Q4 Highlights

• Annual Recurring Revenue increased to MSEK 44.7 (39.8), an annual growth of 12%
• Net revenue increased to MSEK 18.6 (15.8), of which software revenues were MSEK 13.0 (9.6)
• EBIT amounted to MSEK -18.5 (-12.1), including development costs of MSEK 16.7 (13.4)
• Net result amounted to MSEK -18.6 (-1.2)
• Earnings per share amounted to SEK -1.69 (-0.11) before dilution
• The financial result for the period reflects the ongoing investment phase for accelerated growth

2022 Highlights

• Net revenue amounted to MSEK 67.6 (68.9), of which software revenues were MSEK 46.0 (36.4)
• EBIT amounted to MSEK -64.6 (-39.4), including development costs of MSEK 57.4 (48.5)
• Net result amounted to MSEK -64.8 (-28.5)
• Earnings per share amounted to SEK -5.88 (-2.59) before dilution
• The board proposes that no dividend is paid for the 2022 financial year

Comments from the CEO
Solid software revenue growth in Q4
Software revenue growth in the fourth quarter amounted to a solid 36% compared to Q4 2021, which is a significant increase versus the 18% growth reported in Q3 2022. Annual Recurring Revenues continue the double-digit growth at 12% in Q4 vs. previous year, driven by our cloud flagship product Modelon Impact.
Notable new software wins in the fourth quarter include:

• Asian global ICT solutions provider
• US multinational medical technology company
• European expert engineering consultancy in maritime and offshore renewable energy
• European fuel cell innovator.

We are pleased to continue seeing the global spread of new customers, and the adoption of Modelon Impact for highly innovative and high value sectors such as renewable energy, de-carbonization and hydrogen applications. The sales mix continues to be dominated by new accounts, with good potential for future upsell.
Pipeline volume and market activity in the quarter was steady. The US region stood out with high activity in the HVAC&R (heating, ventilation, air conditioning & refrigeration) sector. In addition, the activity related to our professional services to support and drive software sales was notably higher than during previous quarters.
In the quarter we signed an agreement for participation in the European Defence Fund research project NEUMANN, funding our product R&D investment with MSEK 11.2 over four years. The project aims to address novel propulsion and energy system technologies for air dominance with the next generation of fighter aircraft. This will accelerate Modelon product roadmaps and provide exposure and collaboration with key industry actors in related sectors. We expect the defense sector to provide increasing opportunity for Modelon over the next years.

Cloud Scaling
Product development focused on cloud scaling, as reported in the third quarter, continued in the fourth quarter, and aims at releasing substantial new capabilities starting in the first half of 2023. These capabilities will support our growth strategy and journey towards our financial goals by leveraging unique customer values enabled by the cloud from our pioneering market position.

Building the global Modelon Impact community
We have, with Modelon Impact on the market for about two years in October 2022, attracted a significant international user base for community building. To kick off this initiative, we organized our first international user conference, Modelon Innovate, in Stockholm on October 19-20, with users from more than 50 companies from 15 countries attending. The event was successful with great feedback from attendees on the high value of networking with other users and Modelon experts, and with enormous value for our product teams to get insights into our customers’ needs and expectations. We had ten customers presenting use cases at the conference, and all turned into video testimonials where the first five have been published in our digital marketing channels:

• Heliogen, a US innovator in solar power, is using Modelon Impact to gain insights for engineering decisions for optimal design and operation of concentrated solar power plants. They are highlighting the high-value expert implementation support by Modelon. Their vision is to extend the use of Modelon Impact to systems-of-systems applications and connecting engineering workflows within the company.
• Collins Aerospace, one of the world’s largest suppliers of aerospace and defense products, has been using Modelon simulation solutions for many years and is adopting Modelon Impact for the design of air management systems for commercial aircraft. Their testimonial highlights the benefits of working with Modelon as a long-term partner for system simulation solutions.
• Newcastle Marine Services is a UK specialist in zero emission ship propulsion that uses Modelon Impact to investigate and validate the substitution of diesel fuels with alternative fuels such as liquid hydrogen. Their testimonial highlights the value of combining high level energy flow with detailed physics modeling. Their vision with Modelon Impact is to apply it for new ship design and digital twins.
• Electric Power Research Institute is a US research institute collaborating with more than 450 energy companies in 45 countries on clean, safe, reliable and affordable access to electricity around the globe. They are using Modelon Impact for optimizing configuration, design and operation of green hydrogen generation and storage for gas turbine electricity generation. Their testimonial highlights how Modelon Impact enables rapid and meaningful results for engineering decisions.
• Volvo Autonomous Solutions is using Modelon Impact for physics-based vehicle dynamics simulation in the testing and validation of autonomous driving systems. Their testimonial highlights the value of using a standards-based simulation solution for toolchain integration and sharing.

We concluded 2022 and enter 2023 with confidence and a clear picture of our priorities and opportunities. We are committed to meeting our recently updated financial goals to exceed an overall ARR annual growth in the medium term of 35% and an EBIT to long-term, in a mature state, exceed 20%. Our customers repeatedly validate and confirm that Modelon Impact is a pioneering cloud native system simulation solution that brings unique value to the industry. Accurate simulations – better engineering decisions!

Magnus Gäfvert, CEO Modelon
Lund, March 3, 2023

Investor presentation
Modelon invites to presentation of Q4 year-end report at 10am CET on March 3, 2023. CEO Magnus Gäfvert and CFO Jonas Eborn will present the Q4 and 2022 earnings in a webcast: www.finwire.tv/webcast/modelon/q4-2022/.

Complete Q4 year-end report is attached to this press-release and is also made available on the company webpage: www.modelon.com/investor-relations/#FinancialReports.