Good morning, and welcome to Acast Earnings Call for the Interim Report Covering the Period January to September 2025. We have our CEO, Greg Glenday, and CFO, Emily Villatte, who will present Acast results for the quarter. You're welcome to submit questions throughout the presentation using the form next to the stream, and we will answer them during the Q&A held after the presentation. I'd now like to start the presentation by handing over to our CEO, Greg Glenday. Greg, the floor is yours.
Thank you, LP. Good morning, everyone. Thanks for listening in. I'm Greg Glenday, the CEO of Acast, normally operating out of our New York office, but today I'm thrilled to be over in Stockholm. I'll take you through our business highlights and performance for the third quarter, before handing over to Emily, who will cover our financial performance in detail. For new investors, Acast is the world's largest independent podcast company. Podcasting is a very fragmented ecosystem, making it hard for creators to be discovered and for advertisers to buy. We're solving for this. We help podcast creators reach highly engaged audiences by maximizing their reach through distribution across all relevant channels, and importantly, maximizing their monetization across those channels. We do this by leveraging both our human expertise and technology, connecting advertisers who seek to maximize their return on ad spend to these valuable audiences.
We do this on a global scale. We are in fact the only true global independent podcasting company, with our geographical spread of both listens and revenue unmatched by any competitor. This gives creators access to audiences and revenue worldwide, and advertisers a single point of entry to a fragmented global market. We truly hold a unique position in the rapidly changing media landscape. Podcasting is moving into an exciting phase that takes the industry beyond audio- only. As the influencer market continues to mature quickly, the concept of premium narrative-led influencers is taking shape. Podcasters will be the centerpiece of this valuable category, where brands can unpack a more nuanced story. As audiences redefine consumption and brands seek authentic connections, Acast can deliver this value at scale.
This is thanks to our extensive network of more than 140,000 podcasts, and the technology investments we have made and our commitment to innovation. Annually, we generate clear value for more than 3,300 advertisers, by maximizing their return on ad spend. This creates clear value for our creators. Since inception, we have paid out more than $550 million to our creators, over half a billion dollars to the creator economy. These dynamics create a powerful self-reinforcing loop that lays the foundation for strong network effects. More creators and larger advertisers, and larger audiences strengthen our position with brands. Getting more advertisers to spend more, means we can deliver more impactful campaigns, which enhances revenue generation for our creators and makes us a more attractive home for new shows. I'm incredibly excited about our future and the opportunity we have.
I'm very confident in Acast's core strengths, our top-tier creator network, advanced technology platform. This will continue to enable us to deliver immense value at scale for brands and advertisers, driving the next chapter of our success. At Acast, we're building a one-of-a-kind global podcast network, fostering relationships with creators of all sizes and specialties. Our roster includes household names and large independent podcasters like Peter Crouch, The Giggly Squad, alongside established powerhouses such as TED Audio Collective and leading publishers like The Economist, The Guardian, and The Athletic. Our exclusive partnerships with hundreds of thousands of the world's most talented creators are our greatest asset. Our track record of helping them monetize their content and build sustainable businesses is our most powerful proof point. We provide them with all the tools and support they need to focus on what they do best, creating.
We're their partner, and their success is our success. Our network is both broad and deep, which is a key differentiating factor. It allows us to precisely match advertisers with their ideal audiences. This is the real magic of a unique platform like Acast. In addition to larger shows that I mentioned, the ability for us to extend ad campaigns into the longer tail of niche creators unlocks a lot of value. We describe this as selling podcasting, not just podcasts. Advertisers get to extend their reach to an aggregate audience that in many cases, is even more engaged and loyal to their podcasters. Of course, this approach brings revenue to more creators in our network, which is the ultimate goal. Our advertising customers who combine those larger integrated buys on specific shows with scaled horizontal audience buys are seeing amazing results.
