System1 Group Plc · LSE:SYS1
System1 — Investor Day (February 2024)
64 slides from System1's investor day presentation, Feb 7, 2024
Slide 1: System1
Slide 2: Capital Markets Day
Capital Markets Day 7th February 2024
Slide 3: James Gregory, Chief Executive Officer
James Gregory Chief Executive Officer
Slide 4: Agenda
Agenda James Gregory Delivering on our promises Chief Executive Officer Robyn Di Cesare Customer-centric product Chief Product Officer Scalable growth Chris Willford Chief Financial Officer Q&A
Slide 5: We help the world's largest advertisers make confident creative decisions
i B\. = 2 ¥ o 1/8 gp h\ ae We help the world’s largest advertisers make confident creative decisions that lead to transformational business results
Slide 6: Source | Clayton Christensen, Harvard Business School
Source | Clayton Christensen, Harvard Business School
Slide 7: Creativity is a superpower
Slide 8: We are a marketing decision-making platform
predicts and improves marketing effectiveness … We are a marketing We predict and improve decision-making platform marketing effectiveness
Slide 9: Through our 'predict your' and 'improve your' offering
… through our ‘predict your’ and ‘improve your’ offering … Data Data-Led Bespoke Consultancy Consultancy (Predict Your) (Improve Your) © System1 Group PLC 9
Slide 10: Predictions delivered through an automated platform
… our predictions (and some improvements) are delivered through an automated platform … Predict Your… Improve Your… Project Management Set up Programming Panel Data processing Reports Data Led respondents Consultancy Forward translation Back translation Key: Automated Process Consultancy © System1 G
Slide 11: Results provided on a self-serve platform
… with results provided to customers on a self-serve platform … © System1 Group PLC 11
Slide 12: Based on world leading IP, methodologies and technologies
… based on world leading IP, methodologies and technologies Ads | Brands Survey Emotions measured Markets Ideas tested Responses through FaceTrace™ © System1 Group PLC 12
Slide 13: Platform revenue continues to grow
Platform revenue continues to grow Platform Revenue (£m) 14 12 10 8 6 4 2 0 FY22 H1 FY22 H2 FY23 H1 FY23 H2 FY24 H1 FY24H2 (Consensus) Data Data Led Consultancy © System1 Group PLC 13
Slide 14: Our USP is predictiveness, translating emotion into business results
Our USP is predictiveness, translating emotion into business results Most Predictive CMO C-Suite Speed Price
Slide 15: We reinvest the results of higher volumes & margins
We reinvest the We’ve created results of higher a platform & volumes & margins… proposition… To help the world’s largest advertisers to make confident We scale up creative We’re famous and are decisions for predictions & embedded improvements… throughout… We make it easy for System1 to convert at th
Slide 16: Reinvestment flywheel: support structure and performance culture
We reinvest Wethe We’ve created have a robust results ofsupport a platform higher structure & & volumes &performance margins… proposition… culture… To help the world’s largest advertisers to make confident We scale up creative We’re famous and are decisions for predictions & embedded improvements… t
Slide 17: Performance & Outlook
Performance & Outlook FY24
Slide 18: Q3 Highlights
Q3 Highlights Q3 platform revenue grew to £6.2m up 46% versus Q3 FY23 incl: « Predict Your (data) revenue grew by 53% to £5.2m « Improve Your (data-led consultancy) revenue increased by 16% to £1.0m System1 won over 60 new clients in Q3, over 200 in 9 months 5 new partnerships secured including a le
Slide 19: Full year expectations
Full year expectations Revenue for the current financial year is expected to be at least £29 million (FY23: £23.4 m) Statutory profit before tax to be comfortably above £2 million and materially ahead of pre-January 24 consensus (FY23: £0.7m) © System1 Group PLC 19
Slide 20: Under the Hood… What's Working Well
Under the Hood… What’s Working Well
Slide 21: We are delivering what we set out in the strategic review
We are delivering what we set out in the strategic review
