NIQ Global Intelligence plc Ordinary Shares

Good morning, and welcome to NIQ's first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. With that, I'd like to turn the call over to Will Lyons, head of investor relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to NIQ's first quarter 2026 earnings call. Joining me today are CEO Jim Peck, CFO Mike Burwell, and Chief Product Officer Troy Triangan. Following Jim's and Mike's prepared remarks, we'll open the line for Q&A. As a reminder, today's remarks will include forward-looking statements regarding our expectations and outlook. Actual results may differ materially from those expressed or implied in these statements. For information about factors that could cause actual results to differ materially, please refer to today's earnings press release and our SEC filings. We undertake no obligation to update any forward-looking statements made on this call, except as required by law. During this call, we will also discuss both GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings press release, which is available on our IR website. A replay of this call will also be available there. And finally, a few housekeeping items. Unless otherwise noted, growth rates mentioned on this call are compared with the prior year period. In addition, a supplemental file is posted alongside our Form 10Q and earnings release reflecting the retrospective reallocation of revenue and costs from our end-to-end businesses, which are now reported based on geographic location. These changes had no impact on our consolidated financial statements. And with that, I'll turn the call over to Jim.

Thank you, Will. Good morning, everyone. At NIQ, we power mission-critical consumer commerce decisions globally. Our ecosystem connects brands, retailers, and consumers across 90 countries and $7.4 trillion of consumer spending, an unmatched position with enduring value. Our first quarter results reflect this. We delivered organic constant currency revenue growth of 5.1%, expanded adjusted EBITDA margin by 150 basis points to 21%, and generated meaningful free cash flow improvement, all while accelerating our AI investments. These are not separate stories. Our ability to grow revenue, expand margins, and invest in AI reflects the strength of our business model and financial profile. On recent earnings calls, I've outlined how AI is a profitable growth enabler for NIQ and how our data is permissioned and governed. Today, I will discuss our views on the evolving AI landscape where AI agents increasingly mediate commerce and how it can advantage NIQ and create structural tailwinds for our business. I'll cover four areas. One, our context layer that makes our proprietary data decision grade. Two, how AI is already driving measurable growth and deepening our partnerships. Three, how agentic commerce is a transformative new channel that further amplifies NIQ's leading role. And four, how all this can translate to faster profitable growth over the long term. On the first point, our foundation is a clear advantage. We have nearly 9000 retailer partnerships across 90 countries 5.5 million consumer panelists and 253 million product items in our database. Because our data is permissioned governed and not publicly available it's a differentiated asset that is impractical to replicate, but the deeper advantage is what we build on top. Every week, NIQ harmonizes 4 trillion data records on consumer purchases from fragmented retailer feeds, proprietary panels, traditional trade, and e-commerce receipts, and creates a unified deduplicated view of the market down to the SKU level. We then add context that makes the data intelligible and actionable. Specifically, Our semantic framework encodes how consumer markets actually work across categories, products, substitutes, promotions, and retail relationships, embedding NIQ's vertical expertise directly into the data. This transforms raw data into a proprietary system that can be understood and acted on. With our context, AI can interpret data correctly, reason across it, and generate decision-grade answers to critical business questions. Because our intelligence is constantly refreshed with the latest ground truth, clients can deploy it across their enterprises with confidence. We deliver intelligence directly to our client's point of decision. Today, this happens through Discover, our client tools, and shared clean rooms, and increasingly through direct integrations into clients' AI systems and autonomous agent workflows. Even our most sophisticated clients with strong internal data science teams are leaning in with NIQ. Building a complete dynamic commerce intelligence layer is expensive, complex, and time intensive. Our specialized vertical expertise and interconnected data position NIQ as the highest quality, most decision-ready partner in the market. We believe our context layer is increasingly essential infrastructure for the AI era. It informs not only what happened, but drives what to do next across growth strategy, innovation, and emerging agentic channels. As AI agents begin to influence and execute transactions, NIQ's intelligence can help determine what brands and products get seen, selected, and sold. We're building the