Good afternoon, and welcome to this live video interview with Zinzino, following the Q3 2025 report. My name is Niklas Elmhammer from Carlsquare Equity Research, and we're very pleased to be joined today by the CEO of Zinzino, Dag Bergheim Pettersen. But before we begin, I would like to welcome you to submit questions in the chat function. So please send in as many questions as you like, and we'll try to address them. But now I will turn over to today's main attraction, Dag. So we're very welcome, and we're happy to have you here again.
Thank you. Thank you for having me. It's always a pleasure to be here with you.
Okay, so Zinzino released its Q3 report this morning. Very strong growth, that has been a familiar theme, for some time now, but also very improved margin, and also you had, you have been, quite busy on the M&A side during the quarter, but please, Dag, give us your perspective on the quarter.
I think your summary is pretty precise. Strong growth, which we have announced and has happened the whole year, and then the profits are increasing quite significant now in quarter three. I would say it's within our plan or a little bit above what we have promised the market. So very pleased with everything that we do. I think I'm in the office in Gothenburg now, and some people here are a little bit tired of me dragging in new acquisitions, so they asked me to stop for a while now and make sure that we're implementing everything. All in all, I'm very pleased, very happy, very happy with the team, the development on so many different aspects. And we also created a new...
You know, we are dealing with test-based nutrition, so we launched a new test, as we have been talking about, in October. That has been fantastic. So all in all, we're doing extremely well from my perspective.
Okay, great, and if you look at the regional development, there's a very solid momentum in Central Europe. Good growth in North America as well, boosted by acquisitions. Could you please comment on the underlying growth in these very important regions for you?
We can start off by talking about U.S. We are actually quite happy with the organic growth in U.S., plus the acquisitions that we have made and the mergers. That is a strong region, and I strongly believe with that we are kind of in an early stage, and I think there the potential is quite much higher than what we have seen so far. But we are working on it, so that would be probably one of the strongest markets or regions if you look at the next two to three years. That's my prediction and forecast for that. If we move over to Asia, before I turn my focus on Europe, Asia have been growing.
Our model with sales, selling and the Test-Based nutrition and the focus on customers takes time to be perceived, I would say, in the market space. We're working in direct sales and home parties, so we are super happy with the growth that we've seen in Taiwan, for instance. That has been, like, super strong now for one and a half year. We have been established for six, seven years now in Malaysia. Now, we see that we are gaining some kind of trust and growth. Australia and New Zealand are doing pretty well. Asia in total is doing fantastic, but it's driven by some few countries from that point. But happy, since Asia has the most populated area in the world, so of course, if you're gonna be a global company, you need to be present in Asia as well.
It's early stages for us. So Europe has been the strongest foundation of Zinzino. We started in Scandinavia, like, 20 years ago, and we are number two, I would say, in the Nordics from the direct sales perspective of every company that we are comparing ourselves with. So that has been our fortress, and I'm happy to play out the global footprint of what we're doing. If you move a little bit further south to the region in the middle of Europe, that is the strongest, and Germany, combined with Austria and Switzerland, are now having approximately like 33, one third of the total revenue in that region. So of course, that is the strongest region. It has been growing pretty fast the last two, three years, and it's still kind of growing, which is fantastic for us.
But whole Europe are growing, except for some markets in the eastern part of Europe. South of Europe, with France and Italy and Spain, are now doing good leaps. U.K. are in a strong mode. They have all-time high there a couple of times this year, plus the Nordics. So the only kind of region in Europe that I would say that are a little bit lagging now are the eastern part of Europe, which has been our strongest region for three, four years. So we have had, like, a constant growth for many, many years now in the eastern part of Europe. But now it starts to be kind of on a new wave, which happens in some of the markets that we are part of. All in all, most of the regions have good conditions to grow.
We are, we put a lot of effort into creating some good promotions and making sure that we got good people that are supporting the sales and the revenue. So I'm quite positive with the future and what the future will bring, from that perspective.
Okay, and just touching back on the US, how much has the sort of distribution network expanded since last year with acquisitions and organically?
