Earnings call transcript: Adtraction’s Q2 2025 results show decline amid challenges

Adtraction Group AB reported its second-quarter 2025 earnings, revealing a decline in key financial metrics amidst a challenging macroeconomic environment. The company experienced a 5% year-over-year decrease in net sales, reaching SEK 263.8 million, while gross profit fell by 3% to SEK 51.5 million. Despite these declines, Adtraction maintained an operating margin of 3.6% through cost reductions. According to InvestingPro data, the company maintains a strong financial health score of 0.97, with more cash than debt on its balance sheet. The stock reacted negatively, dropping 6.29% to SEK 29.8, reflecting investor concerns over the company’s financial performance and future outlook.

Key Takeaways

• Net sales decreased by 5% year-over-year.
• Gross profit declined by 3% compared to the previous year.
• Stock fell by 6.29% following the earnings announcement.
• Finance vertical faced an 18% decline, impacting overall performance.
• Company maintained a 3.6% operating margin through cost reductions.

Company Performance

Adtraction’s overall performance in Q2 2025 was marked by declines in net sales and gross profit, largely due to challenges in the finance vertical and a weak consumer credit market across Europe. The e-commerce vertical, however, demonstrated stability with an 8.6% growth, providing a silver lining amidst the broader financial challenges. The company focused on operational improvements, including staff reductions and process enhancements, to maintain profitability.

Financial Highlights

• Net Sales: SEK 263.8 million (-5% YoY)
• Gross Profit: SEK 51.5 million (-3% YoY)
• EBITDA: SEK 9.4 million (-4% YoY)
• Adjusted Net Result per Share: SEK 0.43 (-7% YoY)

Market Reaction

Adtraction’s stock price declined by 6.29% to SEK 29.8 following the earnings release. This price movement places the stock closer to its 52-week low of SEK 27, highlighting investor concerns over the company’s declining financial performance and uncertain outlook. However, InvestingPro analysis indicates the stock is trading at a low revenue multiple, suggesting potential value opportunity. The market’s reaction reflects the challenges Adtraction faces in its finance vertical and the broader economic environment. For deeper insights into Adtraction’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking forward, Adtraction anticipates a slight negative growth in the third quarter as it continues to navigate the challenging market conditions. According to InvestingPro analysis, net income is expected to grow this year, and the company’s liquid assets exceed short-term obligations, providing financial flexibility. The company remains focused on returning to growth by expanding its European presence, exploring potential mergers and acquisitions, and serving a wider range of clients. Despite current challenges, Adtraction’s management expresses confidence in its long-term strategy.

Executive Commentary

Simon Gustafson, CEO of Adtraction, acknowledged the company’s underperformance but emphasized the importance of returning to growth. "We are not performing, but we’re still delivering an operating profit," Gustafson stated, underscoring the company’s resilience. He also highlighted the need to focus on growth, stating, "The only way to fix that is to actually get back to growth."

Risks and Challenges

• Finance Vertical Decline: The significant downturn in the finance vertical poses a major challenge for Adtraction, impacting overall sales and profitability.
• Regulatory Uncertainty: Changes in the Swedish finance market regulations add to the complexity of operating in this sector.
• Macroeconomic Pressures: The weak consumer credit market across Europe continues to affect Adtraction’s performance.
• Market Competition: Maintaining competitive advantage amid diverse traffic sources and partner networks remains crucial.

Q&A

During the earnings call, analysts inquired about the company’s strategy to address the decline in the finance vertical and its plans for potential mergers and acquisitions. Management reiterated its commitment to the finance sector despite current challenges and expressed optimism about exploring new verticals and expanding its client base.

Full transcript - Adtraction Group AB (ADTR) Q2 2025:

Simon Gustafson, CEO and Founder, Attraction: Morning, and welcome to the presentation of Attraction’s second quarter results. You are listening to Andreas Hockstrom, our CFO, and my name is Simon Gustafson. I’m the CEO and founder of Attraction. If you have any questions, please post them in the chat tool that you hopefully can see in front of you. So let’s get started with the performance in the second quarter.

