System1 Group (LSE:SYS1) — Capital Markets Day

0:01 Good afternoon, and welcome to the SYSTEM1 GROUP PLC Capital Markets Day. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. I would now like to hand you over to CEO, James Gregory. Good afternoon to you.

0:23 Good afternoon. Good morning, everybody. Thank you for taking the time to join us today for our Capital Markets Day for SYSTEM1 GROUP on the 10/22/2025. We have a fun filled agenda for you today, and there'll be other people joining me throughout the presentation. So we'll start off with an update on our trading and outlook, which is myself and Chris Wilford, our CFO. We'll have Rebecca Hatherall, our chief strategy officer, taking us through AI and SYSTEM1. John Evans, our chief customer officer, taking us through advertising. Tristan Finley, our innovation managing director, taking us through innovation, and then we'll finish up with q and a. And before we jump into the detail of that, I'll I'll introduce myself as well. So I'm James Gregory, CEO here at SYSTEM1.

1:12 I've been with the business for four and a half years and in the CEO role for coming up for three years. I'm delighted to have some time to spend with you today. Before we jump into the detail of our trading and outlook, I've got three to four slides that I will share with you just as an overview of the business because I know there's a few of you on here who are new with us today. So firstly, who is SYSTEM1? Well, we're here to help the world's largest brands make confident creative decisions that lead to transformational business results. So three key parts to that. Firstly, our target audience, so the world's largest brands. Secondly, what do we do for them? And that's that we help them be confident in their creative decisions they make in advertising and innovation. And then thirdly, because it delivers real world results. That's long term brand growth, short term sales, transformational business results for their businesses.

2:03 And the reason we do this is because fundamentally, most advertising and mostly product development doesn't work. You can see on the charts here, that over 50% of advertising has no long term impact on market share growth. Imagine that. All of those adverts on the screen doing nothing for your brand. And even worse in the world of innovation, 95% of new product launches fail. So that's so we're here to help. So what does SYSTEM1 do? It fundamentally uses emotion to drive the twin engines of marketing growth, that's advertising and innovation, and helps grow our customers' long term brands and short term sales. So our our three key offerings are test your ads, where we're able to help predict and improve the advertising from our what the world's largest brands. Test your innovation, where we can really help predict the commercial potential of the innovation of the world's largest brands. And finally, test your brand where we help with a predictive brand health framework for those brands.

2:59 And something we set out for this a while ago was our strategic goals, and we remain confident that these investment choices are the right ones, and they're in three areas. Number one is the world's largest brands. As I mentioned, they are our target audience. They're the people who have the capacity to deal with the insight we can give them and the capability to continue to test and improve their advertising and innovation as they develop it. Secondly, it's in winning in America. We know that The US is the biggest market for innovation, for advertising, and for market research. So fundamentally, if we can make a dent into The US, we'll be successful. And then finally, in innovation. You'll hear today about both our advertising and our innovation offerings. The advertising has been going like a rocket for the last few years, and innovation has been an area of focus for us over the last twelve to eighteen months. So you'll hear from Tristan as what why we're building out and investing in that space.

3:51 Super. So with that, I'll jump onto trading and outlook. I'll pick up the first couple of charts, and then Chris will come in and cover off the end of it. So first, as you might well have seen today, some trading update highlights. I'll just walk you through these at the top level. So our total h one revenue was £17,100,000, which our platform revenue was £16,200,000. And linking back to some of our goals we talked about beforehand, our US platform revenue at £6,000,000 up year on year by 3%, innovation platform revenue at £1,500,000 up over a 100%, and our new platform revenue. So this is revenue from new customers at a record £3,400,000 for the half. Our q three trading to date, is in line with guidance that we set out previously.

4:39 And then on a cash perspective, so our gross margin at 87 in line with half one last year. Our period end cash at £10,800,000, and our adjusted PBT range of 0.2 to £300,000 for the first half. So how's the first half been? Well, it's been really good despite the macro headwinds. So what have we seen going well? Firstly, our innovation revenue. We're up 26% versus half one last year, and our platform revenue is up a 107% as I called out on the previous charts. There's big momentum in The US where we've invested, so we're up 3% in revenue. But on constant currency, so in US dollars, we're up 8%. And the platform itself is up 13% in constant currency. We've also invested in our APAC momentum, in particular out in Australia, and you can see we're up 11%, which would have been 16% at constant exchange in that market too.

5:33 And new platform revenue, as I called out, is plus 6%, and it's a record h one for new customer revenue, this year. And then also retention of our largest clients. So while there are challenges and macro headwinds, we have not lost any of our largest clients this financial year. All remain with us, although spending a bit less. And as I mentioned, the cash end of h one at £10,800,000.

5:57 And having said that, there have been some challenges we face in h one. In the first instance, our testing budget has been reduced within our major clients. As I mentioned, what we're seeing is clients continuing to spend with us. They're staying loyal to us and our methodology, but they are test either creating few adverts that require testing, or running fewer campaigns. There's also been an impact to the tariff wars in from The US, and what we've seen is it's hit twofold. Number one, client confidence, but secondly, in particular, pretesting budgets in Continental Europe. Thirdly, back here in The UK, the impact of the minimum wage and the ERNI on retail hospitality clients' discretionary budgets has had a big impact on some of our core customers in The UK. And finally, as mentioned, the FX has also had an an adverse impact of minus 2% in total revenue, most notably in US, Australian doll US dollars, Australian dollars, and Brazilian lira.

6:54 And I'll hand over to Chris to to help take us through the final part of this section. Thanks, James. The lead up to today, we've had a few questions about the change in our cost base compared with the expect expected flat year on year revenue and how both of these relates to the additional 2,000,000 investment that we announced a year ago and the profit guidance that we put into the market last month.

7:22 As you will know, this is a business with high operational gearing and which throughout last year was planning and resourcing for continued double digit growth in platform and total revenue, in line with recent years. And on top of that resourcing, we committed in December last year to boost our investment in medium term growth by a further 2,000,000, in f y twenty six. And so in a flat year on year revenue scenario, f y twenty six EBITDA would be 2,000,000 lower than would have been the case without that investment, all other things being equal. And this chart shows the progression from the blue bar on the left showing f y twenty five adjusted EBITDA of 6,600,000 to, on the right in blue, the f y twenty six guidance in a range between 3.5 and 4,000,000 adjusted EBITDA.

8:21 The two segments in purple on the waterfall chart highlight respectively the 1,000,000 of employee costs and 1,000,000 of third party expenditure that comprise the 2,000,000 additional investment that we announced at the end of last year. And on the left of the chart, the first segment in yellow is gross profit, which in h one was in line the margin was in line with h one last year. But we're maintaining a prudent playing assumption for h two, which gives rise to a modest year on year reduction in gross profit for this projection with flat revenue. And on the far right, in yellow, we have the loss of some other operating income, most of which relates to the rent recovery we used to have from our old New York office.

9:09 And to the left of that is the small net balance of all other operating expenditure, which includes the benefit from a profit perspective, not an employee perspective, of the expected 2,000,000 plus year on year reduction in bonuses, which in turn, results from a low or no revenue growth, projection. And offsetting that reduction is the flow through of investments in people and infrastructure made during f y twenty five to service last year's 25% growth, to support the big three strategic goals that James just remind us of, and to be ready for expansion in the current year.

9:54 So that's the end of the trading outlook section. We're now moving to the strategic part of the agenda, which seeks to address three important questions that investors ask us. Firstly, our chief strategy officer, Rebecca Hathorill, will be outlining what AI means for SYSTEM1. And then John Evans, chief customer officer by day and uncensored CMO by night, will tell us why we can still look forward to growth in the advertising business. And finally, Tristan Findley, the innovation managing director, will update you on how the relaunch of SYSTEM1 innovation is going. Over to you, Becky. Thanks, Chris. So there'll be loads who don't know me, by way of intro. As Chris says, I'm Becky. I'm chief strategy and operations officer at SYSTEM1.

10:42 I joined three and a half years ago while we were still very much on the journey to kind of fully automating out the product suite. The background in translating strategy into action, but particularly within hybrid model businesses, so where there is an like, both an online product alongside a service admin. I was really excited to join SYSTEM1, clearly doing something really different in the market research industry, so helping drive the digital transformation of a challenger brand, a great opportunity. And now that we've got the products on the platform, of course, my focus is really on how do we stay ahead of the competition, how do we keep challenging both the industry and ourselves to evolve, and, of course, AI is a key part of that. So in terms of the market, I think it would be fair to say AI is supercharging both the marketing and market research industries.

11:32 And although that's that's obviously far from unique to our sector, there are kind of two ways that that impacts us. The first way is that we've seen a huge increase in the quantity of assets that brands and agencies are able to create, both in the advertising world and the innovation world. We know that roughly half of marketers are using say that they're using AI to help in the early stages of asset creation. So whether that's brainstorming or actually using AI to create their, images, their ads, or their concepts.