First, it's a good reminder for everyone who is listening here and maybe have heard me talking a couple of times or maybe the first time. We are working with a direct sales model where we have distributors and the partners, and those are the ones who are selling the products for us. Then 80%, and over 80% are direct to consumer from those partners. So that is a ratio that we see in all of the world. Some of the new markets have a little bit more revenue among their partners and less on customers, but on average it's 80-20. We see that fits directly into the model in U.S.
With the acquisitions that we have done over the last years, and that also with the European acquisitions as well, have given us a much stronger sales force in the U.S. How many of those who are working in the U.S. is about. It has been probably 200% growth, so we probably have 1,500 or yeah, 1,500 to maybe 2,000 sales people in the U.S. at the very moment.
Okay, thank you. And we have a question from the audience on the Asian markets.
Yeah.
Do you have any updates on your expansion into China and India?
Thank you for that. India is two different markets, of course, you know that. The largest populations on the planet, both of them. They're very different, but they have some similarities. We have had some good growth in India, but it's kind of fragile, I would say. It's established on an early stage numbers, I would say. The same thing with China. We changed to what we called an e-commerce model for China. We did that in June this year. It's still kind of early stages. We don't have a lot of revenue. I think we will probably end this year on both markets. China probably would be on EUR 1 million in total, so it's very small revenue, but it's the building block for the future.
China will be a good market for us coming into the future. I'm sure of that. For India, we have had a little bit, like, up and down, so I guess we're gonna hit, like, maybe EUR 4 million-EUR 5 million in revenue in India over this year. But it's very regulated, so we are working a lot on the regulations still, product design, making sure that all of the things are working. So we go slow before we go fast in both of those two markets. It takes time to learn the market and before you really expand it on the growth. So we have a. We are now putting a little bit brake so we make sure that we could deliver when the hypergrowth is hopefully coming in those two markets.
Okay, very interesting. We also have a question regarding the growth. What is the sort of, distribution between, new customers, subscriptions versus new distributors?
It's the same answer as I revealed. So we have an eighty-twenty rule, so 80% of our revenue comes directly from consumers, and that is the new intake and new partners, so it goes hand in hand, more and less. We have what we call a compensation plan that are intensified on those premises. So the incentives are on the partners to also put a lot of effort to retaining and getting new customers, but also retaining customers. So that is a part of our total system. So it's very predictable what we're doing, and most of the markets are just following the same kind of principles.
A good thing, you want to know that, I can kind of predict now the revenue for December and January based on the amount of customers and partners that we have and the intake of that, because we have a lot of subscriptions. So that gives us a lot of benefits when it comes to production planning and, inventory and those kind of things.
... Okay, I see. And you mentioned also new product launches, the gut health test, and there's some questions about that. You mentioned already in the report that you sold 60,000 already.
Yep.
That seems quite incredible, I must say.
It is.
What is your expectations for this product? Is it sort of a charm of the new, or is this a sustainable path?
For sure it's gonna be sustainable. It's one of a kind. It's the first dry blood spot test that could take and analyze the gut in that certain way. Normally, you need to take different other tests, which is much more complicated and difficult to take. So this is gonna give you a good insight on how your gut is working and what you need to do to improve your gut. And the literature over the last 10 years have shown that the guts are more important maybe to your whole kind of system of how your body is working. So we know for sure there is a lot of interest. We got a lot of publicity. It's still kind of early stage work, so we need to get all the reports in.
There is a lot of work on analyzing all of these tests that comes into the lab. So remember that we have the largest database on fatty acids or omega-3s to omega-6, so it takes time to build that kind of foundation of the gut. We also have some products that you could use if you shows that your gut needs a little bit more fiber perhaps. So I have super strong beliefs that the gut health will be extremely important for preventative health for the next upcoming decades, and this is the new big, big thing for Zinzino. I still think that the BalanceT est that we launched four, thirteen, fourteen years ago still will be the largest player on the testing device, but who knows?
This has been like crazy good. It's received extremely well among our sales force, and there is a lot of attention around it and publicity and by practitioners, I would say, all across the countries that we are working in. It's a fantastic start, but it's also just a start, so this will be one of the top, top analysis and tests that we... and we've been working almost like a decade to prove the test and done all that kind of work. It is like tons of hours of many people, so I'm so grateful for that. I'm not sure it's very hard for me, when I'm not like a scientist, to explain to you how good this is, but this is truly amazing.
