Kahoot! ASA (KHOTF) Q4 2022 Earnings Call Transcript

Kahoot! ASA (OTCPK:KHOTF) Q4 2022 Earnings Conference Call February 16, 2023 10:30 AM ET

Company Participants

Eilert Hanoa – Chief Executive Officer

Ken Østreng – Chief Financial Officer

Conference Call Participants

Unidentified Company Representative

Welcome to nan Kahoot! Group Earnings Webcast for nan Fourth Quarter of 2022. I'm [indiscernible] from Kahoot! and I will beryllium your moderator today. We are very excited to beryllium present pinch you to springiness you updates connected our advancement present astatine Kahoot! We will commencement by giving you an introduction, and past we will proceed to talk Kahoot!'s financial and operational highlights from Q4. At nan extremity of our presentation, we will return immoderate questions from nan chat. So please consciousness free to stock your questions successful nan chat arsenic we move through. Today, we person pinch america here, Eilert Hanoa, CEO of Kahoot!; and Ken Østreng, CFO of Kahoot!

I will now walk it connected to Eilert to get america started. Over to you, Eilert.

Eilert Hanoa

Thank you, Irma, [ph] and bully greeting and bully day everyone. Thank you very overmuch for taking portion successful this 4th fourth position and nan pursuing Q&A. We look guardant to taking you to our last 4th of past twelvemonth and stock immoderate of nan highlights connected – arsenic good arsenic really this sets america up for awesome 2023. Kahoot! is simply a ngo driven institution calved retired to nan thought of making a learning awesome for everyone. And a sustainable early starts pinch learning, arsenic we each know, and learning and improvement is what really drives our nine and each america arsenic organizations forward. And for america pinch genuine desire to create nan champion learning devices successful nan world to prosecute learners of each ages is besides fundamentally what underpins our attraction and our maturation arsenic a company.

As we're entering 2023, Kahoot! is good positioned pinch a unsocial opportunity to lend crossed nan spectrum, reaching each learners worldwide. Evolving complete nan past years, nan group coming consists of nan halfway Kahoot! learning and engagement level that we each cognize pinch nan signature Kahoot! experience. In summation to Clever, nan starring U.S. K-12 integer schoolroom solution, connecting education providers pinch students, teachers and schools each complete nan U.S. And past but not least, a afloat suite of complementary learning applications and experiences developed and acquired complete nan past mates of years.

The first 4th of 2022 – sorry, 2023 marks nan 10 twelvemonth day since Kahoot! was launched arsenic an highly celebrated schoolroom quiz. As we each remember, it was bully to person and free backmost successful nan early days, but celebrating our anniversary, I think, it's important to admit nan roots of nan institution and nan awesome team, nan founding team, did connected building nan basal thought of making learning awesome. This continues to beryllium our guiding shop aliases DNA and nan substance that is really driving our merchandise led invention and maturation strategy. At nan aforesaid clip arsenic we make disciplined investments going forward, moreover though half of our statement is devoted to merchandise development. We really besides want to ever person a observant guidance of investments and costs to nan committedness of our profitable maturation arsenic we proceed to build nan statement and that is simply a portion of our DNA arsenic well, arsenic we had demonstrated done not only 2022 and Q4, but besides for past 12 quarters.

And complete nan past 3 years alone, we person seen invoiced gross maturation substantially, arsenic you tin see, but besides being capable to proceed to standard connected nan financial side. And we do proceed to standard pinch some amended offerings, broader offerings and being capable to spell deeper into our users lawsuit and worth proposition. And we're besides already importantly increasing erstwhile it comes to nan footprint among master users and corporations successful different segments and verticals. And past but not least, we person nan spot of nan Clever level successful nan acquisition abstraction successful U.S. And going guardant and contempt uncertain marketplace economical times, Kahoot! stands very patient pinch its committedness to continuous profitable maturation into our scalable package level shape that started retired successful 2022.

And pinch our cardinal maturation levers, we judge that we person respective ways to proceed beardown maturation trajectory going forward. First of all, it's important to admit that Kahoot! dissimilar galore others is not limited connected outer sources for illustration paid trading to grow. The astir important maturation lever is nan merchandise itself. And knowledgeable Kahoot! is really really nan connection is passed forward. And this is why nan personification acquisition and engagement connected nan level creates nan ground of nan viral dispersed and successful nan adjacent information to conversion to paid usage, whether it's betwixt individuals astatine schoolhouse aliases successful corporations. Secondly, our world starring Kahoot! emotion brand, which is globally known and respected crossed audiences, verticals and geos, are besides an highly important portion of this foundation.

Thirdly, our beardown scalable level pinch hundreds of millions of users capable to usage nan ecosystem either arsenic learners aliases presenters aliases contributors together pinch our world partner brands and pinch publishers that are creating premium contented for each kinds of usage cases pinch our highly businesslike and scalable debased operational costs guidelines platform. And I deliberation we demonstrated nan leverage of this exemplary very good successful our 4th fourth wherever we efficaciously grew nan portion economics good arsenic we besides were capable to turn our apical statement arsenic we proceed to put heavy successful much worth for each our users successful each cycle.

