Cint Group AB (publ)

Thank you very much and good morning. Welcome to our Q1 announcement, our Q1 results. It doesn't feel like very long since we were here last time, does it? I think we did Q4 in the end of February, so it's a couple of months. So let's get going. Next slide, please. Slide two. This is the same slide as you would have seen before. Can you move it forward, please? uh can you there we go uh so it's just a very simple explanation that centers the world's largest survey exchange where over 4 000 companies um come to get their surveys answered by over 300 million respondents so we plug in an enormous number of panel providers and our own supply on one side and on the other side, um, we have thousands of customers and, uh, wanting to get their surveys answered. And, you know, roughly speaking, we do 300 plus thousand surveys a day, and that can peak in, um, in, in, uh, peak time. So it's a, it is, it, it has the economies of scale and the, the scale to be the world's largest exchange for, uh, getting surveys answered. Next slide, please. Just in a nutshell. So, Q1. I'm actually going to go to point four first. Can we have the next slide, please? Oh, it'll come. So, point four first or the fourth bullet point. We just noticed in a couple of the reports that have kind of come out already this morning that there's a little bit of confusion around what we've done with the different the changes in in reporting. So let me just explain that. And Neil's one who's our new ish CFO who's sitting next to me. Say hi, Niels.

Good morning.

Well, we'll explain more later as we transition to one platform, which is going to be called the Sync Exchange from the two previous legacy platforms, the Lucid platform and the Sync platform. we want to recognize revenue in the same way. Previously, SINT recognized revenue on the SINT platform gross and then supplier costs or costs of the costs that go to the sample, the panel providers came in as a cost of goods sold, whereas On the Lucid platform, we recognized just the difference between those two as revenue. So there was a bit of an apples and pears thing going on there, which had been the case ever since the acquisition. And as we now move to one platform, that makes no sense. And so we want to, starting in Q124, recognise revenue in a consistent way. We think it's also the right way to do it, frankly. And interestingly, what happens is obviously the top one revenue goes down, but the gross profit is significantly higher. And the difference between what we're now calling revenue uh and gross profit is really hosting two things hosting costs and the costs of the the people internally that support our customers or or run the managed services that uh that the customers use so so that's the top line and then on the cost side we decided that it would be much more helpful to the market and and internally uh direct to to account for things in a more in a more departmental way. So R&D costs, sales and marketing costs, general administrative costs, and break those out. Whereas before that, that wasn't the case. They were just all lumped in personnel. So we've made these changes to be more consistent and more transparent. And then we get down to an EBIT A number, which we think is a more useful number in terms of the actual performance of the company. So we're doing this to be consistent uh as we transition to one product um or one platform and to be helpful so i just want to make sure that people that everybody is clear that that we personally internally think that this is a move uh towards transparency and openness and and and consistency rather than any sort of um anything else so i just made that point because i'd seen a couple of comments this morning so let's go back to the quarter um It's a growth quarter, right? So on a net sales basis, and if we were to look at it on a previous basis, growth sales basis as well, it's a growth quarter. It's the first quarter of growth since, I think, Q3 2022. I think from memory, I wasn't here back then, but it's a milestone. So I'm not going to make it bigger than it is. It's a very small growth year on year. but it's still a growth quarter. And I was asked back in June, the earnings, the Q2 earnings last year, when the company will return to growth. Well, and I said in the not too distant future, well, I think that this is roughly the not too distant future. Just want to be cautious that the idea of returning to growth suggests that it's going to be there permanently. We're not giving guidance on Q2 and beyond. So we're not saying that this is now back to growth and growth is going to increase. Not saying that. That may be the case, but what we are saying is that Q1 is a growth quarter. So simple as that. And that's driven by, you know, really strong performance in media measurement and some weakness still in the historic the two platforms, the two exchanges. So our goal is obviously to combine those exchanges, drive efficiencies, and make sure that we get back to growth there as well. We've started to migrate our managed service customers, as I said, in February. That's on plan and going well. And yeah, the internal teams are extremely happy with the new platform because they're using it to run the managed services on behalf of our customers. And we are beta testing our self-serve platform, the new SYN exchange. in may so very soon next next week uh or at least may starts next week i'm not sure we actually will start absolutely next week because we're still bug fixing but um it's going well that's what i