Good afternoon and welcome to Azerion Interim Financial Results Q1 2025. After the speaker's remarks, there will be a question-and-answer session. If you would like to send a question through, please type it in the Ask a Question tab at the right-hand side of the player. These questions can be sent at any time during the presentation, and they will be addressed after the live Q&A portion of the event. Thank you. I'd now like to turn the call over to Sebastiaan Moesman, Chief Strategy Officer at Azerion, for welcome remarks.
Yes, good afternoon, everyone. Indeed, I'm Sebastiaan Moesman, Chief Strategy Officer at Azerion, and I'm here with my colleague, Ms. Julie Duong Ferat, our Chief Financial Officer.
Hello, everyone.
We would both like to welcome you to today's webinar to present Azerion's Q1 2025 interim results. Before we start, though, I would like to take a moment to acknowledge the disclaimer and our forward-looking statements as well. Thank you. Please move on to the presentation. This has been a strong quarter for the company as we have continued to execute on our strategy and deliver long-term profitable growth. We delivered 7% solid revenue growth from the group, largely driven by the platform segment and resulting in a total revenue of EUR 128 million. Since we got listed on Euronext early 2022, this is the fourth Q1 in a row where we have delivered increased year-on-year revenue growth.
It is a similar dynamic for the adjusted EBITDA, with, again, the fourth quarter in a row with increased year-on-year numbers, thanks to almost 20% growth and EUR 12 million of adjusted EBITDA, mostly driven by strong performance in the platform segment, particularly through the integration of recent acquisitions we did in the last months: Goldbach Austria, Purdue Press, and a monetizer, and also strong performance in AAA Game Distribution. The metric I would like to highlight most today is the EBITDA, which grew an impressive 68% to EUR 8 million and reflects our ambition to provide solid, stable, and predictable growth. Commercially, we signed partnerships with over 80 new publishers, SSPs and DSPs, as well as signing major campaigns to promote globally recognized brands such as A1 Telekom in Austria, Avanti West Coast, and OTML in Jeanne d'Arc.
Finally, we successfully started our first phase of Goldbach Austria integration, and we entered new partnerships with Huawei and SoundCloud. With that summary, I'd like to hand over to Julie for a more detailed look at our Q1 financial performance.
Thank you, Sebastiaan. Yeah, let's start by looking at group financial highlights. As you mentioned, yeah, we are happy with the quarter. It's our fourth Q1 in a row with year-on-year growth. Revenue increased then by 7% at EUR 128 million. In this first quarter of the year, which is the lowest one in the year seasonality-wise, we are growing and driving synergies in eliminating redundant costs in the advertising platform. This drives significant adjusted EBITDA growth, which came in at EUR 11.7 million, representing circa 20% year-on-year increase. Regarding the EBITDA, as you mentioned also, the quarter reached circa EUR 8 million, up by 68% compared to the same period last year.
Again, these consistent improvements in group metrics are driven by three factors: higher spend across the platform segment, and particularly this quarter in AAA game distribution, increased profitability in both platform and premium game segments, and benefits of integrating recent acquisitions. Now, moving now on our segment in detail. Platform. Our core platform segment is a combination of advertising platform in dark blue and AAA game distribution business in light blue. The whole platform segment generates revenue mainly by displaying digital ads in both game and general content, as well as selling and distributing AAA games. Basically, advertisers are serviced through two models. First, the direct sales, which involve a direct engagement between Azerion's commercial team and advertisers or their agencies in the placement of digital advertisements. Secondly, you have the automatic auction sales, in which advertising inventory is purchased through the open market.
In Q1 2025, the total platform segment delivered EUR 116 million, compared to EUR 108 million in Q1 2024, an increase of nearly 7%, largely driven by AAA game distribution. AAA game distribution revenue in light blue generated approximately EUR 24 million in Q1 2025, compared to EUR 19 million in Q1 2024, a significant increase of 25%. This performance was driven by new releases and seasonal promotions. Notably, this March 2025 marked the highest revenue for AAA game distribution. Regarding the total platform adjusted EBITDA, it amounts to EUR 9.3 million in Q1 2025, an increase of 3%. Moving on to non-financial KPIs presented in the right side of the slide, you can see here that we focus on the average digital ads sold per month. The seasonal impact of the advertising sector is clearly visible here. You need to look at those figures on a year-on-year basis.
