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Sorry about that. Yeah, I was just telling you about the story. We acquired Crimson Hexagon. We did a ton of planning on the technical integration ahead of time, ahead of the deal. We negotiated the deal, stepped into it. We took out a bunch of synergy, a bunch of costs in the first quarter. The key thing that I wanted to bring to this call is that, with two completely separate technologies, we planned and integrated them and created a net new product from different parts of the two, the two independent stacks within one year. We transferred or migrated all the customers over to the new product.
That took another year, but it was a much more complicated customer migration than the customer migration that we're looking at Cint because there was so much historic data from each of the products tied up with the customer accounts. That process was, you know, obviously very challenging and very bruising, but it set the company up for significant long-term success. We took the pain early. We did the hard work, we integrated the companies, then once that it was done, the growth rates, we were able to put more money into the go-to-market machine, and the growth rates accelerated very quickly thereafter. During the course of that integration, that two-year integration of the companies and the technologies, you know, the commercials were very challenging.
We saw growth rates decline despite the fact that the thesis ahead of time was that there would be less churn because the, you know, we wouldn't be churning between the two competitors. I've seen this movie before a little bit. It's obviously different this time around, but the, the approach that I'm bringing to this organization and the thinking, the philosophy is to create an integrated organization back to front, a product which is, the best of...
Well, In this case, we're choosing one technology over the other, but we're going to extend it, we're going to improve it, and we're gonna create an integrated platform with which we can bring the customers across, and then we can optimize and streamline the organization and make it more efficient. I just wanted to kind of at least bring that to this call ahead of time before we talk about the Q1 numbers, that there's a philosophical approach that I'm gonna be taking here, and I just wanted to give you a bit of background as to the fact that I've done it before. Right. Next slide, please. Thank you.
As you know, I'm sure, because I don't think anybody on this call is new to this company, I think you have a lot more experience with Cint than I do. The Cint business founded in 1998. Lucid was founded, I think, in 2006.
9. I think it was 9.
Yeah, yeah. Anyway, that's not on here. Anyway, Lucid was acquired in 2021, around about 1,000 employees. The key thing here is that, and the way that I think about this is that Cint brings together organizations that want questions answered with real human beings who answer those questions for, you know, for those companies, and we matchmake. We bring those two sides of the market together. The way I think about it is that we are feeding and helping to, we're feeding in both in terms of satiating and growing the world's desire, the world's curiosity. That's us and a global company. America is, the Americas is the biggest market, 58%. Obviously, APAC's the smallest, but you know, very much a global company. Next slide, please. Yeah, Q1.
Weak start to the year. Well, let's not sugarcoat this. Q1 was not a great quarter. We're not gonna pretend that anything different. You know, you can read through what's on the slide here. The media measurement business did go well, but the underlying marketplace businesses, both the Cint and Lucid business, we had challenging quarters or a challenging quarter. The fourth point down here I mentioned in the introduction. The focus is now on the complex phase of product and customer integration. Well, product integration and customer migration. Once that's done, and it's gonna take a while, the company will be extremely well-positioned for long-term, sustainable, profitable growth, and that's my focus. I'm gonna come back to the leadership team, my new team, on the last slide. Next slide, please.
Yeah, here it is in numbers. I've made them big. They're not the numbers that I wanted to be seeing. They're not the numbers that we're gonna be posting in the future, but there they are. Let me just say a little bit on the right-hand number, which is, I've just read a couple of analyst reports this morning saying that, or one that said that reversals are confusing. This number is versus Q1 2021. It's a comparable. 2022, sorry, 2022. Reversals in Q1 2023 were at a similar level to Q4 2022. There's, I think, maybe a little bit of surprise that it was, I guess a sense that Q4 was hugely different to all the other quarters last year.
It was definitely the worst quarter last year for reversals, but it wasn't hugely different. It wasn't double the number of any of the other quarters. It's just that they had a bigger impact because the organic growth rates weren't as high. Q1 2023 is similar to Q4 2023, in broad terms, and it's a key, it's a key focus. For me, it's my number one focus right now, and I put this under the broad banner of trust. Marketplace dynamics for me are reasonably simple. They come with scale. The larger the marketplace on the supply side, the more choice the buyers have, and that's a desirable thing. The larger the marketplace on the demand side, the better the higher prices that suppliers can choose, can provide.
