Adtraction Group Ab · OMXSTO:ADTR

Adtraction Group Ab — Q2 2024 Earnings Presentation

44 slides from Adtraction Group Ab's earnings presentation, Jul 26, 2024

  1. Slide 1: Financial Hearings Q2 2024

    Financial Hearings Q2 2024

  2. Slide 2: The short story

    The short story ● Very weak market, negative growth ● Adtraction remains profitable ● A better market would much better EBITA than what we see in Q2 ● We believe that the market will turn ● The main focus of the organization is of course growth and costs © Copyright - Adtraction

  3. Slide 3: The short story

    The short story ● Very weak market, negative growth ● Adtraction remains profitable ● A better market would mean better EBITA than what we see in Q2 ● We believe that the market will turn ● The main focus of the organization is of course growth and costs © Copyright - Adtraction

  4. Slide 4: The short story

    The short story ● Very weak market, negative growth ● Adtraction remains profitable ● A better market would mean better EBITA than what we see in Q2 ● We believe that the market will turn ● The main focus of the organization is of course growth and costs © Copyright - Adtraction

  5. Slide 5: The short story

    The short story ● Very weak market, negative growth ● Adtraction remains profitable ● A better market would much better EBITA than what we see in Q2 ● We believe that the market will turn ● The main focus of the organization is of course growth and costs © Copyright - Adtraction

  6. Slide 6: The short story

    The short story ● Very weak market, negative growth ● Adtraction remains profitable ● A better market would much better EBITA than what we see in Q2 ● We believe that the market will turn ● The main focus of the organization is of course growth and costs © Copyright - Adtraction

  7. Slide 7: The state of Adtraction

    The state of Adtraction ● Growth rates Q2 ○ Sales -14% ○ Gross profit -11% (Klara Lån divestment ≈ 40% of decrease) ● Profitability ○ EBITA of SEK 9,8 million, ○ Margin of 3,5% (-34% growth) ● Cash Flow from operations ○ SEK -3,8 million ● Second tranche of dividend, 1 SEK, Oct 28-31 © Copyright - Adt

  8. Slide 8: The state of Adtraction

    The state of Adtraction ● Growth rates Q2 ○ Sales -14% ○ Gross profit -11% (Klara Lån divestment ≈ 40% of decrease) ● Profitability ○ EBITA of SEK 9,8 million, ○ Margin of 3,5% (-34% growth) ● Cash Flow from operations ○ SEK -3,8 million ● Second tranche of dividend, 1 SEK, Oct 28-31 © Copyright - Adt

  9. Slide 9: The state of Adtraction

    The state of Adtraction Operational Cash Flow, SEK million ● Growth rates Q2 ○ Sales -14% ○ Gross profit -11% (Klara Lån divestment ≈ 40% of decrease) ● Profitability ○ EBITA of SEK 9,8 million, ○ Margin of 3,5% (-34% growth) ● Cash Flow from operations ○ SEK -3,8 million ● Second tranche of dividend,

  10. Slide 10: The state of Adtraction

    The state of Adtraction ● Growth rates Q2 ○ Sales -14% ○ Gross profit -11% (Klara Lån divestment ≈ 40% of decrease ) ● Profitability ○ EBITA of SEK 9,8 million, ○ Margin of 3,5% (-34% growth) ● Cash Flow from operations ○ SEK -3,8 million ● Second tranche of dividend, 1 SEK, Oct 28-31 © Copyright - Ad

  11. Slide 11: The state of Adtraction

    The state of Adtraction ● Project X (migration) and integration ● Casper Grud has decided to leave Adtraction ● Q2 ○ Challenging markets ● Current focus ○ BACK TO GROWTH ○ Costs © Copyright - Adtraction

  12. Slide 12: The state of Adtraction

    The state of Adtraction ● Project X (migration) and integration ● Casper Grud has decided to leave Adtraction ● Q2 ○ Challenging markets ● Current focus ○ BACK TO GROWTH ○ Costs © Copyright - Adtraction

  13. Slide 13: The state of Adtraction

    The state of Adtraction ● Project X (migration) and integration ● Casper Grud has decided to leave Adtraction ● Q2 ○ Challenging markets ● Current focus ○ BACK TO GROWTH ○ Costs © Copyright - Adtraction

  14. Slide 14: 14

    14

  15. Slide 15: So what is that business model?

    So what is that business model? 15 Partner marketing (affiliate marketing) We help brands (advertisers) increase sales We help partners (publishers, affiliates) monetize traffic and content Active partnership management © Copyright - Adtraction

  16. Slide 16: A platform business

    A platform business Advertisers Partners ● Lyko ● Content ● Influencers ● Lindex ● Tech ● Åhlens ● Affiliates ● Lendo ● Viaplay ● Hallon © Copyright - Adtraction

  17. Slide 17: Active partnership management

    Active partnership management 17

  18. Slide 18: Partners

    Partners Content marketing Creators Savings & rewards Other © Copyright - Adtraction

  19. Slide 19: How does partner marketing fit into the marketing mix of a brand?

    How does partner marketing fit into the marketing mix of a brand? 19

  20. Slide 20: Example of traffic sources of an online business

    Example of traffic sources of an online business ● Most online business depend on giant platform companies to acquire traffic ● Google is a monopolist and has a market share of more than 90% of the search market in many/most geographies ● Buying traffic from Google is fine until it isn’t. Getting tra