commerce of tomorrow from a position of embedded strength. Clients use NIQ as a system of record to make everyday pricing, assortment, promotion, and competitive decisions. In Q1, that role strengthened. For example, in Q1, we closed 17 seven-figure wins, averaging three years in duration. In Americas, we took multiple accounts from an established competitor, with clients pointing to the strength of NIQ's FullView platform and the quality of our service. This included several high seven-figure renewals and expansions, including with a large multinational food manufacturer and the win-back of a major global beverage manufacturer across multiple markets. In EMEA, our largest Q1 wins included retail measurement and consumer panel within a single integrated relationship, multi-product adoption that differentiates from point solution competitors and drives long-term customer retention. Following a formal competitive RFP, a leading global financial services client renewed for the seventh consecutive year. In Eastern Europe, we monetized a new loyalty data product across 15 brand clients, in a market where no other provider can deliver this level of granularity. In APAC, one of our eight-figure renewals was a five-year global commitment with a leading tech and durables enterprise client that will anchor its worldwide category strategy to our intelligence and activation solutions. And across markets, we accelerated e-commerce revenue growth to 33%. We also expanded full view measurement to 209 clients, reinforcing NIQ's role at the center of omnichannel decision-making. We extended our leadership in high growth verticals and strengthening the retailer side of our ecosystem. For example, in beauty, leading specialty retailer Ulta selected NIQ as its primary insights panel provider, expanding our full view of beauty in a vertical that's growing approximately 10% annually, with online growth running roughly six times faster. On the retailer front, we scaled manufacturer participation in our Wake Fern retailer analytics program in the US. On the tech side, we introduced Activate Light, our software platform that helps small and mid-sized retailers access decision-grade retail intelligence and activation tools without building a full analytics stack. In new verticals, we expanded our media marketing mix offering into three additional categories, auto, telecom, and retail. Clients turn to NIQ at their most consequential moments. For example, in Q1, multiple global consumer products companies used NIQ data as a primary input to M&A due diligence. They chose NIQ for data quality, credibility, and speed, reinforcing NIQ not just as a measurement provider, but as a trusted strategic partner when the stakes are highest, a role that's hard to displace. NIQ's embeddedness compounds, creating high switching costs and strong retention. Q1 net dollar retention was 104%, gross retention was 99%, and annualized subscription revenue was $2.9 billion, up 5.9%. Q1 was our ninth consecutive quarter of durable subscription growth, reflecting the stickiness of our relationships. And this stickiness increases as we develop our new AI capabilities. In intelligence, the global beverage manufacturer we won back in Americas cited AskArthur and our advanced analytics roadmap and AI-driven capabilities as the deciding factor. A leading CPG chose NIQ over multiple competitors for a growth strategy engagement. specifically because of our AI-powered integration of qualitative and quantitative intelligence. Just a few examples, but multiple exist. In Activation, less than a year since launch, more than 70 clients have embedded our AI-native solutions, BASE's AI Screener and Product Developer, into their workflows. Clients have tested more than 2,300 product concepts, helping accelerate their innovation, development, and delivery. And adoption continues to broaden globally, with these AI-native solutions now in use across 27 countries. Clients are seeing strong value. For example, global leader in hygiene and health products, Reckitt, cited 65% faster consumer research innovation velocity at 50% lower cost through AI Screener. We continue to see rapid NIQ data consumption, including our top clients engaging with our AI-native applications and increasing spend faster than non-adopters. Clear signals of NIQ's value. BASE's AI is just the beginning. Our go-forward vision is organized around a single purpose, to fuel the future of trusted AI. We seek to achieve this through our three-pillar AI strategy. The first pillar is to deliver NIQ IP that fuels AI. This pillar makes NIQ's most valuable proprietary assets, data, models, coefficients, product content, and analytical constructs, available as licensable infrastructure for clients building and operating their own AI systems. It is delivered through an API and MCP-first governed architecture. That architecture reflects our more than $1 billion invested in platform transformation and strategic acquisitions since 2021. Second, we're building AI applications for smarter outcomes. This pillar delivers purpose-built tools across specific commercial use cases ranging from everyday insights and growth strategy to innovation, brand and media, digital shelf, and price and promotion. We made