Earnings call transcript: Scent Group AB sees profitability rise despite revenue dip in Q2 2025

Scent Group AB reported a decline in net sales for the second quarter of 2025, with revenue dropping by 6.6% to 39.3 million. Despite this, the company improved its profitability, achieving a gross profit margin of 88.8% and an EBITA margin of 20.8%. The company’s stock saw a significant decline, with a drop of 8.73% to 8.25, reflecting investor concerns over the revenue decrease. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts setting price targets ranging from $6.70 to $9.07. The company remains focused on innovation and growth, setting ambitious targets for the future.

Key Takeaways

• Revenue decreased by 6.6% but profitability improved with a higher gross margin.
• Stock price fell by 8.73% following the earnings announcement.
• Strong performance in media measurement partially offset the decline in SynExchange.
• Significant cost savings were implemented, enhancing overall profitability.
• The company plans to focus on growth and innovation in 2026.

Company Performance

Scent Group AB experienced a mixed quarter, with a notable reduction in net sales primarily due to a decline in the SynExchange business. However, the company managed to improve its profitability metrics, with gross profit reaching 34.9 million, reflecting an 88.8% margin. The EBITA margin also saw an increase, rising to 20.8%. These improvements were attributed to significant cost-saving measures and growth in the media measurement sector. The reduction in net debt from 80 million to 13.7 million and an improved leverage ratio of 0.3x further strengthened the company’s financial position.

Financial Highlights

• Revenue: 39.3 million (6.6% decrease)
• Gross profit: 34.9 million (88.8% margin, +1.8 percentage points)
• EBITA: 8.2 million (20.8% margin, +3.9 percentage points)
• Net debt: Reduced to 13.7 million from 80 million

Outlook & Guidance

Looking ahead, Scent Group AB is targeting a 10% sales growth and 25% margins as part of its strategic focus on innovation and expansion in 2026. The company plans to continue expanding its channel partnerships and expects the exchange business to return to growth following the completion of customer migrations. InvestingPro data shows the company maintains a healthy financial position with a strong Altman Z-Score of 9.96 and an impressive current ratio of 1.55, suggesting solid financial stability to support its growth initiatives. The company also hinted at potential acquisitions or reinvestments to bolster its market position. For deeper insights into Scent Group’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

Patrick Comer, CEO of Scent Group AB, emphasized the shift in focus towards innovation and growth, stating, "Now we move to innovation and growth." He also highlighted the significance of the company’s recent platform consolidation, saying, "We’ve accomplished this major milestone of consolidation." Comer’s comments reflect the company’s strategic pivot from internal restructuring to external growth and customer engagement.

Risks and Challenges

• Continued revenue pressure from SynExchange could impact future sales.
• Market volatility and investor sentiment may affect stock performance.
• Potential challenges in executing growth strategies and achieving sales targets.
• Economic uncertainties and their impact on customer spending and survey volumes.
• Competition in the media measurement and data solutions sectors.

Q&A

During the earnings call, analysts focused on the impact of the migration on volumes and the company’s strategy for upgrading legacy Lucid customers. Executives confirmed that the platform deprecation planned for early 2026 would have minimal impact on profitability and highlighted the growth potential in media measurement as a key area of focus. With the next earnings report scheduled for August 15, 2025, InvestingPro subscribers can access 10 additional ProTips and extensive financial metrics to make informed investment decisions ahead of the announcement.

Full transcript - Cint Group AB (CINT) Q2 2025:

Patrick Comer, CEO, Scent Group AB: All right. Good morning. My name is Patrick Comer, and welcome to the second quarter earnings for Scent Group AB. I’m joined by our CFO, Niels Boone and our COO, Brett Schnitlich. So let me go ahead and dive into the presentation.

I’m going to go immediately to results that I believe most of our friends or analysts out there understand our business model and speak quickly to our overall view of the quarter. We continue to deliver on our promise of strong profitable improvement. And at the same time, we’ve achieved a pivotal milestone, which is the substantial completion of our platform migration. So this quarter marks the end of the heavy lifting of the consolidation phase, which, of course, will continue throughout 2025. But the major milestone in terms of migration has been accomplished.

