Earnings call transcript: Verve Group Q4 2024 sees 46% revenue growth

Verve Group, with a market capitalization of $755 million, reported significant financial growth in its Q4 2024 earnings call, with revenue reaching $144 million, marking a 46% increase from the same quarter last year. The company also highlighted a robust adjusted EBITDA of $48 million, up 53%. According to InvestingPro analysis, the stock appears fairly valued at current levels, with the company maintaining strong momentum as evidenced by its 234% return over the past year.

Key Takeaways

• Verve Group’s Q4 2024 revenue grew by 46% year-over-year.
• Adjusted EBITDA increased by 53%, reaching $48 million.
• The company maintained a strong net leverage ratio of 2.4x.
• Verve Group is expanding its AI-driven advertising solutions.
• The stock price remained stable, closing near its 52-week high.

Company Performance

Verve Group demonstrated impressive growth in Q4 2024, with revenue increasing by 46% compared to Q4 2023. The company’s focus on AI-driven advertising solutions and expansion into emerging channels like mobile and connected TV contributed to this growth. Verve Group’s strategic initiatives, including the integration of the June Group acquisition, are expected to further strengthen its market position.

Financial Highlights

• Revenue: $144 million (46% increase from Q4 2023)
• Adjusted EBITDA: $48 million (53% increase)
• Full Year 2024 Revenue: $437 million (36% growth)
• Operating Cash Flow: $55 million in Q4, $137 million for the full year
• Net Leverage Ratio: 2.4x

Outlook & Guidance

Looking ahead, Verve Group has set ambitious midterm targets, aiming for 25-30% revenue growth and a 30-35% EBITDA margin. The company’s 2025 focus includes enhancing AI-driven targeting, operational improvements, and free cash flow growth. Verve Group also plans to integrate two supply platforms in 2025 to boost efficiency. InvestingPro data shows analyst consensus is moderately bullish, with price targets ranging from $3.28 to $4.81, reflecting confidence in the company’s growth strategy.

Executive Commentary

CEO Remco emphasized the company’s growth potential, stating, "We want to let’s make media better," and highlighted the strategic focus on reinvesting earnings to drive further growth. Remco also noted, "Every extra dollar that we make, we will invest in also further growth," underscoring the company’s commitment to expansion.

Risks and Challenges

• Market Saturation: As Verve Group continues to grow, it may face challenges in maintaining its current growth rate.
• Integration Risks: The integration of recent acquisitions could pose operational challenges.
• Competitive Pressure: The advertising industry is highly competitive, with rapid technological advancements.
• Economic Uncertainty: Macroeconomic factors could impact advertising budgets and demand.

Verve Group’s Q4 2024 performance reflects strong growth and strategic focus, positioning the company well for future expansion. However, potential risks and market challenges remain, requiring careful navigation to sustain momentum.

Full transcript - Vereit Inc (VER) Q4 2024:

Moderator: During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone

Remco, CEO, Verve Group: to our financial hearings with regards to Q4 and full year 2024. Yeah. We had really nice numbers, and I would like to guide you through the different slides going to the beginning. Just a short start to remind everybody and for those that don’t know us so well, we are leading digital media company. We are working for both advertisers and publishers because that’s creating the best results.

It’s cutting middleman, and it’s, the most efficient setup. We’re working with responsible advertising solutions, those being, brand safety, fraud prevention, but most of all, privacy. The advertising market is, changing. It’s being disrupted. Identifies are disappearing.

Consumers are being asked to give consent. They mostly say no. That’s a huge opportunity in this market, which we are really using and and which we’re focusing on. Then emerging channels, we talk about mobile, connected TV, digital out of home and audio. Those are all growing channels that we focus on because we want to do a full customer journey.

Our mission is to let’s make media better. We think that this market is still very fragmented. It has a lot of inefficiencies, too many participants, too much clutter and, yeah, we think that things can be done better. Getting into Q4. First to start with an overview of, let’s say our main achievements or our main highlights actually for Q4 and also a bit of a ’25 outlook.

