Ladies and gentlemen, welcome to the Cint Interim Report, Q3. My name is Kenneth, and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I will now hand you over to your host, Patrick Comer, the Chief Executive Officer, to begin. Patrick, please go ahead.
Thank you, Kenneth, and good morning, all. Of course, my name is Patrick Comer. I'm the CEO of Cint, and I'm joined by our CFO, Niels Boon. It's a privilege to speak with you today as the new long-term CEO, having stepped into the role at the beginning of September, after two and a half years of being chair of the board. As many of you know, I am uniquely qualified to lead the organization. I was the founder and CEO of Lucid, which of course, was acquired by Cint in twenty twenty-one. Over the past forty-five days, I've spent a lot of time and dozens of meetings with our largest and most important customers, many of whom I've known for many years, speaking with them about their opportunities and the challenges that they face.
What I've learned is that Cint remains a critical part of this industry, and that our partners are ready for us to complete our migration and our integration so that we can build our future together. Welcome to our results presentation. Next slide, please. I'd like to start with our heroic purpose, which serves as our North Star. Our purpose is to feed the world's curiosity, and it's this purpose that informs every decision that we make. It is our commitment to help our clients understand and to engage with their audiences more effectively. This purpose not only defines who we are today, but also shapes our vision for the future. Next slide, please. A quick reminder/overview of the role that Cint plays in this market research industry or ResTech industry. We are the critical global exchange for distributing surveys.
We power insights for a wide range of research types, and most importantly for us, the media measurement or audience... I'm sorry, advertising effectiveness industry. With customers in more than 70 countries, our platform reaches more than 300 million respondents, and we reach respondents in more than 130 countries globally. Every day, surveys are launched on our platform, leveraging our profiling data to connect researchers with the right audiences in the right time. Our role is to provide this critical technical infrastructure and insights platform, servicing more than 4,300 customers globally. And at Cint, we have built the world's largest automated survey exchange, ensuring the efficient delivery of insights at scale for businesses worldwide. Next slide, please. Looking at an overview of our third quarter.
Despite our ongoing and challenging market conditions, we have maintained stable sales and achieved continued improvements in our profitability. As you can see, our media measurement business continues to grow strongly, offsetting slower sales that we've seen in the Cint Exchange, which has been impacted by weaker demand. What's important to highlight is our improved gross margin, driven by higher operational efficiency and lower cost, thanks in part to the ongoing platform integration process. We're on track with customer migration and expect the majority of clients to be fully transitioned by the middle of next year. Our commitment to innovation also continues, and we'll highlight recent investments, focusing on product enhancements and leveraging automation to deliver more value to our customers. Next slide, please. Briefly looking at our Q3 figures.
Our net sales for the third quarter reached 42.4 billion, reflecting a 1.6% growth in on a constant currency basis. As mentioned before, this growth was mainly driven by strong performance in Media Measurement. Our gross profit increased to 37.3 million, with a gross profit margin of 88%, slightly up from 87.4% last year. This improvement in gross margin could be attributed to lower operational costs, particularly in hosting. Our operating expenses were down to 25.6 million, leading to an improved EBITA of 11.7, which translates to an EBITA margin of 27.5%. This is a significant improvement from the 22% last year, partly due to lower costs associated with our long-term incentive program.
Overall, our focus on operational efficiency has resulted in a stronger financial performance and positions us well for the future. Next slide, please. Let's talk a little bit deeper about the progress we've made with platform integration, customer migration, and some of our innovation products. By the end of the third quarter, we had successfully migrated 66% of our customers to the new Cint Exchange, and we're aiming for 80% by the end of this year and expect to fully migrate all customers by the middle of 2025. Obviously, customer retention is a key focus during this migration. I'm pleased with the momentum so far and feedback from our customers. We have a dedicated team closely working with each client to ensure a smooth transition, and we've implemented several support initiatives to address concerns they may have.
We have not seen significant churn, and we are closely monitoring customer satisfaction throughout this process. In terms of looking at innovation for the quarter, one of our key releases is our AI-powered fielding assistant, which helps our customers get the best price and best delivery options for their surveys, while cutting down the time it takes to manage projects. This is a major step forward in making the platform more efficient for all of our users. We've also rolled out what's called RPI, which is Revenue Per Interview. This replaces the old supplier take rate systems of our legacy platforms by optimizing for delivery, quality, and price. Over 70% of our supplier volume is already using this model, and we're on track to reach 90% by the end of the year.
