2023
Annual Report
Annual Report 2023
XMReality
Table of
Contents
01 | Letter From the CEO |
02 | Company Information |
05 | Financial Highlights |
06 | Future Outlook |
07 | Sustainable Value Creation |
08 | Corporate Governance |
10 | Risk Factors |
13 | Share Capital |
14 | Overview of Financial Performance |
15 | Board of Directors' Report |
26 | Notes to the Financial Statements |
34 | Definitions of Key Data |
35 | Signatures |
36 | Audit report |
01 Letter From the CEO
Andreas Jonsson
CEO XMReality
Despite the numerous challenges we faced in | |
2023, we emerged with a significant | |
achievement: record-breaking customer | |
growth. This is a testament to our resilience | |
and adaptability, as we successfully | |
2023 | implemented a new, more efficient sales |
process with shorter lead times. Our US | |
Report | customer base alone grew over 160 percent, |
contributing to XMReality's customer number | |
Annual | now exceeding 150. This is clear evidence that |
our updated sales strategy is yielding positive | |
results. With the promising growth potential of | |
the customers we onboarded in 2023 and | |
increased efficiency in our sales process, I am | |
confident that we are well-positioned to | |
achieve the goal of becoming cash flow | |
positive by the end of 2024. | |
Progress made during the year | |
Despite market uncertainties and turbulence, our | |
order intake for the year increased by 8 percent | |
compared to 2022, although it could have been even | |
higher if not for certain delays in larger orders. We still | |
saw a negative effect during 2023 on our ARR from | |
adjustments made by some clients in license renewals, | |
attributed mainly to the lingering effects of the COVID | |
years when they bought a large number of licenses. | |
Product-wise, we've made significant strides during | |
2023, completing the transition to a new back-end and | |
enhancing integrations and performance. These | |
improvements not only bolster our competitiveness | |
XMReality | but also significantly cut down on maintenance and |
continued development costs. | |
Streamlining the organisation for 2024
To navigate market uncertainties, we have decided to prioritize achieving our goal of reaching a positive cash flow in 2024. This has led us into a process of substantially adjusting our operating costs by the end of last year. These changes means we expect to reduce costs during 2024 by approximately SEK 20 million compared to 2023.
Reflecting on 2023, my first year as CEO, I can summarize a challenging year that has resulted in the need to prioritize. However, I'm certain that these adjustments are for the better in the long run, and we come out of 2023 as a stronger and more streamlined company set up for growth.
/Andreas Jonsson
02 Company Overview
Report 2023 | |
Annual | About XMReality |
The company | |
XMReality was founded in 2007 by researchers from | |
the Swedish Defense Research Agency (FOI) to help | |
bomb disposal experts defuse landmines in the field. | |
After six years of advanced Contract Research in | |
Augmented Reality for the Swedish Defence Materiel | |
Administration (FMV) and BAE Systems, we realized | |
the need to improve and simplify knowledge transfer | |
within various organizations worldwide. | |
We decided to commercialize our product to meet this | |
growing need, offering smart and efficient remote | |
video support for a wide range of organizations and | |
use cases. In 2017 we became a publicly listed | |
company on Nasdaq First North and have since then | |
expanded usage of our solution globally. | |
As part of our expansion strategy we recruited a small | |
team in the US in 2020 to start introducing XMReality | |
to the American market. In 2022 we officially | |
established a subsidiary in the US, XMReality Inc., and | |
XMReality | since then, we have successfully increased our |
American market presence and grown our customer | |
base. |
Our product
XMReality serves the global market with our product, Remote Guidance, which connects people regardless of where they are. XMReality Remote Guidance is a 'see-what-I-see' video software powered by Augmented Reality that connects workers with a remote expert to plan, assess and solve different scenarios. The product offers powerful guide functions combined with smart administrative features such as step-by-step instructions and automatic reporting. We are an enterprise-grade software offering integrations, branding and compatibility with AR smart glasses.
Security is always top of mind, both for us and our customers, and we are proud to have received ISO27001-certification which showcases our company-wide commitment to data security.
Our solution is today used worldwide in more than 60 countries and by some of the top industry leaders and Fortune 500 companies. We are committed to creating lasting value for our customers while contributing to a more sustainable business climate.
03 Strategy and Goals
Strategy
XMReality's operations are based on four core strategies:
Report 2023
We prioritize ease of use,ensuring minimal training and intuitive usage. Our solution is seamlessly integrated into critical industrial processes, making it accessible and efficient.
Being customer-centric, we gather real-world use cases to help shape a product and offering that addresses diverse needs, delivering superior value with quick ROI.
We ensure compatibility with widely used hardware, such as iPhones, Android devices, and all types of computers, facilitating effortless deployment and scalability.
