System1 Group Plc · LSE:SYS1
System1 — Non-Deal Roadshow (July 2022)
34 slides from System1's roadshow presentation, July 2022
Slide 1: Investor Roadshow July 2022
Investor Roadshow July 2022 The World’s Marketing Decision-making Platform
Slide 2: John Kearon, Chief Executive Officer
John Kearon Chief Executive Officer
Slide 3: The Case for System1
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 4: Building high quality customer experience into our self-service platform
Building high quality customer experience into our self-service platform …
Slide 5: Innovation & investment to maintain this product lead
Innovation & investment to maintain this product lead Product Platform Database Innovation Now c.80,000 ads Fully automated TYA Profit Projector UK 95% of all TV ads June 2021 TYA Pro Reports US 76% of all TV ads Fully automated TYB Pro & Reports Now c.6000 brands November 2021 Complete Fully automa
Slide 6: Underpinned by world class Creative Guidance
… Underpinned by world class Creative Guidance
Slide 7: We have the largest database of Ads in the UK and US
We have the largest database of Ads in the UK and US tested within 24 hours of airing Test Your Ad Premium Database 80000 70000 60000 50000 40000 30000 20000 10000 0 FY18 FY19 FY20 FY21 FY22 UK Ads US Ads
Slide 8: 2000-2020 Highly bespoke market research operating model
2000-2020 | Highly bespoke market research operating model Very manual, adding time, cost and complexity Traditional Manual Bespoke Market Research Operating Model Project Management Set up Programming Panel Data processing Reports Creative respondents Guidance Forward translation Back translation K
Slide 9: 2021-2022 Highly automated 'Test Your...' Platform operating model
2021-2022 | Highly automated ‘Test Your…’ Platform operating model Better, Faster, Cheaper, and Hugely Scalable M L d ng Au om d ‘T You …’ Pl fo m Operating Model
Slide 10: Slide 10
Slide 11: m lu n l ng
m lu n f nd om f ogn d l o m nd nd u l good o good o P T T A A l ng f f l good ou nd good o L T T A A A L Y T A AP M M
Slide 12: Advertising
$43bn $1000bn $1700bn 10% Idea testing $4.4bn 48% 1 Star ads = zero ROI $4.4bn 4% Ad pre-tests $1.6bn 0.16% Ad prediction spend $1.6bn 10% Brand track $4.4bn $480bn wasted investment $4.4bn 100% 3-5 Star ads = +ROI 10x Ad predict = 1/6% $16bn $.0bn Waste + profitable growth Market Research Future re
Slide 13: Target CMO's and partner with creative and media agencies
Target CMO’s and partner with creative and media agencies Owner & CEO Media Deliver long term Reach as many people profitable growth with the right creative CMO Ad Agency Finance Create 5 Star advertising Predict & measure the for my brand value of ad investment Insight Provide the means to better u
Slide 14: Half the money I spend on advertising is wasted
“Half the money I spend on advertising is wasted; …the trouble is, I don’t know which half.” John Wanamaker US department store merchant 1838 - 1922
Slide 15: Why System1 is set for success
Why System1 is set for success 1 2 3 4 5 We We We We We understand predict improve deliver employ effectiveness effectiveness effectiveness faster & more the best at better than better than better than effectively maximising anyone anyone anyone than anyone effectiveness
Slide 16: Slide 16
Slide 17: New commercial organisation is set up to achieve rapid growth
New commercial organisation is set up to achieve rapid growth Chief Customer Officer Jon Evans SVP New General Director of New General General Chief of Staff & Marketing Business & VP Customer Manager Business & Manager Manager UK, Sales Director Global Partnerships Development Linkedin Partnerships
Slide 18: Chris Willford, Chief Financial Officer
Chris Willford Chief Financial Officer
Slide 19: Profit & Loss
Profit & Loss 2022 2021 Change £m Change % Adjusted Revenue 24.1 22.8 +1.3 +6% Adjusted Gross Profit 20.2 19.2 +1.0 +5% Adjusted Operating Costs (19.2) (16.2) +3.0 +18% Adjusted Profit Before Tax 1.0 3.0 -2.0 -65% Statutory Profit Before Tax 0.9 2.1 -1.2 -55% Tax Charge 0.0 (0.4) -0.4 -103% Statutor
