Team Internet Group (LSE:TIG) — Interim Results

0:01 Good afternoon, and welcome to the TEAM INTERNET GROUP PLC Investor Presentation. 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. The company may not be in a position to answer every question received during the meeting itself. However, company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would

0:31 now like to hand you over to the management team, Michael William. Good afternoon to you both. Thank you for the intro, and welcome everybody this afternoon to the TEAM INTERNET GROUP h one results call. I'm here with Billy Green, our CFO today. And our agenda for this meeting is, first, me running you through what the company does and what makes it so successful. Second, Billy will then present to you how our first half year has stacked up in financial terms, and then, I will take over the screen for the strategy and outlook session at the end of this presentation.

1:19 So what do we do? TEAM INTERNET GROUP is active in two highly attractive markets, digital audience matching, which, in our reports, we call the online marketing segment, and digital identity solutions, which, again, our reports, we call the online presence segment. In online marketing, we match audiences between walled gardens, which are not innately connected to each other. So, for example, we connect users on Facebook. I'm not sure why the screen just skipped a few slides forward. So on so so we we match we match to people who are on on Facebook with programmatic brand advertisers, people who normally don't come together because the systems are not linked, or we match people on TikTok with the advertisers who've booked search ad campaigns on Google or match or we match audiences that start a product search on Bing rather than Amazon and match them with the Amazon marketplace partners.

2:34 Over over these business models in the first half of this year, we generated $312,500,000 of revenue and extracted $65,000,000 of margin from this process. And, in the online presence business, we we will, in the future, highlight more the importance of, this business in terms of digital identity. So the domain name is still the business card of any kind of business on the Internet, and everything else where exactly you host the website or what kind of website builder you use is is quite incinerate to it.

3:21 And from the from the sale of domain names through, the the diverse channels that we operate, it we've done $97,200,000 of revenue. And here, we extracted $32,700,000,000 of margin from it. Also, thanks to the increase in average revenue per domain name, which comes from several sources, in particular, change of mix, more exhaustive domain names. We will come to that later, but also us being able to command a more fair share of the value that we create from our customers.

4:03 So deep dive deep diving a bit into the online marketing segment. Here, we operate digital audience matching platforms in the leading monetization categories, which are PPA, pay per action, where you actually need to deliver a result, most in most cases, a sale, in order to be rewarded by the advertisers. Or, secondly, pay PPC, pay per click, where you need to generate a click out to the website of the advertiser to be be rewarded or PPM, m standing for Miller, Latin, being thousands where, where you are rewarded for, the the ads being seen by a use, by a user.

4:58 And through the acquisition of Shines, we are now active in all three in in all three stages of the conversion cycle. And how how we'll make the three businesses that we own more valuable than they were before we acquired them? The one thing is that on properties like for.org, while it's highly profitable, there are still quite a few page views that don't result into a sale of of a product. And also on Tonic, there is still quite a few page views where no one clicks out on the Google Ads, and still this business are highly profitable. However, now imagine adding some of the ads that people normally book on Shines where we would make some extra money for for the ads just to be seen. You can already imagine from common sense that this will lift up the the revenues and profits of VGL and Tonic even further.

5:59 And reciprocally, of course, on these properties like VGL or Tonic, we also get strong conversion signals. Someone has either bought a kitchen blender or a vacuum cleaner, or someone has clicked on an ad for life insurance or a credit card. And if you then feed this data back to, they might also be able to deliver more targeted ads on the websites, again, lifting up the revenue here. And while it may take a few quarters to implement all the systems and fine tune them, we are very enthusiastic about the combined potential of us now covering the entire value chain from low intent awareness stage action to the high intent conversion action at the end of the conversion funnel.

6:55 So what else can we what else can we do here in our in our journey to build the online marketing business? We follow this own square vision, omni media, omni monetization. So today, through our products, we are very strong in in matching users of social media and content discovery networks with the demand side on search engines. We are also very strong in matching the supply or the audiences on search engines with the demand, of affiliate marketers and ecommerce marketers. However, there's still there's still a lot of white space, on our strategic map. For example, we are not active yet in in in app advertising.

