Acast AB (publ)

Good morning and a warm welcome to ACOS presentation for the first quarter of 2024. Our CEO Ross Adams and CFO Emily Villette will present the results and development for the quarter. You can ask questions throughout the session by typing them in in the text box below your screen and we will answer them in the Q&A session after the presentation. I would like to hand over to our CEO Ross Adams.

Good morning everyone and thank you for taking the time to listen to our presentation. for our first quarter of 2024. My name is Ross Adams, CEO of ACAST and based in New York, but today I'm in our sunny Stockholm office with our CFO, Emily Verlatt. We'll take you through the numbers and events for the first quarter of 2024. If you're new to Acast, I'll briefly introduce our positioning and how we create value. Acast is the market-leading independent global infrastructure platform in podcasting. We're uniquely positioned at the center of the podcasting value chain, connecting advertisers with podcast creators who want to monetize their content and their highly engaged audiences. Acast is essentially an interconnected ecosystem, bringing together creators who produce compelling content to attract listeners, using their creativity to build a loyal audience base. That high quality content attracts audiences who are eager to consume it. And we've previously called these our listeners. And so this is just an important language evolution, acknowledging that a podcast has an audience beyond just RSS listeners. This becomes increasingly relevant, both as the interest in multi-channel podcasting grows while we continue to encourage audience-first buying behaviors amongst advertisers. And a sizable and engaged audience is highly attractive to advertisers seeking to reach specific demographics. Advertisers will pay when they know they can effectively reach their target audiences at scale through the work done by our creators. And we are uniquely positioned at the center of this podcasting value chain, connecting advertisers with highly engaged podcast audiences across the globe and then sharing the advertising revenue we generate with the podcast creators on our platform. In building the world's most valuable podcasting marketplace, we have amassed a portfolio of nearly 125,000 podcasts, generating more than 1 billion listens per quarter. Around 2,700 advertisers in the form of both global brands and smaller companies reach these listeners with effective and creative advertising campaigns via ACAST's marketplace. On April 25th, ACAST celebrated its 10-year anniversary, reflecting on our company history and what we have achieved so far. We take great pride in our position as the leader in driving innovation and shaping the podcast industry. We were the first to introduce dynamic ad insertion to the space. which enabled podcast advertising beyond just ads baked into the content forever, thereby allowing podcasters to monetize their entire back catalog with up-to-date relevant advertising. This didn't just start ACAST's journey, but it effectively created the podcast advertising market that we know today. Today, DAI is the industry standard that allows the continued acceleration of the industry. Since our introduction of dynamic ad insertion, we have maintained our position as a pioneer in the podcast industry through innovations, including being the first in programmatic ad buying, our self-serve ad platform and our first party platform. data targeting solution for advertisers. Our leading technology combined with local market investment has helped us to gain market dominant positions in the UK and Sweden, while also establishing a sizable presence within the US. Since ACAST began, we have served more than 37 billion ads globally and paid more than 350 million US dollars directly to creators around the globe. For the first time ever, we participated in PodTrack's monthly podcast publisher ranking in March. The results showed that we, by far, have the largest podcast network globally. PodTrack's US ranking also revealed that we hold a strong position, number two, in the US, which is the world's largest podcast advertising market, thanks to our reach exceeding 20 million monthly unique listeners within that region. What we've achieved so far is incredible. but we remain fully committed to keeping our first mover position. This is reflected in our continued innovations, including harnessing AI to improve both creator and advertiser efficiency, as well as increasing our expertise in multi-channel ad campaigns spanning video, social, live events, and more. We're not only continuing to drive tech innovation, but we also take great pride in fostering and growing our relationships with podcasters of all sizes and types around the world. These range from some of the biggest podcasters like Marc Maron, former President Barack and Michelle Obama, and news publishers shows to those hosted by emerging creators. The common thread is that they all choose ACAST as their partner to find and grow their audience and earn revenue through working with advertisers of all sizes. Now let's turn to our developments during the first quarter of 2024. Our team's hard work and commitment continues to pay off. We've managed to increase our sales growth compared to the previous quarter while maintaining the strict cost control shown over the past year. This quarter, our sales grew by 25% to reach 413 million sec compared to 331 million sec last year. The organic growth was 23% when adjusting for FX. We have maintained a solid momentum in North America, which has been the key driver of growth in the quarter. Our gross margin came in at 39%, which reflects a three percentage point increase compared to a year ago. Again, showing a healthy, positive underlying development to our business. In combination, we've maintained cost control It's allowed us to achieve large EBITDA improvements also in this quarter. In Q1, our EBITDA loss amounted to minus 15 million sec or a minus 4% EBITDA margin, which can be compared to minus 61 million sec a year ago. The positive development reflects that we are on track to deliver against our target of positive EBITDA in the full year 2024. When it comes to new product developments, we launched an update to our AI-based predictive demographics capability in March. The first version of predictive demographics was released in 2023 and is an industry-first language modeling capability analyzing the language spoken within a podcast to predict characteristics of its likely audience. The new update enables more precise audience targeting across 3 million English-speaking podcasts globally by adding information regarding which listeners are parents, in what country they live, and their level of education within the model. Thereby, the technology improves podcast advertisers' targeting capabilities when building data-driven campaigns. Since we launched predictive demographics in October, 84% of Podchaser's clients have used the predictive demographic data. We see the launch as another important step towards improving audience-first buying for advertisers, which thereby allows us to scale sales across our ad inventory. The update not only reflects that we continue to build on Podchaser's innovative technology, but also shows our sharp focus on continuously increasing the scalability of our business. Excuse me. We consistently keep adding new large creators and publishers to our stable. In Q1, we welcomed The Telegraph, one of the world's oldest and most well-respected news organizations to ACAST. Its popular podcasts include The Daily Shows, The Two Minute Briefing, and Ukraine the Latest, among many others. ACAST is now home to all major publishers in the UK, with The Telegraph joining the BBC, The Times, The Guardian, the FT, The New Statesman, Taurus Media, and The Daily Mail. Furthermore, we are also pleased to announce that we welcomed another major global publisher, CNN, to our network within the quarter. Additionally, Higher Ground, Barack Obama and Michelle Obama's media company, launched its New Ways to Win podcast with a cast in March. The show began with a miniseries during March Madness, one of the biggest sporting events of the year in the US, and the premiere starring Barack Obama discussing his NCAA March Madness bracket selections. All of these additions clearly reflect that we continue to strengthen our position among significant news publishers and creators. And it's clear testament to the value we generate through our platform and well-known creators across the world choose and stay with ACOST. I'll now hand over to Emily to walk you through our financial performance for Q1 2024 in more detail.