12:01 For us, that's a huge opportunity. Simply put, there's there's plenty more to test, so there's plenty for us to be doing to help. And then the second change is in the speed and cost. So AI is putting huge downward pressure on both of those, as in common with in common with other industries. Advertising and innovation cycles that used to take months now take weeks, and there's an expectation, of course, that the testing portion of that cycle will shrink to fit. Again, that's a that's a great opportunity for us. We're already pretty quick. We offer a twenty four hour turnaround on testing with human respondents. And then, of course, there's more we can do here as well through our through our use of AI to help meet those demands. Next slide. Sorry.

12:46 Of course, quality is key. So just because as an industry, we can create more assets doesn't mean that they're any better. And then similarly with AI tools, just because they're quick doesn't mean that they'll be predictive. David Ogilvy puts it more succinctly than I will, but you get out what you put in. We know that human emotion is the key driver of action, and therefore, as the only people in the industry predicting this, we're uniquely placed to help. 67% of marketers say that creativity is a competitive advantage. Only 12% are able to convince their CFO that there's ROI in it. So that's the confidence gap. That's where we can help we can fill in. Next, please. And then, of course, while practices are changing, human principles remain the same.

13:34 As marketing professor Mark Whitson put it recently, even AI can't deny the brand building power of TV. We'll just watch a quick video of ChatGPT's recent TV advert.

14:24 So that was chat GPT arguably leading the way in AI, but who have recognized the need to build their brand in a world where 48% of US adults say they don't understand what AI tools actually do. And even among adults who use AI, half of them can't distinguish between the different brands that are out there and their offerings. They recognize that, you know, the way to build your brand is on TV. It's it's through emotional storytelling. It's creating distinctive brand assets, and that applies equally no matter how technologically advanced your business. Brand building rests on human emotion. Next slide, James. And no one knows more about human emotion than SYSTEM1.

15:10 We are the only ones with a database of ads and ideas that have been tested with real humans to gauge their emotional responses. Now that's obviously great for our current products because they're the most predictive in the market, but it's also great for the future because in order for AI to be predictive against the metrics that matter, those human emotional metrics, it needs to be trained on human emotion. Our databases of over a 120,000 adverts, over 66,000 ideas form the basis of SYSTEM1 AI. We've got over 20,000,000 human responses in those databases, and that equates to hundreds of millions of emotional data points, because each person answers multiple things against each ad and idea. So we are really uniquely placed to be able to build, a re a really predictive AI in this space.

16:01 Next slide. In terms of what this means for SYSTEM1, so I think it's it's become really clear to us that across the whole value chain, the winning formula is that combination of AI alongside human expertise. Broadly speaking, if you take out some of the nuance, the value chain is quite similar for advertising and ideas. So you create the asset, which could be an ad or a concept. You'll test to validate that asset. You'll improve it, and then you'll eventually launch, and you'll want to review it at a point in time before starting that loop again. So in the asset creation space, our view is that AI is really helpful in reducing time to create initial assets, but then that you need humans in the loop to iterate and improve. So in this space, we've worked with a few different partners.

16:48 On the left sorry. Could you click flow again? We have got we've partnered with a business called Bionics in the innovation space, and they're helping businesses define white spaces to play in and concepts fit within those white spaces by helping them to focus on on which of those concept has the most emotional resonance with consumers. We've then been able to take those concepts at SYSTEM1 and test them, help refine them using humans, and retest again. I have anonymized the chart on the left, but you'll see that we have done recently done a project with nine concepts And the improvement there, we've been able to make really significant improvement across the piece. And then at the bottom, we've got a piece of work done as part of our ongoing partnership with ITV in the advertising space. ITV is pioneering the use of AI to make TV ad creation faster, more affordable, more accessible for small and new to TV brands.

17:41 And similar to the Bionics model, we've tested then some of those initial AI generated ads and used human expertise to help refine them, and to refine the prompts. The one at the bottom there is, we've increased the style score from two to 3.2, which puts it significantly ahead of the category average. So we're really clear there that the combination is what drives success. The next part of the value chain then, so validation. This for us is where most of our revenue comes from in the form of pretesting. And then here, our belief is that AI can provide instant directional results on some of the headline metrics with humans then able to provide more extensive and precise emotional diagnostics for greater understanding and performance. Our TYA and TYI pro products already provide best in class human offering in this space.

18:30 So alongside those, we'll release an instant TYA product early next year that will provide the the instant directional results that we know that customers want in order to inform the direction that creative is taking. That product will be changed on our competitive edge database and to ensure its predictiveness. Sorry, James. You clicked through a bit on this.

18:53 I thought there's a shot from that. The third part of the value chain then is improvement. And there's a there's a couple of ways that AI can improve speed to market here and quality of offering. So the first is AI, of course, is great at providing instant application of known best practice to specific use cases. The second is in helping to mine large datasets for trends that would be difficult or impossible to spot with the human eye and then to be able to surface those trends so that the human can pick out highly tailored actionable guidance. So in this space, we are doing two things. We'll be upgrading our TYA pro and pro plus reports, with instant insight based on our extensive bank of thought leadership, again, early next year and looking to do the same in our TII space.

19:44 All of that, sits on top of the competitive edge database. And that and the the same AI model can help our human experts to bring additional diagnostics and recommendations to our customers in order to help them create five star ads, which is what you see at the top there. And then finally, we've got the launch and review stage. So the only way to really know how well you've done is to review it against the whole market and to understand the emotional power of your competitors' ads and ideas as well as your own. We're the only people in the market with that data, and, of course, that is all based on real humans. So that's the human underpin of it. But where AI can accelerate that is through enabling easy search and analysis of that large dataset, which allows, like, best practice insight not just to emerge from your known competitors or your known, category, but also enables you to take best practice from other relevant ads or ideas, you know, regardless of what sector or market they are in.

20:44 Our search functionality is already live, and we are developing out our analytics tool currently. So on that, I'll pass over to John to talk through the advertising side of the business in a bit more detail. Good afternoon or good morning, depending on where you are. So my name's John, and I am the chief customer officer at SYSTEM1. Before joining SYSTEM1 six years ago, I worked client side for about twenty years, working on advertising myself and on innovation. Perhaps the most important thing, though, was I was actually a SYSTEM1 client for a few years before joining. And the reason I was so enthralled by what SYSTEM1 does is, first of all, I understood what they were talking about, which isn't true for many research companies.

21:29 Secondly, the predictive power enabled me to have confidence to make recommendations to my business about what I was going to do. And thirdly, the advice was always immediate or quick and easy to action. So I I basically was very, very convinced by SYSTEM1 and have used it in action. So what that means is what you've got in me is someone passionately enthusiastic about what we do. Okay. So the question that Chris posed earlier on is how confident are we in the future advertising? I thought I'd start with a summary by showing you the best, still from the number one ad on our database from last year. Now this is Amazon's Christmas ad, featuring three grannies going sledging together. It's a beautifully made ad, and it scored 5.9 winning, our Christmas poll last year and was equal top of the charts for the whole of 2025.

22:24 Now why I think it's interesting is you may know that Jeff Bezos is famous for saying advertising is a tax on a poor product. It's slightly ironic that actually adverts Amazon has ended up becoming not just the biggest spender on advertising in the world, but also one of the best advertisers in the world. But what's interesting about Amazon is they really know the importance of human behavior. Their positioning is delivering joy, and they position Amazon as delivering the perfect gift or the perfect package just when you need it. And every bit of advertising they do like this one focuses in on human behavior and human insight. So firstly, they're very, very good at understanding the role of human insight as we are. The second thing is even though Amazon have the world's most impressive and fast growing retail media and they're in the business of selling advertising themselves, they also spend a lot of money advertising other platforms. This ad was a Christmas ad last year. You'll also see them advertising the Super Bowl. You'll see them on out out of home posters all around the world. They really understand that advertising lives in multimedia.

23:32 And what we've done at SYSTEM1, which I'll

23:34 show in a second, is make sure that we bring our human insights to every possible media touchpoints. Now the third thing that's interesting about Amazon, and I've interviewed them a number of times actually on my podcast, is they're not suggesting that AI might replace what they do. What they're doing is enhancing what they know to be true using AI. So whether it's whether it's producing advertising quickly or whether it's actually delivering the right products to the right consumer at the right time, they're using AI to enhance their proposition, to do what they're world famous at even better. And I think that's really our vision at SYSTEM1. So I wanted to start with some foundations for you. So if I can use my second Jeff Bezos quote in in about two minutes, he also said, tell me what won't change, and I'll build a business on that. And the reason I wanna start here is just to acknowledge the really strong fundamental foundations that our business has been based on. The pink book on the left, written by John, John Kieran, Orlando Wood, and Tom Ewing about seven or eight years ago really laid out the importance of SYSTEM1 thinking, a lot of it inspired by Daniel Kahneman, thinking fast, THINKING SLOW, but also the twenty years of innovative market research techniques that the three of them developed and tested and learnt from. On the right hand side, you've got Orlando Woods' absolutely phenomenal book. And by the way, if you're interested in how advertising works, please please order a copy of this. It literally is the instruction manual for how advertising works. And what Orlando has done beautifully

25:05 is shown people how to elicit emotion,

25:08 how to lodge your brand in long term memory, and how to create market share. And he does it in a way that only he could in a beautiful way. Now what we then did is we then built a platform based on those insights. So about five years ago, just after I joined, actually, one of my initial briefs working with the team here, was to take all the insight we have on our platform, take the twenty years of knowledge we had built, and turn it into something fast, easy, and predictive for marketers around the world to use. Now I remember being on the other end of the debriefs knowing

25:39 how useful the insight was, And what we invested in at the time was the very latest technology. So for example, it takes us around eight hours from a brief right the way through to a report being ready. And in the pro report that you see here, we can go through very simple diagnostics. So second by second face trace ups we see on the bottom left, which shows the emotion that people feel every second they're watching the ad through to comparing your ad versus other benchmarks in the database. Through to on the right hand side, you'll see top right there, even Orlando's right and left brain features where he diagnoses which features drive an emotional response, and you can see how you're doing with those. So we built a very impressive platform that enabled our customers to make decisions very quickly and based on predictive data.

