Slide 1: System1 Interim Results
System1 Interim Results November 2021 © System1 Group PLC 1
Slide 2: Profit & Loss H1 £'m (6 months to 30th September 2021)
Profit & Loss H1 £’m (6 months to 30th September 2021) FY22 FY21 Change £m Change % Revenue 12.4 10.1 2.2 22% Gross Profit 10.4 8.6 1.8 21% Adjusted Operating Costs -9.1 -8.2 0.8 10% Adjusted Profit Before Tax 1.3 0.4 0.9 252% Statutory Profit (Loss)Before Tax 1.3 -0.4 1.7 n.m. Tax (Charge)/Credit -
Slide 3: WIP mix switch: bespoke consultancy to Std. Data products
WIP mix switch: bespoke consultancy to Std. Data products Revenue by Variant £’000 7000 Consultancy Revenues £’000 7000 6000 6000 5000 5000 4000 3000 4000 2000 1000 3000 0 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 2000 Comms Brand Idea 1000 0 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 Data Consultancy © System1 Group PL
Slide 4: Growth in Data Revenue mainly from Test Your Ad & New Customers
Growth in Data Revenue mainly from Test Your Ad & New Customers Test Your (TYX) 1st Year Revenue by Qtr… ...by Pre-existing and New Customers 3000 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 500 0 0 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 TYA TYB TYI Pre-existing New sin
Slide 5: H1 £'m Revenue by Region
H1 £’m Revenue by Region 10% 36% 5.0 25% H1 FY21 £10.1m H1 FY21 H1 FY22 4.0 29% 3.0 Americas UK Europe APAC 2.0 8% 1.0 36% 24% H1 FY22 £12.4m 0.0 Americas UK Europe APAC 32% © System1 Group PLC 5
Slide 6: H1 £'m Revenue by Product Group
H1 £’m Revenue by Product Group 5% 8.0 40% 38% H1 FY21 7.0 £10.1m H1 FY21 H1 FY22 6.0 17% 5.0 4.0 1% 3.0 27% H1 FY22 2.0 £12.4m 59% 1.0 13% 0.0 Comms Brand Idea Other Comms Brand Idea Other © System1 Group PLC 6
Slide 7: Adjusted operating costs and headcount
Adjusted operating costs and headcount FTE £M 160 10 9 140 8 120 7 100 6 80 5 4 60 3 40 2 20 1 0 0 FY21 H1 FY21 H2 FY22 H1 Headcount FTE (LHS) Adj Op Costs £m (RHS) © System1 Group PLC 7
Slide 8: Share buyback
Share buyback •From December 2021 to end of financial year •On-market repurchase via broker •Review progress at year end •First buyback since FY17 © System1 Group PLC 8
Slide 9: THE Marketing Decision-Making Platform: The Case For System1
THE Marketing Decision- Making Platform The Case For System1
Slide 10: The case for System1
The case for System1 Assertion Thesis 1 World-beating prediction/improvement methodologies 2 Unique, step-change improvement in product value for customers 3 Innovation and investment to maintain this product lead 4 Prediction and Improvement market dynamics are very favourable 5 Defensible through
Slide 11: Fame Fluency Feeling
Fame Fluency If a brand comes If I recognise readily to mind, a brand quickly, it’s a good choice. it’s a good choice. PREDICTS FUTURE BRAND SHARE Feeling If I feel good about a brand, it’s a good choice. REFLECTS CURRENT BRAND SHARE ENABLES YOU TO CHARGE A PREMIUM
Slide 12: World-Beating prediction/improvement methodologies
1. World-Beating prediction/improvement methodologies 48% 32% 15% 4% 1% Quantity of Advertising Quantity & Quality of Advertising TV ESOV TV ESOV x Star Rating ACTUAL GROWTH ACTUAL GROWTH PREDICTED GROWTH PREDICTED GROWTH Star Predicts long-term profits UK Cereals: 12 Brands (55 ads) Correlation: 0.