Also awesome pinch a passion is that we proceed to spot from our activity of users of each age. The [indiscernible], which was precocious published, is nan U.S. intelligence agency focusing connected Gen Z and millennials analyzing young consumers affinity for brands crossed each industries. And it's of people very bully to spot Kahoot!'s ranking among nan coolest brands some successful Western Europe and successful nan U.S. successful 2022. This is genuinely an astonishing accomplishment for institution for illustration ourselves successful a niche conception of learning together pinch this very good established user brands. So this nickname alongside others is simply a testament to nan unsocial narration we person established to our personification base. The Kahoot! marque stretches crossed virtually each audiences from kindergarten each nan measurement to – kindergarten teachers each nan measurement up to nan CEO offices connected Wall Street. And ideate nan magnitude of opportunities that this established marque level gives america into nan existing verticals, into adding much worth and besides to grow to caller verticals crossed nan globe pinch this background.

The associated worth of others is already proven done nan galore partnerships that we person established pinch different renowned world brands, and we person yet to commercialize this successful a ample way. So, overall, our marque is powerful and highly important assets are what build retired nan Kahoot! level arsenic it converts straight into nan usage, engagement and worth for each our users successful each nan segments that we are providing solutions for. And nan astir unsocial is that this marque position is built without buying nan position alternatively building it done an utmost worth created connected behalf of nan users and nan users promoting nan worth by connection of mouth.

That takes america to nan 4th fourth wherever we delivered a coagulated capacity from a financial perspective, contempt nan marketplace turbulence, some successful position of apical statement maturation and successful peculiar operating rate travel amounting to $17 cardinal successful Q4 and $43 cardinal successful nan afloat twelvemonth of 2022 pinch marginal CapEx. Clever had coagulated maturation successful usage and apical statement pinch now 75% of each U.S. K-12 schools connected nan level and buildings exceeding $64 cardinal for nan afloat year, a 29% maturation connected nan pro forma ground connected apical line. And moreover though their full maturation successful Q4 was reasonably flat, nan usage connected nan level is continuing to turn some passim 2022, but besides into January arsenic we spot nan aforesaid inclination proceed pinch maturation successful usage astir 8% successful January connected MAU compared to past year.

Another cardinal driver for our maturation was nan proceed inclination successful paid master users. Professional users, which is of people nan full spectrum from hosts successful schools, hosts successful business settings, and worker seats arsenic good uses peculiarly nan – and shows nan – sorry, nan spot of nan retention numbers. The dollar retention for our apical endeavor and schoolhouse districts accounts stay coagulated astatine 120% plus, which is astir nan aforesaid level arsenic we person successful Q3 and q4. And furthermore, we presently spot a somewhat improved colony compared to nan extremity of Q4, and peculiar successful nan Work conception pinch somewhat stronger maturation successful nan opening of this year.

We're besides very pleased to spot that integrations and characteristic for each segments, including student-led crippled experiences alteration accrued learning value, usage and engagement connected nan platform. And each these investments that we person done crossed nan level for nan past mates of quarters will really make it imaginable for america to accelerate our commercialized activities successful 2023. Through integrated maturation connected acquisition complete nan past years, nan Kahoot! Group is now positioned astatine nan intersection of learning and assemblage engagements needs crossed cardinal vertical and business areas. And fto maine return a infinitesimal to present really nan group will study and shape our diversified business going forward. And we do this to prehend nan opportunity crossed 3 broader categories pinch vastly different users representing different commercialized imaginable and nan commercialized which you person heard of arsenic Kahoot! astatine work. Previously, we stitchery group's resources devices and solutions for firm learning and engagement, including Actimo and Motimate arsenic their acquired units and, of course, each plus finance we do connected nan Kahoot! level for master usage successful corporations.

Under education, Kahoot! schoolhouse and Clever will dress up our powerful offerings to teachers and students. Today, Clever is successful nan U.S. and Canada, but that's a portion of our world rollout going forward. And of course, nether user and experience, you will find not only nan Kahoot! astatine location and Kahoot! academy pinch marketplace, but besides our learning level and learning apps that's combining nan acquisitions of Poio, DragonBox, Drops and others to make judge we person a awesome learning level for learners of each ages, including premium contented from educators, publishers and brands. And arsenic we proceed to germinate arsenic a group, we will shape astir these 3 business categories to further powerfulness up our commercialized efforts and unleash nan afloat imaginable of some our teams, our setup, our customer guidelines and our merchandise offerings successful nan clip to come.

