Oneflow interim report Q2 2024: Competitive advantage in contract intelligence

Thu, Aug 15, 2024 17:31 CET

Press release
15 August 2024

The board of directors has resolved to explore the possibility of conducting a directed share issue, which is why this interim report is being published at this time. For further details, please refer to the separate press release that is disseminated concurrently with this press release.

Oneflow publishes its interim report for the second quarter of 2024:

April - June 2024 (compared to the same period last year)

Net sales increased 36% to MSEK 32.5 (23.9). Share of Net sales outside Sweden increased to 35% (30) with paying customers in 34 countries.
EBIT was MSEK -24.5 (-25.4), with an EBIT margin of -76% (-106).
Net income for the period amounted to -24.6 (-24.4).
Basic earnings per share amounted to SEK -0.96 (-0.97) and diluted to SEK -0.96 (-0.97).
Total ARR YoY increased 37% to MSEK 152.0 (110.8). Net New ARR for the second quarter increased 1.3% to MSEK 11.4 (11.3).
During the quarter cash-flow from current operations amounted to MSEK -8.9 (-15.3).
Total cash and cash equivalents amounted to MSEK 54.0 (156.5).

January - June 2024 (compared to the same period last year)

Net sales increased 39% to MSEK 63.3 (45.7). Share of Net sales outside Sweden increased to 34% (29) with paying customers in 34 countries.
EBIT was MSEK -46.0 (-48.9), with an EBIT margin of -73% (-107).
Net income for the period amounted to -45.9 (-47.1).
Basic earnings per share amounted to SEK -1.82 (-1.87) and diluted to SEK -1.82 (-1.87).
Total ARR YoY increased 37% to MSEK 152.0 (110.8). Net New ARR for the first half year increased 12% to MSEK 22.6 (20.2).
Cash-flow from current operations amounted to MSEK -16.4 (-24.6).
Total cash and cash equivalents amounted to MSEK 54.0 (156.5)

Anders Hamnes, CEO and Founder of Oneflow, comments:

“Oneflow continued to deliver strong sales numbers during the second quarter of 2024. The ARR increased by MSEK 11.4 during the quarter, ending the period at a total of MSEK 152.0, representing a year-over-year growth of 37%.

Oneflow achieved ISO 9001, 14001 and 27001 certifications in June 2024, highlighting our commitment to maintaining the highest standards in everything we do. The ISO certificates will unlock new markets and make Oneflow even more attractive to especially the largest enterprises and government sectors across Europe.

AI is moving fast, and faster than most of us predicted only 1-2 years ago. To continue driving innovation within the contract intelligence space, Oneflow made a strategic decision to expand our AI strategy by partnering with a legal AI company during the second quarter this year. This has enabled Oneflow to offer leading edge contract AI products already today that otherwise would have taken us years to build. On top of that, Oneflow has continued to hire AI competences. All these AI initiatives have added some extra costs not originally planned for a year ago. However, we are confident this will pay off. Oneflow now has a strong initial portfolio of AI-powered products automating and facilitating contract management processes, saving costs and improving quality for our customers, and we have more exciting releases on the horizon.

In the second quarter of 2024, we incurred a one-time cost of MSEK 1.4 related to share-based payments. This occurred because more options than expected were exercised through incentive programs. This is purely an accounting technicality that impacts equity and has no effect on cash flow.

All in all we had several one-time costs totaling MSEK 3.1 during the second quarter. These expenses included costs related to the ISO certifications, legal work for negotiating and finalizing the agreement with the AI company, and stock option related expenses.

EBIT losses were MSEK -24.5 during the second quarter, or MSEK -21.4 if we exclude the one-time items. The EBIT margin for the second quarter of 2024 was -76%, compared to -70% in the previous quarter and -106% in the second quarter of the previous year. Adjusted for the one-time items, the EBIT margin was -66% in the second quarter. We are fully focused and committed to reducing our losses, and significant improvements will be seen in the third quarter and going forward.

Gross retention (including downgrades) has been relatively flat during the last quarters, ending the second quarter at 91%. Despite all-time-high new sales during the second quarter this year, expansion sales have been under pressure for some time now due to the strained market sentiment, and Net retention ended at 107% for the second quarter. We expect to improve both Gross and Net retention going forward.

The second quarter has been an eventful period with several heavy weight product releases. In addition to the AI product suite already mentioned, we have released approval flow, suggestions (redlining), and more. Oneflow continues to strengthen its position as a market leader in the contract intelligence space.

We decided to launch a few new KPIs with this report, and at the same time sunset two old ones. Paying users and ARR per user are now gone, and the reason for this is that we’re signing more and more contracts where the user count is less relevant to the customer ARR, and sometimes even misleading. This has to do with how we package our customer offering. One such example could be when customers publish contracts through the API instead of individual users' seats. We have instead shipped three new KPIs that we think are far more interesting: number of paying customers, ACV (Average Customer Value) and ARR per FTE (Full Time Employee).

Oneflow is a company heading full force towards profitability. Almost all our revenue is recurring. We have a gross margin of 94%, and our main cost is salary and employee related expenses. Hence, the ARR per FTE metric should give a good indication on our progress towards profitability. ARR per FTE (including team Sri Lanka) was TSEK 808 in the second quarter, up 41% from TSEK 574 the corresponding quarter one year earlier.

Considering our current ARR and growth rate, our cost base—that now will be more or less fixed throughout 2024 and 2025—we’ll maintain a sufficient cash position and steer towards profitability. We maintain our financial targets of reaching an ARR of MSEK 500 and an EBIT margin of 20% during 2027.

Say contract, think Oneflow!”

Oneflow’s report presentation webinar

Anders Hamnes, CEO and Founder of Oneflow, and Natalie Jelveh, CFO of Oneflow, will present the report and answer questions in a webinar at 10:00 CET on Friday, 16 August 2024. The presentation will be held in English.

To join the conference, please register here: https://oneflow.zoom.us/webinar/register/WN_muZ9bmz9Sx25WodryXqwSQ

Report and presentation will be available for download on our website here: https://oneflow.com/ir/investors/financial-reports/

This information is such information that Oneflow AB (publ) is obligated to make public according to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on 15 August 2024 at 17:31 CET.

For further information, please contact:

Anders Hamnes, CEO and Founder

Mobile: +46 76 788 50 76

Email: anders.hamnes@oneflow.com

Certified Adviser is FNCA Sweden AB.

About Oneflow

Oneflow develops a contract automation platform powered by AI, helping businesses achieve a fully automated contract process. Contracts are at the heart of all businesses and yet, while the world is undergoing digital transformation, contracts are stuck in a frustrating mess between PDFs, legacy systems, inboxes, just to get a contract signed. Oneflow believes there’s a better contract workflow. One that is intelligent, easy, rich in data, gathers every step of the process in one place, allowing for better clarity and collaboration between all parties involved. And people can get on with what they do best. With Oneflow, contracts are smarter, giving our users an experience so delightful, it feels like magic. Get started for free at oneflow.com.