Embracing Software as a Service (SaaS), we offer annual subscription contracts with automatic renewal while also providing direct online access for smaller customers, ensuring seamless accessibility and convenience.
Annual
2023 strategy revisions
In 2023, XMReality shifted its sales strategy from focusing primarily on large manufacturing companies to small and medium-sized businesses. The sales cycles are shorter with these types of customers, and most importantly, they are usually more ready to embrace new ways of working. This resulted in better adoption of our product and good potential for future growth and upsell. With this bottoms-up sales approach, we've seen great progress during the year. In some cases, we have also expanded to several subsidiaries within a large enterprise and seen greater success compared to a top-down rollout.
XMReality
Goals
During 2023, XMReality revised its financial goals due to the market's economic uncertainty, which has resulted in longer sales cycles and a decrease in available funding. The company has chosen to prioritize the goal of reaching a positive cash flow in 2024 and an EBITDA of 15 percent in 2025. In order to reach the goal of positive cash flow, the company has significantly reduced its cost basis for 2024.
04 2023 Highlights
New partnership with Viveo focusing on the Swedish facility management market
Important milestone with a new and improved
Salesforce integration available through their
AppExchange
Andreas Jonsson appointed new CEO of XMReality | |
2023 | starting from May |
Launched an industry-first OneDrive integration for | |
Report | |
cloud storage, enabling secure and easy access to call | |
Annual | content for customers |
Reinforced sales team in the US, resulting in a growing | |
momentum within the US hospitality business with | |
several new customers onboarded | |
Directed share issue of approximately 5.95 MSEK at a | |
subscription price of 0.43 SEK per share | |
Framework agreement with Coor, further | |
strengthening XMReality's position within the facility | |
management market | |
Finalizing the shift to a new product backend - | |
improving both the performance of the solution and | |
making future development more efficient | |
XMReality revises financial goals and doubles down on | |
becoming profitable in 2024, leading to large cost | |
restructuring with a planned cost reduction of 20 | |
MSEK in 2024 compared to 2023 |
Focus on user-friendliness
Throughout the year, XMReality's product development focused a lot on ease of use, reducing friction and helping users get started successfully. Several functions have been introduced to improve the experience for new users, such as a guided tour of the product when signing in and the ability to make guided test calls.
It also includes better performance on bad internet connections and functions making users aware of when they, or the person they are talking to, have a bad connection since this is fundamental to perceived call quality.
XMReality
05 Financial
Highlights
The total order intake for 2023 increased by 8 percent compared to the previous year. This growth is fueled by the expanding customer base, which now exceeds 150 clients.
Annual Recurring Revenues (SEK thousand)
20000
15000
10000
5000
0
Q1-22Q2-22Q3-22Q4-22Q1-23Q2-23Q3-23Q4-23
Order Intake (SEK thousand)
2023
In terms of net sales, the company saw a 5 percent uptick in 2023 compared to 2022, demonstrating steady progress. However, the annual recurring revenues (ARR) saw a dip at the end of the year. This is because some larger contracts that came in during the pandemic are set to renew during the fourth quarter, and a few of them renewed at lower levels than before, which negatively impacted the ARR.
2022 2023
8000
6000
4000
2000
0
Q1 | Q2 | Q3 | Q4 |
Annual Report
For the entirety of 2023, costs were down by 10 percent compared to the previous year and ended at slightly over 60 million SEK. During the final quarter of the year the company carried out several larger changes to further reduce the cost base. These adjustments are poised to positively impact performance starting from the beginning of 2024.
2023
Annual Recurring Revenues | SEK 16,849 thousand | |
Net Sales | SEK 19,788 thousand | |
XMReality
Order Intake | SEK 16,801 thousand | ||||
" | The past year presented significant challenges as the global economic | ||||
downturn impacted our customers and their investment decisions. Prolonged | |||||
sales cycles and postponed investments among our enterprise customers | |||||
were evident, leading to some contraction and churn. Despite these obstacles, | |||||
our new sales strategy and robust product offerings enabled us to achieve a | |||||
record number of new customers in 2023. | |||||
With a growing customer base and increased usage of our software, we are | |||||
confident in the future growth of our Annual Recurring Revenue (ARR). | |||||
While we did not reach our goals for 2023, we have entered 2024 with | |||||
Björn Persson | strengthened resolve and positive momentum. We have confidence in the | ||||
journey ahead and look forward to the opportunities and growth that the | |||||
Chairman of the Board | coming year will bring. | " | |||
06 Future Outlook
Numerous studies predict the growth of Augmented Reality applications and software. However, looking at the challenges our customers face is the most accurate indication of how our market will develop. That's what will drive the real demand for our product-value creation by helping them address pressing business problems while making their operations more efficient and sustainable.
