Cint Group AB (publ)

Good morning. Thank you for joining everybody at Q2 Results. The way that we're going to do this is that we'll walk through the deck. So I will start off and I will talk through the first dozen slides or so, and then I will hand over to Niels Bohn, our CFO, who will walk through the financials in more detail. Let's start with slide one. So slide one is the same as before. This is the SIN exchange. Basically, we join panel providers who provide access to millions of respondents to companies that want to get their surveys answered. So we are the world's largest survey exchange. And just on that, size is important because in any marketplace the buyers go to where uh there's the most choice the most supply the the where they can get access to large amounts of people or niche audiences and suppliers or panel providers go to where uh there are the most buyers because they get the best price in there and they obviously um get to monetize their panels so size is important which is why We've said here that that is the world's largest. So let's move on to slide three. Broadly, it's sort of a low drama quarter in terms of the, you know, the economics of the company. As we've said here, stable sales, what we mean by stable, I'm talking year over year. We're pretty flat year over year. There's some, obviously behind that, there are some puts and calls. In particular, the media measurement business continues to have a very strong performance. Very pleased with the way that that's going. And as I've said in the report, we're investing more there. We think that there's more opportunity and we are we are going harder at that part of the business. And the Sint exchange is no secret that the the consolidation of Lucid and Sint in particular, but also Lucid, um p2 sample and gap fish um is complicated it's extremely complicated and it's and we have a very clear plan and we're executing our plan step by step but we are the the nature of this kind of work means that we're very internally focused or rather more internally focused than one would ordinarily be when you're not integrating large bits of technology um so that has an impact on our ability to innovate and really push that side of the business forwards, which is why there's so much focus internally from me and the rest of the management team on integrating these technologies. Once we have got that done, we enter a whole different phase of the life of this company. There's incredible focus internally and extraordinary levels of work going on to integrate this complicated technology stack. So it is progressing. There are a couple of small delays in certain areas. The new, what gets called internally user interface, but really it's the applications in exchange. We're rebuilding it. We're rebuilding the front end. We're rebuilding the user experience. We're taking years and years of learning and baking into a new product. We launched it internally in Q1. We're testing it with customers, and they've just been more bugs than we were expecting. We've fixed nearly all of them now, but it's more complicated than we expected once we started road testing it. There's a few months delay on that, and then there's a couple of months delay on the panel management system that will allow us to plug in different types of panels, different types of communities of suppliers, of respondents. So it's a hugely important piece of the new SYN exchange. That's a couple of months late, but it's going to launch in Q3. So there's lots of amazing work going on, but there's a couple of delays in a couple of areas, but nothing that is not unexpected in a project of this scale. And then the final two points here, migration of managed services customers is on plan. So managed services customers, this is where we use our product and our technology on behalf of our customers. So that's going super well. And then finally, we took out about a million dollars a month, even close to a million euros a month in Q2 from our cost base. 10% of the cost, the personnel cost for the company, which we've taken the cost of that exercise in the P&L in Q2. So the redundancy payments are all accounted for in Q2, but obviously that benefit starts to kind of accrue in Q3 and beyond, because that will happen in June. So, but that's a nod to our, you know, very diligent work on cost management. So if we go to next slide, please, slide four. Figures in brief, as I said, nothing too dramatic here. Obviously, we want to get the company back to growth. I mean, there's no secret there. And we didn't. Q2 was not a growth quarter. Now there was a, we deprecated, we turned off the P2 sample platform in Q2. And it's a complicated thing to sort of describe the impact of that, but basically the traffic that was going through that platform was routed through to the SYN platform. we missed a couple of things during that migration or when we turned that off, which caused some of the programmatic buyers to not be able to programmatically buy basically, or they weren't getting the right price through the platform. The programmatic buyers that were using the P2 sample platform weren't getting the right data through the API on the SYN platform, which we think it's hard to actually I'd be absolutely kind of confident on this number, but we think it's a minimum of two million impact in net sales in Q2. Now, if that was an error, like, you know, hands up, we made mistakes. That was that was an error, self self-inflicted, as it were. But if that hadn't have happened, you know, the company would have, we think, been marginally in growth for Q2. But it did happen. So let's not get away from it. The impact of that, though, was mainly in May, a little bit in June, and we think will be nowhere near the magnitude of what we saw in Q2 going forward. So we're pretty confident that we've pretty much solved that problem. But as I said in the report, this is a complex process and you know, we can't predict everything that's going to happen. And there might be other issues as we as we deprecate platforms, turn things off, unify our tech stack and move all of our customers