Haypp Group AB (publ)

Welcome to Hype Group Q2 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Gavin O'Dowd and CFO Peter Deli. Please go ahead.

Good morning and good afternoon, everyone, and welcome to Hype Group's Q2 results. My name is Gavin O'Dowd, and together with our CFO, Peter Deli, we will take you through today's presentation. Starting at slide three, which is the agenda for today, I will take you through an overview of Hype and the Q2 performance highlights, and Peter will take us through the consumer, financial and segment performances before handing back to me for progress on our key strategic priority markets and an outlook. I would like to take you to slide five to remind you of some of the key dynamics around our business. We are an online retailer of risk-reduced products with a strong focus on nicotine patches, which as of today make up over 70% of our volumes. We have multiple storefronts per market, and we operate in five markets in Europe, in the US, and we have also recently launched in Saudi Arabia. Approximately 90% of our revenue comes from product sales, with sales of media and insights to brand owners accounting for just over 10%. While the jurisdictional complexity around the sale of nicotine is often viewed as a hardship, given our expertise and scale, we view it as a barrier to entry. We are targeting to approximately double our 2024 revenue by 2028 and increase our 2024 EBIT by 3 to 4x. Moving to slide six, the scale of market growth potential in our existing geographic footprint is determined by the US and the UK. While the UK is a distant second, it has some very favorable long-term dynamics. Continuing on to slide seven, The US and the UK are also the two markets with extremely low online penetration rates, reflecting the early stages of the category lifecycle, including the historically limited assortment in the US. Hence, these are two markets which we have dedicated significant resources to in recent quarters. We will touch on this more throughout our presentation. Moving into the quarterly performance updates and remaining on slide seven for a moment, This is the first quarter, sorry, this quarter has been our fastest volume and sales year on year growth since we IPO'd five years ago. It is also our highest ever gross margin. Moving to slide nine, we're happy to see continued acceleration in nicotine batches to 45% year on year growth. In absolute volume, this is by far our fastest year-on-year nicotine pouch growth in the history of the Group. Growth markets have been a significant contributor with 91% year-on-year growth and now account for almost half of our nicotine pouch volume. The strong performance in the growth segment accounted for 71% of the Group nicotine pouch growth. This momentum is underpinned by the Group's investment focus and supports our future growth expectations. Moving into our performance highlights on slide 10. An increase in active consumers was the primary driver of our growth. However, increased share of consumption among existing consumers in our core markets also contributed to the 28% volume growth. Gross margins were up slightly to a record high, generating a gross profit increase of 29%. This consisted of a substantial increase in median insights, which was partially reinvested into the consumer offer to further accelerate the flywheel. Year on year, we have materially increased our investment and capabilities in the US and the UK. This combined with increases in marketing expenditure, while the window to do so remains open, has led to a reduction in the EBIT margins, which we expect to level off and to continue at this level for the remainder of this year before trending back towards our 2028 guidance. On slide 11, we show the actual performance of each of these KPIs and their relative change versus prior year. Growth in consumer flowed through to orders and volume, leading to our fastest net sales growth in five years, which in turn led to our highest ever gross margins. The planned investments, predominantly in the US and the UK, have temporarily reduced a wee bit. With that, I will hand over to Peter.