We had a strong revenue growth and we’re able to structurally improve our profitability. We continue our strong customer growth and have a well diversified customer base. On the product side, we’re seeing a fast growth in full screen and video ads, and also we’re seeing good momentum in our idealist targeting solutions. So those are really continue to drive growth. Then further focus was on unifying and growing our demand side.

As mentioned before, we want to work for advertisers and publishers, and the more idea the best efficient solution is, having an advertiser dollar coming on our direct supply. Then Zoom (NASDAQ:ZM) Group, acquisition we did in 2024. Yeah. Accelerating growth, integration progressing well. And then I’m getting to 2025 outlook, US advertising market, maker economy look good, and there’s a lot of opportunity for ideas advertising.

So I said, I’ll dive into all those six bit deeper now. Coming first to strong growth and further structural improved profitability. We’re very happy and, yeah, it’s great to present, our strong growth, 46% revenue growth, getting to a hundred 44,000,000 revenues in q four versus 99,000,000 in, q four last year. Our organic growth, was yeah. Doing a lot a big part of that with 24%.

So we were also able to increase our organic growth with 16% organic growth in Q4 twenty three, now 24 in Q4 twenty four. Our adjusted EBITDA growing faster than our revenues with 53% now coming to $48,000,000 and our net results, growing with 192%, ending up the quarter with $40,000,000 Christian will go in more detail about financials, but we wanted to highlight the strong growth profile of the company already in the highlights. Then what’s behind it, the strongest growth driver were our large customers, customers that did more than $100,000 per year. We saw a 57% increase in debt. We added over 400 large customers, So new customers is really driving the growth strongly.

We also differentiate on this chart between full organic, which is coming to over 1,000 to ten fourteen and including June group, we end up with eleven fourteen. Then also our existing customer base, we saw a very good net dollar expansion rate growing with 10%. That’s a nice achievement to grow the current customers and asset, the new customers are doing the majority of the growth. Then client retention was very strong at 97% in the range of 95% to 98% where we are normally. And then driving our overall growth, the ad impressions, yeah, we take a cut of the advertising revenues that are being generated by those impressions and a 33% increase in ad ad impressions is a nice result.

And we see here also clearly the, seasonality. Q4 is the strongest quarter, and q one, the slowest, and it’s building up like that. But already in ’24, in q two, we were above q four twenty two ’23. Then coming to the customer base, going a bit more in-depth, already mentioned a very strong increase in new customers, new large customers, stronger even than in 2021, which was also a very strong year that we had. And going a bit into the risk profile, we see that on the advertiser side, the largest, advertiser is doing 6% of our revenues.

And if we come to the top 10, they’re doing a substantial part of our revenue, but 61% of our revenue is done by our other advertisers, and those are many more. On the supply side, and, similar view, the largest supplier, 6%, and then the smaller suppliers behind that. Coming to our growth, I mentioned it before, full screen and video have been driving a lot of our growth. You see the numbers below. So we had a 49% growth on full screen and video.

That has to do with the market moving in that direction, but it also had to do with improvements in our technology that we did to just enable this better, and we see further growth continuing here. Then coming back to the split between demand and supply, as already mentioned before, we want to work for advertisers and publishers both. We have been a bit more focused on the supply side in the last years, because that’s important to have direct supply to have the direct relations with the publishers because it gives you better access to data and gives, a lot of, yeah, let’s say the best supply position possible. Demand side was not as strong as you saw see in Q4 twenty twenty three, it was 14% versus 86%. Now with the June Group acquisition and further investments on the demand side, we were able to bring the demand side to 27%, which is 169% growth.

Well, we also were able to grow the supply side very nicely. The ideal that we are going for towards is fifty fifty, so we still have a bit of work to do here. Then getting into June, I mentioned already before, June was acquired in 2024. We saw a good growth. June was a great acquisition, very accretive, and I’ll come through some more details on the next slide.