26:27 Now, of course, we were famous probably at the time for being a TV led company. A lot of the things we talked about were film. At the time, TV was still a very dominant media. But what we've done in the time since then is we've really doubled down on partnering with the oh, sorry. Actually, I'll back up on one second here. Yeah. Sorry. Go to the next one. This is a really super important point, actually. The vision that John had at the time to build a database of everything in the category is incredibly important. And if I can just explain why, you only can predict how you will do if you know how everyone else will do in your category. And that's because the work

27:05 that John Orlando did on predicting outcomes depends on effectively how good your creative is versus the category norms. So by investing significantly as we have done on building a database of every category in The UK and many categories in The US, we can give our customers real benchmarks for their advertising in the categories that matter. So for example, this is a small snapshot from Super Bowl this year, and you'll notice that number seven is Pfizer, which is one of our clients, and we help them develop the best performing Pfizer sorry, best performing Pfizer ad and the best ever performing pharma ad that's ever been aired. Now we only know that because we collect the data for everything in the category. So the premium database here is incredibly important. If I can jump to the next slide, please.

27:50 Now, as I was about to say, we are quite well known for TV and the role that film and video has, but what we've worked incredibly hard at over the last two or three years is extending our insight and our thought leadership across every significant media channel. So if I walk you through these in examples, so last year, we launched compound creativity with the IPA. The IPA is the most respected body of advertising expertise in The UK, and we looked at their database of advertising outcomes, matched it with ours, and identified what delivers returns in the long run. The extraordinary cost of doll, which is the second one, was a partnership with Peter Field, one of the world experts on advertising, and Eat Big Fish, one of the world experts on challenger brands. And this was our challenge to the industry to stop making boring advertising because actually how you feel predicts how you'll buy. And so what we wanted to do was give the industry a bit of a shock to show them how much money they were wasting on boring advertising.

28:46 The third one there, Listen Up, is a partnership radio center looking at how to make audio ads that connect with the audience. One of the questions actually in the q and a was what about creator content? And the fourth one here, the long and the short form of it, was a partnership we developed with TikTok looking at how do you communicate through creators and how does that compare to advertising on the platform, and what are the rules of getting both of them right? Because they operate

29:10 quite differently. But by using TikTok's data and our data, we came up with the with the playbook for how to make both of those work effectively on that platform. Bottom left is, our partnership with the Effie's. At SYSTEM1, what we have is a brilliant predictive We predict outcomes. What the Effie's have is an amazing database of actual outcomes from successful award winning cases, and what we're able to do is put our dataset and their dataset together to work out what predicts real world outcomes, And this is global as well with a lot of with a heavy emphasis on The US as well. So, again, it ratified a lot of things we understood on a very large dataset. We've worked with ITV for five years, and this year was the seventieth year of TV advertising to celebrate that. We launched the 70 best ads of seventy years and what everyone can learn from doing those. JC Decaux, another long term partner. Again, we're looking at how you can optimize out of home and how you create an emotion, create attention, and deliver memory in out of home. And the final one, which was quite

30:11 fun as well, was Ardman are perhaps the world's best storytellers. They make Wallace and Gromit and many world famous animated films. They are very, very good at creating an emotion. And so we partnered with them to talk about the role of showmanship, which as Orlando Wood talks about in his book, is much, much better than salesmanship, so emphasizing the rules of showmanship that work. Now as well as creating all these assets, have been downloaded in the last twelve months 43,000 times, which is a a big growth from the previous year. The important thing about this is not only does it allow us to show our credibility in different sectors, but it informs how we develop our products. So the insight we get from this feeds directly into products we launch. So whereas we launch with test your ad TV, we now have test your ad out of home, we have test your ad print, we have social, and we have audio, all designed to give you the right information when you need it.

31:05 So if a lot of people are downloading our thought leadership, how are we getting our message out there? I mean, Chris very kindly introduced my, evening job as host of Uncensored CMO podcast, and, actually, I created it as an excuse to meet the world's biggest advertisers. So I have the privilege every single week of sitting down and having a conversation with the CMOs of some of the world's largest advertisers. On the left hand side, you'll see this is just a sample from the last six months of 12 CMOs in The US that I've met. You can see the kind of companies there, PepsiCo, Kraft Heinz, you know, Pfizer I mentioned before as well, Yum Brands, AB InBev. These are all advertisers spending hundreds of millions of pounds every year on advertising. It gives me a reason to talk to them. Now one thing I know speaking to a lot of them at the moment, which kinda links back to I think what Chris and James were talking about at the beginning is everybody is under a lot of constraint this year.

31:59 Given the uncertainty that exists in the world, the one thing they all all talk to me about is how do we get out of this short term trap that we're in, being asked to do more with less and in a shorter time horizon. So that's one of the the kind of insight that I get from talking to them. But it also gives me a great chance to discuss the role that SYSTEM1 has in testing. On the right hand side, we've also invested a lot in building our profile on LinkedIn. Andrew Tindle, who leads our partnerships program yesterday hit a 100,000 followers, And every single day, he is sharing our insight with his followers and sharing, you know, latest, thought leadership from us. Vanessa, Orlando, and others in the team are doing likewise. He also has a weekly column in the drum. I write for marketing week, and people like Mark Ritson, who's probably the most influential person in marketing, also regularly talks about us in the columns he does. So across all those, different forms of media, we've developed a following of over a quarter of a million, and in the last twelve months, across all of that, we've generated over a 150,000,000 views.

33:02 I think it's fair to say that for a research company of our size, we're punching well above our weight. And the momentum continues as well. You can see the stats at the bottom, but pretty much across the board, we are seeing triple digit growth in all the various media that we engage with. Now the one that I like the most, and again, anyone, any of you out there that have done a marketing job before

33:23 or have spoken to a marketer will know the hardest thing to increase is spontaneous awareness. Brand leaders dominate when it comes to who do you think of first when you think of a particular category. We've doubled our spontaneous awareness in The US in the last twelve months. So we've got tangible evidence that our brand is being built and we are cutting through at scale.

33:45 So what I thought would be fun is just very quickly to give you an example of what I'm talking about. So Pfizer, as you may know, are the world's fourth largest pharmaceutical company, turnover somewhere in the region of $50,000,000,000 a year. We won a pitch to win their pretesting business just over two years ago, and they came to us and asked us to help them with their Super Bowl ad. Now there's a bit of context that goes back to the point I made about the premium database earlier, which is you need to know how you stack up versus your competition. Vaccines, which Pfizer, as you well know, are famous for, is the lowest performing category in the world. People don't wanna hear about vaccines, and they don't want all the terms and conditions and warnings that come along with them too. So it's a very, very difficult job. Now what I love about the work we did with Pfizer is from the very early idea through to literally the day before the ad was supplied to Super Bowl, supplied to the TV channels for Super Bowl, we were working every single day, many hours a day to try and help them optimize it. As a result, we help them create the best performing soup sorry, best

34:48 performing, farmer ad that is in our date on our database, and we literally have thousands. So, anyway, rather than listen to me talk about it, because you'd expect me to say that, here's a short clip from Susan, their CMO, talking about how they work with us.

35:06 Pfizer uses SYSTEM1, as you know, for all of our ads now. So I think we've tested 300 ads, over the last couple of years. So, you know, we think the having the sort of standardized approach with really clear benchmarks linked to ROI that allows us to be able to to understand how our various ads are performing against themselves, but also how they're performing against other benchmarks has been extremely useful for us to be able to improve the sort of emotional resonance of of the advertising that we've we've put out there.

