Hello everyone, and welcome to the Cint second quarter 2022 results presentation. My name is Nadia, and I'll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press Star followed by one on your telephone keypad. I will now hand over to your host, Tom Buehlmann, CEO of Cint to begin. Tom, please go ahead.
Thanks very much, Nadia. Good morning, everybody. It's a pleasure to be here to talk to you about our Q2 results. I mean, without kind of getting into the details, I mean, overall, we feel really good about our Q2 and equally, you know, optimistic about the future. We will talk about that as we get into it. If we move to the next slide, I'm just gonna spend a couple of minutes here because we do have somebody new here. Myself, you've met multiple times, as Joakim as well. As you know, we've got Britta as our Interim CFO at the moment.
I think it would be helpful, Britta, if you just say a little few words about yourself. You can introduce yourself.
Yes, hello. This is Britta. Happy to be on the call, and especially happy to be with Cint now. I have a strong background, also in investment banking. I have done a lot of interim CFO mandates and a couple of post-merger integrations and also an IPO for a company. Really happy to be with Cint, where everything is combined.
Fantastic. Good. Very good. Thank you. In terms of agenda, we are obviously gonna talk about Q2, integration of Lucid. Wanted to give you an update on that because that's obviously very topical and very important. As usual, we're gonna go through a more detailed financial update with summary and plenty of time for Q&A as well. Before we do that, I know there's. If we move to slide number 4, please. There are a couple of new folks on the call. This might be a little bit of a repetition for some of you, but just a couple of slides. Really, in a nutshell, we are the global leader in connected consumer insight.
What we do is we connect brands or companies on the left-hand side there at the top who want to ask questions with a whole bunch of consumers on the right-hand side who've agreed to answer questions, and we do that in a very smart, using very smart technology, right? That's basically us in a nutshell. In terms of operational KPIs, we have now done our best to combine those. We'll talk a little bit more about those in a couple of slides' time, but you will see, you know, very nice upticks on B2B consumers, B2B customers, connected consumers, and of course, also completed surveys. We'll delve more into that in a couple of slides' time.
Then just by way of reminder, on the bottom right there, you can see, you know, how much of a two things that stand out there, really. One is how global our business is, in terms of geographic spread, which is really important for our, particularly, you know, multi-country, international and global customers, and how much of a U.S. skew we've now gotten with our combination with Lucid, right? Almost 60% of revenue now coming from the Americans. If we move to the next slide, just a very brief recap on our strategy.
I throw that up again because it is repetition, but that's because we think we're doing the right thing and we're planning to continue doing this. I do wanna just do a couple of minutes of refresh on that. In terms of the red circles there, moving left to right, key part of what we're trying to do and we continue to do successfully is increasing the share of wallet with established insight companies. They are growing very nicely, as you may have seen in the report that we released earlier today. The tech-enabled, again, key part of our strategy.
They are kind of the long-term future of our industry, in our view, in many ways, and we are definitely hitching our wagon to those partners as well. New customer acquisition really important, keeps feeding the pipeline, and we've had a very good quarter actually on new customer acquisition, which is one of the reasons for our optimism about the future. Of course, you know, software platform, we can't stand still at all. We keep having to evolve and want to evolve that. That's a big focus going forward for us as well. M&A, we've done a couple of transactions recently, in terms of GapFish and of course, Lucid.
It is absolutely part of our thinking going forward. For the time being, that is something that is not on pause, I would say, 'cause we keep, you know, talking to folks and seeing what's out there in the marketplace, but not a priority, I would say, at this point in time. Just a recap on our financial targets, and I do reaffirm those. We are, you know, very confident being able to get to organic net sales growth of 25% in the medium term, and equally and in parallel, get to an EBITDA margin of 25% also in the medium term with no plans to pay any dividends.
With that's a quick recap on us. Let's move to the sort of Q2 highlights on slide number 7. This is what we, you know, we're proud of this, right? We've got net sales of SEK 23 and a bit million on a pro forma basis year-over-year which is 18% on a constant currency basis. Then if you look at that for the first half of the year, that goes up to 21% on a constant currency basis, which, you know, is perhaps a true measure of how we're doing. What I would say is, I think that those are really good results in my view.
If you think about Q2 in particular last year, that was a mega quarter, and it really was on the back of, you know, kind of a post-COVID recovery across a lot of our clients. You know, we're really pleased with the revenue momentum here. It's across the board. You'll see that coming through both in our marketplace, which is our sort of core business and on media measurement. We'll talk more about that kind of regional split in a couple of slides' time. Very encouragingly, I know there was some discussion around, you know, our 12% or thereabouts EBITDA in Q1. We're now at 17.7%, right?