We are obviously not happy with our performance in the second quarter. Gross profit dropped by 2.6%, and we wanted to grow. We said in the beginning of the year that we expected growth, then April happened. In April, we delivered a lot lower sales than expected both in the finance vertical and in the e com vertical. We saw a recovery in May and June.

May and June were substantially better months than April, but that was not enough to end up with growth. Adjusted for currency effects, we’re fairly close to zero, but that is still not good enough. We need to grow. So let us continue and discuss what’s going on. I think an important thing here is that attraction remains profitable.

So we’re not performing, but we’re still delivering an operating profit of EUR 9,400,000.0, which is in line with what we delivered the same quarter last year. I would characterize the e commerce vertical as stable. We grew by 8.6%. Of course, that growth is helped by acquired gross profit from ad service, but we also saw a small organic growth in May and June. Finance was weak or even very weak.

We saw a negative growth of almost 18%. We think that this is a market trend. We’ve seen weak market for everyone who’s involved in selling new consumer credits across all of Europe. I will comment a little bit more on this in a minute. Cash flow was lower for the quarter.

That is, in a way, unsurprising. We cannot keep delivering a cash flow that is greater than EBITA over time. I think the way to look at this is to look at the cash flow of rolling twelve months, which Andreas will help us do. We’ve also said that we expect a small negative growth in the third quarter. The reason is that that’s exactly how the quarter started.

So again, finance vertical is not performing and e commerce is looking stable. We are seeing some M and A opportunities, and I think the angle or the background is a little bit different than before. So I’m going to talk about that later on in the presentation. We’re, of course, getting a lot of questions about AI and how that is impacting our business, and we will share some thoughts about that and see if that helps anyone. Then you may remember that in the last quarterly presentation, we said that we want to track more.

We always want to track more, and I will give a little bit of a background in in this presentation, what we mean by that and what it is that we’re doing and intend to do. So the things that we have focused on in the second quarter are the following. We want to get back to growth. You are probably getting tired of hearing this, and so are we. The only way to fix that is to actually get back to growth, and this is what we intend to do.

We have spent a lot of time and resources on our new CRM system. And that may not sound like a big thing, but it really is because that will fundamentally change the work that we work the way that we work with new sales, with account management, and also actually how we cooperate internationally. So we are going to make it much easier to work cross border between our different markets. We have also, on the tech side, spent a lot of time on updating tracking. Some of those updates have already been implemented, and some of them will be implemented in the third quarter.

We’re also happy to report that there will be a new great partner platform for our partners, and that’s going to be launched in a couple of months. And we spend a lot of time and effort on making that one great. So let us talk a little bit more about finance. Our view is that we have seen weak markets in general with lower demand and a lower number of loans approved. And I think our view is that this applies to anyone who’s trying to sell new credits or new loans in this market.

Of course, there is some regulatory uncertainty. And and by that, we mean that there’s a regulatory uncertainty in Sweden. We have seen some new laws being passed. And our basic view is that the Swedish market, the Swedish finance market is not doing well right now. And but that is actually not because of the new regulation.

We see sort of the same development across Europe. We also think that attractions, big clients, both loan providers and brokers, actually will get the the the the license that is required. They will get that license, and we’ve already seen that happen. So for example, attraction’s client, Brixo, got a banking license just a few weeks ago, and we expect other quality companies to to go the same path. So we think that that loan providers and brokers will adjust.

There will be fewer players, but the volumes will probably not go down. That is our basic assessment. And I will also say that we remain committed to this vertical because we can provide great value to brands and partners. That’s and we’ve done that for for many years, and we’ll keep doing that. We’re also convinced that the market will grow over time, and we’re also thinking that change leads to innovation.

So we’re gonna see some new setups, some new services being deployed in the market. And of course, attraction is also looking at new solution to face the regulatory changes. Ecom saw a very challenging 2024, and I think you can see that in this graph. We grew basically every year until the end of twenty twenty three. Then in 2024, we’ve seen a flat development.

I think it looks a little bit better now. We see fewer accounts being closed or paused. We have seen some strong account wins that are not reflected in our results yet. And we also see a slightly more optimistic outlook from brands. That means that they’re a little bit more willing to do things.