want to say there okay next slide please um so here we are the figures um net sales 36 million 36.4 million 1.6 percent constant currency as i said gross profit um also uh OPEX down year on year and EBITDA up. Actually, the gross profit percentage is down. I think the gross profit actually is slightly down because the gross profit margin is slightly down versus last year. OPEX is less. EBITDA is up. It's not hugely up, but it's up. So as we're carrying this cost of integration and consolidation, we're still managing to reduce that cost, even with inflation and so on, on a year on year basis whilst actually just returning gently to growth. So nothing too dramatic there, but I just wanted to be clear about what's going on. Next slide, please. Slide five. We've decided to say a little bit more this time about the media measurement business because it's becoming quite material and it's performing super well. So I wanted to sort of flesh that out a little bit. You can read what I've said here, but I'll just summarize it. increasingly cross-platform so historically it would have been mainly sort of digital advertising but now we're in in integrating or making making it possible to compare things like audio and social and linear tv tracking so broadening out the scope of the of the offering and also onboarding to really big new partners in Netflix and Disney in Q1 as well. So the revenues from those deals really just beginning to show up in Q1, but those are significant and Netflix have announced uh the deal was sent in there in their earnings call recently and also the upfront pro um season where the tv you know pre-sales of tv as in the us sin is baked into that uh with with netflix so so really encouraging lots of great work done by the team there uh great performance and and obviously more to come um slide six please focus on product integration and customer migration. I've been saying this since I joined. Synth is, you know, in 2023 was a bottom line loss making company. And as we all know, it shrunk last year. So My job, our job as a team, and I just want to make a note that I'm incredibly happy with the senior team that we've got in place now. So just a nod to them. They're doing amazing work. Our job is to integrate all of the technologies that we have inside the company, create one best of breed, fantastic new platform with a new user experience, streamlined, efficient, baked in all of the learnings that we've had over the last 10 plus years. fire up or refire up and reinvest in sales and marketing and make the company leaner and have uh more modern products to drive growth and be more efficient so so consolidation is the net is the first piece of that consolidate the platforms consolidate the back-end systems consolidate different Salesforce instances, different NetSuite instances, all of the stuff that is required. And that's going really well, massive undertaking, lots and lots of work, lots of people doing this work internally. And as we cycle through that consolidation, in the coming two three quarters the company will become more efficient it will become easier to run it will data will flow more seamlessly we will automate processes it will be a very different company and alongside that we'll be launching the new syn exchange so so lots and lots of work and focus been on on consolidation and integration and we're also moving into the standardizing and optimizing how we do things as we move into a new planning process in the next two or three months so so lots of really really good work this is continuation of the messaging that i've been saying since i joined about a year ago um but i'm i'm super happy with the way things are going it's a lot of work but it's going very well and the customer migration is um is in play as i said a few minutes ago next slide slide seven please um quality Obviously, quality was a big deal a year ago when we announced that it was spiking upwards. It's been a constant sort of base note in these calls for the last year. But I'm pleased to say that it's now that the reversals are now below 9%, which was the target and amazing work by all the engineering teams inside Sint. both on internal projects and integrating external bot analysis and bot tracking products that have allowed us to really get on top of this. So again, great work, R&D team. And we're not going to talk about this going forwards unless it becomes a problem again. It's not part of the growth story. It's not part of the core work to consolidate and improve and grow the business we will keep an eye on it and if it starts going in the wrong direction we'll talk about it but it's not doesn't warrant this level of this level of discussion once it's under control which it now is and still trending downwards so that's all I really want to say on that but I just want to be clear and transparent Slide eight and then my final slide. It's a repetition, but. I think by now you will know that we are extremely focused on making this company streamlined, efficient, highly, highly productive and prepped for the next phase of its evolution, which will be a phase of innovation. And we're moving to that reasonably quickly now. And the levels of excitement inside the company are beginning to go up, you know, cautiously. But we are still executing this strategy this year. Consolidate, standardise, optimise and plot that path to efficiency and higher profitability. So that's it from me. I will now hand over to Niels. Over to you, my friend. Morning. Slide nine, please. Next slide. And then maybe slide 10.