35:39 Now what's lovely about that is Pfizer don't do publicity like that. They they they pretty much never do any interviews. So to get an interview there was was pretty cool. One other scoop as well, and that, in fact, anybody I'm not expecting anyone listening necessarily follows the podcast that I do. But, today's episode is with Craig Bromers, who is the CMO of American Eagle. This campaign is the most talked about campaign of the year. It caused a lot of controversy. There was a huge debate about it in marketing circles. Everyone's got an opinion. But what I was able to do because of having the podcast

36:10 was sit down with the with the CMO himself, and only the second media interview is ever given after the, after kind of big crisis happened earlier in the year. But the important thing is I was able to talk to him about the role of SYSTEM1 testing and how it would help inform, situations like this. So I've got a short video of me talking to Craig now.

36:37 SYSTEM1 GROUP PLC. Am still a little bit dumbfounded because I think the claims are absurd, and I think a vast majority of Americans understand that the claims are absurd. It was always about the genes, and this was Sydney's story in her genes. It was a curveball that we didn't see coming. Certainly created another interesting narrative in the launch of the campaign. Yeah. Yeah. I I put it through our SYSTEM1 test actually just to see because we measure, like, emotional response and why people feel how they feel. Not here to tell you to buy American Eagle jeans. And I definitely won't say that they're the most comfortable jeans I've ever worn or that they make your butt look amazing.

37:31 Why would I need to do that? But if you said that you wanna buy the jeans, I'm not gonna stop you. But just so we're clear, is not me telling you to buy American Eagle jeans. Sydney Sweeney, Hasbrooke jeans. You see what I did there. Right? And it was really interesting because it it plays out exactly, actually, what you just said there. I didn't get anything about racism or eugenics or even objectification. On the positive side, a lot of people going, Sydney Sweeney, lots of confidence, looks great in their jeans, they look comfortable to wear. So certainly from our point of view, and we were testing a a big, you know, big sample size, we couldn't see anything that connected back to the to the backlash. John, I'm not surprised to hear that at all. And again, I think how most people took the campaign.

38:18 But there were clearly a a lot of conversation in social media and in the mainstream press that took it into into other territory. So what hopefully you've seen from those examples there is that we've been able to build a brand that people are talking about. We've been able to reach our customers in different channels and demonstrate to people through kind of various media what SYSTEM1 does and how it can help people. So if I go to the next slide, if you wouldn't mind.

38:50 And and the consequence of all that is over the last five years, we've been building a powerful long term brand around advertising. So the most important thing actually, back to any kind of followers of Byron Sharp about mental and physical availability, is we've been building our customer base consistently year on year. So what started out as 81 customers when we relaunched the platform is now 533 as you can see on the chart. And what we started with about 1,500,000 in turnover in our first in fact, this is a part year, this one, is now touching 30,000,000 at the kind of margin that James and Chris mentioned earlier. So we've got a very sustainable, healthy, growing business over the last five years. We've also been able to work with some of the world's largest advertisers as well. So whether it's the biggest retailer in the world that you might have seen earlier, the number two entertainment company we've won this year, the number four, you know, pharmaceutical industry, or a major, you know, modern social media company. And the exciting thing is this we're not working with the usual FMCG suspects that believe in brand building. We're working with some of the biggest entertainment platforms and tech companies in the world who really, really buy into what we do.

39:58 So the question is, really, what's gonna come next? And this goes back to my first point, really, where we started about Amazon. So what Amazon do is use AI to enhance what they already do brilliantly rather than replace what they do. And the first thing, and Becky mentioned this in her section, is AI is giving marketers an ability to create so many assets at scale so quickly. But the question is just because you can do that doesn't mean you should. And what if they all are just designing more more communication that no one actually wants to see? Well, what we've developed here and, we'll be launching next year is an ability to train AI on our human data and to use it to predict the likely outcome of a pretest. So what what we do here is basically give people a range, low, medium, and high, of potential outcomes instantly on their assets. Now the ability to upload as many assets as you want, to compare between them and then to use that to give a sense of what might happen. Now, of course, what will then happen is what having done that job, they'll then be able to do the proper test on the assets they want to go go to market with.

41:04 The next thing that we can do, and this is only because we do have a database of every category in The UK and lots of majority of categories in The US, we can give our customers inspiration instantly. So whether you want to know who emotionally connects best in my category, which which one is doing a good job of short term or long term, how do I improve my branding, we can instantly provide case studies from the database matching precisely the requirements that you have in the ad. The next thing we've been working on as well, which I'm quite excited by this because when I joined, this is my favorite thing that SYSTEM1 did. So the face trace, which, hopefully, you'll have seen us talk about before, which is second by second how people feel, what the guidance team do magically is they bring the reasons people feel those emotions at the very second that they feel them to explain the story of your, you know, of your ad. And that gives you an amazing ability to kind of diagnose why does someone feel sad? Why do they feel happy? Why were they surprised? Why do they feel nothing?

42:04 And what AI can do is basically do that job. It can take all the reasons people feel. They can match it to the particular second of the ad and show you the precise frame that is creating the response. Now the reason I'm excited by this is this is what I was doing with Pfizer on their Super Bowl ad is breaking it down second by second, and they were asking literally which scene was doing which job and how to improve it. So this gives us an ability to do something that previously would have taken a few hours and maybe some days to do. We can now do it at the touch of a button. So the the advanced diagnostics we'll get will just be faster and better than ever. Now the final point, and I know Becky hinted at this earlier, and, again, I'm very excited that we can do this, is what we've built up in the last last few years is an amazing treasure trove of data, insight, information, and expertise.

42:55 But none of us as individuals have got the ability to read everything, remember everything, reference everything, and know where everything is. So what would happen if we can take our 123,000 ads we've tested, all the thought leadership we've done with all the expertise that's in there, and train AI to give you instant recommendations exactly when you need it? So taking Orlando Wood's advice of having a fluent device, we're creating our own fluent device that's gonna be on the platform that will be able to tell you what you should do and give you access to our thought leadership and our data to give you advice as you go through the report. So, hopefully, that'll be pretty magical. The point I wanted to end on actually is, and, again, I'm borrowing, from someone else slightly here. There was a a campaign that's just launched yesterday from a company called ServiceNow, and their headline was, you don't need AI agents.

43:47 AI agents need you. And it's a beautiful insight about the fact that AI is only as good as the human training that's applied to it. Now what we have is the best human database on the planet, which predicts actual outcome. So the opportunity for us is to train the AI in that, and that's gonna be where we get the advantage. So on that note, I will hand over to Tris. Thank you, John. What a what a wonderful demonstration of everything we are doing wonderfully well in the world of advertising. But now to switch to innovation. So by means of introduction, because I'm the the newest member of of this group that's speaking to you today, I joined SYSTEM1 at the end of January of this year to spearhead the reinvigoration of our innovation business. My background of twenty one years is completely in this space working across insight, research, innovation with the majority of the world's largest organizations that that companies varying from Nielsen where I began my career to tech organizations like Zappi and more recently, Toluna, the tech and and sample providers. And I just wanna touch on a point that John made, which which really resonated with me.

45:00 Because if I think back to the very original conversations I was having with James and John Kieran and what seems like quite a while ago now about this role and this opportunity, it was the foundation of the business that was the reason for me joining. Because if we think back many years, innovation was the core of the SYSTEM1 and then brain juicer business. And and what that meant for me and my team and and the growth of innovation is we're already working from such a strong foundation, a foundation of thought leadership, a foundation of expertise, a foundation of predictability, and the opportunity for me to come in and grow that part of the business and reinvigorate it and delight our clients was was just an incredible opportunity. So I'm gonna take you through now some slides. I'm gonna give some broader context on the world of innovation as well because I know for a lot of you that have been in some of these calls before and and current investors, you're you're you're clear on the world of advertising and what we do. So on some of these slides, I'll I'll give a bit more context. If you could move to the next slide, please, James. So the innovation testing world is humongous.

46:04 To give some clarity to this, though, there's a lot that goes on in this space. So when we talk innovation testing, we are effectively saying anything an organization might do to come up with an idea, to turn that idea into a proposition, and then to get that proposition onto shelf. Right? So this world would include market understanding pieces or or white space that happened very, very early in the journey through to testing. So whether you're testing a claim, a pack, a name, or a concept, all the way through to then product development and testing physical products in home. And something I'll talk talk sort of towards at the end of my session is is where SYSTEM1 are playing at the moment and why we're really excited about that, but also how we want to stretch our kind of footprint in the innovation or or or insight world as well.

46:54 Jump forward, please, James. Unsurprisingly, like many industries at the moment, but particularly, I think in the world of of insight and innovation testing, the landscape is so disrupted at the moment, but that's great for us. It's absolutely wonderful for us because it's creating so many opportunities for us to get in front of clients and to win. I'm not gonna sort of go over these in in major detail, but but I kind of put them into four buckets around the traditionals really are being challenged at the moment. They're really being challenged in terms of our industries, the way people shop, the way people become aware of products is so different now that that can those sort of more traditional ways of of testing a product, like, really work. Organizations also need more help. We've put the term insight partners here, but organizations want to work with people who can, yes, give them the data, but can also give them some guidance, can give them some help, can actually sort of help them on that journey to a successful product or a successful launch. They also want flexibility, which is great for us. Right? Sometimes they want an automated report. They want that delivered via the platform.