The higher prices. Suppliers can charge higher prices, and they're gonna get fulfilled more often. There's a natural leaning towards scale in a marketplace business. The one key thing for me underpinning the health of a marketplace is trust. This is my key focus for H1 2023, is to make sure that Cint is the most trusted marketplace in the world. Are we there right now? I'm not sure. I would like to think so. There was a report that we published on our website last month saying that which was an independent, some independent research done by Sapio and Cambri saying that Cint has found this. It was nothing to do with us. They did this themselves.
They found Cint to have the highest quality sample across the industry. These are independent studies. Maybe that's true, but it's not good enough for me as far as I'm concerned. We need to do better at this reversal problem, at fraud problem, and we need to make sure that we are the most trusted marketplace in the industry. Next slide, please. I've talked about point one. We have an ongoing Mike Misial , who's, who I promoted to Chief Trust and Safety Officer, has teams of engineers and analysts working on this. This is a key focus for us at the moment, and we are implementing features every month to counteract these issues. There's not one size fits all solution to this.
There's a bunch of different things that we're implementing. It's not a, it's not a one and done either. It's a little bit of a moving target. We can deal with this in the Q&A if people wanna know more. Also I just do wanna say that some of the things that we're doing, we're gonna keep to ourselves 'cause we think we've got some pretty interesting and very technologically advanced solutions that we're gonna be bringing to bear here, and we see those as a competitive advantage going forward. I'm gonna be reasonably tight-lipped on exactly what we're doing. Okay, next slide please. Yeah, what I said at the beginning, product integration, having one world-class market leading product is my focus for the next year and a half, let's say. It's not gonna be quick.
There's a lot of work to do. This is not a straightforward business. There's lots of moving parts, but we are well underway in bringing these two products together. It's not just about the products integration, it's about upgrading the user experience. It's about plugging into back-end systems and BI systems and all sorts of other operational systems. It's about making sure that this company is as efficient as it possibly can be. I think of analogies like, you know, like the Tesla factory where everything is optimized for efficiency and profitability. That's the kind of thing that we wanna be building towards.
To make that happen, obviously there are some costs that we're carrying right now, integration costs and people working on the integration, which can be repurposed towards growth and innovation going forwards a lot of those. One of the things that we're not gonna be needing to do is increase the level of costs in order to get the integration done. We can do it with the staff that we have right now, and we'll do it under the budget of SEK 40 million, which was what was the number stated a year ago. Next slide please. My mantra internally is consolidate, standardize, and optimize. Number one, as I said, consolidate the platforms, consolidate the back-end systems, and make sure that we have the most efficient organization from a systems and product point of view.
Consolidate the customers onto that platform. Standardize how we do things. Make sure that we are building models and operational methodologies across the company that we can duplicate and we can optimize and bring on people, bring in new people and get them up to speed as quickly as possible. That's the standardization process. Optimize how we do things in order to drive profitability. I've said at the bottom, this will move towards the creation of an efficient and highly profitable organization primed for the next phase of the organization's evolution, which is gonna be very growth focused. Next slide, please. Just gonna bring in something here which you may not have heard us talk about before. Cint is a data genesis company.
In a world where AI is an emerging and in some cases rather scary prospect, where organizations across the globe are going to move towards automation and the increased use of AI. There is a need, a huge need for what I call, data genesis. That's the origination of real human-orientated data. You can't ask an AI how it feels about a product. You have to ask your consumers. That's where Cint comes in. We are the connector between organizations who have curiosity and who want to ask questions, and real people who can answer those questions. In a world of increased AI, this, I think, is going to be a hugely important thing.
Furthermore, with the increasing large language model desire, need for data, there's another opportunity here down the road for Cint to for the data that Cint creates to power these large language models or other AI. That's not something we do right now. That's not something that's in our plan, but it's something that just to sort of give you an example of how what we do has huge long-term future potential. I just wanted to say it here. We are and, you know, we need to be understood as a data genesis company. Next slide, please. I've got a fantastic team. It's a blend of industry experts who have, you know, significant tenure, who understand this business, who understand this industry.
Jake and Mike and Felicia and Michelle are all long-time Cint and Lucid employees. Olivier, who you'll hear from in just a second, joined in November last year. I've brought on. Oh, and Bridget as well. Sorry, Bridget, I forgot to mention, is our fantastic Chief Product Officer. Alessia Braga , or B as we call her, have joined in the last month or so, two fantastic executives who round out the team. I now have a full team. We've just spent three days off-site. It was a fantastic.
