Q4 concludes transitional 2023 with continued growth
Q4 Highlights
- Annual Recurring Revenue increased to MSEK 50.9 (45.7), an annual growth of 11%
- Net revenue increased to MSEK 20.7 (18.6), of which software revenues were MSEK 14.4 (13.0)
- EBIT amounted to MSEK -14.6 (-18.5), including development costs of MSEK 14.1 (16.7)
- Net income amounted to MSEK -13.4 (-18.6)
- Earnings per share amounted to SEK -1.22 (-1.69) before dilution
2023 Highlights
- Net revenue increased to MSEK 79.0 (67.6), of which software revenues were MSEK 53.1 (46.0)
- EBIT amounted to MSEK -57.2 (-64.6), including development costs of MSEK 53.5 (57.4)
- Net income amounted to MSEK -55.6 (-64.8)
- Earnings per share amounted to SEK -5.05 (-5.88) before dilution
- The board proposes that no dividend is paid for the 2023 financial year
Comments from the CEO
Q4 concludes transitional 2023 with continued growth
The fourth quarter concluded 2023 with double digit growth in software and service revenues vs. 2022, with full year net revenue growth of 17% and 15%, respectively, vs. 2022. Annual Recurring Revenue at end of Q4 amounted to 50.9 MSEK and sequential 6.0% growth vs. Q3. FY 2023 EBIT improved by +7.4 MSEK vs. 2022 driven by revenue growth and cost containment.
All of 2023 has been affected by the cloud transition activities as previously described. We are pleased to have concluded this development in Q4 and enter 2024 with a significantly strengthened cloud product offering.
Our flagship cloud platform Modelon Impact remains the strategic growth driver, with the Library Suite and FMI (Functional Mock-Up Interface) products as entry-level offerings. In Q4 we maintained a good business mix across this full portfolio. Our complementary professional services business drove product business by accelerating onboarding and model-based workflow implementation with our product customers. The professional services business developed well in 2023 with 21% growth over the full year.
Customer wins and testimonials with increasing pipeline activity
Notable wins in Q4 include both new accounts and upsell:
- Swedish-Swiss multinational leader in electrification and automation (new)
- Italian multidisciplinary research institute (upsell)
- US fuel cell company (new)
- Chinese commercial aircraft corporation (new)
- Spanish industrial automation company (new)
- Korean automotive company (upsell)
- US supplier of aerospace products (upsell)
- US global automotive motion control technology company (new)
- US multinational HVAC&R corporation (upsell)
Global pipeline activity increased in Q4 and provides a solid starting position for 2024. Lead generation and development are supported by the flow of customer testimonials and case studies from our well recognized customers across industries. Opportunities continued to be related to clean and sustainable energy and technologies in the Energy, Aerospace, Automotive and Industrial Equipment industries, where Modelon Impact provides demonstrated high value across the engineering life cycle and particularly in the innovation and development phases.
In the fourth quarter, we were delighted to add another strong testimonial to our portfolio from Universal Hydrogen: "Pioneering Hydrogen-Powered Aviation with System Modeling and Simulation." Universal Hydrogen is a recognized US innovator in hydrogen-powered carbon-free commercial flight, relying on system simulation and Modelon Impact for rapid and cost-effective development of their disruptive liquid hydrogen technologies. Universal Hydrogen explains that Modelon Impact shortens their simulation lead time with a factor of 2 to 3 compared to other options and enables effective team collaboration on the cloud as they build a more sustainable aviation industry.
Modelon Innovate 2024 User Conference
The planning of our second international user conference Modelon Innovate is underway with a strong line-up of planned customer presentations under the "Where Simulation Meets Sustainability" theme. The event will take place in Copenhagen on October 10 - 11.
Cloud transition development completed in Q4
The cloud transition development activities that have been ongoing throughout 2023 were successfully completed in Q4 with a significantly improved offering for on-premise installations of Modelon Impact. This new capability has been validated with pilot customers and is included in the 2024.1 release in Q1 alongside other high-value capabilities and improvements to be announced.
During Q4, Modelon has been assessed by independent auditors to meet the high security and regulatory compliance requirements of the Trusted Information Security Assessment Exchange (TISAX®). TISAX® is a global information security standard developed by the German Association of the Automotive Industry. Our structured and focused efforts on information security enables Modelon to grow business and establish confidence as supplier under increasingly demanding information security requirements.
We look back on 2023 as a transitional period with continued albeit subdued growth, substantial strengthening of our cloud product offering and the onboarding of a good number of great customers representing the most innovative, successful and demanding technology companies across the globe. With the good pipeline activity in Q4 and the new software release 2024.1 in Q1 we head into 2024 with great anticipation and confidence. We look forward to a year of success and accelerated growth towards meeting our financial goals!
Magnus Gäfvert, CEO Modelon
Lund, February 29, 2024
Investor presentation
Modelon invites to a presentation of the Q4 year-end report at 10:00 a.m. CET on February 29, 2024. CEO Magnus Gäfvert and CFO Jonas Eborn will present the Q4 and 2023 earnings in a webcast: https://us02web.zoom.us/webinar/register/WN_mePLQ2SCQEaScc2Q735DBQ
Complete Q4 year-end report is attached to this press-release and is also made available on the company webpage: www.modelon.com/investor-relations/FinancialReports.
For further information, please contact:
Magnus Gäfvert, CEO
Cell phone: +46-73-324 59 04
magnus.gafvert@modelon.com
Investor Relations: ir@modelon.com
About Modelon
Modelon offers systems modeling and simulation software that accelerates product innovation, development and operations in a range of industries. Modelon's flagship product, Modelon Impact, is a cloud-native system simulation software platform featuring a collaborative browser-based interface and thousands of proven models and components spanning a broad range of applications. Headquartered in Lund, Sweden, and with global reach, Modelon is an expert industry leader in model-based systems engineering with a focus on leveraging open standard technologies.
Modelon AB is listed on Nasdaq First North Growth Market with ticker symbol MODEL B. Redeye AB is appointed the Company's Certified Adviser.
