Good morning, and welcome to the presentation of Adtraction's fourth quarter and full year 2023 results. Today's presenters are Andreas Hagström, CFO, and myself. My name is Simon Gustafson. I'm the CEO and one of the company's founders. So today is the first time that we do this audio cast in English, and I would like to extend a special welcome to all new international listeners joining us today. I would also like to encourage everyone to please send questions to ir@adtraction.com throughout this presentation. I believe there's also a feature in the platform that you can use to ask questions. Andreas and I will do our best to answer your questions in the Q&A session immediately following today's presentation.
So I'd like to start by talking about the state of Adtraction, and there's three things that I would like to cover. That's the financial performance, operational performance, and also our current focus areas. So from a financial point of view, I think that many of you know that we focus on growth, profitability, and cash flow. And in my opinion, we have delivered in all of these three areas in both 2023 and in the fourth quarter. So sales grew by 45% in 2023 and by 41% in Q4. Of course, most of that growth is from the acquisition of Adservice in Q1, but I'm happy to report that we're also seeing organic growth in a fairly difficult market.
The other good news is that gross profit is growing quicker than sales, which of course means that we're increasing our gross profit margin. Because our cost base is relatively stable, we're also increasing our EBITA significantly. In the nice little graph on the right-hand side, you can see that we more than double our EBITA the fourth quarter. For the full year, EBITA is SEK 75 million, and for the fourth quarter, SEK 25 million. In the third and fourth quarter, we're also approaching our EBITA goal of 7%. We're fairly close to that. Adtraction is a business that's generating cash. In the fourth quarter, SEK 34 million, and for the full year, SEK 66 million. Andreas will do a breakdown of that later on, and I will just say that we have a nice cash conversion in Adtraction.
A lot of EBITA becomes cash, and that's because we are not capitalizing any expenses, and we don't have a lot of investments either. Because we're generating cash and because we're profitable, we can now start paying dividend. The board of directors has proposed a dividend of two SEK per share. In Q4, we made a release about Black Friday and Black Week, and we reported that the number of transactions grew by 15%, and that order value grew by 30%. This in itself is not amazing in any way, but I still think it's fairly good in relation to other observations in the market.
I think that many of you have seen that the retail market has been generally weak in Q4, and so has the e-commerce market, and Adtraction still manages to grow, and this has been true for the e-commerce segment the entire year. We're delivering a nice organic growth. And the reason that we can do that is fundamentally because we have a great business model. Advertisers only pay if we deliver sales or orders to them, so they tend to stick to this business model and Adtraction also in shaky times. Adtraction is also increasing market shares, not only in Europe, but also in Nordic countries. We've seen a weak or very weak market for consumer credits. This should not be surprising to anyone.
We've talked about this before, and this is the result of the central bank's increasing interest rates across the board. Of course, this will have a negative impact on consumer credit and the credit volume. What I have to say about this is the following: We have worked with consumer credits for many years, and so has Adservice. We are experts at this, and we remain committed to this industry, and we remain committed to trying to help our advertisers and partners generate great results. We know that this market is volatile, but we're long term, and we're patient, and we know that over time this is a very profitable business for advertisers, partners, and Adtraction.
Just to be clear, this is still a profitable business for Adtraction, even if no growth rates in certain regions are negative. Our current focus is, as always, to help grow the business of our advertisers and partners. This is always our top priority. Internally, we're focusing on coming back to growth for teams and markets that currently have negative growth rates. And again, this is mainly about consumer credits. E-commerce is growing in most markets. Overall, we're very interested in Europe. We want to do more in Europe and grow more in Europe, and I'll talk a little bit more about that later on in the presentation. We've made three other releases in the last couple of months.
The first one that I talk about here is what we internally refer to as Project X, and that is the strategy to use one platform for Adtraction and Adservice. I will explain the thinking here, and also the process for implementing this strategy. Adtraction is working a lot with influencers, and I'll talk a little bit about what it is that we're doing. We have announced a collaboration with a great company called Collabs, and I'll give a little bit more background to that release. Finally, we have, or rather we are in the process of divesting our subsidiary called Klara Lån. I don't think there's any drama here.