7:45 We are not using browser extensions. We are not running lead generation programs yet on the demand side. So there's still a lot of potential, to grow to grow further. And why do we believe that we have a license to play and a license to win in this business? This is because we've done it before in the domain space. While domain names and owner advertising are different in some aspects, they have one feature in common, which is that they have both a very fragmented demand side and a very fragmented supply side. And by basically building all the connections that make that make the the customers that make the biggest web hosting companies on this planet by .com directly from the source, which is very signed, a US company, they would come to us for the entire long tail. And by just combining all the long tails of all the, web hosting companies, we now we now manage 4% of all the domain names on this planet on our system after twenty five years of work,

8:56 which is then the online presence business. You've just seen the numbers for the first half. But now we are doing the same thing in a 100 times larger vertical, and our ambition is also that once we end this business for twenty five years, we would also own want to own a few percent of this entire of this entire vertical. And this is why we're inviting you on this journey to take us from from a few $100,000,000 of revenue to later once this vision comes to play, hopefully, a few billion dollars of revenue in in the future.

9:35 So what supports what supports the success of this strategy? There is the ascendance of social media. Social media is now the most popular form of Internet users to connect with each other and to consume content. With social media, user generated content has emerged as a megatrend. And here, completely separate walled gardens have evolved. So you now have a meta con controlling assets like Facebook and Instagram. You have a ByteDance controlling assets like TikTok. And on the other hand, you have, the older companies like Alphabet controlling the Google search engine, Microsoft controlling Bing, or Amazon pretty much controlling ecommerce in the Western world.

10:24 These are all separate. And now we have now we have a big supply oversupply of user hours on the social media platforms and an over an oversupply of demand on the on the incumbent search engines and ecommerce providers, and we make the match and the bigger social media becomes, the better for us. What helps us here is the advent of data privacy, which which makes it would make which which requires that you need special algorithms that are not generally available to basically make these matches. And just as there's social media is a one is a one way road, we've only have we've only we've only attracting more and more users. Also, data privacy is something that's not going to go away. There's simply no way that the that the EU Commission would turn around and cancel GDPR and allow to trade all data freely again. It's just like text law.

11:27 It only it only goes one direction becoming more restrictive, and this completely floats our boat. And, basically, we've then developed this audience matching approach to use these two to use these two trends for our and our shareholders' benefit. And when we then look at the online presence business, what are the reasons for the for the continued success of this business? First of all, by having built a clearing house that basically matches the, 4,000 different buyers of domain names or resellers of domain names being all the world's largest hosting companies and the 15 adopt different top level domains. So this clean host makes that rather than having 6,000,000 bilateral connections, everyone can basically connect through us. So we are helping the industry become more efficient, and helping industry to drive towards the efficient frontier is, of course, an evergreen purpose.

12:27 However, this also, this approach also makes that we have a higher USP, a higher unique selling proposition on exotic domain names rather than on .com. And, this this this firmly positions us, in the in the most attractive part of this industry being a software domain name. So people would today rather than taking a .com domain name with many hyphens in it, they would rather go for their proper name under .aior.ioor.coasahipalternativeto.com. And this is exactly where we are positioned, and this is why we are in the most attractive part of the business. And, again, just like with the audience matching here, we also need the key to unlock these two opportunities into success, which in this case is our commitment to excellence, over over different properties that we operate in this business model.

13:26 We have an average trust pilot score of 4.6 out of five, which is several integer amounts higher than our closest competitors. And as you can imagine, the customer experience here is very important because if we would make an error with the domain name of a customer of a larger hosting company, it would be a big problem for them. And this is why more often than not, they turn to us to deliver them the right service at the right quality and the right price.

14:02 So when we then look at at TEAM INTERNET GROUP as a whole, we see that we are that we have plenty of supply sources and plenty of demand sources with social media being the biggest supply source and search engines being the biggest demand source, but there's many others like native networks, search engines also serve on the supply side, disconnected domain names, etcetera. And also on the on the demand side, we have many others, like a few advertisers, ecommerce players, or when we move to the domain business, domain resellers, smaller companies, large corporates. And as we as we follow this own square strategy that you've seen a few slides before, the the number of these the number of these connections on both sides will only increase.

14:56 This is not the strategy of the group where we currently stand, and I will now hand over to Billy who will talk you through how this has all stacked up in financial terms.

15:13 Thank you, Michael. The the first slide in terms of financials is just a a handful of financial highlights of our performance in h one twenty twenty four compared to h one twenty twenty three. And you'll see across the top row there that TEAM INTERNET GROUP has made progress, I. E, grown compared to the prior year in in all of the operating financial metrics that we usually highlight. Just to take a slightly closer look at each one, gross in gross revenue has been 3% year on year. So that's that's not the highest growth rate we've we've experienced. We have experienced growth rates that were higher in in some previous years when the advertising market was more favorable. But there are there are certain parts of the business that are running quicker than others. So to grow gross revenue at all when there are such headwinds in terms of the advertising market and specifically click prices to to to grow revenue at all indicates that we're still moving in the right direction.