But this is still very far from a booming market, of course. We’re still far from a booming macro environment, which is also reflected in our numbers. If we look at the combined picture here, it looks like things have stabilized a little bit. We get the same picture if we look at sales and add rolling twelve months. It looks like things have stabilized, and the same goes for gross profit.

So things are not not really changing here. I think that before we see a turnaround, we need a stronger market for consumer credits, and we honestly do not know when that will happen. In the meantime, we’re doing what we can to find growth where we can find it. What is changing, though, is the Internet. So the Internet is changing, and what I mean by that is that I think that probably everyone in this call is using one or several of the these services.

Some of us use use use more than than one service. And the reason that we do that, of course, is that they provide a great value and are super useful. And these services are also seeing great growth in terms of of number number of users. So what is not clear, though, is exactly what their business model will be. It’s not possible to buy ads or traffic from these players yet, at least not at scale when it comes to these specific AI models and AI services.

And to me, it’s clear that they are facing some interesting challenges. Either they stick to whatever the AI AI thinks is the best answer, or they introduce paid results, and they risk compromising the quality of service. Sort of what what happened to Google. And it’s going to be very interesting to follow what it is that they will do. And what we have seen so far is that companies are experimenting with different things.

We have read about ChatGPT seeking to get paid for conversions, which, by the way, is a great business model in in our view. We know that Perplexity, which, by the way, is not big in Europe at all, is experimenting with ads. And, of course, it’s not it’s not farfetched to think that Meta will have a ad many ads based solutions. So my personal guess for whatever that is worth is that we’ll see different business model emerge here. And I think it’s sort of important to remember in this context that when Google was at its peak, enjoyed the most dominating position, we think that they had around 30% of global ad spend.

That’s a massive number, but it’s still very far from from 70%. So we we think that there will still be a a broad portfolio of advertising solutions going forward. But there are problems with the emergence of AI. And one of the core problems here is that AI is taking content from content sites without really sending any users back. And that puts the content sites in a strange position because they’re delivering great content, They’re not getting users, and there’s fewer ways to monetize their content.

This actually is a is a problem that the industry needs to solve. We’ve seen some deals between the AI companies and media houses, but there probably needs to be a more profound solution to solve this problem. This is not attraction’s job, of course, to solve. We are more concerned about our own traffic and what’s happening to attractions traffic. That’s that’s what we like to think about, and that’s what is important to us.

And I think the first thing that we should point out here is that attraction does not rely on one traffic source. We rely on an innovative network of traffic sources. We rely on in an innovative network of partners. And partners are indeed showing up in the AI results. So if you ask ChadGPT certain questions, for sure, the partner sites are there.

We have seen partner sites also in in Google AI overview. And it for us, it’s difficult to know to what extent partners actually are getting traffic from from, from these services. But I think it’s very encouraging to see that they are showing up there, and it’s encouraging to see that, partners are following, the the the development. So this this is this makes me sort of hopeful for the future. But what’s important right now is attractions traffic.

Did we, like Wikipedia and some other sites, lose a lot of traffic, or what’s going on? And the answer is that no. We didn’t we didn’t lose traffic. So this shows an index number of clicks. We’re starting in the beginning of twenty twenty one, and then we’re seeing what’s happening with our our clicks.

And it it turns out that they’re more than stable. Traffic is growing. And this dataset is not perfect. There’s always gonna be some bot clicks in the in the dataset, and it’s impossible to to clean things up entirely. But but I think what’s important here is the is the general trend that we’re growing.

So the number of clicks is growing, and our model is is is still working out from that point of view. What also is growing is the number of conversions. And here, we’re looking at conversions both in terms of leads and sales. So those are the two types of of conversions that you see in our platform, and we actually see a very nice increase here also. So to summarize, we have not seen a drop in traffic or conversions.

The traffic is there, and and tracking obviously works. So by by by this data, you can obviously draw some implicit conclusion. And and one important conclusion is that the average commission per transaction has decreased because both the number of transactions and the number of clicks have increased, then it sort of follows that the commission has decreased because gross profit has decreased a little bit. And our view is that this is a reflection of the macro environment, and this will change over time. But let’s talk a little bit about tracking and how that is working out.