Ladies and gentlemen, we have lost connection with our speakers. Please stand by as I reconnect them.
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Hello?
Hello, we can hear you.
Very good. On the left, what you can see is our net sales figure. Our net sales were SEK 60 million in Q1. Due to seasonality, Q1 has normally a lower level of demand. That's what we see, like, every year. Compared to Q1 2022, which is the most relevant indicator, you will see that our organic growth, our net sales decreased by 11% versus Q1 2022 from SEK 67.3 to SEK 59.9. On the like for like basis, organic growth in constant currency, as Giles said earlier, we were down 12% in Q1. Our gross margin for Q1 was SEK 35.9 million compared to SEK 41.3 last year.
The gross margin is at 60%, slightly down versus the 61.3% of last year, due to price pressure in the market. On the right, what you can see is our Adjusted EBITDA. Again, because we are relatively that fixed cost business and Q1 is a pretty low quarter, the most relevant comparison is with Q1 last year. What you can see is that our Adjusted EBITDA was at SEK 3.7 million versus SEK 8.1 million last year. A reduction of from 12.1% to 6.1% due to the relatively fixed cost base of the business. I will come back to that later on in the presentation. Next slide.
Now we are going to deep dive a little bit more like into net sales. On the left, you can see the business segments. The way we break down our net sales between media measurement and marketplace. Media measurement is a product that was created by Lucid a few years ago, and that has been growing consistently since then, year after year, quarter after quarter. Marketplace is our largest product. Marketplace has reduced by 16% versus Q1 last year from SEK 61 to SEK 51.2, 16% and 7% in constant currency. The main driver of that is that we are seeing a lower spend from the existing clients. That's really the main driver.
In terms of media measurement, which is, unfortunately, I would say a smaller portion, we have seen a very strong growth of 38%, 33% in constant currency, driven by higher volumes with existing clients and also quite a lot of new client gains. In the middle, you have the breakdown of net sales by region. Americas, as Charles said earlier, is our largest region, and saw a decline of 11%, 15% in constant currency. EMEA and APAC, by contrast, did a little bit better. We're a little bit more resilient with 7% organic decline in EMEA and 9% in Asia Pacific.
On the right, you can see the breakdown by customer types, between tech-enabled companies and established insight companies. We saw like a decline of 3% with tech-enabled, 3% in constant currency, and 14% for established insight companies, 16% in constant currency. Tech-enabled companies segment has overperformed established insight companies, which is something that we've seen, I would say like almost like every quarter since we are tracking this indicator. Next slide, please. Little bit more figures about like the P&L here. What you can see again is that our Adjusted EBITDA has reduced from SEK 8.1 last in Q1 2022 to SEK 3.7 in Q1 2023, mainly driven by a reduction of net sales and operating profit.
As I said earlier, our operating expenses are slightly down compared to last year, due to the cost synergies from the i-integration and cost containment measures that have been put in place a few months, a few months ago. By far and large, our operating expenses are under control. Next slide, please. Focusing on cash. What you can see here is that our cash position at the end of Q1 2023 is at $56.6 million, which compares to $55.7 million at the end of Q1 2022.
Also, we have seen like in the quarter an improvement of the working capital of SEK 5.3 million, driven by a higher focus on managing payment terms from accounts payable and receivables, which is a pretty good like improvement compared to last year, when we saw like a reduction of close to SEK 80 million in Q1, which was due to the acquisition cost and also some like increase in accounts receivable. I will comment about that later in the presentation. Interestingly as well, what you can see on this slide is that our interest has gone up significantly from SEK 0.5 million in Q1 last year to close to SEK 2 million in Q1 this year.
This is coming from our $120 million US dollar loan, which is on variable rate, which is impacting us significantly this year. Next slide, please. If we focus now on the net working capital, what you can see is our net working capital is at $21.2 million at the end of Q1 2023, compared to $28.8 million last year. It's pretty significant, 26% reduction. What you can see as well is that our net working capital has been reducing consistently since Q2 last year, due to the efficiency measure that has been launched in Q3 2022.
Our accounts receivable are at like SEK 84.9 million compared to SEK 90.9 million last year, which is a significant reduction. Our accounts receivable compared to last 12 months, total customer spend, has continued to reduce to 21.2% at the end of Q1. We are seeing, as mentioned, like in the title, some gradual improvement in net working capital. Now I'm handing over, like, to Giles for wrap up and conclusion.