And arsenic grounds for this, for astir – sorry, arsenic it is evident for astir macroeconomic business astatine nan extremity of past year, and besides continuing into this twelvemonth is much challenging. In this context, Kahoot! offers an charismatic worth proposition pinch a CapEx descent learning instrumentality for corp of each size. We really spot a higher liking successful utilizing Kahoot! arsenic a company-wide instrumentality for learning, some from nan Kahoot! level from Actimo and from Motimate than ever earlier during nan turbulent times of nan past mates of quarters. And we person a very bully tally successful nan 4th fourth erstwhile it comes to inbound interests to america to fundamentally spot really we tin cater for ample organizations utilizing our toolboxes for flexible, easy to deploy and easy to devour solutions for enterprise, whether it's for retail, for recreation aliases for corporations.

And fto maine dive into immoderate of nan highlights from nan Q4 lineup of customers that had moreover either bought caller licenses, extended their existent subscription, aliases been coming up caller conception representative. The 4 I will commencement disconnected pinch is BPP University, which is simply a assemblage – backstage assemblage successful England pinch astir 20,000 students crossed nan UK. They started retired pinch a 100 licenses for their teachers and past arsenic they saw nan value, not only for nan teachers, but besides for nan admin and nan unit accrued that to 1 licence for each employee, 1500 licenses.

A awesome illustration to spot really moreover successful a corporations and organizations, nan viral dispersed of Kahoot! and upsell is presently working. And this, of course, is simply a awesome measurement for besides to show nan worth that endeavor and acquisition institutions connected galore aspects person nan aforesaid attributes and besides nan aforesaid usage for nan aforesaid functionality.

Another illustration is Open English that are utilizing Kahoot! successful a full different way, fundamentally arsenic a distribution platform, arsenic they person complete a 1,000 teachers who are perpetually pinch a precocious turnover, but besides utilizing nan aerial level to do training and seminars for students done Zoom. And they usage Kahoot! nan branded edition, to administer their learning worldly to these classes from nan different teachers for each session.

In corporations, we person Compass Group, which is simply a institution pinch astir 500,000 labor crossed Europe wherever we person been capable to adhd different 2 countries to nan database of countries utilizing nan Actimo level for training of employees. Latest successful Q4 pinch Germany and Slovakia, adding different 10,000 positive seats connected nan Actimo platform. And it besides shows arsenic they’re continuing to grow and adding respective countries each twelvemonth nan committedness we person together pinch Compass to make judge that we person a awesome solution for them and besides that we supply nan ratio for their soul usage arsenic they proceed to rotation retired our solutions internally.

RoadSafe, U.S.-based institution pinch nan attraction connected postulation systems is besides a caller customer on-boarding to usage their Actimo suit for soul training of their unit and really seeing that this is nan champion solution for them erstwhile it comes to reaching retired to some caller and existing labor and caller training and necessaries arsenic they go.

And last, but astatine slightest Discover Financial Services besides a customer being pinch Kahoot! for immoderate time, proceed to grow their licenses. And pinch their 15,000 employees, we besides deliberation location is simply a awesome opportunity to proceed to grow, to get pinch them successful nan future. And each these customers we conscionable talked astir are spending successful nan scope of $10,000 a 4th aliases up pinch america successful bid to person entree to our solutions and really utilizing them efficiently internally.

What’s unsocial pinch Kahoot! scalable business exemplary is that successful astir of these cases, each leads are inbound. These are inquiries coming to america either because they person seen it utilized already successful nan organization, successful different akin companies successful nan aforesaid akin industry, aliases because they’ve seen nan worth from nan small, first usage cases and nan opportunity to standard it connected our larger grade successful this organizations.

So pinch that, let’s move to nan priorities this twelvemonth to really make judge that we are capable to leverage this scalable level going forward, because that’s really what we are each astir and focusing on. There’s a batch of untapped imaginable for america to proceed to grow, and not only that, proceed to build awesome devices pinch moreover much commercialized opportunities than what we person seen successful nan marketplace from Kahoot! successful 2022.

The deeper and broader learning aspect, which of people besides triggers opportunities for much commercialized opportunities erstwhile it comes to existing customers and caller segments, and getting much mileage retired of nan awesome teams and knowledge from our acquired offerings, giving america an opportunity to optimize really we distribute? How we sell? How we bundle each nan assets person successful nan group? When it comes to Clever location is simply a awesome measurement now arsenic entering their adjacent shape to besides double down connected nan commercialization of Clever’s premium offerings, which is together pinch their changeless merchandise improvement gives america an separator arsenic we person 10,000 schoolhouse districts already connected nan platform.

And of people marketplace, which is not conscionable offering contented arsenic we person seen successful our first first phase, but besides nan opportunities to connection different kinds of business opportunities, whether they are subscription, apps, and integrations for some publishers and contented creators going forward. And past but not least, make judge that we ne'er hide that it’s each astir continuous invention successful bid to succeed. So resources utilized connected invention will proceed to beryllium a ample part, 50% of organization, and you will spot a overmuch higher tally complaint and rollout velocity successful 2023, moreover compared pinch our grounds twelvemonth aliases 2022 to really make judge that each customers are getting a awesome valuable proposition successful each cycle.

So pinch that, I’m very happy to manus complete to Ken to spell done our financial reappraisal of Q4.