Thank you, Ross. Let's step into the details of our numbers. And per usual, we will start by having a look at listens. Listens declined by 12% in the quarter compared to the same quarter last year, where the decline is due to the iOS 17 update that we have mentioned over the past quarters. And this update basically changes how podcast listens are measured. We believe that the impact from the update is now in full effect and that we have reached a new baseline for our listens. Our average revenue per listen, which reflects our monetization of each listen, continues to develop positively, with us posting a 42% growth to our article in Q1 of 24, illustrating that the decline in listens, in fact, did not put a cap on our ability to continue to monetize our portfolio. Our net sales growth amounted to 25%, reflecting a step up quarter on quarter, but also compared to a year ago. The organic growth was 23% when adjusting for FX, as Ross mentioned. The growth improvement was primarily due to a strong quarter for our North American team, whilst our other markets continue to also post solid growth. And we'll have a look at our markets and segments in just a second. I'm glad to report that we have maintained the underlying gross margin we had in the previous quarter amounting to 39% also in Q1 of 2024. The outcome reflects a 34% growth in gross profits compared to Q1 of 2023 and a three percentage point improvement to the gross margin compared to the same quarter last year, a number I'm happy with. As we've discussed over the recent quarters, we've had a positive gross margin development over the past quarters, driven by the contribution from BondChaser. And there's also a product mix effect coming into play this quarter. And as a reminder, we have a high gross margin on pre-produced ads versus host-read sponsorships. Looking at our segments, in the first quarter, we had North America taking the lead on sales growth, growing by 48% year on year. The favorable development stems both from an improved sentiment among advertisers during the period, whilst we also see positive returns from the investments that we have made into the region. We saw more steady but still solid growth in Europe at 16%, where the ad market environment remains a bit more challenging compared to North America. Other markets grew by a healthy 20%. Importantly, we see local profitability improvements across the board. Our continued focus on cost efficiencies has also had the effect this quarter and our costs remain under good control with total OPEX being down 1% compared to last year's level. We ended the quarter with total staff and consultants of some 382 persons. reflecting just a minor increase compared to the balance per year end 2023. And we continue our measured investments primarily in North America, where we currently are experiencing the greatest revenue attraction. So we're balancing our cost control with some measured investments. Now let's have a look at EBITDA. And here, the combination of our continued sales growth, our gross margin improvement, and strict cost discipline has resulted in another quarter with large EBITDA improvements comparing the same quarter last year. And I want to highlight that our business is of course subject to the quarterly seasonality as we are in an advertising business, which explains the difference between the positive adjusted EBITDA in Q4 versus the small loss that we are seeing now in Q1. But as you can see on the right hand side, looking at EBITDA on the last 12 month basis, we continue to deliver large improvements. And this is all showing that we are on track to deliver on our profitability target of positive EBITDA in the full year of 2021. The operating cash flow in the quarter amounted to negative 15 million SEKs. And last year, I'd like to remind you both in Q1 and actually in Q4, We had some large positive working capital effects, which explains a large part of the difference between this quarter and Q1 last year and the fluctuation quarter on quarter. And there are often some fluctuations to working capital. But the bottom line is that over time, we've become better at driving down our DSO whilst maintaining our DPO at a steady level. On a rolling 12 months basis, it is clear that our bottom line improvements have also had a great effect on our cash flow development. And by the end of the quarter, we held 734 million SEKs in cash, reflecting a robust balance sheet. Ross, back to you to wrap up.