Ladies and gentlemen, welcome to the Cint interim report Q1. My name is Neil, and I will be coordinating the call today. If you would like to ask a question during the presentation, you may do so by pressing Star 1 on your telephone keypad. I'll now hand you over to your host, Giles Palmer, the CEO of Cint, to begin. Giles, please go ahead.
Thank you very much, and good morning. Welcome to our Q1 announcement on Q1 results. It doesn't feel like very long since we were here last time, does it? I think we did Q4 in the end of February, so it's a couple of months. So let's get going. Next slide, please. Slide 2. This is the same slide as you'll have seen before. Can you move it forward, please? Can you. There we go. So it's just a very simple explanation that Cint is the world's largest survey exchange, where over 4,000 companies come to get their surveys answered by over 300 million respondents. So we plug in an enormous number of panel providers and our own supply on one side, and on the other side, we have thousands of customers and wanting to get their surveys answered.
You know, roughly speaking, we do 300,000+ surveys a day, and that can peak in peak time. So it's a—it is, it has the economies of scale and the scale to be the world's largest exchange for getting surveys answered. Next slide, please, just in a nutshell. So Q1, I'm actually going to go to point 4 first. Can we have the next slide, please? It'll come. So point 4 first, or the fourth bullet point. We just noticed in a couple of the reports that have kind of come out already this morning that there's a little bit of confusion around what we've done with the different—the changes in reporting. So let me just explain that. And Niels Boon , who's our new-ish CFO, who's sitting next to me, say hi, Niels.
Good morning.
We'll explain more later. As we transition to one platform, which is going to be called the Cint Exchange, from the two previous legacy platforms, the Lucid platform and the Cint platform, we want to recognize revenue in the same way. Previously, Cint recognized revenue on the Cint platform gross, and then supplier costs or costs of the costs that go to the sample or the panel providers came in as a cost of goods sold. Whereas, on the Lucid platform, we recognized just the difference between those two as revenue. So there was a bit of an apples and pears thing going on there, which had been the case ever since the acquisition.
And as we now move to one platform, that makes no sense, and so we want to, starting in Q1 2024, recognize revenue in a consistent way. We think it's also the right way to do it, frankly. And interestingly, what happens is, obviously, the top line revenue goes down, but the gross profit is significantly higher. And the difference between what we're now calling revenue and gross profit is really hosting two things: hosting costs and the costs of the people internally that support our customers or run the managed services that the customers use. So that's the top line. And then on the cost side, we've decided that it would be much more helpful to the market and internally to account for things in a more departmental way.
So R&D costs, sales and marketing costs, general administration, travel costs , and break those out. Whereas before that, that wasn't the case. They were just all lumped in personnel. So we've made these changes to be more consistent and more transparent, and then we get down to an EBITA number, which we think is a more useful number in terms of the actual performance of the company. So we're doing this to be consistent, as we transition to one product, or one platform, and to be helpful. So I just want to make sure that people—that everybody's clear that we personally, internally, think that this is a move towards transparency and openness and consistency rather than any sort of anything else. So I just make that point because I'd seen a couple of comments this morning. So let's go back to the quarter.
It's a growth quarter, right? So on a net sales basis, and if we were to look at it on a previous basis, gross sales basis as well, it's a growth quarter. It's the first quarter of growth since, I think, Q3 2022. I think from memory, I wasn't here back then, but it's a Cint, it's a milestone. So, I'm not going to make it bigger than it is. It's a very small growth year-over-year, but it's still a growth quarter. And, I was asked back in June on the earnings, the Q2 earnings last year, when the company will return to growth. Well, and I said in the not too distant future, well, I think that this is roughly the not too distant future. Just want to be cautious that the idea of returning to growth suggests that it's all, it's going to be there permanently.
We're not giving guidance on Q2 and beyond. We're not saying that this is now back to growth and the growth is going to increase. Not saying that. That may be the case, but what we are saying is that Q1 is a growth quarter. So simple as that. That's driven by, you know, really strong performance in media measurement and some weakness still in the historic two platforms, the two exchanges. So, you know, our goal is obviously to combine those exchanges, drive efficiencies, and make sure that we get better growth there as well. We've started to migrate our managed service customers, as I said, in February. That's on plan and going well.
