Alcanna Inc.

Good afternoon and welcome to Qlik Group's first quarter 2025 results presentation. My name is Sebastian McCoskey, Head of Qlik's Investor Relations, and I will be hosting today's earnings call. As always, our CEO, Luc Vonken, will present Qlik's strategic and operational highlights in Q1. And afterwards, Ben Boss, our other management board member, will walk you through the group's financials. After that, the gentleman will answer the questions you kindly sent in via email this morning. Ladies and gentlemen, please take note of the disclaimer shown here and that this call is being recorded. The visual, audio and or transcription of this call may be published, including any of the data arising therefrom. If you have any objection, please disconnect at this time. So, without further ado, I will now hand over to our CEO who will start today's results presentation. Luc, the floor is yours.

Hello everyone and thank you for joining today's call. First of all, allow me to talk about the elephant in the room and briefly recap. While no final decision has yet to be made, our ownership structure could be facing significant changes. A potential partial public tender offer from Dylan Media may be forthcoming, giving shareholders an option to sell their shares at a fair offer price. However, we currently have no further information regarding the if, when or what the offer price could be. Following a potential partial public tender offer by Dylan Media, Click could, subject to the relevant approval by the General Meeting, decide to make a partial public share repurchase offer and redeem the Treasury shares acquired in this course. This would reduce our share capital. The Annual General Meeting has yet to be finally determined, but will definitely take place before the end of August, most likely on Thursday, the 24th, 1st of August. In addition, a delisting from all relevant stock exchanges is under serious consideration and an outcome supported in principle by both the management board and supervisory board, particularly if Dylan Media makes a public tender offer and acquires a substantial shareholding in Click. However, the management board and supervisory board have not yet taken any decision with respect to the delisting. As you can see, there are still many balls up in the air and we wish we could give you more information at this point in time. But unfortunately, that's currently not the case. But we will of course inform our shareholders of any news regarding the possible delisting as well as the potential public tender offer and the potential partial public share repurchase offer. Now moving on to today's main agenda item, the Q1 figures. This has again not been an easy quarter and today's presentation will reflect the ongoing challenges we face, both in the broader market and within our own transformation efforts. Year on year, our customer base per end of March dropped by 30% to 800,000 euros and sales decreased in line to 50 million euros. And this top line weakness continued to overshadow our operational progress. EBITDA before special items came in nearly 2 million euros below the level generated in prior year's first quarter. And although the corresponding EBITDA margin held at over 7%, this reflected our strict cost management rather than a greatly needed top line strength. The improvement in the net cash position to 14 million euros was welcome and due to our positive cash flow. Ladies and gentlemen, let's now discuss Qlik's operations. All in all, we had hoped our Fit for the Future program would yield more immediate performance improvements. We implemented wide-reaching structural changes. We started merging tech systems and executed a complete overhaul of our external service provider's footprint. downsized our selling, general and administrative expenses, as well as undertook a full-scale HR review. Cost efficiencies were achieved, but at a cost, and we lowered our target CPA and protected our margins in the short term that have yet to deliver meaningful sustained growth. All these measures were designed to create a more agile, cost-efficient Qlik. However, the tangible positive impact on our earnings growth momentum remains limited. On the productivity side, we tapped into new sales channels and launched additional digital products. Yet, despite these initiatives, top-line growth is lacking. The new sales channels have yet to meaningfully offset the decline in our dismal revenue source. In short, the transformation from fit for the future is now hardwired in our operational framework and DNA. We have laid the groundwork, but productivity gains remain elusive, and while we have seen some early results from our initiatives, these are in their infancy and not yet material nor reliable growth levers. The Fit for Future program was essentially concluded in the first quarter 2025. However, we do expect to continue optimizing and streamlining our personal structure and IT landscape in the next quarters to become more efficient and more productive. Strategically, we are in a better position quarter by quarter. Sales and EBITDA showed minor sequential improvements, but the gains were modest, more reflective of operational tightening than market momentum. Although our affiliate partners providing a strong sales foundation, growth beyond that was minimal. The AFOD model introduced in the US, while an encouraging experiment, produced more learnings than revenue. It's too early to say whether this model will scale. We definitely believe and do fully hope so. New accepted payment infrastructure improvements like integrating Apple Pay and Google Play are in the final preparation and could eventually translate into an uplift in customer numbers and sales. Some new products were rolled out alongside our traditional streaming services. Content licensing efforts expanded, as you will see on the next slide. But cost efficiency dominates also in our content supply management. Ultimately, while we had hoped to emerge from this quarter with clearer signs of recovery, the reality was that most of our strategic bets were still in the setup phase. Execution has undoubtedly improved, but external headwinds and internal pricing continue to delay the outcomes we originally targeted. As just mentioned, our content strategy was always active this quarter. We renewed and extended a pan-territorial licensing agreement for both North and Latin America, which included telenovelas and films for SVOD as well as AVOD monetization models. In addition, we secured a rights deal for the US to launch 10 linear fast sports channels, including live events, recaps, documentaries, and niche formats like Padel and Billiards. Both deals have expanded our content library nicely and bolstered the respective verticals. And importantly, we can use the content also for hooking up new customers. Ladies and gentlemen, in an operational nutshell, Q1 did not unfortunately deliver any quantum leaps, but we remain fully committed to our strategy and our action plan, how we can best get Qlik back on a sustainable growth track. On that positive note, let me hand over to Ben for our financials.

