System1 Group Plc · LSE:SYS1
System1 — FY2020/21 Earnings Presentation
26 slides from System1's earnings presentation, July 2021
Slide 1: System1 2020/21 Results
System1 2020/21 Results July 2021 © System1 Group PLC 1
Slide 2: Financial Performance
Financial Performance © System1 Group PLC 2
Slide 3: Profit & Loss
Profit & Loss 2021 2020 Change £m Change % Adjusted Revenue 22.8 25.3 (2.5) -10% Adjusted Gross Profit 19.2 21.4 (2.2) -10% Adjusted Operating Costs (16.2) (19.5) 3.3 -16% Adjusted Profit Before Tax 3.0 2.0 1.0 46% Statutory Profit Before Tax 2.1 0.3 1.8 601% Tax Charge (0.4) (0.5) 0.1 n.m. Statutor
Slide 4: Progress in H2 on H1
Progress in H2 on H1 Revenue (£m) 10.1 12.7 • Recovery in USA • Successful launch of Data (Test Your Ad) 2020/21 • Partnerships and Strategic Accounts bearing fruit H1 H2 Adjusted Profit Before Tax (£m) 2.6 • H1 Covid savings carried over into H2 0.4 2020/21 © System1 Group PLC 4
Slide 5: Revenue by Region
Revenue by Region 6% £m 22% 7 FY 19/20 50% H1 20/21 H2 20/21 £25.5m 6 5.2 5 22% 3.8 3.6 4 Americas UK Europe APAC 3.0 2.7 2.5 3 9% 2 1.0 1.0 23% 39% 1 FY 20/21 £22.8m -1 Americas UK Europe APAC 30% © System1 Group PLC 5
Slide 6: Revenue by Product Group
Revenue by Product Group 8% 35% £m 8 FY 19/20 H1 20/21 H2 20/21 39% £25.5m 6.5 6 18% 4.1 Comms Brand Innovation Other 4 3.9 3.8 3% 2.1 2 1.7 33% FY 20/21 46% 0.5 £22.8m 0.3 0 Comms Brand Innovation Other 17% © System1 Group PLC 6
Slide 7: Successful launch of Test Your Ad drove Data growth in H2
Successful launch of Test Your Ad drove Data growth in H2 £ million £ thousand 14.0 Data Revenue by Month FY 2020/21 500 12.0 10.0 8.0 6.0 4.0 2.0 0.0 H1 H2 0 Data Consultancy Other Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar © System1 Group PLC 7
Slide 8: Headcount back at pre-pandemic levels by end of Q4: higher cost base to be expected in FY21/22
Headcount back at pre-pandemic levels by end of Q4: higher cost base to be expected in FY21/22 Adjusted Operating Costs by Quarter FY 20/21 Headcount (FTE) by Quarter FY 20/21 4.3 145 4.2 140 135 4.1 130 £ Millions 4.0 125 3.9 120 3.8 115 3.7 110 3.6 105 3.5 100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 © System1 Gro
Slide 9: £2.5m Investment in IP & Product last year – expected to increase to over £4m this year
£2.5m Investment in IP & Product last year – expected to increase to over £4m this year FT 20/21 Planned increase FY 21/22 Spend Product Development - IT £1.6m Asset development (AdRatings D-base) £0.6m Thought leadership (Labs) £0.3m £2.5m © System1 Group PLC 9
Slide 10: Strong Operating Cash Flow
Strong Operating Cash Flow • Period-end Net Cash up £2.3m on FY2019/20 • Significant cash investment in R&D • Cash tax partly offset by £0.6m R&D tax credit received • £0.6m Covid subsidies (mainly PPP) • No dividend payments © System1 Group PLC 10
Slide 11: Summary
Summary • The strategy is working: the successful Test Your Ad launch was in line with our expectations • We will continue to promote and grow Test Your Ad this year • Test Your Brand and Test Your Idea rolling out in H2 of this year and H1 of next year • Tough trading in H1 (Covid, Americas) was tu
Slide 12: Strategy, Execution & Progress
Strategy, Execution & Progress July 2021
Slide 13: Where to Compete & Goal | #1 at Predicting & Improving Marketing Effectiveness
Where to Compete & Goal | #1 at Predicting & Improving Marketing Effectiveness $42bn $900bn $1700bn 2% Ad pre-tests $0.9bn 50% Ads have no impact 6% Brand-track $2.7bn 0.1% spent in pre-testing 7% Idea-testing $3.1bn largest brand investment Market Research Future Performance Advertising Marketing ©
Slide 14: Mission Vision Goal