And yeah, the internal teams are extremely happy with the new platform because they're using it to run the managed services on behalf of our customers. We are beta testing our self-serve platform, the new Cint Exchange, in May. So very soon, next, next week, or at least, May starts next week. I'm not sure we actually will start absolutely next week because we're still bug fixing, but it's going well. That's what I want to say there. Okay, next slide, please. So here we are, the figures. Net sales EUR 36 million, EUR 36.4 million, 1.6% constant currency, as I said. Gross profit, also, up. OPEX, down year-on-year, and EBITA, up. Actually, the gross profit percentage is down. I think the gross profit actually is slightly down because the gross profit margin is slightly down versus last year. OPEX is less. EBITA is up.
It's not hugely up, but it's up. So as we're carrying this cost of integration and consolidation, we're still managing to reduce that cost even with inflation and so on, on a year-on-year basis whilst actually just returning gently to growth. So, nothing too dramatic there, but I just wanted to be clear about what's going on. Next slide, please. Slide 5. We've decided to say a little bit more this time about the media measurement business because it's becoming quite material and it's performing super well. So I wanted to sort of flesh that out a little bit. You can read what I've said here, but I'll just summarize it. Increasingly cross-platform. So historically, it would have been mainly sort of digital advertising, but now we're integrating or making it possible to compare things like audio, and social, and linear TV tracking.
So broadening out the scope of the offering, and also onboarding to really big new partners in Netflix and Disney in Q1 as well. So the revenues from those deals really just beginning to show up in Q1, but those are significant. And Net—you know, Netflix have announced the deal with Cint in their earnings call recently and also the upfront season where the TV, you know, pre-sales of TV ads in the US, Cint is baked into that, with Netflix. So really encouraging lots of great work done by the team there, great performance, and obviously more to come. Slide 6, please. Focus on product integration and customer migration. I've been saying this since I joined. Cint is, you know, in 2023 was a bottom-line loss-making company.
As we all know, it shrunk last year. So my job, our job as a team, and I just want to make a note that I'm incredibly happy with the senior team that we've got in place now. So just a nod to them. They're doing amazing work. Our job is to integrate all of the technologies that we have inside the company, create one best-of-breed, fantastic new platform with a new user experience, streamlined, efficient, baked in all of the learnings that we've had over the last 10+ years, fire up or re-fire up and reinvest in sales and marketing, and make the company leaner and have more modern products to drive growth and be more efficient. So consolidation is the first piece of that.
Consolidate the platforms, consolidate the back-end systems, consolidate, you know, different Salesforce instances, different NetSuite instances, all of the stuff that is required. That's going really well. Massive undertaking, lots and lots of work, lots of people doing this work internally. As we cycle through that consolidation in the coming two-three quarters, the company will become more efficient. It will become easier to run. It will. Data will flow more seamlessly. We will automate processes. It will be a very different company. Alongside that, we'll be launching the new Cint Exchange. So, lots and lots of work and focus been on consolidation and integration. We're also moving into the standardizing and optimizing how we do things as we move into a new planning process in the next two-three months. So, lots of really, really good work.
This is continuation of the messaging that I've been saying since I joined about a year ago, but I'm super happy with the way things are going. It's a lot of work, but it's going very well. The customer migration is in play, as I said a few minutes ago. Next slide, slide 7, please. Quality. Obviously, quality was a big deal a year ago when we announced that it was spiking upwards. It's been a constant sort of base note in these calls for the last year, but I'm pleased to say that reversals are now below 9%, which was the target. Amazing work by all the engineering teams inside Cint, both on internal projects and integrating external bot analysis and bot tracking products that have allowed us to, you know, really get on top of this.
So again, great work, R&D team. We're not going to talk about this going forward unless it becomes a problem again. It's not part of the growth story. It's not part of the core work to consolidate and improve and grow the business. We will keep an eye on it. And if it starts going the wrong direction, we'll talk about it. But it doesn't warrant this level of discussion, once it's under control, which it now is, and still trending downwards. So that's all I wanted—you want to say on that, but I just want to be clear and transparent. Slide 8. And then my final slide.
It's a repetition, but I think by now you will know that we are extremely focused on making this company streamlined, efficient, highly, highly productive, and prepped for the next phase of its evolution, which will be a phase of innovation. We're moving to that reasonably quickly now. The levels of excitement inside the company are beginning to go up, you know, cautiously. But we are still executing this strategy this year: consolidate, standardize, optimize, and have a plotted path to efficiency and higher profitability. So that's it from me. I will now hand over to Niels. Over to you, my friend. Morning.