But the previous owner was basically milking June and just go for maximum cash flow. We want our companies to grow. That’s very clear message to the management and to the teams. And we’re really happy to show a good growth on June, which was let’s say stimulated and helped by the combination with Verve. But if you look a bit further and go to the next slide, then we see that there’s much more possible with Dune.

There’s a lot of synergies that we have, which we’re working on. Connected TV, for example, June group has strong relations to agencies. They’re selling CTV. They used to be selling CTV from other suppliers, from other partners. Now they started to sell supply from Verve.

So direct supply and we see that we make good progress with being at a 50% of where we want to be. Then on the marketplace side, there’s the June group’s SDK base. We have to do technical changes. They were working with, waterfall bidding. We’re now changing them to head of bidding.

And, we’re also enabling for of the model net. That’s still in the beginning, but technical progress is good. And we also expect this to start yielding and bring further synergies in. Then joint Salesforce (NYSE:CRM) and international expansion. Also, there, we’re making progress.

We have just integrated the teams, and now we are really training them all on the same story. We are adding extra salespeople. So there we also at the beginning, but we are pretty sure that we can, scale this pretty fast. Also, part of that is, of course, getting them on the same CRM systems and things like that. Then Cox and OPEX, also there’s a substantial synergies, for example, getting the companies in the same cloud, but also other cost potential.

There we make a good progress that goes a bit faster. And, yeah, looking at the numbers, we mostly expect the synergies to come in from the end of Q1 twenty twenty five onwards, but we expect synergies of 9,000,000 on the revenue side and 2,000,000 on the OPEC side. Then already getting to a bit of an outlook or also looking a bit forward. Yeah, the macro economy in The U. S.

Looks strong and it seems to be strong also for the next years. If we look at INAP and that’s what you see on the left side, there’s an market CAGR expected of 10% plus, which means we have a strong underlying growth already by the market. And as you’ve seen, we put in also gaining market share, so we also expect to grow faster than the market growth. A bit on the positioning on the right side, if we look at the positioning on iOS, and this is, let’s say done by Pixel eight. We have a number one position iOS, that’s where the ID has largely been deprecated.

So that’s an an environment where we’re really driving, which is really showing where we can show how good our ID solutions are, but also on the trust side and that has to do with brand safety, with, with, for mitigation and with privacy, we have a good score. That’s also a good basis for further growth, coming, looking into the future. Further driver for future growth is our ideal solutions. I mentioned that a few times and that’s really where we have focused on and which is really shown to, show very good results. Also in The US now people are being asked, do you want to be tracked or not?

Most people say no, 80% says no. So what we see now on, iOS at signals that 80% has no ID in it anymore. That’s an environment that we love. We can also target with IDs, but the idealist one is really where the market is being disrupted. And that’s where we see our major growth.

So shown very good growth on iOS, ’24 versus ’23, sorry, ’24, yep, first twenty three. And, then looking a bit forward, iOS is hard, but also Google (NASDAQ:GOOGL) is moving into that direction. There’s less and less consent, less and less IDs, on Google and also in other platforms. So we see a very nice, future for us here to further continue to focus also on ideal solutions. That is the end of my part and I would hand over to Christian for the financials.

Christian, up to you.

Christian, CFO, Verve Group: Thank you very much, Remco. Yes, allow me to first focus on the highlights of Q4. So as Remco mentioned, it was indeed a very strong quarter in terms of financial performance, both in terms of revenue growth, but actually also in terms of a structural lift in profits. As you see here, we posted 46% total revenue growth. That was on the basis of total revenues of $144,000,000 in Q4 twenty twenty four.

