I guess, to open up for questions.

[Lisa Norlander, executive]

Okay. So we had a few questions coming into our e-mail address. So we will see if we can go through them all now. And if there's any question that we don't answer now on the call, we can circle back to you afterwards as well via e-mail.

So starting off, Martin, we had a question here on the external costs that are SEK 5 million higher compared to Q1 of last year. So what are these costs related to?

[Martin Lindh, executive]

Yes. And I understand it's a little bit hard to follow here because there are several factors affecting this. But you can say that our external cost sometimes varies over time. In general, I think we are very good in control of our cost base. But factors that can affect this type of cost can be attributed to nonrecurring costs. And in this quarter, we had around SEK 1 million of those that we didn't have last year. So that's one difference.

It's also due to the fluctuation of currency rates. So when the SEK weakens, the cost we have in other countries they affect us more, and that has certainly happened this quarter versus the same quarter last year. And finally affecting other external cost is that last year we didn't own Prodikt until beginning of March. So for 2 extra months this year, there are costs related to Prodikt that isn't really comparable to the same quarter last year.

[Lisa Norlander, executive]

And then another question related to the numbers we presented here on the difference between what we present as ARR and recurring revenue. So if you look at the rolling 12 months ARR, that is now up to a very good level. And if you look at then the recurring revenue, there's a smaller difference there between Q4 and Q1 of only SEK 0.2 million. So can you share on what is the difference between these 2 metrics?

[Martin Lindh, executive]

Yes. So the ARR is, you can say, like the theoretic metric of the portfolio value we have in the company. So that is the total value of the contract. So if we have that value today over the next 12 years, that's the revenue we're going to get over time. But what happens in reality is that there are some differences in terms of when the contract starts and how much they are because in the end of each month, we know exactly what the portfolio size is.

So what we report here is what's the ARR at the end of the period. So obviously, there are some differences there that has some effect. Also when we do revenue accrual, we do it linearly over the year. But then you have quarters with different days in the different quarters and that also can affect these numbers a bit. But I would say that these 2 factors are the main reason for that while we might have some discrepancies in between the 2.

[Lisa Norlander, executive]

And then we have another question here that you -- we have improved on the process for accounts receivable, which have improved the cash flow during the quarter. And could you elaborate more on what are the changes we have made there?

[Martin Lindh, executive]

Yes. So I think we've mentioned a couple of quarters ago that -- or for some quarters now that we've had some challenge with receivables. So first of all, we've had some internal changes in our finance functions, which I think was necessary.

And then also, we have internally developed a tool that helps us in coordinate the work in the whole dunning process of meaning that how we collect receivables from our customers. And then thirdly, we have also put better management attention on it so that we have someone really focusing on it and coordinating and leading the efforts in collecting cash. So yes, that's basically what we have done.

[Lisa Norlander, executive]

And a follow-up question on that, on our cash conversion cycle. How has that changed after we started this work with receivables?

[Martin Lindh, executive]

Yes, it has, of course, improved. And we typically measure this through the KPI days of sales outstanding. And over the last year, there has been an increase in this metric. And that increase we have recovered now in this quarter, which is really good. And then we, of course, hope that we can increase it further since we are improving the way that we are working, but not only we have a solid process but also a good supporting tool in place to help us with this.

[Lisa Norlander, executive]

And then we have some questions more centered on the future here. So looking ahead, we can see that the industry is facing challenging times if we think about Q2, Q3. So the question here is what type of preparations are we making for that? And what do you think of our possibilities to grow ARR throughout the rest of this year?

[Martin Lindh, executive]

Yes. And you can say that the future is always hard to predict. But we -- so therefore, we closely monitor the development, of course. And we -- fundamentally, we want to grow, and we should grow. I mean it's part of our strategy, and it's important for us. That's why we do a lot of work on sales and also to improve the efficiency of how we do sales. And I think that will be very useful and important in any scenario we would land into.

And we also try to prepare by also adjusting our communication and our offerings to make better sense for the clients in any type of scenario. And I've talked a little bit about that today. And we will -- I mean we will also adjust the cost base if and where needed if we were to come into a completely different scenario that we are in today.

[Lisa Norlander, executive]

And then as we mentioned in the beginning of the call, we announced yesterday that you've been made the permanent CEO. And we have a question here if there's any change to the plan in relation to that nomination?

[Martin Lindh, executive]

Yes. And you can say that, for sure, the underlying plan remains. We will continuously adapt it, of course, when and where needed. But the overall direction will remain the same. And this, I believe, is quite important, especially for this company as it sometimes takes time to get things right. And in those cases, persistence is especially important.

[Lisa Norlander, executive]

Yes. And then one of the tasks that we listed here as part of our strategic plan was to "increase focus on user value creation and monetization." Can you elaborate on what we mean by that?

[Martin Lindh, executive]

Yes, we can do that. I mean first of all, we have a good traction when it comes to our user monetization when it comes to our Prodikt platform in Sweden. But independent of that, we are also, of course, working on monetizing our users on our BIMobject platform. As this area is rather new for us and more opportunistic. We are working on a couple of tracks here. And we've also done a lot of research during this period and now also have a development team, which I mentioned that we will deploy as of June this year. And hopefully, we will start to launch on small features during H2 of this year that we will build upon thereafter.

[Lisa Norlander, executive]

That's great. And then we had a question about Prodikt, the sustainability platform that we purchased last year. What was the turnover and result for Prodikt in 2022?

[Martin Lindh, executive]

Yes. And we are currently not sharing the top line revenue from Prodikt to the market on a quarterly basis, but we will look into if we're going to do that going forward. However, Prodikt is progressing in terms of revenue, and we are at the same time also quite much in control of the costs that are related to that to make sure that they don't increase too much, which is sometimes the case for growth companies. But so we want to make sure that we're still in line with our strategy, both in terms of reaching profitable growth.

But in last year, Prodikt had a negative effect on our result of around SEK 6 million. And that we actually share in the P&L earlier presented as you can see it's broken down in what type of -- what share of the result is related to minority owners.

[Lisa Norlander, executive]

So and then perhaps you already sort of answered this one, but we got a question on the call, if you could say a little bit more on how we're planning to tie in the AECs to the platform?

[Martin Lindh, executive]

Yes. I'm not sure exactly how to answer this one because the platform is basically for AECs as it is, but I guess this is related to monetization and that is -- I believe I've already answered that on the initiatives we have ongoing. And of course, this is something that we find quite interesting and are pursuing.

[Lisa Norlander, executive]

Great. So I think those are all the questions that we have got so far. So with that, we're going to wrap up this call. We will be available to answer questions continuously on this e-mail address if you thought some of your questions weren't answered. So with that, I'd like to thank everyone for the time today, and thank you for your interest, and we'll speak to you soon. Thank you.

[Martin Lindh, executive]

Thank you.