Good morning. I would like to welcome our investors, analysts, and other stakeholders to our financial hearings with regards to the Q1 2025 financials of Verve Group SE. I would like to take the first part and then hand over later to Christian to do the financial part. I would like to start with some highlights of our first quarter. We are pleased to report another strong quarter, gaining strong market share and further expanding our EBITDA margin. Going into the numbers, a bit of an overview here. We were able to generate EUR 109 million of net revenues, which is a 32% increase versus last year, and very proud to have the very strong organic growth again, building on a very strong first quarter last year already, but now this quarter with 16% organic growth.
Our adjusted EBITDA, we see really that, let's say, with scaling, we get also more profitable. Adjusted EBITDA grew by 37% and amounted to EUR 30 million in the first quarter, EUR 30 million in the first quarter 2025. Our adjusted net result also showed an increase of 30%. A bit more taxes we had to pay. That is when you become more profitable, but also here, really nice development. Going to the growth drivers, what is behind it? We saw our ad impressions growing nicely with 24%. With an overall faster growth, we were also able to make more money per impression, actually. What you see here also is that Q1 is not always the strongest quarter, or it is not the strongest quarter. Q1 seasonally wise is the weakest quarter, but we are really able to grow our ad impressions in a very nice way.
What's behind that? On the right side, right upper side, you see, let's say, new customers. As in the last quarters, new customer gain is really driving our revenue increase strongly. We had a 51% year-on-year increase in customers. The customers we show here are the customers over $100,000 annual revenues. Nice increase here also in this quarter. On the net dollar expansion rate, which is showing how much revenue did customers do versus the same customers we had already last year in the same quarter. There we saw that they did the same amount of revenue, which is 100%, which is a bit lower than we are used to, actually. We're normally around 110%, really increasing the existing customers. We had a bit of headwinds from some larger customers, especially Google.
Large walled garden is really taking more volumes as it looks on its own platform, YouTube, and is taking volumes away from the market. We felt that and we had some other customer losses, but they were fully compensated by other customers growing. With 100% stable versus last year. Same number, customer retention rate, always a bit weaker in Q1, 94%. Yeah, some companies also getting under the $100,000 level, but still, I think a good number and a good basis for further growth. Low churn will, of course, drive our growth faster into the future and keep in, I'd say, in mind that it's the over $100,000 customers. There's always some getting under or over the $100,000. Getting to the next part of the presentation. What we often forget, because we concentrate a lot on numbers, but it's all about customers.
Customers is what is driving our revenues, and customers are in a market which is, yeah, let's say, pretty difficult at tech markets. Our mission is to make media better, and that's what we work on. I would like to guide you through a bit of insight of what is driving our customers, our partners. We work for two sides of the, let's say, advertising equation, and the one side is the publishers, the other side is the advertisers. For publishers, it's about monetization. They want to make as much money as possible, of course, but they're facing also challenges at the moment. They get less on-page traffic because of the search results of Google sending less people to the pages, but also now the search tools, the new AI-driven search tools are also not sending traffic to pages anymore.
On top, there is, because of privacy, more and more ad volume that does not have an ID, and that is more difficult to sell or where they get less money for. What is it about? It is about selling ad spaces at best price and with a high fill rate and about maximizing earnings, ensuring customer privacy, not annoying customers. Also important to not show ads that are irritating or too many ads and leveraging customer relations and data. In our ecosystem, we are able to really help customers on this to boost their revenues and to boost their results. We have two examples here. SmartNews is a leading AI-powered news aggregator. They have approximately 5-6 million monthly active users worldwide. It is one of the top news apps in the world. We help them with creating more demand for their ads.
One of the ways we are doing that is by creating private marketplaces, so-called PMPs. That is where we curate their inventory and make it easier to sell. Yeah, they are super happy with the results we are achieving. We are as well, of course. We had a 141% quarter-on-quarter revenue growth with them, a strong increase of the ECPM, and yeah, a 39% fill rate increase. This is one example. Microsoft, we work for Microsoft for their app business, for the Microsoft App Store. They are both the major app developer themselves, but also publisher. They enable third parties, yeah, to publish their apps on their store. We were able to show a quarterly revenue increase of 20% and a 138% increase in revenue per user. Also here showing really good results and yeah, happy with being able to help our publishers here.
We have many more, of course, but we did not want to make the presentation too long. We have the other side, it is agencies and advertisers, especially the advertisers are using mostly agencies. Also, they have the challenges, challenge like more ID-less audiences. If somebody says no, how do you reach this person? I say no to using the data, sorry. How do you reach this person? They also are facing, let's say, a lot of chaos basically in the ad tech market with a lot of double fees that they pay, margins, I would say, intransparency. It is all about, in the end, ensuring their outcomes. How do we do that or what is important for them? It is about reaching the right target group with the right message in the right channel for brand and performance. Brand advertising is different.
You want to make your product known, your brand known, and you have performance advertising, and that is about really much more direct selling. We do both. It is about, of course, for the advertiser, about brand efficiency, brand, sorry, budget efficiency, brand safety, no fraud, and privacy compliance. It is also about insights measuring, and it must be easy to use. AI tools and support play a big role here. That is on the advertiser side. Also here we have examples. One of the examples is from Reckitt. Reckitt is a big, how to say, company in the US, and they have their tablets, their, how to say, tablets for the dishwashers and their brand Finish Ultimate. It was for them to drive more sales basically in store. For that, we use Schema, which is one of our solutions.