This makes our advertising much more efficient, scalable, and effective, which means better returns for everyone involved. Let's have a look at the highlights of the third quarter. We maintained our strong growth momentum into the third quarter, driving a 35% net sales increase, of which an impressive 41% was organic growth. We're seeing tremendous momentum in North America, which continues to be the primary growth engine again this quarter, while also supported by strong growth in Europe. With increasing revenues, profitability improvements continue to follow. This quarter, we noted an EBITDA margin of 6% and an operating margin of 2%. This development validates our strategy and execution, with us continuing to deliver strong growth and continued profitability improvements. In conjunction with this report, we've announced a new financial target framework that builds on our strategic momentum.
The new framework clearly defines our commitment to sustained value generation for the coming multi-year cycle. The new financial targets that we've set out are organic net sales growth CAGR exceeding 15% in the 2025- 2028 time period. We are also committing to deliver an EBIT margin of 10% by 2028, and I'd like to point out that that's a milestone, not a final destination. This new framework supersedes all of our previous formal financial targets, including the old full-year 2025 targets. I do want to be clear however, our commitment to delivering against our previous financial goals for the full year 2025 remains firm. We are heavily committed to delivering a 3%- 5% adjusted EBITDA margin, and positive operating cash flow for the full year 2025. How do we get there?
The trajectory is supported by the operational discipline we've established, continued broad-based local market profitability, improvements, and leverage gain, by effectively scaling against our global cost functions. Our conviction in our growth trajectory stems from our unique position in a large, growing, and significantly under-monetized market, where consumption is 4.5x higher than advertising spend. We also have a track record of outgrowing the market that we plan to continue. We benefit from global scale, which is anchored by our strong positions in the U.K. and the Nordics, with vast potential for growth in the U.S. and continental Europe. We will continue to drive monetization growth, expanding the amount of listens and the average revenue per listen we generate. We provide a scalable, accessible, and sophisticated marketplace for advertisers to tap into the power of podcasting in audio, video, and beyond at scale.
Over the past five years, we've achieved strong improvements in local profitability across key markets. As we showed previously in our Capital Markets Day in April, the data clearly illustrates that in established markets like Sweden and the U.K., our very high market share has translated into higher local contribution margins. This is compelling proof that we are effectively monetizing our scale. As we continue to grow and execute on our focused local strategies, we're confident that a strong margin trajectory will continue and we are targeting further improvements in local profitability across the board. This next slide shows how those local market improvements are taking effect at the group level, demonstrating our successful execution over the past five years. As the dashed group line shows, we've successfully driven total group contribution margin from 8% in 2020 to above 17% as of Q3 2025, last 12 months.
Our Europe segment in dark blue represents the highest margin development, currently delivering 23%. Apart from Sweden and the U.K., it's worth reminding you that this also includes markets that are on a strong upward trajectory. Another important driver of the group development is North America, which has improved significantly over the past three years to reach 11%, which we expect to continue delivering improvements benefiting the group's profitability. Our other markets category are following a similar path, also reaching 11%. This momentum across our segments enables continued expansion of the group margin, confirming our strategy is effective. Sustaining this momentum across our segments will enable us to continue expanding our group contribution profit. Another crucial driver of our profitability is how effectively we are scaling against our group-wide global costs. These are costs for global shared services covering our central functions, including product, administration, finance, and legal.
The data clearly shows a substantial improvement. Since 2020, we've successfully scaled these costs down from 33% of sales to 17% on a last 12 months basis by Q3 2025, which is proof of our operational leverage at the group level. We remain absolutely committed to continuously optimizing these global costs. Our goal is to ensure they remain a diminishing percent of our growing revenues, which is key to enabling further profitability improvements across the entire group. This chart brings together two key elements we just discussed, contribution margin and global costs, to show how they translate directly into our EBIT margin. This shows our operational leverage in action. Our strategy is to continue growing the dark blue contribution margin, while seeing decreasing share of global costs to drive further EBIT increases.
For several years, like 2020- 2022, the high relative size of our global costs meant that despite an improving contribution margin, our EBIT margin remained largely negative. The hard work of the last few years has paid off, and expanding contribution margin and declining global costs have driven adjusted EBIT up and over the zero mark by Q3 2025 on an LTM basis. The operational momentum is not stopping there. We expect this trend to deliver sustained margin expansion as we continue to realize this leverage. We've set the structure, and we continue to execute our strategy to ensure further profitability improvements. The foundation of our growth is an unmissable market opportunity. We are actively participating in a large and growing market, where podcasting ad spend is catching up with consumption. This is key for us.