Ken Østreng

Thanks, Eilert. Good day and bully greeting everyone. I’m very pleased to return you done nan numbers for a coagulated 4th fourth of 2022. From a finance perspective, our attraction successful Kahoot! is astir continued scalable growth, expanding profitability, and coagulated rate travel procreation pinch a disciplined superior allocation.

In position of continued profitable growth. The financial improvement of nan past 3 years confirms that we person a proven scalable business model. Our 30 adjacent billing maturation to $169 cardinal of nan past 3 years is driven by integrated maturation successful number of paid subscriptions and effect from acquired companies. Revenue maturation follows nickname of nan build and subscriptions of nan word play driving nan 18x summation of nan past 3 years to $146 cardinal gross past year.

We person continued betterment successful adjusted EBITDA pursuing gross maturation and prudent costs improvement pinch an adjusted EBITDA summation of $37 cardinal complete a three-year period. And successful 2022, adjusted EBITDA accrued 57% year-on-year to much than $30 million.

Our scalable business exemplary pinch marginal CapEx is proven by nan beardown free rate travel betterment of $44 cardinal of nan past 3 years. In 2022, free rate travel accrued 37% year-on-year to $41 million. The 4th fourth operating tally rate, which lies nan scalability of nan Kahoot! operating model.

And arsenic you tin spot successful this chart, we person operating exemplary leverage pinch a humble quarter-on-quarter maturation of nan operational costs guidelines and this comes done a debased customer acquisition costs by scalable level supporting each customer categories globally pinch infrastructure costs for some free and paid users included successful nan existent costs guidelines and we person a capital-light business model. Its minimal CapEx required to support nan standard of nan operations. So nan standard [indiscernible] successful nan floor plan includes some Clever and nan remainder of nan Kahoot! Group. Furthermore nan Kahoot! Group, excluding Clever delivered approx $105 cardinal successful billings successful 2022, it adjacent to 35% free rate travel conversion past year. And arsenic Clever now has completed location aliases not, we’re nary aligning astatine nan financial improvement for Clever pinch nan remainder of nan group.

Now onto nan quarterly development. We person a building seasonality done nan year, and that’s impacted by nan back-to-school play successful nan 3rd quarter. And of course, regular business seasonality astatine done nan year. In particular, for nan afloat year, Clever grew 29% successful billings year-on-year pro forma erstwhile nan mostly of billings came into 3rd quarter, giving nan earthy seasonality of nan business. The nickname of measure pre-paid yearly subscriptions translates into continued quarter-on-quarter gross maturation done twelvemonth pinch Q4 gross up 18% year-on-year.

Adjusted EBITDA continued to amended quarter-on-quarter during nan twelvemonth pinch an adjusted EBITDA separator expanding from 17% to 25% done to quarters successful nan twelvemonth and adjusted EBITDA for Q4 was each clip precocious complete $9.6 cardinal up 76% year-on-year.

Our free rate travel procreation follows nan billing seasonality pinch nan mostly of nan free rate travel successful nan 2nd half of nan year. And successful Q4, we had 28% year-on-year maturation successful free rate flow, and successful Q4 we achieved nan aforesaid free rate travel arsenic we delivered for nan afloat twelvemonth 2020. So our proven scalable business exemplary mixed nan expertise to thrust profitable maturation successful acquired companies arsenic portion of nan group is demonstrated by our adjusted EBITDA separator description complete nan past 5 quarters.

Now onto nan year-on-year improvement for nan 4th quarter. The 8x maturation successful billings for Q4 to almost $44 cardinal complete nan past 3 years is driven by integrated paid subscription maturation and nan acquisition of Clever that was afloat included from nan 4th fourth 2021. The billing translates into nan 13x gross improvement complete 3 years increasing from little than $3 cardinal successful Q4, 2019 to $39 cardinal successful nan 4th fourth 2022.

Conversion of free to paid users and relationship description is driving maturation successful nan number of paid subscriptions crossed each personification categories, and by nan extremity of 2022 will scope nan 1.3 cardinal paid subscriptions crossed nan group. And from a geo perspective, nan U.S. and Canada proceed to create arsenic nan awesome gross region for Kahoot!, and has complete nan past 3 years accrued its stock of nan afloat twelvemonth billing from 46% to 65%. So accordingly Kahoot!’s billing rate is dominated by dollars. However, arsenic nan group has billings successful different currencies arsenic well, pinch much than $4 cardinal antagonistic effect connected invoice gross for 2022 owed to nan strengthening of nan dollar successful 2022 compared to 2021.

Now connected to EBITDA and nan rate travel development. Following a continued year-on-year betterment adjusted EBITDA was up 76% year-on-year successful nan 4th fourth pinch an adjusted EBITDA separator aliases 25% successful Q4 2022 versus 17% successful Q4 2021.

Cash travel from operations almost translates into free rate travel owed to nan business exemplary pinch minimal CapEx required to support nan standard of nan operations. And Kahoot! turned rate travel affirmative successful nan 4th fourth 2019, and has remained rate travel affirmative ever since. So Q4 2021 was nan first afloat 4th pinch Clever, and for Q4 2022, we person had a humble year-on-year maturation aliases 6% successful operating expenses talking to nan scalability of our operating model.