48:01 But you know what? Sometimes they also want some help. They want some guidance. John touched upon this earlier in terms of the value that our our research teams, our guidance teams can provide in terms of bringing this bringing our data, bringing our predictability to life. And finally, AI. Unsurprisingly, Becky had the AI section, which was brilliant upfront. John's talked about it a lot, and I'm gonna talk about it a lot as well. The point I will add on AI, and it's it's it's a personal one, is we are in a very lucky spot at SYSTEM1 because we're not bound by a single piece of AI technology. We're not an AI organization in the way that if you were purely an AI organization, you have to push that particular piece of technology. The ability that we have with the data we have and the teams we have is that we can pick and choose the AI that works best with human understanding, that works best with expertise, that works best with emotion, and use that to increase the efficiency of what we deliver to our clients and the predictability.

49:01 Next slide, please, James. So what what was the first step? Well, unsurprisingly, the first step was to build out a dedicated innovation team. Now, let me be clear. It is the responsibility of the whole business to drive innovation, and the business is is really on board with that and really driving it. But we recognize the need to have a group of individuals dedicated to innovation. And as of a month and a half, two months ago, that team is now complete. What that means is we have dedicated commercial resource in Europe in the case of Sarah and in The US in the case of Megan. Both people with immense experience in this sector, in this space, and with with a massive amount of of client exposure in their relevant regions.

49:47 We also have a dedicated research resource. But to give context on Hannah, what she does is she brings all of our content and our thought leadership and spreads that out across the research team so that they can bring that insight to their reports in terms of how they work with clients. We've also got Jesse heading up our marketing team for innovation so that we can have a really singular focused approach to generating awareness for innovation as well as the great work that we're already doing on advertising, and I'll cover this in a second. We have Danny heading up our our labs area for innovation. I probably shouldn't say it this way, but labs labs are the smart guys at the business. Labs are the guys that prove that what we do actually works. They're the ones you go to when you have a really tricky question, and I I really, really value having Danny and the team. And then we've also got Sophie, a dedicated innovation product manager to allow us to continue on our kind of our product road map in terms of getting to where we need to get to in terms of innovation within SYSTEM1.

50:49 I'll let this video play first given it's playing automatically, and then I'll talk because I I don't want to be too too sort of disrupted. But in essence, how do we do it in the world of innovation? Well, you would have recognized and if we could maybe go back one, but stop the stop the autoplay on the video if we can. Thanks, James. So we use the same star. It's a lovely distinctive asset for us. And that star, just like in advertising, is the predictor of success for your product or your proposition. How we get to that star differs a little bit in the world of innovation because we're not looking at second by second response because we've got a static asset. But ultimately through the power of understanding emotion, through the utilization of behaviorally science led techniques. Within the survey, we can tell clients how likely your product, your claim, your name, whatever, is to succeed in market.

51:42 One of our first jobs as a team was to I I often use the phrase sort of securing base camp. So this product was already there built on the amazing foundations of of the innovation experience and history that we have at SYSTEM1, but we needed to make some tweaks. We created a couple of distinct products so that we would have slightly different use cases for clients dependent on whether they were testing final stage concepts or something earlier like a a claim or a name. We revised costs to make certain parts of the test more competitive in terms of in terms of market market forces and and what the market expects. We increased the database. Becky touched on our database earlier. I'm really, really proud that I might quote it ever so slightly wrong, but I'm gonna say sixty six thousand two hundred and one.

52:27 And and how quickly we're growing that database is is is amazing and and critical for sort of client validation as well. We've run company wide training. We haven't just done this as a company wide training. I everyone sit down and listen to Tris and the team, but we've we've created bespoke training sessions dependent on the the function within the business. So for the commercial teams, let's obviously make sure they understand the methodology, but then let's help them translate that into client conversations. We've updated the creds. And as you'll see throughout this deck, we're really, really focusing on our clients talking for us. Right? It's one thing me sitting here and and saying how how great the solution is, but when we hear that coming from clients through case studies or testimonials, the power that the the power of that is is unbelievable in terms of credibility.

53:16 Next slide, please, James. So it would be crazy to not try and replicate what we're doing in advertising. Right? As as an outsider and a relative newbie to the world of SYSTEM1, you guys that are not in the sector will will not believe how much share of voice SYSTEM1 has. It's it's almost a joke within the market research world that when you're working at Nielsen or you're working at SYSTEM1 or or any any of the other agencies, the amount of amazing SYSTEM1 content that you come across is is unbelievable, and it's it's it's testament to the hard work of of of all of the SYSTEM1 folks who've been in the business longer than me. So we're trying to replicate that in the right way for innovation. So whether that's something like innovation news of the week, which is something we started fairly recently through to category specific learning pieces like one we've recently done on dairy and kefir, which actually has already led to two client client projects.

54:13 Partnerships through the likes of amazing organizations like the Future of Food and the Meals Collective, and then a constant kind of underbelly or a constant thread of blogs that are tying in sort of our views on innovation to real examples to then just, again, build that credibility. We're very early in the journey. Right? But I'm I'm really proud and excited by the impact that we've already had. So coming close to a quarter of a million impressions for innovation of the week, We've seen just over a 60 increase in demo requests, and we've seen about a 35% increase in social post reshares coming from coming from the SYSTEM1 branded post, which is which is great. So early in the journey, but but I'm really, really happy with the positive signs. And something that that we're really proud of, and and this is something that in the advertising world is just normal for us now.

55:06 But in the innovation world, it wasn't. Right? Because we haven't been focusing on it as much. People are now starting to talk about us in the world of innovation. And, again, these these will be small on your screen, but the point is that the point in time whereby clients or organizations or individuals are starting to quote SYSTEM1 in terms of, oh, SYSTEM1 have called this a true category innovation. You must listen. Or something we've talked about in regards to creatine becoming the new ingredient to watch or a client actually referencing the fact that they were included in a post. Like, it's really, really valuable in terms of building our fame and building that recognition that, hey. You know what? Like, we know what we're talking about when it comes to innovation. And if you work with us, you will increase your chance of of of successful launches.

55:56 And this has resulted in some amazing growth. So you've already seen some of these numbers from from the opening section from James and Chris, but we've we've seen a wonderful a 107 a 107% increase in platform revenue, half versus last year half. Total revenue's gone up by about 26%. We had our biggest q one in four years. Again, remember that historically, the innovation was a big part of the business, but to have the biggest quarter in four years was was wonderful. And actually, q two from a again, from a total perspective, not just platform, was up by about 47%. So we're seeing a lovely trajectory of of of continued quarter on quarter growth that is standing us up really nicely for for growth this year and growth in the long term as well. And there's some lovely stories across that as well. And if you if you maybe build one more as well, please, James, with the quote. So we've won about 38 new customers year to date versus last financial year year to date as well, and and that includes a global ecommerce giant. It includes a global snacking leader. It's also one of the biggest sort of home appliance innovators globally as well.

57:05 And the reason this is important is because we're confident that when clients see what we do, when in front of them they have the data coming out of their test, and when we get that original project, they will come back because they're seeing value in what we're offering. And if you look at that quote on the right hand side and and think back to what I said at the start of this session, which is clients want data, and they want data that is validated. They want data that is predictive, and they want data that helps them understand emotional response. But that's the start of the journey. They also want some help. And and what I love about this quote, came in, I think, about a week and a half, two weeks ago, is by working with us for their innovation, they've got more clarity. They're excited by that. And as well as being flexible, they appreciate our brainpower.

57:50 And this is us really trying to strike that balance between giving them data that we know is predictive, but also working with them to help them on that journey and ultimately drive repeat purchasing. Because at this point, you start to build trusted adviser status, and you're stickier than you would have been without that. Obviously, there's a lot to come. So I've I've tried keeping this simple, and I I'm gonna talk about about one initiative in more detail. We're early in the fame journey. So there's many, many things we're doing in this space through through Jesse and and dedicated innovation marketing team as as one would expect. But we're we're we're starting to recreate, I think, actually, on Friday of this week, we'll be launching our first evaluation of the innovation of the week. So the start of it was let's generate awareness of new products. Let's generate fame, but also let's now test them.

58:39 Let's get people excited about how how well some of these products are actually doing in the market. So trying to replicate something through out of the week that has worked really well in the advertising world. And h two was also gonna focus more on industry events. So starting to explore opportunities to be up on stage with some of the clients that we're now working with that are really valuing what we're doing with them. We're still on a route to improve the core. So by core, I mean, what I've just shown you with the test your innovation platform. So there's new features coming very, very regularly, almost almost biweekly. And we will also be launching a dedicated pack test likely in in January of next calendar year, which is incredibly exciting as well to have a a dedicated proposition to tap into the pack testing world as well.