Oh, that sounds exciting. Looking at the strong margins, they improved, mainly related to the higher gross margin of 35% or above. Is this a sort of normal level going forward, given the raw material prices and your growth, or?
Oh, it's a combination of many things. It's not that easy to read everything out of the balance sheets or the profit and loss, but you're into something right. The growth makes a lot of is helping out. The gross margins, of course, are improved, and then also, what I've been talking a lot about are scalability. So you see a lot of scale advantages in that quarter, and so that is the reflection. Honestly, that's the biggest reflection you can actually read out of that.
Okay, and regarding the EBITDA margin, well above your targets, almost 16%, is that boosted by something special or?
It's a little bit lower costs, little bit lower cost of goods. It's a reflection a little bit about adjustments of the dollar, the fluctuations, the currency a little bit, but overall, it is the scale of the business. So I think I've said once in one of our interviews, that we probably could have had those kind of margins. If we only focused on margins, we could have had those margins, but we are also focusing on building the company for the future. So what I'm proud of is the investments that we have done on the tech side. What I'm proud of is the investments that we've done on the product, and also opening new markets, doing acquisitions, and all of these things are building up towards this quarter. So it's not like one single thing.
It's like many, many years of work and no magic. It's just, like, hard work that gives us this kind of margins. You're asking me, and I avoided to answer the question, if this is the new normal. I think we will go back to page five where we are stating the financial goals. I think we still have the same kind of financial goals. We wanna exceed a certain percentage in growth this year. I think I claimed that we're gonna do around 50% instead of 20%. We promised the market 20% over three years, so 20% 20% plus 20%. We are overperforming on that, and then we said, like, EBITDA on more than 10%. We are not ready to kind of adjust those kind of targets yet.
But of course, if we are overperforming, those financial goals seems to be a little bit like on the low end. If that's probably what you're asking me about. Shouldn't you just adjust them? We haven't done that adjustment, but we're probably gonna do that for next year, and giving you a forecast for what we will bring to the market in 2026.
Okay, looking forward to that. We have some question regarding... "Hello, I have a question on the case with the authorities, specifically with regards to the accusation of aggressive marketing. Do you have any comments on these..." I guess it's kind of media articles that have been around.
Yeah, yeah. I do. It's a very interesting thing. So every year, by regulators and authorities and governments, what you should call us, they go through all our things. I mean, they go through the regulations of the product, the authorities run through how we're describing things, if we are following the laws and the regulations, EFSA claims, and all those kind of things. It's kind of a normal thing for us, that sometimes the government are even changing parts of the regulations and the governance, and we are just following all the different things that the government are putting on us. This year, the Swedish regulators have been watching all those, I would say, influencer media or the social media and those kind of things.
For us, this has been just business as usual, business as normal. There was a couple of questions about the way we used a symbol on the packaging. We changed it immediately, but last year it was okay, but this year it's not okay. So it's business as usual in our sense. Then you have local government also that has certain questions on, let's say, we are buying a company, and then suddenly that company maybe have different labels. So we need to look through that and make sure that we are aligned with the laws and the regulations everywhere. But that is kind of business as usual for us. We have that for the Danish Food Authority that goes through this every year.
That is an audit that we go through, and we just follow the laws, and we are good on the compliance matters to change towards that. So honestly, I think it's blown out of proportions, and it was blown out of proportions of a media article, and at the same time, our shares were shorted. Which is... I don't wanna speculate. What I wanna do is to create a fantastic company based on the facts. What I'm happy about today is that I've shown fantastic results, and we've answered up all those questions on the government, and I don't think this, there is a case going on at any place. But if there will be, then we will answer it, and we will change and adjust always.
Okay, thank you, Dag, for clearing that out. I think unfortunately, we are running out of time here. It's a busy reporting day. But thank you, Dag, for taking the time and bearing with us with the questions and hats off for the strong, profitable growth, I would say.
Thank you so much. It's always a good thing and an honor to be here, so thank you. Thank you for listening to me, and good luck on everything that you do on your end.
Thanks again, and thank you all for listening in, and hope to see you soon again.