The fact that the average digital ads sold per month decreased a little over 3% to EUR 11.5 million in Q1 2025 is reflecting an ongoing focus on our side on more premium and formats such as DOOH and audio. Now, let's have a look on our segment, premium games. Premium games. A very good performance of the segment this quarter. Indeed, in Q1, total revenue amounted to circa EUR 12 million, an increase of 10% year-on-year. The revenue growth is driven mostly by strong performance from our social casino titles. Regarding the adjusted EBITDA for the quarter, it amounts to EUR 2.4 million compared to EUR 0.8 million last year, an increase of 200%. This profitability increase is mainly explained by a strong focus on margin as part of the commercial strategy and also ongoing operational efficiencies.
On the operational KPIs on the right-hand side, average daily active user around 230,000 in Q1 2025, slightly lower than Q1 2024, mainly due to lower user acquisition spend and continued focus on our side on greater engagement with higher paying users. Indeed, as you can see with the ARPDAU, it increased by 21% year-on-year, which has been driven by improved spending in social casino and metaverse due to improved in-game sales mechanism and the launch of Habbo Origins last year. Regarding the average time in game per day, it continued to increase with an average of 96 minutes per day in Q1 2025. That is the review of the segments. Now, I would like to focus on the operating performance and the operational efficiencies.
In this chart, you can see the light blue line, which represents our FTE, and that has been consistently decreasing year-on-year since the end of 2022. Personnel costs in Q1 2025 have decreased despite the addition of close to 100 FTEs from recent acquisitions from Goldbach Austria, Purdue Press, and the Monetizer. We are continuing our actions and integrating our previous acquisitions and optimizing our staffing levels. Now, please have a look at the black line that represents revenue per FTE. You can see that our revenue per employee is increasing year-on-year, which shows the efficiency gain that we are setting. Indeed, revenue per FTE grew from EUR 117,000 in Q1 2024 to EUR 128,000 in Q1 2025. These figures are highlighted here in the white column.
This chart, as mentioned earlier, is also illustrating the seasonal aspect of our business, as it shows the revenue growing through the years, starting in Q1 with advertisers starting the year conservatively before increasing spend in Q2 and reducing spend in the summer months, and then finally investing heavily as the holiday season approaches at the end of Q4. To summarize, a good first quarter on our side. We are continuing our work to be able to demonstrate our capacity to deliver sustainable growth. After this focus on the figures, I would like to hand over to Seb for a strategy update.
Yes, thank you, Julie. I think this time around, we have a single focus on the strategy update. There are multiple things to say. We could talk about acquisitions and the organic business, but this time, we would like to pay attention to AI. You might have read this in the news recently, but we have launched Azerion Intelligence, and that is basically our play in AI, and this is a topic I want to discuss. Now, I am personally always a little bit careful with it because everybody talks about AI and a beautiful future, but we have really been working in the last few months on making something, let us say, seriously, fundamentally different than what we think others are delivering. We would rather draw your attention to that than anything else this time.
Because of our advertising auction technology, Azerion has over more than a decade of experience in machine learning, algorithms, and high-availability cloud services because, yeah, these systems need to cope with over 500,000 auctions every second. You can imagine the amount of intelligence actually needed to not only execute those, but then to do it smartly at the same time. We've been working for the last months to build this platform and infrastructure that allows our clients and partners to use that experience for the benefit of their own business and success. We see a big need for independent solutions at this time for cloud and AI solutions that reduce vendor lock-in and improve cost efficiency. Azerion Intelligence really offers a multi-cloud solution, meaning a mix or a choice of global cloud providers.
On top of that, we built an AI infrastructure that offers access to both API models and ready-to-run applications. I think that is, yeah, in the current times, it is important to be less dependent on a single vendor. What does it mean to offer such an advanced, scalable, and agile AI infrastructure? I know everybody is talking about it, so I really would bring this to life a little bit with a few videos for you. I will start with two examples. In our media and digital advertising industry, there are many obvious areas where you can imagine AI will make a big difference for companies. Think about, for instance, the creation or the adaptation of advertising or the management of social media posts and channels, maybe translating content, articles, posts, ads, etc. I want to take you through two of those examples.