And now we turn our eye and we pivot to innovation and to growth. And while this transition phase has obviously impacted our top line as we expected, our operational execution has created a more efficient and a more scalable foundation to build on, and the strategic initiatives we’re launching are now present and will be built to fuel our growth in 2026 and beyond. Notably, of course, we’ve seen this quarter a stronger growth in our media measurement business offset by lower sales in Syn exchange. Operating cash flow has been supported by higher profitability again, and we have further reduced our accounts receivable showing our focus on cash flow. As I just mentioned, 95% of our legacy sent customers have now migrated to the new platform.

This is a crucial part of our overall synergy and merger plan. Ongoing operating cash flow is supported by our higher profitability and of what you’ve seen as a very much a focus on reducing our accounts receivable. Of course, after our rights issue, we have a stronger balance sheet with a much better net debt net debt position overall. So in brief, in terms of net sales, 39,300,000.0, gross profit of 34,900,000.0, operating of 26.7, and EBITA of 8.2 with a 20.8 margin for the quarter. Let’s talk a little bit more about platform consolidation and migration.

Given the criticality of this, it’s important to spend some moments on it. First of all, it’s important to note that the scent exchange is now feature complete and fully operational with 95% of our customers running all new work on the platform. This has been a tremendous amount of work by our customers and by our teams involved, and I wish to thank them all for the last quarter. But in in reality, several quarters have worked to get us here today. As we suggested in our last quarter release, it’s likely, and we have found that there are some quarters who need a slight extension of their deadline of migration, mainly for trackers and for some API integration that’s continued into the early third quarter.

But we have absolute expectation that the vast majority of all customers will very quickly be fully migrated onto the platform. We don’t expect this to linger long. Also, importantly, we have announced a new commercial agreement with our large research partner, Kantar. We just signed this and announced it yesterday. This is not just an extension of a historical program.

What’s critical about this new deal is that it tightly couples the internal innovation build for, Kantar with Sense, new exchange. We are excited about this new deal, and we’ve really been enjoyed, working with a new partner in a technology context. Our goal is to achieve, of course, full platform consolidation by the end of the year, and we’re still on pace to do that. This consolidation will include an upgrade path for our legacy Lucid customers, which will start in the fourth quarter. Platform deprecation, is planned for early twenty twenty six, and we look forward to, seeing those, material but relatively smaller, cost mitigations in the in the early of twenty twenty six.

We also thought it critical that we add some customer testimonials as well, and you could read those as we have some delighted customers who wanted to speak out and how much they’ve been enjoyed the transition to the new scent exchange. Beyond migration, we now point towards innovation, and we wanted to speak about four of our clear, focus areas for the quarter in that regard. We have rebuilt Engage, which is our new panel platform, and that panel platform is now fully integrated with the Scent Exchange. What that means for our customers is that they’ve access in the new Scent Exchange to exclusive high quality panel at a larger scale and size than ever before. It’s also critically important for our legacy, Lucid customers who have not had direct access to this panel before.

Very soon, later in July, we will launch our sent verified audiences as a native app in the Snowflake marketplace. This is an opportunity, of course, for our data solutions business and allows customers to purchase our verified data through the Snowflake platform. As we’ve been speaking, the study creator DIY product within our measurement business is growing rapidly. It’s a very nice fit, especially within the European region, and we’ve seen substantial growth in that part of our business over the last quarter. And finally, we spot we speak about our new measurement integration into The Trade Desk.

We’ve upgraded our API as well as the reporting and data capabilities that our customers can achieve through the Trade Desk integration, including visualizations, AI generated reports, and also multi touch reporting as well. So these are clear areas of innovation that we’ve been able to achieve. We’ll store all lifting the migration in the second quarter. So proud of what the r and d and product teams have been able to accomplish with a lot of things on their desk.

Brett Schnitlich, COO, Scent Group AB: And now I’m going

Patrick Comer, CEO, Scent Group AB: to Niels to go through the financial elements.

Niels Boone, CFO, Scent Group AB: Thank you, Patrick. Good morning. Starting with the first one, just a reminder of our financial targets that we announced at the January. In particular, the sales growth of 10% combined with margins of 25%, and then the leverage ratio to keep that below 2.5 x. Dividends policy, no dividends, and we are following the net zero targets from Sweden as well.