16:14 You then convert that into net revenue, which

16:17 is which is what we call gross profit, and you'll see that gross profit growth net revenue growth is 7%. That's higher than the gross revenue growth rate. And the reason for that is that we've achieved slightly higher average gross margins in h one twenty twenty four compared to h one twenty twenty three, and that's mainly product mix related. So where in some quarters in the past, one might see gross margin deteriorate slightly quarter on quarter because the lower margin products were growing exponentially faster than the the higher margin products, We've actually seen a slight reversal of that in h one of this year, which is, of course, beneficial that the higher margin products are growing at a faster rate than the lower margin products. So the net the net impact of that is that we we create more dollar value gross profit, which is more important for me in terms of absolute profitability than than gross revenue is, and indeed, more more more more more gross profit and net revenue proportionally.

17:15 You then get to adjusted EBITDA, and we continue to operate at a high level of operating conversion, I. E, conversion of of of gross profit into operating profit or adjusted EBITDA. The the the growth of 4% year on year is reflective of the business continuing to move forward, but h one twenty twenty three, and in particular, 02/2023 were quite a challenging comparative. Q two twenty twenty three was the lowest quarter's operating expenses that we've seen for for a cup for the last couple of years. So the the comparatives in the second half of the year are less challenging, but it is incumbent on all of us within TEAM INTERNET GROUP to ensure that when we're looking at the operating costs of the business and managing the cost base, that we are only making the the the the right cost decisions, and we're only investing in the areas where the return in terms of higher gross profit and indeed net profitability will be amplified.

18:17 So the adjusted EBITDA growth of 4% year on year is solid, but, again, not not the best we've ever experienced. You then look now across at the top right hand side of the screen, you'll see that the gap, the IFRS operating profitability is 13% higher year on year. So it's important that we continue to disclose and to talk first about adjusted EBITDA because that is the reflective of the underlying growth in the business, the underlying real trend in the business. Operating profitability, I. GAAP profitability growth is even higher. So it's clear there that we're we're we're very happy to publish both bases. There are, you know, there are other companies who focus solely on on on the adjusted metric because the operating I sorry. The gap metric, the IFRS metric is nowhere near as impressive, but it's actually the opposite for us right now. And we may see from period to period that either the non GAAP metric or the GAAP metric are higher, but we're very transparent, and we'll we'll disclose both.

19:14 Moving on to the the the the the bottom few boxes on the screen. Adjusted EPS growth continues to be strong year on year, buoyed not only by the growth in earnings, but, of course, the slightly lower average share count following the very expansive share buyback program that we engaged in. We launched in May of last year, and that ran through to April of this year. The the modest increase in net debt will come I'll come into it in lot more detail on a on a subsequent slide because I think netted net debt is of such interest as a topic that it that it kinda deserves its own slide. But the ink but but the increase there to to start the debate about net debt, you'll see that net debt compared to annualized adjusted EBITDA is still at a very moderate level. Net debt compared to certainly pro form a adjusted EBITDA is is much closer to one to one than it is to two to one. So I'll I'll lay out a little bit later on how we see net debt developing over the next couple of quarters.

20:21 Profit after tax growth of 4%, still generating a very solid level of profitability to return to shareholders and to add to shareholder value. And the the the PE ratio has changed in the last quarter, but still still still, we believe, remains very attractively priced as both a growth and a dividend stock. In terms of a slightly deeper dive on each each segment of the business, as Michael alluded to earlier, the the KPIs on the right hand side of the page show that the business continues to develop in in in lots of respects. The the growth of the online marketing side of the business, which which has typically been the much higher growth engine of the business over the last several years, but that's actually matched by the impressive performance of the online presence business.

21:09 So online marketing continues to grow despite it it trades through the headwinds that we see in terms of click prices, which you'll see on the right hand side of the page, RPMs being down year on year. And we've, you know, we've made we've made no attempt to obfuscate the fact that click prices are are are lower year on year. But with volumes increasing and with the the the strength of some of our online marketing businesses, which are less which are less exclusively dependent on the condition of the ad market, we're we're still able to show decent organic growth there. And and as I say, that's matched by the growth in the online presence segment, where it's almost exactly the opposite. We've been increasing prices in the online presence segment, and we've been quite comfortable for that to come at a slightly lower retention rate. The retention rates within the online online presence business for repeat business remain very close to 100%.