59:25 But equally, we need to accelerate, and we need to accelerate with with offers outside of just the core. And I'm gonna talk about this on the next slide as well. One way of doing that is, of course, with a lot of the amazing AI stuff that Becky has already shown, but it's also through partnerships. We are very happy to if there is an organization out there where there is an opportunity through partnership to scale quickly or to have something available that potentially would take a lot longer for us to produce, we have to be exploring those opportunities to be able to accelerate our innovation offer at an appropriate pace given the changes we're seeing in this world at the moment. And if you skip to the next one, I I guess this should bring it to life a little bit. This is incredibly simplistic, but we kind of broke the innovation landscape into four buckets.

1:00:12 Now call that first bucket Inspire. So this is where if you are a a customer, you need some help understanding something. Let's say you want to launch into a new market or you want to launch into an adjacent category or you just wanna understand what's going on in your own category. So this can be work like white space understanding or or or market understanding or consumer segmentation, all of those sort of pieces that happen before you develop a a proposition or a a concept. Then we have these two buckets in the middle screen. So once you've got inspiration, you typically have a lot of assets. Right? You might have a lot of claims, a lot of names, a lot of ideas, and you wanna screen those out in an efficient, cost effective manner, but in one that's gonna give you good data. Right? So that I won't quote the Ogilvy question, but it it applies here. The Ogilvy Ogilvy quote. Sorry. And then we need to be able to predict.

1:01:02 When the assets are more finalized, we need to we need to have confidence that that asset, that concept, that product is gonna do well in market. And then there's this final bucket of tracking. So once something is actually launched, how how is it doing? Now at the moment, we go to the next build, we play in this in this middle space. Right? And that's brilliant because our our product is very well suited to enabling clients to screen volume, but with confidence that the data's worthwhile, and then to turn that into more final assets to then predict the likely success in market. But what we've got are a couple of gaps in this inspiration and this tracking space. And our belief from client conversations is that clients are looking for partners, and, again, as the point I made earlier, that can work with them at various stages of the process.

1:01:49 So our priority for as well as continuing to grow, test your innovation as a core offer. Our priority for the remainder of this half and and moving forward will be products and offers that are helping us tap into this inspire piece. There's another reason why that is important because if you're talking with customers at an earlier stage of their innovation process, if you're getting embedded within that process, if you are a partner in that process, you're more likely to be involved at later stages. So not only does it offer incremental revenue opportunity because you're tapping into a space that we're currently not playing in, but it also increases likelihood because you've landed the importance of emotion, because you've landed the importance of behavioral science. It increases your opportunity of testing at the later stages as well. And then we will we've also started exploring the idea of how with the utilization of of AI and the ability to get a quicker read on reviews and performance of products once they're launched, we started early stage exploration of how we could tap into this tracking spacious space as well. In reality, that will be something that we prioritize for f y twenty seven.

1:02:55 Now to bring this to life a little bit, we've already started on this journey. So back to that inspiration bucket, we've identified and established a product partnership with a company called Bionics, who, the simplest of terms, are a an insight discovery organization, but doing that through the utilization of AI. Now why did we think this partnership was relevant? Well, because number one, we both had a shared belief in the importance of emotion in terms of truly predicting the likely success of a product in the same way that we do for for advertising. But what we also realized is that there was a gap. There was an AI gap for going back to what Becky said and also what John closed with. There was a gap in this space in terms of propositions that were combining AI with humans, with real people, both in terms of expertise about the insight discovery approach, which comes from Bionics, but also with consumer touch points throughout the process. Like, AI can mark its own homework.

1:03:58 Right? Like, any of us could ask a question to chat GPT now, which a lot of us use, and we can often we can often get a response that it kind of wants us to wants us to hear. So what we've done with Bionics is we've created an insight discovery approach driven by AI fundamentally, but then with SYSTEM1 testing interwoven throughout the process. So what that means is opposed to just getting a response from AI, we're validating what AI is telling us with real consumers and bringing emotion to the forefront. It's applicable across creative and innovation, which is an additional benefit. And more importantly, historical approaches in this space have been incredibly time consuming and incredibly expensive.

1:04:44 And what this is enabling us to do is to go from brief to boardroom in in record time. And I'm gonna close with one slide because we had a wonderful opportunity. We we've already done this with a lot of clients now, and and we've had a wonderful opportunity with Plattice where we actually presented the results to to actually the majority of their c suite a few weeks ago. We have a quote from Joanna Dumont who, as well as being a VP within the Insight team at Plattice, is also a board member of the Insights Lighthouse who are a very influential, important, forward thinking organization within the world of Insight, both both client side and agency side. And the quote speaks for itself, but in essence, like having someone with the experience of of Joanna talk about the how invaluable this partnership is between SYSTEM1 and Bionics, the speed at which we could turn around an original concept to an improved concept. This goes back to what Becky shared earlier on in terms of the the improvement that we were able to to drive. And even using words like using words like genius and and how much improvement can be gained by just getting the insight right was a was a really lovely a really lovely quote. And, actually, since since this project, we have started to do more work with with the organization as well, who we already work with from an advertising perspective, but we didn't from an innovation perspective.

1:06:04 And on that note, I will hand over to James to close, and I I look forward to any q and a that comes in from innovation as well. Thank you, Tris. And I'll I'll just leave you with a few closing comments before we move on to q and a. I think sort of borrowing a phrase from somebody there, the future is pink for the SYSTEM1. There we go. So think the first thing to call out is that it's early days, but October and sort of the second half is looking in line with guidance, which is great to see. Great to see some more stability in the market. The power of our ad and innovation databases is unique. I think you've heard from everybody who's talked to you today about the power of us testing every ad that has across The US and The UK and testing all those multi thousand ideas and concepts and claims as Chris talked about, allows us to truly understand how humans respond to advertising and to innovation.

1:06:59 And what that means, therefore, is going forward, it creates a nice defensive moat, but also a real opportunity for us then to move forward into the world of AI. So based on that, I think our third point here is that exciting opportunity to really commercialize our IP from the start of f I twenty seven with new AI products. And you've heard from sort of Becky, from John, and from Tris we can do that ourselves directly off the back of our database, but also how we will accelerate that with partnerships in the innovation space in particular. To really then grow the advertising business, we know the massive opportunity we have in The US, and it's great to hear, as John called out, our sort of un unprompted awareness really, really growing in The US means that our fame and then subsequently our sales would be really growing in The US. Wonderful to see. And finally, great to see how we're able to deploy that fame building playbook for innovation, which is then really driving out early commercial success in the innovation space.

1:07:53 So on that, big thank you to everybody for joining and listening today. There is a question functionality in here. I'm probably jumping into IMC territory here. But if you want to pose a question, we are here. We're available to answer your questions. So please do submit them, and we'll answer them as best as we can. That's great. Thank you all very much indeed for your presentation. And ladies and gentlemen, please do continue to submit your questions, as James just said, using that q and a tab. And while the company take a few moments to view those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. James and team, as you can see, we have received a number of questions throughout today's presentation. And if I may now hand back to you and kindly ask you to read out the questions where appropriate, and I'll pick up from you all at the end. Thank you.

1:08:42 Super. And we'll try and answer as many of these as we can go through, and we'll make sure the relevant person in the team can help too. I think, John, I know you you touched on this, but one of the first questions was towards the creator led community how we can support that. Then it maybe you want to build a little bit further onto that comment you made about our work with TikTok and how we can really help in that space. Yeah. No. It's a very huge observation, actually, because, creators I mean I mean, everyone probably the theme of Cannesline this year was the creator economy. So a lot of brands are I mean, the the big headline was oh, was it P and G or Unilever? I'm getting the wrong way around now. I think it was Unilever announced a 20 fold increase in their investments in creators this year. So it's big business. There's a lot of brands partnering with creators. TikTok is probably the most famous platform where creators are doing business.

1:09:31 And so we partner with TikTok basically to understand what happens when brands partner with creators and how do they get the advantage. Because creator content typically engages more than advertiser content, which won't surprise you. So what we were able to break down is how advertising content can cut through and how advertisers can benefit from creator content because the the the trap that people fall into with creator content is that you forget who the partner is or who the advertiser that they're connected to is. So we gave some advice on that. And and and the probably the the nugget information is treat creators as brand builders, not as a sales channel. Because people tend to treat them like, you know, sell more shampoo, you know, kind of thing. But, actually, what they do is they're great for kind of building long term relationships and kind of getting word-of-mouth out there and so on. But, yeah, do download the report if you want to.

1:10:20 Go to the website. It's called the long and the short form of it. Awesome. Thanks, John. There was then a question from John W. He said, I joined late in service. The questions were being asked. But what threats are you seeing from synthetic respondents? With synthetic data being an issue in market research, wondering if companies are using AI simulations. And I think, John, just for reference, this will be recorded and you'll be able to watch back the section. Becky had a relatively comprehensive topic of covering off AI and where it can play with us. But, Becky, I don't know if there's anything else you want to maybe just summarize on this part. Yep. No. I think I just I mean, go back to say synthetic data is as as good as the information is trained on. Right? That's our view. So there are absolutely people and players who we're working with as well who are starting to really be able to train excellent synthetic respondents who will be able to respond to emotional questions. Fundamentally, you all you're always going to need more human data to train those models and to keep them up to date. So there is definitely a place for synthetic respondents in the in the value chain, and we're looking into it. But they are our view is that they aren't going to replace human respondents more augment that capability, especially with particular audiences.