Going into this quarter, you can see on the left graph that we had decline of revenues of 6.6%, 2.9% in constant currency. I have to highlight that this quarter, the USD versus euro exchange rate had a lot of movements. USD becoming weaker, and therefore, the constant currency numbers are are better for us because we have a lot of sales in in USD. About two thirds comes from from The Americas. Underneath of this sales number, we have the same picture as we have seen before.

So we have decline in syntax change and then increases in media measurements. And moving to the middle graph, the gross profit improved even though we declined in sales, which is, of course, great. So we now have 88.8% gross margin, which is 1.8 percentage points above last year on a smaller basis, so that’s that’s great. It’s driven by lower hosting costs and personnel costs. Then moving to the right, the full profitability, the EBITA.

Also, there you see a strong increase. So we arrived at 8,200,000.0 being a margin of 20.8, which is 3.9 percentage points above last year. And, again, also here on lower sales basis. Right? So this is also a great improvement.

This is driven by the cost savings that we did both in June and in in December. Moving on to the net sales development. So as mentioned, same exchange declines. It’s 9.1% in constant currency. Media measurements, 14%, one four.

So that’s similar picture as we have seen before, and it’s mainly driven also by the by the Americas region. Then if you go to the right, you see the regional splits. So we have a decline in Americas and APAC and an increase for the first time in in a while in the EMEA region. So that’s also great to to see. And then moving on to the full p and l.

So we already discussed sales and gross profit. You see here the the full numbers and EBITDA as well, of course. So we don’t have to focus on that. Again, you can see that the cost basis is is lower across the board. So this is actually the first quarter where we have a clean and new cost base for going forward after we had the cost savings last year and also the rights issue that we completed at the end of q one.

Right now, that’s fully behind us. We also had lower interest expense. Therefore, you cannot see that here, but we will get that later. So overall, this is, yeah, a really clean and nice p and l to look at. Also, NRIs items affecting comparability.

So there’s actually a small positive effect reversal that you see there from last year. It’s 500,000 compared to last year when we still have 4,900,000 in NRIs. That was partly for the integration between Lucid and Sint, and also that we announced cost savings in June. So that was also in there last year. So we don’t have any of that this year, which is great, of course.

Moving on to cash. See also similar picture. So we have good strong cash flow from operations. The working capital cash flow was actually down this quarter. That’s driven by the accounts payable side.

We go into that later. Other than that, cash flow from investing that’s related to capitalized software development where we capitalized investments into the new platform and the new features, etcetera. So that’s in line with expectations. And the bigger change that you see there is the financing part. So here, I need to highlight that we had, of course, the rights issue proceeds that we received at the end of q one.

And at the ’2 in April, we paid down the loan with 35,000,000 USD. So that’s in there. And then also we had a 5,000,000 USD down payment at the end of the quarter in June. So that is what goes in there. That’s all according to plan and what we announced with the rights issue.

So overall, that leaves us with a net debt of 13,700,000.0 compared to almost 80,000,000 last year. So that’s, of course, or less, yeah, less year exactly. So that’s huge improvement. And the final point, the leverage ratio, we just looked at the targets. It’s 2.5 x.

We’re actually at 0.3 x, so that’s much better than our target actually, which is great, of course, and a really strong position to to act from. So we can be proud of all of this. Moving to my final slide around working capital. So you can see that the total working capital went up a little compared to the previous quarter. This is driven by accounts payable decline as you can see there in the middle of the table.

We had a strong reduction again in accounts receivable. So this is still our main focus, of course, to reduce further, but it’s great to see this decline from 120,000,000 to 97 to now 84. It’s still coming from the same structural improvements that we talked about last quarter as well. So legal entity rationalization, ERP consolidation, one CRM system, and we also have more capabilities there. A lot of automation and improvements in the background, so this is really great to see as well that it’s paying off now.

So overall, as a percent of total customer spend, also, the receivables is now lower than we have seen in a very long time. Yeah. I think that’s actually it from the financial side. We can get Patrick back on the virtual stage, and then we open it up for questions.

Patrick Comer, CEO, Scent Group AB: Thank you, Niels. I am back.

Speaker 3: The next question comes from Daniel Gerberg from Handelsbanken. Please go ahead.

