NIQ Global Intelligence plc Ordinary Shares

Good evening and welcome to NIQ's second quarter 2026 earnings conference call. This call is scheduled to last approximately one hour. 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. Hello everyone and welcome to NIQ's second quarter 2026 earnings call. Joining me today are CEO Jim Peck and CFO Mike Burwell. Following Jim's and Mike's prepared remarks, we'll open the line for Q&A with Jim, Mike, and our Chief AI and Product Officer Troy Triangan. 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 investor relations website. A replay of this call will also be available there. And finally, unless otherwise noted, revenue growth rates mentioned on this call are compared with prior year period. And with that, I'll turn the call over to Jim.

Thank you, Will. Good afternoon, everyone. Before we begin, I just want to apologize. I have a cold and so I'm sure my voice is a little bit raspy and we'll just do the best we can. Q2 marked our fifth consecutive quarter, exceeding the top end of our guidance across all key metrics. We accelerated organic constant currency revenue growth to 5.8%, grew adjusted EBITDA nearly 22%, and expanded adjusted EBITDA margin 270 basis points to 23.3%. Adjusted earnings per share came in at 27 cents, well above the top end of our range. Levered free cash flow inflected positive at 74.1 million, and we reduced leverage to 3.1 times. That's progression from top to bottom line. We are raising full year 2026 guidance across the board, reflecting our upside performance and positive outlook. It's been a year since our IPO and several things stand out. Strong demand for our solutions, our structural advantages, and our strengthening financial profile, including Durable growth and retention with 10 consecutive quarters of 5% plus growth in organic constant currency and strong Q2 retention at 105% NDR and 99% GDR. This is a strong core with emerging AI growth opportunities. We're also seeing expanded margins approaching our mid-20s target with a longer term path into the 30s. Increased profitability tracking to more than a billion of adjusted EBITDA and more than a dollar of adjusted EPS this year. Inflecting cash flow and a raise outlook for $245 million to $255 million. And continue deleveraging on track to achieve our sub three times target. We're delivering results today while reinvesting in competitive differentiation and our future. AI native innovation, consumer panel expansion, technology platform enhancements, and discipline tuck in M&A. As I've described on our recent calls, NIQ sits on one of the world's most defensible data assets in our view. Decades of permission harmonized data and vertical specific context layer across consumer, retail and market intelligence. We believe that combination is impractical, if not impossible to replicate. Last quarter, I outlined how NIQ intelligence drives client decision making and how AI adoption is creating additional growth opportunities. Today, it's about progress we're making on our innovation roadmap. Optic, Bridge and Connect AI deliver NIQ intelligence The balance of my remarks today will cover three areas. How a broadly healthy client demand environment is driving our core growth. Second, our progress laying the foundation for additional AI-powered growth. And third, our progress expanding profitability by embedding AI across our organization. On point one, clients are buying more NIQ. Looking at our regions, America's OCC growth led the way, growing 8.3%. EMEA OCC growth accelerated to 4.9%. In both, we saw new wins and strong upselling of our intelligent solutions. In the US, a leading coffee manufacturer consolidated onto NIQ from two encumbered providers at once. They told us why, our AI capabilities and product roadmap, as well as the seamless unified full view experience across every data set. In EMEA, leading Swiss and UK grocers paired measurement with consumer panel to get the full view. and a major UK grocer came back to us from a competitor on that same value proposition, choosing our new product granularity and e-commerce expertise. APAC returned to 1.9% OCC growth. Here we saw strong activation, cross-sell and early improvement in China, Japan and Korea from the retailer relationships and partnerships we outlined last quarter. In Vietnam, we won back a global CPG manufacturer from a competitor mid-pilot by designing a tailored measurement plus field solution in weeks, not quarters. That is the pattern across the region. We start with granular measurement data, then expand into analytics to power go-forward decisions. We also beat two major global incumbents to win the largest going global contract in that market to date, helping a major automaker expand overseas. We also recently acquired Yimions, and e-commerce data and insights business in China and Southeast Asia. It