All of these efforts are helping us streamline operations, improve customer experiences, and set the stage for continued profitability. Next slide, please. Let's spend more time on media measurement as it continues to be a key driver for us. This quarter, we built on our partnership with Disney by enhancing our self-service media measurement platform. This now is open to new customers and allows them to quickly set up studies and to get real-time insights in just minutes, making it easier than ever for them to move from a study concept to actionable data. We've also expanded our capabilities into measuring Digital Out-of-home. These are particular ad placements, and one of the fastest-growing areas of digital ad spend. Additionally, we've introduced AI-powered reporting enhancements to help our customers synthesize their brand lift insights more effectively and optimize their media strategies across different platforms.
These innovations are helping us meet the evolving needs of our customers, making Cint an essential platform in providing advanced cross-channel measurement solutions. Next slide, please. And with that, I'll pass the mic to our esteemed CFO, Niels Boon.
Thank you, and good morning, everyone. Next slide, please. This slide is just a reminder that we changed our reporting formats in Q1. So the three main changes are the revenue recognition, function-based P&L in terms of costs, and the EBITA measure instead of EBITDA. So just to remind you, because of the year-on-year comparisons. Next slide, please. So all the numbers that you see here are pro forma numbers, meaning they are like for like under the new method. So as already mentioned by Patrick, we had 1.6% constant currency growth at the group level. Gross profit was higher. You could see we had this one-off dip in Q1, and since then, we have been improving mainly due to the lower hosting costs and ongoing optimization of that.
Then on the right, you see EBITA, the profitability, and of course, there we also see a nice spike upwards towards 27.5%. It was, however, helped by a 2 million kind of one-off adjustment on the LTIP programs, compared to 0.9% last year. Next slide, please. So here you see the different business segments. So as was already kind of common during the previous quarters as well, Media Measurement has been growing quite well, 47% year on year, compared to Cint Exchange with -12%. Then if you go to the right, you see the regional split of the same numbers. So here, the Americas includes Media Measurement, therefore, it went up.
Without that, it would also have been a negative growth there, unfortunately, with 17%, EMEA, -1%, and APAC, -17% as well. Next slide, please. So going down the P&L, so we already discussed a little bit, gross margin and total OpEx. So as you can see, further, you can also see the split there, the different function-based cost items. We also had this efficiency program that we announced in July that becomes visible here, mainly in the sales and marketing expense line. And other than that, worth to point out, amortization last year was related to the depreciation of systems. This is why it's a big number last year and not so big this year. So this year is more normal, I would say there.
Items affecting comparability has to do with CEO change mainly, and that's therefore also non-recurring. So yeah, coming down to EBIT of three million compared to -21 last year. Going to the next slide, please. So this is about cash flow. You see, total cash flow was -7 million, compared to -4.3 in the previous year for the same quarter. Operating cash flow actually improved by 6.5 million, so based on the stronger profitability, as we already saw before. Changes in working capital, -9.9 million. We will go deeper into working capital later on. Investing activities, that has to do with capitalized development costs, was stable compared to last year.
You see here cash flow from financing, that has to do with a EUR 3.6 million loan down payment that we had in 2024, but not last year. So that's the main change that you see there. So total cash, EUR 23.4 million, and total net debt is EUR 78.6. Going to the next slide about working capital. So here you see the split. So total working capital went up, with receivables being stable. Accounts receivables actually going down here, but you have to kind of look at that one in combination with the other current receivables as well. So if you take those two together, it's stable.
Accounts payable went down, however, and therefore, total net working capital went up as a percentage of total customer spend and also in absolute number, of course, because the customer spend was stable compared to the previous quarter. So we are still, and will be focusing on working capital going forward. I expect more gradual changes there, improvements there, rather than a step change. We have a couple of, you know, major things working to our favor there that will become visible over time. So one is, of course, the ongoing migration/consolidation of the two platforms going into one platform. We're doing the same with the CRM systems and also with the ERP system, where we still have multiple or two, one for Cint, one for Lucid, and we're close to completing that as well.
And also, we went through what we call legal entity rationalization, where we went from 28 legal entities to 18, and we're just finalizing the last two of that. All of this will lead to more efficiency on the invoicing side, in particular, going forward. However, in the short term, it's not helping because it's more confusing and extra work maybe, but it will pay off in the medium and the longer term, for sure. Yeah, so the teams are fully focused on this. I think that's my last slide. Let me go back to Patrick for the last one before the Q&A.
All right. Thanks, Niels. So as we look ahead, the completion of the platform consolidation in the middle of next year is the major milestone for Cint. Once this process is complete, we'll be able to shift our focus towards accelerating innovation and expanding our commercial capabilities, particularly within the core marketplace business, which has seen a slower demand over recent quarters. While we continue to work through consolidation and migration, we anticipate only modest year-over-year sales. However, we do expect a typical strong seasonal fourth quarter. Looking further ahead, we're developing our robust strategic plan, which we'll present in the coming months, and our vision is clear. We want Cint to be the fastest, most efficient provider of consumer insights, offering the best quality and the widest variety of data to our customers.