Patrick Comer, CEO, Scent Group AB: Hello Daniel?

Speaker 3: Daniel Gerberg, your line is now unmuted. Please go ahead.

Patrick Comer, CEO, Scent Group AB: Why don’t we come back to Daniel? And if you’re having a challenge with audio, you can also detect

Daniel Gerberg, Analyst, Handelsbanken: the question. Can you hear me now?

Patrick Comer, CEO, Scent Group AB: Oh, yes. Hi. How are you? Hey, Daniel. Good morning.

Daniel Gerberg, Analyst, Handelsbanken: Hello? Can you hear me?

Patrick Comer, CEO, Scent Group AB: Yes. I can. Can you hear me?

Daniel Gerberg, Analyst, Handelsbanken: Can you hear me?

Patrick Comer, CEO, Scent Group AB: We hear you just fine.

Brett Schnitlich, COO, Scent Group AB: There seem to be some technical The

Speaker 3: next question comes from Daniel Thorson from ABG Sundal Collier. Please go ahead.

Daniel Thorson, Analyst, ABG Sundal Collier: Yes. Thank you very much. Let’s try with the next Daniel.

Patrick Comer, CEO, Scent Group AB: That’s right. Can

Daniel Thorson, Analyst, ABG Sundal Collier: you hear me better? Yes. I heard it was quite noisy, the first one. Okay. So a few questions here.

First one on costs. You continue to surprise on the lower end here again. How do you view recruitment and total costs for the rest of the year? What’s your plans? And also into 2026, do you need to invest a little bit more on the cost side to start to see a growth recovery?

Patrick Comer, CEO, Scent Group AB: Well, I’ll start with maybe Niels can color in as well that I wouldn’t really frame it as that we’re in in some way holding back or slowing down, you know, cost or investment in order to just be more efficient. Obviously, we’ve been very effective in our cost management over the past couple of quarters, and we look to continue that level of efficiency as we’ve consolidated on the unified platform. So the savings we unlocked last year, especially running multiple legacy systems, which we unlocked now, is gonna be obviously redeployed for for growth initiatives. Niels, you wanna comment on as well?

Niels Boone, CFO, Scent Group AB: Yeah. No. I would say so as well. I’m also, of course, constantly exploring ways to accelerate things. Right?

And but at the same time, we want to be cautious. And yeah. We come from from far, of course, with the cost, so we also don’t want to go overboard right away. But if you see good opportunities, we will definitely invest in those.

Patrick Comer, CEO, Scent Group AB: That’s right.

Daniel Thorson, Analyst, ABG Sundal Collier: Okay. That’s that’s clear. Thanks. And then on the organic decline here in Q2, it’s quite small still. But is it mainly driven by lower number of customers all in all due to some customer churn in recent quarters?

Or is it entirely explained by lower volumes per customer?

Patrick Comer, CEO, Scent Group AB: I think it really gets down to the heart of the migration, which is impacting sales in the scent exchange during these quarters where customers are moving and going through their own process of whether reintegration or retraining. There’s an obvious change in in the volumes between legacy systems and the new sense exchange. So we would expect as we get through this that a lot of the challenges in terms of top line growth on the SIN exchange would start to to rebound. And so we we point at most of this at the moment to be correlated to the migration process.

Daniel Thorson, Analyst, ABG Sundal Collier: Okay. Okay. That’s clear. And then the final one, you’re soon in a net cash position here. What are your alternatives for deploying cash in 2026 and beyond?

Are there any potential acquisitions you’re thinking about or anything else?

Patrick Comer, CEO, Scent Group AB: Well, obviously, we’re not going to announce talking about new acquisitions at this stage. But as Niels just pointed out, we do find ourselves for the first time in a while in a positive cash position. And now that we have, started to prove our ability to have a more successful accounts receivable position, also from a free cash flow standpoint, our net debt is in a much better place, and we’ve proven our major focus for 2025, which is consolidation. Now we move to innovation and growth, which means that we are starting to think about the opportunity to grow in new ways, and that could be reinvestment back into the company at different levels or something outside. But the key thing for us is that we’ve accomplished this major milestone of consolidation, which is critical to the long term success of the business, which gives us now the opportunity to, dare I say, dream a little differently now that we started to prove ourselves effective in in execution on several important levels.