strengthens our digital commerce capabilities, accelerates the full view, and extends NIQ into adjacent opportunities like agentic commerce in these markets. We also opened new categories and buyer types that were not NIQs a couple of years ago. A global ad tech platform licensed our purchase data to power privacy safe campaign planning at scale, selecting NIQ over a direct competitor and traditional panel providers. Unlimitail, a leading European retail media platform, chose NIQ to measure business outcomes across its multi-retailer, multi-country network, our first client of its kind. Ad tech and retail media, our newer adjacent demand pools, prove our data travels well beyond CPG. Growth was not only strong by region, but by product. Q2 Intelligence growth re-accelerated to 5.7% on new wins and strong upselling motion, particularly in e-commerce and consumer panel. And annualized intelligence subscription revenue, our version of ARR, grew 5.8% in Q2 and eclipsed the $3 billion mark. Activation OCC growth accelerated for a second straight quarter to 6.1%, signaling our commercial and go-to-market efforts are working. In North America, a global convenience retailer expanded its renewal into SKU-level analytics, price and promotion, and category management across more than a dozen countries, adding over $5 million of incremental value. In the Middle East, a regional manufacturer layered shopper and consumption analytics onto its core measurement subscription, and we took that work back from a competitor across three markets. and a Global Personal Care Leader extended its worldwide agreement, adding analytics and servicing on top of core measurement. Within Activation, demand remains strong for our analytics and innovation-based solutions. Year-to-date, these solutions were nearly 60% of Activation revenue and grew low double digits. Looking deeper, our AI-native solutions, Basies AI and Retail Activate, drove meaningful share of that growth. This growth isn't a one-off. It's driven by newer AI native offerings that feed directly from our proprietary core data. And that data is growing fast. We added 4.3 trillion consumer transaction data records per week in Q2, 23% faster than last year. This spans 260 million product items with 10.5 billion product attributes in our 160 petabyte data engine, all rooted in NIQ's vertical specific expertise That granularity benefits our entire portfolio. In fact, more than 90% of our revenues derived from this proprietary data and our capabilities are increasingly at the fore as client AI adoption accelerates. Let me share some proof points from our first wave. Data point consumption on our platform grew 25% year over year. Roughly 51% of our top 100 clients now use at least one of our AI native solutions. and the number of clients using them has grown 64% year-to-date. This is also translating into financial results. Revenue from AI-native solutions grew by 34% in Q2 and more than 80% of AI-native revenue comes from recurring clients, a good sign of stickiness and long-term value. Clients are at the center of everything we do and we're focused on doing more. In June, our annual flagship client event, C360, through more than 600 CPD, tech and durables, and retailer decision makers from across the globe, their message was clear. Help them cut through the fragmented data and disconnected systems and decide faster in a fast-changing consumer landscape and help them capitalize on their AI strategies. Which brings me to my second point, our progress laying the foundation for additional AI-powered profitable growth. Last quarter, I described our three-pillar strategy to fuel the future of trusted AI. In Q2 and year-to-date, we accelerated innovation to deliver AI-native value for clients and our business. In our first pillar, Building NIQ AI Applications for Smarter Outcomes, at C360, we announced Optic Suite, our Insight Assistance, and NIQ Cadence, our Gen-I native marketing effectiveness platform. Aligned to our second pillar, NIQ IP that fuels AI, we announced the launch of Optic Bridge and Connect AI Suite, which embed decision-grade NIQ intelligence directly into market-leading applications, AI-powered workflows, and the enterprise. We've also progressed MCP access and integrations with all of the leading AI platforms so clients can reach secure, governed NIQ intelligence directly through these platforms. These launches let us meet clients exactly where they are, Whether they're an AI buyer of NIQ solutions directly or through an LLM or an ad builder embedding NIQ within their own AI environment. Importantly, every solution has permission service layers built in. Clients can embed NIQ intelligence into their AI use cases while keeping the NIQ decoder ring, the IP methodologies and models that power our differentiated analytics. And last week we announced the first charter clients for