Q2 in summary

• Annual Recurring Revenue (ARR) decreased by 8.2 percent to SEK 160.1 (174.3) compared to the same period last year.
• Net sales decreased by 6.9 percent, or 7.1 percent in local currencies, to SEK 70.0 (75.2) million.
• Subscription revenue decreased by 4.3 percent to SEK 42.8 (44.8) million, and ad hoc revenue from subscribers decreased by 37.8 percent to SEK 12.7 (20.3) million. Ad hoc revenue from other clients increased by 42.6 percent to SEK 14.3 (10.0) million.
• Gross profit amounted to SEK 53.8 (55.8) million and the gross margin to 76.9 (74.2) percent.
• EBIT increased to SEK 1.7 (-9.7) million and the EBIT margin amounted to 2.4 (-13.0) percent.
• Excluding items affecting comparability of SEK 0.0 (6.9) million, adjusted EBIT increased to
  SEK 1.7 (-2.9) million.
• Net profit increased to SEK 1.3 (-9.0) million and Earnings per share increased to SEK 0.16 (-1.14).

H1 in summary

• Net sales decreased by 7.0 percent, or 7.3 percent in local currencies, to SEK 137.5 (147.9) million.
• Subscription revenue decreased by 3.0 percent to SEK 84.9 (87.5) million, and ad hoc revenue from subscribers decreased by 28.7 percent to SEK 26.6 (37.3) million. Ad hoc revenue from other clients decreased by 12.3 percent to SEK 25.9 (23.0) million.
• Gross profit amounted to SEK 104.5 (108.7) million and the gross margin to 76.0 (73.5) percent.
• EBIT increased to SEK 0.2 (-13.6) million and the EBIT margin amounted to 0.1 (-9.2) percent.
• Excluding items affecting comparability of SEK 1.3 (6.9) million, relating to restructuring costs, adjusted EBIT increased to SEK 1.5 (-6.8) million.
• Net profit increased to SEK 0.7 (-13.4) million and Earnings per share increased to SEK 0.09 (-1.71).

Business highlights

DURING THE QUARTER

• Solid profitability improvements were achieved, despite the continuing slow market.
• Sara Davidsson Nyman assumed the role as Chief Revenue Officer.
• The AGM 2024 re-elected Dan Foreman as Chairman of the Board, and Ulrich Boyer, Fredrik Lundqvist, Ashkan Senobari, and Eric Gustavsson as board members.
• The AGM decided on a SEK 1.23 per share dividend.

AFTER THE PERIOD ENDED

• Continued good profitability development in July.

Key financials

Comments by the CEO

IMPROVED PROFITABILITY IN A SLOW MARKET
Net sales for the second quarter amounted to SEK 70.0 (75.2) million, reflecting a 2.1 percent decrease from the same period last year, excluding Nepa APAC where operations ended at the beginning of 2024. In total, net sales declined by 6.9 percent. Despite lower net sales, our targeted efforts to lower costs and enhance efficiency have strengthened profitability, with the adjusted EBIT margin rising to 2.4 (-3.8) percent. We are leaving a challenging period of restructuring behind and are now shifting gears to drive profitable growth.

STRENGTHENING OUR PROFITABLE GROWTH FOCUS
As we are moving into the next phase of the company, we are professionalizing key functions such as Sales and Marketing, which up until recently have been quite limited. By developing a proactive, outbound, and highly skilled salesforce, we see strong potential to materially improve the growth trajectory.

Over the past three quarters, we have experienced a slowdown in the growth of our subscription products and an increase in churn, leading to a decline in revenue from subscribers during the second quarter. Subscription revenue, our largest revenue stream, decreased by 4.3 percent, and ad hoc revenue from subscribers declined by 37.8 percent. However, ad hoc revenue from other clients gained momentum, increasing by 42.6 percent, primarily driven by former subscribers returning for ad hoc services. Our strong relationships with former clients have been crucial, as they frequently return to us for valuable insights.

At the end of the quarter, our Annual Recurring Revenue (ARR) stood at SEK 160 million, with a net revenue retention of 95.4 percent. The lower retention was primarily due to the contraction of a major client, which new sales or upsells did not fully offset. Despite ongoing cautious demand, we maintained high sales activity throughout the quarter. We are actively engaged in numerous client discussions and events, with a growing emphasis on expanding our ARR offering. With that said, there is still considerable room for improvement.

In light of the current market conditions, we remain firm in our commitment to build a stronger sales team to drive profitable growth. During the second quarter, we recruited new leaders for our sales and marketing organization. Our goal is to clearly differentiate growth from new versus existing clients and to enhance our marketing capabilities. We are continually refining our sales strategies, with a greater focus on driving ARR growth from new clients while also maximizing retention.

EFFECTIVE COST CONTROL CONTINUES
The gross margin continued to develop positively, with an increase of 2.7 percentage points to 76.9 (74.2) percent in the quarter. This is a result of improved project profitability, data quality management, and supplier strategy. Furthermore, we have achieved significant improvements in our cost structure across the Group. Over the past year, measures to reduce operating costs and initiatives to improve efficiency have led to a 26 percent decline in personnel costs (net of restructuring) and a significant increase in average project and product profitability. Adjusted EBIT increased to SEK 1.7 (-2.9) million, and the adjusted EBIT margin improved to 2.4 (-3.8) percent. Project and product profitability continues to be a top priority, and through the increased focus on ARR, we aim to scale profitably.

DEVELOPING THE MARKETING INTELLIGENCE SUITE
Our Brand Tracker stands as our most successful product to date. Alongside Campaign Evaluation and Marketing Mix Modeling, it has empowered brands worldwide to fully understand their marketing impact and take timely, informed actions. We are now focused on advancing our core offering within an integrated environment to better appeal to brand experts. Our goal is to enable brands to seamlessly track performance, optimize media expenditure, and evaluate marketing campaigns - all within a single platform. We have noted a growing interest from clients in this integrated, always-on solution and are eager to take our marketing intelligence suite to the next level.

OUTLOOK
The summer generally represents a period of lower activity, and we anticipate that the soft market conditions will continue in the short term. In the third quarter, we will reinforce our client-facing teams to build long-term sales momentum. We remain deeply committed to operate a profitable business and plan to achieve this by accelerating growth through strategically fitting products and improved operating leverage.

Anders Dahl
CEO