Schema, I would like to explain that a bit. We're collecting data directly from consumers through an opt-in polling technology. As an ad or before an ad, we show a choice where we ask people, "Hey, are you interested in? Yes, no, and you can also opt out." With this solution, which works in an ID-less environment as well as an ID-based environment, we get 100% first-party consent-based interest from people. That leads really to very good, how to say, rates, very good success rates. That means that every consumer reached has opted in, and when they then see the message, we are ensuring the best results for the advertiser for the campaign. Here we have some really good results. For example, for Reckitt, we achieved 88.3% increase in household penetration, 3.2% increase in the sales buying per occasion. That's good.
I mean, 3.2% sounds low, but for in retail, this is really a very good number. With this campaign, we added 240,000 products to the shopping cart. Another example that you see on the right is McDonald's. We are also working for McDonald's. Here, it was about creating foot traffic to get more store visits, and that is happening via the app. Also here, we use Schema, and we were able to, let's say, get a 6.8% store conversion rate, which is really also very strong, 628,000 store visits. We had a 1.5% click-through rate, which versus normally a 1% benchmark is also an extremely good rate. Very happy customers, and that is what it is about in this market. We need to make sure that we show results for our customers, for our partners, and drive the revenues.
As in the past, we are really strongly focused on ID-less advertising. ID-less advertising, yeah, privacy means that less and less IDs are available. Apple is already very strongly supporting that, but also on Android, we see a big part of the ads, substantial part of the ads without an ID. Even though Google now announced that they will not deprecate the cookie, there is still the trend towards, let's say, you have to ask the consumer, "Do you want to give consent?" More and more people say no. In that sense, it's important, and that's what we want to show here, that you achieve results also with ID-less ads. What we show here on the left side, you see it's more cost-effective. Below, you see some of the comparisons that's from our platform. We see that with an ID-less ad, you are 36% more cost-effective.
This has to do, there's much less people bidding on this traffic. So, there's a lower price on it. Then on the performance, on average, we are performing a bit worse than with an ID. We talk about 83% performance, 17% lower than with an ID. If you then take the equation, you have a 30% higher efficiency by targeting without IDs. That is not the only world. When an advertiser wants to target, he wants, of course, to target with IDs and without IDs, because there are also parts of the market where you still have an ID or a big part of the market also. It is all about having the combination and the possibility to do it. A bit of progress also here, Atom, our solution to really generate audiences on device. We have presented that before. We have now 30% penetration on our SDKs.
It's really getting at scale now, which allows us to really use it, yeah, at scale for advertisers. Also, super happy that Atom now also for Android is ready, and we started launching that. It's still in an early adoption phase, but we will also scale that throughout the year. Another thing we're working on is further progress here. On the screen, it's possible to see a difference between male and female. Female with long nails touches the screen of a mobile phone differently than a male. You would say, "Why is this important?" It's important to differentiate between male and female because most advertisers have different campaigns for male and female. Even for the same product, it's often in a different color.
Now with our screen, we are able to with 70% accuracy to say it's a male or female to get the gender. That's pretty cool. We further continue to innovate on that part. Going a bit to the next page, getting to, yeah, let's say an overview of what we are investing in. I think that's also important to show, to give a bit of wider overview. One of the main points here is expansion and unification. We're further continuing to unify and aggressively grow our sales force. Important, one brand, we decided that last year during the AGM was the official decision. We've started rolling that out. Jun Group still has to be rebranded to Verve, but we're doing that. For the rest, sales forces are integrated.
The Verve sales force, the Jun Group sales force are integrated, and we're now really growing that. Globalizing our offering, it's about also going into different markets, into Europe, into LatAm, into Asia. We take market by market, and each market has different requirements. That needs to be done. Expanding our product portfolio and getting sector specialists. We see that really demands per sector are very different. Travel has a totally different demand than retail, and we need sector specialists to really drive our sales there. I'll come to that later also, our products. Increased brand recognition and global go-to-market approach. Also with the unified brand, we're working on really, yeah, getting more recognition. We do that on the trade fairs where we are, but also, of course, with branding campaigns and expanding that. Platform unification, yeah, mentioned it already before.
We have now our infra all on one platform. Everything is integrated into GCP. That project is finalized. It drives a lot more efficiency, has the advantage that you do not need as many people to run the platforms, and also that you are, of course, able to scale easier and go forward there. The next point is about integrating the platforms. The aim is to, by the end of this year, have one single integrated supply, demand, and data platform architecture. With the acquisitions we did, we acquired several stacks, several technology stacks. We have integrated a lot of them already, but we are now currently working on big integration of the last two SSPs to integrate that into one.
We're now in a hot phase at the moment in Q2, where we're really doing a lot of the lifting of the volume already. The rest of the year, we will have more fine-tuned work and to shift the last parts of the traffic. That's a big project we're working on. It will make us a lot more efficient. Same on the demand side, there we have two DSPs, which are almost integrated into one. The data platform architecture, a lot of it has already been prepared, and also that will be integrated into a single architecture once the stacks are integrated. Those stacks, DSP, SSP, and data platform are seamlessly connected. That makes it efficient. That makes us a much more efficient company, of course.
Yeah, just to give a simple example, if you now do some solution development, product development, platform development, we need to do it for several stacks, in this case, for example, for two SSPs. It is, of course, much more efficient if you only have to do that for one SSP. Driving a lot of efficiency if we've done this. Improved performance and efficiency, further investing in AI, further investing in our targeting. We're looking at floor price settings, at demand shaping, supply shaping, and a lot of processes that run in a platform, which is very complex. We have to, within 100 milliseconds, to really make this targeting, get the ad sold, and yeah, very important to use AI there, but also to have a lot of data. We're working on product innovation. We continue our focus on ID-less targeting.
