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Introduction & Market Context
Adtraction Group AB (STO:ADTR) presented its Q2 2025 financial results on July 24, revealing continued challenges across its business. The affiliate marketing company reported a 5% year-over-year decline in net sales to SEK 263.8 million, while maintaining profitability with an EBITA of SEK 9.4 million. The stock reacted negatively to the earnings announcement, falling 9.12% to SEK 28.9, approaching its 52-week low of SEK 27.
The company’s management was candid about the quarter’s performance, stating they were "not happy" with the results. Despite the challenges, Adtraction emphasized its continued profitability and highlighted divergent performance between its e-commerce and finance verticals.
Quarterly Performance Highlights
Adtraction’s Q2 2025 financial results showed declines across key metrics compared to both the previous year and the same quarter two years ago. Net sales decreased by 5% year-over-year (2% excluding foreign exchange effects), while gross profit fell by 3% to SEK 51.5 million.
As shown in the following comprehensive financial summary:
EBITA decreased by 4% to SEK 9.4 million, though the company maintained its operating margin at 3.6% through cost reduction measures. Adjusted net result per share declined by 7% to SEK 0.43, partly due to financial items.
Vertical Performance Analysis
The company’s performance showed a stark contrast between its two main business verticals. The e-commerce segment demonstrated resilience with 8.6% growth year-over-year, reaching SEK 31.4 million in gross profit. This growth occurred across 8 of Adtraction’s 12 markets, with slightly positive organic growth.
The following chart illustrates the performance by vertical:
In contrast, the finance vertical experienced a significant 17.9% decline, with gross profit falling to SEK 19.4 million. The company attributed this to weak markets in general, lower demand, and some regulatory uncertainty. Despite these challenges, Adtraction stated it "remains committed to this vertical because we can provide great value to brands and partners."
The finance vertical’s performance has been volatile over recent years, as shown in this trend chart:
Meanwhile, the e-commerce vertical has shown more stability with growth potential, despite what the company described as "a very challenging year" in 2024:
When viewed together, these verticals show how the company’s business mix has evolved:
AI Impact and Tracking Solutions
A significant portion of Adtraction’s presentation addressed concerns about the impact of artificial intelligence on digital marketing. The company acknowledged industry concerns that "AI is taking content from content sites without sending users back" and that "big drops in traffic [have been] reported from many content sites."
However, Adtraction emphasized that its business model doesn’t rely on a single traffic source but rather on "an innovative network of traffic sources." The company presented data showing stable and growing platform traffic:
Similarly, conversions have continued to grow despite AI-related concerns:
The company also addressed tracking challenges, acknowledging "tracking gaps" where conversion tracking code may not execute due to consent issues, GTM settings, aggressive deduplication, or app redirects. Adtraction proposed solutions including increased transparency, providing additional data for GA4, and offering brands options to either "always fire the code or compensate" through other means.
Growth Strategy and Outlook
Looking ahead, Adtraction expects negative growth to continue in Q3 2025. The company has been implementing cost control measures, reducing its workforce from 131 employees in Q1 2023 to 116 in Q2 2025.
Despite current challenges, Adtraction outlined four key growth paths:
1. Growing with the existing customer base
2. Increasing market share
3. Capturing Google (NASDAQ:GOOGL) budget
4. Pursuing M&A opportunities in new markets
CEO Simon Gustafson acknowledged the company’s underperformance while emphasizing its continued profitability: "We are not performing, but we’re still delivering an operating profit." He stressed that "the only way to fix that is to actually get back to growth."
From a long-term perspective, Adtraction highlighted that despite recent challenges, the company has maintained an overall growth trajectory since its founding. Management expressed confidence that the internet’s evolution, including AI changes, presents opportunities for companies that can adapt effectively.
The market’s reaction suggests investors remain concerned about the company’s ability to return to growth amid challenging conditions in the finance vertical and broader economic headwinds across Europe.
Full presentation:
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