strides on this front in Q1. We beta-launched Arthur AI Analyst within our Discover platform. We also beta-launched Arthur Chat to clients, providing them with a conversational AI experience that unifies Discover and FullView into a single intelligence interface powered by NIQ consumer intelligence. These beta launches, plus the capabilities on our product roadmap throughout 2026 and into 2027, lay the foundation for usage-based monetization. Our third pillar is delivering commerce intelligence. Let me describe this in detail. Over the past decade, consumer shopping has moved from in-store to omni-channel to social and quick channels. Each wave added complexity, making NIQ's measurement capabilities more critical. The same is happening with agentic, which is estimated to be the most significant structural shift since the advent of e-commerce. McKinsey estimates up to $1 trillion in U.S. consumer revenue could be orchestrated by AI agents by 2030, with global potential of $3 to $5 trillion. NIQ's own research shows 74% of shoppers are already using AI for some form of product discovery, and consumer openness to AI-assisted purchasing rises from 40% to 50% to 70% to 85% after a single positive experience. NIQ is advantageously positioned for this shift. As agents move from search assistants to autonomous transaction engines, discovering, evaluating, and buying on behalf of consumers, the intelligence layer they rely on becomes the layer commerce runs on. NIQ is building that layer. Let me make this concrete. A consumer asks an AI shopping agent to plan a week of high protein, heart healthy groceries within a set budget. Using NIQ's granular product content, the agent recommends comparable options with more protein, stronger heart health attributes, and a better price. Those recommendations are powered by NIQ intelligence across product attributes, consumer demand, pricing, and availability. This is the vision we are building towards. For decades, NIQ has been a leader in measurement and analytics. In an increasingly agentic world, our granular proprietary measurement data amplifies NIQ's value in several ways. Our product content is structured, enriched, and AI ready, making a brand discoverable and selectable in an agent's recommendation set. That would be NIQ ensuring our client wins the agentic shelf. And when an agent cross-references consumer preference models to personalize a result, that would be NIQ intelligence driving conversion. And when an AI agent wants to have higher confidence that the products it is recommending for same day delivery are available, that would be NIQ data and infrastructure powering the match. Our commerce intelligence strategy is tied to three pillars, product intelligence and availability, channel and media measurement, and agentic transaction integration. Together, these form the data and measurement foundation required for AI driven commerce to operate reliably at scale. We launched NIQ Commerce Labs to support our agentic commerce vision and advance our thought leadership on proposed industry standards, driving collaboration and feedback, and sharing learnings and prototypes. Inside NIQ, we are building agentic commerce measurement standards grounded in our vertical expertise. Lastly, we believe our position at the nexus of consumer commerce makes NIQ central to the AI value creation stack. We are engaging with all the major players across the ecosystem accordingly. At the infrastructure layer, we completed a proof of concept with Snowflake on clean room data sharing and have begun a follow-on sprint using production data. At the distribution and application layer, we are in active discussions with several leading AI platforms. Our discussions reflect a consistent recognition that governed, permissioned data is essential for AI to work effectively. Let me bring this together financially are advantaged position creates incremental monetization opportunity. We have now delivered 5% plus organic constant currency revenue growth for nine consecutive monetization opportunity. We have now delivered 5% plus organic constant currency revenue growth for nine consecutive quarters. That consistency is supported not only by strong retention, cross-sell, upsell, and adjacent market expansion, but also by pricing power. In Q1, a leading global management consulting firm renewed its NIQ relationship at a 50% price increase. While anecdotal, we believe that reflects the mission-critical role our data plays in client workflows. Looking forward, as we continue to build the Commerce Intelligence Foundation We see AI revenue upside through new features, faster product releases, and usage-based monetization models. Add to that our ability to do more with less, and we see a clear path to margins in the 30s over time. We began our transformation journey in 2020 at 13% margins. We exited 2025 at 22%. Today we reaffirmed full year 2026 guidance approaching 24%, bringing us closer to our midterm target of mid 20%. Our AI investments are delivering measurable tracked results across the business today. In engineering, we have deployed AI assisted development tools across more than 2,600 engineers. We are scaling output, faster time to market, higher productivity without adding