We said something about that in the in the last report, and we just want to clarify perhaps what we mean and what it is that we’re doing. So first, I want to say a few basics about our model. So, obviously, it makes sense for a brand to pay for conversions. Obviously, it makes sense for a brand to to pay for conversions. That’s the cornerstone of our business model.

And, yes, if a brand pays for conversions, that will get even more conversions. So let’s say as let’s say that a partner sends traffic to meds and meds is paying for conversions. Of course, the partner will continue to send traffic to men’s, and they will continue to get paid. So it’s sort of a self reinforcing model that’s great and and and working out exactly as it should. And, yes, tracking can be automatically updated.

When something needs to be fixed, tracking can be automatically updated. And there’s also a number of other nice features with tracking. So, there’s an opportunity for, brands to validate sales. There’s an automated return handling and all sorts of good stuff that makes the model work. But the world is not perfect.

So here are some challenges that we see with with the tracking and that we’re trying to address. The first problem is not a huge one, but it’s something that pops up maybe once a month or so. And this is about the different realities presented by GA four, Google’s analytics tool, and attraction and and other networks. And the problem in a nutshell is this. We send an invoice to a brand of x transactions, And then the brand will take a look in their GA four, and they will see, well, there’s only y transactions here.

And why why are you sending an invoice with with x when you should send an invoice with y? That’s the question to us. Well, that that that that question has a really simple answer. We are, of course, not basing our invoicing on what’s happening in GA four. They are measuring a different thing.

We are measuring or basing our invoicing on what’s happening in our platform because this is also what it says in our agreement. So what we do is we simply explain this to the brands, and typically, they understand. And we we we may need to spend a little bit of time explaining why there is a difference between GA four and what we measure. So I will not dig into the details here, but if you’re interested in that, you can read an article. You can scan the QR code, maybe click the link.

You should be able to click the link when it’s posted on the site, or you can Google it if if, of course, anyone is still googling things. So let’s go to a slightly more challenging problem, and that’s what we call tracking gaps. And tracking gaps occur because the tracking code is not executed for one reason or another. So so, you know, it doesn’t help that we can we can automatically update the tracking code under certain circumstances if the code is not executed. And, of course, the code should not decide itself whether it’s executed or not.

That’s really up to the to the brand. The brand should decide if and when the code is executed. And under under certain conditions, actually, the code is is is not executed the way that it that it should be. And the first one is when the the brand is making certain consent settings and certain GTM settings. Then then the then the our our code may not be executed.

We’re also seeing examples of aggressive deduplication. So our agreement says that under certain conditions, our code should be executed, and perhaps the brand thinks that, well, hey. This this user came from Facebook or whatever, so let’s deduplicate, and let’s not execute the Traction’s code even though it should be executed according to the agreement. And the third problem is perhaps probably the smallest one out of this, and that is redirect to apps. Some ecommerce companies prefer to send their users to apps, and it’s well known that tracking works a lot worse in apps for different reasons.

So I would also say that this is not a huge problem because there’s some some self adjusting mechanism in our platform. So if a brand is not converting good enough, then partners will simply send their traffic elsewhere. So so the model is still working out. There are self adjusting mechanism in the platform. But, of course, some brands are simply great brands, and they get traffic anyway.

And and then we make need to make sure that things are are are right. I also think there are some consequences of a tracking environment that’s less than perfect. So for example, short term sales may be underestimated, which means that partners and attraction may not be fairly compensated. Of course, we need to fix this. Longer term, of course, the brand may perceive the channel as less valuable.

If the brand thinks that we are sending fewer conversions than we actually are sending, that is a problem long term when you’re comparing different channels. But fortunately, there are some beautiful solutions. I think the GA four problem is is fairly straightforward. We already have a solution in place where we can provide additional data for GA four if that is requested by brands. In in most cases, they don’t need that.

But if they want it, we we can provide some more data for GA four. And, also, we will introduce a lot more transparency regarding tracking data for each tracked transaction. So so the the the brand will know a lot more about about each about the tracking for each transaction. So this will be implemented within a couple of months. And then for the the other problems, the tracking gaps, we have two options.