1:11:36 Should I touch on the other the the other ones or the kind of operational panel piece at the same time? Is that helpful? In terms of the I think, look, in terms of the AI bots, please, the answer is no. Sorry. I just just hold off here as another question came in. The question was, is SYSTEM1 using AI bots to ask its panel questions? No. We don't have our own panel. Just to clarify, we use partners in that space, but we don't use AI bots to ask those questions. It's a it's a standard survey, which is is industry norm, and that survey goes out to human respondents. Yeah. And I think just on that one, Becky, there was, a question that came in, and apologies. We've lost the name of who it was because it got deleted from our question. But I can remember the question itself, which was how is SYSTEM1 standing out from the crowd? What are the sort of some of the core metrics that you use? And I think you'll see a little bit of a demo of that. But, Jon, maybe if want to just touch on sort of some of the core metrics and face trace we use on in on advertising, and then Tristan, some of the core metrics we use and how sort of the if the share trading innovation works in innovation.

1:12:36 Yeah. Absolutely. Yeah. So at at the top level, three basic core met core metrics, star spike and fluency. Marketing works in two time horizon short term, long term. And so the star rating, is based on emotional response, and the work of Orlando basically tied emotional response and how positively, people respond to long term changes in market share. And you adjust it, by the way, for media spends and other factors to to identify that. So star rating is the ability of the campaign to have an impact in the longer term. Now we mean kinda twelve months plus when we say that. Spike rating is our short term prediction. Now in the short term, basically, the strength of emotion and the speed of remembering the brands are the most predictive. So it doesn't necessarily mean whether it's a good or bad emotion. You just need to create an emotion, and that emotion needs to be strong. So the stronger it is, the more likely you are to act. But importantly, and this is what a lot of advertisers forget, you need to know who the advertiser was. So, that's our third metric, which is fluency, which we have a fast fluency and an overall fluency. Fast fluency is how quickly you recognize the brand. Overall fluency is the percentage of the total audience that did recognize it once exposed to the advertising. So, basically, long term impact, short term impact, and ability to recall the brand quickly and overall.

1:13:55 Cheers, John. And then in the world of innovation, we we have the same star in terms of look and feel, and that star is a predictor of sales success. The way we get that star is a little bit different. One of the sort of key areas is we know that humans are better responding when they predict what someone else would do or how well they think something would do versus their own kind of consumption. So they're much better at predicting whether someone else would buy something versus answering whether they would buy something, which is quite a flawed flawed metric. Number one is what we call a share trading element. Number two is the emotional response, lever leveraging exactly the same emotions that we have across the world of advertising, which is obviously critical, and also the speed of that response. So in terms of how easy is it for someone to comprehend that product or that idea, because that can translate then into complexity of articulating that product in market.

1:14:50 And then finally, we talk about fluent innovation, which is this this idea of of striking the appropriate balance between surprise and happiness. And if you don't strike that, you might have something that people like. But if there's no surprise, if if there's no novelty, is that something that is really going to be sustained in market, or is it liable to to competitor threats? So, yeah, brief summary, I could talk about this for ages, obviously, as a as a researcher and innovation nerd, but I won't. Cool. Thanks, Tristan, and thanks, John. And let just to overlay as well. I mean, these what's great there is that's built on twenty five years history of sort SYSTEM1 in its previous iterations, Brain Juicer, which you've seen in our thought leadership, but it also obviously then applies to all of our product development that we built out to date. Question around what we said in the trading update. So Sam asked around.

1:15:38 October is looking you said we said with sorry. In the trading update, you stated October is looking strong. Given that August and September were very weak, what's changed in October? So I think probably two parts to this answer. I think in the first instance that we built out a really strong amount of new customer growth, which you're going to see continue to flow throughout the year. Obviously, as more customers get used to us and working with us, they'll continue to spend into the second half. And then secondly, there was an uptick in advertising in The UK and The EU, where we've seen the market is picking up a little bit and that we we hope that that will continue to carry forward as we go throughout h two. And and then thirdly, then there was a question around margins. And Chris, maybe one for you here. So margins are steady, but profits are down, cost rise. Do you expect operating leverage to kick in again? Yeah. Well, the the nature of this business because the direct variable cost of sales is under 15%, The very basic answer to this question is when when we get double digit sales growth back.

1:16:37 So provided if we can get to even your 10% sales growth versus whatever it is, you know, 7% cost growth, OpEx growth, then you you would see that effect quite quickly if the absolute if the revenue percentage growth is bigger than the cost percentage growth, the profit percentage growth is a big multiple of those in this business. Yeah. So definitely business that's going to be focused on growing the top line to make sure we can then drive out the bottom line off the back of it. Thanks, Chris. I think lots of AI questions as we're going in this as well. Maybe one sort of John and Tristan, I think, for pair of you. So impressive impressive to see some this coming together. But what I want to know is how you really stand out on AI and what's resonating with clients. I think it'd be great, I guess, sort of, I guess, Tristan, I mean, you obviously talked about some of the recent examples, and maybe you can build on that. And, anything you're hearing from customers on the advertising side as well?

1:17:30 Yeah. I'll start on that one. And and having having spoken to a lot of clients about the SYSTEM1, Bionics offer over the last few months, it really is this idea of combining human expertise, whether that's us as a as a SYSTEM1 team or whether that's consumers doing a real survey and getting real consumer data together with AI is is where where the power comes in as long as that AI has been trained appropriately because that's critical as well. And and for me, it's that it's it's it's the reassurance that we can talk to clients about we're we're doing this in the right way. There's a reason that we have a labs team that behind the scenes are doing so much testing on synthetics to the earlier question. Like, is it good enough at the moment? Where do we think that will go? Where will it play a part, or where will it not play a part?

1:18:20 How can that reference emotion? So for me, it's all about clients believing that our utilization of of AI is done in the right way, it will drive a better outcome, and it's not AI for the sake of the sake of AI. Jonathan, if you have a a build on that. Yeah. I mean, one one of the things I'm really fortunate is that I get to talk to a lot of the big tech companies either at their conferences or with their CMOs, you know, after I've interviewed them. The interesting thing is what's said off camera and about AI, and I think there are two things that stand out. One is there's a big lag between promise and reality. So everybody in the industry is talking about what might be possible. And then when you ask for use cases actually applied and business results, people go quite quiet. So I think, generally, we're kind of at the hype phase of AI versus reality. So I think what's really important is we prove out the actual use case, and we can do that. The second thing, and this comes from all of the big tech companies, AI is only as good as the training data it's trained on. And the technology is ahead of the quality of data and the ability of different datasets to talk to each other. So there's there's literally a gold rush happening at the moment where everyone's trying to lock in the best quality data they can to make sure that the output of AI, and this is what I know Becky was talking about, is really good. What gives me massive confidence is I think we've got the most credible human informed database.

1:19:42 So when we apply AI, we're applying it to a very, very robust dataset. So, I mean, the old phrase be first or be better. I think for us, we have to make sure we're better by making sure that what we do is is robust based on good data, and we've proven the use case rather than kinda talk a good game, which you'll hear a lot of across the market. Awesome. Thanks, John. And thanks, Trace. And I think there's sorry. I have maybe a related question here, which was, have we signed any agreements with LLMs to give them access to our data? So our data is our proprietary data. It's worth saying that. So this is our data, which is very much within the business. And we are obviously working with various people across multiple industries to see how best this could be explored. So I would say just watch that space, but there's nothing obviously being given out for free. It's very much our proprietary data to help the business grow in the future.

1:20:31 Another couple of questions on our databases I might take, and then we'll go on to a couple of around sort of, I guess, cross sell between TIA and TII. The first one was what are the barriers to entry or what would be the cost for a competitor to build a database that compares system once? I think there's two parts to this answer. One is the the time and cost. So we've tested, as you can see on the previous one, so sort of 200,000 adverts and innovations and ideas. Now, obviously, that will take a whole chunk of time to go and test with real respondents, which is what we've done and built out in the first instance. So there is time. There is the multimillion pounds of investment that that takes. But fundamentally, it's not just about testing the ads. What it's about is having the right IP and the right product technology that allows you to create predictive outcomes.

1:21:18 Because anybody could say I could turn around and ask some people, does this make you happy? Does it make you sad? But fundamentally, it's taking those emotional data points, taking the correlations they have to real world outcomes, and understanding the predictiveness then on long term brand and short term sales. So that's the fundamental IP that even if you were to try and go and replicate the database, it's not only impossible without our IP underneath it. And then the second question was just around language. So a lot of our database is in English as we test everything that airs in The UK and The US, which obviously are the two largest English speaking markets. However, we do test across 81 markets. For each one of those markets, we will have either various category, country, or sort of down sort of lower level norms depending on the amount of work that we do in those countries and the customers that we serve.