I gave an example there already before, working on several cool things there. Focus on AI-driven measuring data, targeting optimization. The process that I just described for the performance and efficiency for platform, yeah, are AI-driven. That's a strong focus there, but also further processes where we use LLMs, etc. Sector and channel-based innovation, mentioned before, we're getting sector experts. We're also focusing our product more on different sectors, on the needs of the sectors. I just showed you Schema, for example, for more retailer, how to say, applications, but we have different solutions there also for digital audio. We're working a lot for podcasts now, for example, to drive that. Also on the capital market side, we have some big achievements, not in Q1, but now in early Q2.
We'd like to mention the uplifting into the regulated market in Frankfurt, which opens up the share for a lot of other investors that were not allowed to invest in non-regulated markets, and also successful bond refinancing, which will bring us to lower interest costs. Further focus on our investor relations. We still have to find out that a lot of people do not know us, and a lot of people do not understand what we are doing. EdTech needs a bit more explanation. We are also doubling down on investor relations. This brings me to the end of my presentation. Getting to a fully unified end-to-end platform by the end of 2025 is the goal, further continuing to grow and further continuing to innovate and further continuing to make media better.
I would like to hand over to Christian for the financials.
Thank you very much, Remco. I will first cover the financial performance, and then I'll transition into guidance for the full year. If we go to the first slide here on financial update, we had a solid start to 2025. Total revenues grew 32%, up from $82 million to $109 million. I think by any standard, that's a very strong start to the year. Also, when we look and compare ourselves with peers, 32% growth in Q1 is very strong. Our organic growth was 16% like- for- like. This is actually on top of a very strong quarter last year, Q1 last year, which was 21%. It is 16% on top of 21% organically. Jun Group is performing very nicely and obviously contributing to our overall growth. It is also becoming increasingly integrated into our go-to-market model.
Our sales teams and commercial teams are now fully integrated and working basically seamlessly together towards customers and representing our products. This actually also means that it is becoming and will become increasingly difficult for us to separate out Jun Group revenues because of the cross-sales and synergies. It is a headache for finance, but basically, it is a good thing for the business because it shows our integration and our synergy extraction is going well. That covers the revenue side. In terms of costs and profitability, costs are in check. We are managing according to our plan. You also see here that while we grew top line 32%, we actually lifted EBITDA 37% to a margin of 28% margin, and we lifted EBIT 40% at the same time. We really see the operational scale coming through with profits growing faster than top line.
If you look here at the left-hand side and the different quarters represented, you will note that Q1 is always our lowest quarter. Q4 is always our highest quarter in our types of business. That also means that the scaling effects in Q1 are least pronounced. Scale is less pronounced in Q1 versus Q4. That is because we run less ads, but basically on the same setup and people cost. In spite of this, and in spite of us also doing investments in the business this year, already here in Q1, especially around our expansion of our sales coverage, we improve EBITDA margin with one percentage point and go from to 28% versus 27% same period last year. In terms of cash flow, cash flow generation was in line with expectations.
We always have a negative effect from net working capital in Q1 and Q2, and then it reverses in Q3 and Q4. If we look at cash flow generation before those net working capital effects, we generated a positive cash flow from operations of $23 million. From that, we made investments of $10 million. That is Q1 in a nutshell. If we then move to the next slide, you will see revenue and EBITDA on a five-year horizon. Excuse me. Essentially, Q1 adds to the scaling of our revenue and profitability and extends our track record. On the revenue side, we grew our revenues on an LTM basis up to $464 million, up from $437 million for the full year of 2024. On EBITDA, we grew to $141 million versus $133 million for the full year 2024.
You also see that over those five years, we've achieved 32% growth on our top line, and at the same time, we've lifted EBITDA 45%. Altogether, this is way beyond the rule of 40 that many of you will be familiar with. We take a lot of confidence out of this track record, and being able to do this in such a consistent way, it proves our ability to convert investments, make investments, and really convert those into attractive returns over time series. This also basically provides us the confidence that we will continue to invest in the business, even if this year will be challenging and we may face some macroeconomic headwinds. We will continue with our plan to make investments in technology and in sales to capture growth in this year and the coming years. That actually brings me to the next slide.
This slide shows our operating cash flow and our CapEx investments. Granted, it is quite information-rich, I am aware. The key message here is we are producing healthy cash flow generation to both service our debt and to make the investments that we want to make in innovation and differentiation of our technology platform. If we first turn to operating cash flow here on the left-hand side, and I think let's focus on the dark blue bars, we had an operating cash flow of $128 million on an LTM basis. It is slightly down from the full year of $137 million. This is again due to seasonal effects on networking capital and some larger one-off payments, including taxes that we made in Q1. Overall, we expect a strong lift in the operating cash flow as we move through the year and we move into high season.
You will also know that we placed a EUR 500 million bond, refunding our existing bonds. We did that at very attractive terms compared to what we were paying before, EURIBOR plus 4%. This will lower our cash interest payments that are depicted here in the chart. We are still paying in total EUR 45 million. From Q2 and onwards, you will see the impact of our refinancing of our bonds. This will significantly reduce our interest payments going forward. On the right-hand side, you see our CapEx development. If we focus here on the purple and dark blue, which is our maintenance and expansion CapEx, it has been roughly around the EUR 40 million mark. We will continue to invest between EUR 40-45 million this year and in the years to come.