I think we've done a really nice job at bringing up the EBITDA compared to SEK 13.4 at the same time last year on a pro forma basis. Really, it's a function of the scale benefits and the synergies starting to come through. I do have a couple of slides on the synergies in particular. I know it's a point of big interest. I've got a couple of slides on that coming shortly. Integration update, you know, definitely reaffirming the synergies of SEK 40 million.
I would also say that we are ramping up faster on those than we had originally planned when we put the plan together back in September, October last year, and that really is because we're focusing very much on the OpEx side of things, which obviously is very much in our control. If we could move to the next slide, please, and here we're gonna look at net sales development, and this is on a pro forma basis. Really, I think the message here is in the black box at the bottom. It's positive in all segments, in all regions and in all customer types.
That to me is one of the reasons I'm optimistic about the future because, you know, we have not yet seen, kind of, apart from perhaps a little bit on measurement, we've really not seen a kind of a dampening of demand, which is really encouraging. You know, as you can see here for Q2, you know, very positive progress across both measurement marketplace and across all the three regions and across both customer types that we talk about. If we move to the next slide, what we've now got is the operational KPIs, which are now including Lucid, right?
That was something we wanted to do is to combine those. What I would say is we've not restated backwards on a pro forma basis, right? What you see here is kind of the black histograms are kind of Cint only or legacy Cint only, I should say. Then you've got the kind of the combo in the red bars on each of those. Kind of over time, we'll get a good sense of progression. Really, I mean, it's a very nice picture and it's, I think again, one of the reasons that I'm optimistic is we continue to land B2B customers, which is important.
We are expanding our kind of network significantly, expanding our network of connected consumers, which we obviously need. It's in many ways our sort of raw material and very important. The end product obviously is output of those two connected consumers and B2B customers are the completed surveys. It's I think to me, this says, you know, it's a strong evidence of current momentum and is very indicative of kind of the building blocks that we're putting in place to maintain that into the future. If we could go onto the slide 11, please. I do wanna talk, as I've said a little bit about the integration.
In our view, we're ahead of plan and we're starting to see the synergies ramping up from Q2. Just to recap, we had a whole bunch of integration work streams. We kicked those off very early in Q1, and we're starting really to get a sense of much tighter alignment between the two legacy organizations. I was earlier this week, just by way of anecdote, in Barcelona, and we had an operations and commercial summit, obviously all the kind of top bunch of people there. You could just sense it was face to face, which is really important.
You could just sense sort of a much tighter alignment in terms of objectives, in terms of ways of working, in terms of kind of just getting on and focusing on the business than perhaps with a little bit more kind of uncertainty in the organization that we had in Q1 particularly. Now, in terms of what are we gonna do next. We're gonna start the functional operational level integration in H2. That's obviously then aligning very closely with the three-year strategic business plan that we discussed and got agreed with our board a month or so ago.
Importantly, I do believe in this. We had combined a new mission, vision and value statement that we've rolled out in the business, communicated in a whole bunch of workshops, and it was not just a top-down exercise, it was bottom up and then communicated out. That really is starting to see a good kind of evidence of that in the integration work and also just in the general sort of team building and how folks are interacting. In terms of focus, a big part of what we're focusing on is this Lead to Cash process.
As you can imagine, you know, two more or less equally sized businesses, you know, different IT systems, different invoicing, you know, all sorts of different, you know, different accounting obviously, IFRS and GAAP. You know, harmonizing that which is not yet done, but it's an absolute key priority is gonna yield tremendous benefits both operationally in terms of efficiency, but also financially in terms of savings. That is a big focus. We've done some very deep planning in Q2. Now we're gonna kick that off now in August in earnest, if you like. Just a recap on the synergies and integration cost update. We talked about at announcement SEK 40 million.
We're definitely reaffirming that number at least SEK 40 million. I would say we are ramping up faster than we originally expected, and this is by the OpEx, and I'll show you a slide on that on the next slide when we get to it. The benefits from that we're starting to see in Q2 and we'll continue to do that. In terms of the non-recurring integration costs, we did say about SEK 40 million. So far in H1, I think we've incurred about SEK 9 million. You know, the bulk of that is gonna get taken in 2022.
If we move to the next slide, I do want to talk a little bit about the deep dive on the headcounts, because this kind of gives you a little bit of view of a flavor, I hope, of how we're thinking about it and how we're taking action. Overall headcount is reduced in line with the synergy plan, but earlier than we originally thought, right? If you look at the sort of three bars, the combo at close had about 1,050 total headcount. Then we spent a lot of Q1 was about, you know, setting up and communicating the go-forward combined org with the leadership appointed and the LTAs appointed and so on.