22:06 It's a very, very sticky business, but we're quite comfortable with a slight deterioration in volumes there as we as as as we implement our pricing strategy and when should we ensure that we propagate price increases that that are passed to us by our suppliers. We propagate them onto our customers so that we ensure that our pricing doesn't deteriorate over the years, and that is that that is part of the beneficial impact on our gross profit margins. Very briefly on the income statement, it's it's I I feel like it's nice to see in the presentation the numbers in the tabular format, but you'll have seen the highlights already that all the way through the p and l, the company continues to make progress. And that's pleasing because the first half of the year, without a shadow of a doubt, is is our less profitable half of the year. So the second half of the year, when we see the the the boom in q four related to not only advertising sales, but also to consumer sales.

23:02 And we have a very strong consumer related

23:04 business, our product comparison business that's that's that's very focused on q four growth. So you'll see that even in the first half of the year, our less profitable half of the year, we still recorded nearly 10,000,000 of profit after tax. So that is that indicates that even in even in the weaker parts of the year, we can still generate a profit that the shareholders can enjoy. I said I would come back to net debt, and you'll see here that the the bottom line of this balance sheet summary, you'll see there was an increase in net debt compared to the end of twenty twenty three, but that's driven primarily by two factors. So on the right hand side of the screen, we we try and explain those those two more material factors. The acquisition of Shines, of of course, it's it's been a pleasure to return to more material m and a activity and to be successful in closing out on one of our one of our most coveted targets in the first half of this year.

24:02 So acquiring Shines naturally leads to a cash outflow initially. And then because Shines is a profitable and a cash flow positive business, Shines then becomes immediately accretive to our profitability and cash flow prospectively. Now that we've had the cash outflow related to the actual actual acquisition itself, we then start to feel the benefit every month, every quarter. Plus as well, it's important we we we remember that in the first half of this year, we returned a further $11,900,000 of cash to shareholders by repurchasing 7,500,000 shares through the share buyback program that concluded in April of this year. So once you once you aggregate the 11,900,000 that we that we return to shareholders by way of the share buyback and the and the acquisition of Shines, you would actually be seeing a lower net debt position at the end of June than we had at the end of last year. As you know, we don't as I alluded to earlier, we don't necessarily judge the business and judge the level of net debt on the on the absolute level of net debt. So the number itself is is is fairly subjective to say, is it is it high or is it low? We compare the level of to our trailing pro form a adjusted EBITDA. And on a trailing pro form a adjusted EBITDA basis, net debt remains at a sort of 1.1 or 1.2 times net debt compared to pro form a trading adjusted EBITDA.

25:28 And as I said earlier, that's much closer to one to one, which is the level we've enjoyed over the last eighteen or so months than it is to the two times net debt to adjusted EBITDA level that we were experiencing as a business two or three years ago. So net debt still remains at a very comfortable level in terms of leverage, bank covenants, every every conceivable liquidity metric you could think of. So we're very comfortable to continue generating cash each month each month as a business, but to ensure that that cash is available to declare an interim dividend as as indeed we've we've we've just done. That that declaration of the interim dividend is as a formality, needs to be approved by our syndicate of banks under our under our bank covenant. But that, as I say, is a is is a formality of timing to work through that, and then we will we will publish the dividend timing once that's received in the next several days.

26:24 But but if if if money is not being spent on dividends, there are further m and a opportunities, and then there is potential share buyback activity. So there are many uses of cash in line with them, very consistent with our cash flow waterfall model that we first launched and published in our annual report for 2022 in March last year, and we then reiterated in our annual report for 2023 in March of this year. We we set out those capital priorities in detail. And there's a long, long way to go in terms of cash priorities before we would need to turn or we we feel we would need to turn our attention to paying down debt. So it's a much better use of our cash at the moment return some more of that cash to our shareholders by way of an interim dividend than necessary to turn straight away to paying down a level of debt that is very comfortably covered by our our annual adjusted EBITDA and indeed our annual cash generation.

27:17 The last word I'll say on cash conversion. If you look at the cash conversion, the operating cash conversion rather of the business for the first half of the year, it's fairly fairly unusual for TEAM INTERNET GROUP that individual working capital events have a material impact on the cash conversion percentage. But in the first half of this year, we have had seven months' worth of payments to one particular significant business partner, seven months of worth of payment in six months, that naturally leads to a slightly lower level of cash conversion. And we anticipate that over the course of the rest of this year, we will be having the the same volume of monthly payments in the same volume of months, I. Six months of payments for within a six month time frame. So that is very much a a a onetime cash outflow And the regular working capital business and the the systematic way in which we manage cash inflows and outflows remains exactly the same as in previous years. So we have full grounds to to be confident that cash conversion will return to a level of near 100% by the end of this year, as indeed it did last year.