Yeah. Thank you, Olivier. very clear. I think it's pretty clear what we're saying here. Q1 wasn't great. Nobody's trying to pretend anything different to that. I did want to spend that time, like, giving you some sense of how I'm thinking about this business and the. Yeah, next slide, please. The short-term priorities and what we're gonna be working on. Let me just reiterate the product integration is really front of mind for us. Trust is my number one priority. In order to do the product integration, my mantra to the company, our sort of calling card, is to consolidate, standardize, and optimize the business. Like I said here, implement additional security features to prevent reversals. That's under the banner of trust, as I said.
Olivier mentioned our focus on cash flow, net working capital, and collecting our debts. We have a fantastic team. I am really happy with my leadership team. Our final slide, please. As I was saying a little bit earlier on, there is, I think, in this new world where AI is a growing presence, an increasing need to connect companies with the opinions of real people. That's what we do at Cint. We are positioned at the heart of, right in the middle of, the market research value chain. That's a key strategic position. Finally, the way I think about this, and the reason why I was so excited to take this job, is that for me, marketplace dynamics benefit from scale. I mentioned that earlier on.
Furthermore, digitization. There's still I don't know what the stats are, but there's a lot of market research which is done offline, and in inefficient ways. Over time, that's gonna move online, and Cint is very well positioned to be a core provider as more market research and more opinion mining moves into the digital realm. Thank you very much. That's the end of the presentation. Let's open it up for questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. 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 goes to Predrag Savinović of Carnegie Investment Bank. Predrag, please go ahead.
Yes. Thank you. Thank you, operator. Good morning, all, and also welcome on board, Giles. First I wanna ask about the integrations. I mean, this is the first time you addressed the market. I mean, your shareholder letter, you write that integrations are the top priority. You did reiterate OpEx synergies, but there's a comment then on the timeline. Do you believe that the integrations will take longer time than previously anticipated? Could you give us a timeframe also if that would be the case?
Yeah. Thank you for the welcome. When I'm talking about integration here, I'm really, you know, reiterating. I'm talking about the platform integration, the product integration, all the systems that support that all the way into the ERP system, so that we have one unified flow inside the company. We're not spinning four plates, four systems. We're operating one system, which we can then use as our core innovation engine. It's not a one and done kind of thing, this. There's a ton of different work streams involved. There's lots of dependencies. This project we've said will take well into 2024. We are in the process of putting together a very detailed plan for exactly what will happen when.
When you're looking out, you know, more than a couple of months, those plans are, when it comes to technology, they're very difficult to forecast with a very high degree of accuracy. If, if pushed right now, I would say that if we can get everything done by the end of 2024, I would be, I would be very happy, 'cause I'm looking at where we are right now and the amount of work that's ahead of us, and there's a lot, there's a lot to do. It's not gonna be, you know, all work streams continuing all the way through to the end.
There will be times it will drop off as things get delivered, as systems get integrated, as customers get migrated, then the integration work sort of drops off. It's not like everything will continue throughout to the end of next year. Not at all. I would be surprised if we got it done. We will try to get it done before the end of 2024, and I don't have an exact plan right now because we haven't done all of the work, but that's my, that's my rough estimate. It's not, it's not an exact science.
Okay. Thank you. Secondly, on the reversal rates, you note that they are on the same level as in Q4, but then you also write that you expect to gradually reduce them. Could you elaborate a bit on this point? I mean, do you see certain improvements here after the first quarter, or do you have certain security measures that you expect will have an effect on these? Also further to this point, I don't know really how this works, but is there a balance between how much security measures you can implement versus impacting, say, legitimate respondents? Any clarity here would be appreciated.
Yeah. Okay. Like I said in the presentation, there's a few things that I don't wanna talk about because I see them as competitively advantageous. We have two main systems, right? We have the Cint marketplace and the Lucid marketplace. I mean, they're not exactly the same, but we're continuing to operate both. We've seen changes in reversal rates between the two in Q1, right? The Lucid marketplace, we implemented some security features and reversals came down. Some annoying, I guess not fraudulent behavior, but scripting, script fraud or script interruptions got, you know, increased in the Cint platform. We're looking at that very closely to, you know, reduce that level.
It's not a simple one solution thing. There's a data science solution, which I'm not gonna talk about, but we're using some advanced statistical analysis and some AI to implement, which we will be rolling out in Q2, which we are hopeful will have a significant impact. It's a cocktail of measures that we're deploying across several systems and at several points in the value chain in order to minimize the weaknesses or the opportunities for sort of bad actors to kind of interrupt the flow of things. In terms of the answer to your question, is that gonna minimize the real respondents? No is the short answer.