So the first option is to always fire attractions code no matter what happens, and then we can do our job. And, of course, we should do that in a consent friendly manner and make sure that we follow GDPR in in in every way. And if the if the brand for some reason is not firing the code, then there needs to be different ways to compensate. And this is a fairly big project that we’re working on. And this we will not finalize this project in Q3, but we will, for sure, start in Q3.

We think that these things together will have a positive impact gross profit and sales, but this is not something that happens overnight. This is sort of a long term project because some of these things need to be implemented manually. But it’s important that tracking is working out for the reasons that I have mentioned. So we go back to the question about how will we grow, and you will recognize these slides if you have watched our presentations before. The main objective for us is to grow with our existing base of brands and partners.

That is the most important thing to us. And we do that by providing a great service and providing great value to partners and brands. This is the core business idea of attraction. Of course, we also want to increase market share. We have been trying to grow in Europe for many years.

We have seen some growth, but we want to achieve a lot more. And probably, we will need to do, more m and a in in Europe to speed things, up a little bit, but we’re also gonna keep working to grow organically. We wanna grab the Google budget. I have talked about that many times before. It doesn’t make sense for a brand to spend too much on Google, especially now.

I would argue that in many ways, Google’s model is under threat. So you cannot be certain that that Google will be able to deliver what they have delivered delivered before with all the changes going on. We want to do m and a in new markets. And one thing that has that we have understood now is that our business is becoming more complex. Maintaining and developing a platform is a lot more complex.

Historically, when we’ve acquired company, the reason has been that the founder perhaps wanted to do an exit or partial exit or or wanted to be part of a bigger team and saw other synergies, and it was exciting to do a deal like that. Now we see opportunities where where smaller companies have platforms that are simply not performing in in this market. They they don’t have the resources to update the platform, and they really need to to update the platform or they will be left behind. So we think there are some opportunities there. We will see what happens.

So we normally talk about the number of employees, and and the big picture here is is this. This this chart looks almost a little bit random, I think, but it’s not. So what happened was that we did the IPO towards the end of twenty one, and we started hiring a lot of people. Then we acquired ad service. The number of employees increased.

We faced a more difficult market, and the number of employees was reduced until last year when we started growing again. We added a few people through acquisitions. And then all of a sudden, we see a drop in q two. I think that this drop is more or less random. A lot of things happen at the same time.

We have already hired a lot of new people. So, actually, I would expect some continued growth here going forward. Not a massive growth, but we will continue to add a few employees here and there. The cost base per quarter is something that we, of course, follow closely. We need to know what the cost base is, and we need to know what the gross profit is so that we know that we make an operating profit each month.

And we’re trying to, you know, keep keep the control control over the cost so that we always make a profit. And and what we’re facing now is a situation where the cost is about SEK 1,000,000 lower than the same quarter last year. So with that, I will turn the mic to Andreas for a couple of slides.

Andreas Hockstrom, CFO, Attraction: Thank you, Simon. And then looking at numbers from the second quarter, starting with the net sales, we have SEK 263,800,000.0. That’s a negative growth of 5%. And we will also comment a little bit on FX in this presentation as it’s been quite volatile, and we’ve received a few questions from investors lately. So we can see that it’s slight negative effects on the growth rates, and we would have a negative growth rate of 2% if we would have had fixed rates.

Looking at gross profit, we have 51,500,000.0, that’s a negative growth of 3%. You can assume the same thing regarding FX here. It would have been slightly less with fixed rates. I will also comment a little bit on acquired versus organic growth when we get to the verticals. Under the profitability and EBITDA at 9,400,000.0, that’s a decrease with 4%.

We have maintained the same margin as last year, 3.6%, and that we have been able to do through lowering the total cost base despite having acquired at record and added to the total cost base by doing so. We also limit the FX exposure on our profitability, and we do that by getting paid and paying partners in local currencies and also paying our operating expenses on the local markets with local currencies. Thereby, we have a little bit of a shield towards fluctuations on the currency market, and you should expect the fluctuations on the currencies to have limited expect effects on the profitability in attraction. The adjusted net result per share is at SEK 0.43. That’s a decrease by 7%, a little bit more in the EBITA, and the reason for that is being differences in the financial items between the quarters.