This will position us for sustainable growth as we move into the next phase of our company's journey. I'm specifically focused on improving our commercial footing and positioning our platform for success post-migration. And personally, as a major shareholder, I'm passionate about this company and this industry. I am focused on executing this strategy and believe that we will see results in profitability and free cash flow, and I'm committed to clear and transparent communication with our investors throughout this process. I appreciate your time and attention, and we can move to Q&A.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press Star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is unmuted locally. We have our first audio question from Thomas Nielsen from Nordea Markets. Please go ahead.
Yes. Hello, Patrick and Niels. This is Thomas Nielsen from Nordea. I have two questions for you. First, in terms of the overall market, do you see any signs of improvement? And secondly, Media Measurement is showing very strong growth. Is there any risk that Cint is competing with its Cint Exchange customers here?
These are two great questions, Thomas, and I appreciate it. The first question is about the overall market. Are we seeing improvement around growth? And the second question is around media measurement. Do we see any kind of conflicts with the kind of marketplace or exchange business? Did I get that right?
Yes.
Perfect. Overall, in the market, having spoken with all of our customers, I think that across the board, and you've seen that with some of our other public peers that released, it's been a challenging market for research globally over the past few quarters. In the U.S., we have seen some improvement, particularly around the U.S. election, and so we have seen those volumes come through as we would expect, but in general, I still think that the overall view towards the research industry has been sluggish at best, and I think you see that across the board with public statements. On the media measurement side, there are particular customers that actually use both of our products. They use the marketplace, and they use media measurement. They license both, as it were.
And so the number of conflicts are actually relatively small. Most of our customers in media measurement are the agencies and the platforms themselves, like Disney. And so we don't see that many conflicts in the market between those two product suites. Does that answer, did that answer your question?
Yes, perfectly. Thank you so much.
Thank you. We have our next audio question from Emil Särnqvist from Danske Bank.
Hi, Emil Särnqvist calling on behalf of Victor Högberg. First of all, I would like to know, since the media measurement is continuing to outperform, is there anything we should be aware of on year-on-year comparables for the coming quarters that could potentially affect the growth? Secondly, given the currently muted growth, what's the OpEx plan for 2025 in order to protect the cash flow? We can start with those, and then I possibly have two other questions if we have time for that.
Can you clarify a little bit about the Media Measurement question? What do you mean by year-over-year comparables with Media Measurement?
Like, is there anything that we could expect for the next coming quarter, in like results or revenues that we could compare to next, last year?
Well-
Or is it expected to be growing as expected?
So Media Measurement continues to be an outperform, from our perspective, as the overall TAM and opportunity with that group continues to evolve and grow. So I can say that we don't see an obvious external reason why that product cannot continue to grow into the future. Does that answer that question?
Yes. Yes.
Then, in terms of operating expenses, obviously, we did an efficiency program over the summer, which is paying dividends. As we plan our next three-year strategic view, we look at, of course, the correct operating structure of the business, and we'll make the right choices to create a free cash flow environment that's positive for the company. Obviously, expenses and how we go forward are of particular importance as we navigate the growth of the business.
I can also add that we don't have NRIs next year anymore that we had this year, right? So we had about 8.7 million of NRIs in 2024, that are not coming back in 2025 and beyond. So from the integration, mainly.
I'm sorry, could you repeat that? Sorry, I couldn't hear you that good.
Yeah, the NRI. So we had items affecting comparability this year of 8.7 million, mainly related to the integration still. We don't have that going forward anymore because we stopped those at the end of Q2. So therefore, that is also a positive effect, combined with the efficiency program going into next year.
Thank you. Do I have time for two other questions as well?
I think so.
Well, then I'm just wondering how you're viewing the current net debt and the gearing in the light of cash flow and cash position.
Yeah, so-
And then the second question would be... Oh, sorry. Sorry.
No, no. Go ahead.
Go ahead.
That's the second one. That's all right.
Okay. And the second question would be, you mentioned it in the call previously, that the gross margin is shrinking to 88%, and I'm just wondering, is that, would you say that it's also driven by the mix, or is it mostly costs?
Yeah.
You wanna take the first one?
Yes. I'll start with the first one, so of course it will depend on the next couple of quarters or year, and the plan that we will announce later on, right, but of course, like what I said before as well, we will have more OpEx already from the NRI and the efficiency program, so that will help cash flow as well, of course, so from that perspective, next year looks brighter than this year, but we're currently developing the strategic plan that we will come out with later, and that will also, of course, affect this number, but other than that, we're more confident than a year ago or two years ago, I would say.