To give clarity to the employees as to what we're trying to do and the direction we're trying to head and who they report to and all that kind of stuff, really important. But in parallel, we had a you know, significant focus on identifying and also actioning, you know, the initial OpEx synergies. That was a combination of, you know, operational optimization, and we had some harmonization of processes and, you know, in some cases, obviously some overlap. You can see what the kind of the benefit of that was that, we ended up on thirtieth of June with a little bit over 80 people less than we started with at the combo.
The reason I put this up is to give you a little bit of a sense of how we're thinking about the synergies and actually not so much talking about them, but actually doing it, right? This is kind of hopefully gives you a little bit of a flavor of how we're approaching that. With that, Joakim, I'm now gonna pass over to you, if we move to slide 14 for the financial update.
Perfect. Thank you, Tom. On page 14, the financial highlights. For the ones that have listened to us in the past, you will recognize this slide. This quarter we have put some more data on it. Looks a little bit messy maybe, but just explain why and what before we dig into the numbers. You will see that the black bars here on this page represent our reported numbers. That means that the 2021 numbers is legacy Cint and the amount of GapFish, while the 2022 numbers also include Lucid. The dark red bars in the same graphs represent Cint organic and Lucid, which is probably more interesting for the like, for like performance. That is also what we call the pro forma numbers. Now the numbers, and there will be some repetition from what Tom mentioned already.
Firstly, to your left, we delivered net sales of EUR 73.2 million in the second quarter. If we translate that into pro forma numbers, we saw a 28% growth year-over-year with good contribution from all businesses and all segments. Secondly, our gross profit was EUR 46.2 million in the quarter, which corresponded to a 63.1% gross margin. This is an improvement of 1.8 percentage points from last quarter, Q1 this year, but more or less unchanged to last year on a pro forma basis. Thirdly, to your right, our adjusted EBITDA was EUR 13 million for the quarter, and the margin was 17.7%, which again is a good uptick from the previous quarter's 12.1%.
On a pro forma basis, we improved the margin from 13.4% to 17.6%. Let's now move to the next page and drill a bit deeper into the profitability analysis. Here we have our usual slide with a more detailed P&L and the longer trend of our margin. A couple of comments to this page. First of all, as highlighted in the table to your right, we can conclude that the adjusted total net operating expenses is more or less the same in this quarter compared to the last quarter, which is in line with our plan to manage more revenue with more or less the same cost base this year. This is good and a sign of scalability.
We internally and you should of course look at this over a longer time period too, and we expect the last twelve months ratio to come down over time, again, as a proof of the scalability. This is also the main reason for the margin expansion this quarter. Total integration cost this quarter was SEK 5.2 million. It's slightly higher than Q1 this year, but our forecast of around SEK 40 million is unchanged, which means that it will increase slightly in the second half of the year. The last twelve months adjusted EBITDA margin increased from 16% last quarter to 16.5% in this quarter. Next page, please.
On this slide we have our cash flow statement, which now is clean from transaction-related disturbing items that we talked about last quarter, but there obviously is still a burden, call it, from the integration cost. A couple of key takeaways on this slide. First, highlighted on the right-hand side, the operating cash flow before changes in working capital was SEK 6.4 million. Then from this we take away SEK 7.5 million of changes in working capital, which mainly is driven by higher accounts receivables. The ones that follow us and know us will remember that our business is tying up working capital as we grow. In the integration work, we are looking into ways of getting more efficient in our processes, and we're aiming to see some improvements going forward.
Operating cash flow was then consequently negative SEK 1.1 million, but a clear improvement from the first quarter this year. We ended the year with almost SEK 50 million of cash and a net debt of SEK 71.7 million. With that, back to you, Tom.
Thank you, Joakim. If we just move to the final slide, I mean, you have seen this before, but you know, similar to the strategy section, I really do believe that these are the key things that are helping to drive our business. In terms of a massive underlying market, we still, even with the combo, have probably 10% or so market share, so plenty of room to grow. You know, the structural shift towards digitalization is continuing and it's accelerating. It accelerated during COVID. You know, who knows what's gonna happen macroeconomically and macropolitically in the future over the next year or two? No idea.
What I do know is that the, you know, the structural shift will continue. Really believe that, and we will benefit from that. We're very well positioned at the very center of the value chain. You know, we really are at the essential part of the quality research chain because we're providing respondents, which is exactly what brands and market research companies want. I think we have especially now in the combo complementary and additive value props with, you know, definitely more global scale, as you can see in the number of connected consumers that we now have access to.