This is obviously a choice for us, but a necessary choice for us, we believe, to be on the cutting edge of technology, make the investments that we need to do in our being differentiated around our ID-less technology. We could do less to have a better operating cash flow generation, but this is a choice that we're doing for the year. We are also reaping the benefits of a more unified platform, more unified development teams. That means that we're also getting more coding hours, more development hours on a like-for-like basis, all helping us to get to a better result on our development efforts. Turning now to the next page, here you see on our net debt leverage ratio and also our interest coverage ratio, two factors depicting our financial health, balance sheet health.
It's important for us to say that we continue to have focus on net leverage ratio here depicted on the left-hand side. It's slightly up from the levels of end of 2024. Again, it's due to less cash at hand because of payouts in Q1 and networking capital effects. But it's key for me to we are maintaining it at 2.5 times, so largely unchanged from going out of last year. And it is important for me to state that this will be a continued focus point for us during the year, aiming to get to a ratio of 2.0. On the right-hand side, we have interest coverage ratio at 3.3. So we are able to pay our interest 3.3 times, also a testament to a healthy level and testament to our financial health. So in summary, overall, a very good start to the year from Q1.
We maintain a focus on operating cash flows and deleveraging for the company, and we are fully able to service both our debt and our technology investments. That brings me into the next point, which is guidance for 2025. I think everybody can appreciate with all the dynamics going on in the world, both macroeconomic, political, geopolitical environments, tariff wars, 2025 is a particularly tricky year to set guidance for. There is a lot of factors to take into account. That also means that we have a slightly wider range on our guidance than we might have in a normal year. Let me try to share just some of the perspectives on some of the key considerations that go into setting our guidance.
Essentially, to summarize across all these factors, we do have there are certain elements of uncertainty and less visibility on the macroeconomic outlook and ad spend outlook for the U.S., which is particularly important for our business, given we have so much of our business in the U.S. Also, as many of you will have noticed, we've seen volatility around the development of the U.S. dollar, initially with an appreciation in Q1 and then a depreciation in Q2. I would say those are probably the two factors that, on a shorter basis, make it difficult to set guidance for 2025. On the other hand, we also have a number of factors that provide some structural tailwinds, both on the short term, midterm, and long term.
Just to mention a few, yes, we operate in quite competitive business, but at the same time, where there are quite sizable players that we often refer to as walled gardens, but all regulatory shifts and antitrust actions are addressing this and will, over time, we expect, lead to a much more level playing field for independent players as us. Obviously, everybody has focused on the potential breakup of Google. Difficult to say when that could happen, but the long-term trends all support a more level playing field. We continue to see a shift towards privacy. And this drives, obviously, the big opportunity for us in ID-less targeting. Yes, Google has announced that they will not deprecate the third-party cookies. This may slow the development, but all the tailwinds are towards a higher focus on privacy and an opportunity for our targeting technology.
We get also a lot of questions around, sorry, we get quite a bit of questions around how does the change in consumer behavior around moving to large language models, ChatGPT type of potentially impact. The net net of it is that it will move focus and time spent and money away from search and open web to channels that are more immersive, those being some of the channels that we are in, in mobile, in-app, and CTV. I hope you can appreciate that while facing some volatility on the economic macroeconomic potential, we have a number of factors that also very support growth. Those are some of the factors that we try to come into now. Please go to the next slide. Having all this in mind, what does this really mean in terms of numbers?
Our guidance for 2025 full year on top line is between $530 million-$565 million. This is a lift of between 21%-29%. Our guidance for the adjusted EBITDA is between $155 million-$175 million, a lift of respectively 16%-31%. At the lower range, representing an EBITDA margin of 29%, 29%, and at the higher range, it would represent a margin of 31%. The difference comes from a more pronounced operational scale effect if we have higher, if we hit the top end of our range. We will, of course, strive to narrow the band as we gain more visibility through the year. Despite some of the factors at play right here in these quarters, we are confident that we will have another very strong year, and we will continue our path around profitable growth to deliver results in this range.
If we then look to the next slide and we look towards our midterm growth perspective, we reconfirm our growth perspective on a three- to five-year time horizon. It is unchanged versus last year. Our growth perspective and aim is to deliver between 25-30% revenue growth and 30-35% EBITDA margin. Some years we will see more growth, some years we will see less growth. I think showing our past track record for the last five years, we have proven we have done it before. We also know that there is plenty of opportunity in the market and growing size of market opportunity for our ID-less targeting technologies to achieve these goals.
With this midterm perspective, we are on a path, if you do the math and you do the midpoint, we are on a path to create a business that has more than $1 billion in revenues and at least at the level of $330 million in EBITDA generation. Our aim for, I also want to just mention a callout net leverage ratio where the target is to be between, or the aim is to be between 1.5-2.5 and with a short-term aim to be closer to 2. This really depicts the potential of the business in a 2028 to 2029-year time horizon, $1 billion in revenues, $330 million in EBITDA at least. With such numbers to capture for us, I hand back to Remco to summarize the core priorities for 2025.
Thank you very much, Christian.
Yeah, coming a bit more towards what are we further planning in the company? Christian already gave the guidance. I think, yeah, we have positioned the company very well, but we will further do, let's say, a lot of things to drive the growth further. We will, first of all, start to continue investing in our ID-less and AI. We have seen that really with that we are differentiating ourselves in the market. We are, let's say, with our early invest in ID-less, we have really built a strong position, and we want to further double down on that and to invest further in it. AI, I mean, everybody's talking about AI. It's for us super important, and we make big progress. Also there, important to invest. AI is nothing with our data.
