Bambuser AB

STO:BUSER

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to Bambuser Q3 Report for 2024. [Operator Instructions] Now I will hand the conference over to CEO, Maryam Ghahremani; and CFO, Jonas Lagerstrom. Please go ahead.

[Maryam Ghahremani, executive]

Good morning, everyone. Welcome to Bambuser Q3 2024 report and presentation. Today's agenda looks like this. First, we do a short company overview. We will then go to key highlights for the quarter, followed by financials and Q&A.

Before we jump into the details of this quarter, here's a quick intro about Bambuser. We offer a single unified virtual commerce platforms with 2 core solutions; Social Commerce, which includes live and Shoppable Video and Digital Clienteling, featuring video consultation and chats. Our platform enables merchants to connect with customers at every stage of the sales funnel using interactive 2-way communication.

But we're more than just a platform. We offer access to a whole ecosystem of partners to help our clients to succeed. This includes everything from production support to strategic guidance and integration with e-commerce platforms and third-party apps.

We're operating in a massive and growing market, projected to reach USD 8.5 trillion by 2030. And as we expand our product offerings, our potential market growth even larger. Our ARR growth is currently a bit volatile, and this quarter demonstrated a weaker development compared to the previous quarter, but we believe we have good underlying trend that is not yet visible in the numbers.

Let's take a moment to highlight some key wins and developments from this quarter. Zara has officially launched Zara Streaming, a new format of launching collections. The platform is powered by Bambuser, a leading interactive video platform provider. The debut event featured legendary supermodels Cindy Crawford and her daughter, Kaia Gerber. Viewers enjoyed an interactive experience where they could shop Zara's latest collection in real time.

This innovative approach merges entertainment with shopping, offering a new way to engage customers, potential to drive sales and brand engagement by offering a unique and immersive shopping experience. Victoria Beckham is embracing a digital-first approach to showcase its latest collection. High-quality video content is being utilized to highlight the collection's key pieces and design details.

This content is available on the official Victoria Beckham's website and the brand's social media channels. This strategy aims to reach a wider audience and provide an immersive experience for customers. It represents a bold move by Victoria Beckham to leverage digital platforms for enhanced engagement and brand storytelling, emphasizes the brand's commitment to innovation and adapting to the evolving landscape of the fashion industry.

We are continuing launching incredible innovation in how brands connect with customers. Our new AI Dubbing is a game changer. Imagine perfectly localized versions of Shoppable Video instantly, this AI captures the original speaker's nuances, their tone, their style, and translates it flawlessly into multiple languages. No more clunky subtitles.

Customers anywhere can have a truly immersive shopping experience in their own language. And for brands, forget expensive time-consuming dubbing sessions. With one click, they personalize content for any market, reaching more customers and boosting sales.

This is about tiering down language barriers, forging deeper connections with a global audience and making every customer feel [indiscernible]. And it's not just about spoken language. Did you know that 75% of consumers actually prefer to browse in their native language.

That's where self-serve translations coming. This empowers brands to offer a truly tailored experience. They can easily customize interface languages and sync with shoppers' browsers. The result a seamless, personalized journey that resonates with global audiences.

It's about giving customers that feeling of being understood and valued no matter where they are or what language they speak. I'm now leaving over to CFO, Jonas Lagerstrom, who will take you through the financials.

[Jonas Lagerstrom, executive]

Good morning, everyone. Let's start with the ARR development. Our ARR was negative this quarter with a decline of 7% quarter-over-quarter at constant exchange rates. EMEA was the main contributor for this quarter and Americas had a tougher quarter with declining ARR.

ARR by customer showed a slight decrease this quarter impacted by some initial lower deal sizes due to our usage-based pricing model. Our customer composition is slightly smaller in total, but denser in regard to enterprise customers. The breakdown per region shows that APAC had growth year-over-year followed by EMEA and Americas, who had a declining market development.

Our overall NRR was 64% showing a small improvement from the last quarter. Top 20 accounts reached NRR of 99%. We believe that this figure will go back to over 100% in the near future.

If we move on to the net sales, we are, as mentioned last quarter, solely focused on SaaS revenue in these presentations as we divested our Professional Services business at the end of last year.

The net sales are developed in line with our ARR development and are expected to follow the future ARR trajectory. Our gross margin was also like last quarter, negatively impacted due to the acquisition of HERO. We were exposed for higher cost of revenue due to a technical carve-out and transition phase that took place post closing.

As we fully integrate HERO into our tech stack, we expect to realize cost efficiencies and see our gross margin to improve again. We are pleased to report continued improvement in adjusted EBITDA. We see a 27% improvement compared to last year.

This is a direct result of our disciplined cost and controlled measurements. So looking at the underlying reason for the improved EBITDA is obviously the operating expenses, and they continue to decrease and again, reflects that we are having very good cost control and continue to manage them effectively.

If we finish up with the cash flow, our cash flow continues in good development looking at year-over-year comparisons. We were impacted by negative working capital this quarter, which is to some extent a distorting factor when we look at the full cash flow bridge.

We believe that our adjusted EBITDA improvement will continue to improve our cash flow going forward. We ended the quarter with a strong cash position of SEK 191 million. And that was all for today. We thank you very much for listening, and we are now welcoming any questions.

[Operator]

[Operator Instructions] The next question comes from Nikola Kalanoski from ABG Sundal Collier.

[Nikola Kalanoski, analyst]

So just one question on business momentum. It looks like new business is somewhat soft in the recent quarter and that there is still a little bit of a negative trend. Could you tell us a little bit more about the current pipeline and how you perceive it? Because you mentioned that the current ARR doesn't necessarily reflect the ongoing operations.

[Maryam Ghahremani, executive]

Of course. So we would say that it's negatively impacted because U.S. is the market that I would say is behind. With that said, it's a lot about timing. I think we historically have never had, I'd say, a good pipe like we have a great pipeline right now in terms of looking at our [ ICPs ]. So we're really moving towards the larger enterprise companies and moving away from the long tail.

And this has a lot to do with timing. So I would say we have a good pipeline, but it is very much about timing. And as the quarter is what it is. So if we close the deal 1 week, after the quarter, it will move to the next quarter. But I would say EMEA is performing really strongly. APAC also, we have been struggling in the U.S. for a while now. We see great improvements, but I think the numbers are just not in the balance sheet yet.

[Nikola Kalanoski, analyst]

Cheers for the color. I appreciate that. And then just a final question on costs. Would you say that the current cost base is the one that you aim to maintain or do you believe that some further adjustments are acquired?

[Jonas Lagerstrom, executive]

I would like to phrase it like this that we believe that there are still a number of fixed costs that we can improve. And we would like to keep a higher portion of our OpEx as a variable, tailored more towards marketing, so we can have a more on and off approach depending on market sentiments and where we see traction. So it's reasonable to expect at least improvements of the fixed cost base.

[Operator]

[Operator Instructions] There are no more questions on the line. So I hand the conference back to the speakers for any written questions and closing comments.

[Maryam Ghahremani, executive]

Thank you for joining.