You know, as we, you know, I would say proudly said, you know, over the last few minutes, I mean, we are delivering profitable growth, right? We are definitely delivering profitable growth, and we plan to continue doing so. In terms of the synergies, it's been a little bit of talk so far. I get that. You know, it probably made sense during the, you know, when we did the initial pitch in October. I also understand that the proof of the pudding is when we start delivering them. I hope you get a sense now that we are starting to deliver them.
You know, as I've tried to explain with the headcount slide, how we are thinking about that. Overall, you know, pleased with our Q2. Happy from a kind of management and board perspective on that. You know, equally optimistic about the future as well. With that, Nadia, I'm gonna pass back to you for questions, please.
Thank you. If you would like to ask a question today, please press star followed by one on your telephone keypads. If you choose to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question today comes from Daniel Ovin of Nordea. Daniel, please go ahead. Your line is open.
Yes. Good morning, Tom, Joakim, and Britta, and congratulations on a very good Q2 report here. My first question is around the overall macro weakness that we're seeing. You also mentioned in the report that you feel that you think you will be resilient, but maybe you can elaborate on whether you have seen any weakness in any region or in any business segment. Also following up on that, I mean, you have been around since 1998, so perhaps you have some notion on what have happened in previous situation where you have seen macroeconomic weakness. That's my first question. Thank you.
Sure. Thank you. Thank you, Daniel, and thanks for attending this morning. In terms of the macro situation, a couple of things. I've said this in the past. I would say three things. First of all, I mean, brands still need to have questions answered, right? Whatever's happening. In some ways, turbulence helps us, as I've said in the past. You know, we are in very, you know, perhaps increasingly, some would say turbulent times. That just increases the need for brands to ask questions of their consumers, of their competitors' consumers, and so on.
That's something, that's a pattern we saw during COVID, and in previous you know kind of macroeconomic sort of downturns as well. One is, you know, turbulence breeds uncertainty. Uncertainty breeds, you know, drives the need for questions. That'd be number one. Secondly, I would say, we definitely are targeting some demand synergies between the combo, right? On the demand side, OpEx, we've done, I think we've done pretty well. On the demand side, we're starting to see those, but we're very, very early. But they will come. I'm convinced that we will get the demand synergies. The second sort of related to that, the other thing is this is a midterm year in the US.
Right? Historically, particularly the Legacy Lucid side has been very strong in terms of providing respondents and very quick dipstick for the midterms, right? That for this year in particular makes me confident for the back half of the year. Then finally, you said that, right? None of us can predict what the future holds, and past performance is not a guarantee of future success. Absolutely not. Nevertheless, we have been around for quite a long time, and I would say our track record of weathering storms is pretty good.
You know, those three things combined do make me confident about the future. Now, in terms of your specific question, have we seen any kind of short-term weakness? What I would say is on media measurement, as I said in the written report, a little bit that has started. It's also, I would say, our product line or our value proposition that is most closely linked to advertising spend, obviously, 'cause it measures advertising spend or advertising effectiveness. Whereas, you know, the bulk of our business is qualitative research, right? It's opinions about things. It is perhaps the most advertising spend exposed product line. But I don't think it's gonna have a material impact for this year overall. In terms of...
You asked about regions. No. Nothing that's cropped up. In general, we had a couple of softer weeks in some regions at the end of June. You know, the first week in July is generally very quiet, particularly in the U.S. for obvious, you know, kind of holiday reasons. Since then, we've had, you know, really substantial pickup in week two and three in July. I would say from where we're sitting. The other thing I would say is, you know, Ipsos, who released their quarterly results, I think a day or two ago, had, you know, a really good Q2 and H1 overall, right? They're big and important clients of ours.
You know, there is. I think yeah, I remain optimistic. I really do. I mean, I can't predict the future obviously not, but I would say is we're optimistic, but not oblivious, right? Yes, we're being thoughtful, yes, we're obviously looking at all the indicators and looking at, you know, kind of both on the demand side. Another indicator that we learned was very important was how quickly clients are paying, particularly during COVID. We have the DSOs creeping up a bit, so we're monitoring stuff carefully. We're keeping a close eye on things, but so far, I remain very optimistic. Does that help, Daniel?
Very helpful. Yeah, that's very helpful. Thank you very much. Actually, you came into the next question I have, slightly there, actually, and that was on the accounts receivable. They seems to be up quite significantly, even if you adjust for the acquisition and you look at the last 12 months pro forma sales. If I calculate, it looks like they're up like it from 22%-36%, something like that.