We have a platform where we will have more than SEK 1.3 billion in sales, and this should be our focus, not Klara Lån's platform. So we believe that we have found a good owner for Klara Lån, and again, I will explain a little bit more about the process later on in the presentation. So I think this graph illustrates my point in a nice way. We've consistently grown the gross profit quarter by quarter, and in the last two quarters, we have managed to increase the EBITA margin also. Adtraction is engaged in something that we call partner marketing. We can also call it affiliate marketing. The fundamental idea here is that we help advertisers and partners grow their business.
Of course, the key feature or characteristic of our business model is that advertisers only pay for results. This is risk-free advertising. Adtraction is a platform company. We have a scalable business model. When we grow, margins should increase, and this is the one of the reasons that we focus so much on growth. And again, from a financial point of view, we are interested in growth, profitability, and strong cash flows. On the right hand side here, you see a little picture with the different flags. These are our local markets. I would claim that Adtraction is the indisputable market leader in the Nordics, and we aim to continue to grow in the Nordics, but we will also have a strong focus on Europe. We have established a very nice foothold.
We have great teams, and we are now ready to grow. We're going to Europe. That will be a strong focus of Adtraction going forward. And I will also say that we are super, super long-term about this, just like we have been in building the Nordics. We will be big in Europe for sure. I think this is a nice way of explaining our business model. I've shown this before, but I'll repeat the story once again. This is not a real customer. This is a fictional e-commerce company. Any e-commerce company would prefer to only get direct traffic because the customer acquisition cost is zero for that. If someone just types in the company URL and buys something, the customer acquisition cost is zero.
In reality, there's tough competition in the marketplace, and many companies rely on Google to acquire traffic. In this example, 40% of total traffic is from Google. That is organic search and paid search. For many companies, it's going to be a lot more than 40%. Getting traffic from Google is never free, so companies invest a lot in organic search, in SEO, site optimization, and so on, and they invest even more in paid search. And what a lot of companies have experienced in the last few years is that they tend to get bigger and bigger invoices from Google, but traffic is not necessarily increasing.
And I think that, this is something that is true for many other paid media channels, that, it's, reasonably easy to get a small number of customer or a certain number of customers, but once you want to expand beyond that number, the marginal cost of an additional customer increases, and all of a sudden, the customer acquisition cost is very high. There is a solution for this, and this is what we're trying to illustrate at the bottom of the, graph here, where we see, many small sites. So, by working with many small sites, it is possible for an e-commerce company to scale without increasing the cost per transaction that much.
Of course, it is complicated for an e-commerce company to build and maintain relationships with hundreds or maybe a thousand different sites. It's difficult to manage tracking and to handle payments, but the good news is that Adtraction solves all of these problems, as we are showing in this picture. At the bottom here, it looks like Adtraction represents around 10% of this company's sales, and this is true in many cases. In other cases, we actually deliver a lot more. By working with Adtraction, things are easy. Adtraction manages the relationship with partners and everything related to that. Here are examples of partners that we work with. We divide them into five different categories: affiliates, influencers, content, finance, and tech.
I will not describe these different partner types in great details today. I will just say that content is They're by far biggest category for our e-commerce business in the network, and I'm really happy to see that we've seen a massive improvement in traffic quality and partner quality over the last few years. Managing hundreds and thousands of relationships with partners is a complex business. Adtraction is a super relevant speaking partner to these partners because we do not represent one advertiser, we represent many, and we can find good solutions for all partners essentially. This is yet another way to illustrate the business model. Partners send visitors to advertisers.
Advertisers only pay if there is an order or a sale or some other result that is valuable to the advertiser. Partners like this business model because they typically make more money than they would if they were working with a impression-based model or a click-based model. The reason for that is that they have specialized and high quality traffic. Adtraction's role is, of course, to provide a platform where all of this happens, and specifically, we are doing matching. We're matching the right partners with the right advertisers. We're doing tracking. We see what clicks result in sales. We're managing payments. The advertiser gets one invoice, and we distribute payments to hundreds and thousands of partners, and of course, there's a service layer on top.
