Q3 Highlights

• ARR increased by 16% to MSEK 42.1 (36.4).
• Net revenue increased to MSEK 16.1 (14.1), software revenues increased to MSEK 10.9 (9.2).
• EBIT amounted to MSEK -15.9 (-11.0), including development costs of MSEK 13.1 (11.7).
• Net result amounted to MSEK -15.9 (-10.9).
• Earnings per share amounted to SEK -1.45 (-0.99) before dilution.
• Financial result for the period reflects the ongoing investment phase for accelerated growth.

Comments from the CEO
ARR growth and new customer acquisitions
Annual recurring revenues in the third quarter of 2022 increased 16% compared to Q3 2021. Software revenues in the quarter increased 18% compared to 2021 and comprised 68% of total revenue vs. 65% in 2021.

• Notable new customer wins in the third quarter include:
• US multinational consumer goods corporation
• Leading European home appliance manufacturer
• European aerospace institute
• European aircraft engine manufacturer
• Chinese automotive research institute
• Multi-national nuclear reactor provider
• US global energy technology company
• US geothermal HVAC company
• US defense research laboratory
• Swedish global automotive company

This list of new customers continues to demonstrate how leading and global innovation driven technology companies across Europe, the Americas and Asia are adopting Modelon Impact. Most of these companies are new customers, while some are longer term Modelon software and services customers who are starting to adopt or migrate to Modelon Impact. The energy sector remains strong in the sales mix, while we also see a good spread across our other industry focus segments with increasing activity in defense. The pattern with larger deal sizes in the US compared to other regions continues. New customers continue driving Modelon Impact sales, building a solid foundation for future upselling. The summer seasonal effect means that the third quarter orders are concentrated late in the quarter, contributing to Q3 ARR with a smaller portion of the order value with the full effects from Q4.

Customer testimonials demonstrate Modelon Impact positioning
Pipeline activity is healthy. We are pleased to continue seeing good effects in our lead generation from the return of face-to-face events and visits. For example, in the third quarter Modelon experts and commercial staff attended ThermoSim in Braunschweig, Germany and the GE Edge Symposium in New York. The quarter ended with the final preparations for Modelon’s first international user conference Modelon Innovate, held in Stockholm October 19-20. The event was a great success and will be described further in the upcoming year-end report.
We published two exciting case studies during the quarter: One from Saab that explains how Saab worked with Modelon to incorporate model-based systems engineering (MBSE) and greatly enhance the Gripen multi-role fighter aircraft without overextending its in-house resources. We published a second case study from Siemens Energy that explains how they adopted Modelon Impact for integration of heat-pumps into evolving energy technology and district heating systems.

Accelerating the transition to public cloud
The Modelon Impact public cloud offering was announced in August 2022, after a soft launch in Q2. The market reception has exceeded our expectations, with more than a third of all new Modelon Impact licenses in Q2 and Q3 on the public cloud version. To meet demand, we are currently and in the short term prioritizing the product roadmap to optimize the transition towards public cloud. In Q3, we see this ongoing shift slowing ARR growth compared to the target growth rate, until the new functionality is established, while after the transition we will be in an even stronger position for scaling.
We continue to have great confidence in our growth strategy and goals by pioneering system simulation on the cloud with Modelon Impact. Accurate simulations give better engineering decisions and make technology companies more successful, innovative and competitive. That holds true in any market or macro situation, and will drive our success for many years to come.

Magnus Gäfvert, CEO Modelon
Lund, November 11, 2022

Investor presentation
Modelon invites investors to a presentation of the Q3 interim report at 10am CET on November 11, 2022. CEO Magnus Gäfvert and CFO Jonas Eborn will present the Q3 earnings in an audiocast: https://tv.streamfabriken.com/modelon-q3-report-2022.

The complete Q3 interim report is attached to this press release and is also made available on the company webpage: https://modelon.com/investor-relations/#FinancialReports.