Mm-hmm.
Wonder if that is due to Lucid more reporting, you know, only commission sales and Cint reporting the full sales, or is there anything else in that measure that we should be aware of that drives this increase?
No. I'll let Britta speak to that in a second, or Joakim.
Okay.
Sorry, go for it.
No. Well, sorry, I interrupted you. I was going to comment on it. You want to go, Tom?
No. What I was gonna say, it is something we're very focused on, and we'll be again, sort of going forward. Joakim or Britta, do you wanna pick that one up?
Yeah, maybe I can go in and just give a technical explanation, Daniel. I mean, first of all, I think you're on it because we have on the Lucid side, as you remember, a big portion of their business is recognized on a net revenue basis. But they're processing, as you say, the payments for suppliers and customers, so we are, I should say. What we are doing in our report in the notes is that we are then giving you total consumer spend. That's kind of how to gross up Lucid volume. If you re-run or run the working capital over that total consumer spend KPI, it's not that dramatic. It's actually in line with the previous quarter's growth.
Okay, perfect. That's what I suspected, actually. But also, one question then also on the gross margin. It seems like on a pro forma basis, you're not talking about it being flat on a year-over-year basis. If I'm right, in Q1, it was actually down a bit, and I wonder, have you taken any measures here either on, you know, price increases, or have you been in negotiation with panels on supply prices or anything like that? Have you basically taken any measures to help the gross margin? That's my last question. Thank you.
Joakim, do you wanna-
If I start, I think what we talked about last quarter in Q1, we had a lower gross margin on legacy Cint, which was driven by these investments we made into the supply. Then I think I mentioned then too, that we saw that, and then we managed gross margin up a bit towards the end of Q1, but we still ended that quarter with a lower than last year, gross margin. This quarter, we have continued to stay a little bit more close to it and managed a little bit more careful. On the legacy Cint side, we are now back up again, to say. We ended Q1 on the higher level, and we maintained that level during Q2, that helps.
Perfect. Those are all my questions. Thank you very much.
Thanks, Daniel.
Thank you, Daniel.
Thank you. Our next question comes from Predrag Savanovic of Carnegie Investment Bank. Predrag, please go ahead. Your line is open.
Thank you, operator. Good morning, Cint team. Well done this quarter. I'll follow up with a few questions on the same topic as Daniel initiated with. Tom, you say in the report the market is more stable and growth path is more sustainable generally. And I guess you kinda hint that we should see organics in line with this quarter for the rest of the year. Please let me know if that's the case. The other question here is what makes you say this. You gave the Ipsos example, but are you seeing your business become, you know, the visibility increase further. Are you seeing the market generally or business environment as less volatile. Any certain contracts you have that gives you this confidence. I'll start there.
Yeah. Hi, Predrag. Good morning. I don't think our visibility is any greater. I think the visibility is the same that we've had in the past. You know, the kind of the fundamentals of our growth which is, you know, are our established clients still spending money? Yes, they continue to do that. Are the tech-enabled guys growing as we would expect them to do? Yes, they are. You know, key part of that, of course, is how our new biz activity is happening?
Because generally speaking, when things get a little bit tougher economically, it tends to be that the new business becomes a little bit more challenging because, you know, customers tend to spend money in the ways that, you know, to people that they are familiar with in general. That's what we found at least. You know, our new business activities are really very good right now. We're lending new logos, new customers at a very good rate. Now, you know, is there a guarantee they're all gonna spend loads of money in the quarters to come?
As I've said in the past, no, it's not a guarantee, but it's a good indication that you know, people are still open to kind of doing, you know, different ways of accessing respondents. You know, I would say those things do make me kind of, you know, confident and optimistic about the future.
Great. Thank you very much, Tom. To Joakim to break down the cash flows, there is a big sequential improvement here from Q1, but we're still in negative territory when it comes to free cash flow, as should be expected. We know that cash flow is H2 tilted for Cint and Lucid as well, as you previously said. If you can give any flavor or comfort in this for the remainder of the year, is there anything you can say in terms of the cash flow profile for the remaining two quarters?
Yeah, I think you're right. I mean, we see an improvement from Q1 to Q2. The one reason for that is because we now leave the transaction costs behind us. As I mentioned, it's now more clean in a way. Then EBITDA as such, I mean, Q2 and Q3 are bigger quarters, and Q4 will be the biggest quarters, as we've said, in the beginning of the year too, due to the seasonality. We have that in mind, and then we see the working capital and we have started a few initiatives there. Then you have the integration costs that will continue to burden operating cash flow. Yes, there should be an improvement, and it should be more clean going forward.