Slide 13: World-Beating prediction/improvement methodologies: Spike validation
1. World-Beating prediction/improvement methodologies UK Validation US Validation Spike predicts short term TV ROI Spike Predicts Spike predicts click-through for digital ads short-term sales SPIKE INDEX SPIKE INDEX Correlation: 0.70 Correlation: 0.70 Non Radio Radio SAME WEEK ROI (INDEXED) SAME WEE
Slide 14: Unique/step-change improvement in product value for customers
2. Unique/step-change improvement in product value for customers 3 2 4 We improve effectiveness 1 better than We deliver 5 We predict any1 effectiveness effectiveness faster & better than cheaper than We understand any1 We employ the any1 & promote best, so your effectiveness effectiveness is better
Slide 15: Mark Ritson endorsement quote
“System1 have a unique calling card here… System1 is special because you’ve looked at creativity in a far more detailed way. You’ve balanced the creativity/media thing, you’ve done it on an effectiveness basis. You’re not paying me as far as I know, so I endorse System1; I think the work is great” M
Slide 16: Innovation and investment to maintain this product lead
3. Innovation and investment to maintain this product lead Platform Database Innovation Now c.70,000 adverts Fully automated TYA Profit Projector Test Your Ad June 2021 UK 95% by Dec 21 TYA Pro Reports US 95% by Mar 22 Fully automated Now c.6,000 concepts TYB Pro Reports Test Your Brand Nov 2021 TYB
Slide 17: Innovation and investment: Profit Projector
3. Innovation and investment to maintain this product lead Profit Projector™ Uses our TYA database + the customer’s share, spend, and margin data, to accurately predict in minutes, any US/UK Brand’s advertising ROI: 1. Av. Star-Rating in TYA 2. Market share 3. Ad spend share of voice 4. Gross margin
Slide 18: Prediction/Improvement market dynamics are very favourable
4. Prediction/Improvement market dynamics are very favourable © System1 Group PLC 18
Slide 19: Defensible through IP, Branding, Customer and Supplier relationships
5. Defensible through IP, Branding, Customer and Supplier relationships Star, Spike, Fluency Predictions “Test Your” Automated Predictions FaceTrace ® Fame, Feeling, Fluency Registered Trademarks Mark Territory “System1” UK and EU “System1 Research” UK, EU, USA etc “System1 Marketing” UK, EU, USA et
Slide 20: Defensible through IP, Data, Brand, Customer/Supplier relationships
5. Defensible through IP, Data, Brand, Customer/Supplier relationships Asset 1. BUILD on the largest db of c.70,000 adverts evaluated on long term effectiveness. We use this to enhance the effectiveness of our Test Your Ad prediction & guidance consultancy business. 2. BRAND use our database and pro
Slide 21: We are winning new customers, retaining, and growing them
6. We are winning new customers, retaining, and growing them 3000 ...by Pre-existing and New Customers E.G. 2500 2000 1500 1000 500 0 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 Pre-existing New since Apr-20 © System1 Group PLC 21
Slide 22: Winning with CMOs
6. We are winning INDIRECT CMO SELLING with CMO’s As the biggest investment, ad decisions are made at the most senior levels, with a whole eco-system of influencers/participants. Reaching CMO’s at scale will be mainly through PARTNERSHIPS DIRECT CMO SELLING CMO’s are incredibly hard to reach & well-
Slide 23: Strong scalability and operational gearing from Platform
7. Strong scalability and operational gearing from Platform Area / Revenue £50m £100m Comment Increase with account management Slow Slow Sales & Marketing on major customers and new Increase Increase business wins Highly automated. Volume increases Minor Minor Operations minus productivity result in
Slide 24: Summary
Summary •Data platform strategy is on track •Strong profitability and cash position in H1 •Focussed investment in people and platform in H2 •Underlying profitability on track •Building and defending our IP •CMO dialogue transforming customer relationships •Prioritising growth while protecting profit
Slide 25: Questions?
Questions? © System1 Group PLC 25