Thank you, Gavin. And good morning, good afternoon, everyone. Let me take you through our Q2 performance. The headline this quarter is strong, broad-based growth, highest organic growth rate since IPO. We have accelerated both our top line and our consumer base. Our fundamentals remain solid, and exactly as planned, we are carrying a deliberate level of investment that is waning on near-term profit. Let me now go a level deeper, starting with our consumers, because ultimately, consumer growth is what underpins everything else in the model. Going to slide 13, this slide shows the continued strength in our consumer base. Group active consumers reached a new all-time high, up 24.4% year on year, There are two reinforcing trends behind it. Rapid growth in all growth markets and core turning firmly into growth. The standout is the growth segment where active consumers were up 74.2% driven primarily by the US and UK. Our marketing that is showing clear traction with strong conversion and repeat purchase behavior. In core, active consumers grew 9.3% a meaningful improvement versus the declines we saw earlier last year. This is supported by a growing number of nicotine pouch consumers and a stabilizing snus base. The momentum in both score and growth gives us confidence that our acquisition strategy is working, paired with sustained strong retention, and that we are building a solid foundation for continued volume and sales acceleration. Slide 14, here we break volume down by category. Nicotine pouches remain the engine. Nicotine pouch weight in group volume supports for future growth with the US and UK the primary market drivers. In core markets, nicotine pouches are now around 54% of volume and still growing at high team rates, taking meaningful market share. On snooze, volume decline continues to moderate since Q4 last year, helped by an enhanced consumer offer designed to capture mixed category household purchases in Swedish homes. On vape and heat not burn, the UK discontinuation reduced the year-on-year growth, but the underlying trajectory is expected to continue with strong growth, both in Germany and Sweden. Important to note that volume growth is ahead of consumer-based growth across all markets, signaling that our offering resonates well with the consumers and we are gaining share of wallet. Overall, the category dynamics remain very supportive and our scale positions us well to capture the ongoing shift toward reduced-risk products. Now let me turn to the financials and walk you through the P&L and the balance sheet. Startinging with the net sales on slide 16. We saw further acceleration in our top line. Net sales grew 27.7% as reported and 27.1% at constant currency. The highest constant currency growth rates we have delivered since IPO. In absolute terms, net sales reached almost 1.2 billion SEC. The negative FX translation impact is driven by the NOC to SEC translation with US dollar to SEC partly offsetting it. What I'm particularly pleased about is that all critical parts of the business contributed. Nicotine pouches remained the key growth driver, and given NP is above 70% of our volume, that strong growth plus the rising share of sales creates a positive mix effect. Within nicotine pouches, the US and UK are the key drivers, with solid mid-team growth in the core markets. Price mix in the nicotine pound segment was negative in the quarter driven by the growth segment, mainly the US business. I want to stress that these promotions are manufacturer-led and margin-neutral for us. There is an offset in our cost of goods sold. Snooze sales stabilized after a few challenging quarters in 2025. The decline is slower now than what we have anticipated at our capital markets day, helped by the improved Swedish consumer offer. Weed and heat node burn contributed to growth despite the UK discontinuation, with Sweden and Germany volume up by 70%. On slide 17, let me talk to you about our gross profit. We delivered gross profit of 229 million SEK this quarter, a major step up in absolute terms, up 29.2% year on year. Gross profit growth run slightly ahead of net sales, so gross margin improved a marginal 0.2 points to 19.5%. Within the margin, there are two opposing forces. The fast growth of median insights lifted the margin, adding 0.9 points to bring median insights gross margin contribution to 11.9%, with growth across all key markets. We then reinvested much of that incremental benefit back into our consumer offer, mainly targeted pricing, which we believe is the right trade-off while the acquisition window is open. Moving to slide 18. Overheads increased in the quarter, and this was fully expected. From last quarter, we break the base into three elements, marketing, fulfillment, and G&A, and total overhead was 14.8% of net sales. Marketing at 1.8% increased as we leaned into consumer acquisition in the US and UK while the opportunity window is open, and we are seeing substantial increases in new Nucleotide Pouch consumer acquisition rates in both markets. We are pleased with some of the channel's performance, particularly with high purchase intent, lower funnel marketing, and we will continue to deploy capital subject to the ongoing performance. We will be efficient and disciplined with the capital