Very, very minimal because it's the patterns that we're seeing for fraudulent behavior or behavior that we don't want on our platform are reasonably clear. Interrupting those actually shouldn't have very much impact, if any, on real people and real respondents.
Okay. No, that's brilliant. Thank you. Just a final one, if I may, in terms of revenue progression, if you could reason around the revenue development per month in the quarter, say maybe January started weaker, March ended better, the other way around or similar across the quarter.
We're not, we're not commenting on that, but what we're not seeing is revenue dropping off a cliff, right? We're not seeing things deteriorating further than they are right now. Yeah, it's, we're not giving kind of month by month, but I'm not alarmed by the shape of the quarter to kind of hint at it.
Okay. No, that's super helpful. Thank you.
Thank you. The next question goes to Sara Starlova of SEB. Sara, please go ahead. Your line is open.
Thank you very much. Hi, Giles and Olivier. Thank you for the presentation and, welcome aboard from me as well, I guess. I'd like to start by getting some more color on the macro backdrop. If you could comment on how you think the Q1 looks compared to Q4, I think that would be very helpful.
Yeah. I'm not sure I can, to be honest. I don't have enough experience to do that. What I will point you at is the slides that Olivier presented around what we have called tech-enabled versus in-industry players or large industry players. What we're seeing is that number, the large industry player declines, I think is, it's higher in Q1 than it was in Q4, which is indicative, I think, of the macro in that area. That's about all I can say with any sort of helpfulness, I think. Unless, Olivier, have you got anything to say on that?
No. What I would add is that I cannot give, like, names of, like, industry players, but everywhere you look, like, everywhere you look, you see that companies with some declining, like, growth rate, like, everywhere we look in the industry.
Okay.
We don't see like a single player, like in the market research industry that is like, improving in terms of revenue.
Right. Are you at all able to comment on what you're seeing so far into Q2? I mean, it's been a month. Are you seeing any kind of sequential improvements, would you say?
We're not gonna comment on Q2 at this stage, I'm afraid.
Okay. Do you have any sort of internal analysis or expectations on when you expect to return to growth? I mean, you said that your priority this year lies in other places on the integration and optimization and so on. Is the conclusion that returning to growth isn't really a priority for this year? Is that correct? Or how would you describe it?
Everything is a balance, right? Coming into this organization, it was pretty clear to me that we need to create that single platform. We need to create that platform for long-term sustainable growth. That's a, that's a decision that you could argue might have an impact on this year's growth. I'm not sure it does. I think it has an impact on next year and the year after's growth in a positive way. Unless we create this single platform on which we can innovate and expand what we do and really lead in terms of thought leadership and innovation, then growth is always gonna be more challenging. I'm not sure the two are actually a trade-off. In terms of this year, we're not, we're not giving guidance this year.
I'm 1 month in and, you know, we've got a budget for this year. I'm very comfortable with it. We're not giving guidance on when the company's gonna get back to growth. It is a priority, right? Like, it's not... Well, what we're not saying is, "Oh, yeah, we're not planning on getting back to growth." That's not what we're saying. We're just not saying when at this point.
Okay. Well, thank you for that. I have one sort of question, which I hope you could help me with because I looked at the underlying KPIs that you report, and I noticed that the number of B2B customers is unchanged sequentially, though the customer spend or the total customer spend is down 30%. I was just wondering, could you say if you have lost any major clients during the quarter? I think that would kind of explain this dynamic if you assume that new clients tend to come in with a lower spend and then ramp up gradually.
Yeah. Look, that 4,900 number was that was a slide from last quarter to really illustrate what the business does. There's One of the other things that we're looking at very closely is how we count customers. As we integrate the platform and as we go through a kind of a customer hierarchy and a rethink of how we of what it means to actually have, you know How we count customers, basically, then we're not not that comfortable in basically saying what our customer count is. But for sure, you know, the customer count is not higher now than it was at the end of December.
Depending on how you count them, I'm not clear enough about how we do that right now, so I'm not happy to sort of publish those numbers. The customer numbers are, if anything, gonna be lower now than they were at the end of December. We don't have that data to share, unfortunately.
Okay. Got it. That's all from me. Thank you.
Thank you.
Thank you. The next question goes to Viktor Högberg of Danske Bank. Viktor, please go ahead. Your line is open.