Daniel Thorson, Analyst, ABG Sundal Collier: Yeah. Thank you very much. That’s clear.

Speaker 3: The next question comes from Thomas Nielsen from Nordea.

Thomas Nielsen, Analyst, Nordea: Could you perhaps elaborate a bit on the visibility you have into organic growth for the 2025 and whether you’re seeing any green shoots in client activity or demand pipelines?

Patrick Comer, CEO, Scent Group AB: Absolutely. Well, in terms of visibility, and Thomas, it’s good to hear your voice. Welcome back. The, obviously, we’re going through this still this migration story, which is impacting our top line. And so we’re spending a lot of time with our customers navigating, the final stages of their transition here and really looking to understand the very question that you ask, which is what is our visibility and how do we view their move of volumes of revenue onto the new synth exchange.

Obviously, there’s been some friction with that final cut over. But we believe the bulk of that revenue impact is now behind us. In terms of green shoots, what we’ve seen, we highlight that with Study Creator. This is the DIY tool for our measurement business, which allows our advertising customers to run brand lift measurements projects themselves. And this is a very good fit for middle sized or smaller customers or customers that are wanting to move quickly and especially in the European market.

And we’ve seen a substantial growth curve in the number of customers, but more importantly, the volume that each of those customers is contributing to that study creator business in the last quarter. So that’s a a tremendous green shoot for us as well. Secondarily, we’ve seen some EMEA growth this quarter, which is something that we’ve been wanting to see for a while. And especially in our SMB and and smaller businesses, the cut over to the Nucynt exchange, we’ve seen a lot of of of growth there as well above above the plan. So I think that’s some green shoots there critically, and I expect to see a lot more in the coming quarters as we move again from this migration story, which is very kinda internal operational focus to more customer and innovation and forward looking focus with our customers on a go forward basis.

Thomas Nielsen, Analyst, Nordea: Okay. And a second question, if I may. Looking forward, when it comes to innovation and new products, Could you talk a bit about what kind of new products and services you’re planning for the coming years? And which customer groups would be well served by these?

Patrick Comer, CEO, Scent Group AB: Absolutely. Well, we announced our strategic plan in January, and that has not changed. And so our innovation story is very much focused on those key areas. For our exchange business, one of the key areas that we talk about is premium supply. So these are audiences that are more valuable, but also harder to reach.

The key area we often talk about is b to b. So in this past year, we’ve ran a, what I’ll call, a b to b cycle with our commercial teams as we learn, which suppliers and which buyers are more focused on this, as we start building out the capability to launch what we call the premium marketplace, which is an an additional layer to the existing marketplace, which focuses on the needs of premium, buyers, premium suppliers, but also the respondents themselves to make sure we’re taking care of them effectively. On the measurement side, part of it has been growth outside of The US. We speak a little bit about the European opportunity, but also we want to keep adding new channels, new platforms, and new types of measures. So for example, we’re launching the ability with our, verified audiences, the Snowflake marketplace, the new, upgraded integration with Trade Desk.

We keep adding new integrations. I think last quarter, we announced four or different platforms and partners we go out to, and that’s a big value to our customers. And then on which measures we actually provide. So I think a big focus of ours recently has been especially on social media, And and there are several different measures and types of channels that we’ll be adding for our customers over the coming quarters.

Thomas Nielsen, Analyst, Nordea: Okay. Thank you very much.

Patrick Comer, CEO, Scent Group AB: Absolutely. Thank you.

Speaker 3: Next question comes from Daniel Gerberg from Handelsbanken. Please go ahead.

Daniel Gerberg, Analyst, Handelsbanken: Hello, operator. Can you hear me now?

Patrick Comer, CEO, Scent Group AB: Yes. Welcome back.

Daniel Gerberg, Analyst, Handelsbanken: Thank you so much. Sorry for my headset was actually broken. No worries.

Patrick Comer, CEO, Scent Group AB: We had an extra Daniel, so that was fine.

Daniel Gerberg, Analyst, Handelsbanken: Yes, yes, that’s good. It’s all little there. A question starting off with the completed surveys. I think they were down like 15%, 16%. And this is on back of your shift for higher value surveys and you have an election year impact on the platform transition.