Slide 9, please.
Next slide.
Maybe slide 10.
Yeah, you can go on to 10. Yeah, so as Giles already mentioned, we changed the format, of course. I'll just go over it once again briefly. So we have three changes. The first one is around the revenue recognition, as mentioned by Giles. So we went from gross to net revenue recognition. That also means that the gross margin is higher and therefore not comparable with previous years. So we reclassified a couple of items that were previously under operating expense, and they are now called cost of services sold. So that goes into the new gross margin. It's hosting and direct labor. So those two things. Yeah, the second one.
Most of that is hosting, right?
Yeah, it's two-thirds hosting, roughly one-third direct labor. Then the second one is around the cost. So in previous reportings, we always talked about only personnel cost as a group, and now we have split it out into the different buckets. So we have sales and marketing, research and development, and general and administrative. And this is also more aligned with how we look at it internally and also just providing more transparency here, of course. And the final thing is that we moved from EBITDA to EBITA . And the difference here is that we now are including the depreciation of capitalized software development into our profitability measures. So also being more honest there, if you will, on more transparency, as previously that was not the case. Next slide, please. So Slide 11. Yeah, here you see the numbers already, briefly touched upon by Giles as well.
As you can see on the net sales, on the left, Q1 is always seasonally the least strong quarter, and we also see that here. So there's nothing unexpected there. Still, there was growth for the first time since a long time, right? So it was 1.6% in constant currency. Moving on to gross profit. There you see that it went down a little bit, so 2.4 percentage points compared to last year. I'm looking at pro forma again here for the comparability, of course. This was mainly due to the hosting element there, and that had to do with like new partnerships that we were onboarding. One of them in particular was the Netflix one, and that is therefore not expected to recur. Moving on to the profitability. So EBITA for the first time. Here you also see the two things, actually.
On the one hand, you see the seasonality as well, of course, from the sales, right, reflected in here, but also the operating leverage, that we have. So as soon as sales goes up, because most of our costs are fixed, you will see that also reflected in profitability. Overall, even though we had a smaller, gross profit, we still had, better, EBITA. So that's, quite good. So we moved from, EUR 900K to EUR 1.5 million or 2.5% to 4.1%. Next slide, please. Number 12. So here we have two splits from, our net sales. The first one is, about the two business segments. So we already saw the media measurements, before. There we had, 45% growth in, constant currency. And then on the right, you see what we call, the Cint Exchange. This is a new labeling.
We used to call this marketplace, but it's the same in terms of numbers. And it covers both legacy systems as well as the new Cint Exchange. So going forward, this will be how we will name this. There we had 8% decline in constant currency. And then on the right, you see the same numbers, but then split by region. As you can see, it's a bit of a mixed picture. So Americas was going down by 1%. And then in Europe, it was positive, and in the Asia-Pacific, it was even more positive. So Europe was 2% up, and APAC was 11% up in constant currency. Going to slide 13. Yeah, actually here, similar to what we just saw on slide 11, of course. It's just everything combined with all the details that you can see here.
Overall, we had a bit higher cost of services sold due to the hosting when I mentioned before as well.
Just one thing to say there, though, that the reason when you look at operating profit, EBITA or EBITA and EBIT, they're the same. The second two columns are the same.
Yeah, exactly.
The gross profit, the second two columns, which are 2023, January to March 2023, are a little bit different. So it's maybe worth saying something about why that is.
Yeah, exactly. So you can see here, the last two columns. So when we start from the bottom, you see that EBITA is actually the same, pro forma, and in the report, that's how we know it from last year. But we have reclassifications going on, at the top. So, of course, first of all, the sales one where you can see clearly the difference between EUR 60 million and EUR 36 million. That's, of course, a huge, difference, but this is the growth to net revenue recognition that we discussed earlier. And then you see the cost of services sold. So there, you see also a huge difference, and that's because, this is now only including hosting and direct labor related to selling, the projects, whereas before it also included, cost of sample, and that's already deducted now from our new net sales number.