There are calculated share-based compensation expenses deriving from nan Group’s equity program. And nan calculated disbursal accrued notably successful nan 3rd 4th successful 2022, and that was owed to nan rollout of a caller equity program. But we tin spot that nan share-based costs expenses are decreasing successful nan 4th quarter, and these expenses will proceed to diminution done 2023, successful peculiar successful nan 2nd half of nan twelvemonth based connected nan vesting schedule of existent outstanding instruments.

And by nan extremity of 2022, we hired outstanding instruments nether nan equity program, some nan aged and nan caller of 32.7 of which astir 50% of nan instruments are non-dilutive astatine today’s stock price. And of course, calculated payroll taxation fluctuates pinch nan stock value development. When it comes to nett income, we had a affirmative nett income for some Q4 and nan afloat twelvemonth 2022 for Kahoot!.

Now connected to nan rate position development, and successful Q4, we saw each clip precocious rate travel from operations successful a 4th exceeding $17 million. The rate outflow from investments successful nan 4th was chiefly owed to deferred costs for nan Clever acquisition successful statement pinch agreed costs schedule.

And for nan afloat year, adjusted rate travel from operations was $42.7 million. That’s up 37% year-on-year. And arsenic we tin spot from reported rate travel from operations for nan afloat year, that was $41.9 million. So nan adjustments are really minor. So fundamentally $42 cardinal successful existent [ph] rate travel from operations without adjustments.

The nett rate retired from investments for nan twelvemonth is driven by costs for deferred and contingent considerations for anterior years acquisitions. And we person now remaining approx $35 cardinal to beryllium settled for Clever and max $45 cardinal for Drops to beryllium settled successful a operation of rate and shares successful nan coming years. So pursuing these settlements, we’re done pinch contingent and deferred payments. And considering superior allocation, nan Group doesn’t request further superior to turn organically. Furthermore, our existent rate position and early rate procreation supply america pinch opportunities some integrated and non-organic alternatives, including M&A and partnerships.

So going forward, nan Kahoot! Group will supply guidance that’s outlined connected nan existent page. For nan afloat twelvemonth 2023, continued double digit year-on-year maturation successful billings, delivering recognized revenue, exceeding $117 cardinal pinch humble yearly maturation successful operational costs base, and adjusted EBITDA exceeding 40% year-on-year maturation pinch coagulated free rate flow.

For nan first 4th of 2023, location is continued year-on-year maturation successful billings and delivering recognized gross of $39 cardinal to $40 cardinal pinch a humble quarterly summation successful operational costs guidelines resulting successful year-on-year betterment successful adjusted EBITDA and free rate flow.

For nan semipermanent ambition, we are reiterating nan semipermanent maturation imaginable and scalability ambition targeting approx 40% rate conversion successful 25 arsenic percent of billings. And further accusation will beryllium provided connected nan Investor Day successful nan 2nd 4th of 2023.

So by that, I’ll manus backmost complete to our CEO, Eilert for concluding remarks.

Eilert Hanoa

Thank you, Ken. And let’s wrap up by looking astatine why our level really make this highly profitable and scalable maturation possible. So our business exemplary is based connected a viral dispersed pinch 1 cardinal yearly transactions from our customers and marginal trading for nan group arsenic a full and income costs similarly. Our user-generated contented pinch marginal costs of gross is besides a measurement to build our ecosystem. And nan infrastructure that we person is genuinely scalable arsenic we already are hosting and catering to 98% of users connected nan Kahoot! platform, not having a paid subscription.

Our high-paced innovation, which is of course, nan driving motor for each their users having a awesome acquisition each clip they travel backmost to our platform, is besides really making judge that it’s not astir what was successful successful a lifecycle, but really what’s each astir occurrence successful nan adjacent cycle. So these halfway elements mixed pinch a beardown marque and pinch a passion shape each our users connected our ecosystem and each our partners, is really what drives nan momentum successful societal settings, successful schools, education, and successful corporations astir nan world.

Finally, let’s look astatine our strategical attraction areas going forward. Kahoot! [indiscernible] committedness to solid, profitable double digit maturation arsenic we proceed to put successful these 4 very important areas. That will play a domiciled by proceed to fundamentally make judge that we put each our power into these 4 tracks, engaging learning, evolving our level deeper and broader, meaning, of course, nan unrecorded and besides azygous play and study modes that we each know, but besides adding much worth and much dimensions to these experiences going forward.

The firm learning which is taking each engaging learning features we person and packaged them for corporations, which makes it imaginable to get pinch what we person some of our products, but besides acquisition from Actimo, Motimate to person a amended – moreover amended opportunity for serving these segments going forward. Our integer level for schools of people built connected Clever, giving america an opportunity to besides partner pinch different EdTech solutions, publishers and app providers crossed K-12 U.S., and besides arsenic we grow to different markets being an important portion of nan distribution web we person successful Kahoot!.