28:30 And we we continue to set the business, the target that we will achieve cash conversion of close to a 100% each year. And that's what we need to we need to overachieve in the second half of this year and achieve a more than 100% conversion to to to drag that 87% to closer to a 100% by the end of the year. So that remains the bar to which we set ourselves. And whether it's working capital or or nonrecurring cash outflows, the continued focus on our cash generation as a business remains something that we're super focused

29:01 on and continue to generate significant amounts of cash each quarter and indeed each month so that we're able to very objectively add to shareholder value. I'll now pass over to Michael for an update on where we are with our strategy.

29:19 Thank you, Billy. And in order to keep the results as great as they are, we are following this following virtuous circle. We We first focus on organic growth by winning new customers, growing existing customers, and launch new products and contracting with new suppliers. Then this growth together with our disciplined approach to cost turns into operating leverage, And, you will have seen that our the ratio between EBITDA and, and net revenue or gross profit, is roughly 10% higher than it was two years ago. Then the operating leverage ultimately leads to lower cost of capital. We first seen a major crystallization event when we refined our bonds at the end of two thousand twenty two, obtaining roughly 4% lower interest rates than than before.

30:16 And this is why we've changed our focus on the cost of equity, where we introduced a dividend policy and, also conducted two

30:27 major share buyback programs in the last year. And the more competitive cost of capital then allows us to do focus bolt on acquisitions. I really want to focus, or highlight the word bolt on. So all acquisitions that you will see are, will be will be obvious even to a layman how they fit into into the ecosystem. So you've seen this OMSQUARE slide. It would either address a new source of supply or add a new source of demand, hence expanding our our network in which we create value. And this then, again, every new acquisition creates new adjacencies that then, again, help us restarting this virtuous circle through more organic growth.

31:23 So when we when we play this when we play this when we follow this playbook for

31:30 a longer time, how will this change to Internet? It will be more diversified in terms of revenue streams and supply sources. So you've seen the chart, basically, where you've seen all the supply and demand sources in in their person's distribution. So this should be even more balanced than it is today. Second, we will be more vertically integrated, keeping more of the value by connecting different wall gardens to ourselves and, hence, you as our shareholders. And you would also see that we've made further progress on our aspiration and ambition to be to be the world market leader in everything that we do. So in in the in this TIG product that you've seen in the in the in the online marketing value chain. We are very clearly the uncontested world market leader in with with with VGL.

32:30 We are currently a national champion, but will accelerate our international rollout materially starting in the fourth quarter this year, going to an almost global footprint by the end of next year. And in all of this and in all of this, we will remain firmly rooted in our core values and beliefs. And, actually, one of these beliefs is to work smart, to build products that we are proud of, which brings us to the topic of AI. AI has always been woven into the fabric of our daily operations. You've seen the numbers. You can't match 6,000,000,000 website visitors with the millions of advertisers advertising on search engines manually. Of course, everything must be highly automated and and run by self learning algorithms.

33:27 However, we now have we have we are now entering a new phase of AI generative AI, and we want to harness this through three initiatives, which we call raising the floor, raising the ceiling, and raising awareness. Raising the floor is basically education and tooling for all employees of the group to do what they've ever done just more efficiently. The second is raising the ceiling where we train our product managers and engineers to use the power of AI to build to augment our existing products, to exceed our customer expectations, to win more market share, and create more value.

34:15 And then raising awareness is then the training program for our senior executives so that they are aware of both risk of disruption, but where they also

34:27 get awareness for opportunities of disrupt of for disruption of other industries. And with this with this program, which is also supported by a formal academy program within within the group, we believe to be very well suited to harness this this great new age of even more AI in in our business, which then brings us to the outlook. With all that all told, the directors confirmed confirmed that we are confident in our ability to meet the market expectations. And, with the high cash reserves that we've seen, the strong operating cash flow, and our committed credit facilities, we are fully funded to simultaneously invest into our future and return cash to shareholders.

35:25 And then that's another important value of TEAM INTERNET, putting your money where your mouth is. So we instantly live up to it, by our declaration of intent to pay a 1p dividend, which as Billy has laid out, still has go through some formal hoops, but we hope that next week we can come back come come back with the exact calendar of these payments to be made. This takes us to the end of the presentation, and I we should we should give you a minute to potentially add a few more questions to the q and a section else. We will just start going through them from from top to bottom. That's great, Michael. Billy, thank you very much indeed for your presentation.