Yeah, you can go on to 10. Yes, as Giles already mentioned, we changed the format, of course. I'll just go over it once again briefly. So we have three changes. The first one is around the revenue recognition, as mentioned by Giles. So we went from gross to net revenue. revenue recognition. That also means that the gross margin is higher and therefore not comparable with previous years. So we reclassified a couple of items that were previously under operating expense and they are now called cost of services sold. So that goes into the new gross margin, its hosting and direct labour. So those two things. Yeah, the second one.

And most of that is hosting, right?

Yeah, it's two-thirds hosting, roughly one-third direct labour. And then the second one is around the cost. So in previous reportings, we always talked about only personnel cost as a group. And now we have split it out into the different buckets. So we have sales and marketing, uh, research and developments and general and administrative. And this is also more aligned with, um, how we look at it internally and also just providing more transparency here, of course. And the final thing is that we moved, uh, from EBITDA to EBIT A and the difference here is that we now, um, are including the depreciation, um, of capitalized software developments into our, uh, profitability measures. So also being more honest there, if you will, on more transparent. As previously, that was not the case. Next slide, please. Slide 11. Here you see the numbers already briefly touched upon, as well. As you can see on the net sales on the left, Q1 is always seasonally the least strong quarter. We also see that here. There's nothing unexpected there. Still, there was growth for the first time since a long time. It was 1.6 percent in constant currency. Moving on to gross profit, there you see that it went down a little bit, so 2.4 percentage points. compared to last year. I'm looking at pro forma again here for the comparability, of course. This was mainly due to the hosting element there, and that had to do with new partnerships that we were onboarding. One of them in particular was the Netflix one, and that is therefore not expected to recur. Moving on to profitability, so EBIT A for the first time. Here you also see two things actually. On the one hand, you see the seasonality as well, of course, from the sales reflected in here, but also the operating leverage that we have. So as soon as sales goes up, because most of our costs are fixed, you will see that also reflected in profitability. um and overall even though we had the smaller uh gross profit we still had a better uh ebta so that's quite good so we moved from 900k to one and a half million or two and a half percent to 4.1 percent um next slide please number 12. so here we have two uh splits from uh our net sales the first one is about the two business segments so we already saw the media measurements Before, there we had 45 percent growth in constant currency. Then on the right, you see what we call the Synth Exchange. This is a new labeling. We used to call this marketplace, but it's the same in terms of numbers. It covers both legacy systems as well as the new Synth Exchange. Going forward, this will be how we will name this. There we had eight percent decline in constant currency. And then on the right, you see the same numbers, but then split by region. As you can see, it's a bit of a mixed picture. So Americas was going down by 1%. And then in Europe, it was positive and in Asia Pacific, it was even more positive. So Europe was 2% up and APEC was 11% up in constant currency. I'm going to slide 13. Yeah, actually here, similar to what we just saw on slide 11, of course. It's just everything combined with all the details that you can see here. So overall, we had a bit higher cost of services sold due to the hosting, what I mentioned before as well.

Just one thing to say there, that the reason when you look at operating profit EBITDA or EBIT A and EBIT, they're the same, the second two columns are the same. Yeah, exactly. The gross profit, the second two columns, which are Jan to March 23, are a little bit different. So it's maybe worth saying something about why that is.

Yeah, exactly. So you can see here the last two columns. So when we start from the bottom, you see that EBIT A is actually the same pro forma and in the report, that's how we know it's from last year. But we have reclassifications going on at the top. So, of course, first of all, the sales one, where you can see clearly the difference between 60 million and 36 million. That's, of course, a huge difference. But this is this growth to net revenue recognition that we discussed earlier. And then you see the cost of services sold. So there you see also a huge difference and that's because this is now only including hosting and direct labor related to selling the projects. Whereas before it also included cost of sample and that's already deducted now from our new net sales number. Yeah, and furthermore, you also therefore have a bit lower operating expenses because this hosting and direct labor cost element moved from below to into the cost of services. It's about 5 million that was moved up, if you will. And you can see that on page 14 from our full reporting. So therefore, you see that below gross profit, all the costs are actually going down, except for sales, I think they were stable. Then below the EBIT A line, similar items as before. items affecting comparability. This is what we call NRI or non-recurring items. They are related to the acquisition of Lucid. We expect one more quarter of this. So the next one Q2, and after that we expect it to go to zero, which is in line with what we have said, I think from the beginning since the acquisition. So that's also still the same. Next slide please, 14. This is about the cash flow. So here, comparing with last year, you see that operating cash flow was actually 4.4 million better than last year, which is, of course, quite positive development. However, overall... In the same period. In the same period, exactly. Q1 to Q1.