But can you give some more granularities here on which of these factors have impacted most? And how we should think about these going forward, I. E, can we see any annualized effects that supports this going forward?

Patrick Comer, CEO, Scent Group AB: Good call out there. It’s an important part to look at our overall transactional volumes in the exchange business as the number of completed surveys or completed interviews being down. I think it’s important to note that while interviews are down a certain amount, obviously, our revenue is not at that same level. So it’s not a direct correlation between the two. And I think there are three key areas.

I think you mentioned two of them outright that we talk about. One is 2024 is an election year. And in an election year, you see customers do a lot of high volume, low value studies that are not replicated for three more years. So the twenty twenty four election in The US, huge amounts of volumes come through the platform that are not replicated in ’25. You see a smaller bump in ’26, but nothing like ’24.

And so we won’t see really those volume and type of surveys really return to the platform until 2028. Additionally, last third and fourth quarter, we did a review and audit of a certain type of buyer, which we we would call low value, which means they were putting types of surveys and types of work into the overall ecosystem that was hurting the respondents and hurting the suppliers. And so there was revenue there, don’t get me wrong, but it was the juice was not worth the squeeze. So we remove those from the platform in order to increase the value of the ecosystem and the health of the platform altogether. And then, of course, the other segment as as we’ve had some softness in the SynExchange business, particularly through migration, we’ve seen some lower volume there as well.

I think the biggest and most important one in terms of just net volume is the election year tied to that, And then probably split between changing and upgrading our quality of demand, but also just the overall transition of migration having lower volumes until the the lifting is behind us.

Thomas Nielsen, Analyst, Nordea: Perfect.

Daniel Gerberg, Analyst, Handelsbanken: Thank you. Can I also ask you on you have of the verified audience in the on the Snowflake platform? Can you say anything about the potential you see there in terms of add on to growth potential?

Patrick Comer, CEO, Scent Group AB: Well, I don’t want to give a signal on the exact volume or size of the potential there. But what it really is, is an indication of the types of new products and services that, Scent can launch that are, data oriented or audience oriented through channel partners like Snowflake. So on the measurement side of the business, we’ve seen the ability for channel sales or channel partners to really scale the business. A great example of that is the Trade Desk. Now we look at the data solutions and data management side of our business, also looking at which channel partners can that business.

And the first one that we’re launching is, of course, the Snowflake marketplace. We’ll be looking for more opportunities to create channel partner relationships so our customers can engage with sent data through a third party and through APIs versus calling us directly through a more services oriented transaction.

Daniel Gerberg, Analyst, Handelsbanken: Interesting to follow-up. May I also have a last question on the legacy Lucid customers that you aim for a full upgrade starting in Q4 to come to the new platform features. Is this a forced upgrade, I. E, will we see less cost for legacy platforms already in 2026? Or will that be later on?

And what kind of key risks and opportunities do you see in this work that you’ve started in Q4?

Patrick Comer, CEO, Scent Group AB: What’s important it’s important to note that the the product architecture or tech architecture that the SynthExchange, the new SynthExchange is built on is the legacy Lucid marketplace. So there’s not the same level of consolidation requirement or deprecation, any of those heavy lifting elements that were a focus for the for the legacy Scent platform where we had a forced migration, not only of our customers, but also all of our systems. So that in in that way, by the end of the year, we’ll have consolidated into a single platform that every customer and all of our internal systems can be on. The upgrade cycle is really for those Lucid customers who want to take advantage of all the new features that we’ve released in the Scent Exchange. So the the legacy Scent platform had a lot of new capabilities, for example, engage the panel platform that those customers want to upgrade and start taking advantage of.

So it’s not a forced or managed process in the same way. I think probably what you’re getting at the heart of it, do we run the same kind of revenue or operational risk? And the reality is we do not have the same level of operational or revenue risk associated with an upgrade cycle as compared to a a forced migration cycle.

Brett Schnitlich, COO, Scent Group AB: I’m gonna double click on something Patrick just said. In in very clear terms, the underlying data store for Syntexchange is the legacy Lucid data store. And upgrades to SynthExtchange for legacy Lucid clients is literally the adoption of a superior user experience, a superior UI.