Annual Report 2023
Market Growth | Product Innovation | |
XMReality
A global study conducted by IFS in 2023 among Field Service companies highlights how technology has become vital to the success of service and maintenance operations. For service organizations, the number one pressure that impacts their organization is the struggle to meet customer SLAs. Closely followed by the lack of skilled workers and high employee turnover, emphasizing the need to work smarter and leverage technology to bridge the gaps.
Respondents acknowledged the importance of technological innovation, with 65% expressing intentions to implement remote assistance to enhance service. Surprisingly, only 25% had already adopted this technology. This underscores a clear demand for XMReality's type of product and indicates significant untapped potential. As demand increases and the market expands, maintaining competitiveness amidst a rising number of suppliers will become the primary challenge.
As for many other companies, Artificial Intelligence (AI) will drive much of the product innovation going forward. AI will be applied to automate and improve all aspects of the existing user experience, from automatically documenting all XMReality calls without any effort to providing on-demand and tailored expert knowledge during a call to help resolve problems or perform other remote tasks.
Furthermore, being the communication tool used to resolve problems remotely puts XMReality in a strategically important position, where the experience and knowledge required to improve the AI continuously can be automatically harvested from real-world conversations. The harvested knowledge will be used to both improve the AI models used inside XMReality and also to improve AI models used across our customers' organizations, making XMReality a strategically important source of information for future enterprise AI training.
07 Sustainable Value Creation
Annual Report 2023
Even though XMReality is a small company, we have a big impact. We are helping companies globally develop and adopt more sustainable business models. In our pursuit of social responsibility at XMReality, we see the important role that remote video support software can play in fostering a sustainable future. Our type of solution not only revolutionizes how businesses operate but also aligns with the key principles of Corporate Social Responsibility.
XMReality
Environmental value
For us, it is very obvious-we help our customers reduce travel. It is the most tangible way we contribute to the environment, and it directly reduces carbon emissions for our customers. Our software minimizes the need for extensive travel, enabling companies to maintain operational efficiency while reducing their carbon footprint. This direct environmental impact is a testament to our commitment to sustainable practices.
Business value
Our software not only benefits the environment but also promotes efficiency in various aspects of business operations. By streamlining production processes, minimizing wastage, and optimizing inventory levels, we contribute to resource conservation and cost reduction. This dual impact is a win-win situation, reinforcing our commitment to sustainable practices.
Social value
Furthermore, our software facilitates knowledge transfer and collaboration between geographically dispersed colleagues, empowering businesses to operate more effectively and profitably. This emphasis on knowledge sharing and improved productivity embodies the social and economic dimensions of sustainability, enhancing the overall resilience and longevity of businesses.
At XMReality, we remain dedicated to leveraging technology for positive social and environmental impact while driving sustainable innovation in the corporate landscape.
08 Corporate Governance
The information about the company governance reflects the organization on May 31, 2024.
Board of Directors
BjörnPersson
Chairman of the board since 2020
Annual Report 2023
XMReality
Born: 1975
Björn Persson has an MSc in Industrial Industrial Engineering and Management from Linköping University. He is currently Head of Finance & Business Operations at LRF. Previously, he served as an investment manager at Investment AB Spiltan and before that as CEO of Invest Östra Mellansverige AB. Björn has wide-ranging experience from Swedish SaaS companies expanding globally with a particular focus on the US. He has been a member of the board since 2014.
Shares: 5,280,213 shares held through Klösen AB, a wholly owned company, and privately.
AndersFerntoft
Member of the board since 2014
Born: 1960
Anders Ferntoft has a licentiate degree in economics and an MSc in Industrial Engineering and Management from Linköping University. He is currently a business coach at the LEAD start-up incubator and provides consultancy services to small and growing tech companies. Anders served previously as business development manager at Agama Technologies AB and as CEO of Anelda AB.
Shares: 304,154 shares held through A Ferntoft Consulting AB, a wholly owned company
TommyJohansson
Member of the board since 2019
Born: 1956
Tommy Johansson has an MSc in Industrial Engineering and Management from Linköping University. He has held senior positions with companies including Saab, Ericsson and Nokia Data and is the former deputy CEO of IFS AB. For the past 12 years, Tommy has been CEO of two successful start-ups: C3 Technologies AB and AMRA Medical AB. He has substantial experience building high-growth companies for a global market in the software sector.
Shares: 182,370 shares held through TopSolutions AB, a wholly-owned company
ÅsaArvidsson
Member of the board since 2020
Born: 1972
Åsa Arvidsson has a Master's degree in Information Science and an MBA from Henley Management College. She has extensive experience within IT and Telecom and has held CEO positions at Iver, portfolio companies within EQT and the Swedish branch of Avanade, and as a Sales Executive at Microsoft. Åsa has more than 10 years of experience in leading roles at IBM and is currently VP of EMEA North at Rockwell Automation.
Shares: -