QUARTERLY REPORT: JANUARY TO MARCH 2024

RECORD QUARTER: +40% YoY GROWTH IN SAAS API CALL VOLUMES AND TOTAL ARR OF 67 MSEK

JANUARY TO MARCH 2024

• SaaS API Call Volumes 23.8 million (17.0), +40 %
• SaaS ARR amounted to 37.2 MSEK (28.3), +32%
• Total ARR amounted to 66.9 MSEK (53.7), +25%
• Recurring revenues amounted to 17.0 MSEK (13.4), +27%
• Net Revenue Retention Rate (NRR) +141% (134)
• Net sales amounted to 17.1MSEK (13.6), +26%
• Gross margin amounted to 79% (56)
• EBITDA adjusted amounted to -8.5 MSEK (-18.1)
• Earnings per share amounted to -0.0 SEK (0.1)

EVENTS DURING THE QUARTER

• Successfully closed rights issue with a 166% subscription rate providing the company with 26 MSEK
• Renewal of SaaS agreement with Medtronic, one of the largest medical device companies in the world
• Renewal of License agreement with Swisscom, the leading Swiss telecom operator
• Expansion of our solution to Japan with our Global American Tech company customer
• New Partnership agreement signed with System Integrator and AWS Connect Partner, EPAM
• New structure of sales organization implemented
• Teneo 7.4 + Copilot released in January 2024
• Teneo.ai’s advanced RAG solution unveiled for maximizing integration of Large Language Models (LLMs)
• Teneo.ai now available in the Microsoft Azure Marketplace, making it accessible for all Azure customers

EVENTS AFTER THE QUARTER

• New SaaS agreement signed with MedHelp Care, a company with one of Sweden's most used health platforms
• Renewal of SaaS agreement with a Global American Tech company
• Renewal of existing License agreement with UBS, a global financial services company
• Teneo.ai Awarded Best AI Telecom Solution in Remend’s 2023 AI Self-Service Automation Report and Buyer’s Guide

KEY FIGURES (For definitions please see page 19)

CEO STATEMENT

Dear Shareholders,

First of all a big thank you for the vote of confidence in the oversubscribed 26 MSEK rights issue closed this February. We are working hard to give back a great ROI on your investments. And when it comes to Natural Language we are the experts.

Q1 2024 delivers Record-breaking Performance:

3 years in, our SaaS solution proves it´s value with unprecedented revenues, volume, and product expansion, hitting all financial KPIs. With gross margin at 79% it is clear that our software provides value and that our focus needs to be revenue growth. We are not a large company when it comes to employees. We are not large when it comes to revenues. But as far as impact on the Global stage we are really delivering results.

Back in 2018 Google showed a demo of booking a hair salon appointment. Since then, many companies have been hard at work to deliver this experience. But no one has achieved this fiendishly difficult task but Teneo. And customers keep expanding their usage of our technology pushing us to deliver even more and better functionality.

Market awareness of Teneo.ai

In the current quarter, Teneo.ai’s solutions deployed at ATT, Swisscom, and Telefonica garnered significant recognition, including a prestigious award from California-based Remend. Our innovative approach to enhancing customer engagement and Teneo.ai’s capabilities were acknowledged as ‘Best AI Telecom Solution’ in Remend’s 2023 AI Self-Service Automation Report and Buyer’s Guide, amplifying market awareness of our offerings.

Market demand drives product development

All our customers are venturing into the world of Generative AI and LLMs (Large Language Models). This led to some Teneo based solutions launched in the fourth quarter 2023 (and launched with Amazon in the first quarter 2024) like Teneo for RAG (Retrieval-Augmented Generation), Accuracy Booster for Amazon LEX and Generative AI Orchestration. Adding to the first quarter 2024 saw the introduction of a new and separate product - Gecholog.

Gecholog.ai

Gecholog.ai is the missing link for customers that are deploying solutions on the new AI stack. In the world before ChatGPT shocked the market, communication between systems was almost always done with well structured data. And an industry evolved around controlling these data flows. Companies such as Splunk and Datadog sold the ability to see and audit the communication between applications. This monitoring was a necessity for any sort of compliance in a modern company. But with the advent of LLM the integrations both to and from applications are natural language and not structured data. And when it comes to Natural Language we are the experts. After being asked at a presentation at the Microsoft AI Inner Circle we built an LLM Data Governance concept in Teneo which was tested by partners and customers. As the functionality was clear we decided that this could not be a SaaS solution but needed to be a separate code base that could be deployed in the customers own environment. That recoding is now done and Gecholog.ai has been formed as a separate division within our company under the leadership of Daniel Eriksson. Gecholog.ai is an LLM Data Governance product which includes a free offering that will increase our footprint in the LLM space.

New Sales

During the fourth quarter 2023 we reorganized to focus on new sales as well as developing existing customers. We have built an impressive Pipeline with companies with very large contact centers and I was expecting us to be able to close a few of these in the first quarter 2024. However, I misjudged the sales cycle length in these companies. As it became apparent that getting to signature in these really large enterprises would take longer we decided to quickly focus on creating a SaaS delivery at a lower price point. Already right after the quarter close our first customer in this delivery model – Medhelp – decided to use Teneo.ai in their employee health service. We will continue to focus on the large volume customers but also add small and medium sized  customers that contribute to in selected segments.

Artificial-Solutions.com or Teneo.ai?

We started a transition in our go-to-market branding during last year and now all our customer facing material is on Teneo.ai. Furthermore, our sales organization are contacting prospects from Teneo.ai. This has proven positive for our market recognition and we want to take the next step in this direction and change the name of our company as well to Teneo.ai. We will therefore evaluate a potential change of the company name as well to Teneo.ai in the coming months.

Sales and Marketing

As I mentioned the sales cycle related to the large customers has proven to be longer than we have hoped. There are several reasons for this, but the main one is the pressure in the market from startups building purely on the LLM technology. All our prospects have built Chatbots based on LLMs in the last few months which has taken focus away from the Voice channel. We and most of the market now know that an LLM based chatbot in itself will never be predictable and always correct. Take the below example from FastCompany on New York city´s chatbot for business owners. Very smart people have been involved in fine-tuning this model. But still…

Connecting LLMs to a voice-service increases the complexity even more. With the references we have – companies like Microsoft, Swisscom, Telefonica – some of the smartest organizations on earth – now is the time to push on marketing and sales.

In summary

Thank you shareholders for your confidence. The first quarter 2024 is our best quarter yet. We delivered class-leading growth, margin and NRR. We surpassed our planned 65 MSEK ARR, thanks to the best implementations of Natural Language AI in the world. We will double down on helping more companies achieve better service at a lower cost enabling them to experience lower churn and more new sales. 

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 26-04-2024 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 a leader in AI. Our platform, Teneo®, is used by millions of people in hundreds of SaaS implementations in the private and public sectors worldwide. Our solution Teneo OpenQuestion optimizes AI for voice, automates customer service and reduces costs. 

Teneo.ai, Teneo, and OpenQuestion are registered trademarks of Artificial Solutions.

Artificial Solutions International is listed on Nasdaq First North Growth Market in Stockholm with short name ASAI. Redeye is the Company’s Certified Adviser.  

Visit www.investors.artificial-solutions.com/financial-reports for more information.