We are riding a powerful secular tailwind where consumption already exists,, and the ad spend is playing catch-up. Our strategy is to systematically remove barriers and obstacles between this emerging demand and our valuable supply. This growth ensures that we are the primary beneficiary of this market growth. We are global, we've built strong positions and successfully monetized scale in our high share markets like the U.K. and Nordics. We' re seeing strong momentum and massive growth in the highly strategic U.S. market, laying the foundation for strong long-term growth opportunities. We' re also growing our reach and scale in continental Europe. Finally, our growth strategy is more efficient than ever, benefiting from increasing campaign sizes on the direct sales side and an elevated use of our low-touch channels, meaning our sales process is becoming inherently more efficient over time.
As clients continue to buy larger deals and place more of their transactions in our low-touch channels, our revenue grows, while the relative cost of servicing those transactions grows much slower, reflecting operational leverage. By leveraging this established position in the market and our operation model, we are set to translate our opportunity into delivery for our upcoming financial targets. Everything we've shown, from local market profitability to scaling global costs, feeds into these goals. We are confident in delivering organic net sales growth exceeding 15% on a CAGR basis for the period 2025- 2028, and achieve an EBIT margin of 10% by 2028. I also want to be clear that the margin set out again for this 2028 is a milestone, not an ultimate destination. Our path is built on validated execution, and forms our clear commitment to long-term value generation.
Now, let's look at the business highlights for the quarter that serves as evidence of our ongoing success in optimizing low-touch sales channels. At the end of July, we announced a new partnership with Magnite, the world's largest independent omnichannel SSP. Magnite has over 100 partners on both the demand and supply side integrated. In essence, it provides a wider choice of DSPs for which to buy our premium ad inventory. Advertisers can now seamlessly plan and execute campaigns across podcasts in addition to CTV and video, all from a single Magnite interface. This is crucial because it solves a major pain point, and allows us to capitalize on the trends of brands incorporating podcasts into larger multichannel campaigns. This robust programmatic approach is a step in maximizing value for 140,000 creators.
By making our inventory easier to buy programmatically, we are strengthening our opportunities to increase the flow of transactions into our low-touch channels, ensuring our scale translates directly into higher revenues and greater profitability. It's also a clear signal that podcast advertising has come of age, when players with a scale as big as Magnite entered this space. Now, let's look at the other major engine of our low-touch strategy, our self-serve ad platform. This channel is crucial, because it allows us to efficiently and instantly onboard the long tail of smaller advertisers curious about podcasting. By enabling them to plan campaigns with less direct sales effort, this platform provides another powerful source of operational leverage for the group. Let's have a look at how it works, before I hand over the mic to Emily to run you through the financial performance of Q3.
Welcome to Acast Ad Platform. There are two types of podcast ads you can choose from, pre-recorded ads and sponsorships. Let's start with pre-recorded ads. Set up your campaign info, like name, dates, budget, and frequency cap. Y ou can upload your own audio, use our free AI-powered tool to create studio-quality ads, or for larger campaigns in select markets, work with Acast Studios to create bespoke audio ads. Next, decide who your ad reaches by defining your audience. Start with location, from broad countries to specific zip codes, and select the podcast language you wish to target. Let's refine your targeting. Use audience attributes to get precise, using behaviors, interests, or niche demographics. Use topics and genres to reach audiences based on podcasts they're listening to, such as comedy, history, or true crime, or even target specific podcasts. Finally, set up tracking with pixel-based attribution.
We offer Podscribe for free, or use your own compatible third-party tracking. Now let's look at sponsorships. Search by podcast name if you already know your pick, or filter by category, podcast availability, target market, podcast language, age, gender, to reach the right audience. Not sure where to start? Use smart recommendations. Type in your target audience, and our AI-powered planner suggests shows that fit your campaign. That's your tour of Acast Ad Platform. Now it's time to launch your podcast campaign.