Daniel Gerberg, Analyst, Handelsbanken: Good. Yeah. Thanks for the clarification there. And finally, if I may ask you about you you also write that that you would do target final platform depreciation early twenty six, but no material impact on profitability. Can you just give some more light on this?

How should we interpret this not materially?

Patrick Comer, CEO, Scent Group AB: I think that when you think about what the cost structure of the legacy Scent platform is, it’s a combination of hosting, but also the teams necessary in r and d to support and maintain that platform. And so the part of the reason why we we don’t expect to see a large cost structure shift is that the r and d element will be shifting from, of course, this maintenance to innovation and growth. And so we don’t expect to see a a in cost from that perspective.

Daniel Gerberg, Analyst, Handelsbanken: There will be very much.

Patrick Comer, CEO, Scent Group AB: There will be some improvement on

Daniel Gerberg, Analyst, Handelsbanken: Thank you.

Patrick Comer, CEO, Scent Group AB: Thank you.

Brett Schnitlich, COO, Scent Group AB: There

Speaker 3: are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Brett Schnitlich, COO, Scent Group AB: Well, thanks, everybody. We we do have some questions in the web feed. And by the way, as a reminder, if you have specific questions, feel free to put it into the prompt in the platform. I’m gonna start with question from Victor Hoberg at Donske. It’s actually a series of questions, and I’m just gonna break them down one by one.

First, does the Kantar extension come at new terms that might be a bit more beneficial to Kantar than Cent?

Patrick Comer, CEO, Scent Group AB: That’s a fun question. Obviously, I’m not gonna comment on the specific commercial terms of any specific agreement, but maybe I can provide some strategic context for the deal, which, of course, we’re extremely proud of. I think the the biggest understanding that everyone should have is that we’re partnering with Kantar through their own technology transformation. And so we have not only are they integrating with Ascent Exchange, we’re partnering with their own transformation cycle that’s going on right now. And so Kantar being one of the most sophisticated and largest players in the industry, it’s a validation of our overall technology process, but also a validation of the capabilities and features of the new Scent Exchange.

So, of course, with every commercial deal, there’s a give and take. But what I can tell you is that we’re incredibly proud of this mutually beneficial partnership with Kantar.

Brett Schnitlich, COO, Scent Group AB: Moving on to part two. Media measurement q two organic growth matched what you specified as underlying growth in q one. What are your plans for this segment in the next year? Is it possible to accelerate growth further?

Patrick Comer, CEO, Scent Group AB: Obviously, we believe that we can grow faster with media measurement. We’re pleased with the momentum in our media measurement business, and there are key segments that I mentioned before that are really paying off. For example, the study creator business and our overall potential within Europe, as well as payoff down the road for our recent reintegration with the new Trade Desk platform. These types of integrations and moves lay the foundation for growth in the future, for example, with the the Snowflake integration for verified audiences. So as we continue to integrate with new platforms, improve our integrations with existing platforms, these allow for the foundation to not only have sustainable growth, but at growth levels that are higher than the 14.2 we saw on a constant currency last quarter.

Brett Schnitlich, COO, Scent Group AB: And and as Patrick alluded to earlier, now that migrate migration is substantially in our rearview mirror, our efforts are pivoting towards innovation. And we also believe that some of the innovations baked into coming quarters will also help to continue to fuel growth. Our next question our next part here for how long yeah. Actually, this was already asked and answered. I’ll move on to number four, which is exchange and new platform.

What do you expect of volume revenue churn, not customer churn, now in h two that the last clients roll into the new platform?

Patrick Comer, CEO, Scent Group AB: Yeah. The question really goes down to what do we expect in terms of revenue as we have are turning the page on migration. It’s a critical point. I think we’ve mentioned to you before, but I’ll I’ll go back to what I think is critical here. The heavy lifting of the work is mostly behind us with 95% of legacy customers already migrated.

For that remaining cohort at the beginning of this quarter, we’re taking a very hands on approach. So we’ve extended some of those deadlines to those customers so they have a service continuity with long running studies and trackers. This is all meant to reduce friction for this final cutover as best we may. So we will are doing everything we know in order to support our customers successfully in this final bit of transition. The focus in our second half of the year is to shift from this active migration to help our customers leverage all the full capabilities and superior features of the platform to grow their business with us.