Slide 22: Product & Platform, Fame, Go to Market, Customer Service Model
Focussed on Customer Product & Go to Service Fame Platform Market Model
Slide 23: We continue to invest in being the most predictive
We continue to invest in being the most predictive New Largest Data Quality Validations Customers
Slide 24: New product channels across the marketing funnel including digital
We have built out new product channels across the marketing funnel including digital Channel Creative Stage Storyboarding Offline Edits Finished Film
Slide 25: Expanding our partnership base
We are expanding our partnership base to successfully launch our products, grow our fame and win new customers More to come…
Slide 26: Expanding our partnership base: US broadcast and cable network
We are expanding our partnership base to successfully launch our products, grow our fame and win new customers One of the leading ad- supported broadcast & cable networks in the US More to come…
Slide 27: We are growing in the USA
We are growing in the USA - We work with 5 of the top 10 USA advertisers Ad Spend Ad Spend Rank Parent Company Rank Parent Company June ’23 ($m) June ’23 ($m) 109.3 38.5 81.4 38 52.8 34.1 47 33.7 44.4 31.9
Slide 28: Increasing both new client wins and retention rates
We are increasing both new client wins and retention rates Platform Revenue (£m) All years Q1-Q3 20 18 New Client Revenue 16 14 +237% 12 Q1-Q3 FY24 YoY 10 8 Existing Client Revenue 6 4 +32% Q1-Q3 FY24 YoY 2 0 FY21 FY22 FY23 FY24 Existing Client Revenue New Client Revenue
Slide 29: Customer Centric, Team | People, Focus on the Plan
My personal reflections Customer Team | People Focus on Centric the Plan © System1 Group PLC 29
Slide 30: Consistently delivering growth
All of which is resulting in us consistently delivering growth 18 16 14 Consensus 12 Total Revenue (£m) 10 8 6 Q3 4 2 0 FY22 H1 FY22 H2 FY23 H1 FY23 H2 FY24 H1 FY24 H2 © System1 Group PLC 30
Slide 31: We haven't scratched the surface of where we could get to
…but we haven’t scratched the surface of where we could get to…
Slide 32: Reasons to Believe
3 Reasons to Believe Innovation USA World’s Largest (Idea Testing) Advertisers © System1 Group PLC 32
Slide 33: Massive headroom in the pre-testing market
There is massive headroom in the pre-testing market and we are playing in growth areas Total Addressable Market Total Market $20.43bn $129bn Source | Global Market Research 2023 | ESOMAR © System1 Group PLC 33
Slide 34: Total addressable market by segment
There is massive headroom in the pre-testing market and we are playing in growth areas Total Addressable Market $20.43bn Ad Pre Testing Innovation Testing Brand Tracking $2.46bn $12.02bn $5.95bn Source | Global Market Research 2023 | ESOMAR © System1 Group PLC 34
Slide 35: We are focussed on Winning in America
We are focussed on Winning in America $11bn 9% +45.9% $71bn 55% +17.2% $129bn Global Insights Industry Key Industry FY23 H1 Growth YoY Source | Global Market Research 2023 | ESOMAR © System1 Group PLC 35
Slide 36: Targeting the world's largest advertisers
We are targeting the world’s largest advertisers who account for the majority of marketing spend 80 60 The top 10 global advertisers have spent $1bn 40 in FY23 on advertising 20 Source | ALF Insight © System1 Group PLC 36
Slide 37: Robyn Di Cesare, Chief Product Officer
Robyn Di Cesare Chief Product Officer
Slide 38: Customer is at the heart of our focus
Customer is at the heart of our focus TODAY Now Next Future
Slide 39: Now Next Future
TODAY Now Next Future
Slide 40: Growth driven by TYA; TYA Pro supercharging growth
Our growth has been driven by TYA; with TYA Pro supercharging our growth TODAY £m Comms Sales Revenue FY19 FY20 FY21 FY22 FY23 © System1 Group PLC 40
Slide 41: Flexibility is consistent customer feedback
‘Flexibility’ is consistent feedback we receive from customers and prospects TODAY Scalable Flexible Product Product © System1 Group PLC 41
Slide 42: We have recently launched TYA Pro+
We have recently launched TYA Pro+ TODAY Scalable Flexible Product Product © System1 Group PLC 42
Slide 43: Product tiers to meet client needs
