Acast AB (publ)

Good morning and welcome to ACAS Earnings Call for the interim report covering the period January to March 2025. Today we have our CFO and Deputy CEO Emily Villatte who will present ACAS results for the quarter. You're welcome to submit questions throughout the presentation using the form below the stream and we will raise the questions during the Q&A held after the presentation. I'd now like to start the presentation by handing over to Emily. Please Emily, the floor is yours.

Hi, and thank you to everyone for listening in. I'm Emelie Willat, CFO and Deputy CEO of Acast, operating from our Stockholm office. Unfortunately, our CEO Ross Adams was not able to make it today due to illness. But I'll take you through our highlights and financial performance in the first quarter before we open up for Q&A. Now for all new investors listening in, Acast is in essence the leading independent podcast network globally and we're uniquely positioned at the center of the podcasting value chain, matchmaking advertisers with podcast creators who want to monetize their content and their highly engaged audiences. So essentially we bring together creators who produce compelling content to attract listeners using their creativity to build a loyal audience base and this high quality content attracts sizable and engaged audiences, who are highly attractive to advertisers, seeking and paying for efficient reach and engagement at scale. And we underpin this with the widest dataset in podcasting through our data company, Podchaser, allowing us to drive discovery for podcasts, matchmaking between advertisers and audiences, and creating revenues for both creators and Acast. Our competitive edge is based on the fact that we are true podcasting pioneers, being the inventors of the technology behind global podcast advertising as we know it today. And we have unmatched scale and exclusivity. Our portfolio, in fact, consists of more than 140,000 podcasts that generate more than 1 billion listens each quarter. And we connect to more than 3,300 advertisers spanning global brands and smaller companies. And we have now paid out more than $470 million to creators worldwide. We are innovation leaders, consistently first to market with technologies like AI-driven targeting, real-time podcast campaign planning and first-party data onboarding. And we also go beyond the podcast. We are podcast first, but not podcast only. We have the capabilities needed to deliver broad omni-channel campaigns that span across social media, video, live events and more. And in essence, Acast empowers podcast creators and advertisers with global reach, strong monetization and cutting-edge technology. And we foster and grow relationships with podcasters of all audience sizes and types around the world. Our portfolio of creators ranges from the biggest personalities like Peter Crouch, and Giggly Squad to establish networks like TED Audio Collective and news publishers like The Economist, The Guardian and CNN. We have heightened focus on increasing monetizable listens and at the end of the first quarter we announced an exclusive ad sales deal with The Athletic. Now, The Athletic is a New York Times company covering daily sports stories and the world's biggest sports moments. It's a network with a portfolio of more than 35 high quality podcasts covering every major sport, including the NFL, Premier League and F1. The network is home to some of the most trusted voices in sports media and their worldwide audiences. It's an ideal match for ACOS international reach. And this partnership will bring over 100 million annual global listens to ACOS network. And ACOS will have the exclusive rights to audio ads and sponsorships, podcast video and branded content across their podcast portfolio. But we also support niche shows of all types who bring with them dedicated communities. And this diverse range of content allows us to connect advertisers with the creators and audiences that perfectly match their needs. And the common thread among these creators is that they all choose ACAST to help them find and grow their audiences and earn revenue from advertisers of all sizes. So let's have a quick look at the highlights in the first quarter of 2025. We started the year with strong growth, delivering 30% net sales growth, of which 26% was organic growth. In Q1, we did not see any impact on our campaign deliveries from the global macro uncertainties. Our gross margin amounted to 37% in the quarter, down slightly from prior quarters impacted by a lower gross margin in the US. And we also continue to deliver profitability improvements and close the quarter with an adjusted EBITDA margin of minus 1% versus minus 4% a year ago. With a proven track record of navigating economic downturns we're confident in our ability to adapt investment levels quickly and effectively if needed to ensure sustained profitable growth. In early April we presented new financial targets ahead of our capital markets day and we provided two short-term targets related to 2025 and one mid-term growth target extending through to 2028. And our financial targets are as follows. For the period 2025 to 2028, we target an organic net sales compound annual growth rate of 15%. In 2025, we target an adjusted EBITDA margin of between 3% and 5% as we focus on continuous profitability improvement. And we are of course committed to generating a positive cash