36:14 Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Michael, Billy, 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 to do so, and I'll pick up from you both at the end. Right. I think I had a I had a sound review of the of of of the questions.

37:05 I think a few of them can can probably be grouped together. Yes. Let me just let me just start from from the top. So the first question is simplified where we see this points out the fact that most software businesses, and, ultimately, we are a software business, that the biggest cost base is is the headcount and whether we see potential to reduce it. Yes. It's both it's both it it is it is true that that that staff cost is the biggest cost item for software companies if you if you exclude pass through costs like the traffic acquisition cost, etcetera.

37:51 Let's also not forget at the same time, it's exactly this talent that has built all the software, and it's this talent that has created the brands. So without without all these people, there would be no software generating any kind of revenue. So it's always the the job of the of the management to keep the right balance between the efficiency and and and and growing the business and making a future proof. Where we where we where we where we stand where we stand today, I think we can conclude that adjusted or notwithstanding future acquisitions and and ignoring inflation, we've probably seen peak cost in the organization for now. And and it would it would would expect that's the that's the that the ratio between gross profit and and EBITDA, this cash this EBITDA conversion, which is one of our key metrics, will continue its positive trend, which has already gone up from the high thirties to now the high forties, and we'll ultimately go somewhere into the fifties.

38:58 So there's this journey. And and the AI program that we just presented will, of course, also contribute its part in in making the group even more efficient than it already is. They're just if you just if you just take out if you just take out the pass through cost like traffic acquisition cost, we're talking about a business that has already almost a 50% EBITDA margin, which is a feature that not that even a software industry is not a very common feature. Going to the going then there's a few questions around around click prices or the revenue per thousand, which is not necessarily a click price. It's basically the the product of click prices and the the probability of a page view resulting into a click.

39:52 And we've seen that this has come down for for for for some for some time. And and I think it would be a fair assumption to believe that there will remain pressure on this number, but not necessarily for for for the bad reasons that everyone believe that the people might see in in this in this this in this trend. Basically, we we we start we've we've started in in ultra high click price verticals, like, for example, dental services, which on the other hand have a certain limited volume. So if you then want to grow the business, you need to go into other verticals which maybe allow you for slightly lesser click prices.

40:38 And and and and and hence, there's almost a natural balance between that that that growth, will to some degree come at a at at a at a cost of a lower RPM, all other things being equal. And, but over the last years, we've always shown that we that we could always, that we could always produce net growth, by adding by adding more verticals, adding more, types of customers, which would then which would then automatically come at at a certain reduction in in the average yield per user that you have. Let's say, if you operate a business class only flight, and then you buy then you build then you buy a bigger jet to also take economy class passengers with you, your lead proceeds will come down, but you will still be a bigger airline and and and probably still more profitable, and that's exactly what we are doing here.

41:41 So when do you expect the synergies between VGL, Tonic, and Shines to start showing through in the numbers? So we will we will we will we will we will we will see here, it's it's not all about the technical integration or making it technically work, which normally goes quite quite quickly. In our business, data is the new oil. So in the beginning, it would take you some time to let your algorithms learn. When you do it slowly, it probably rather rather smaller smaller additions or or additions to the revenue and and the profits until the additional data helps you to scale up because your your algorithm is making smarter smarter decisions until the point where it then really lifts off.

42:41 With with with Tonic with Tonic, which we which was on our watch since late two thousand nineteen, it has taken until roughly mid two thousand twenty one until we were really seeing the breakthrough of our strategy yielding much higher much higher revenues. So this is and also the VGL, which we now which is now currently in its in its third year of ownership. Probably this this oh, sorry. Let me take one step. And today, Tonic is is and, Billy, keep me genuine, probably doing, like, five times the profits that it had pre acquisitions. Easily. Yes. And with the v g with VGL, given that we had a certain bit of headwind from end of the pandemic, which, of course, we all appreciate.

43:36 I think no one wants to exchange lockdown for higher profits. But but but still now in year three, I would I would think that we will probably end up at a number not far from double the profit of pre acquisition despite the headwinds of the pandemic ending and thereby stopping the exponential growth of some ecommerce businesses. And having said that, so I I think probably a time range between eighteen to thirty six months is probably the right time to to ex to to to see notable impact of this of this strategy. But then we're talking about an uplift of a total now more than $600,000,000 revenue business. So only a few per only a few percent of of of additional of additional margin coming from the strategy will will will yield dramatically higher profit numbers in that in the in the future.