We make sure that the right price is paid and that the advertisers get the right volume. This fundamentally is a great business model. It is so great that we're now in a position to pay a dividend. I would say that this is nothing new to Adtraction. As a private company, we always paid dividend. As a listed company, we've moved away from that, but now we're back to paying dividend. The thing that we announced in Q3 was that we would distribute 30%-60% of the adjusted net profit over time, and again, I would like to highlight the fact that it's not meaningful to look at net profit and EBIT for Adtraction because we have significant goodwill amortizations. I don't even know what our EBIT or net profit is.
It's not important because they don't tell us anything about Adtraction's ability to generate cash. I look at EBITA and adjusted net profit. So for the financial year 2023, the board of directors has proposed a dividend of two SEK per share, and the idea is that this dividend will be paid on two separate occasions. I think the idea is to pay one tranche in April and one in October. In total, we're paying SEK 33 million in dividend, which is 57% of the adjusted net profit. So paying dividend actually is a financial goal. We will not pay dividend every year. That depends on what we're doing, what M&A activities we're doing, and of course, also on the profitability.
So our other financial goals is that we want to generate a sales growth of 20% over time, and we want to generate an EBITA in excess of 7%. Growth is super important. I already touched on this a little bit, and it's important for two reasons. So first of all, we want to realize scale effects. If we become bigger, we believe that our margin will increase, and the reason is that we can distribute the cost of the platform on more business units that are profitable. Also, we're very interested in network effects. We've seen magic happen in our platform many times. That happens when you reach a critical mass of advertisers and partners.
When we have that in a market, we can just introduce any advertiser to the platform, and we will immediately start generating sales. Of course, from a shareholder point of view, our objective is to maximize long-term EBITA and, of course, adjusted net profit. I would say that we have delivered on these goals over time, so we have delivered significantly higher growth than 20% over time, and again, we are interested in the mix of organic and acquired growth over time. It's not possible to separate the two, especially if we move into one platform. This is another way of illustrating our growth. We see that rolling 12-month sales is continuously increasing.
EBITA has historically been around 4% or 5%, and what has happened is that as soon as we reached profitability in a market, we would start a new market and increase our cost base that way. In the last few quarters, the cost base has been relatively stable, and that has resulted in an improved margin, so we end up at 6.8% for the fourth quarter. Ultimately, what drives our sales and gross profit is the number of transactions, so we want the number of transactions to increase every quarter, and I think that that actually is happening. I also think that it's clear that Q4 stands out in terms of number of transactions.
That is, because of Black Friday, Black Week, and Christmas shopping in the e-commerce vertical. And the key to increase the number of transactions is to increase the number of advertisers, so we're continuously working with adding more great advertisers to our platform. If we add the right advertisers, we will also add more attractive partners. And our goal is to continuously increase the number of advertisers quarter by quarter. That's not always going to happen. Sometimes we need to remove some advertisers from the platform because they don't meet our size or quality requirements. So it's quite clear that the main driver of Adtraction's growth in Q4, and also for the full year, is acquisition.
So we acquired the great company Adservice in Q1 last year, and that contributes to 37% growth in the fourth quarter. Organic growth is only 4% in the quarter, but again, we're dealing with a fairly difficult market situation, and I'm happy to report organic growth. Gross profit grew by 13%. Again, this is important because it helps us increase our EBITA margin. So we have following the IPO, invested heavily in building the organization, and in 2021 and 2022, we increased the number of employees significantly. In January 2023, we acquired Adservice, and thereby added many other great employees. In the last few quarters, we've been more careful in terms of hiring.
And the reason is, of course, that we, we think that we can serve our existing advertiser and partner base with the existing employee base. We are not, per se, looking to reduce the number of employees. We are still hiring in several markets, and I think that what we see here is natural fluctuations. I expect the number of employees to be relatively stable in the next few quarters. It may increase a little bit or decrease a little bit, depending on the needs of local markets. The single biggest cost item for Adtraction is employees, and because the number of employees has been fairly stable, so has the cost base.
We will see the cost base increase or decrease by SEK 1 million or SEK 2 million here and there, but all in all, I think that has been relatively stable. This is important because this is what has helped us improve the margins. With that said, Andreas will now take over and go through some financials in greater detail.