headcount. That is direct operating leverage flowing through our cost structure. In operations, we are deploying agentic AI across our data collection and coding workflows, the work that powers every product we deliver. Recently, an AI-powered coding system operated at extreme scale on a major global retailer data challenge, compressing timelines and reducing delivery costs. In customer support, AI driven automation is running ahead of plan through ticket deflection, automated resolution and translation tools now live across our global support operations. These are durable reductions in cost to serve. We're unlocking productivity gains from our 2026 cost program and now expect 70 to $80 million of annual run rate savings versus our 2025 expense base. As I mentioned in February, This program signals a prominent next phase for NIQ, reflecting our commitment to leveraging AI, automation, advanced digital tools, and data-driven processes to streamline operations, enhance agility, and reinforce competitive advantages. We'll continue to actively identify opportunities to structurally improve margins and drive long-term free cash flow. The path to long-term margins in the 30s is fundamentally about scale. As revenue grows, we can spread a largely fixed and increasingly productive cost base across a larger business. Commerce intelligence and agentic AI help on both sides of the equation. They create new revenue opportunities through new products, new customer types, such as AI platforms and ecosystem partners, deeper client embedment, and usage-based monetization. And they reduce costs to serve through efficiency and process reinvention. As a result, each incremental dollar of revenue should carry higher margin than the last. That is the path from the mid 20s to the 30s, and it is already underway. So let me conclude by bringing this all together. We believe NIQ is well positioned to win in AI. Our AI ready data, expanding AI native product suite, and deepening ecosystem partnerships strengthen that position. And because NIQ is embedded in mission critical client workflows, We believe we are uniquely positioned to lead as agentic commerce emerges, not only as the gold standard in measurement and analytics, but increasingly as a conversion catalyst. We also have a strong and improving financial foundation, with upside as we execute. In closing, Q1 was a solid start to the year, and we're excited about the long-term future we're building. I want to thank NIQ associates worldwide for their expertise and dedication. I'm confident in our team, our position, and our strategy to create value for clients, partners, and shareholders. With that, I'll turn it over to Mike. Thanks, Jim, and good morning, everyone. We have a solid start to 2026 with first quarter results exceeding our expectations. Revenue grew 5.1% on an organic constant currency basis. Adjusted EBITDA increased 19.1% and margins expanded to 21%, all reflecting continued ongoing disciplined execution. We also delivered meaningful year-over-year improvements in free cash flow and maintained a strong balance sheet position. In our earnings release this morning, we revised upwards our full-year guidance for reported revenue and adjusted EBITDA, largely due to positive FX movements. Based on our first quarter outperformance and generally healthy underlying demand trends, balanced against a dynamic and uncertain market and prudent guidance approach, All other financial guidance remains unchanged versus what we provided in late February. This outlook reflects our continued progress, durable revenue growth, attractive margin expansion, free cash flow generation, and deleveraging. I'll start with a brief walkthrough of our first quarter results, then cover liquidity and free cash flow, and finish with our detailed outlook for Q2 and the year. Q1 revenue grew 11.1% reported to $1.1 billion, or 5.1% on an organic constant currency basis, exceeding the top end of our guidance and in line with consensus. Growth was driven by value-based pricing, strong retention, and continued cross-sell and up-sell of new capabilities, with contributions across both intelligence and activation. Net loss and adjusted net income improved by $29.7 million and $47.9 million, respectively, year over year. Adjusted EBITDA growth accelerated to 19.1% year over year to $224.8 million. with margins expanding 150 basis points year over year to 21%. Margin expansion was driven by profitable revenue growth, disciplined cost management, operating leverage, and early benefits from AI-enabled automation and our 2026 productivity initiatives. From a segment perspective, America's revenue grew 9.3% in organic constant currency, driven by both intelligence and activation. In the US, we reinforced intelligence leadership through key renewals and competitive wins. including renewed long-standing agreements with a global media holding company and a leading management consulting firm, and takeaways with a multinational packaged foods producer and a regional salty snack manufacturer, both choosing NIQ for a more integrated, full-channel view through our Discover-led platform. In LATAM, we bolstered pricing with the rollout of MarketTrack Pro in Brazil. America's adjusted EBITDA grew 