Also further making sure that we get enough data to feed our AI engines. Then leveraging our direct supply, that means that we further will continue to build on our direct supply. We integrated over 65,000 apps, reached over 200 million TV screens, CTV connected TV screens, are further doubling down also on digital out-of-home audio and retail media. Having this strong direct supply position really also differentiates us in the market. We're one of the best in that in the U.S. We want to also double down on that internationally. Finalize our platform and unification by the end of the year. I mentioned that already before extensively that I won't go in detail here. Invest in brand and agency sales. We have great products. We can prove that they work. Now it's really about scaling that. That means adding extra sellers.
There's over 3,000 mid-size agencies in the U..S. There's the Holt Coast. There's a lot more agencies internationally. To really work with those, you need salespeople, and you need also, of course, the backup staff, the account management, the people that run the systems, etc., etc. Then expand omnichannel capabilities. It's, yeah, not only getting supply partners, but also making sure that as we are in in-app with our SDK, it's really a top-notch SDK. We want to have the same technical capabilities also in the other channels. Those things are very important. We have now over 800 employees in the company, and we are focusing on a lot. We are also even focusing on a lot of other things. Sorry, on a lot of other things we don't focus because we need to focus as a company.
These are the main ones here on the left side. It is about what is going to go now. We want to further gain market share by delivering measurable outcomes for our customers with a focus on AI-driven ID-less targeting and access to direct supply. Despite macroeconomic uncertainties, we will keep investing in these growth drivers with the potential to reach over $1 billion net revenues within the three to five next years. Verve has shown consistent revenue and EBITDA growth in the past years. We have become one of the major players in ad tech in the U.S. With our strong product offering and now further scaling our brand and agency sales, we are well positioned and on a successful growth path to further drive this growth. That brings me to the end of this presentation. We are happy with Q1, and there is more to come.
I would hand over to the moderator for questions. Thank you very much.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.
Hi there and good morning to you. It's Alden Edmund here from Nordea. Thanks for taking my questions. Can you hear me?
Yes, we can.
Perfect. Okay. Firstly, you talk a great deal here in the report of economic and geopolitical uncertainties. Could we get your thoughts behind how this impacts your business in Q1? Did you see any major fluctuations here in Q1? Also, with regards to the comment of the start to Q2, which seems to be somewhat soft in your language, do you expect stronger growth in the second half of the year?
Since if we look here, I'm referring to rather confident revenue guidance for the full year. If Q2 seems to be a bit weak, is it H2 back and loaded, so to say?
Yeah, I can take that question. In terms of Q1, we did not see any big effects of advertisers slowing their advertising or marketing budgets. We obviously do see concern when we talk to our advertisers. We do see that they are concerned, and there is certain uncertainty around whether the sentiment in the U.S.. market would layer into GDP fundamentals and thereby impact the economy. We could see a quarter or two quarters with a little bit less growth, but we would evaluate it to be more transitory.
You're right in the way that we could see a somewhat slight dampening in the coming months, but then with a pickup later in the year.
Yeah, maybe to add to that example, we just had a few weeks ago a car manufacturer that I was also involved in, a U.S. car manufacturer. He said, "Why should I advertise if I don't know if I still make money on my cars?" That's because of the import parts and things like that. We see some weakness in the market. I wouldn't say it's really overwhelming at the moment, but we have to be careful with the coming quarters. As we see it at the moment, let's say it's difficult to judge, but there has been a lot of loud shouting and threatening of very high, how to say, tariffs.
But in the end, it might not all come as severe. We all don't know, and nobody has a crystal ball. We are, let's say, yeah, taking a bit larger spread on our guidance than we normally do. That has to do with the market circumstances. I think that's what you hear from other companies as well. It's super difficult to guide. We are more confident with our midterm guidance than it is easy to guide on the short term, to be honest.
Okay, fair enough. Thanks. You also guide here for a potential decline in the adjusted EBITDA margin year over year. How much of this would be related to economic uncertainties versus your investments in OpEx being personnel and technology investments, etc.? Is there any CPM or ading pressure and expectations that you could share with us for the year?
Yeah, I can maybe start with, let's say, the market development. And Christian, you can maybe go on the overall. What we see is that it differs a bit per market, and it not necessarily all has to do with, let's say, weakness in the market. On CTV, we have seen versus last year a strong decline in CPMs. That has a bit to do. There has been a lot of extra supply coming to the market with fast channels with Netflix, etc., etc. As such, within a lot of supply and the demand, not all yet focusing so much on CTV, you can see that CPMs go down. On the mobile side, we do not see that.
Let's say we have seen in 2022, 2023, if really it would come to a more severe weakness of advertising budgets, that there is less demand, less demand means lower prices. On the other hand, we have been able also now with Jun Group to really add more services, especially on the demand side. That is also resulting, as you already see in Q1, in, let's say, a higher yield per ad impression, basically. We are pretty confident that we can, let's say, compensate a big part of it. Of course, we are also dependent on the market. That, of course, higher revenue, lower revenue has an influence on EBITDA, but Christian can say some things to that.
Yeah, I would comment that the main effect is because we are choosing to add people to the business, especially in two areas, mainly around expanding our sales coverage in the US towards brand and advertisers. Essentially building out the team that we already acquired with Jun Group. That is number one. We are also, in certain areas, hiring experts for AI, and those are expensive. That means that we continue to plan to make those investments for the year. Should we then hit the lower range of our top line, we, of course, still need to cover that cost.
