Zinzino AB (publ)

Good afternoon and welcome to this live video interview with Zinzino following the Q3 2025 report. My name is Niklas Elmamer from Karlsruhe Equity Research and we're very pleased to be joined today by the CEO of Zinzino, Dag Berghem Pettersen. But before we begin, I would like to welcome you to submit questions in the chat function. So please send in as many questions as you like and we'll try to address them. But now I will turn over to today's main attraction, Dag. So we're very welcome and we're happy to have you here again.

Thank you. Thank you for having me. It's always a pleasure to be here with you.

Okay, so Zinzino released its Q3 report this morning. Very strong growth, that has been a familiar theme for some time now, but also very improved margin. And also you have been quite busy on the M&A side during the quarter. But please, Idag, give us your perspective on the quarter.

I think your summary is pretty precise, strong growth, which we have been announced and have had the whole year. And then the profits are increasing quite significant now in quarter three. I would say it's within our plan or a little bit above what we have promised the market. So very pleased with everything that we do. I think I'm in the office in Gothenburg now and some people here are a little bit tired of me dragging in new acquisitions. So they asked me to stop for a while now, make sure that we're implementing everything. All in all, I'm very pleased, very happy, very happy with the team, the development on so many different aspects. And we also created... You know, we are dealing with test-based nutrition, so we launched a new test, as we have been talking about in October. That has been fantastic. So all in all, we are doing extremely well from my perspective.

Okay, great. And if you look at the regional development, there's a very solid momentum in Central Europe. Good growth in North America as well, boosted by acquisitions. Could you please comment on the underlying growth in these very important regions for you?

Well, we can start off by talking about US. So we are actually quite happy with the organic growth in US plus the acquisitions that we have made and the mergers. So that is a strong region. And I strongly believe that we are kind of in an early stage. And I think the potential is quite much higher than what we have seen so far. But we are working on it. So that would be probably one of the strongest markets or regions. If you look at the next two to three years, that's my prediction and forecast for that. Then if we move over to Asia before I turn my focus on Europe, Asia have been growing. Our model of selling and the test-based nutrition and the focus on customers takes time to be perceived, I would say, in the market space. We're working in direct sales and home parties. So we are super happy with the growth that we've seen in Taiwan, for instance. That has been super strong now for one and a half year. We have been established for six, seven years now in Malaysia. Now we see that we are gaining some kind of trust and growth. Australia and New Zealand are doing pretty well. Asia in it all are doing fantastic, but it's driven by some few countries from that point, but happy since Asia has the most populated area in the world. Of course, if you're going to be a global company, you need to be present in Asia as well. But it's early stages for us. So Europe has been the strongest foundation of Zenzino. We started in Scandinavia like 20 years ago, and we are number two, I would say, in the Nordics from the direct sales perspective of every company that we are comparing ourselves with. So that has been our fortress. And I'm happy to play out the global footprint of what we're doing. If you move a little bit further south to the region in the middle of Europe, that is the strongest. And Germany combined with Austria and Switzerland are now having approximately like 33, one third of the total revenue in that region. So, of course, that is the strongest region. It has been growing pretty fast the last two, three years, and it's still kind of growing, which is fantastic for us. But whole Europe are growing, except for some markets in the eastern part of Europe. South of Europe with France and Italy and Spain are now doing good leaps. UK are in a strong mode. They have all-time high there a couple of times this year, plus the Nordics. So the only kind of region in Europe that I would say that are a little bit lagging now in the eastern part of Europe, which has been our strongest region for three, four years. So we have had like a constant growth for many, many years now in the eastern part of Europe. But now it starts to be kind of on a new wave, which happens in some of the markets that we are part of. All in all, most of the regions have good conditions to grow. We put a lot of effort into creating some good promotions. making sure that we got good people that are supporting the sales and the revenue. So I'm quite positive with the future and what the future will bring from that perspective.

Okay. And just touching back on the US, how much has the distribution network expanded since last year with acquisitions and organically?