onto it. And as I said, to get to a new phase of innovation and growth. So, yeah, the numbers are there on the screen. I mean, I won't read them out because it's self-evident. But as I said, net sales, slight decline there. Good cost control, but we took significant amount of redundancy costs in Q2. Next slide, please. Slide five. Focus on product integration and customer migration. I've said this already, but it really is, and I said this when I came into the company, the mantra that we have internally is consolidate, standardise and optimise. That's the phase. We're still in that phase. We're getting through it. As I said, I'm super proud of the team and all the work that's going on. It's extraordinarily difficult, but everybody is really working very diligently and we have a very clear plan. And as I said earlier on, there's a couple of delays in two particular areas, but in general, everything else is on plan. And also, you know, decommissioning, deprecating one of the four platforms that were there when I joined, getting that done is a landmark moment. And then we've got, you know, we've got, we've already deprecated Gatfish, we've deprecated P2 sample now, we've got the last job now, which is integrating SYNT and Lucid and releasing our new application. And that, as I said, is the core focus and then migrating our customers. So final point here, investment in automation, AI, and the new state exchange give customers feedback on the feasibility of getting their surveys answered, saving them time and money. We've spent a lot of time, our data science team has spent a lot of time on this feasibility feasibility functionality in particular. So what this is, is a customer comes in, they have a complex request or a complex survey that they want to get answered, and they've got a whole bunch of different respondents that they want to have answer that survey. And we are able to tell them, how quickly they can get it done and for what price ahead of time. And this is the best in the market. It's driven by pretty advanced AI and it works super well. And it also works extremely quickly, which is important for programmatic buyers. So very proud of that work. And that was rolling out in the new platform. which is just a small hint to the fact that we're not just consolidating, we're not just sort of cleaning up, we're actually innovating as well. And that leads us on to the next slide, slide six, media measurement. More resources are going into this part of the business because it is performing super well. It's high margin, it's high growth, and we think there's more to come here. So just I've called out three things that we're doing here, adding social media data, insights from social media data, as well as the ability to measure digital display ads out of home, so in public. So this is a new functionality that we added during the quarter, and we've also upgraded the reporting to analyze the results that come back using more advanced techniques, AI. So just very briefly, the media measurement business is super interesting because we ask the people who have actually seen the ads, we can match through cookies and mobile ID devices and hashed emails, the people that get served advertising, digital advertising, via Trade Desk, Amazon, Netflix, Disney, and so on, We can ask them before, during and after the campaign, their opinion about the brand. So this is about brand uplift. And as we have the world's largest exchange, so we have the ability to get to the most number of people. And so we're in a unique position here to actually give brands the sort of emotional response, the brand uplift data around their around their advertising. So obviously you've got behavioural data, you know, click here and buy and so on and so forth. That's that's obviously very important. But so is brand and so is attitudinal data. And Cint is in an amazing position to be able to deliver this attitudinal data at scale. And it's obviously that part of the business is doing extremely well. But I just want to give a little bit of a flavour of what this media measurement business is. We occupy a very interesting and quite unique space within this sort of area of understanding how your paid media is performing. If we move, so Nils, do you want to take it from here on the financial update?

Yeah, thank you. You can go to the next slide, please. And the next one. Yeah. So just as a reminder that we changed our reporting format as of Q1. It's the same slide as we showed last time, but it didn't get picked up everywhere completely. So I thought it's good to remind everyone. So we have the net revenue recognition instead of the gross revenue recognition that we had before. And in terms of costs, we have the function-based income statement right now instead of cost-based. And we have a new measure called EBIT A and not EBIT DA to also include depreciation and basically give a better representation of the company performance. Next slide, please. So overall, the numbers we just saw already briefly with YAS as well. You can see here the seasonality pattern that we usually have. So Q1 was low, as it's always one of the weakest quarters or the weakest quarter. So we had a nice rebalance in terms of revenues. Year on year, it was still down. However, without this temporary supply issue of the migration of suppliers, we would have shown a small growth. But it is what it is, as Jas mentioned as well. on the gross profit side, you see also the nice rebounds compared to Q1 in particular. Year on year, it's still a little bit lower in terms of margin. There are two items in here. One is what we call direct labor costs. That's people working directly with the projects basically and with the clients making sure that the projects are happening. And the other part is hosting costs and hosting is the bigger one. This deprecation of P2Sample that also triggered the revenue issue of 2 million, it's also going to save costs on the hosting side actually, which will be visible more on Q3 onwards. So it is overall a net positive. It's just that right now during this migration, you lost on the revenue