Thank you, Greg, and I love that demo. It's such a beautiful showcase of the efficiency and scalability of our platform. Now let's look at our financial development in the third quarter. We start by having a look at the development of our listens and average revenue per listen. Our listens' growth rebounded to positive territory in Q3, with a 1% year-on-year increase. As noted in our previous calls, our focus on commercially valuable content has really paid off and our inventory increased by more than 25% versus last year. Importantly, we've also continued to benefit from expanding ARPuL, or average revenue per listen, which increased by 33% to reach SEK 0.58 in the quarter, clearly reflecting that our monetization strategy continues to pay off.
Now, as Greg mentioned, we have continued to benefit from a strong sales momentum into Q3, with our revenues growing 35% year-on-year to reach SEK 642 million. Adjusted for currency effects and contributions from Wonder Media Network, the organic growth rate was 41%. We maintained a solid gross margin at 39% in the quarter, resulting in a gross profit of SEK 252 million. This reflects a 31% gross profit increase versus last year. I will note that there were no material changes to product mix or yield affecting the gross margin development at the group level, and our steady gross profit trajectory remains intact. Looking at the performance by segment, the strong growth this quarter was driven primarily by North America, as you can see here, while Europe also delivered solid growth as well. Sales in Europe increased by 27%, delivering 32% organic growth.
Europe's contribution margin itself was slightly lower this quarter, which was an effect of a product mix in this segment only, resulting in a lower gross margin in the quarter. As you can see, the absolute profit contribution grew and remained solid. Our momentum in North America has remained very strong, resulting in 58% year-on-year growth, with an outstanding 64% organic growth rate. This has spurred strong increases in our contribution margin for North America, which stood at 16% for the quarter, demonstrating great operational execution. Our other markets delivered 11% organic growth. Those sales grew 4% reported, and this was negatively affected by foreign exchange movements. This development laid the foundation for a maintained profitability uplift. Our reported EBITDA was SEK 38 million, corresponding to a 6% EBITDA margin. This reflects a 3% point improvement versus last year. Our EBIT margin amounts to 2% in the quarter.
Actually, if we look at this on an LTM or last 12-month basis, our adjusted EBITDA amounted to SEK 88 million, reflecting a 4% margin, showing that this upward trend in our underlying profitability remains very strong. On to operating cash flows, where operating cash flow gains have followed the profitability development. Our operating cash flow was SEK 20 million in this third quarter, including a small negative impact from working capital changes, meaning that our operating cash flow was SEK 50 million on an LTM basis. By the end of the quarter, our cash position was a robust SEK 548 million. With that, I would like to hand back over to Greg for a final wrap-up before we open up for Q&A.
Thank you, Emily. To summarize the third quarter, we have strong momentum with 41% organic growth, and I'm very glad we've sustained strong performance in North America, which remains the primary engine. This growth has spurred further profitability improvements, with an EBITDA margin of 6% for the quarter, reaffirming the strength in our business model. We will now open it up to questions.
Thank you, Greg. As I said, we'll open up to questions. Please use the message box below, and we will put them to Greg and Emily as we go. The first question comes from Andreas at DNB Carnegie. On the long-term financial targets, where do you see the greatest potential among your various levers, listens, sell-through rates, prices, ad loads, other video platforms, or other? Just to be clear, the ambition is for organic growth, sorry. Is that correct?
Correct. Organic growth is the ambition. I think there's potential in all of those. No t to cop out on the answer, but I think sell-through rate and revenue per listen is going to be a metric that we really think about a lot, because we believe that as advertisers become more sophisticated and buying podcasting, not just podcasts, we're going to be positioned to spread a lot of that revenue into the longer tail. We will have a higher sell-through rate on the network itself, as opposed to just the largest shows.
Another question from Andreas. On the EBIT margin target, how do you see your costs developing? You have invested in sales and marketing, but can the organization, as it stands today, handle a majority of the expected growth? How is the need for further R&D investments?
As you heard Greg note previously, we are both going to deliver operating leverage against our market operations. T hat will drive an increased contribution profit, but w e will also scale against our global costs. Possibly, the greatest leverage will come from scaling against our global costs. That is where we see the key contributor. Greg, anything to add there?