And past but not least, nan premium contented initiatives some astir nan creation tools, nan hosting experiences, nan branding experience, and each nan aspects of contented transactions connected nan marketplace and packaging and protecting IP for each our creators arsenic we spell forward. And I conscionable want to extremity connected illustration suing each this together, which is our caller worker acquisition connected nan Kahoot! 360 level which is up for motorboat successful nan first shape successful nan coming months.

This will springiness each labor and organizations utilizing Kahoot! 360, nan opportunity to upgrade to usage this for labor for each kinds of training, engagement, feedback loops and involvements, which is simply a awesome measurement for immoderate statement pinch marginal costs from deployment, installation, consulting, configuration, and of people nary CapEx to instantly person a instrumentality to some stock and to prosecute and build nan firm civilization astatine nan minimum investment. And this is 1 of nan important building blocks, evidently that makes it imaginable for america to besides grow our worker licence based offerings into corporations, some mini and ample organizations astir nan world.

So to wrap it up, our world recognized marque pinch nan scalable platform, nan knowledgeable organization, which is correct size for each initiatives we’re going to do successful 2023. The maturation imaginable we some have, nan maturation we doing and nan maturation of our financial capacity will continue. And truthful will our attraction connected continuously improving everything we do for each segments and each cycle.

And past but not least, arsenic we each saw from nan outline from Ken, we person a coagulated financial position makes it imaginable for america to do some strategical partnerships, but besides perchance non-organic maturation successful nan early to moreover grow nan Kahoot! level and maturation further.

So pinch that, I manus it backmost to Irma to kickoff our Q&A.

Question-and-Answer Session

A - Unidentified Company Representative

Thank you Eilert, and convey you, Ken. We are now fresh to move to Q&A for nan last conception of nan presentation. We person received galore questions successful nan chat. And we’ll commencement pinch nan following. Given your guidance connected maturation for this year, what are you seeing regarding maturation momentum now successful Q1 compared to Q4?

Eilert Hanoa

So, I tin footwear that off. So I deliberation what we spot is that nan opening and this is besides what we person talked astir successful erstwhile events that nan opening of Q4 was beautiful strong. And past nan past portion of Q4 went very silent compared to some what is normal from nan seasonality. But besides what I deliberation we are now, arsenic we person seen from endless of quarterly presentations a alteration successful sediment [ph] from nan opening of December that changed dramatically for some aliases nan starring tech giants of nan world, but besides for section providers successful almost immoderate facet of nan tech industry.

The bully news is that we person seen overmuch much normalized than affirmative sediments, some erstwhile it comes to existing customers, liking from caller customers towards what we are providing of solutions and that mixed with, aliases initiatives that we besides talked astir coming that tin springiness america opportunities to possibly moreover play successful different leagues than wherever we traditionally person been playing.

Unidentified Company Representative

Thank you. Next 1 is besides for you, Eilert coming from Pete-Veikko Kujala from Morgan Stanley. Could you talk astir nan drivers down Q4 deceleration successful Clever’s invoicing maturation year-on-year? Is this a technicality owed to timing of invoicing betwixt quarters aliases are location immoderate changes successful information partners, volumes, monetization, really galore beta partners Clever had successful Q4?

Eilert Hanoa

Yes, truthful each successful all, I will opportunity that Clever, arsenic besides mentioned during nan today’s position seeing a bully infinitesimal to some nan full maturation for nan twelvemonth of 2022, but besides now successful January this year. So it’s decidedly a continuously maturation Clever level year-on-year erstwhile it comes to usage, erstwhile it comes to nan number of partners connected nan platform. And of course, besides nan opportunities we person connected nan level pinch nan caller Clever positive paid services that nan 10,000 schoolhouse districts connected nan level tin beryllium capable to upgrade with.

That said, Clever is not a day-to-day trading level akin to nan remainder of nan group. So schoolhouse twelvemonth is much nan rhythm pinch nan back-to-school arsenic nan large twelvemonth events. So a batch of nan maturation momentum will beryllium concentrated astir nan 3rd quarter, arsenic we besides saw past year. And past erstwhile we guided for a twelvemonth of 2022, we said that fundamentally a 3rd of billing gross successful Clever will beryllium successful nan first half and 2 thirds successful nan 2nd half, which of course, not connected nonstop percentage, but beautiful adjacent was besides nan consequence for 2022.

So I deliberation nan momentum successful full connected Clever is strong. It’s decidedly imaginable successful nan Clever level good beyond what we person been capable to execute truthful far. And arsenic Clever now person ended their portion of their earnout structure. We person besides opportunity to do immoderate further associated projects and ways to activity together successful 2023 that was a small little easy to negociate successful 2022. So each successful all, we are very assured that nan sum of Kahoot!, Clever, nan momentum, nan level distribution and associated projects is connected nan beardown broadside of our activities database successful this year.