Thank you, Simon. So then we start with the sales of the quarter. They're ending up at SEK 375 million. That's a 41% growth, 4% organic, and 37% acquired. Looking at gross profits, it is at SEK 71 million, and that is 43% growth and 13% organic growth. As you can see, organically, Adtraction grows faster in gross profit than in sales, and that is due to that the e-commerce vertical has a higher share of the gross profit in Q3, sorry, Q4 2023 than we got in 2022. And naturally, e-commerce has higher gross profit margin than we have in finance. Looking at EBITA, it's at SEK 25.6 million in the quarter.
That's a 103% increase from last year, same quarter, and an EBITA margin of 6.8%, which is close to the EBITA margin goal of 7%. Like Simon said, we have had a stable cost base throughout the year, with a little bit lower due to a seasonal effect with the vacation pay in Q3. Looking forward, we are also expecting this to keep at a stable rate. And the adjusted net result per share is at 1.28%, and that's a 22% increase. And the adjusted net result is also what we're talking about in our dividend policy, where we say that we will have dividends between 30%-60% over time.
The board of directors are also having a proposition in the upper range of this dividend policy, close to 60% in, for the year of 2023. So digging into the verticals, starting by e-commerce, we have SEK 43 million in gross profit. That's a 37% growth, 17% organic growth, and we grow in nine out of 12 markets. And the three markets where we have negative growth is just a small negative growth between 2% and 5%. Looking at finance, we have SEK 24 million in gross profit. That's 80%-81% growth. All growth is acquired here in finance, as we have a negative growth of 4% organically in the quarter. And we are still looking at the same challenges as in Q3. It's mainly the Swedish and the Spanish markets that's challenging.
Overall, we see a more challenging market for finance as well. Like Simon said, generally, when interest rates are increased, the volume in new loans decrease, and the other way around. When interest rates are decreased, we tend to see an increase in volume for new loans. Looking at the other vertical, we have Klara Lån with SEK 3.8 million gross profit. That's a negative growth rate of 6%. Looking at our geography, starting with the Nordics, we have SEK 56 million in gross profit. That's a 46% growth. We grow 9% organically. We have growth in Denmark, Norway, and Finland, and a slight negative growth in Sweden.
Looking at Europe, we have SEK 16 million in gross profit. That's 33% growth, 11% organic growth. We're growing in six out of eight markets. What's nice to see here is that we're also having good growth rates in markets that's going to be important for future growth, bigger countries. We are mainly looking into the e-commerce vertical when we see that growth. Taking a look at our cash flow, starting with the operational cash flow, we have a SEK 34.4 million operational cash flow in the quarter. That's more than half of the annual operating cash flow. I will dig into the seasonalities in a later slide. Looking at our investing activities, we have SEK -2.6 million. It's nothing new happening here. It's the last payments for the Adservice acquisition we made in Q1.
That gives us a total cash flow of SEK 31.8 million in the quarter, and a net cash position at the end of year of SEK 116 million, and that is also the basis of the board's proposition of 2 SEK per share in dividend. So the cash flow seasonality, we see it's pretty clear here in operational cash flow in blue bars. So Q4 sticks out in every single year here, and there are two main reasons for that. The first one being that Q4 is, of course, a very important quarter for Adtraction, having so much, e-commerce, which is the high season, there annually. And then we also have the working capital fluctuations, where you can see in the light blue line here in the graph.
And that is mainly due to our payment model, where we get paid by our advertisers, our customers, first, usually, and then we pay our partners for their commission in the beginning of the month after. So I'm gonna end the financial part of the presentation with a pro forma. I'm not going to dig into details here. It can be read on our investor site afterwards. But two highlights is that we're growing in each individual quarter in 2023 on gross profit level, and then we also increase our EBITDA in Q3 and Q4, ending the year with an increased EBITDA all over.
Thank you, Andreas. So I will get back to some of the things I mentioned in the introduction. So the first thing I would like to talk about is Klara Lån.
We announced that we would divest Klara Lån in December. Obviously, we had been negotiating that transaction for a while, but what we announced in December was a letter of intent, then we signed a binding SPA in January 31st. So, a transaction like that needs to be approved by Finansinspektionen. We do expect to get that approval, and if we follow a timetable, that will happen sometime towards the end of March. And if that's the case, we can close the transaction before the end of Q1. I will say that we cannot be certain that this happens, but my best guess is that this is the case. And I would say that there's no drama here.