Important to say that the absolute EBITDA will further grow according to our guidance, and if you're confident, it will have a good year. As I've said before, if it's raining, it's easy to overtake.
In that sense, even if the market conditions are maybe not as great as here, which we do not know, then we are very confident that we have further gained market share.
Okay, perfect. Last question here. Could you talk us through the potential impact from a break and kind of where the market stands today? What is the potential magnitude if this would go into effect?
Sorry, you broke off at least on my side. Can you repeat the first part of your question? The effect of.
Sorry. Could you walk us through the potential impact from a breakup of Google? Where does the market stand today and what could happen?
It's also here difficult to really say, but Google with its walled garden, as we call it, which is, let's say, having a lot of advertiser contacts and has a very strong, let's say, asset in the market being YouTube. At the moment, they force agencies to spend big budgets via their network, and a lot of that goes to YouTube. What we've seen in the last year, and it has not only in our numbers, also in Q1 now, that, let's say, a lot of Google spend that they also did on third-party supply is more and more going to YouTube because they just make more money with that. One of our peers has been heavily hit by that. I think everybody has seen a bit of it in the market. Those kinds of games are not possible anymore if there's a breakup.
The first difficulty already is how will the breakup exactly look because that's not known or not decided yet. For sure, if they cannot play this, yeah, I'd say I put I have a lot of power in the market to get budgets, and then I put them on my own properties. If that goes away, it will free up a lot of budget in the market, and that should have a very positive effect on the open market. I don't know how big the effect will be, but there will be a very positive effect.
Okay, perfect. Thank you, Remco and Christian.
Thank you very much.
The next question comes from Rasmus Engberg from Kepler Cheuvreux. Please go ahead.
Yes, hi. Hi. Thank you. And thank you for your presentation. I just wanted to come back to Q2.
In the report, you mentioned supply-side unification, but did you also see an effect on the demand side in the second quarter in the beginning there, or is it a technical thing?
Yeah, I can take this one, this question. Thank you, Rasmus. What we are referring to, we are doing this big migration of the platforms. In Q2, let's say we have a big shift of, let's say, the supply-side platforms. What we are referring to is an internal thing where we really are putting a lot of unifying all the traffic on one platform. If you shift traffic from one platform to another, you get things like a database that maybe does not work. You can have technical hiccups, which we had a few in the last weeks, actually.
You also have AI routines which need to be adjusted to, let's say, new AI work on it on our side, but also on the side of the DSP that's, for example, buying it. In that sense, doing these platform integrations, and we have done them in the past, always leads a little bit to disruptions in the service. Also, your onboarding of new customers is delayed a bit by that. That is not a problem, not an issue. It is short-term, it hurts a bit, but on the mid and long term, it will have a positive effect. Let's say the big shift and lift on the SSP is happening now in this quarter. We expect that to all have an extremely positive effect in the rest of the year.
Yes, you are, how to say, interpreting it in the right way.
We do not see so much on the, let's say, on the market side, except for the car example that I gave before. We have a few, but not a lot. On the demand side, talking to our agencies, we hear some that are drawing budgets forward. They say, "Let's spend it already, then it's spent." If that will have an effect on the midterm, we do not know. Still looking pretty positive about our chances of opportunities into the market. I hope that answers your question.
Yes, very much. I was more worried that the guidance included flat or no growth towards the end of the year, but that does not at all seem to be the case.
No,
organically, I mean.
Also, the salespeople that we are adding also does take time.
I mean, if you add a salesperson now, he doesn't immediately bring in a customer. I mean, that's rare. And some of the salespeople might not be so good, so you have to replace them. Also, those things are, yeah, let's say, working out a bit later. That's the reason that we are really speeding that up now, which might indeed, let's say, put a bit of pressure on Q2, but I'm not so afraid of that, actually, because it will really yield in Q3 and Q4. Yeah, no concerns there from my side at least.
Right. Thank you. Thank you. That was a good clarification. Can you just outline, because you don't give the details in the report, what happened with the tax rate, both paid and reported, and what do you sort of think is a reasonable assumption for the year?
Christian?
About the paid tax effect.
Yes. Overall, we do see that we will be paying more taxes going forward than we have done prior. That is because we are turning profitable in many of our entities. We would expect an effective tax rate around 30% for the year.
That is both paid and reported, I assume, or?
Yeah.
Okay. Very good. Thank you.
The next question comes from Edward James from Cantor Fitzgerald. Please go ahead.
Good morning. Thanks for taking my questions. I have three, so if we go through them just one by one, if that is okay. Just beginning with organic growth, I believe the previous guidance at the time of the full year 2024 results was for meaningful double-digit organic growth for fiscal 2025. Q1 organic growth 16% is clearly strong, and it is a really good number.
But can you just give us some more context as to how you feel this should evolve through the year and just some more context as to how you view organic growth for 2025 with your updated guidance?
Yeah, let's say maybe I can take this, Christian. We see further double-digit organic growth, but as we mentioned before, there is macroeconomic uncertainty in the market. There can always be a quarter where it's a bit less. We're super happy with Q1. I think at 16% is a good percentage to start the year with. This company can do substantial double-digit growth. We are really aiming for that, but there is no guarantee on it. In that sense, it's difficult to say. I mean, of course, the guidance includes our June Group, which was consolidated last year from August 1.
For the rest, it's all organic growth. If you do the calculations, you see that there's a substantial organic growth in this company in the guidance. I hope that answers your question.