Unidentified Company Representative

Thank you. Ken, nan adjacent mobility goes to you. How do you expect your costs guidelines to create this year? Are you readying immoderate changes to your costs base?

Ken Østreng

So acknowledgment Irma. So for 2023 we expect a prudent improvement of nan costs base. We’ve been during nan past 5 4th had a very humble costs guidelines summation and we expect to attraction connected operational excellence going into 2023. We person – ne'er had a stronger starting constituent successful position of an knowledgeable statement going into a twelvemonth than we person successful 2023. And this is nan twelvemonth wherever we’re going to maximize leverage of our existent squad and make judge that we make nan correct priorities successful position of really we usage our costs guidelines and nan elasticity that you usually will person successful a costs guidelines during a year. So fundamentally continuing pinch a humble improvement successful our costs base, that’s our reasoning correct now.

Operator

Thank you. The adjacent mobility is for Eilert – Kristian Spetalen from Arctic Securities. The implied correction for you connected caller subscribers seems substantially little successful H2 versus H1, and Kahoot! has tally campaigns pinch this again during Q4. Is it then, adjacent to opportunity that Q4 subscriber maturation is somewhat boosted by these discount campaigns? For example, subscriber maturation successful location and study was surprising?

Eilert Hanoa

Well, I deliberation first of all, we person been doing campaigns since we launched our first commercialized plans. That’s very overmuch what we do some from a play perspective, from introducing caller features, introducing caller plants, and of course, besides for existing customers to upgrade to much to caller plants. So that’s decidedly a portion of our moving operation. Our ARPU of people besides it’s impacted by what benignant of operation of nan services customers are buying. Then it’s a quality successful pricing for example, a premium hosting licence for an arena versus an worker licence for thousands of labor successful an optimal customer company.

And you will astir apt spot america having a wide scope of value points for business licenses arsenic you person from immoderate different package institution arsenic well, of course, doing different products from nan single-digit dollar per user. And up to I deliberation our astir costly scheme is $79 per personification per period correct now. So, I deliberation nan sum of really do we supply a awesome platform, a awesome offering and a awesome opportunity to turn that offering for nan user, meaning either stepping successful from free to salary aliases salary to salary much mixed pinch offering caller services for some caller and existing customers that they mightiness buy, successful summation to what they already person is nan base, champion measurement we tin proceed to turn nan full gross and besides nan full usage and implied successful that maximizing ARPU arsenic well.

Unidentified Company Representative

Øystein Lodgaards from ABG has besides submitted a question. One of nan initiatives you mentioned Eilert, is that you will recalibrate nan statement astir 3 halfway areas. Can you springiness immoderate much spirit connected what you mean by this?

Eilert Hanoa

Yes, a small bit. Most important we’re doing and which has already started, is done fundamentally opportunity that we request to beryllium moreover amended connected commercializing our offerings. Everyone aliases anyone who’ve been pursuing for immoderate clip person seen that we are beautiful bully successful launching awesome caller free services. So, I deliberation that’s nan subject we, you really master, what we besides beryllium request to beryllium arsenic bully arsenic to motorboat premium services connected nan get go. And I deliberation that’s hopefully nan results of nan alignments we’ve done internally that you will see, successful nan adjacent future.

And besides I deliberation nan measurement we build package and nan build services pinch a starting constituent of really tin we make judge that nan commercialized travel is arsenic seamless arsenic imaginable and past widen that commercialized travel pinch besides free usage arsenic whether it’s a ray touch further disservice aliases if it’s further features that tin beryllium trialed for a short time. On apical of what we each cognize arsenic nan free quiz Kahoot! standalone assets. So this, it’s a operation of mentality, really we task and scheme and really we shape our teams. That will beryllium nan astir important effect connected this.

Unidentified Company Representative

Thank you. Next is from Yemi Falana from Goldman Sachs. Thanks for your presentation. Firstly, comparative to immoderate different players successful nan Apex [ph] space, you are continuing to present beardown growth. Is it conscionable your pipeline that is giving you assurance to guideline for $170 cardinal admit revenues? Or are location different factors? Secondly, you person consistently talked astir scaling to your semipermanent rate procreation target. Do you position yourself arsenic connected way aliases possibly moreover up of this space?

Eilert Hanoa

Yep. I mean nan EdTech sector, of people includes a batch of different, some companies successful different authorities of maturity and besides very different business models which is an important constituent here, because nan business exemplary locally, it is very overmuch to supply a level for personification to make nan contented that mightiness beryllium utilized for soul usage successful nan institution aliases a coach for sharing pinch different teachers aliases a publishing house, sharing their content, either free aliases against nan transaction connected nan codification platform.

But what is unsocial present is that nan scalability of trading entree to a level is, of course, overmuch higher than if you waste our accordant contented transportation per se, that besides needs maintenance. So, I deliberation nan way, nan logic we are beautiful assured successful our guidance is that not only do we benignant of perpetually elaborate and spot nan measurement of transactions, we cognize it’s divided connected let’s opportunity astir a cardinal transactions this twelvemonth arsenic well. And we cognize that we person some from a geo perspective, from a conception perspective, and from invention aliases an evolvement perspective, a batch of different levers that we tin calibrate and attraction on.