Connect AI. These include Purina, a global personal hygiene company, a leading beauty company, and two global beverage companies. Each is working with a dedicated NIQ engineering and data science team to build AI-ready intelligence infrastructure and decision workflows inside their own environment. Early client demand has been strong. Our pipeline has grown quickly to 49 live opportunities, including our charter clients and active discussions with many of our top clients. It is also broad based across FMCG and tech and durables as well as with clients large and small. We plan to add more charter clients including retailers in the next phase. We are also in active discussions on several AI partnerships with major players that can accelerate our objectives. These include a partnership leveraging forward deployed engineering expertise to accelerate deployment of optic bridge and discussion with multiple partners around our agentic commerce measurement launch targeted for later this year. And on our third pillar, powering commerce intelligence and agentic commerce, we see a long term growth opportunity. AI is playing a bigger and bigger role in consumer shopping, moving from answering questions to influencing commercial decisions to helping execute them. As that happens, NIQ's granular content on product attributes, availability, pricing, and consumer preferences moves directly into the commerce flow and rises in value. Our capabilities span product intelligence and availability, channel and media measurement, and agentic transaction integration positioning NIQ, we believe, to play an operative role in the next phase of AI-powered commerce. During Q2, we built toward that future. NIQ Commerce Lab is establishing the data, API, and measurement infrastructure for AI-driven commerce. We launched product intelligence, the first offering in our commercial intelligence portfolio. It resolves fragmented product data under a single structured layer. This allows AI commerce systems to accurately identify, compare, and recommend products to drive shopping conversion. Taken together, we believe this wave of AI launches positions us for significant growth. 2026 is a foundation building year, driving early adoption, expanding partnerships, validating monetization models, and scaling our first client implementations. Over time, we look to layer on additional revenue streams, premium AI-ready data, usage-based AI services, AI-native applications like Optic, Bridge, and Connect AI, as well as AI deployment services. While we expect these initiatives to contribute some revenue in 2026, our RAISE 2026 outlook does not assume a material contribution from them. This year is about building. We expect to begin scaling commercially in 2027 and beyond. Leading that effort is Irina Stoyan, who joined us as our Chief AI Commercial Officer in July from Palantir, where she scaled technology and analytics businesses. She's partnering with Troy and the team to drive our next chapter of AI-powered client value, and I look forward to you meeting her in the future. So our core revenue base is strong and we're building AI value on top of it. Which brings me to my third point, the benefits of AI led operating efficiency. AI is accelerating our ability to build, deliver and support our products and our clients. We're seeing AI led productivity gains across data operations, engineering, commercial and support functions, contributing roughly half of the 270 basis points of year over year margin expansion in Q2. and in the first half we completed the vast majority of actions under our 2026 restructuring program achieving most of the 70 to 80 million of expected run rate savings these are structural efficiency gains with less than one year payback and we believe we've only scratched the surface we're pursuing additional efficiencies across our largest expense areas prioritizing these that carry little to no one-time cost to achieve will remain disciplined, harvest efficiently, reinvest a portion in long-term growth, and expand profitably. As I outlined last quarter, the path from the mid-20s margins into the 30s is fundamentally about flowing durable revenue growth across a largely fixed cost base that we're making more efficient. As a result, every incremental dollar of revenue should carry higher margin than the last. To close, we are doing what we said we would do, and as I've said before in a previous call, we are going to show you that we're an execution machine, driving our core algorithm, expanding margins, raising EPS, inflecting cash flow, and laying the foundation for AI-native monetization and operating efficiency into 2027 and beyond. Thank you to NIQ associates worldwide for delivering a great quarter. I'm excited about what we're building. With that, I'll hand it to Mike to cover our detailed Q2 financials and our raised full year outlook.