Yeah, and furthermore, we also therefore have a bit lower operating expenses because this hosting and direct labor cost element moved from below to into the cost of services. It's about EUR 5 million that was moved up, if you will. And you can see that on page 14 from our full reporting. Yeah, so therefore, you see that all the below gross profit, all the costs are actually going down except for sales, I think they were stable. Then below the EBITA line, similar items as before. Items affecting comparability. This is what we call NRI or non-recurring items. They are related to the acquisition of Lucid. We expect one more quarter of this. So the next one, Q2, and after that, we expect it to go to zero, which is in line with what we have set, I think, from the beginning since the acquisition.
So that's also still the same. Next slide, please. 14. This is about the cash flow. So here, comparing with last year, you see that operating cash flow was actually EUR 4.4 million better than last year, which is, of course, quite positive development. However, overall.
The same period.
In the same period, exactly. Yeah, Q1 to Q1, and overall.
That's a significant improvement.
Yeah, it's a huge one. Exactly. So we, we went from last year.
Because it's also in the quarter, right? On a I mean, I guess we're looking at collecting cash from the previous quarter's sales, but it's a significant improvement.
Yeah, exactly. Yeah, so we're quite happy with that, indeed. You see that overall net cash flow went down by EUR 2.7 million. That has to do more with financing as well, as you can see here, which moved from 600,000 to EUR 2.4 million outflow. That one includes two elements. One of them is that we started repaying the loan for the first time. We have quarterly repayments. That was EUR 1.9 million, $2 million. And also there was like an interest element, actually. That's in operating cash flows. I forgot to mention that. So the EUR 4.4 million positive change between yeah, last year and this year in operating cash flows, that's including 900,000 negative impact from higher interest rates. So therefore, it's actually more remarkable. I hope it don't confuse people too much now. Onto the next page. 15. Working capital.
Here, I would say it's more of a stable picture when you compare to December last year. So you can see the accounts receivables combined with the current other current receivables, they are stable. And payables went down combined by -EUR 1.1 million, and therefore working capital went up by EUR 1.1 million, obviously. In relation to total customer spend , it's also quite stable. Even though it's stable, of course, we want to improve this and we're working hard to do so. And I think the general focus on consolidation, standardization, and optimization will also play into this. It won't show overnight into the numbers, but for sure, it should improve as we go along with the migration and all the other projects that we have going on. So I'm quite confident about this as well. I think that's the final thing. Yeah.
Great. So, if we just push on to slide 17, please. So in summary, product and backend systems and all other parts of integration is our priority together with migrating our customers onto the new Cint Exchange. Then we standardize and optimize our processes and the business in general to create efficiency and drive profitability. And then three is really stepping into increased investment in the media measurement business and stabilizing and turning around the growth in the core Exchange business. And then finally, as Niels just said, and this we've been saying for a while, so it is clearly something that we haven't delivered on, but it is a massive focus. We need to improve cash flow from operations and the flow through from operations right to the bank balance, and cash generation. And then the final slide. And again, this is a repeat.
I'm just going to step through it. Connecting with our customers and companies in general in a global marketplace, the need to connect with consumers and understand consumers and make sure that their messaging, their advertising, their marketing, their products are as targeted, specific, and land as clearly and as accurately and as efficiently as possible is massively important. And one of the ways of doing that is to understand consumers, and one of the ways to understand consumers is to ask them questions. And we are the premium and biggest place for making that happen. So, I'm a strong believer that the underlying need is global and large. We are, as it says in number two, positioned uniquely in the center of the market research value chain.
It's Cint; it's not a nice to have. It's a must-have. The market research value chain, the market research does not happen without, without Cint, executing, facilitating, and joining up customers with respondents. And finally, scale matters in this business. Customers come to where they get the best choice, and that's Cint. And suppliers come to where, there's the most demand there, the most customers, so that they can get the best price. So the marketplace dynamics very much are there, and it's our job to make sure that we continuously innovate in that marketplace and offer our customers and our suppliers, more and more opportunity to to do business and make money. And that, that ends the presentation, and and we can move to Q&A now. So thank you very much, and thank you, Niels, for doing a great job on your first one.
Thanks.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to withdraw your question. When preparing to ask your question, please ensure your phone is unmuted locally. Thank you. We will pause you briefly as questions are registered.
No questions. It's all so clear.
We currently don't have any questions on the line. As a reminder to ask any questions, please press star followed by one on your telephone keypad now. Thank you.
We'll give it one more minute, if there's no questions. I think we should call it. There seems like there are no questions. So thank you, everybody, for being here. And, yeah, look, we'll see you again in three months' time, for Q2.