So the reason that we're selling Klara Lån is that we want to focus on our core business. We have a great platform, and we want to focus on that. So the new owner, Silentium, has a strict consumer focus, and they're used to working in a regulated environment. They are an insurance broker, so we think that they can develop Klara Lån in a nice way. We also expect that Klara Lån will continue to be a good customer of Adtraction and be available for our partners. Then we've also announced what we internally call Project X, which is a one-platform project. You may remember that when we acquired Adservice, we said that we would go for two brands and two platform because this was demanded by the market.
In the last 12 months or so, I think that we have seen a different development. We have understood that it would be okay for us to work with one platform, so we have started looking at that strategy. A strategy like that has some obvious positive effects. The first one is that we will see nice network effects. If we add more advertisers into the platform, that's great for partners, and if we add more partners into the platform, that's great for advertisers. It's also going to be easier for our account managers to optimize accounts when they have access to a larger pool of advertisers and partners. Finally, we think that this is a good way to focus our development resources and avoid double work.
An easy way to explain this is that, let's say that we need a new feature for the platform. Someone has a great idea for a new feature. If we have two platforms, we obviously need to develop that two times, and that's twice the amount of work. Now, we can instead focus on one platform. There will also be some cost savings relating to hosting, et cetera, but these are not; this is not the main driver of this. So this is not a cost savings project. This is a gross profit increasing project. The migration process is ongoing. We started in Q1, actually towards the middle of Q1, and we expect to finalize everything in Q2.
It's not critical that we do that, but that's the timetable that we're currently working on, and we believe that it is realistic. Our goal is to migrate 100%, more or less, of the gross profit. Of course, not every single advertiser will be migrated. There will be a hiccup or two, but we're working towards the 100% goal. And we've done this before at Adtraction. We acquired two companies before, so we've been through this process, and we have great help from our colleagues at Adservice. What we're aiming to do here is to set a smooth process for advertisers and partners. That's the main goal. We're not doing everything at once. We're doing it market by market. We're learning something as we go, and we continuously improve the process.
I think that this is the right move for Adtraction. Influencers. So I just want to clarify a little bit how we work with influencers and how we view them. So fundamentally, influencers are like any other traffic channel for Adtraction. The main platforms that we work with are Instagram and YouTube, and we're also seeing increased activity on TikTok. We do have dedicated teams working with influencers, and for us, it's very rewarding to see that the CPA or cost per action model can be applied also for influencers. This means that the influencers can deliver high-quality traffic, make money, and make advertisers happy. We've also announced something, a partnership with a company called Collabs.
For now, we are mainly using their great platform for brand influencer discovery, but longer term, we will give their influencers access to Adtraction's advertiser portfolio. And, I will also say this, we are bigger than you might think when it comes to influencers. So Adtraction Group has total sales of SEK 1.3 billion or so. That means that the few percentage points of influencer sales that we have amounts to a significant number, and it means that we are actually bigger in the influencer space than some dedicated influencer agencies. And we are looking forward to continue to develop this channel. Finally, I will say something about what's happening in Q1.
We try to be as transparent as possible when it comes to our performance, and I think the picture is relatively straightforward, but I will try to describe a little bit more what I think is going on here. So first of all, Adtraction, the old Adtraction, if you will, is growing both in January and February. Adservice is not growing. We see quite a significant negative growth, and this is only related to market conditions and a difficult market for consumer credits. There's no customer losses or anything like that. It's only market conditions. And like I said before, we've been through times like this before. We know that the consumer credit market is volatile, and we also know that it will recover at some point.
To conclude this, we're seeing a small growth for the group in January and in February, we see a small negative growth. All in all, the growth in January and February seem to be relatively neutral, which of course is not where we want to be. We want to grow quicker than that, but that's where we currently are. We're also saying that we expect a somewhat increased cost base, and you know, just to add to what Andreas said, is another way to describe it is a relatively stable cost base, but we might see a small increase. So this is in line with the development of previous quarters, I think.