13.2% to $122.5 million, with margins flat year over year, driven by timing-related expense allocations that we expect to normalize over the balance of the year. EMEA revenue grew 4.6% on an OCC basis, driven primarily by strong intelligence renewal momentum, pricing, and cross-sell-slash-upsell, despite the ongoing conflict in the Middle East. We delivered several large multi-year agreements combining retail measurement, consumer panel, and e-commerce, reinforcing NIQ's role as a trusted full-view partner. In Southern Europe, we achieved a meaningful intelligence win-back with a global beverage and refreshment leader, renewing and displacing a competitor through stronger local execution and faster insight delivery. EMEA-adjusted EBITDA grew 24.0% to $155.2 million, with margins expanding 270 basis points to 31.8%, reflecting profitable revenue growth, disciplined cost management, and benefits from ongoing efficiency initiatives, including restructuring actions. APAC revenue declined 3.6% on an organic constant currency basis. As we navigate the early stages of turnaround in this region, we are beginning to see early returns from investments focused on improving retailer relationships and data coverage. For example, in China, we expanded our retail ecosystem by partnering with one of the country's largest grocery retail chains and a scaled convenience store operator, significantly broadening our modern trade and convenience coverage. In Japan, we partnered with leading market research and data analytics firm Intage in a mutual sales collaboration that pairs its nationwide retail store panel data with NIQ's global retail measurement services footprint across 100-plus countries and regions. Building on our tech and durables presence, the partnership expands our reach in CPG and helps clients close historic comparability gaps between Japan and global markets. supporting global companies expanding into Japan and Japan-based companies growing internationally. Our internal forecast reflects an improving trajectory in APAC over the course of the year, as these retailer partnerships contribute to data coverage improvements and client confidence. APAC-adjusted EBITDA increased 10.1% to $34.8 million, with margins expanding 230 basis points to 22.7%, reflecting early turnaround benefits. From a product perspective, intelligence revenue grew 5.1% in OCC. As Jim mentioned, we've seen continued strong growth in e-commerce and consumer panel, reinforcing client demand for our full view value proposition. Annualized intelligence subscription revenue reached $2.9 billion, growing 5.9%. NDR was 104%, and GDR improved to 99%. underscoring the durability of our revenue algorithm and the mission criticality of our solutions. Activation revenue accelerated materially to 5.3% in OCC. This reflects strong new client wins, including scaling our Wake Fern retail analytics program we signed last fall, as well as converting some of our project backlog that was delayed from late 2025. While it's a bit early to expect Q1's growth to repeat every quarter, We do expect that the operational changes Jim described in February and a healthy forward pipeline can drive steady growth improvement. Now I'll walk you through the details of our P&L. Q1 operating expenses increased 14% driven by higher restructuring costs related to the 2026 program. Excluding these charges, operating expenses grew well below reported revenue growth of 11.1%. reflecting continued cost discipline and operational efficiencies. One-time and restructuring costs totaled approximately $80 million in the quarter. Of this amount, $55 million was driven by expenses associated with the 2026 program announced last quarter. Depreciation and amortization was $153.7 million for the quarter, approximately 14% of our revenue in line with prior quarters. Below the operating line, Gap interest expense was $58.5 million, $25 million lower compared to prior year, driven by lower debt balances from transforming our capital structure through our IPO and successful debt refinancing. Changes in foreign currency resulted in a $5.6 million gain in the period compared to a $32 million gain last year, driven primarily by remeasurement of our debt obligations held in foreign currencies. Income tax expense was $25.6 million, or approximately 11% of adjusted EBITDA, reflecting a favorable earnings mix across jurisdictions during the quarter. Net loss attributable to NIQ improved by $29.7 million year over year, while adjusted net income improved by $47.9 million, resulting in positive adjusted net income of $43.4 million. driven primarily by higher adjusted EBITDA and lower interest expense. Adjusted EPS was 15 cents, well ahead of both guidance and consensus of 10 cents. As of March 31st, 2026, the company had $362.3 million in cash and cash equivalents and $747.5 million of available revolver capacity, resulting in total available liquidity of $1.1 billion. Cash used in operating activities was $63.6 million in Q1, a $90 million improvement due to higher profitability, improved net working capital, and lower interest. Cash used in investing activities was $59.2 million in Q1 2026, compared to $3.7 million in Q1 2025, a period in which we received roughly $62 million of