Uh, so first is a good reminder for, for everyone who is listening here. And maybe I've heard me talking for a couple of times, or maybe the first time we were working with a direct sales model where we have distribution and power. And those are the ones who are selling the products of us. Then 80 percentage and over 80 percentage are direct to consumer from those partners. So that is a ratio that we see in all of the world. Some of the new markets have a little bit more revenue among their partners and less on customers, but in average it's 80-20. We see that that fits directly into the model in US. With the acquisitions that we have, done over the last years, and that also with the European acquisitions as well, have given us a much stronger sales force in US. How many of those who are working in US is about? It has been probably 200 percentage growth, so we probably have 1,500. Yeah, 1,500 to maybe 2,000 salespeople in the US at the very moment.

Okay, thank you. And we have a question from the audience on the Asian markets. Do you have any updates on your expansion into China and India?

Thank you for that. Well, India is... Two different markets, of course, you know that. The largest populations on the planet, both of them, they're very different, but they have some similarities. We have had some good growth in India, but it's fragile, I would say. It's established on early stage numbers, I would say. The same thing with China, we changed to what we called an e-commerce model for China. We did that in June this year. It's still kind of early stages. We don't have a lot of revenue. I think we will probably end this year on both markets. China probably will be on a million euros in total. So it's very small revenue. But it's the building block for the future. China will be a good market for us coming into the future. I'm sure of that. For India, we have had a little bit like up and down. So I guess we're going to hit like maybe five, four to 5 million euros in revenue in India over this year. Um, but it's very regulated. So, so we are working a lot on the regulation, still product design, making sure that all of the things are working. So we go slow before we go fast in both of those two markets. It takes time to learn the market and. before you really expanded on the growth. So we are now putting a little bit break, so we make sure that we could deliver when the hypergrowth is hopefully coming in those two markets.

Okay, very interesting. We also have a question regarding the growth. What is the sort of...

uh distribution between new customers subscriptions versus new distributors oh it's it's the same answer as i revealed so we have an 80 20 rule so 80 percentage of revenue comes directly from consumers and that is the new intake and new partners so it goes hand in hand more and less we have what we call a compensation plan that are intensified on those premises. So the incentives are on the partners to also put a lot of effort to retaining and getting new customers, but also retaining customers. So that is a part of our total system. So it's very predictable what we're doing. And most of the markets are, just following the same kind of principles. A good thing, you want to know that I can kind of predict now the revenue for December and January based on the amount of customers and partners that we have and the intake of that, because we have a lot of subscriptions. So that gives us a lot of benefits when it comes to production planning and inventory and those kinds of things.

Okay, I see. And you mentioned also new product launches, the gut health test. And there's some questions about that. You mentioned already in the report that you sold 60,000 already. That seems quite incredible. I must say it is. So what is your expectations for this product? Is this sort of a charm of the new or is this a sustainable path?

For sure, it's going to be sustainable. It's one of a kind. It's the first dry blood spot test that could take and analyze the gut in that certain way. Normally you need to take different other tests, which is much more complicated and difficult to take. So this is going to give you a good insight on how your gut is working and what you need to do to improve your gut. And the literature over the last 10 years have shown that the gut are more important maybe to your whole kind of system of how your body is working. So we know for sure there is a lot of interest. We got lots of publicity. It's still kind of early stage work. So we are, we need to get all the reports in, there's a lot of work on analyzing all of these tests that comes into the lab. So remember that we have the largest database on fatty acids or omega threes to omega six. So it takes time to build that kind of fundament of the gut. We also have some products that you could use if you're shows that your gut needs a little bit more fiber for perhaps. So I have super strong beliefs that the gut health would be extremely important for preventative health for the next upcoming decades. And this is the new big thing for Cincinnati. I still think that the balance test that we launched 13, 14 years ago still will be the largest player on the testing device. But who knows? This has been like crazy good retrieved and received extremely well among our sales force. And there is a lot of attention around it and publicity and by practitioners, I would say, all across the countries that we are working in. So it's a fantastic start, but it's also just a start. So this will be one of the top, top analysis and tests that we and we've been working almost like a decade to to prove the test and done all that kind of work. It's it is like tons of hours of many people. So I'm so grateful for that. I'm not sure. It's very hard for me when I'm not like a scientist to explain you how good this is. But this is truly amazing.