MISSION We empower every marketer to create effective ads, launch successful new products & improve brand equity VISION Let’s be the insurgent, transform the industry, & put a dent in the Marketing universe GOAL Undisputed #1 for predicting & improving Marketing Effectiveness
Slide 15: We understand & promote effectiveness
3 2 4 We improve effectiveness 1 better than 5 any1 We deliver We predict effectiveness effectiveness faster & better than cheaper than any1 We understand any1 We employ the & promote best, so your effectiveness effectiveness is better than better than any1 any1 © System1 Group PLC 15
Slide 16: Insurgent strategy | #1 Predicting & Improving Marketing Effectiveness
Insurgent strategy | #1 Predicting & Improving Marketing Effectiveness 20,000,000 2,000,000 “Improve Your …” 200,000 20,000 “Predict Your …” £/ # 2,000 200 20 2 100 1,000 10,000 100,000 1,000,000 10,000,000 100,000,000 Market size (# units) © System1 Group PLC 16
Slide 17: Test Your Ad product tiers and pricing
Ad Ad Ad Ad Essential Pro Express/Full Guidance Free access / Premium Essential predictors Essential predictors + Pro Express & Full Guidance to Compare your Ads and overall of your Ad’s success diagnostics and custom sample Improve your Ad performance to your competitors ★ Nat Rep Sample x150 In ad
Slide 18: Value proposition - headlines: Kantar, Zappi, System1
Value proposition - headlines Kantar Zappi System1 Price Price Price £13.5k (no custom, with ‘guidance’) £1,895 (no custom no guidance) £3k Nat Rep Pro plus Express Guid. Time to deliver = 2 weeks Time to deliver = 3 days Time to deliver = 15 hrs inc Exp. Quality of insight Quality o
Slide 19: Kantar v System1 v Zappi Value Equation
Kantar v System 1 v Zappi Value Equation (Client Side View) and implications for proposition Blue Ocean Canvas. Value equation gap analysis – where can we pull apart and differentiate 12 10 8 6 4 2 0 © System1 Group PLC 19 System1 Kantar Zappi
Slide 20: Goal Hierarchy: sequential & progressive
Goal Hierarchy: sequential & progressive (since Sept 2018) 1. BUILD on the largest dB of 55,097 adverts evaluated on long term effectiveness. We use this Asset to enhance the effectiveness of our Test Your Ad prediction & guidance consultancy business. 2. BRAND use our database and provide topical p
Slide 21: System1 Asset Building | 2021
SYSTEM1 ASSET BUILDING | 2021
Slide 22: System1 Fame Building | 2021
SYSTEM1 FAME BUILDING | 2021 June July August Activity 7th 14th 21st 28th 5th 12th 19th 26th 2nd 9th AOTW AOTW AOTW AOTW AOTW AOTW AOTW AOTW AOTW AOTW US/UK US/UK US/UK US/UK US/UK US/UK US/UK US/UK US/UK US/UK Always-on AOTM May WhatsApp Pepsi LinkedIn AOTM June AOTM July SE Asia / Thought Thought
Slide 23: The Starting Eleven: What's the formula for a winning Euros ad?
THE STARTING ELEVEN What's the formula for a winning Euros ad? Now it’s time to get training and prepare for a match winning performance so we have produced this guide to show you how to create an Ad worthy of the Euro 2020 final. Star Rating: Spike Rating: Exceptional (*) Fluency Rating; Exceptiona
Slide 24: Customer quote from Tesco
"There is always a universal insight, seen through the lens of D&I at the heart of our work...you only get that reaction from audience when you hit upon a universal truth” George Rivers Head of Campaigns Tesco © System1 Group PLC 24
Slide 25: Ad of the Month: Nestlé Brazil
System1 Test Your Ad Test Your Brand Test Your Idea Resources ~ GetinTouch= Q The Ad Eftetivonoss Agency Editor in chiet Nestlé x Published: 17 June 2021 BRAZIL: Nestlé OOO 3 Tom Ewing Ad Of The Month do Dia Das Maes Nestlé NINHO@\SeuAmoriransforma O amor p ensin Watch on @VouTube Nestle's Ninho for
Slide 26: Thank You
Thank You © System1 Group PLC 28