Quaterly Report January to March 2022

SAAS ON STRONG GROWTH TRAJECTORY - API CALLS VOLUMES UP 84% AND SAAS ARR UP 37% IN THE FIRST QUARTER

JANUARY TO MARCH 2022

• Net sales amounted to 10.1 MSEK (9.8), + 3%
• Recurring revenues amounted to 8.8 MSEK (6.6), + 34%
• SaaS ARR amounted to 12.9 MSEK, +37% compared with December 2021
• SaaS API Call Volumes 5.5 million, + 84% compared with December 2021
• Gross margin increased to 74% (72)
• EBITDA adjusted amounted to -17.9 MSEK (-13.1)
• Earnings per share amounted to -0.4 SEK (-0.2)

EVENTS DURING THE QUARTER

• Signed a SaaS agreement with one of the world’s largest National Healthcare Providers
• Signed a SaaS agreement with Medtronic, one of the largest medical device companies in the world
• Signed renewal agreement with Loomis, a global cash handling group
• Signed renewal SaaS agreement with CSG Systems, our partner and a leading global system integrator  
• Signed renewal SaaS agreement with SelectQuote, a US online insurance broker
• Signed a reseller agreement with our implementation partner CGI, our partner and a leading global system integrator 
• Updated external Intellectual Property indicating a value of 1.6 BSEK
• Received 6.4 MSEK in cash tax refund January 2022 for performed R&D work in 2019

EVENTS AFTER THE QUARTER

• Skoda expands its Conversational AI offering built on Teneo to 13 regions
• Signed renewal SaaS agreement with a large Multinational US Tech company
• Sean McIlrath appointed as Head of US Sales
• 3 additional sales employees hired in the US
• Diversity and inclusion success – 39% females in the company by start of second quarter

KEY FIGURES (For definitions please see page 17 )

CEO STATEMENT

Dear shareholders, colleagues, customers, and partners:

In the first quarter of 2022 we received strong proof that our business model fits our market.

New Customer & Sales Focus

We won yet another very high potential engagement with a National Health Care Provider, and we continue to primarily chase the largest customers in our key markets although this is a longer and more resource intensive sales process. The reason for that is that we now also see in reported API calls that the development of large clients are magnitudes better than having several smaller clients. A large customer for us is a Telecommunication Provider, a Retailer, or an Internet Native company. On a selective basis, we add large customers outside these priority segments such as this Healthcare Provider.

Loomis signed a renewal agreement with Artificial Solutions, as a step in their efforts to combine the physical and digital customer offering. Loomis operates through an international network of more than 400 branches in more than 20 countries.

Our sales model is channel first, meaning that we always engage a partner in our pursuits. Often a combination of Microsoft and an implementation partner, such as CGI that signed a reseller agreement with us in the quarter. The markets we are in still requires our direct involvement to work on the accounts, therefore the buildout of sales capacity is important. We have started the buildout of a strong team in the US where SaaS implementations are growing fast. We have appointed a Sales VP with experience from our industry and from partnering with Microsoft, two sales executives and a product marketeer which will drive sales in the US.

We saw signs in the first quarter of a return to normal when it comes to physical meetings with our attendance at Mobile World Congress, the largest telecom event of the year, resulting in many leads and possibilities to show off what our customers can do with Teneo, our industry-leading Conversational AI platform.

84% growth in SaaS API calls

The API calls on our SaaS model grew 84% between December 2021 and March 2022. And we see that the large customers have more and more use cases and therefore volume to add, facilitated by our commercial model without step costs. On the non-SaaS customers, we also continue to grow and also continue our efforts to convert them to SaaS to provide more value to them. The API calls volume growth for non-SaaS customers was 19% from first quarter 2021 to first quarter 2022. We will start to report the revenues generated on our SaaS model as of this Quarter as this is the key metric for our growth. The SaaS platform was launched in the second quarter last year so the history is short, but we want to provide this key metric to our investors. We currently have 13 clients on our SaaS model, 23 customers in total with four renewals and one new customer in the quarter. We also, in this quarter, saw customers acquire more seats for their developers.

Teneo platform keeps getting better

We released Teneo 6.2, an update that provides a range of new features and capabilities to its industry-leading Conversational AI platform, including a major upgrade to its language library that allows users to access pre-built knowledge of Bulgarian. With a total of 86 languages available to users of the platform, Teneo offers a range of native language solutions that are unrivalled in the Conversational AI sector. Artificial Solutions has released Teneo 6.2, an update that provides a range of new features and capabilities to its industry-leading Conversational AI platform, including a major upgrade to its language library.

During the quarter we have run Early Access testing of a new web-based development client and a new user interface across the Development Platform. The feedback has been very positive, and customers can have teams collaborating while using the Web client and the Windows client, meaning that there is no switching cost for existing users. We will take this new development client live during second quarter 2022. 

We have initiated a change of our internal development organization to better align with our SaaS delivery and this yielded results already in the first quarter 2022 with features such as publishing automation, data access enhancements and new security features making it to our customers in record time.

Customer Development

One of the clients that started their project in the third quarter 2021 has surpassed 500,000 API calls in a month in the first quarter 2022, again showing that large customers may be slower to buy but with our technology quicker to scale. Our Customer Success Department strives to support the customers in whatever development they may want to pursue and guide in how best to use the platform. We do not guide customers on ‘What’ to do, merely on ‘How’. ‘What’ is for the customers or partners to drive. This we see frees the creativity to try many different use cases within the customers and therefore discover new applications.

Staff Focus

We continue to foster a multicultural and diverse culture, and in addition grew our female representation to almost 39% by the end of this first quarter.

We continue working to embrace a flexible culture with a remote and hybrid working approach and a culture that takes care of the wellbeing of our employees.

We see that productivity increases and our Teneo becomes easier and faster to use with this approach.

First US Trip

During the quarter we managed to do our first trip to the US after the Covid-19 period to interview staff, meet customers and of course meet up with Microsoft HQ live. This was very positive for our momentum in the US and will result in a great team in place as well as new collaboration opportunities with Microsoft. We hope that borders and flights will remain open so that we can easily visit our focus markets Europe and the US.

2022 is developing in the right direction on all fronts and we look forward to helping more customers cut their customers’ waiting times!

Per Ottosson, CEO

This disclosure contains information that Artificial Solutions International AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 29-04-2022 07:30 CET.

For further information:
Per Ottosson, CEO, Artificial Solutions
Email: per.ottosson@artificial-solutions.com

About Artificial Solutions

Artificial Solutions® (SSME:ASAI) is the leading specialist in Conversational AI. We enable communication with applications, websites and devices in everyday, humanlike natural language via voice, text, touch or gesture input.

Artificial Solutions’ advanced conversational AI Teneo®, allows business users and developers to create sophisticated, highly intelligent applications that run across 86 languages and dialects, multiple platforms and channels in record time. The ability to analyse and make use of the enormous quantities of conversational data is fully integrated within Teneo, delivering unprecedented levels of data insight that reveal what customers are truly thinking.

Artificial Solutions’ conversational AI technology makes it easy to implement a wide range of natural language applications such as virtual assistants, conversational bots, speech-based conversational UIs for smart devices and more. It is already used daily by millions of people across hundreds of private and public sector deployments worldwide. 

Artificial Solutions International is listed on Nasdaq First North Growth Market in Stockholm with short name ASAI. Erik Penser Bank is the Company’s Certified Adviser (www.penser.se, tfn +46 (0) 8-463 83 00, e-post certifiedadviser@penser.se).

For more information, please visit www.artificial-solutions.com.