1:22:06 So one of the questions then was around thinking about growing and winning innovation. Is there an opportunity to leverage the fame you already have with your tier way customer base to cross cross sell or upsell innovation? What's our approach for taking that? So probably one for Tristan in the first instance, and maybe, John, you can help build on too. Yeah. Perfect. Great question. So unsurprisingly, the world's biggest advertisers are typically the world's biggest product developers, whether that's a a tech based product or whether it's something you find in a in a in a local supermarket. So, yes, 100%, a core part of our strategy. You've almost got two threads to it. The buyer won't necessarily always be this be the same like the daily buyer, but it almost always ladders up to those CMOs that that that John has talked about a lot within this presentation.

1:22:53 So we've taken a two pronged approach. One of those prongs is by having dedicated commercial resource in both The Americas and in Europe. We tag team with existing expanders. So our account growers in those regions to open the door to innovation. So if that's the same buyer who's already brought into SYSTEM1, then obviously having a conversation with with them about innovation that utilizes the same emotional response that you know is so important for advertising. Well, hey. Look. No surprise. It's important for innovation as well, so let's talk. But then if it's a different buyer, we use that person to open the door to the other buyer within the organization. So if we strip out the new business approach where we're going after brand new logos, our kind of core approach is if we're taking our biggest current advertising spenders, having a very clear road map and a very clear plan to get innovation in front of those folks as well. So, yeah, 100%.

1:23:47 John, I don't know if you if you have anything to build on that. Yeah. Yeah. I mean, what I was gonna say is is what's nice about the structure we've come up with with with Tris running innovation is if there's an innovation specific need, we need to go to a particular conference, we need to shop in a particular way, Tris and the team can do that. From my point of view, if you just take a podcast as an example, it's easy for me to have themed podcast based innovation. So three little examples, the launch of Guinness Zero, which was an incredible success. I was able to talk to the Guinness team over in Ireland about. I talked to a lot of founders as well. So Tony's Chocolonely, Liquid Death, Seed Lit. Whenever I talk to founders, that is intrinsically based on innovation. In fact, before I do, I always talk to Tris about it in terms of what angles we might wanna find and how we blend it with our principles.

1:24:33 And then I also talk to some, you know, people like Mario Porcini, who is the global innovation director at PepsiCo. And, again, that's on the culture innovation and how businesses can be more innovative, and how they can support more innovation. So that's an example from the podcast, but we've also obviously got the website. We've got our social media feeds. We've got LinkedIn. We've got the thought leadership we do. So the answer is yes. The the great thing is we've built a we've built a media vehicle that can talk about innovation as much as talk about advertising. Yeah. Yeah. Yeah. And I mean, as anyone says, like, the hardest thing to do in business is to win new customers, and it's something we're doing really well here at SYSTEM1. But fundamentally, then we've got, as you both John and Chris have said, those customers working across both areas, be that themselves or get the friendly recommendation into their teams means it's a great opportunity for us.

1:25:19 We've only got a couple of minutes left to get your questions in if you have any left. One well, actually, we had two of the same question written slightly differently about pricing and AI and how it would be positioned across our alongside our current products. I think on that one, if it's okay, we're going to have to keep the rabbit in the hat on that one before we release it. So these products are coming out shortly. I what I can say that my appeal to various ease on ears on here is there is opportunity to look at how we price differently, whether that is, for example, bundling up amounts that people might want to buy or pre purchase access to a tool, for example. But we're gonna be testing with our customers that they they know fundamentally how best they want to spend in their space. So we're talking to our customers and making sure we've got the right proposition that goes to market alongside a world class product when that launches. One question here around please can you talk around why customer needs SYSTEM1 consultants to suggest improvements and what would stop a customer gaming this know how over time themselves?

1:26:14 I think that's one maybe, I guess, both Tristan and John from my I guess, our advertising and innovation space. But guess, for myself, the the key thing we have to do is be at the forefront of the market so there's something new to say. I mean, you heard John talking earlier about the various publications we've done, which means that we are credible in every channel, and we're able to give people that that inspiration, that understanding what there is, as well as having access to all of the various insights that we have across our total database, all of our IP that all of our customers won't necessarily have. So while they can learn the top level principles, I think there's definitely opportunities to make sure we're staying at the forefront. But, yeah, John and Trish, I don't know if there's anything particularly you'd like to call out on that as well. Well, one one thing just to say, if if we wind back five years ago to when we automated the platform and we designed Test Your Ad Pro, we put as much as we possibly could of what used to be called guidance in terms of the things we would put into PowerPoints and actually go and present into report.

1:27:05 And if I can say this as well, there's a lot of nervousness in the business actually at that point going, well, are we giving away too much? Is there still a need for guidance? You know what happened? Guidance boomed off the back of it because what we were doing is basically, people just wanted to know more, and they wanted to understand more, and then they wanted to know what to do as a result of seeing that seeing the charts they they were. So I think, firstly, evidence would suggest that actually with more automation, actually, ironically, comes more guidance. The second thing is customers want to be trained and entertained. Now I know it sounds a bit strange, this, but they they still want somebody to tell them how to interpret what they're saying, and they also want any kind of inspiration from case studies and somebody to kind of add a level of kind of engagement entertainment on top. So so ironically, actually, I I only see a bright future, you know, for for this, you know, you know, and evidence would suggest that, yeah, there's still a big role.

1:28:00 Yeah. And very, very punchy, just in the interest of time, I wrote down four things then, which is we've got teams who are exposed to the thought leadership that we're producing, new and historical, but still incredibly relevant. The testing we do internally across both advertising and innovation can then be brought into reports. Category knowledge, so knowledge outside of just that particular client, and also the fact that they're working across both advertising and innovation. So what that means is the the inspiration and the provocation that those people working on the insight and the guidance can provide is beyond, I believe, what a client would be able to do if they were trying to do it internally. That's it for me on that one. Cool. I'm very conscious of time. I think we might be into our last minute here. So I'm gonna try and rattle through the last couple of questions with our top level of possible.

1:28:52 Think this we had a pre submitted question actually as well, which was asking who are our key competitors across this space? And I actually sorry. My my screen, because it was hit the next time, I can't actually get to the rest of Chris, can you help me read out the rest of Yeah. Let me read that out. How many credible competitors do you have, and where does the company stand in the price and functionality lead versus competitors? I mean, that's a pretty big exam question. Might need a few slides of paper for that one. I I guess, yeah, John and Tris will have a view, I'm sure. Yeah. So I think yeah. So just I mean, the ten second answer for me is that there is no one in the market who who has twenty five years of history of testing emotion and system one behavior to drive real world outcomes across advertising innovation.

1:29:37 So fundamentally, in terms of credible competitors of what we can offer, I would say, actually, there isn't any out there. There are plenty of people if you want to do our testing in traditional manners, plenty of people if you want to look at innovation, testing, and predictions as well in very traditional ways. If you want to truly drive outcomes through emotion, come to the system on they are the we are the only people on there. And then from a price and functionality, I functionality, think obviously, stands alone because the only one built on the IP we built out over twenty five years. And from a pricing perspective, we're a challenger brand. We are we have a slightly challenger price. We wanna make sure that we can be in the right RFPs and have an ability to win with people who don't necessarily know us as well. And then finally, I think we haven't been cut out. So don't know if there's a hard cutout coming or if not, but I think the other two questions I saw were growth in The US. I guess, how excited are you by the share of voice that's growing so strongly and it's converting that into real growth? We've seen massive growth in The US. If you look at what we've done half one and half one, so I think we were so it's very significantly up. And if you look over the last couple of years, investment always takes time, but you have to brew that brand awareness. The big thing we have is we win pictures when we're in pictures. We just aren't in enough. So building our brand awareness, building our fame, and then building out our sales and go to market engine in alongside is really what's gonna allow us to cut through. And then maybe finally, just as a great one to close off with, really high really excited to hear how everything you've gone through to conclude, given you've kept all your large customers, how excited are you about the prospects of working for SYSTEM1

1:31:08 over the next year? I wouldn't say over the next year. I'd say over the next five years that there's there's a massive opportunity, and I think you'll see actually on this all five of us who joined over the last five, six years have joined because we believe that SYSTEM1 is like the next big thing in the space of predicting outcomes for marketing, for advertising and innovation. The the brands we get to work with are unbelievable. By having starting with those customers, the world's largest brands is unbelievable. The IP we have underneath it that we've been able to turn into incredible technology products, but also then the consultancy offer on top. And then getting what an incredible bunch of people to work with. So I'm I'm massively excited on that. I don't if anyone has anything else they want to add. But if not, maybe we'll we'll take the moment to wrap up and say a big thank you to everyone for joining today. And thanks also for to Chris, Becky, John, and Chris for for joining. Lucky, I don't have to talk too much today other than maybe in Q and A.

1:31:58 And with that, I look forward to speaking to you all in the near future. Fantastic. Well, look, guys, thank you all once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of SYSTEM1 GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.