In the verticals, starting with e commerce, we have EUR 31,400,000.0 in gross profit. That’s an 8% growth. We can see growth on most markets. We have previously said that it’s hard to say an exact number on organic versus acquired growth when we have migrated the customer base. That is true.

But we can say that we would have had a slight positive organic growth in e commerce excluding acquisition, and then the rest of the growth is acquired. The finance vertical, 19,400,000.0 in gross profit. That’s a negative growth of 18%. We can see a general negative growth across markets with a couple of exceptions on smaller markets. And then vertical other, everything that is not in the attraction platform, we have 700,000.0 in gross profit.

Comes to geographies, starting with Nordics, we have 38,600,000.0 in gross profit. It’s a 1% negative growth. And this is also where you see the effects of the acquisition of AdRecord. I can also say that the trends within e commerce and finance are similar between Nordics and Europe. They’re positive in e commerce and negative for finance.

In Europe, we have 12,900,000.0 in gross profit, and that is a negative growth of 7%. And then when it comes to cash flow, we can see that we had three consecutive quarters with amazing cash flow, looking at the operating cash flow, followed by the second quarter in 2025. And the reason for this is that we’ve worked really hard on improving processes when it comes to invoicing and getting paid, and that has given very good results. And the reason for it being negative in the second quarter here is seasonality effects and that the partner payments from these process enhancements are bigger. You can instead look at the operating cash flow from a rolling 12 perspective to see the effects on these process enhancements, we’re actually at a historical high when it comes to operating cash flow.

Then breaking down the cash flow to its difference in components, starting with the operating cash flow at minus 13,000,000. That is due to previously stated bigger partner payments and the seasonality effects. We have investing activities of minus 200,000.0, finance activities of 16,600,000.0. That is the first tranche of dividend payment. That gives us a total cash flow of minus 29,700,000.0 in the quarter.

And we can see that the net cash position has grown from SEK 93,000,000 to SEK 100,000,000 in the last twelve months despite having acquired a record and made to tranches of dividend payments. And thereby, I give the mic back to you, Simon.

Simon Gustafson, CEO and Founder, Attraction: Thank you, Andreas. And I just want to reiterate some of the goals that we have and what we’re working towards. So obviously, we’re about growth, profitability and cash flow. I think we’ve done a decent job when it comes to profitability and cash flow, not so much when it comes to growth. I also think that we need to be European network.

So the next step for us is to strengthen our presence in Europe and continue to do things in Europe. We also wanna serve a wider range of clients. We have talked about that before. We are building great solutions for smaller clients, and we will talk more about that going forward. We also wanna be a leading consolidator.

I think that attraction has been involved in in, you know, most of the transactions that have happened in our space. So we have made four we’ve bought four companies. There’s been one recently that we did not acquire, and that’s Bell Boon. And that was actually a a German company that was in a very unsound financial position, and we perceived that as a little bit too risky. So we did look at it, but we didn’t choose to move forward with it because we felt that the transaction structure was a little bit too risky.

So what’s happening now is that, again, we’re focusing to get back to growth. We’re implementing that new CRM system and the new playbook. We’re implementing the new tracking opportunities sorry, the new tracking solutions, and we are looking at M and A again. And of course, I want to say something about Bundler. Bundler is a subsidiary, still very small, but it’s doing great and exciting deals.

And like I said in the report, we expect to talk more about that in the next year, actually. So with that said, we have a number of questions. So we’ll we’ll get started with with with that. First, what is the name of the new CMS? I I’m guessing that we mean CRM, and that is Salesforce, which is, of course, a huge company, and we’re implementing some great solutions, we think.

Can you share some examples of previous periods when you faced challenges in terms of the finance vertical? Yeah. I think the the the biggest thing was clearly COVID. So when that happened, we saw a huge drop initially, and then the then the recovery was a little bit quicker than we’ve seen now. Now it’s been prolonged, but I also think that we’re facing a very special situation in the world.

