Articore Group Limited

Thank you for standing by and welcome to the AttaCore Group Limited first half fiscal year 26 results. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand over the conference to Miss Virginia Spring, VP of Investor Relations. Please go ahead.

Good morning to our Australian participants and good afternoon and evening for those joining us from the Northern Hemisphere. My name is Virginia Spring and I am responsible for investor relations at Articore. With me today I have the Articore Group CEO and Managing Director Vivek Kumar, Group CFO Derek Jung and Deputy Group CFO Curtis Davies. Vivek and Derek will provide an overview of our first half FY26 results shortly and we will then open it up for questions. The key information for today's call is contained in the ASX announcement and investor presentation released to the market this morning. I would like to call your attention to the safe harbour statement in our ASX release regarding forward booking information. That safe harbour statement also applies to this investor call. This session is being recorded and a transcript will be released to the ASX. I will now hand you over to Vivek.

Hello everyone and thank you for joining us today. Before we begin, I'd like to formally welcome Derek Young. We are very pleased to have him join the group at this important stage of our turnaround. Derek brings more than a decade of CFO experience across leading e-commerce and marketplace businesses with a strong track record of driving both growth and transformation. Great to have you here, Derek. Turning to the half, the first half of FY26 represents a clear step forward in our turnaround. The group delivered a material improvement in profitability while strengthening the foundations for sustainable growth. Margin expansion has been meaningful. Gross profit increased 6% and gross profit after paid acquisition, or GPAPA, rose 8.9%, driven by supply chain synergies and the artistry announcements designed to strengthen the marketplace dynamics. The marketplace revenue trajectory is improving, with the rate of decline moderating through the half. This reflects stronger marketing effectiveness, more disciplined pricing and promotion, and an increased contribution from repeat customers. The group delivered its highest first half EBIT in five years, a 14.3 million year-on-year turnaround. Reflecting confidence in the sustainability of these improvements, we have upgraded FI26 EBIT guidance to $6 to $10 million and tightened underlying cash flow guidance, now $8 to $12 million. This slide highlights the structural improvement in the business over time. This half, gross profit margin expanded to 48.8%, the highest first half ever, and G-PAPA margin reached 27.6%. At the same time, we have reduced operating expenses each year since the first half of FY23. Since then, OPEX has decreased 35%, a significant reduction, especially given the impact of high inflationary environment and ongoing cost pressures. Together, margin expansion and cost discipline have driven the 14.3 million EBIT turnaround delivered this half. These results reflect deliberate execution. Over the past 15 months, we have refreshed the leadership team, sharpened our turnaround strategy, and transformed the way the business operates. We have combined the operations of our marketplaces to remove duplication, drive efficiencies, and improve execution. The integration of our supply chain and marketing teams has been the key driver to the margin expansion and revenue stabilization you have just seen. We have just begun the consolidation of our technology stacks. This is an important next phase It will reduce complexity and costs over time and unlock future opportunities for the group, shared capabilities, faster innovation, and improved cross-platform learnings. The flywheel remains central to the investment thesis. A quick overview of how the flywheel works. Creators upload designs to marketplaces, customers purchase products printed on demand by third-party fulfillers, and we take a service fee for each sale. Because creators only earn when they sell, the group benefits from an asset-light, take-rate business model. As more creators join and upload designs, we attract more customers. More customers drive more sales, which attracts more creators, reinforcing the cycle. At the same time, greater volume drives fulfillment scale efficiencies, lowering the net cost and expanding margins. Stronger margins allow us to reinvest in customer acquisition and further accelerate the flywheel. When this flywheel gains momentum, it generates compounding benefits for all participants. More earning opportunities for creators, better value and selection for customers, and importantly, increasing cash flow for shareholders. Our focus is on building that momentum and sustaining it. Supporting that flywheel are four structural competitive advantages. First, scale of content. Over 75 million designs with more than 10,000 designs added daily, creating one of the largest and most dynamic catalogs of unique user-generated content globally. Second, fulfillment scale. A diversified global network of 42 third-party sites, allowing us to flex, volume, optimize costs, and maintain efficient delivery. Third, network effects. We now have more than 3 million creators on the platform. As more creators and customers participate, the platform becomes increasingly attractive to both sides. And fourth, operational leverage. A global team of 200 people generating approximately 1.8 million in revenue per employee. Together, these advantages make the model defensible, scalable, and increasingly efficient as volume grows. Our role is to actively manage and maintain the balance of the marketplace, driving stronger economics. That's why in the first half, we took decisive action to strengthen the marketplace by enhancing our artist account fee to reward value-adding behavior and support sustainable margins. Since the reduction, account fee revenue has increased by more than 35%. A key strength of our marketplaces is the quality and resilience of our customer base. In the first half, repeat customers accounted for more than half of marketplace revenue across both platforms, 51% at TeePublic and 53% at Redbubble. At TeePublic, growth over recent years has been underpinned by increasing revenue from repeat purchasers. This reflects targeted investment in lifecycle marketing, improved personalization, and enhancements to the site experience that make it easier for returning customers to discover relevant content. we are now applying the same learnings to Redbubble and further investing in Deepublic and Redbubble as growing our repeat customer base is central to achieving sustainable long-term growth. Consolidating our technology stacks is an important lever to unlock further OPEX efficiencies and to accelerate future growth. Technology costs represent roughly a third of Group's overall operating expense base. At present, we operate two technology stacks. which create duplication and complexity. That presents a significant opportunity. During the half, we consolidated the engineering and product teams to operate as one function. We are exploring an offshore capability to augment our US and Australia based engineering teams with additional engineering capacity at an efficient cost base. We have begun to consolidate the technology stacks starting with marketing technology infrastructure. This is strategic. It supports our ambition to grow repeat customers, as highlighted in the previous slide, through improved targeting, lifecycle marketing, and personalization. This slide shows how we are leveraging AI across the entire Articore flywheel. Today, 100% of our disapproval workflows are powered by AI, enabling us to detect thought patterns, use manual reviews, and improve speed and consistency. On the customer side, 100% of search is now touched by AI, combining vector search and machine-learned ranking to improve relevance, discovery, and conversion. AI-powered chat is also supporting customer service, with approximately 80% of customer chats now handled via AI. Across marketing and product discovery, AI supports more personalized and targeted engagement. Within engineering and product, AI is increasingly embedded in internal workflows and development processes, helping teams move faster and scale more efficiently. AI is becoming a core capability for the group, helping us operate smarter, scale more efficiently, and support a broader objective of sustainable, profitable growth. We are really encouraged by the momentum we are seeing in the industry in its first year. Dashery is a measured but exciting strategic investment for the group, leveraging our sales capability, tech platform, and global fulfillment network to build a high margin growth platform. It enables creators like YouTubers and Instagrammers to easily set up their own branded storefronts without the operational complexity of managing the backend. Onboarding is simple. Stores can be launched in minutes and feedback from creators continues to be very positive. In the half, Dash regenerated 1.3 million in NPR and GVAP a margin of 35.5%, highlighting its attractive unit economics. Since launch, there are more than 1,200 active selling accounts with the majority of creators new to the Group's ecosystem. We invested 1.8 million in the first half and expect a similar level of investment in the second half as we continue scaling the platform. I will now hand over to Derek to provide a more detailed overview of the Group's financial performance.