On the gross margin, it is mainly the improving, yeah, just processes and like how we do hosting, et cetera, and also the consolidation of platforms, and less so the mix, I would say. I don't know if you want to add.
Yeah, I think that's right. I think as the platform consolidation continues, we expect to see a reduction in hosting costs, and that should have a sustainable positive impact to gross margins.
Okay. Thank you very much.
You're welcome.
Thank you. We have our next question from the webcast, from Inna Jobson. What kind of activities are other current receivables related to? You wrote about some unbilled revenue in the Q3 report. Could you elaborate what this is? Thank you.
Yeah. Yeah, so this is what I briefly alluded to. We have accounts receivables, and we also have other current receivables. So that's a common item on the balance sheet. So other current receivables are items that are not invoiced yet at the end of that period. And also here, we had some improvements in terms of consolidating systems and the process, the way we were doing things, but that led to a delay in the invoicing at the end of September. So, yeah, it's about roughly $5 million. So we have EUR 4.5 million. Too much, you could say, in other current receivable compared to a normal period, and therefore, I'm looking at those two combined. So the improvement in accounts receivable is about $5 million, right?
So this is roughly equaling out this. So it will still be improving, but less so. And all those invoices already went out, of course, right, in the first week of October, after that. So yeah, as you can see also in previous quarters, there's always a certain level of this. It was just a bit higher this quarter, which I would consider a one-off as well, and it would be different again in Q4, et cetera. But there's nothing, yeah, specific to it. It's more like from an accounting perspective, this is how you record that.
Thank you. We have our next question from. Sorry. Thank you. We have our next question from Thomas Nielsen from Nordea Markets.
Okay.
Yes. Hello again. Could you talk-
Mm-hmm.
A bit about net working capital, either as % of sales or of, as a % of total customer spend, and where you would like to see net working capital to go in, say, two to three years' time after the migration is complete?
Yeah. It's a bit difficult to answer as a straight number.
Do the math.
Because also we're not doing, we're not giving guidance yet, et cetera, right? But, what I can say in general, that of course, we have the accounts receivable as the major component here, as you can see, right, in the numbers. And from that, at least 70% is current, so you have about, like, 30% that can be reduced. And what we've said in the past is that, we can say if you can close that gap, for example, by half, this is kind of what we're working with. And then you have to see that, of course, as a % of customer spent, because that's what's driving it, ultimately, right?
So when you look in a static way, meaning not as % of spent, then it would be 10-15 million EUR from the current amount with this logic. But of course, hopefully, it will go up again after the migration, right? And that's the plan. And then also this amount will follow as a % and therefore increase in absolute amount, but then decrease as a %. But yeah, there's a lot of different factors coming together into this number here. And that's yeah, definitely difficult to predict with certainty. And then also it depends on our strategic plan, et cetera, and the speed of the migration and all those other factors. Yeah, but we will see improvements for sure.
I'm quite confident of that because we have so many ongoing efforts coming together that will affect this number in a positive way.
Okay. Okay. Thank you, Niels.
You're welcome.
Thank you.
Thank you. We have our next question from the webcast. Have Triton Partners or other institutional investors expressed alternative forms of support beyond share purchase activity as part of Cint's robust growth? Thank you.
I think the question is around Boler becoming one of our more significant partners. We have good conversations with all our investors, including Boler, where we welcome Boler as part of our NomCom to help guide the board level, but other than that, they've been helpful in terms of asking good questions and being an important investor for us. We've been delighted to see their interest as well as other interest in terms of investors buying shares into the company.
Thank you. We have our next question from the webcast. In an effort to strengthen Cint's commercial team, will Cint work to increase.. Sorry. Will Cint work to increase the compensation package that better align with the employee incentives? Thank you.
To be clear, I'm not exactly sure what that question is about. What I can say is we are consistently looking at whether it's sales or executive or employee compensation, and making sure they're aligned with the strategic growth of the business. We're going through a strategic review process now, which we will report on in the coming months, which will look at our forward plan for growth. And of course, aligning employee incentives with that plan is critical.
Thank you. We currently don't have any further questions. As a reminder, ladies and gentlemen, to ask any question, you can press star followed by one on your telephone keypad now. Thank you. Thank you. We currently don't have any further questions. As a reminder, you can press star followed by one on your telephone keypad for any questions. Thank you.
Your presentation.
Perfect.
Thank you. We currently don't have any questions, and I will hand over to Patrick for any closing remarks.
Once again, I want to say how much a privilege it is to join you as the long-term CEO, with Niels Boon, our CFO. This is our first webcast and so bear with us as we learn this new mechanism. But appreciate your time and attention to Cint and our shares. Thank you so much.
Thank you.