Slide 20: Progress in H2 on H1
Progress in H2 on H1 Revenue (£m) • Q4 decline in USA consultancy revenues 12.4 11.7 • TYA growing more slowly than in H1 2021/22 • In hindsight, evidence of Russia/Ukraine impact H1 H2 Adjusted Profit Before Tax (£m) • H2 expenditure emerging from Covid-related trough 1.3 • Accelerated expenditure
Slide 21: Revenue by Region
Revenue by Region 9% £m FY 20/21 FY 21/22 23% 39% 8.8 9.0 FY 20/21 £22.8m 7.9 6.8 30% 5.5 5.2 Americas UK Europe APAC 7% 2.0 23% 38% 1.7 FY 21/22 £24.1m Americas UK Europe APAC 33%
Slide 22: Revenue by Product Group
Revenue by Product Group 3% £m 15.0 33% FY 20/21 FY21/22 FY 20/21 46% £22.8m 10.6 17% 7.6 Comms Brand Innovation Other 5.6 1% 3.8 23% 3.3 FY 21/22 £24.1m 0.8 0.2 14% 62% Comms Brand Innovation Other
Slide 23: Revenue by Product Variant
Revenue by Product Variant 3% 6% £m 20.6 FY 20/21 FY 20/21 FY21/22 £22.8m 14.1 90% Data Consultancy Other 9.7 1% 40% FY 21/22 1.5 £24.1m 0.8 0.2 59% Data Consultancy Other
Slide 24: We have built a £10m data business in 2 years
We have built a £10m data business in 2 years with the majority of that being created in the past 12 months Data Revenue £ Million 5.3 4.5 1.4 0.1 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 25: The success of Test Your Ad sets us up for Test Your Idea & Brand
The success of Test Your Ad sets us up nicely for Test Your Idea & Test Your Brand Revenue by Product £ million 6.0 TYA TYB TYI 5.0 4.0 3.0 2.0 1.0 0.0 FY21 H2 FY22 H1 FY22 H2
Slide 26: Majority of data sales are now coming from new customers
Majority of data sales are now coming from new customers No.1 UK Advertiser, No.1 UK Broadcaster, World’s No.1 B2B platform, World’s No.1 laptop manufacturer, World’s No.2 sportswear brand Source of Revenue £ million 6 Pre-existing New since Apr-20 5 4 3 2 1 0 FY21 H2 FY22 H1 FY22 H2
Slide 27: Most new business has come through partnerships with agencies and media platforms
The most significant source of new business has been through partnerships with advertising agencies and media platforms Test Your Ad Partnership Revenue £ Million 2.4 1.5 0.8 0.3 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 28: As we grow partnerships data sales will follow consultancy
As we grow partnerships data sales (prediction) consultancy will follow (improvement) Test Your Ad Data vs Consultancy Revenue £ million 2.5 Data Consultancy 2 1.5 1 0.5 0 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 29: Our Top 5 Test Your Ad customers all subscribe to the Premium database
Our Top 5 Test Your Ad customers all subscribe to the Premium database Test Your Ad Premium Subscription Revenue £ million 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 30: Growth in expenditure in FY22 due to focused investment in platform strategy
Growth in expenditure in FY22 due to focused investment in platform strategy
Slide 31: We intend to maintain our investment in the platform
We intend to maintain our investment in the platform… and have the resources to do this Net cash up £2.2m YoY after £0.6m buyback Shareholders Equity £m 12 9 8 10 7 8 6 5 6 4 4 3 2 2 1 0 0 YE 21 INT 22 YE 22 FY20 FY21 FY22 Cash net of borrowing Borrowing
Slide 32: Capital allocation hierarchy
Capital allocation hierarchy • Product Innovation Organic • Business development e.g. partnerships growth • Platform development Internal • Supply chain automation efficiency • Tactical opportunities to invest e.g. infill acquisition Inorganic/ • Loss or external shock absorption non-linear • 30-40%
Slide 33: Summary
Summary Data platform strategy is on track Prioritising growth while protecting profitability Maintaining expenditure on people, platform and partnerships Some external environmental headwinds in new fiscal year Which means back-weighted profitability
Slide 34: Thank you. Questions & Answers
Thank you. Questions & Answers