One example is the Content Creation Engine that we have, where we let the AI help journalists, writers, influencers, and the likes to provide ready-to-run articles for their publications. We have created these applications for our partners, and our partners can actually, yeah, basically use this from our AI platform. You can see the video running, hopefully, but think about a website like this. It is a gaming news website we call brickgame.io. You can see the content, but it was our content automation engine that generated this entire website. We use RSS feeds to scrape news from various sources, like you can see here, a few, and then we prompt our AI to write articles about that news.
We tell the AI how to behave, what an Azerion journalist would look like, how he thinks, and we make sure that the AI gets basically in the mood in a way that fits our style and culture. We also tell how the article should be built up within the website, like a structure with a lead-in and some summary, etc. We connect that engine, which creates the article, to the actual publication engine, WordPress in this case, the content management system a lot of people use to host their websites. Last, we integrate it with Slack in this case, so the owners get the notifications of the engine, and we schedule the agent to work on a daily basis, for instance. That means now we have the AI generating articles. It actually puts them in WordPress, where you can then review your articles.
Once you're done, you can pick them up from the draft section of WordPress. As a journalist, you can then start to edit, review, and finalize the articles. Once you've gone through all of that, just, I don't know, marginally changing it or just fact-checking whether everything went the way you wanted it to go, basically you click on publish, and the end result is there. A complete website generated totally with AI, where the journalist can still do the oversight, but you can imagine the enormous reduction in time and money spent on creating the content here. Just use the feeds of the news, and the AI, in your own words and styling, will get increasingly better at creating content and articles for your publication. This is one example of how this works.
Let me take you through the second example here, which is our campaign orchestrator. When you run advertising campaigns, there is a lot of work going into the orchestration and operation of the ads in what is called a DSP. That is a platform for the demand side. You need to think about strategizing and operationalizing your campaigns in systems like this. Our campaign orchestrator assists users and clients with both the ideation phase, chatting about targets, budgets, the running time, the optimal channel mix, resource allocation, etc. That, in the end, basically gives you the brief, the whole program that should be implemented in the system. Again, with AI, you can chat about what kind of campaign you want. Normally, with the client, you would get a brief like this.
Now, with the AI, you can really have him help go through the objectives, audience analysis, etc. The thing is, even if you have the AI create the briefing, the next step is to activate a campaign like this in your system. If you have a media plan like you see on screen now, where there is a different allocation between video gets EUR 100,000 or digital out of home gets EUR 50,000, you still need to activate that in a system. Our Campaign Orchestrator does not just help you set up the campaign, but it can also really add the campaign. You can see that happening here. Once you agree with the AI on what kind of campaign to set up, it will actually create the campaign in our systems and thereby also massively reduce the operational work. There you have two examples.
One is creating content, and the other one is helping the buying systems to be much more efficient. You can imagine the time savings here for operators, but also the future of this for small and medium-sized businesses. It will be as easy to operate a EUR 100,000 campaign or a EUR 20 million visitor website as it will be a EUR 250 campaign, making the whole platform viable for increasingly smaller clients and publishers on a self-serve basis. I hope those two examples bring to life a little bit better how AI can help companies in our industry because I hear a lot of people talking about AI, but really showing how it could actually help a specific client is often absent. I hope this gives you a little bit of insight. We have a whole marketplace with different apps in this space.
We took the whole idea one step further, though. We think we can support our clients and partners on an even more fundamental level, providing AI as a service. That means not just the tools I just shown, which work for your business, but also the infrastructure for our partners to build their own tools to automate their own business. Let me show you this with the third video. Our platform allows access to many different models. Just like ChatGPT, you could chat with this platform, type "hello" like we do here, and then you get an answer like, "Okay, how can I help you?" This is the typical chat box. However, we want to provide the technologists, the developers, and the AI experts to be able to include AI in their own application and business.
What you would do then is you would set up an account with the Azerion AI. You could, just as with other providers, buy tokens on a pay-as-you-go basis. You create a whole account, and you make sure that you're basically ready to go. You create what they call an API token, which means that you're basically creating an access pipeline into our AI infrastructure to be used by your own system. Basically, you have the computing power ready. If you use, for instance, the n8n as a workflow automation platform that you see here, you go there, you build your agent, and you then link the agent to our fundamental platform through the API key that you just bought, basically.