Yes. No, that's helpful. Thank you. Just on guidance, as you mentioned, the revenue guidance and EBITDA guidance is wider than it normally is. I guess the key swing factors within that guidance is revenue given you continue to invest. Could you just unpack the underlying assumptions for the upper end and the lower end of this range? What are the two or three particular things that you would need to see in Q2 or Q3 to increase your confidence in hitting the higher end of that range?
Yeah. I can give you a bit of context around the bands.
If we take the top line, the revenue line first in our guidance. In our lower end of the range, we do factor in a scenario where we would see some macroeconomic uncertainty lead advertisers to conserve spend in the short term. Not a contraction, but conserve some of the spend, which would mean lower growth in the market overall, but also for the channels that we are in. You will probably note that in the channels we normally are in, mobile in-app and CTV, they are structurally growing 10%, 12%, 14% every year. In our lower range of the scenario, we do factor in that that growth will tip off for some time. Now, is that one quarter, two quarters, three quarters? That is to be seen.
In our high end, we factor in sustained growth in our advertising channel with some marginal impact from macroeconomic worries, but not a significant lowering of the growth rate. Does that provide you some sense of the scenarios that are behind?
Yes. No, that's really helpful. Thank you. And just to be more specific on the ethics point, in terms of ethics for the lower and the higher end, I guess the implicit assumption is a continued weakness in the US dollar.
It is. It is. So it's very important to look at what happened in Q1 and what happened in Q2. In Q1, there was actually an appreciation of the U.S. dollar versus the euro, +3%. In Q2, of course, everybody would have noticed that the dollar fell quite significantly around 4%.
Those effects of Q1 and Q2 roughly even out each other, not fully, but they're opposite directions. The assumption is actually for the remainder of the year to have a $1.12 to EUR 1 exchange rate, so roughly where it is today. If we calculate through and with our exposure of the business to the US dollar, and I just remind you that the vast, vast majority of our incoming payments and outgoing payments are in U.S denominated, so they naturally hedge. If we calculate those scenarios through, then we can see an effect of roughly 2 percentage points. Now, if the dollar moves more, it could be in either direction. It could have a bigger effect, but that's how we looked at it and with roughly around plus minus 2 percentage point impact on translation for the full year.
That's very helpful.
Thank you. And then just my final question is just on just some of the trends we've seen in Q2. I know you've answered some of the questions already, but if we were to just exclude the kind of internal impacts around the supply-side platform unification, we just focus on, let's call it the underlying market signals that you're seeing in your core customer segments, how they evolve in Q2, and how does that kind of make you feel where the net expansion rate, in particular for your business overall, will trend in Q2 and Q3 as we go through the year?
Yeah, I can take that. Sorry. We see on the customer front, let's say not much. There is a bit, I would say. It's always difficult to judge. Is it market? Is it more individual customers? There's some segments that are a bit weaker at the moment.
Overall, I would say Q2, as we look at it today, does not look too bad. Let's wait to see what is going to happen. I mean, there was a lot of shouting about tariffs, etc. So far, I gave the example of the car industry, a car manufacturer, but so far, it is not coming as bad as it was expected at a certain point. I mean, yeah, it could change. As I said before, there are some agencies that tell us that they bring budgets forward. That means that you do not see it now, but you might see it in the next quarters or already at the end of this quarter. So far, as I said, it is not as bad as we expected a few weeks ago, let me say it that way.
Great. Thank you for taking my questions.
Thank you, Edward.
The next question comes from Martin Yang. Please go ahead.
Thank you for taking my question. My first question is about the weakness you cited on the second quarter. Is there any way to quantify the impact of the integration either on a weekly revenue run rate or monthly revenue run rate basis as a comparison from a year ago or a quarter ago?
No. Thank you for your question, Martin. We are not giving exact numbers out at the moment because, let's say, we have a larger company here, and we are not looking at extra details. What I said, I mean, on the market, we do not see a lot of effects, and we see a bit on the technology side on a few days that we had in the last weeks. For the rest, no alarm here. Positive signs, positive signals.
Let's also see, June is, let's say, in Q2, always an extremely strong month, much stronger than the month before. Let's see what's coming for the next month. I'm pretty confident that also Q2 will not be as bad as some people make you believe. Yeah, let's look forward. Our guidance, let's say, is for the full year also. We're confident at this point in time that we will be making that.
Thank you, Remco. My second question is about, do you have a target goal for Atom's penetration among your customers? And is the continued penetration of Atom a driver or a factor for your annual guidance?
Yeah, Atom has become an important part because it gives us a lot of data, and with data, our AI systems work better and our targeting works better.
Atom is important and becoming more and more important. With now the current penetration, we have it at scale. That means that we really can, how to say it, target with it, and we are further building on that. That makes it better, but it's not, let's say, we have the minimum scale that was required. With that, we are able to build more cohorts, so more categories. That also takes time. It is really scaling now. It is getting nicely into, let's say, our targeting, our revenues. We are super happy about it. Now also with Android, we are able to further extend that.
Because we've also seen that with Atom, even if you have an ID, it gives you different signals, like for example, this male-female signal, which is often much more reliable, in most cases more reliable than what a lot of data providers give you as signals. So with Atom, yeah, I think we really have got a very strong, how to say, tool to get our targeting and everything stronger, and with that also increase our revenues. I hope that answers it.
Thank you. My last question is about AI and do you have any plan to embed more either AI agent-like features or copilot features in your customer's dashboard so that they can maybe save more time, get more value out of your targeting products?