Oh, that sounds exciting. And looking at the strong margins, they improved mainly related to the higher gross margin of 35% or above. Is this a sort of normal level going forward given the raw material prices and your growth?

It's a combination of many things. It's not that easy to read everything out of the balance sheets or the profit and loss, but you're into something, right? The growth is helping out. The gross margins, of course, are improved. Then also, what I've been talking a lot about are scalability. You see a lot of scale advantages in that quarter. And so that is the reflection. Honestly, that's the biggest reflection you can actually read out of that.

Okay. And regarding the EBTA margin, well above your targets, almost 16%. Is that boosted by something special?

It's a little bit lower costs, a little bit lower cost of goods. It's a reflection a little bit about adjustments of the dollar, the currency a little bit. But overall, it is the scale of the business. So I think I've said once in one of our interviews that we probably could have had those kind of margins if we only focused on margins, we could have had those margins, but we're also focusing on building the company for the future. So what I'm proud of is the investments that we have done on the tech side. What I'm proud of is the investments that we've done on the product, and also opening new markets, doing acquisitions. And all of these things are building up towards this quarter. It's not like one single thing. It's like many, many years of work and no magic. It's just like hard work that gives us this kind of margins. You're asking me, and I avoided to answer the question, if this is the new normal. I think we will go back to page five where we are stating the financial goals. And I think we still have the same kind of financial goals. We want to exceed a certain percentage in growth this year. I think I claim that we're going to do around 50 percentage instead of 20. We promised the market 20 over three years. So 2020 plus 20. We are overperforming on that. And then we said like on more than 10 percentage. We are not ready to kind of adjust those kind of targets yet. But of course, if we are overperforming, those financial goals seems to be a little bit like on the low end. That's probably what you're asking me about. Shouldn't you just adjust them? We haven't done that adjustment, but we're probably going to do that for next year and giving you a forecast for what we will bring to the market in 2026.

Okay, looking forward to that. We have some questions regarding... Hello, I have a question on the case with the authorities, specifically with regards to the accusation of aggressive marketing. Do you have any comments on these? I guess it's kind of media articles that have been around?

Yeah, I do. So... It's a very interesting thing. So every year, by regulators and authorities and governments, we are what you should call, they go through all over things. I mean, they go through the regulators of the product, the authorities run through how we're describing things, if we are following the laws and the regulations, EFSA claims and all those kind of things. It's kind of a normal thing for us that sometimes the government are even changing parts of their regulations and the governance. And we are just following all the different things that the government are putting on us. This year, the Swedish regulators have been watching all those, I would say, influencer media, or the social media and those kind of things. And for us, this has been just business as usual business as normal. There was a couple of questions about the way we used a symbol on the packaging. We changed it immediately. But last year, it was okay. But this year, it's not okay. So it's business as usual, in our, in our sense, and then You have local government also that has certain questions on, let's say, we are buying a company and then suddenly that company maybe have different labels. So we need to look through that and make sure that we are aligned with the laws and the regulations everywhere. But that is kind of business as usual for us. We have that for the Danish photovoltaic system goes through this every year. So that is an audit that we go through and we just follow the laws and we are good on the compliance matters to change towards that. So honestly, I think it's blown out of proportions and it was blown out of proportions of a media article. And at the same time, our shares were shorted, which is I don't want to speculate. What I want to do is to create a fantastic company based on the facts. So what I'm happy about today is that I've shown fantastic results, and we have answered up all those questions on the government. And I don't think there is a case going on at any place. But if there will be, then we will answer it, and we will change, and not just always.

Okay, thank you, Dag, for clearing that out. I think, unfortunately, we are running out of time here. It's a busy reporting day. But thank you, Dag, for taking the time and bearing with us with the questions. And hats off for the strong, profitable growth, I would say.

Thank you so much. It's always a good thing and an honor to be here. So thank you. Thank you for listening to me. And good luck on everything that you do on your end.

Thanks again and thank you all for listening in and hope to see you soon again.