You use the same logic and the same language as you would with chatting to ChatGPT and including them, but now it's the Azerion platform. Once you're connected, you can then integrate our compute power, basically, in your own agent and business, very similar to using platforms like Open Router or Replicate. This might sound a bit techie, but we are really proud not to just provide the AI automation and intelligence in our own apps like the DSP or the content creation, but really to democratize the entire infrastructure for use by our clients and partners. The platform allows for independent development, and our media publishing experts with their ready-to-run apps and agents allow for super fast integration of AI in your media business. Basically, best of both, if you want.
We provide the platform so people can create independent applications and really integrate it in their own, I do not know, finance, media systems, email, what have you. At the same time, we are in the media and publishing business, so we can help those kinds of clients really well also with existing tools that we build to make their business better. We expect a lot from this project, not just for ourselves. I think we expect more than 30% of our entire revenue in 2026 to be somehow AI-related. I also think that many non-advertising-related customers will start using our platform because it is just a generic access to independent compute power.
At our scale, we really believe we have a very competitive, high-quality, and scalable solution here, and we will invest significantly in this new business line and, of course, keep you updated about our progress in this space. Okay, so that was on the AI. With our full year 2024 net revenue at just over EUR 551 million, the closing of several partnerships in the last few months, subsequent bond issue last year, the opportunities we see coming this year, and also the AI, our full year 2025 net revenue expectation is unchanged in the range of approximately EUR 600-EUR 650 million, with the annual growth thereafter in the medium term expected to be approximately 10%.
Adjusted EBITDA also unchanged, expected to be at least EUR 85 million with annual adjusted EBITDA thereafter in the medium term expected to be in the 14%-16% range through further integrations, synergies, and skill effects. Yeah, there you have it, a little bit of an update on the numbers and our biggest project at this time, the AI, as we go through the rest of the year. With that, I think it's time to hand over to our Head of Investor Relations, Andrew Buckman, for the Q&A.
Thank you, Seb. Operator, before we start, can you please repeat the instructions for Q&A, and then we can get started?
Absolutely. Thanks, Andrew. We will now move into our Q&A session. If you would like to send a question through, please type it in the Ask a Question tab at the right-hand side of the player.
I will now hand over back to Andrew Buckman for written questions.
Thank you. Our first question that's come in is about economic strategy. I'll just read it out, and then I'll hand over to Seb to answer. Could you give any color on the development of the Q2 so far, and if you see any significant impact from the increased macro uncertainty, and how will you balance and prioritize growth, profitability, and M&A in a potentially more cautious spending environment?
Yes, let me unpack that a little bit. I think most of this question is, given the, I'll turn it around, given the increased uncertainty, how do you think that implicates the Azerion business, right? First, I think, and I've read this many times in the past few weeks, the actual effects insofar as they will be coming are still out there.
We don't have immediate results or effect on the business right now. All we can do is think about how ongoing uncertainty will affect our business. In general, what you see is advertising relies also on a certain predictability. If markets know things are going to be amazing and fantastic, then instantly companies start to advertise for their products because they see opportunity. While when things are uncertain, then also, let's say, the advertising budgets become uncertain. There's a little bit of this we see in the automotive area right now, but not a lot elsewhere. Of course, as soon as things are clear, it doesn't really matter which way they go. Clarity means resuming business. Right now, because we are also everywhere and we're heavily European-based as well, I think the benefits and the dangers are somehow still offsetting each other.
I don't think there's going to be a big impact in our numbers as we see it right now, which is also why we stuck to our initial guidance. We might be affected somewhere, but then we might actually get some benefits of that elsewhere. For instance, in the AI business, if companies are increasingly concerned about independence and, let's say, not just single American cloud alternatives, for instance, that business, in our case, can thrive. At the same time, if advertisers are thinking, "Yeah, I'm not going to spend on a certain topic in a certain market because of that," that could also be detrimental. I think in all, it will probably offset, but we'll know more, especially after the second quarter.
Balancing and prioritizing growth, profitability, and M&A, I think actually where the market now finds themselves in a bit of unclarity, I think since we listed in 2022, this was actually we listed almost at the same moment as the Ukraine war started. We, as Azerion, have been coping with quite a few uncertainties for a while, and we have been balancing growth and profitability all that time. As you can see through the graphs and the presentations we made in the last few years even, you can see that we are super, let's say, focused on increasing the profitability while also increasing the revenue. You can see these graphs of the revenue slowly going up and also the relative cost that we make to get that revenue in to go down.