Okay, fantastic. A final question also on accounts receivables. These have been growing and there have been other companies in our universe lately where they've been questioned on the health of accounts receivables, when, you know, the balance sheet has been expanding. I wonder if you could give or reason a bit on these items on your balance sheet. You gave a comment there in terms of how they will convert to cash flows, but generally in terms of the health of these, bad debts, any comments regarding payments which are overdue and so on?
We're closely monitoring. So far, we do not see any issues on this. Yeah, especially given the macroeconomic environment, of course, this is a watch-out area. As I said, we set up a new process, so we are on top of those.
Thanks.
Don't see the risk there at the moment.
Okay. No, that's great. Thank you very much.
Thank you.
Thanks, Predrag.
Thanks, Predrag Savanovic.
Thank you. Our next question comes from Viktor Husberg of DNB Bank. Viktor, please go ahead. Your line is open.
Yes, good morning. Just a brief question on the gross margin. I don't know if you mentioned this, but, we could calculate maybe from the report, backwards, or if you could help us with what the gross margin and the EBT margin in Lucid was in Q2, that would be very helpful.
Joakim? Yeah. I think you probably can back that out from the report. I mean, we are internally not talking about it and not following up on the performance in that way any longer because we look at the company as one company now, and we also see I mean, we'll see even more so, volume shift and so on between companies and legal entities. It's getting more and more difficult to follow up on the company since company Lucid kind of basis. But probably you can figure out from the report. I don't have it in front of me, to be honest.
Okay. Yeah, we'll do that. Also, with an easier growth comparable now in Q3 versus what you had now in Q2, and with your previous discussion with Predrag and the slowdown in the media measurement in the end of Q2 and overall macro uncertainties, would you say that it's possible? Do you have the foundation to accelerate growth in the second half over the 19% you presented now in Q2? Is the foundations there to do that? I heard you mention new logos and so forth. Would you say that it's possible to accelerate, or would this be a level that you would be happy with maintaining?
Hey, Viktor. Look, we generally steer away from quarterly predictions or quarterly guidance. I'm gonna stick to what I said earlier, which is, you know, very confident to get to the 25 in the medium term, and very happy with current momentum.
Okay. We'll leave it like that. Thank you.
Thank you.
Thank you. Our next question comes from Daniel Thorsson of ABG. Daniel, please go ahead. Your line is open.
Yes, thank you very much. The first one is on realized synergies in this quarter. Did we see any decent contribution in June or maybe already earlier in the quarter that or did we really not see that much at all, and we should expect much more in Q3 here? What's the timing of it?
Well, I mean, you saw the headcount kind of evolution. In terms of the actual kind of impact on the P&L, Joakim, do you wanna say a couple of sentences on that?
Yes. I mean, what we said in Q1 and what we saw now in Q2 was that the effects of the integration plan and synergy plan came a little bit faster than we originally expected or planned. Yes, we saw impact in Q2. It was mainly then on OpEx side and people related as the slide tried to illustrate. I mean, we don't have any specific numbers to give you for Q2 and then Q3, Q4, but we have the at least SEK 40 million, right? We also have the split, original split between OpEx growth and COGS buckets, where we say that the OpEx is going to be at least the 21.6, I think we had on the side, right? I should probably not guess.
Yes, we see the OpEx, we see it come through Q2. It will increase in Q3 and Q4. Also, I should say, I mean, it's getting more and more baked in a way, into organization, into kind of performance. It's more and more difficult to isolate the synergy effects and compare them to the plan. I mean, we have now a joint plan, and that's the one we are delivering on, if that makes sense.
Yeah, true. Yeah, absolutely makes sense. I think my question related to kind of the timing where you saw the headcount decrease in Q2. Was it happening, like, the first, second week of April, or was it happening end of June? Which then obviously.
Ah.
-cost less or-
Yeah.
Higher synergies realized in Q2, although we see the same effect in the full Q3.
Yeah. Okay.
That was my question.
No. Yeah, okay. I think it's kind of evenly distributed in the quarter. The numbers we put on the slide was the end of quarter headcount number. You have the averages to mention in the report. Yeah, it's kind of evenly distributed. It's not. No big bump.
Yeah.
Uh.
No, there wasn't a big sort of event inside the company. No, it was done by department and over time, so during the quarter.
Excellent. Thanks. Second question on the B2B customers, the data you provided us with now combined Cint and Lucid, 4,600. How was that in Q1? Do you have that number? And can you say something on new customer onboarding in Q2? Kind of what was the net increase here in the quarter?
Do we have those numbers, Joakim?
I don't have them in my head.