Other than that, we’ve seen shorter drops throughout the years, but nothing like the the one that we’re currently are experiencing. So another question is you’ve reduced staff by seven employees. What roles have been cut, and was this a deliberate strategic decision? So this is a mix of things. So some people left us, and we wish that they hadn’t.

That’s gonna happen for for any company of our size. And in other cases, we we made agreements with people to leave. If something is not working out, we try to to fix that. And I would say that it’s more or less a coincidence that a lot of things happen in the same quarter. We already have hired a lot of new people, and we expect to get back to growth.

Most of the people who left us, if I remember correctly, were account managers and partner managers. Do you see the m and a market starting to be more active or is still as cold as in previous quarter? Well, I think it’s a little bit more active. There are there are you know, we’re constantly probing people and asking if they wanna talk to us, and now it turns out that some people wanna talk to us. So we’ll go ahead and do that, and we’ll see what that leads to.

You’ve previously used a fair amount of shares and acquisitions. Now that you have 100,000,000 in cash and no debt, how do you view optimal finding structure for future acquisitions? Well, please remember that that in the ad record thing which we did last year, that was a 100% cash transaction. Connects was cash transaction or and then we borrowed a little bit for

Andreas Hockstrom, CFO, Attraction: Yeah. We have made small loans that we have actually very fast amortized after the acquisition.

Simon Gustafson, CEO and Founder, Attraction: Yeah. And the only the only transaction where we used shares was ad service because ad service was sizable. So it depends on the on the size of the company that we’re acquiring. If it’s a we prefer to use cash. So I think our first priority would be our own cash position.

Our second priority would be debt. And if we have to, we’ll use shares. But but I don’t that that is a little bit less likely, I would say. Can you comment on the performance of the finance vertical at the beginning of Q3 and whether there are any indications that the sequential incline is nearing a bottom? Well, this is, of course, the key question here.

So what I did say was that we saw a small negative growth in q three, the start of q three. And, course, what’s going on there is that we were growing ecommerce and we’re not growing finance. But but but we’re seeing a better development than we saw in in April, of course. April was super, super bad. And maybe April was the bottom, and maybe we’re recovering.

I I I honestly don’t know. I don’t want to speculate here, but I I’m fairly confident that this will not go on forever. My my personal feeling is perhaps that this is some some sort of of of botting that we’re seeing now and we have seen, but I honestly don’t know. So here’s a question from about ecom. Ecom stable at the beginning of Q3, stable as zero or stable as in growing as the same rate as in Q2?

Well, it’s the same situation as in Q2. We’re seeing growth for ecom. So we have a few more questions. Here’s a question about Google AI overview and how that is impacting traffic. I think I think we have answered that to some extent, Obviously, not in a in a perfect way, but but my my sense is that Google AI overview is not impacting things a lot.

And like we we like I’ve shown, our traffic is still there. We have a question about the effect of the law that we’ve seen in Sweden and what impact we will see on the gross profit. And like I said before, we are not doing well in the finance vertical in Sweden, but I don’t think that is primarily related to the new legislation because, of course, we’ve seen an interest rate cap, but there seems companies seem to be adjusting to that. And the question is what will happen next year, next summer when you need the banking license? And our assumption is that all our big customers will get that license.

And I think that some of the big brokers have actually publicly confirmed that they will go ahead and get the license, and it would not make sense for them to not get the license. So probably they they can pay a few million, strengthen their organization, and get the license. So we think that the market will keep going, of course, even even after the the new legislation has been fully introduced. Here’s a question about the number of employees again. Is is the current number of employees still sustainable, or should we expect the growth?

Well, we should actually expect the growth. Like I’ve said before, we already hired a lot of new people. Are there any seasonal effects within the finance segment? And if so, why? Well, the big trends are that typically January is a good month, then we see a drop during the spring, and we see a little bit better performance during July and August.

Now these patterns are not as clear in a weak market like that, but somehow they’re still around. Then there are local effects. So for example, in in the Swedish market, tax returns in April and June, I think, will will impact the need for borrowing. So there are some seasonal effects, but they’re a little bit less pronounced than a weak market like that. In the small uptick in gross profit in other segment, an outlier or should we expect that segment to continue to grow?