Providing our clients with product tiers to meet their needs TODAY Predictive Metrics $ Rich Diagnostics $ Flexible Questions $ © System1 Group PLC 43
Slide 44: Provides customer with flexibility
provides customer with flexibility TODAY © System1 Group PLC 44
Slide 45: Scaleable flexibility unlocking work with the largest advertisers
Scaleable flexibility is unlocking work with the world’s largest advertisers TODAY © System1 Group PLC 45
Slide 46: Now Next Future
TODAY Now Next Future
Slide 47: Maximise the opportunity in Innovation Testing
Next we are seeking to maximise the opportunity in Innovation Testing © System1 Group PLC 47
Slide 48: Simplifying our innovation offer
We are simplifying our innovation offer with the customer at the heart © System1 Group PLC 48
Slide 49: Applying what works from TYA
We’ll also apply what we know what works from TYA Scalable Data-Led Flexibility Consultancy © System1 Group PLC 49
Slide 50: Customers buy both Predict your and Improve your
Customers buy both our ‘Predict your’ and ‘Improve your’ offer FY23 Revenue by Offering 100% 80% 60% 40% 20% 0% Data Only Data + Consultancy Consultancy Only Sales Revenue (%) © System1 Group PLC 50
Slide 51: Test Your Innovation
ey Test Your Innovation System 1 Create with Confidence Oo
Slide 52: Now Next Future
TODAY Now Next Future
Slide 53: …and there's even more to come
…and there’s even more to come
Slide 54: Delivering against our reasons to believe
Delivering against our reasons to believe Innovation USA World’s Largest (Idea Testing) Advertisers © System1 Group PLC 55
Slide 55: Chris Willford, Chief Financial Officer
Chris Willford Chief Financial Officer © System1 Group PLC 56
Slide 56: Full year expectations | Consensus revenue at least £29 million
Full year expectations | Consensus Revenue at least £29 million Revenue £m 29.1 23.4 FY23 FY24 Consensus © System1 Group PLC 57
Slide 57: Full year expectations | Implied quarterly revenue
Full year expectations | Consensus Revenue at least £29 million Revenue £m 8.0 7.7 29.1 7.1 23.4 6.2 FY23 FY24 Consensus Q1 Q2 Q3 Q4 IMPLIED © System1 Group PLC 58
Slide 58: Scaling effect has kicked in
Scaling effect has kicked in Revenue £m Adj EBITDA £m 35 30% Adj EBITDA % (Right Scale) 30 25% 29.1 £ EBITDA 25 20% 2.16 x Revenue and EBITDA £m 20 23.4 14% EBITDA Margin 15% 15 8% 10% 10 £ Revenue EBITDA % 1.24 x 1.74 x 5 4.1 5% 1.9 0 0% FY23 FY24 Consensus © System1 Group PLC 59
Slide 59: On track to meet our medium-term goals
…and we believe we are on track to meet our medium-term goals KPIs H1 FY24 Goal at Scale Platform Revenue % total Revenue 82 95% Platform Revenue growth % 44 10-20% Gross Profit % Revenue 87.8 >85% Adjusted EBITDA % Revenue 13 >30% “Rule of 40” 57 >40% © System1 Group PLC 60
Slide 60: Operational gearing from Platform
Operational gearing from Platform | Cost base is mainly fixed, mainly people Only Direct Costs rise in line with Revenue Expenditure by Type | Statutory Staff Overhead Admin 3.7 16% Sales & Marketing 39% £22.9m 12.9 FY23 Data £12.9m Operations 6.3 23% IT 22% Direct Costs Staff Overhead Non-staff ove
Slide 61: Low impact on overhead costs as we grow
We anticipate low impact on overhead costs as we grow Area Impact of volume growth Comment Increases with new clients and partnerships and Sales & Marketing Low-medium account management on major clients. Highly automated. Volume increases minus productivity Operations Low result in only minor cost
Slide 62: The scaling effect | Illustrative
The scaling effect | Illustrative Revenue £m Adj EBITDA £m 70 35% Adj EBITDA % (Right Scale) 60 30% 30% 58.2 50 25% £ EBITDA 4.24 x Revenue and EBITDA £m 40 20% EBITDA Margin 30 15% 14% 29.1 20 17.5 10% £ Revenue EBITDA % 2x 2.12 x 10 5% 4.1 0 0% FY24 Consensus At Scale (2x) This is not intended to
Slide 63: Summary
Summary Platform revenue growing strongly with lots of headroom for future growth Record number of new client wins in FY24 & strong revenue retention Revitalised Innovation proposition coming soon Profit margin trending up due to scalable business model Return to cash generation Relentless focus on
Slide 64: Q&A
Q&A