Yeah. I do have them. It's almost the same if you look at legacy Cint because you saw that in Q1 because it was Cint only in Q1. In Q2, we saw on the Cint side. Now again, we don't want to talk about Cint and Lucid, but I mean, you could assume a similar kind of intake on the Cint side. Then we have looked at the Lucid. The rest is Lucid contribution clean of overlaps.
Okay. Underlying Cint is trending around the 100-ish B2B customers intake in the quarter, and then Lucid kind of. Their underlying, can you say something around that? Is that similar, 100 as Cint is doing in a quarter or much less or much more?
No, I can't say, I'm afraid. You're right on the spend side. We said in the past, and you see in the historical numbers, that we have added roughly 500 a year.
500 a year, yeah.
I think that's what we are heading to. Honestly, I don't have the number for Lucid. Tom, do you want to give a flavor or do you know? No, I mean, I think it's as you said, right, it's very hard 'cause right now we're not selling as Lucid anymore, right? Haven't been for six months.
Yeah.
It's the sales teams were combined relatively early on in Q1. I think that's gonna be very hard to isolate.
Yeah. I'm not after the isolation. I'm more after the total increase of your B2B customers in the quarter. I guess that's maybe then around 125-200, I guess, but I don't have the Q1 figures. That was kind of the question.
If I had to sort of estimate, I think that feels right.
Yeah. Excellent. That's it for me. Thanks.
Thank you.
Thanks.
Thank you. Our next question comes from Charles Brennan of Jefferies. Charlie, please go ahead. Your line is open.
Great. Good morning, guys. Two questions from me. Firstly, one for you, Tom. You called out the midterms as being one of your reasons for optimism for the second half of the year. I was just wondering if you can size the potential benefit from that and whether that gives you an organic growth headwind as we go into 2023. And then secondly, can you just talk about the OpEx plans going forward? It sounds like for the second half of the year, you're assuming that OpEx ticks up modestly, but how do we think about that in 2023 to support your growth ambitions? And I'm asking particularly in the context of consensus expectations that I think have got you at a 23% EBITDA margin next year.
Already within a whisker of your midterm targets.
Yeah. Good morning, Charlie. If we start with the OpEx one. Yes, I think you're right. Modest uptick for the rest of the year because we do need to invest selectively for future growth. But as we've seen, you know, kind of on a sort of standalone basis pre-combo and also now, we are, you know, increasingly getting the benefits of scale. I do think we do need to invest selectively, and we will do that because it's important to be able to continue growth and the, you know, the primary areas will be, you know, product and commercial, I would say.
We will see the benefits of scale as we continue to see the benefits of scale as we think into the future.
On balance.
Jorgensen?
On balance, do you think that means that consensus expectations for 23% margins next year feel about right? Or do you think we're being too ambitious in the extent of cost constraints into 2023?
I don't wanna answer that.
No, I was going to say this was the red button, Tom. Yeah.
Yes.
We are not going into specifics on this year or next year, so we stick to the midterm guidance of 25% growth. Obviously that's a journey from now to that, but we feel confident about that due to scalability and synergy this way.
On the size of the benefit from midterms?
Yeah. Size of benefit.
Pardon?
So, so-
Okay
Again, we don't want to size it specifically, but it's enough to make a difference. If you look at the Lucid data from 2020, Q4 2020, I mean, they had a nice uptick. You know, I would expect that to be similar this time around.
Perfect. Thank you.
Thank you. Our next question comes from Fredrik Lithell of Handelsbanken. Fredrik, please go ahead. Your line is open.
Thank you very much. Thank you for taking my question. I have two of them, if I may. The first one is to go back and talk about your gross margin that in the traditional sense came in at below 50% in Q1. At that point in time, we had some discussions around it. You know, you have good demand, but at some cases you lack supply and thereby you had to pay up a little bit. How do you address that going forward? Maybe Tom, on a strategic level, how do you intend to build the connected consumers base in order for you to be able to meet demands at all times? That's really the first question.
The second one also may, Tom, you comment in your CEO speech in the report about your new infrastructure that is part of the synergies or sort of the integration between the two companies. What do you intend to? Are you building a fully new technical platform, a new engine for all, or it's a lot of integration between two platforms? If you could put some color on that'd be great. Thank you.
Yeah, sure. I'll take the second one first. What I meant by the infrastructure investment with Lead to Cash project, that I mentioned earlier today as well. We see a lot of inevitably, as expected, you know, quite a lot of inefficiencies with two companies understandably doing the sort of Lead to Cash process very differently. You know, that's underpinned by history, by you know, different pricing models, different accounting rules, with you know, GAAP versus IFRS and so on. Being able to standardize that, from a process and technology perspective, I think is gonna be hugely beneficial, not just for us, but also for our customers.