So we’re confident that the having these customers on a single unified platform is the necessary foundation of returning the exchange business to a growth position.

Brett Schnitlich, COO, Scent Group AB: Good deal. I’m gonna move on. There’s a few questions from anonymous listeners. The report mentions continued improvement in accounts receivable. Can you briefly touch on the operational enhancements that are driving this and your expectations for working capital going forward?

Niels Boone, CFO, Scent Group AB: Thanks. I’ll take this one. Yes. As mentioned, we had a lot of improvements there. Of course, you see the number coming down.

I think, overall, we are normalizing the situation more and more. On accounts payable side, we should be at the level that’s kind of to be expected from here going forward. But then on accounts receivable, we want to bring it down further, of course, going forward. So the structural improvements was also the question. Briefly spoke about it already in the presentation, so it has to do a lot with consolidation in the background of legal entities, systems, processes, etcetera.

And the final thing that will help is, of course, also the migration of the platforms. Right? So that simplifies also the operations on the financial side going forward. So this is also something we’re looking forward to during the next couple of months and quarters to come.

Brett Schnitlich, COO, Scent Group AB: Good deal. We’ve got a question here. It’s it’s primarily around Engage. Again, it comes from anonymous listener. The presentation highlights the new rebuilt Engage platform for panel management.

How does creating a better, more integrated experience with suppliers ultimately enhance value to our customers?

Patrick Comer, CEO, Scent Group AB: This is a think I’ll take this one if I may, Brett. The Engage platform is the newly built panel management platform that existed in the legacy Scent and now in the new Scent Exchange. And this is critical for value to our customers because we have hundreds of unique and exclusive panels across the globe that our customers rely on to deliver their work. And so it unlocks, the ability for, especially, the Lucid customers to start using this type of panel for their own projects. It also means that our existing panel customers, have access to all of our new features and that our sales teams can go out and recruit even more panelists, but also panel customers to engage to engage with Engage.

So it’s a it’s a big unlock of value for us, and we’re pretty we’re we’re pleased about its about its readiness on the news and exchange.

Brett Schnitlich, COO, Scent Group AB: Good deal. And I I have one more question out there. Again, I’m gonna reword this just a little bit. Now that our net debt is at point three times EBITDA, well below our target. How does our how does this stronger balance sheet influence capital allocation priorities and primarily ability to invest in future growth?

Patrick Comer, CEO, Scent Group AB: I smile because it’s a it’s it touches on a little bit of the questions we’ve had in the past, which is I’ll frame this question differently. It’s exciting from my perspective to be talking about how we should invest in future growth versus how we’re solving for challenges through the merger and migration. So the story, over the, over the past years have been working capital, has been about migration, has about cost management. What we’ve proven over three or four quarters is that we have gotten our house in order. Neil’s and his team have done a a great job, not done obviously on a working capital and AR perspective, but we’ve seen dramatic improvement in our ability to, collect and manage our cash flows.

Our cost structure is well in hand. We went through a very successful rights issue in partnership with our investors from a balance sheet perspective, and we’re at the tail end of this very successful migration story. So now, of course, we’re being asked where do we grow from here? And the fact that we’re being asked this question is a key indicator of the success we’ve had over the past number of quarters of getting our house in order. And I look forward to talking about what our priorities are our ability to invest in the future.

Rest assured, the opportunities are strong. We’re gonna be able to make the right choices here. But the change of tone from fixing the house to what we’re building with our customers in the future is the most critical tone shift I’ve seen in this organization for quite some time.

Brett Schnitlich, COO, Scent Group AB: Wonderful. Thank you, Patrick. That’s it on questions from the audience. Patrick, I pass the mic back to you to wrap.

Patrick Comer, CEO, Scent Group AB: With that, I I think I I I said the most important bit at the end already. But I continue to want to thank our customers for their partnership with us through this transition from the legacy Scent platforms to the new Scent Exchange. It’s been a critical process important for their business as much as anything important to scent. So just wanna say say thank you to our customers, and the ongoing support for our investors is not lost on me. The roughly in USD 60,000,000 that we raised last quarter to improve our balance sheet and pay down some of our debt.

These have been important factors, and without your support, we would not be successful in the future. So appreciate your time and attention. Look forward to doing this again in ninety days.

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