QUARTERLY REPORT APRIL TO JUNE 2022

CONTINUED HIGH GROWTH REVENUE TRAJECTORY – QUARTERLY SAAS ARR GROWTH OF 55%

APRIL TO JUNE 2022

• Net sales amounted to 10.2 MSEK (8.2), + 24%
• Recurring revenues amounted to 9.1 MSEK (6.3), + 44%
• SaaS ARR amounted to 20.0 MSEK, +55% compared with March 2022
• SaaS API Call Volumes 9.3 million, + 70% compared with March 2022
• Gross margin 67% (67)
• EBITDA adjusted amounted to -22.4 MSEK (-17.2)
• Earnings per share (*) amounted to -2.4 SEK (-2.3)

JANUARY TO JUNE 2022

• Net sales amounted to 20.3 MSEK (18.1), + 13%
• Recurring revenues amounted to 17.8 MSEK (12.9), + 39%
• SaaS ARR amounted to 20.0 MSEK, +113% compared with December 2021
• SaaS API Call Volumes 9.3 million, + 210% compared with December 2021
• Gross margin increased to 70% (69)
• EBITDA adjusted amounted to -40.2 MSEK (-30.3)
• Earnings per share (*) amounted to -6.3 SEK (-4.1)

EVENTS DURING 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
• Signed renewal agreement with a Swiss International Bank
• Signed renewal agreement with AT&T, an American International Telecommunications Provider
• Signed partner agreement with CGI, one of the largest IT and business consulting services firms in the world
• Launch of Teneo 7.0 – with new functionalities including improved User Interface and simplified solution creation
• Launch of Teneo Developer Certification program
• Sean McIlrath appointed as Head of US Sales  
• Reverse share split – merging the number of outstanding shares with 1:10 ratio in June 2022

EVENTS AFTER THE QUARTER      

• Soon go live with initial first project for one of the largest National Healthcare Providers in the world
• Renewed SaaS agreement with A1 Bulgaria, a Telecommunications Provider controlled by América Móvil
• Telefónica O2 presented its IVR solution created using Teneo during a webinar in July
• Patrik Rosenberg appointed as Head of EMEA Sales

KEY FIGURES (For definitions please see page 18)

(*) The Company completed a Reverse Stock Split of 10 to 1 in June, 2022. Historical share numbers have been adjusted to reflect the split.

CEO STATEMENT

Dear shareholders, colleagues, customers, and partners:

In the second quarter of 2022, we rebuilt our US presence and refocused the European sales effort to develop a stronger presence in the segments that are starting to move fast.

Sales Focus

We remain focused on the largest clients and noticed that the solutions built by customers that have been with us since the second quarter of 2021 are now growing fast. We see several customers with more than a million voice conversations through the bot per month. This is truly unique in our industry, as most of the competitors are still focused on building chatbots that, in most cases, provide little value to companies. The current and target clients usually have or would have the need for thousands of people in their call centres to cover their support demand. A voice deployment can easily provide savings of around 20% of the call centre’s total cost. Made possible by Teneo’s patented language management and hybrid learning.

Sales Organization

We have spent the first half of the year adapting our sales organization to focus on Enterprise Sales. This has meant creating two sales team units reporting to me: one for the US and another one for EMEA. With the focus on these two geographies, we aim to primarily sell to companies within the Telecommunications and Retail industries, and Internet native companies (companies that have not yet built out large customer support organizations). We are working most of our active opportunities together with Microsoft plus a partner involved to provide the services to build the customer solution.

Our European sales organization will be led by Patrik Rosenberg who is joining us from Combient where he, as VP,  has been responsible for the AI sales. Patrik has a long background in Conversational AI and joins us with the experience and drive required in the Enterprise Segment.

The changes in sales also include our CRO, Nicolas Köllerstedt, leaving during August. 

Our US Sales team started at the beginning of the quarter and has managed to build a strong pipeline in a short time. This is thanks to our US VP and GM, Sean McIlrath, who has been able to build a team with four new hires during the quarter. Sean has a background in the Conversational AI space as well as in Contact Centers; he worked previously at TTEC where he was a Group Vice President. The US market is moving slightly faster than the European with regards to the shift from simple chatbots to complex solutions. Having strong references in the market such as AT&T and HelloFresh, who are delighting their customers with astounding support service, make us confident that we have a strong position to get more of the largest US companies onto Teneo.

SaaS ARR up 55% Q over Q

We continue to see a strong growth in our existing customers usage of Teneo and our SaaS ARR grew 55% versus Q1 2022. Exchange rate adjusted, the SaaS ARR in Q2 2022 increased with 51% versus Q1 2022. In July we continued to experience growth and the SaaS ARR grew from 20.0 MSEK in June 2022 to 21.2 MSEK in July 2022, equivalent to a growth of +6% month over month. The key driver for the growth in July is coming from higher API call volumes, primarily from customers that we signed contract with late spring 2021.

The development in July from increased API call volumes is showcasing that our revenue model is aligned with how our customers invest and make money on the technology. The development license is paid on a monthly basis for each of the developers that are in the project and, as the solution goes live, each conversation is providing savings for our customer and revenue to us in the form of API calls. The more conversations customers have with the solutions, the more revenues that means to us. This is a cash straining model but, as we see, it is what provides growth in our customers usage and the scalability is phenomenal.  

Major Teneo Platform Release

Teneo is the most developer friendly platform in the conversational AI industry. And with our new release we have further moved the goal post for developer friendliness.

New Web Interface

The Teneo Platform 7.0 release introduces a completely new Studio Web User Interface (UI). It does not only bring the actual web experience, but also an improved user experience (UX) with focus on guidance and simplification, where information gradually is exposed when required in the dialogue development process.

The new Studio Web is an additional UI to Teneo Studio Desktop with collaboration features enabling parallel development against the same solution, including locking of documents in edit mode, avoiding multiple users editing the same document at the same time, for example.

Simplified Solution Creation

The process of creating a new solution and starting to work with it has been simplified. Users are now guided through solution creation in three simple steps: selecting the language, confirming the solution content, and giving the solution a name. Any new solution will have lexical resources assigned by default and it is now possible to create documents directly under the solution root, without first having to add a folder structure.

Flow editor

The Flow editor has been reworked, bringing the guided and simplified user experience introduced in Studio Web across and allowing users to click Plus icons in the Flow graph to add nodes and elements where relevant options are displayed exponentially. The changes still allow experienced Studio desktop users to work as they are used to, if desired, but will at the same time make the desktop a familiar place for Studio web users and ensuring that the two UIs clearly state that they are part of the same family.

Customer Development

Our customers keep developing their solutions at a great pace. One of the more impressive developments during Q2 2022 was the large Health Care Provider that started its project in the quarter and are taking the first solution live in a few months!

Telefonica Webinar

At the beginning of July 2022, Telefónica O2 Germany presented their Conversational IVR solution built with Teneo. They have built a bot that answers the phone. They illustrated very clearly how they have evolved from what most customers are using today – a combination of a simple IVR and a separate web-based chatbot – to an omnichannel solution that allows customers to use natural language to get support over the phone. Click here to watch Telefónica’s webinar.

All in all, we continue to experience great momentum in our SaaS ARR development, our new sales team are working hard on pipeline generation, and we are looking forward to the next coming quarters.

Per Ottosson, CEO

Artificial Solutions financial reports are available at the corporate website: www.investors.artificial-solutions.com/financial-reports.

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 17-08-2022 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.