  21. Slide 21: Reduced space for organic search results

    ● Reduced space for organic search results ○ Clicks on multiple ads before transaction ○ Increased cost per transaction ○ Organic search used to dominate ● GA4 (web analytics platform) ○ Google attributes most sales to…………… Google ● Seemingly arbitrary changes ○ Who gets traffic for certain keywords

  22. Slide 22: Partner marketing, easy as ABC with Adtraction

    Partner marketing, easy as ABC with Adtraction © Copyright - Adtraction

  23. Slide 23: Reduce risk, spend more on partner marketing

    Reduce risk, spend more on partner marketing © Copyright - Adtraction

  24. Slide 24: Financial goals

    Financial goals Net sales growth > 20% EBITA margin goal > 7% © Copyright - Adtraction

  25. Slide 25: Negative gross profit growth in Q2

    Negative gross profit growth in Q2 Divestment, -4% Geographical expansion Growth in existing markets, -7% © Copyright - Adtraction

  26. Slide 26: Sales growth

    Sales growth © Copyright - Adtraction

  27. Slide 27: Sales R12, MSEK

    Sales R12, MSEK © Copyright - Adtraction

  28. Slide 28: EBITA margin

    EBITA margin © Copyright - Adtraction

  29. Slide 29: Number of employees

    Number of employees1) © Copyright - Adtraction 1. FTE by the last day of each period

  30. Slide 30: Cost base per quarter, MSEK

    Cost base per quarter, MSEK © Copyright - Adtraction

  31. Slide 31: Q2 2024

    Q2 2024 ● -14% growth ● -11% growth ● EBITA decrease 34% ● Decrease to 0,47 ● -7% excl. other ● EBITA margin 3,5% ● Operating leverage ● Costs stable Net sales Gross profit EBITA Adj. net result/share -14% © Copyright - Adtraction

  32. Slide 32: Q2 2024

    Q2 2024 ● -14% growth ● -11% growth ● EBITA decrease 34% ● Decrease to 0,47 ● -7% excl. other ● EBITA margin 3,5% ● Operating leverage ● Costs stable Net sales Gross profit EBITA Adj. net result/share -11% © Copyright - Adtraction

  33. Slide 33: Q2 2024

    Q2 2024 ● -14% growth ● -11% growth ● EBITA decrease 34% ● Decrease to 0,47 ● -7% excl. other ● EBITA margin 3,5% ● Operating leverage ● Cost stable Net sales Gross profit EBITA Adj. net result/share -34% © Copyright - Adtraction

  34. Slide 34: Q2 2024

    Q2 2024 ● -14% growth ● -11% growth ● EBITA decrease 34% ● Decrease to 0,47 ● -7% excl. other ● EBITA margin 3,5% ● Operating leverage ● Costs stable Net sales Gross profit EBITA Adj. net result/share -31% © Copyright - Adtraction

  35. Slide 35: Q2 2024 - Verticals

    Q2 2024 - Verticals ● -8,5% growth ● -5,4% growth ● Klara lån divested ● Growth on 3/12 markets ● Growth on 5/12 markets ● None network related E-commerce Finance Other -8,5% © Copyright - Adtraction

  36. Slide 36: Q2 2024 - Verticals

    Q2 2024 - Verticals ● -8,5% growth ● -5,4% growth ● Klara lån divested ● Growth on 3/12 markets ● Growth on 5/12 markets ● None network related E-commerce Finance Other -5,4% © Copyright - Adtraction

  37. Slide 37: Q2 2024 - Verticals

    Q2 2024 - Verticals ● -8,5% growth ● -5,4% growth ● Klara lån divested ● Growth on 3/12 markets ● Growth on 5/12 markets ● None network related E-commerce Finance Other -91% © Copyright - Adtraction

  38. Slide 38: Q2 2024 - Geographies

    Q2 2024 - Geographies ● -15% growth ● 0% growth ● -9% excl. other ● 4/8 markets grow ● 0/4 markets grow Nordics Europe -15% © Copyright - Adtraction

  39. Slide 39: Q2 2024 - Geographies

    Q2 2024 - Geographies ● -15% growth ● 0% growth ● -9% excl. other ● 4/8 markets grow ● 0/4 markets grow Nordics Europe 0% © Copyright - Adtraction

  40. Slide 40: Q2 2024 - Cash flow

    Q2 2024 - Cash flow ● Partner payments Operating cash flow Investing activities ● Dividend -3.8 MSEK (10.0) -1.7 MSEK (1.1) Apr - Jun 2024 Apr - Jun 2024 ● Strong net cash position Financing activities Total cash flow -16.6 MSEK (66.1) -22.2 MSEK (-55.0) Apr - Jun 2024 Apr - Jun 2024 Net cash 93.6 MSEK

  41. Slide 41: Q2 2024 - Cash flow

    Q2 2024 - Cash flow ● Strong correlation with adj. Net profit over time ● Working capital fluctuate ○ Payment model ● Effects from migration © Copyright - Adtraction

  42. Slide 42: Klara lån EBITA contribution

    Klara lån EBITA contribution EBITA Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Adtraction 9 367 14 665 23 867 25 842 10 387 Klara lån 352 237 505 −281 225 Combined 9 719 14 902 24 372 25 561 10 612 © Copyright - Adtraction

  43. Slide 43: What's happening now?

    What’s happening now? ● Q3 performance ○ In line with Q2 for e-commerce and finance ○ Other, also in line with Q2 ○ Profitable operations ● Focus ○ Back to growth ○ Europe ○ M&A © Copyright - Adtraction 43

  44. Slide 44: Q&A

    Q&A

Adtraction Group — Q2 2024 Earnings Presentation on 6ix