Yeah. Good morning. Just the first question to you, guys. When you signed off on to this one, was this the kind of asset that you signed off for? Or have you been surprised by the state of things in Q1? Or was this a challenge that you were happy to meet? Just some background on what you expected and what you did meet. Thank you.
Well, you know, like you, coming into the company, I wasn't given much guidance in what was coming next. That's the nature of the business, right? It's a public business. I was, you know... It was pretty clear where Q3 was. I felt like I wasn't... I felt like Q4 was... I mean, I took the job on the 23rd of January, so this was before Q4 was announced. In terms of, is it worse or better than I expected? Both. It's both worse and better. The culture is better. The people are amazing. I think the opportunity is fantastic. The results are not as good as I was expecting them to be, for sure.
I think I'm in the same boat as you there. This is an really interesting challenge and one that I am totally up for. Whether I... It's worse or better than I was expecting, like I said, better in some respects, worse in others. But it's gonna be amazing in a year's time. I'm gonna tell you that right now.
Okay. One thing, and it might be too early for you to have the details on it. On the gross margin side, I guess it was mix driven, was on the low side in Q1. Any one-offs in that one or just volume and mix? Any comments on gross margin, what to expect? You previously said 60%-63% could be the possible range in short term. Is that still relevant?
Yeah, that's still relevant. It's complicated. I asked my team this question yesterday, some of the more experienced people in the organization, do you have any comments on gross margin? The response I got back was, "It's complicated. There's different elements that play into it." The improvements in long-term gross margin I think are definitely possible, but that's gonna involve doing the sorts of things that I've been talking about in the presentation, optimizing and standardizing and optimizing how we do things. There's definitely room in our costs for improvement in my opinion. But it's gonna be a systematic improvement that is gonna take some time.
On the OpEx side, fairly stable, what to expect for this year, I guess that's one thing that you can affect yourself, macro and outside demand, maybe not. How are you managing OpEx during this year? 'Cause that was fairly stable throughout 2022. Is that to be expected this year as well, or do you need to ramp up real investments, not the one-offs, the integration cost, but in the organization in order to meet the future demand? Is this a level where you can work from?
No, I think, I think the expectation that this point in time is that, we will remain at about, like, the same level in terms of operating expenses. For sure, if, our, like, revenue is not developing, as, expected, we might need to take some additional, measures, but we are not, at this point, we are not at this point in time. No, we expect, like, expenses to remain relatively steady, in, 2023.
On that, if revenues would develop in another way, would that be additional measures in staffing up or staffing down?
Yeah. I mean, we will. Yeah, yeah. I mean, we'll adjust, like, depending, like, on the business performance. Again, the difficulty is that we are operating a relatively, like, fixed cost model. At this point in time, we expect our operating expenses to remain steady in 2023.
Okay. On the cash flow side, the debt and the covenant, 'cause currently you're not, and we're close to a breach, but you have mentioned the covenant that you did renegotiate that. Is that related to the RCF, and is that even drawn? What is the covenant?
Yeah. As you have seen, so our Q4 numbers and our Q1 numbers are not what they were, like, expected to be, so which, like, trigger a renegotiation of the covenants with the bank that we did, like, in Q1, in order to ensure that we would, like, remain compliant into in 2023. We were compliant at the end of Q1, like, on 31st of March, and we are doing, like, ensuring that we remain, like, compliant for as long as we have this covenant in place. That's what we are doing.
You won't comment on the level of it?
No, we cannot comment on the level of it. No.
Okay.
I mean, we have, like, the usual-
Yeah.
I mean, as you can imagine, we have, like, the usual, like, indicators and ratios and all that in place. We have, like, some, obligations, like, on a monthly basis. We have some obligations, like, on a quarterly basis.
Yeah. Okay. Okay. Just a final question from me. On the platform, the uptime of the platform, basically, the thing that affected Q3 growth, is that behind us? Do you think that it's stable enough, investments to just integrate the platforms or still some work to do on the historical issues on the H2 growth in terms of the platform performance?
Yeah. As far as I'm aware, and I have some data on this, but probably not full information, those issues are behind us.
Okay. Thank you very much.
Thank you.
Thank you. The next question goes to Alex Guo of Jefferies. Alex, please go ahead. Your line is open.