And if gross profit is around zero, and the cost base increases a little bit, then we will see a lower margin than in Q3 and Q4, of course, and we wanted to communicate this and be transparent about it. I think that EBITDA, in absolute numbers, will still be higher than pro forma EBITDA than in Q1 2023, but of course, we don't know where March will end up yet. We remain super optimistic about the e-commerce vertical, and we also know that at some point, the consumer credit vertical will recover. Our focus now is Europe. So again, I will reiterate that we have built a great foothold in Europe, and we are ready to take the next steps.
We're implementing a long-term plan to become super strong in Europe, and I think that we should expect M&A to be part of that. So if we look at what we have done, we have made a significant acquisition in acquiring Adservice last year. We have worked a lot with integration, and I think that the outcome is very positive. And I think that once we have finalized the integration of Project X or the One Platform strategy, we will again start looking more actively at M&A. I feel that there are many opportunities out there, and we are thrilled about building a European leader over time. So this was what we wanted to present, and then we have received a couple of questions that we will try to answer.
We will try to answer. We will read the questions. We haven't received them before, so we will read the questions and try to answer as well as we can here. So here's a question: How is your expansions in France and Italy continuing? What growth rates are you seeing, and when do you expect to reach critical mass? So I would say that we're still making losses in both France and Italy, but we had good fourth quarters in both of those markets. And I think that we have found a model that works, and we are sort of becoming more known in those markets. I still think that we have a little bit of time to reach critical mass.
I'm hesitant to put an exact timetable here, but what I know is that we have the right strategy in both markets, and we're going for that. Also, I think that France and Italy are keys to the European puzzle that we're trying to lay. So here's another thing, here's another questions from the same reader. If you're expecting a low single-digit growth during 2024, is this excluding the Klara Lån contribution of around SEK 60 million? In other words, would the outlook be better if Klara Lån was still in Adtraction? So when we talk growth rates, we will of course exclude Klara Lån from the base.
What I think that we can expect for Klara Lån is this: probably a reasonably good 2024, but after that, Klara Lån is facing some new regulation, which we talked about in the release, and I think that that may be challenging for Klara Lån in that specific segment of smaller loans from 2025 and onwards. So the answer to your question is that when we talk about growth rates, we exclude Klara Lån from the base. Here's another question: Why do you pay dividend rather than reinvesting in the company? Well, I would argue that we do both. So we have a significant net cash position. I don't remember the exact number, but we can both pay dividend and continue to reinvest.
So we've had an idea, when we built Adtraction, that we do not want more than maybe two, max three markets to be loss-making at the same time. That's the loss that we're willing to accept, which means that we're not gonna go crazy and start new markets until we're profitable where we need to be, profitable. So again, this is how we built the company. We always grew, and we always paid dividend, and I think that's a healthy way of running a company. Here's another question: How much money will you save by closing down Adservice's platform and switching to Adtraction, and when will you see an impact? And I will say, again, the main thing here is not to save costs.
So for example, we will continue with the same number of developers. Any cost savings that we'll save are more related to infrastructure, and that's not the big thing. The big thing here is the or are the forward-leaning aspects, that we will provide a better service for advertisers and partners, and we will make it easier to to optimize accounts for our account managers. What's the... Here's the question that I don't know from the top of my head, maybe you'd know, Andreas. What's the impact of Klara Lån on gross profit in 2024?
For 2023, it was around SEK 3 million-SEK 4 million per quarter, so that gives us around SEK 12 million.
Yeah. And a good way to analyze that is to look at the other segment in the report, where most of that is going to be, Klara Lån, right? What's the reason for the lower growth for Adservice in Q1 2024? Is it mainly a weaker market, or what's the reason? Well, yeah, that's the reason. So we see a weaker market for consumer credits, and I would also say that this is something that Adservice has lived through. So if you look at Adservice's historical financial performance, it's more volatile than Adtraction's because they are more exposed to the consumer credit market. But
Adservice has also delivered great profitability many years. So great volatility goes hand in hand with greater profitability, I think. Then finally, please describe the increase in OpEx, operating expenses, going forward. Well, again, you know, it's not like we're gonna see a huge increase in OpEx. What's going on here is that we see a relatively stable OpEx, perhaps a slight increase in costs. That's all. We're being fairly careful in our communication here also. So, that's it, I think from us. I cannot see any more questions, so I would like to thank everyone for listening in, and see you next quarter, if not before that. Thank you.
Thank you.