side and you don't see the full savings yet. And going to the right on the EVTA, you see also a good improvement, both compared to the last quarter and also year on year, despite the slightly lower gross margin. And this is due to lower operating expenditure, of course. Let's go to the next slide, please. So here you have the usual split between Synth Exchange, the main core business, and Media Measurement. It's similar as what we've seen in the previous quarter since Media Measurement is growing quite rapidly, and that's ongoing still, whereas Exchange is in decline. On the right, you see the regional split, and you also split out now from the Americas. the media measurement business because it's mainly in the Americas. So therefore, the Americas actually look quite stable here and here. However, that includes lots of the media measurement business. And without that, it would also have shown a decline similar to the other regions. Maybe we can go to the next page. There we have the overall P&L. We already touched upon the numbers, of course, briefly until EBIT A. I think there's not so much to add. There's a lower cost in OPEX, in particular, G&A. R&D expenses were a bit higher than last year. That has to do with lower capitalization of that work. So that's also what you will see later in the next page. Overall, 7 million EBIT A instead of 6.3. And then we have items affecting comparability that I need to highlight. So the so-called NRIs, non-recurring items. Here we have two categories this time. So we used to have only one category related to the acquisition of Lucid and the integration of that. And that one we always said was going to end in Q2 24, which is where we are right now. And that's exactly what happened as well. So this is the final time that you will see NRIs related to debt. It was 2 million, 2.0 million. And the other part is what Yas also briefly mentioned already. We had this reorganization that we announced externally on July the 1st. 2.9 million NRI is related to debt. That's a provision for expected severances. So that's one of that also shows up here is mainly non-cash in Q2 and coming later, like during Q3, maybe a little bit in Q4 in terms of cash. So overall, EBIT still including all those effects also improves a little bit. Next slide, please, on the cash flow. So overall, that cash flow was kind of stable, so it was 500K minus as compared to minus 10 million last year. So that's a big difference. You see the different elements. Operating cash flow improved by 3.3 million, and that was including 0.3 million higher interest payments. So it would have been 3.6 better year on year without that effect. Then the second element is, of course, the working capital. So there we had a minus of 2.2 million compared to 8 million minus last year. So that's better year on year, mainly driven by accounts payable. And then here you see the cash flow from investing activities, which is mainly the capitalized developments. Both what I mentioned before at the P&L as well. So that's lower than last year. So we capitalized less of the R&D costs, and therefore you see a small increase of R&D costs in the P&L and lower amounts here. Yeah, overall cash, 30.8 million rounded. And then that's, yeah, that's maybe also good to highlight actually. We also had another loan amortization payment of 2.3 million in Euro. That was the second one. We had the first one in Q1 and the second one now in Q2. So therefore, the debt amount is less. Net debt, of course, goes together with cash and increased to 79.5 million. Next page, please. This is my final one. It's about working capital deep dive. It's a bit of a mixed picture, so you can see that it's decreased compared to the previous quarter by 2.5 million in absolute amounts, and also compared to customer spend, it went down from 10.4% to 9.7%. However, when you look at the drivers, you see that cost receivable increased by a lot, by 10.9 million, and account payables by even more, and therefore the net effect Um, it's positive, but of course the thing that I'm personally focused on the most is cost receivable and bringing that down. So this is one of the main areas that I'm working on with not just the finance team, but also together with commercial team, even with, uh, also other teams involved to bring this down. It's, it's a complex, um, uh, kind of structural issue, but we are, um, getting down to the bottom of it and there are so many elements. that are coming together to improve this. However, you don't see it yet in the numbers here. And the good news is that we are not in dispute with clients about that they don't agree with the invoices. It is more of finding ways of how to get them paid and efficiently getting them paid structurally also going forward. Yeah, so I think overall, quite confident that we can solve this over time, but As you can see here in the numbers, it's not shown yet. I think that's actually my final slides and we can go back to Giles.

Thank you, Niels. I'm going to repeat what I said earlier on because this is the focus of the company. Slide 15, please. Consolidate, standardize, optimize, create a company that is um lean and efficient and um able to then refocus on innovation and uh building uh building technology that will will drive the company forward so it's the same message we're still in the middle of it um but it is going it is going pretty much apart from a couple of small areas to plant and as i said earlier on i'm you know very grateful to my team and the rest of the company for the uh the work that's going on it really is um you can't see it from the outside but um it is work we're working incredibly hard to to make this happen so um yeah it's a very sort of repeat of what i've been saying for a while um but hopefully uh that gives some confidence that we are actually doing it because we are um so i guess let's move to q a uh because um we've said i think all we need to say thank you if you would like to ask a question please press star followed by one on your telephone keypad if you would like to remove your question please press star followed by two