we deploy. Fulfillment at 1.6% is where our scale benefits shows. The cost base grew 25% while volume grew 28, so we are growing into a warehouse infrastructure. The UK move to a larger automated facility will extend that. G&A at 11.3% is the biggest driver of the increase. This is mainly driven by the organizational build-out in the US and UK and within your central functions, including AI. Some of this structure is deliberately ahead of the current business because the skill sets and local focus are critical to our long-term success. We expect G&A intensity to moderate, and as a percentage of net sales, we won't expect further increases for H2. Given the size of the Group's G&A cost base relative to adjusted EBIT, management sees significant potential to improve productivity and scalability through targeted AI investments. These initiatives are expected to further improve operational efficiency across the organization. Moving into slide 19, this brings us to adjusted EBIT, which was 28.6 million SEC with a margin of 2.4% down from 4.2% last year. I want to be transparent about this. Your compression is entirely by design. Higher gross profit and a stable gross margin are working in our favor and show that our business model is robust, but the investments in G&A, mainly personal, and in marketing more than offset that at the EBIT line. Growth segment accounting for the compression. We are prioritizing consumer acquisition and market share gains in the US and UK with both markets already showing substantial growth versus last year. We expect this investment phase to continue through 2026 with margin expansion resuming as scale benefits flow through in 2027 and 2028. Slide 20. Finally, on the balance sheet, working capital and leverage. The sequential increase in inventory mainly reflects opportunistic inventory build across several markets with some additional US stock build for new product launches and stock in our newly established Swiss warehouse accounting for the remainder. Networking capital turnover remained in line with the range of prior quarters despite the opportunistic stock builds. Net debt increased sequentially driven by that higher working capital and increased least commitments and leverage moved from 0.2 times to around 1 times on a net debt to last 12 months adjusted EBITDA basis. That is still a low and very manageable level and we remain disciplined in managing working capital as we scale. Let me now turn to segment performance, taking growth and core in turn. This is where you can really see the two engines of the model, growth driving acceleration and future share, core providing the profitable cash generative foundation. Starting with the growth segment on slide 22. This is where we see the most significant acceleration. Active consumers grew 74.2%, orders 72.3%. This is a notable increase of new customers in the quarter, explaining the slower growth of order number. Total volume up 80%, with nicotine pouch volume up 91%. The difference is driven by the discontinuation of UK vape. Growth segment represents 47% of the Group's nicotine pouch volume. Both the US and UK delivered exceptional performance with volumes up by 125 and 113% respectively. Net sales grew 57% or 62% at constant currency and the segment now represents a 30% share of the Group net sales. The gap between net sales growth and volume growth is driven by manufacturers' finance price reductions. Gross margin was 18.9%, down 5.5 points, that reflects an exceptionally strong prior year comparison and the deliberate investment into our consumer offer this quarter. EBITDA was negative at 32.5 million SEC. We are in as we build local teams and scale acquisition. Those investments are what accelerate our long-term share capture, and they are already translating into very strong consumer and volume growth. To support the further development of this segment, we automatized our UK warehouse and localized our operations in Switzerland to improve consumer experience in both markets. As communicated earlier, we exited Austria from 1st of July. Austria generated less than 9 million SEC revenue in Q2 2026. Overall, growth is performing in line with our expectations and is the primary driver of our long-term revenue and EBIT expansion. Moving to slide 23. In the core segment, we delivered steady, predictable performance Active consumers grew 9.3% and total volume 11.3%, driven by nicotine pouch and supported by the improved snooze offer. MP volume up 19%. Volume growth ahead of consumer growth is a clear sign we are increasing share of wallet. Net sales grew 18.2% or 15.8% at constant currency. Positive price mix driven by increased media and insights revenue. The increased median insights revenue led to a gross margin increase of 2.1 points to 19.7%, and EBITDA grew 33% to 87.9 million sec, a healthy 10.7% margin. So while growth is the accelerator, core remains the foundation of all margin and cash generation, and its rise in nicotine pouch penetration supports long-term margin expansion. Strong growth across both segments reflects the continued execution of our strategy and supports our ambition to drive further profit expansion over time. With this, I give the word back to Gavin to guide us through the strategic priorities.