That’s a $45,000,000 addition to the $99,000,000 that we made in a similar quarter prior year. We posted 24% organic growth and I’ll come back to that number. But what is particularly good to see is also an increase and a lift in our adjusted EBITDA. So we grew from DKK32 million in prior year to DKK48 million in Q4. That’s actually an increase of 53%.

And we see that the lift in profits carries through on all profitability measures. So on adjusted EBITDA, but also on adjusted EBIT, which grew 57% and also to earnings per share, which grew with 149%, increasing earnings per share from to on a diluted basis. You’ll note that we had a very strong EBITDA margin for Q4 at 34%. Actually, we’ve been it’s been very nice progression through the year. We started at 27% in Q1 and then increasing through the year ending at 34% for Q4, which is also where we wanted to be.

This is of course helped by the combination and inclusion of June Group as a business into our business mix, but it’s also charismatic of the type of business we’re in. The seasonality of our business Q4 is the biggest season in our business and with higher revenues always generating Q4 on roughly the same number of people and also the same technology cost, you really see scale effect kick in Q4 and producing the very nice margin of 34%. The lift in revenues, the lift in profitability also translates very nicely to operating cash flow, which was $55,000,000 for the quarter. If I then turn to more of a full year perspective and put those and look at the full year performance, overall, the year was very strong. We lifted revenues from $322,000,000 to $437,000,000 as you see here.

That’s a 36% lift on revenues. And we lifted adjusted EBITDA from $95,000,000 to $133,000,000 which is a 40% increase. So we grew top line with 36%. We grew profits with 40%. And that’s really what you would like to see in a business like ours.

You see the scale effect coming in. And overall, 2024 was a very nice addition and extension of our already strong track record. As you can see here across the years 2020 to 2024, we are growing on average at 33% per year. It was also particularly strong result to and I want to highlight, we produced 25% organic growth for the year. Organic growth is a core focus area for us, and we’ve managed to deliver 25% growth.

And you can see here strong organic growth actually in the five consecutive quarters consistently, and we produced 24% growth in Q4, which is slightly lower than we had in Q3, but I also want to point you to Q4 twenty twenty three, where we were already growing 16%. So really the 24% is created on the basis of an already high performing quarter last year. Turning now to operating cash flows and also the development in CapEx. I already mentioned we had strong operating cash flow of $55,000,000 for Q4. We see similar lift strong lift overall for the full year.

If we look at 2023 to 2024 here on the left hand side in the dark blue bars, we actually managed to double our operating cash flow from $69,000,000 to $137,000,000 Also, if we look at free cash flow after interest expenses, we lifted it from $23,000,000 to $83,000,000 So really a big step up in terms of cash flows. We noted forty five million pounds in cash interest expenses, and in line with earlier communications, we see a good possibility to bring down the overall interest expenses for the company by refinancing our bonds at better terms. This would, we believe, has a potential of $10,000,000 to $15,000,000 overall to reduce interest for the full year. Turning here to the right hand side and looking at the CapEx development, we note we had $9,000,000 in maintenance CapEx for $24,000,000 and also $34,000,000 in expansion CapEx, I. E.

Investment in developing the platform and innovating the platform. This level is roughly in line with what we’ve seen in previous years and would also be indicative of the level of investments that we need going forward to both maintain but also really innovate and having a cutting edge technology platform. But it’s roughly stable through the years. This brings me to net debt and net leverage ratio. We have $351,000,000 in net interest bearing debt for the end of the year, down from $378,000,000 at September LTM basis.

This means that we are at 2.4 for net leverage ratio, which is a very strong milestone for us. We had an aim to come under the 2.5 ratio and we’re at 2.4. So it’s really a milestone for the company and a result of the focus of the company to bring down the net leverage ratio. Interest rate coverage interest coverage ratio has improved through the year and maintained several levels to LTM in September at 3.3 times. Now if I take the full performance and kind of compare it to our guidance for the year, we started out initially with a guidance of DKK350 million to DKK370 million on revenues and DKK100 million to DKK110 million on EBITDA.