44:34 And I think here, it's really important to see the the big picture. There have been there have been there have been comments about there have been comments about the the current trading of of of Shines. First of all, we should say that, like, all all businesses, this is also a q four heavy business as all advertising businesses. And but the but our big picture, the here here we here we are talking here we are talking about strategy of nonlinear growth where it's not about taking something in small incremental sub upwards, but once once the algorithm is fully trained on delivering the right the right awareness ads into into Tonic and VGL and feeding the right conversion signals back from VGL and Tonic into Shines, we are we are we're expecting notably higher numbers than we're seeing now.

45:36 And that's that's basically the the the the beauty behind this OMSQUARE concept that bay that each each business is cross pollinating the others. And in the in the time frame that I just alluded to, we would then expect to see material impact from these numbers or from these acquisitions. Yeah. I think we hadn't spoken yet. There's a couple of VGL or or product comparison related questions, Michael. So one was what is involved in a VGL rollout? And then there was a there was a if I can just just basically head off. There's one question here that that asks whether VGL is is a is a drag on profits in q one to q three. So in the first half of this year, VGL was absolutely not a drag on profits. VGL, the product comparison business, is is is contributing positively to profit growth. So it's absolutely a a positive part of the numbers. In terms of what's involved in the rollout, Michael, would you like to to fill that one in a product comparison rollout?

46:53 Yes. So so product product comparison is is a is a is an interesting is an interesting sector. So VGL has VGL has first been been conceived as an so called SEO product, a search that's based on search engine optimization. And search and optimization is something that takes a lot of time. And and also many ecommerce companies have seen in the in the last year that when I say last year, not last twelve months, in 2023, that the Google changes have very negatively impacted businesses relying only on SEO strategies.

47:40 And this is why this is why we've been working on pretty much the bifurcation of, of the VGL product where one where one side, base defense, the number one, position in its German home market, whereas we've basically carved out or spun off a separate product that is that has been specifically designed on paid ads on search engines. And paid ads is something that is way more reliable. Google constantly changes Google constantly changes the rules, who it shows top on their organic search results. However, on paid results, the everyone's relatively simple. You pay more, and you're on the top of the page.

48:32 And we have we have we we've now we've now used most part of this year in in in basically retraining our algorithms to specifically to work specifically well with paid for traffic. And with with this paid for traffic, we can now we can now ex accelerate the global expansion of the company at a dramatically faster pace. We will we will add we will add more details on this, in the road show, in the q three road show later this year. However, we are confident enough in this strategy to basically give a to give an initial insight into this into this business.

49:21 So we would we would hope that by the end, whereas we are now only in Germany or in and in France, we would we would expect that by the end of next year, we will be in all major Western economies. And when when we look at the when we look at the contributions of VGL, which already contribute, again, will you keep me genuine, roughly 10% of the group's net revenue, maybe even a bit more? Yes. Slightly more. And that we extract only out of Germany, then just think this business model on a completely global scale, and and you see the beauty and the vision why why we've actually invested into it. Great. Thanks thanks for going through that in in that that strategic point in detail, Michael.

50:09 There's a couple of other questions I've seen coming through here. This I think this is a really interesting one, noting that growth has slowed. You know, we wouldn't deny, and indeed, we're quite transparent about the growth rates this year being lower than some of those boom years 2020, 2021, 2022. The question is, do you see a return to the growth rates seen over the past two to three years? What will be the drivers of an acceleration of future growth? So do we see a return to the growth rates seen over the past two, three years? Clearly, we can't guarantee that, and we need to be very careful about forward looking statements. But we do it is there is potential for a return to a significantly higher growth rate than we're seeing in the current year. And the main drivers of that future growth are going to be, for one thing, in in terms of our Tonic and Parking Crew and Shine's platforms, the recovery of the of of the advertising market. I I mean, obviously, that's not just the the Internet advertising market, but that's that's what's most that that's what's driving our revenue.

51:10 But globally, the ad market, the ad ecosystem is in a is has been a period of decline, and that that won't last forever. But then when you look at each of the individual products, there are individual product development points and individual rollouts and expansion. And Michael's just been through the expansion in the product comparison product space. And that's that's a significant individual product driver of future growth. So we're putting together all the right tools and products for acceleration of future growth, but there is a there is there is as well a a a macroeconomic recovery that we're looking forward to that should should see future growth rates higher than the ones we're experiencing right now. But but just to reiterate, none of us would promise that we'll see a return to I mean, we were literally seeing higher than 50% organic growth for for a couple of years, and I don't think many businesses would say we're gonna get quite back to that. But, I think somewhere between where we are now and that 50% plus organic growth rate we we were seeing, that would already significantly enhance our profitability and and ensure that we can return even more cash to shareholders in the future.