proceeds from our NetQuest divestiture. Capital expenditures were $59.6 million in the first quarter, largely flat to last year, representing about 5.5% of revenue. I'll note that Q1 is typically a lighter CapEx quarter, and we continue to expect CapEx of 6.5% to 7% of revenue this year based on our growth investments in consumer panels, our platform, and our AI capabilities. As a result, levered free cash flow increased by $93.1 million year over year in Q1, reflecting stronger revenue flow through to adjusted EBITDA, improved working capital performance, and lower interest expense following transforming our capital structure, partially offset by cash costs related to the 2026 restructuring program we announced in February. Our cash flow performance was in line with consensus and with our estimates shared with the research analysts leading up to our IPO, A strong result considering those estimates did not contemplate our 2026 restructuring program. Also, we remained undrawn on our revolver during Q1, which, as we've noted before, is our seasonal cash low point due to variable compensation, IT payments, and data costs. We believe our Q1 performance continues to demonstrate our powerful levered free cash flow inflection, and we're on track to deliver material, positive free cash flow this year. Net debt remained broadly stable at $3.2 billion at the end of Q1. We have hedged roughly 60% of our term loans and ended the quarter with an all-in weighted average interest rate of approximately 5%, benefiting from lower spreads during the period. Our net leverage ratio remained broadly stable at approximately 3.4 times, despite Q1 being our seasonal cash flow low point. We remain committed to achieving our net leverage ratio target below 3.0 times at the end of 2026. Now, turning to our guidance, as I mentioned, we have revised upwards our full year guidance for reported revenue and adjusted EBITDA, largely due to positive FX movements. All other financial guidance remains unchanged. Execution remains strong, supporting our outlook even as the macro environment remains uncertain. I'll note that Q2 has started well, with April organic constant currency growth ahead of Q1. Our guidance balances Q1 outperformance and healthy underlying demand trends against a dynamic market backdrop and prudent guidance approach. With that as a backdrop, for the second quarter, we expect reported revenue growth of approximately 6.0% to 6.3%. Organic constant currency revenue growth of approximately 4.9% to 5.2%. Adjusted EBITDA growth of 12% to 14%, driving margin of 22.0% to 22.2%. Adjusted EPS of $0.19 to $0.21. For the full year, we expect reported revenue and adjusted EBITDA to be higher compared to prior guidance largely due to FX. The rest of it remains unchanged. Reported revenue growth of approximately 6.4% to 6.7%. Organic constant currency revenue growth of approximately 5.0% to 5.3%. Adjusted EBITDA growth of 14% to 16%, driving margin of 23.5% to 23.8%. Adjusted EPS of 95 cents to 99 cents. Levered free cash flow of 235 to 250 million dollars. and our net leverage ratio tracking to below three times by year end. Full year restructuring costs associated with the 2026 program announced last quarter are now expected to be approximately $65 to $75 million. The increase is primarily driven by incremental costs associated with actions identified to integrate AI throughout our operations. The majority of these incremental costs are expected to be executed in Q2, and we now expect approximately $70 to $80 million of annualized run rate cost savings by the end of 2026. Moving forward, we expect to continue to identify additional efficiency opportunities. Other full-year 2026 modeling assumptions remain unchanged from prior guidance. Depreciation and amortization of 614 to 619 million dollars, approximately 14 percent of revenue. Gap net interest expense of approximately 16 percent of adjusted EBITDA, implying net interest expense of 230 to 235 million dollars. Income tax expense of 165 to 170 million dollars. a diluted share count of approximately 300 million, and CapEx at approximately 6.5% to 7% of revenue focused on our top growth initiatives, panel build-out, platform enhancements, and AI capabilities. Lastly, I will address our capital allocation priorities. Our approach is clear. First, continue deleveraging to less than three times, which we expect to achieve by year-end 2026. Second, pursue targeted tuck-in M&A across geographies, categories, and capabilities where we see compelling return profiles. I'll note that we do not currently have a share repurchase authorization in place, but we are very unsatisfied with the dislocation in our stock. As we deleverage the business in 2026 and into 2027, we will continue to assess the full range of ways to return capital to shareholders and will provide an update at the appropriate time. Our ongoing free cash flow inflection gives us confidence in our ability to execute our long-term oriented profitable growth strategy. In conclusion, Q1 was a solid start to the year. We remain focused on what we can control, strengthening our financial profile and investing prudently against long-term opportunities. With that, operator, we're ready to open the call for Q&A.