Hi. Morning, everyone. Thanks for taking my questions. I have two, and I just want to follow up on some of the other questions that other people have had. Number one, this one is for Jai. I understand in your beginning remarks, there's two parts of the process. Number one is updating the tech, the product to improve the customer experience. Number two is that's gonna be the integration process of Cint and Lucid. Is it correct to understand that the integration process itself will cost that SEK 40 million? On top of that, there's another budget for the tech upgrade.
No. No. No. Let me restate. A lot of the integration of the two companies has been done already. Like, one company, one organization, one HR system, one brand, so on and so forth. All of the sort of bringing the organization together. The bit that I'm very focused on as a CEO right now is the platform integration, bringing the two products together into one product, which will be the go-forward product for the entire company. It will be sort of an upgrade on either of the two existing products. Then the final piece is to migrate the customers over to that new product.
they kind of are sequential, but it'll happen, you know, customers will come over, bit by bit, not all in one go. The SEK 40 million covers the entire thing, right? Most of that SEK 40 million has been spent already. I think maybe around about SEK 30 or SEK 25.
2023 at the end of March.
2023 at the end of March. We will get this whole process done for less than 40.
I guess a follow-up with that would be what gives you the confidence? Cause as you mentioned, the process usually takes longer than what is expected at the beginning and most likely gonna cost more.
We have the skills in-house to do the rest of the work.
Okay. Yeah. I
Okay. My second question would be, I think in the press release, you were flagging some supply surplus. I was wondering if you guys have seen any sort of irrational pricings from competitors? I think, I believe Qualtrics and SurveyMonkey are in the process of being taken private soon. Any thoughts on that, on how that might affect Cint's operation in the industry as a whole?
Being a marketplace, a reverse auction marketplace, price finds its own spot on the supply versus demand curve. I don't think that this is a competitive, you know, a competitor underpricing us. I think this is the general dynamics of the marketplace. On the SurveyMonkey and Qualtrics being taken private, tough. I don't know is the answer. I would assume that they're being taken private to because the investors see that as an opportunity, and they will be looking to grow those companies over time in private hands without necessarily the oversight of the public markets or whatever the rationale. That could well be good for us. I don't necessarily see this as a negative for Cint at all.
Okay, cool. Thanks for your time.
Thank you.
Thank you. The final question goes to Fredrik Lithell of Handelsbanken. Fredrik, please go ahead. Your line is open.
Thank you very much. Giles, welcome on board. Most questions have been answered obviously here, but I just wanted to tap you again, Giles, on the integration here and maybe get some more answers out of you. I mean, you have two platforms. I guess there are more sub-platforms within each of those. Is the intention to sort of decide to use one of those two and ultimately close down the second one, or do you intend to integrate these two platforms into one? If you could... I mean, given your experience, your background, it would be interesting if you could sort of put some more color on how you plan this work-
Yeah.
Ahead. It would be interesting. Thank you.
Yeah. Sure. Thank you. When I did it before, we pulled apart the two products and put the back end of one in, into the front end of the other. I mean, to be simplistic about it. It was more complex than that. That's why it took a year. That was the philosophy. With Cint and Lucid, we're basically going to be extending one of the platforms to incorporate the functionality of the other, the important functionality of the other. We're basically taking the Lucid platform and extending that, and that will be our go-forward platform, but with much more functionality, with a refreshed user experience, with a, with some innovation baked into it as well. There's a lot of work going on that right now.
Until we have closed the gap on the functionality that Cint platform owns, then customers won't want to migrate. We have to close that functionality, have an upgraded experience for everybody, and then migrate the Cint customers onto the Lucid platform. That's simplistically from a simplistic point of view, what we're doing. That decision was made before I joined, and it's the right decision. My job is to now make sure that it's pushed through to completion in a really professional way.
Then the migration of the clients, you said in your comments earlier that it will be a gradual move one by one, I guess. Is that a complex nature to move those clients, or is it sort of API easy done when you take one customer at a time, or is it complex?
Some more complex than others. We haven't done that planning yet, my guess is it'll be cohort by cohort, like 200 at a time over a weekend or something like that. There are more complex, larger customers that will have a much more white glove treatment, we will go through that process very much hand in hand with them to make sure that they are getting a fantastic service and are extremely happy with the with the result.
The final one on this then. When you are complete, give that end of 2024 or something like that, will that mean you close down the Cint platform, if that's the choice, and that will take away some of costs, or is it?
Yeah. Yeah.
gonna be some OpEx?
Both.
Costs and OpEx.
Both of them.
Both.
Yeah.