And overall... And that's a significant improvement.

Yes, a huge one. Exactly, so we went from... It's also moving this quarter, right?

I mean, I guess we're looking at collecting cash from the previous quarter's sales, but it's a significant improvement.

Yeah, exactly. Yes, we're quite happy with that indeed. You see that overall net cash flow went down by 2.7 million. That has to do more with financing as well, as you can see here. which moved from 600K to 2.4 million outflow. That one includes two elements. One of them is that we started repaying the loan for the first time. We have quarterly repayments. It was 1.9 million euro, $2 million. And also there was like an interest element actually. That's in operating cash flows. I forgot to mention that sort of 4.4 million positive change between last year and this year in operating cash flows. That's including 900K negative impacts from higher interest rates. So therefore it's actually more remarkable. I hope I don't confuse people too much now. Onto the next page. Number 15, working capital. Here I would say, It's more of a stable picture when you compare it to December last year. So you can see the accounts receivables combined with the other current receivables, they are stable. And payables went down, combined by minus 1.1 million, and therefore working capital went up by 1.1 million, obviously. In relation to total customer spend, it's also quite stable. Even though it's stable, of course we want to improve this and we're working hard to do so. And I think the general focus on consolidation, standardization and optimization will also play into this. It won't show overnight into the numbers, but for sure it should improve as we go along with the migration and all the other projects that we have going on. So I'm quite confident about this as well. I think that's the final thing, yeah.

Great. So if we just push on to slide 17, please. So in summary, product and back end systems and all other parts of integration is our priority together with migrating our customers onto the new SYN exchange. Then we standardize and optimize our processes and the business in general to create efficiency and drive profitability. And then three years really stepping into increased investment in the media measurement business and stabilizing and turning around the growth in the core exchange business. And then finally, as Niels just said, And this we've been saying this for awhile, so it is clearly something that we haven't delivered on, but is a massive focus. We need to improve cash flow from operations and the flow flow through from operations right to the to the bank balance and cash generation and then the final slide. And again, this is a repeat. The. I'm going to just step through it. Connecting with our customers and companies in general in a global marketplace, the need to connect with consumers and understand consumers and make sure that their messaging, their advertising, their marketing, their products are as targeted, specific and land as clearly and as accurately and as efficiently as possible is massively important. and one of the ways of doing that is to understand consumers and one of the ways to understand consumers is to ask them questions and that's and we are the premium and biggest place for for making that happen so um i'm a strong believer that the the underlying need is is is global and large um we are as as it says in number two we are positioned uniquely in the center of the market research value chain. Sint is not a must-have. The market research value chain, the market research does not happen without Sint executing, facilitating, and joining up customers with respondents. And finally, scale matters in this business. customers come to where they get the best choice and that's Synth and suppliers come to where there's the most demand, they're the most customers so that they can get the best price. So the marketplace dynamics very much are there and it's our job to make sure that we continuously innovate in that marketplace and offer our customers and our suppliers more and more opportunity to do business and make money. And that ends the presentation and we can move to Q&A now. So thank you very much and thank you, Niels, for doing a great job on your first one.

Thanks. Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to withdraw your question. When preparing to ask your question, please ensure your phone is unmuted locally. Thank you. We will pause you briefly as questions are registered.

No questions. It's all so clear.

We currently don't have any questions on the line. As a reminder, to ask any questions, please press star followed by one on your telephone keypad now. Thank you.

We'll give it one more minute if there's no questions. I think we should call it. There seems like there are no questions. So thank you everybody for being here. And yeah, we'll see you again in three months time for Q2.