We have subsequently raised the guidance two times through the year, partly because the business was performing very well, and we can see that we would be increasing our, both revenues and profitability, but of course also because we have included June Group as an acquisition. If we take stock of where we ended, we ended at $437,000,000 for revenues, which is a clear outperform of the third guidance of $400,000,000 to $420,000,000 And on adjusted EBITDA, we end at $133,000,000 which is on the high side of the guidance of $125,000,000 to $135,000,000 So we’re very happy, of course, to deliver on the guidance for the year and even overachieving on revenues. This brings me to midterm financial targets. We confirm our midterm financial targets as stated here on the page. And we are really one of the best ways for us to validate those those targets is by delivering results, and we’re very happy to report that for the full year, we can tick all four boxes on the midterm financial targets.

So we produced 36% revenue growth, which is clearly above the 25% to 30% range. We produced 30% margin on EBITDA and also come into range. I also note that we raised the EBITDA margin guidance as we took on June Group, but we come with the guidance. And also on actually on EBIT, we do 25%, so on the higher side of guidance. And as I mentioned, we are at 2.4 times leverage, so we’ve managed to bring it down under the 2.5, which is really a a big milestone.

That concludes the financial update and I will then hand over the word back to Remco for closing remarks.

Remco, CEO, Verve Group: Thank you, Christian. Now we’ll go to the last slide of the presentation, and maybe start with a few words before that, we had a very strong 2024, we were able to further innovate our products and especially the idealist space, we were able to further increase and improve our market position, client base, etcetera And that all led to very strong revenue growth and also strong even stronger growth of profitability. So we’re super happy with that. And yeah, the full year was good, but the last quarter was really exceptionally good. So, a good start to get into 2025.

So also going into 2025, we saw a very nice development already in the market. Christian showed our midterm targets, our guidance for 2025 will be presented with our Q1 financials as we normally always do it. But I would like to give a bit of a deep dive or let’s say a bit of an outlook in our key objectives for 2025. The first one is further to focus on, AI driven idealist targeting expansion. We are good in that that field.

We see that the market is further moving towards that. It takes a bit time to convince agencies and therefore to see test, etcetera, and the same for advertisers. But we see really good traction there. And with our product suite, including Atom, Moments AI, etcetera, we really have a nice position in that market. Then the second focus point is operational focus and improvements.

I showed already a bit on June group, so that’s an important part that we’re looking at, but there’s more. It’s not only June integration. It’s also we still have two supply platforms, two supply side platforms that we’re integrating, which will lead to further efficiencies. Plan is to also fully integrate them in 2025. And there’s many more things on the operational and execution side, also adding extra salespeople, etcetera.

This should all lead to growth in free cash flow, which will lead to further delevering as a target, which also Kristin shows and, of course, also increasing earnings per share. And, yeah, underlying is a very positive trend that we see. First of all, The US market, our main market, is, yeah, is in a good state, maker economically show nice progress and should really also show good market growth. And on top of that, let’s say, the move or the need to move to idealists, there’s less IDs around. Advertisers need to target also those segments.

So that’s also a very nice driver for our further growth. So we have further standing for Let’s Make Media Better. I said good quarter and looking very positively ahead. That brings me to the end of the presentation. I would like to thank you all and hand over to the moderator.

Moderator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial key 6 on your telephone keypad. The next question comes from Adrian Elmland from Nordea. Please go ahead.

Adrian Elmland, Analyst, Nordea: Hi. Good morning, guys. Nice to see the comments, so well done. I got a couple of questions. So first off, do you have any comment regarding the short sellers report on Applovin?

It’s the I think they’re targeting Axon ad software. Could these allegations maybe have any impact on you? And how similar are your products to them? Do you have any comments on that?