Thank you for the question, Martin. I expected the agent question because, yeah, agent technology is now what everybody's talking about.
Of course, we are also working on that, and it's mostly if you talk about self-serve platforms for the customer, but also internally if we have platforms where we do the settings and where we run the campaigns. Agentic is really becoming, yeah, an important part in making things easier, more available, and also less human resource intense. We, of course, also work on that. There is a lot of progress in the market, and we are also profiting from that.
Thank you. That's it for me.
Thank you very much.
The next question comes from Christopher Gentle from Inderes. Please go ahead.
Hello, Remco and Christian. Thank you for taking the question. I wanted to start with retention rate, which is the lowest level for many years.
Would you say that this is an effect of the current macro landscape or some sort of growing pain considering the strong growth rate in 2024? Also, what type of customers are churning in the quarter?
Yeah, thank you for the good question, Christian. Looking at the customers, we cannot see that it is really, at least not in Q1 and also not early Q2, that it is really an overall weakness in the market. There are some customers that bring the budgets down. We saw quite a bit of Google volume, actually, which is coming in via different pipes going down, which we are also not so unhappy about because it is more indirect volume, which we would like to anyway lower or slow down in our platform. Still, it does not show nice in the number. I, let's say, admit that. I rather would have seen 110% there.
But overall, I think it's a bit a part also of, yeah, growing pains, you called it, of really getting bigger. You lose some customers. We concentrate on those where we really can add value and can bring forward. It's not necessarily a bad thing, but of course, it's nicer if your existing customer base grows. Also be careful, Q1 companies get under the 100,000. Some of the negative journey we see now, I would expect in, let's say, the next quarter, especially Q3 and Q4, to come back in those numbers.
Could I also just add, and I understand the focus on that metric, but I think also to add and just complement, I mean, where we are really seeing a significant growth is customers that we onboarded during last year, not even past Q1, but from Q2, Q3, Q4.
That is really driving our growth and supplementing our growth.
All right. Thank you. The next question is regarding the customer intake in Q1. I'm just wondering if you're satisfied with the organic intake in Q1, considering the first half of the year is typically a seasonal, stronger period for customer intake as advertisers are more with new solutions.
Yeah, we are happy with the intake in Q1. We have really added a lot of customers and also a lot of publishers, let me say it that way. Customers on the advertiser agencies as well as publishers. We're happy with that. As we are showing over $100,000 customers in the last year, the ones that we really newly onboard in Q1, you don't see in those numbers or hardly see in those numbers because there's not many that scale in one quarter to over $100,000.
We are super happy, and there will be more growth coming there. Also with the customers, let's say the new customers now getting over $100,000, which have been onboarded earlier, we see a very good momentum.
The last one for me regarding the $1 billion revenue target for 2028 to 2029, how much of that do you anticipate to be M&A, or do you anticipate it to be reached fully organically?
This will be majority-wise organic, but we are, let's say, not ruling out that we can do some M&A to fill some gaps that we have or also to get some skill maybe in different GOs. In that sense, majority-wise, it will be, I mean, we show strong organic. We have said it is more than, yeah, double-digit, good double-digit. Now with our 16% in Q1, a good start for this year.
We're confident that we can do the majority of that organic. In our 25%-30% midterm guidance, there's also some inorganic in there.
Please note that we factor in, of course, that some years we will have high growth and some years we might have a little bit lower growth. This is an average, but it will bring us to a point of a $1 billion company. That's also why we said 2028 versus 2029 as a timeline, 2028 to 2029.
All right. Thank you.
The next question comes from Vincent Edholm from Pareto Securities. Please go ahead.
Yeah, hello. Good morning. I was just wondering about the gross margin development following the acquisition of Jun Group last year.
If you would be able to describe the development you've seen so far and if you might be able to give any color on what to expect for the next year as well.
You want to take that question or shall I?
I think you have a more close eye on the June Group business.
Yeah, June Group has a very high EBITDA margin or gross margin also. And we have announced already in the past, if we start scaling it, then it will go down a bit and still will be higher than what we had on average before. So it has a positive effect on our overall margin. That's also what you saw in the numbers of this quarter. While, let's say, June Group was not growing in the past, it is growing now.
To scale it, really, we here and there let the margin lower a bit because they're working really with extremely high margin. That is also to serve basically advertisers, yeah, more bucks for their money to be, let's say, stronger there. Overall, our margin will go up.
Is that true for the remaining quarters here going forward, sequential increases in gross margin, or will it fluctuate?
No, it will go up. Let's say also, especially in the stronger quarters of the year, Q3, Q4, unless there is a strong macroeconomic downturn. If there's not, you normally see also margins going up during the rest of the year because, let's say, the cost, I'd say the CPMs go up because there's more demand towards the end of the year. We see further development there.
Of course, take into account that from August 1 last year, we had June Group already in the numbers.
All right. Thanks a lot.
Thank you, Vincent.
Thank you for all the questions. I will now hand the conference back to the speakers for any closing comments.
Thank you very much. Yeah, we are coming to the end of the presentation. Yeah, the company is going extremely well, strong organic growth, very good outlook for the rest of the year, a bit of macroeconomic uncertainty, but we will use that. I think an important part of the message is really we have a great product. We need now further to sell it. That is the reason that we are investing in extra salespeople. We want to continue that even if there is a little bit more headwind maybe macroeconomically.
We think with that, we can gain a lot of market share and further build this company. Thank you all for, yeah, listening, and thank you for your trust. We will continue to work on making media better. Thank you very much.