Teneo AI (TENEO) Q2 2024 earnings summary

Executive summary

• Rebranded from Artificial Solutions to Teneo AI, completing its transformation to a pure SaaS business and launching new features for international scalability.

• Achieved record quarter with 74% YoY growth in SaaS API call volumes, 47% SaaS ARR growth, and strong technology innovation.

• Secured new customers MedHelp, HealthFlex/Healthflexx, Valcon, and signed several renewal agreements with major clients.

• Closed an oversubscribed 50 MSEK directed share issue, strengthening the balance sheet and supporting expansion.

• Focused on expanding in the U.S. and U.K. markets, leveraging new features and a robust cash position.

Financial highlights

• Recurring revenues grew 31% YoY to SEK 19.1 million in Q2 2024; net sales at SEK 19.3 million (+31% YoY).

• SaaS ARR increased 47% YoY to SEK 43.7 million; total ARR at SEK 74.3 million (+28% YoY).

• Gross margin improved to 79% (82% excluding commission costs), up from 72% YoY.

• Adjusted EBITDA loss at its lowest level to date, halved to -6.3 MSEK in Q2 2024.

• Cash position at end of June was SEK 60.5 million, adjusted to SEK 68 million after July collections.

Outlook and guidance

• Optimistic outlook for continued API call and revenue growth, especially in Q3, driven by new features and strong customer adoption.

• Short-term gross margin may decrease due to higher cost of sales from new customer acquisition, but expected to improve as existing customers scale.

• Strategic focus on top-line growth in the U.S. and U.K., with board to revisit priorities between ARR and cash flow targets.

• Financial targets: over 1 billion API calls in 2024, over 200 MSEK ARR in 2025, and cash flow positive from operations in 2024.

• Long-term EBITA margin target exceeding 30% in a mature state.