Yeah, I would just say that as we scale, I mentioned the low-touch environments like programmatic and self-serve, which, those will continue to scale without a lot of cost needed. Obviously, we'll do some R&D and some innovation, and invest in improving those products, but certainly not at the scale that the revenue will grow. The same thing with direct sales. Our sales teams have gotten more efficient. The deals are larger, so we expect that the revenue will be able to scale much faster than any investments we need to make. I t's an innovative market, and I think I'm very proud of the product and engineering teams we have. We will continue to invest in R&D, so that we can continue to lead this marketplace.
We have a question from Derek at ABG. Could you give some flavor on the performance of your various European markets, given the growth improvement? The U.K., Sw eden, and others.
Yes. W e aren't breaking out in great detail all of the specific markets, but I can tell you, our strategy of global excellence and an Acast strategy around the world for best practices, coupled with the ability for our local markets to compete in a unique way, has been really helpful to us. I think that's unique to Acast. The French podcasting market is different, and we have a different market position than we do in Germany. We look at each market as high, medium or mature, and the strategy is a little different in each market. Us being able to separate global excellence with local execution has been a real key for us.
Another question from Derek. What uplift have you seen from the Magnite partnership so far, specifically on fill rates, CPMs, and programmatic share of revenue, and how quickly can that ramp up globally?
Very quickly, I would say, besides just Magnite, I think we've spent a lot of time building, putting the pipes in place for programmatic. It takes a long time to put the pipes in place, and then driving demand through those pipes, turning the faucet on is a whole different story. We've seen tremendous programmatic growth even before the Magnite partnership. We're just getting that off the ground. We're about six weeks in. We've seen some good directional indications, but we expect that to continue.
Another question from Derek. An update on exclusive ad sales partnerships like The Athletic. What's the pipeline for similar network-level deals, and how do they impact your gross margin profile?
Yeah, we love partnerships like The Athletic. As they continue to grow and for example, they launched Pablo Torre Finds Out, The Pablo Torre podcast in the U.S. becomes part of The Athletic, and then immediately joins the Acast sales slate. We're really excited about those kinds of high-quality partnerships. We have quite a few in the pipeline. I think the word is out that we're a really good way to monetize those products for teams like that, even if they have a direct sales team. That strategy has really worked. It's high-quality, reliable inventory. Advertisers love it and listeners love it, and those are the two criteria that we care about.
Another question from Derek. On Q4, how has the quarter started, and how sensitive is your outlook to any potential late-quarter cancellations?
We've had good momentum this year. We don't guide specifically on future quarters as usual, but we expect fourth quarter is always robust and we're prepared to finish strong this year.
Another question from Derek on Apple, Spotify, and YouTube platform dynamics. What's the latest on distribution mix, and any economics that could shift the open ecosystem advantage you've historically emphasized?
Yes. T hat's actually a more complex question than it sounds, but we're working very closely with all of our platforms. The beauty of podcasting and what makes it special is, there's no intermediary between the creator and the audience and the audience seeks out these podcasts. They're not served algorithmically. Acast is built over 10 years on being agnostic , we don't want to get in the way with how the creators reach their audiences. We want to support all of those platforms. We're an open ecosystem, agnostic, platform agnostic. We work closely with each of them, but there is a different set of economics, depending on RSS versus video. I think we are leading the way in cross-platform omnichannel creator relationships. We work with each of them individually, and we gear our product and our audience growth against each platform individually.
Another question from Derek. Given the improved structural growth in the podcast ad market lately, is it fair to say that cyclical sensitivity related to coming years' growth outlook has decreased?
It's a good question. If we look back at where we were a couple of years ago in 2022, the ad market situation, including the podcasting ad market, was under more pressure than what it is today. It's always hard to predict what the future will hold, but we're certainly in a better position now than where we were, both as a company and as an industry than what we were a couple of years ago.
A question from Andreas at DNB Carnegie. Where do you see the strongest demand from advertisers? Is it for larger podcasts or a more broad-based demand?