52:19 Another couple of quick questions. There's a question about whether there's now any any revenue generated from Bing in the results and what are our expectations for Bing moving forward. And, yes, that we we do generate some revenue from from Microsoft Bing, and we also generate some revenue from from Yahoo. We, you know, we we we talk about mainly our relationships with with the largest search engine, but there are many search engines that we work with. I think it's fair to say that they are still by far the smallest the smaller portion of the search engines being in Yahoo compared to Google. But that doesn't mean to say that in future, there isn't more and more I mean, there there there's more room for growth there effectively. So we we won't necessarily talk about the individual sources of revenue in our public statements because we don't we don't refer too much to individual business partners, but there is being revenue in there. There are there are other search search engine revenues in there. So that is an area where where where we can continue to target growth over the next the next several years.

53:22 And then I think we're getting to the last couple of questions. One question was, I understand that you can pursue m and a to match new audiences. Are there any areas where you see an imbalance of traffic supply and demand that you can address through organic product development. And, yes, there are there are at least a handful of areas where we've identified ways in which our products particularly because we have the synergies between the the current currently set the identifiable products. The more those products integrate, that will enable us to fill in some of those gaps in the in in the supply and demand chain. And it is still a hugely fragmented market in digital marketing, internet advertising. So there are definitely opportunities for us for us there.

54:09 The last question that's that's published here is basically a two part question. Which companies would you point to as being your closest comparables? And then given 50% of revenues are sourced from The US so so 50% of revenues are sourced from from from North America generally for us as a business, is a US listing ever likely to be under consideration? So in terms of the first part, we have there there's no one direct peer that we can point to. We operate in two distinct segments, online marketing, online presence, and there was literally no other listed business that has the benefit of having an online marketing and an online presence business. But then if you divide that into two, even with an online marketing, there is no listed peer that has the strength of products that we have in all in all areas of of of the advertising conversion funnel. There's no business that has platforms with the strengths of Tonic and Verglaik, VGL, and Shines. So it's hard to find a direct listed peer, but there are some businesses that there are that that are there are some publicly available data points if if if if one looks at the the growth in the growth in revenues at companies, know, the large Internet companies such as Alphabet and Meta. There are there are some industry trends that we are part of the same e ecosystem as. So so when you start to see, say, Meta and Alphabet have a better quarter, that's usually that's indicative of better times for us and and vice versa. When they've had less good quarters, then then you

55:40 you can kind of interpret that as as having a potential impact on us. But as I say, there's no there's no one listed peer that we look to. There are some companies that that are analogous, but nobody has quite the same strength of platforms we have. So we, you know, we we we we we really need to continue feeding the market up to date accurate data regarding our KPIs and our cash generation so that you can just see what a what an attractive proposition we are as a a business and literally peerless as a business. So we have to make that work to our benefit. The second part of the question, sorry, briefly was given 50% of revenues are sourced from North America, is a US listing ever likely to be under consideration? I I couldn't say that it's that it will never be under consideration, but at the moment, as a board, as a company, AIM is proving to be a you know, it's it's it's it's it's it's appropriate index for a company of our scale.

56:40 We we we as a board, it's incumbent on us to consider from time to time what the optimal future capital structure of the company is. And, you know, there are options available. As the company continues to scale both through m and a, but more importantly, frankly, through, through organic growth, then some of those changes to capital options may come into play in future. But right now, AIM is AIM is the right place for us, and we're we're committed to AIM and very, you know, very, very comfortable to be hopefully making good use of AIM. That's great. Michael, Billy, thank you for addressing those questions for investors today. And of course, the company can review all questions submitted today. I will polish those responses on the investment company platform. But before we direct investors to provide you with their feedback, which I know is particularly important to the company, Michael, could I please ask you for a few closing comments?

57:33 Yes. Thank you. Thank you all for your time today and your interest in TIGITANET GROUP. We hope that we've demonstrated the the big the big opportunity that is ahead of us helping helping by connecting all the long tails in the on the demand and supply side of this industry based on our experience in the online presence business that we can build this into a multibillion dollar business over the the next decade. And we're happy to have you on on this journey. And with our with our dividend policy, you will also make some immediate money on the journey while we work towards making this an even more valuable company.

58:20 Thank you all. That's great, Michael. Billy, thank you once again for updating investors today. Can 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 TEAM INTERNET GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you. Thank you.