Okay. Perfect. Thank you very much.
Thank you.
Thank you. We've just had a couple more questions come through. The first one's from Daniel Thorsson of ABG. Daniel, please go ahead. Your line is open.
Yes. Hi. Thank you very much, and welcome, Giles, as well. lots of questions.
Thanks, Daniel.
already answered, of course, but I have one on strategy. Previous strategy has been outlining acquisitions of panel organizations to drive both pricing power but also competitive advantages, obviously. Is that something you think is necessary going ahead, or are you happy with the third-party structure as it is right now?
I don't know, Daniel, is the short answer. My focus really is on getting the efficient, you know, the stuff that we've talked about today in the call. I don't wanna be distracted by too many other things. I want us to focus and deliver on The integration and the standardization, the consolidation, the optimization. If at that point, or as we get through that process, we start looking at other strategic kind of directions, you know, I absolutely happy to do that. Right now, I kinda don't want that distraction.
I see. I see. My second question, you may have answered it. I was in another call here at the same time. When you look at the performance in Q1 and Q4 also here with negative organic growth, is it broad-based across the customer portfolio for all the customers, or do you have any larger accounts that are affecting more in this quarter, for example?
Yeah. What we said in the presentation, I think it's slide, I don't know, 20 maybe, in one of Olivier's slides was that the Lucid Measurement business is growing. The tech-enabled customers are flat, and the larger, more established market research customers are down by something like 16% year-on-year. We can see that that's where the negative performance is really mostly coming from.
Excellent. Thank you very much.
Thank you.
Thank you. Our last question is a follow-up from Viktor Högberg. Victor, please go ahead. Your line is open.
Yes. I just a follow-up on the platform migration and a question where Frederick asked already on what that will do to COGS. Rolling onto this Lucid platform over time, would that mean something on the revenue recognition model that you have net versus gross? That would mean that gross profit growth organic will be the main interesting item in your P&L. Maybe you should start reporting that way ahead of time. If I got it right, that will change the dynamics in the revenue recognition when you roll on the platform to Lucid.
Funny you should say that. We've been talking about that very thing over the last month, and it's my hope that that's exactly how we will report revenues going forward. Obviously, we'll restate the historic... We won't restate it, but we'll recalculate the historics just for comparative purposes. When I was saying that COGS will improve, it wasn't because we're switching the revenue recognition model, 'cause that's like, you know, slight of hand in terms of, you know, the real answer to the question. I do believe that there's efficiencies that can be made in our cost of goods sold, so that our actual gross profit on a like-to-like basis would be higher than it is today, let's say.
In general, having one revenue recognition model across our marketplace business, to me, seems like a very sensible thing to do going forward. As we migrate to the new platform, I think that's the time to do it. We have to go through some hoops to do that. We have to get auditors to agree to it. We have to, you know, go through that process, but that's the aim.
Previous management usually commented on that one, that the Cint customers liked doing business or the ordering in one way, the Lucid customers in another way. It was hard to combine the two for the two customer groups. Do you see that as a potential hurdle, the way they see their payments, basically, and their payment flow? I don't know if that would change. You see some kind of operational.
I'm not sure it's the payments flow.
Difficulties.
I think it's more rate card versus reverse marketplace floating cost, sort of methodologies. I think that's possibly what, I mean, I wasn't here, so I don't know what previous management was referring to. If I was to guess, that was what it would be. We are gonna be building that functionality into the new platform so that there's optionality.
Okay. It won't be, look and feel change maybe, for the customers in terms of how they order on the platform.
It'll be look and feel change for everybody 'cause we're gonna be upgrading, the whole user experience to make it, you know, better for everybody.
in terms of their ordering, they will have the opportunity to switch or to determine themselves how to order. Would that be the right-
That is-
assumption for this?
That is our intention.
Okay.
Like I said, there's still some planning to do, and there's still a little work to do on the integration. We haven't finalized exactly how everything's gonna work, but that's our intention.
Thank you very much.
Thank you.
Thank you. We have no further questions. I will now hand back to Giles for any closing comments.
Not really for me. I think I've repeated myself a bunch today, which I hope hopefully has been useful to you to help you get to understand how I'm thinking about things. Thank you for all your great questions and for your patience with the company. We are going to work hard to to improve how the performance of this business going forward. Yeah, I look forward to speaking to you again in due course. Thank you very much.
Thank you. This now concludes today's call. Thank you so much for joining. You may now disconnect your lines.