Adtraction Group Ab · OMXSTO:ADTR
Adtraction Group Ab — Q3 2024 Earnings Presentation
77 slides from Adtraction Group Ab's earnings presentation, Nov 1, 2024
Slide 1: Financial Hearings Audiocast Q3
Financial Hearings Audiocast Q3
Slide 2: We help brands grow and partners increase sales online
We help brands grow and partners increase sales online 2007 Founded 2014 First international office (Finland) 2021 Listed on Nasdaq First North 112 Employees across Europe
Slide 3: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 4: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 5: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 6: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 7: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 8: The short story Q3
The short story Q3 Weak market, negative growth for Adtraction Adtraction remains profitable and cash flow positive Focus on strategy and positioning Organizational adjustments Acquisition of Adrecord on October 1 Focus, back to growth
Slide 9: Growth, Profitability, Cashflows
Growth Profitability Cashflows
Slide 10: The financial state of Adtraction
The financial state of Adtraction Growth rates Q3 Sales -17,5% Gross profit -16,8% Core business gross profit, -11,3% Profitability Q3 EBITA of SEK 11,7 million Margin of 4,0% (-52% growth) Cash Flow from operations SEK 22,8 million Dividend Second tranche of dividend, 1 SEK, Oct 31 2024
Slide 11: The financial state of Adtraction
The financial state of Adtraction Growth rates Q3 Sales -17,5% Gross profit -16,8% Core business gross profit, -11,3% Profitability Q3 EBITA of SEK 11,7 million Margin of 4,0% (-52% growth) Cash Flow from operations SEK 22,8 million Dividend Second tranche of dividend, 1 SEK, Oct 31 2024
Slide 12: The financial state of Adtraction
The financial state of Adtraction Growth rates Q3 Sales -17,5% Gross profit -16,8% Core business gross profit, -11,3% Profitability Q3 EBITA of SEK 11,7 million Margin of 4,0% (-52% growth) Cash Flow from operations SEK 22,8 million Dividend Second tranche of dividend, 1 SEK, Oct 31 2024
Slide 13: The financial state of Adtraction
The financial state of Adtraction Growth rates Q3 Sales -17,5% Gross profit -16,8% Core business gross profit, -11,3% Profitability Q3 EBITA of SEK 11,7 million Margin of 4,0% (-52% growth) Cash Flow from operations SEK 22,8 million Dividend Second tranche of dividend, 1 SEK, Oct 31 2024
Slide 14: A step back
A step back (2.) ADTRACTION Expect more
Slide 15: A bigger picture
A bigger picture 1.600 000 _] KSEK 1.400 000 1200 000 1000 000 800 000 600 000 400 000 ieee) fees) ee eee 200 000 [] ] oo — a= a ea L 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ADTRACTION Expect more
Slide 16: R12 Financials
R12 Financials Net sales Gross profit EBITA Operational CF 1 233 MSEK 236 MSEK 58 MSEK 56 MSEK
Slide 17: R12 Financials
R12 Financials Net sales Gross profit EBITA Operational CF 1 233 MSEK 236 MSEK 58 MSEK 56 MSEK
Slide 18: R12 Financials
R12 Financials Net sales Gross profit EBITA Operational CF 1 233 MSEK 236 MSEK 58 MSEK 56 MSEK
Slide 19: R12 Financials
R12 Financials Net sales Gross profit EBITA Operational CF 1 233 MSEK 236 MSEK 58 MSEK 56 MSEK
Slide 20: Adtraction - Expect more
ADTRACTION Expect more
Slide 21: Many brands rely too heavily on the big platforms
Many brands rely too heavily on the big platforms
Slide 22: Partner marketing needed
Partner marketing needed (2.) ADTRACTION Expect more
Slide 23: Partner marketing is complex and optimisation is needed
Partner marketing is complex and optimisation is needed
Slide 24: Adtraction is needed
Adtraction is need (2.) ADTRACTION Expect more
Slide 25: Example of traffic sources
Example of traffic sources Dependence on giant platform companies Google is a monopolist, 90% market share Buying traffic from Google is fine until it isn’t
Slide 26: Example of traffic sources
Example of traffic sources Dependence on giant platform companies Google is a monopolist, 90% market share Buying traffic from Google is fine until it isn’t
Slide 27: Example of traffic sources
Example of traffic sources Dependence on giant platform companies Google is a monopolist, 90% market share Buying traffic from Google is fine until it isn’t (Ceiling, Account, Verticals)
Slide 28: Google search results example
G winter jacket men - Googles x + £3 google.com/search?a=winter+jackettmen&sca_esv=1ccOb9b8607bc00f&rlz=1C5CHFA_enNO945NO9468ei=y48gZ4r9F_SGxc8PoY30uQc&og=win... nrc men x Heo YTY) Mtanmespne sagen am ar ©0009 @ 1 All Bookmarks
Slide 29: Poor user experience, advertisers pay more
● POOR user experience ● Advertisers pay more
Slide 30: Partner marketing made easy with Adtraction
Partner marketing made easy with Adtraction
Slide 31: Reduce risk, spend more on partner marketing
Reduce risk, spend more on partner marketing
Slide 32: Partner marketing is complex and optimisation is needed
Partner marketing is complex and optimisation is needed
Slide 33: Why partner marketing?