That's a great question. It's both, but I would say we're more excited about the broad-based demand because, again, that' s how podcasting matures. If I think about pattern recognition and my years in media, I think the analogy would be people used to buy websites. Advertisers used to buy individual websites, and over a few years, that very quickly morphed into buying the internet, right? Buying digital audiences. We're excited about selling the big shows and doing deep integrations, and I don't think that that's going anywhere.
I think advertisers love the idea that you can integrate into a show in a very authentic way, but at the same time, the true growth and the real excitement is being able to sell podcasting audiences to those brands. T ruthfully, the best partners we have on the advertising side do both. They go deep with individual big shows, and then they use the long tail to accelerate that growth and generate impressions against a longer tail.
We have a question from Matt Anderson. When the EBIT margin reaches 10%, at what level do you assume the gross profit margin will be?
We haven't guided specifically on the gross profit margin moving forward. We believe that the main leverage in the future will come from scaling against our operating expenses. Whilst we're on this topic, I think this EBIT margin of 10% really reflects significant progress, and the team is entirely focused and committed to delivering against these. We've also highlighted, the 10% margin is not the final destination, and we believe that we can improve the margin beyond that as well. How long that takes to get to the end destination, we don't really know. The industry is still evolving, but regardless, we aim to improve our EBIT margin profitability in the mid and the long term.
A question from [Burnt at Barclays], which has several parts to it. What drove the return to strong growth in Europe? How are you thinking about top-line contributions to your over 15% midterm target by region? How are you thinking about medium to long-term ARPuL numbers? Is the current level a new normal, and can we expect it to further expand from here?
Sure, I'll take that. In Europe, beyond just the U.K., we've seen our strategy of going upstream to the advertisers and not just waiting for them to discover podcasting, but going upstream and essentially making a market has really worked for us in Europe. It kind of desensitizes Acast from some of the macro trends, when we can go into blue-chip advertisers and create our own growth. R eally, that was our strategy this year. We have slightly easier comps in Europe, but that's really not the driver. The driver is returning to upstream sales process, bringing more revenue into the sector, and then obviously closing and showing results for the brands so that they continue to come back. Emily, anything to add there?
No, I think that's perfect. It covered [crosstalk].
Another question from [Burnt] at Barclays, about your growth in North America. How much of that is driven by bigger ticket sales versus volume?
It's both. I would say the larger advertisers in North America have really started coming into the space. Again, bigger brands, a brand with a direct response brand with a small budget, there's only so much they can do. When we start to talk to the blue-chip advertisers, people that have billion-dollar global budgets, even dipping their toe into podcasting is significant. We're excited about the larger ticket deals, but also, as I mentioned, our efficient sales channels, so more smaller advertisers and more revenue from the larger advertisers is a really good one-two punch strategy.
Another question from [Burnt]. What's your estimate for your U.S. TAM, Total Addressable Market? What do you think you can achieve in terms of market share?
Yeah. I don't believe we've broken out individual market shares, but I can tell you, the U.S. is really competitive. I think there's no one with a dominant market share in the ad marketplace. Our competitive set generally, when we run into somebody in a customer's office, it's somebody that maybe has a larger business where podcasting isn't their primary focus. As I had said, what's wonderful about Acast is, we compete differently in every market. I think there's incredible, incredible upside. We're just scratching the surface in North America, and particularly in the U.S.
Great. Final question from [Burnt]. The partnership with Magnite sounds promising. Has something changed that didn't make such a programmatic partnership viable before, but does now?
Yeah, I think we just have an amazing team. O ur biz ops, ad ops, our tech teams, it's not easy. You can't just be a rep firm or a sales house and plug into a company like Magnite. It's taken a lot of work behind the scenes in getting those pipes connected. A press release takes a few minutes, but it was probably six to eight months of prep work. A lot of work went into hooking up the pipes, and now we're excited to turn the water on.
Great. I think that concludes our Q&A. Greg, I shall hand back over to you for closing remarks.
Wonderful. Thank you, LP. All right. Thanks to everyone who listened and watched. The next upcoming report is our year-end report, which will be released the 11th of February 2026. You are welcome to join us for that presentation. In the meantime, you can follow us on investors.acast.com, to sign up for press releases, news, and financial reports, our Acast blog or listen to our financial results as a podcast. Thank you, and goodbye.