And I must opportunity that nan difficult learning from 2nd half past twelvemonth besides made america a small spot much paranoid successful erstwhile it comes to really we should guideline and hole for nan twelvemonth of 2023 erstwhile it comes to, I would opportunity beforehand loaded investments successful merchandise releases and plans for nan remainder of nan year, arsenic you hopefully will spot coming retired from Kahoot! successful nan coming months astir these to precisely cater to this need.

The past portion of nan question, which was about, sorry nan – yes, nan semipermanent standard connected nan rate commercial, which of people is related to nan level it’s to immoderate grade and we’re very proud of that, that we commencement to spot nan 40% rate procreation imaginable from billing already connected nan halfway Kahoot! broadside of nan obstruction and nan non-Clever portion of our business. We’re not a 100% location yet, but we are closing in. And I deliberation pinch nan timeline we person for 2025 and pinch nan opportunity we person to stock resources, build together, fortify each our initiatives, and arsenic tin besides pointed out, we will beryllium very, very cautious astir costs and discipline. I deliberation we person very bully opportunities to present connected that pinch nan existent measurement of thinking, and past we’ll walk each waking infinitesimal to do moreover smarter some products commercialized approaches and initiatives than what we already person connected our platform.

Unidentified Company Representative

Great. Thank you. Kristoffer Pedersen from Nordea is wondering if you expect world marketplace to make immoderate important gross successful 2023?

Eilert Hanoa

I deliberation we’ll spot a awesome initiatives connected marketplace coming out, each period we will do investments and caller features connected nan marketplace functionality, some to cater to nan creators, but much importantly to make nan products, nan beautiful and awesome courses they make disposable for a broader audience. And past arsenic I besides mentioned successful my presentation, we will present caller business models for these aforesaid creators, not conscionable by trading a one-off people but besides to turn into subscriptions. So I deliberation you’ll spot from america elements that really makes it imaginable for not only nan one-off transaction, but accordant subscription, which opens up a very different marketplace and besides a very potent marketplace successful nan adjacent future. But I don’t deliberation we will springiness a circumstantial forecast connected when, we expect a gross from this each than of course, nan 2nd half this twelvemonth will beryllium nan first, first large benignant of precocious play for nan effect connected nan marketplace successful 2023.

Unidentified Company Representative

The adjacent mobility comes from Kristian Spetalen from Arctic Securities. You person 50% of labor successful merchandise development. How overmuch incremental gross do you expect from nan preamble of caller products successful 2023?

Eilert Hanoa

So that’s a awesome question. And I would emotion to opportunity that, we expect each our initiatives to instantly make a boost successful revenue. After nan difficult instruction learned successful 2022, I would opportunity that we will fundamentally fund and cipher based connected existing products that we spot are evolving slow arsenic nan worth proposition that needs to cater to nan budget’s growth. And past if we are capable to present awesome caller features, capable to get a seller aliases markup whether it’s value aliases upsell aliases description , that would beryllium thing that we tin adhd astatine a later shape to accelerate our maturation further. So, I would opportunity it’s a reasonably blimpish attack successful connected full fast. It really changes nan trajectory connected gross for nan company.

Unidentified Company Representative

We person clip for 1 last mobility from Kristian Flørnes Støle from Carnegie. You study nett subscription growth, but could you springiness immoderate further colour connected maturation subscription maturation and aliases churn levels for Q4 and 2022? Has location been immoderate alteration successful churn levels complete nan past year?

Eilert Hanoa

So of people it’s a quality successful really we person seen this create some done nan pandemic first successful nan 2021, wherever location was a batch of liking for buying licenses from each different sides of and each benignant of businesses. In 2022 the, let’s opportunity normal behaviour came gradually backmost aft nan pandemic. And we judge that the, arsenic we besides saw nan 2nd half of 2022 pinch churn/renewal complaint being stabilizing for a much aliases little akin shape passim nan 2nd half of 2022, somewhat different successful nan different segments, but each successful all, reasonably unchangeable was much backmost normalizing versus nan astir erratic during pandemic compare.

So we expect that to beryllium nan aforesaid shape going forward. We don’t person immoderate nonstop insight, of course, successful really user behaviour will be, but again, arsenic mentioned now a fewer times based connected nan acquisition we had successful 2022. We besides person built very different measurement to make judge that we person a bully measurement to follow-up and supply moreover much worth for our customers. And arsenic we each know, that’s nan only measurement to amended your churn numbers complete clip to supply a awesome merchandise pinch a awesome valuable position that person a lasting worth for each users and each organizations that we person successful our ecosystem.

Unidentified Company Representative

Thank you, Eilert. I’m acrophobic that’s each we person clip for today. Thank you each truthful overmuch for joining america today, and convey you for your questions. Please scope america if you didn’t get to reply your mobility coming and dream to spot you again very soon.

Eilert Hanoa

Thank you.