Why partner marketing? Pay only for results Expand your reach With our performance-based Diversify your marketing and gain payment model, you only pay for immediate access to our broad results — no risk, no wasted spend, range of partners. Uncover new just predictable costs and actual markets, custo
Slide 34: Three things to consider
Three things to consider Optimisation Are you looking for a self-serve or actively managed solution? Quality Is quality or quantity more important to your business? Distribution Is the market distribution relevant?
Slide 35: Why Adtraction?
Why Adtraction? Active partnership management With active partnership management, we manage and optimise your partnerships to ensure that they grow. Quality partners Unlike other platforms focused on volume, we prioritise quality. Every partner in our platform is carefully selected to align with you
Slide 36: Why Adtraction?
Why Adtraction? Active partnership management With active partnership management, we manage and optimise your partnerships to ensure that they grow. Quality partners Unlike other platforms focused on volume, we prioritise quality. Every partner in our platform is carefully selected to align with you
Slide 37: Why Adtraction?
Why Adtraction? Active partnership management With active partnership management, we manage and optimise your partnerships to ensure that they grow. Quality partners Unlike other platforms focused on volume, we prioritise quality. Every partner in our platform is carefully selected to align with you
Slide 38: Financial goals
Financial goals Net sales growth > 20% EBITA margin goal > 7%
Slide 39: Sales growth
Sales growth 60% 50% 49% 40% 45% 30% 33% 27% 28% 0% 10% o% -10% -14% -18% -20% -30% 2018 2019 2020 2021 2022 2023 Q124 Q224 Q324 ADTRACTION Expect more
Slide 40: Negative gross profit growth in Q3
Negative gross profit growth in Q3 Divestment, -6% Geographical expansion Growth in existing markets, -11%
Slide 41: Number of employees
Number of employees 150 126 131 «132 127 125 123 122 112 100 95 75 68 52 50 42 34 24 25 17 u 12 ana ff © 2008 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Qi23 Q223 Q323 Q423 Qi24 Q224 Q524 ADTRACTION Expect more
Slide 42: Cost base per quarter
Cost base per quarter Restructuring cost of SEK 2,5 million in Q3
Slide 43: EBITA margin
EBITA margin 8,0% 7,0% 5,0% (Py 4,7% 4,0% 3,0% 2,0% 1,0% 0,0% 2018 2019 2020 ADTRACTION Expect more 5,0% 44% a 37% 3,5% 2021 5,5% 3% 2022 2023 Q124 = @224 4,0% Q3 24
Slide 44: Q3 2024
Q3 2024 ● -18% growth ● -17% growth ● EBITA decrease 52% ● Decrease to 0,57 ● Weak markets across ● -11% excl. other ● EBITA margin 4,0% most geographies and ● Operating leverage for both e-com and ● Costs stable finance ● One off items 2,5 msek Net sales Gross profit EBITA Adj. net result/share -18%
Slide 45: Q3 2024
Q3 2024 ● -18% growth ● -17% growth ● EBITA decrease 52% ● Decrease to 0,57 ● Weak markets across ● -11% core bis ● EBITA margin 4,0% most geographies and ● Operating leverage for both e-com and ● Costs stable finance ● One off items 2,5 msek Net sales Gross profit EBITA Adj. net result/share -17%
Slide 46: Q3 2024
Q3 2024 ● -18% growth ● -17% growth ● EBITA decrease 52% ● Decrease to 0,57 ● Weak markets across ● -11% excl. other ● EBITA margin 4,0% most geographies and ● Operating leverage for both e-com and ● Costs stable + Adrecord finance ● One off items 2,5 msek Net sales Gross profit EBITA Adj. net result/
Slide 47: Q3 2024
Q3 2024 ● -18% growth ● -17% growth ● EBITA decrease 52% ● Decrease to 0,57 ● Weak markets across ● -11% excl. other ● EBITA margin 4,0% most geographies and ● Operating leverage for both e-com and ● Costs stable finance ● One off items 2,5 msek Net sales Gross profit EBITA Adj. net result/share -50%
Slide 48: Q3 2024 - Verticals
Q3 2024 - Verticals ● -14% growth ● -8% growth ● Klara lån divested ● Growth on 4/12 ● Growth on 4/12 markets markets E-commerce Finance Other -14%