Thanks, Luc. And good afternoon, ladies and gentlemen. On this slide, you see the development of our strategic KPIs in the first quarter of the last three years. In Q1 2025, total customer acquisition costs were 15 million euros. Year on year, the total customer acquisition costs were just focus first and foremost on the group's profitability, not on sales. Sales, in comparison with the first quarter last year, were down 32% to 50 million euros. However, I should point out that this past quarter delivered a small 4% increase in the quarter-on-quarter sales development on the basis of sequential increased marketing spend. This quarter-on-quarter sales development is promising, but as the saying goes, let's not count our chickens before they're hatched. Year-on-year EBDA before special items fell in line with the sales drop by 31% to 3.7 million euros, and our corresponding EBDA margin was flat at 7%, primarily due to reduced costs. The reality is that while EBITDA has been stabilized, we are not yet seeing productivity-led expansion and the margin stability is the result of disciplined cost management. Now let's move on to the regional sales breakdown. Compared with last year's first quarter, our regional sales composition shifted notably this quarter, with North and Latin American exposure now making up over 80% of the total group sales. Europe underperformed and sales in the region and the rest of the world were negligible. 97% of sales came from bundled content services, which continue to form the backbone of our business model. Our customer base was down to 0.8 million from 1.1 million at the first quarter end 2024. This decrease resulted from the group's stronger focus on profitability, whereby the target cost per acquisition, in short the CPA, was brought more in line with the lower expected average lifetime value of our customers, which led to less new customer acquisitions. In addition, churn remained high. As previously mentioned, the card scheme companies' change in customer care tools increased our churn rate across all regions. Against the first quarter 2025-2024 equities, the expected average customer lifetime value, or so-called LTV, was down 40% to 70 euros, highlighting the difficult market conditions and our reaction by decreasing the target CPA. Ladies and gentlemen, here you can see our income statement with the EBITDA development shown before special items. The income statement this quarter tells a story of limited bottom line expansion. Despite the sales and EBDA drop, the profit for the period and the EPS grew favorably year on year. The special items on EBDA level in the first quarter 2025 were 85% less than in prior year's first quarter, reflecting the near end of the Fit for Future program. And these incurred costs only impacted our personal expenses and included transformation-related costs from fit for future, as well as certain long-term incentive expenses not directly related to the group's operating performance. Other operating expenses decreased year on year, and in total, OPEC's operational expenditure was managed down by nearly 19% one night. net profit in Q1 was up from 114,000 euros to nearly 1 million euros, and the EPS therefore rose year on year from 2 to 16 cents. While our efforts to cut costs were effective in containing any possible margin erosion, this quarter reaffirmed that cost discipline alone will not drive sales recovery. Some more about customer acquisition costs. A headline metric this quarter was our near 50% year-on-year reduction in total customer acquisition costs, but it's important to view this in context. This reduction was driven by a lower target CPA, broad aligned with a lower LTV, and a substantial cutback in paid acquisition spent. While this helped with short-term cash flow, it also showed customer intake and could limit growth potential in future quarters. As you are probably aware, Qlik's main action to counter the higher churn, and of course the subsequent lower lifetime value of our customers, has been to align and reduce our target CPA. This decision was taken to put a stronger focus on our profitability, but also that downside to less new and less higher value customers' acquisitions. The customer acquisition costs for a period Those marketing costs related to the revenue recognized in the first quarter totaled €17 million. Ladies and gentlemen, we recorded a decent recovery in cash generation this quarter. Cash from operating activities was €2.5 million, reversing the negative trend from Q1 2024, despite comparatively high tax payments made in Q1 2025. Supported by lesser cash outflows for investments operating free cash flow turned positive compared with Q1 last year and came in at over 2 million euros after minus four in 2024. And also due to minimal final repurchase for the now concluded share buyback program, we ended the quarter with a net cash position of 40 million euros, up from 11 million a year earlier. So, always happy to see how we've improved liquidity and stayed debt-free. Moving on to the balance sheet. Our balance sheet remained stable, but reflected the austerity of the core. Intangible assets declined due to lesser investments and increased amortization costs from the merger of our tech platforms. Contract costs and receivables both dropped, reflecting the cut in customer acquisition activities. Our equity ratio improved to 77%. The expected sales from existing customers. We ended the quarter with a lifetime value of customer base, so-called LTVCB, of 101 million euros. This represents expected revenue from our current customers over their remaining lifetimes. The 26% year-on-year drop is striking as it not only reflects that our customer base is shrinking in size, but also in value. This needs to be right and righted going forward. To complete today's presentations, a brief word on our outlook. So with today's Q1 research presentation, despite market conditions in 2025 remain unstable. Our sales are projected to go in between 180 and 220 million euros. And after spending between 50 to 75 million euros in total customer acquisition costs, EBITDA is expected to range between 10 and 50 million euros. Realizing this outlook depends on stabilization continuing, our strategic shifts finally gain traction. Ladies and gentlemen, 2025 is and will remain challenging for us. We have to grow sales sustainably and thereby keep a close eye on cost efficiencies and cash management. We are convinced that we have the right strategy and the right business model in place to realize the myriad business ideas we have. As I've said before, 2025 will be a year where we do our utmost to stabilize our sales decline and get back on a growth path again. Thank you for your attention. And that concludes our presentations today. We shall now commence on our Q&A session. So Sebastian, our first question, please.