MODELON AB Annual Recurring Revenue growth continued in Q1
Q1 Highlights
- ARR increased to MSEK 47.2 (41.4), an annual growth of 14%.
- Cash flow amounted to MSEK -1.9 (-11.9), an improvement of MSEK 10 due to multi-year pre-paid software transactions.
- Net revenue amounted to MSEK 18.0 (17.8), of which software revenues were MSEK 12.0 (11.6).
- EBIT amounted to MSEK -18.3 (-12.7), including development costs of MSEK 15.6 (13.5)* and one-time personnel costs of MSEK 1.9.
- Net result amounted to MSEK -18.1 (-12.8).
- Earnings per share amounted to
SEK -1.65 (-1.16) before dilution. - Financial result for the period reflects the ongoing investment phase for accelerated growth.
Comments from the CEO
ARR growth continued in Q1
Annual Recurring Revenue growth amounted to 14% in Q1 2023 compared to Q1 2022 and compared to 12% growth reported in Q4 2022. Our flagship cloud product Modelon Impact was the growth driver and the total software ARR includes an annual growth rate of 41% in recurring revenues for Modelon Impact.
Pipeline volume in the period remained steady versus the previous quarter, with market activity in the US region and HVAC&R (Heating, Ventilation, Air Conditioning and Refrigeration) and Sustainable Energy sectors continuing to stand out
Customer wins and upsell
Notable new and upsell customers in the first quarter include:
- American multinational beverage corporation
- British multinational oil and gas company
- American global power generation equipment provider (upsell)
- German national aerospace research institute (upsell)
- German fuel cell innovator (upsell)
These wins demonstrate that we continue to attract some of the most successful and well-known brands in the world with Modelon Impact, and that we continue to build up and start to benefit from a solid customer base of large enterprises for upsell growth.
Meeting our prospects at international industry events continues to be a key part of our go-to-market strategy. In the period we focused on the sectors of HVAC&R and Sustainable Energy systems by participating at AHR Expo (
Customer success in sustainable energy applications
The positioning and successful application of Modelon Impact in key industry sectors on sustainable energy continues to be demonstrated in new customer testimonials during the quarter:
Honda Motor Company , a leading international manufacturer of automobiles, motorcycles and power equipment, are driving towards carbon neutrality in their production plants by 2050 and use Modelon Impact for system simulation sinceOctober 2021 . They testify their success in using Modelon Impact to assess a variety of carbon reduction options, including energy solutions such as renewable energy fuels and hydrogen fuel cell battery systems, on existing plants to make strategic system design decision for cost efficiency and viability and concludes “Modelon Impact was the right choice”.- Fondazione Bruno Kessler, a top Italian institute involved in the research and development of sustainable energy solutions and the decarbonization of society, with fully integrated solutions for hydrogen generation from renewable sources, safe hydrogen storage and efficient utilization by end users in stationary or portable applications. They use Modelon Impact since
August 2021 to model and simulate the complete balance of a hydrogen system, covering steam generation, electrolysis hydrogen production, and fuel cell electricity generation. They testify the value of using a cloud and standards-based solution for collaboration, sharing and toolchain integration, as well as the first-class support provided byModelon . - MAN Energy Solutions, a leading €3.3bn and 14,000 employees global energy technology supplier with a carbon-neutral strategy, are using Modelon Impact since
February 2020 to test and validate transient operation and control strategies for industrial heat pumps for large scale heat application systems. Using Modelon Impact, MAN can replace expensive testbeds with virtual tests based on validated and trusted simulation models. Modelon Impact allows MAN to assess performance and optimize control strategies of e.g., startup/shutdown and part load operations of these cyclic thermodynamics processes on days to year timeframes. Their longer term vision is to link the virtual testbeds with the actual control hardware. They testify to the great support and ease of working with theModelon engineering teams.
Strategic partnership to deliver a digital twin-based approach for power plants and energy infrastructure
In the quarter,
Building Modelon Impact for accelerated growth on the cloud
The product development focus on the improved capabilities for cloud scaling continued as planned during the quarter with preparation of the 2023.2 release scheduled for Q2. As previously described, these capabilities will support our growth strategy by leveraging unique customer values enabled by the cloud from our pioneering market position, with the industry typical sales cycles of 6-12 months. The 2023.1 release in February included significant user improvements and updated model libraries in our target industry application segments.
Also related to our ongoing SaaS transformation, we continue to evolve and adapt our global organization. In the quarter this meant implementing targeted staff changes visible as one-time costs.
As we proceed into the second quarter, we remain highly motivated by the strong and positive feedback from our customers. The overall opportunity and interest are high in our uniquely positioned system simulation cloud-solution Modelon Impact. Our entire organization is executing with the aim of accelerating our ARR growth towards our mid-term financial goal of 35%.
Magnus Gäfvert, CEO
Investor presentation
The complete Q1 interim report is attached to this press release and is also made available on the company webpage: http://www.modelon.com/investor-relations/#FinancialReports.
© Modular Finance, source