Always focused on the profitability because when we get there, then, of course, you have everything in your own hands. At the same time, the M&A often is to accelerate the growth, and we're always looking for opportunities there. We raised another EUR 100 million last year, which also comes with a pretty high interest cost. We need to put that money to use and grow our business with it. That's the other part of the strategy, basically. On the one hand, we're always trying to make sure that we're cost-effective and increasing the profitability. On the other hand, there's a lot of money that we need to deploy and want to deploy to grow the company at the same time.
Great. Thank you, Seb. I think we've got a question that's come in for Julie about financial performance.
Could you please comment on the working capital development in the quarter and the negative trend in cash conversion? Also, when should we expect this to normalize during 2025?
Yeah. Thank you for the question, Christian. Yeah, if we look on the cash from operations, you're right, it's negative for EUR 13 million, which includes roughly circa EUR 10 million from financial interest. You may remember that we tapped two times the bonds last year for the amount of EUR 100 million. Basically, we ended last year with a cash position of EUR 90 million. As Seb mentioned, there are different ways to invest for the future. It could be acquisitions, assets, but there is also low-hanging fruits on specific partnerships when you accelerate payments. Like we did in Q4, we continue investment in long-term relationships with future partners. That's why you see a negative working cap this quarter.
Of course, we are spending only if we have interest to do it because, as said, there are low-hanging fruits on specific partnerships, but at a certain point, this will stop. Free cash flow and working cap are expected to normalize at the end of 2025.
Great. Thanks, Julie. This one for Seb. Thanks for the information on Azerion Intelligence. Can you give us some details on what the near-term monetization prospects are?
Yeah, I think it's much in line with what I just presented. What we see is a lot of people talking about AI and also having a good idea about what it might mean in the future. What it can do for them right now is often a little bit, yeah, elusive.
When we provide both the platform and the tools, what we're also trying to do is really accelerate the business that we have with our partners in our industry because of our knowledge and the platform at the same time. If we were just to offer a platform, people would probably not know exactly what to do to build their own apps. If we just have an AI tool to improve our media buying, for instance, then yeah, we could provide it to our clients as it is right now, but that would not be life-changing. What we see here is that I think in the next half year or so, we'll see a lot of publishers and a lot of advertisers come to us to say, "Okay, we've seen that, let's say, that broadly accessible platform. How can you help me improve my business?
How can we run my publishing on your cloud? How can I infuse AI into my whole publishing business to make it more cost-efficient? How can I use your AI to, for instance, create the more dynamic ad campaigns? Just imagine people are selling running shoes, and you have this beautiful movie shot in South Africa of someone running through the mountains. To have the AI change that person into someone who's more like the person who's watching the ad or the environment where the person is running to be more in the city where the ads are displayed, those are interesting opportunities. In the past, it would be super expensive to do so, but with AI, we can help them. Really helping our own industry publishers and advertisers to implement AI in their own workstream, that's, I think, where the near-term monetization prospects are.
Great.
Thank you, Seb. I think the last question for today is another strategy question that's sort of more focusing on M&A. Can you tell us more about your M&A strategy for the rest of 2025?
Yeah. In general, we've always been working with M&A because we can decide to build something over the next two years and then deploy it in a certain market. It would take a lot of time and money to do so. Time is going really fast in the digital space, and we can see the opportunities around. Europe is still fragmented, meaning there are companies starting, for instance, in our AI space, and they're starting in a small country with a great idea. Scaling up is not easy for them. We say, "Okay, actually, what you're building can accelerate us very quickly and you as well.
Let's do it together and then move forward. Same goes with publishing and other aspects in our business. Our M&A strategy from that point of view is unchanged. Also, to my former point, if you raise EUR 100 million extra like we did last year, having that money in the bank obviously costs interest. We are also looking to deploy that money smartly to make more than the interest rate in the end, right? We are always looking for interesting, high-yield, easy-to-integrate companies that can accelerate us and our clients further. That will happen also in the course of this year. We will be looking for and striking deals with interesting partners.
Great. Thank you, Seb. That was our final question. On that, I will hand back to the operator.
This concludes today's call. Thank you, everyone, for joining.
You may now disconnect.