flow from operating activities in 2025. And these targets reflect our dedication to deliver continued profitability improvements alongside strong revenue growth. So let's have a look at the financial developments in more detail, starting by having a look at our lessons and the average revenue per lessons. Now listens were down marginally at minus 1% compared to Q1 last year, but the listens increased sequentially and are now back at the highest level since Q1 of 2024. And this points to a stabilization of the previous iOS 17 related decline. It's worth pointing out as well that this was our first full quarter without the BBC, while we've had positive contributions from the likes of TED Audio Collective and Casefile that were signed in Q4. And we've also continued to increase our unique reach year over year, which means that we reach more unique listeners. We have continued to see a positive momentum in monetization with the average revenue per listen increasing by 31% in the first quarter. And this is another awful record high for Q1, which seasonally is our lowest revenue quarter. And the development reflects that we have maintained the positive trend in increasing our efficiency in monetizing our portfolio. We had a strong start to the year, growing net sales by 30% in the first quarter and the organic growth was 26% when adjusting for FX and also the acquisition of OneDrip Media Network that was completed on the 2nd of January 2025. Our growth was heavily influenced by an impressive performance in North America, which I will come to discuss shortly. Our gross profits saw an increase of 26% year over year and our gross margin amounted to 37% in the quarter. And it is worth noting that this margin reflects the impact of a lower margin in our rapidly expanding North American segment. Looking at the long-term performance, we are pleased to maintain our trend of consistent gross profit growth. Now let's turn to our performance by segment. Europe had a solid quarter growing sales by 17% of which 16% was organic growth. And in the quarter we've seen solid growth performance in France, Sweden and also improvements in the UK. The contribution profit was up slightly to 62 million SEKs and the contribution margin was 21%. North America delivered strong growth at 65% versus last year, and 55% of this growth was organic. At the same time, we have continued to see an improved contribution profit stemming from the higher sales levels. And we see that our efforts in this segment continue to pay off, and we've also continued to allocate resources to the region. In our smallest segment, other markets, we saw a minor revenue decline of minus 1% versus last year, while the organic growth was actually plus 1%. And the contribution profit in that segment was the same as last year. Our EBITDA was a negative 8 million SEKs including transaction costs of 0.6 million SEKs related to the acquisition of Wonder Media Network and some 4.1 million SEKs of costs incurred related to preparations for a main market listing. If we adjust for these items our EBITDA was minus 3 million SEKs reflecting a minus one percentage EBITDA margin. So this reflects an improvement of three percentage points versus last year. And I will make a note that we expect higher costs related to our listing work in the second quarter. And we will provide you with an update on the listing status at a later stage. Our operating expenses increased by 19% in the quarter versus last year, primarily explained by initiatives in our high growth markets where we see the greatest ROI. And to reiterate my previous comments, we are aware of the ongoing macroeconomic uncertainty and will maintain a strong focus on cost control. On the right side, you will see that we have continued to deliver consistent profitability improvements with the EBITDA margin amounting to 2% on a last 12 month basis. The operating cash flow amounted to a positive 29 million SEKs in the quarter, including 17 million from positive working capital changes. And that means that our operating cash flow in the last 12 months perspective now amounts to 79 million SEKs and that it continues to track ahead of our EBITDA. This quarter, we also had investments related to the acquisition of Wanda Media Network, resulting in a total cash outflow of 36 million for the quarter. And this left us with a cash position of 652 million SEKs, reflecting a robust capitalization. So to summarise, we've had a strong start to the year with 30% net sales growth. We're glad to see that our efforts in North America are paying off and this was again a quarter where the region led the way with an impressive 65% net sales growth. Our focus on profitability of course continues and it continues to deliver results and we're pleased to report another improvement in our adjusted EBITDA margin. We did not see any impact from the macroeconomic uncertainty on our campaign deliveries and the quarter, but we are proactively monitoring the economic situation, of course. We are firmly dedicated to delivering against our updated financial targets with solid growth, profitability improvements and positive operating cash flows.

We are now moving into the Q&A portion of our session. Please use the message box below and I will make sure to read them out. So first question comes from Andreas at Carnegie. Significant growth in the US. Have you seen any macro impact post Q1, i.e. in April?