Well, I would expect that segment to continue to grow and I’m sure we’ll talk about more about that going forward. I would actually be surprised if that segment is not growing. But, you know, not at a super rapid pace, but we should we should see continuous growth there. So here’s a good question. A couple of years ago, attraction made greenfield expansions into Italy and France.

How are those expansions developed? Are they profitable? No. They’re not profitable. I think that we’ve seen some good development there.

We have great teams, but, things are a little bit slower than we hoped. And I think it’s a little bit more difficult to start these things in a in a in a weak market like like we did. We are long term, though, and we are convinced that we will be successful in in those markets going forward. So the teams are fairly fairly small. It’s just a handful of people, but I will say that we’re not comfortable launching new markets until we’re profitable in our current markets.

Here’s the tricky one. How far away would you say that attraction is for making the next acquisition? Well, if if it were up to us, we’d do one very soon, but it’s not always up to us. People need to understand that it’s a good idea to sell to us. But, you know, within a year, I think that we’ve made more m and a.

When it comes to the finance vertical vertical, is the decline primarily driven by less revenues from a handful of significant clients or more broad based? So I would say that it’s broad based. So so this is basically across the client base that we’re we’re seeing drops. Of course, are exceptions. Some some clients are are performing very nicely, but but I would say that it’s a broad based drop.

It would also be interesting to hear how different subcategories and markets within the vertical are performing. And I guess that goes for ecom because ecom, there are a lot of different categories and the performance greatly varies. And I actually agree that that would be good to report a little bit on that to give an extra flavor of what’s going on in ecommerce, and we just need to find find a good good way of doing it. We will not do it in this report, but but but but the question is noted. Then we have a final question here, I think.

Are we looking at any new vertical? And we’re constantly looking at at new verticals. So so this is this is how we look at things at attraction. So we report two verticals. One is finance, and one is one is ecommerce.

Ecommerce is basically everything that is not finance product, and and we’re excited to start new verticals and new things at at all times. And a good way to get a sense for that is actually to look in our platform and see what types of brands we have and what types of brands we’re we’re adding. There’s constantly happening stuff. Then this person is saying that it’s not fun to see the finance vertical shrink quarter after quarter. Well, I couldn’t agree more.

This is something that we’re working on and that we’re trying to fix. And the same person saying that it’s ethic ethically questionable to sell expensive loans to people in financial distress. I strongly disagree with that comment because because here we’re making assumption that everyone who’s getting a loan is in financial distress, and that’s not how the work the the market works. So so in Western Europe, we have a loan based economy, and then the market needs to supply those loans. And and every single loan provider is reporting to different regulatory bodies and so on.

So this is just some consumers demand loans, and then there’s gonna be companies who sell those loans, and we help consumers make better choices. So I have a very different view of the finance market here. Alright. Let’s see if there are any more questions. Yeah.

How is the finance vertical distributed across countries? Are certain markets significantly larger than others? And if so, how large are the biggest geographic markets? So, yeah, we’re not we’re not doing finance in in certain markets, whereas finance is very important in in other markets. So the general picture is that in all Nordic countries, finance is fairly important to us or very important.

Not in all countries, but but we have big a big finance gross profit in all Nordic countries. Finance is also very important in Spain. So the Nordics countries and and and Spain are the markets that have the biggest impact on on on our finance performance. Then we also have strong finance offering in The Netherlands and in Germany. We’re doing some things in Italy and France and Poland.

And, actually, in The UK and Switzerland, we do not have any finance offering to speak of because the market structure is different there. So these are the questions that that we had for today. I think to to summarize things, I would like to say that attraction is profitable. We’re seeing a better development in in ecommerce. Finance is still challenging, and that needs to to to turn before we see a better development.

My view is that is that this is a market thing that everyone who’s trying to sell new credits is impacted by this. We are very active in trying to find good solutions for our partners and brands. And long term, we know that this strategy works. So that’s it for today. Thank you very much.

See you next quarter.

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