Total ARR was SEK84.3m (65.0), which of SEK54.3m (34.3) was SaaS. Our forecasts were SEK82.8m and SEK51.7m. The 30% ARR growth and 58% SaaS ARR growth y/y were mostly driven by an 81% increase in the SaaS API Calls y/y. The q/q increase of SEK10.6m in SaaS ARR was the highest level so far, compared to SEK~6.5m per quarter in H1 2024. While still far from the SEK20m in q/q increase needed to reach SEK200m in ARR by the end of 2025 – the company’s ARR target – we are encouraged to see a substantial increase in absolute q/q growth. Adjusted EBITDA-CAPEX was SEK-12.6m (-20.3), below our forecast of SEK-8.6m.

As mentioned in our last Update, to accelerate the adoption of Teneo AI among current customers (and to attract new ones), Teneo AI has started using auto-translations of the English model instead of building models for each language. In this earnings call, management mentioned that a large customer implemented many new languages in several regions in one weekend. Having additional fast implementation functions is most likely an attractive feature that can help increase revenue from current customers.

We increase our Base Case somewhat to SEK1.0 (0.9), as the net effect of increased SaaS ARR forecasts and increased OPEX positively affects our valuation. We believe Teneo AI is one of the SaaS cases with the highest potential/risk listed in the Nordics. On a positive note, it is very scalable, has 99% recurring revenue, and is among the global leaders in its niche, with several global giants as customers, implying substantial growth potential at a limited cost. On a negative note, it is not profitable (although the trend is positive) and has a high portion of debt (although cheap financing until refinancing) relative to its market cap.