Q4 2018 Interim Report
20 February 2019
Risk Intelligence A/S (“Risk Intelligence” or "Company") hereby publishes the Q4 Interim Report for the period January - December 2018. The report is available on the Company's website (www.riskintelligence.eu).
Highlights
Risk Intelligence System recurring revenue increased to 77% of total revenue in 2018 from 55% in 2017 corresponding to a 40% increase.
Confirmed revenue for 2019 as of 1 January constituted 11.6m DKK with 10m DKK as recurring revenue and more than the total revenue of 2018.
With a larger recurring revenue base and new sales organization in place, Risk Intelligence is on track to double its existing (maritime) business by 2020 compared to 2017 as planned.
The Company launched the LandRisk beta version test in January and have had more positive feedback than expected from invited Beta test participants.
The fundamental business of Risk Intelligence is profitable, yet large new initiatives and investments to scale the Company’s business and to create the necessary basis for future growth of about 6.7m DKK in 2018 have led to an EBITDA for 2018 of -5.9m DKK as planned, of which about 0.8m DKK was one-off costs.
CEO statement
I am proud to file the first end of year statement of Risk Intelligence as a listed company. Going public six months ago was about creating the foundation for scaling of our existing mainly maritime business, and expansion of our reach into the much larger market for land-based security risks, and I am pleased to report that we are well underway.
Risk Intelligence is now a true recurring revenue company
As part of our strategy we decided to increase the long-term ratio of recurring revenue, i.e. recurring subscription-based revenue from clients buying continued access to our web-based Risk Intelligence System, to 90% of total revenue. By doing so we are transforming the business profile into an identity like a subscription-based “Software as a Service” company, thereby the business becomes more predictable, scalable and more valuable. In addition, our weekly reports, which are also fully scalable, are also generating recurring revenue. Quickly after the IPO it became clear that we could increase the recurring revenue ratio faster by focusing our sales efforts solely on Risk Intelligence System license sales.
I am therefore pleased to report, that the 2018 Risk Intelligence System license recurring revenue reached 8.6m DKK or 77% of total revenue (a significant increase from 55% in 2017) and importantly, the Q4 2018 System license recurring revenue reached 87% (over 70% in Q4 2017). The amount of total recurring revenue (Risk Intelligence System and weekly reports) reached 10m DKK or 89% of total revenue in 2018 (over 79% in 2017).
Normally, a stronger focus upon subscription revenue over less valuable, ad-hoc consulting revenue has a negative impact on short term total revenue. On this background, I am pleased to report not only a major change in revenue composition in favor of recurring revenue, but at the same time we managed to deliver a modest, yet important growth in aggregate sales of 3% in 2018. In addition, we had a 100% renewal rate in Q4, which is in line with the overall 98+% renewal target.
This boils down to a total, confirmed revenue for 2019 as of 1 January of 11.6m DKK which is an increase of 5m DKK (+75%) compared to 1 January 2018. The confirmed revenue for 2019 was already higher than the total turnover of 2018. With often only marginal cost for each new license subscription sale on the System, this means that from now, all new sales equals growth in top-line as well as on the bottom line. Subsequently, the goal of doubling of revenue in the maritime business by the end of 2020 compared to 2017 will be reached with a continued 5m DKK growth in recurring revenue in 2019 and 2020.
Importantly, each Risk Intelligence System license sold has an estimated total long-term value of up to 10 times the first year’s license fee. This observation is supported by the fact that some of the original System clients renewed their license for the 12th time in Q4 2018 and translates into a conservatively estimated (without price increases) aggregate license revenue from existing contracts of 85-100m DKK.
LandRisk progress is developing better than planned
The development of LandRisk is proceeding at pace. The Beta-test campaign launched in January has generated stronger than expected interest with more than 28 companies joining and even more are on the way in. This means that we are on track and will have substantial engagement and cooperation with our clients and partners to launch the first fully commercial version round 1 October 2019. The LandRisk sales process will start earlier with offerings to the companies participating already.
In short, we have had a quite positive start of our life as a listed company and look forward to harvesting upon the new initiatives and investments in 2019 and beyond.
Hans Tino Hansen, CEO
For more information about Risk Intelligence, contact:
Hans Tino Hansen, CEO
Jens Krøis, CFO
Telephone: +45 7026 6230
E-mail: investor@riskintelligence.eu