Slide 49: Q3 2024 - Verticals
Q3 2024 - Verticals ● -14% growth ● -8% growth ● Klara lån divested ● Growth on 4/12 ● Growth on 4/12 markets markets E-commerce Finance Other -8%
Slide 50: Q3 2024 - Verticals
Q3 2024 - Verticals ● -14% growth ● -8% growth ● Klara lån divested ● Growth on 4/12 ● Growth on 4/12 markets markets E-commerce Finance Other -93%
Slide 51: Q3 2024 - Geographies
Q3 2024 - Geographies ● -20% growth ● -4% growth ● -13% excl. other ● 4/8 markets grow ● 1/4 markets grow Nordics Europe -20%
Slide 52: Q3 2024 - Geographies
Q3 2024 - Geographies ● -20% growth ● -4% growth ● -13% excl. other ● 4/8 markets grow ● 1/4 markets grow Nordics Europe -4%
Slide 53: Q3 2024 - Cashflow
Q3 2024 - Cashflow ● Strong correlation with adj. Net profit over time ● Working capital fluctuate ○ Payment model
Slide 54: Q3 2024 - Cashflow
Q3 2024 - Cashflow ● Work on processes, affect WC Operating cash flow Investing activities ● Investment in Stockholm office 22.8 MSEK (11.2) -0.8. MSEK (-0.1) Jul - Sep 2024 Jul - Sep 2024 ● Strong net cash position Financing activities Total cash flow 0.0 MSEK (0.0) 22.0 MSEK (11.0) Jul - Sep 2024 Jul
Slide 55: Klara Lån
Klara Lån 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
Slide 56: 30rec4ro
30rec4ro
Slide 57: Adrecord
Adrecord Operating since 2010
Slide 58: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO
Slide 59: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden
Slide 60: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden Connecting roughly 500 advertisers to roughly 1,000 active partners monthly
Slide 61: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden No advertiser overlap Connecting roughly 500 advertisers to roughly 1,000 active partners monthly No overlap on advertisers Adrecord Adtraction
Slide 62: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden 99% partner overlap Connecting roughly 500 advertisers to roughly 1,000 active partners monthly No overlap on advertisers Very high overlap on quality partners Adrecord Adtraction
Slide 63: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden Connecting roughly 500 advertisers to roughly 1,000 active partners monthly No overlap on advertisers Very high overlap on quality partners In-house tech, own platform
Slide 64: Adrecord
Adrecord Operating since 2010 10 Employees, 4 devs, 5 account managers, external CEO Office in Örebro, Sweden Connecting roughly 500 advertisers to roughly 1,000 active partners monthly No overlap on advertisers Very high overlap on quality partners In-house tech, own platform Swedish network 80% SE
Slide 65: Why?
Why? ect mc
Slide 66: Adrecord: This makes strategic sense
Adrecord 1 This makes strategic sense
Slide 67: Adrecord: This is a good deal
Adrecord 1 This makes strategic sense 2 This is a good deal
Slide 68: Adrecord: de facto acquirer in our industry
Adrecord 1 This makes strategic sense 2 This is a good deal 3 We want to be the de facto acquirer in our industry
Slide 69: Some financials
Some financials ADTRACTION Expect more
Slide 70: Some financials
Some financials Sales 70 MSEK GP 14 MSEK
Slide 71: Some financials
Some financials Sales 70 MSEK GP 14 MSEK EBIT 4 MSEK
Slide 72: Some financials
Some financials Sales 70 MSEK GP 14 MSEK EBIT 4 MSEK Net cash 3,6 MSEK
Slide 73: Some financials
Some financials Sales 70 MSEK GP 14 MSEK EBIT 4 MSEK Net cash 3,6 MSEK Value 27 MSEK
Slide 74: What's happening now? M&A
What’s happening now? M&A ● Slow ● We expect more opportunities when the market recovers
Slide 75: What's happening now? Q4 performance
What’s happening now? Q4 performance ● Growth rates In line with/better Q3 ○ For e-commerce and finance ○ “Other” also in line with Q3 ● Adrecord ● Profitable operations
Slide 76: Adtraction is strong
Adtraction is strong 2024 is the weakest market ever ● Adtraction pays dividend (for 2023) ● Adtraction acquires Adrecord
Slide 77: ADTRACTION Expect more
ADTRACTION Expect more