You know, that's what I meant by the infrastructure investment. It's part of the Lead to Cash. Does that help?
Yeah. Absolutely.
In terms of supply, strategically, yes. There is a couple of strands to the supply. First of all, to make sure we have enough supply strategically. First of all, there is a technology work stream to optimize as much as we can what we call yield management. Yield management is the conversion rate of when a consumer gets asked to respond to a survey and the ratio or the percent that actually complete it, right? That is a certain percentage. By increasing that percentage, we can obviously with our existing connected consumer base do more surveys, right?
That's a technology and a kind of an algorithm focus, which we absolutely have, number one. Number two, we are in very active discussions with our existing supply partners, particularly the larger, more professional ones, to get a larger percent of their total available supply. That's, you know, commercial, strategic type discussions and negotiations. Thirdly, we have a dedicated supply sales team whose only job is to go and find new supplies globally. We're in the process of beefing that team up quite substantially now.
We're able to do that on the back of the combo, since we have some really good people now, you know, and we're gonna back them up and focus them on, you know, dedicated new supply sales effectively. That's the
So-
Those are the three strands that we're investing into.
Yeah. Follow up on that one, the third part you say there. Do you see yourself as more forward-leaning today than maybe two years back in terms of, your sales department recruiting new panels, to beef that up? Is that a more active work today than two years ago?
Yes. Yes.
Okay.
I would say that, definitely. It needs to be, right? Because, first of all, we're, you know, we're leaving money on the table when we can't complete surveys. I mean, that's frustrating and irritating. In a world that seems to be, you know, on an ongoing basis, supply constrained, it's something that we just need to do. Yes, I think we are focusing on it more. Then the final piece I would say is obviously M&A.
It's not a priority in a kind of primary focus area, but we did buy GapFish, and that was for reasons of you know, building out our supply in the DACH region. We are kind of considering that as an option. M&A. You know, further M&A, considering that as an option, as a possibility. But we think we've got some very good operational levers that we've just talked about before we start doing that.
Final follow-up on all this discussion then. I mean, in a new world of inflation, can you raise your prices onto your B2B customers and in that way improve the metrics for your partners and that way open up more supply? Is that? Would that work?
Yeah. It needs to work, right? I mean, we've had you know, low or zero inflation for a long time. This is for us as a business. I would say this is new territory, and then for us as the industry, I think it's new territory. But I can definitely say we have started those discussions with some partners. You might recall that we generally have annual contracts that lock in sort of pricing and volumes and so on. They're not all Jan to December, you know. They kind of renew at different times of the year.
You know, as they renew, we're absolutely having those discussions, as indeed our market research partners are having with their end, their brand end clients as well. It is new territory for the whole industry, I would say. It absolutely needs to happen, and I think it will. When it does, then obviously as you say, you know, the respondent will get, you know, kind of more, probably get more rewarded for doing the surveys, which is hopefully gonna unlock more supply as well.
Perfect. Thank you very much.
Thanks, Fredrik.
Thank you. As a final reminder, if you would like to ask a question today, please press star followed by one on your telephone keypads now. Our final question at the moment comes from Sara Söderblom of SEB. Sara, please go ahead. Your line is open.
Hi. Thank you. I just had a quick follow-up on the accounts receivable. When you say that you've started the new initiatives already, do you think that we'll see the effects of that in Q3 already in terms of collecting payments? Or what sort of timeline do you see in front of you? Also, sort of secondly, when looking at the breakdown of the accounts receivable in the annual report of 2021, the maximum overdue category was about 10% of sales. So I was just wondering, are you confident in your ability to collect these in the near term? Or can you say anything about what happened with that ratio during H1?
Yes. As I said, we are in the process of aligning the processes between Cint and Lucid on this. We started close monitoring of it. We are confident to collect. The aging structure is something we are improving currently. I'm very confident that we will really have improvement of the cash conversion cycle in there. As I said, we are also not really commenting on exact impacts in the next quarters, but there will be an impact.
Okay. Thank you.
Thank you. We currently have no further questions, so I'll hand the call back over to Tom for any closing remarks.
Thanks, Nadia. Thank you all for attending this morning. We've certainly enjoyed talking about our business and giving you a little bit more color. Thank you for your continued interest and for following us, and we look forward to speaking to you again over the course of the next month. Thank you very much.
Thank you.
Thank you, ladies and gentlemen. This concludes today's call. Thank you all for joining. You may now disconnect your lines.