Remco, CEO, Verve Group: Yeah, I can answer that. Let’s say I normally don’t like to talk about competition and we are not in a state to check if those, allegations are true or not. We know the short sellers are always pushing at companies, but we cannot really give a decent comment on that. What I can say is that Applovin has a pretty own part of the market, which is really game publishers, where they have a kind of closed ecosystem. That’s a part that’s not so important for us.

I mean, gaming for us is small part of the market. If there’s really issues there, it’s good, let’s say lead to more growth on our side. On the other hand, it wouldn’t impact us too much. So I don’t see a lot of effect of it on our side, apart from it would not be good for the whole sector if there’s, let’s say if, if things are not going in the right way because as I mentioned before, brand safety trust, all those things are very important in this market and, yeah, we should as a market make sure that advertisers get what they pay for and publishers also get fairly treated.

Adrian Elmland, Analyst, Nordea: Okay. Thank you. Fair enough. Also regarding the margin for the DSP segment, it’s down year over year, if I’m not mistaken. Is this because you’re allocating the cost in OpEx to this segment or what is behind the decline?

Remco, CEO, Verve Group: Christian, you want to take it or should I take it?

Christian, CFO, Verve Group: Well, I can maybe start and then, and then, you can add Remco. So overall, I think it’s because of a mix shift in our business and channels, we are pushing certain, formats very aggressively or aggressively in the, full screen and the video ads and that, we are doing to gain market share and that may be affecting the overall margin.

Remco, CEO, Verve Group: Yeah. But still maybe completing to that, we are, let’s say, going in with a bit lower margin, but we still have a very good margin. Yes. And that’s also what we want to keep, of course. But gaining market share, of course, important.

It’s a segment that’s growing and and with lowering our margin a bit, we are able to gain share. We gain share faster than we otherwise would.

Adrian Elmland, Analyst, Nordea: Okay. Thanks. Another question here. How much can you keep adding large customers? Do you have any estimate of your of the market share here in the number of large customers?

And could we or when should we expect to see maybe a lower growth in the customer acquisition side?

Remco, CEO, Verve Group: On the short term or even midterm, I don’t see any limitations there. I mean, we are still a small company if you look in the total size of the market. I mean, we’re talking about a market alone in The US of 300,000,000,000 programmatic dollars. So in that sense, we can add more customers. Of course, at a certain point, it’s more about scaling also the over a hundred thousand dollar customers, which is very important, but so far there are no limitations.

I mean, we are adding a lot of new customers overall. We don’t show them now in this report, but in the end, a new customer can do $10 or can do $100,000 or can do $1,000,000 So in that sense, for us, it’s really important to scale them. But so far, there are no limitations that I see. I hope that answers your question, Adrian.

Adrian Elmland, Analyst, Nordea: Okay. Thanks. And then the last question here, can you comment a bit on the expansion into Asia? And also do you have any interest in growing in Europe as percentage of sales or kind of leaving it as is?

Remco, CEO, Verve Group: Yeah, we are, let’s say, we want to grow everywhere, of course, but it’s super important to also keep focus and, we have so many growth opportunities, you cannot do everything at the same time and we would also keep some for later. So our main focus is really on The US. That’s also there the the price by ETA highest, that’s where customer onboarding goes faster. That’s where a test budget of a customer is much higher than it is in Europe or in Asia, for example. So in that sense, for the main focus is on The US, but we are also not forgetting, let’s say, other markets.

We do a bit in Europe. We’re also increasing the teams there a bit, same for LATAM and the same for Southeast Asia. But as said, main focus on The U. S.

Moderator: The next question comes from Fiona Orford Williams from Edison Group.

Fiona Orford Williams, Analyst, Edison Group: My first question is in terms of the market share. Is it coming from a particular player who may be suffering in the market or is it just being gathered from various places?

Remco, CEO, Verve Group: Yeah. Market share comes from various things. First of all, it’s typical B2B what we’re doing. So if we add extra sellers, if they onboard extra advertisers or extra publishers, that drives of course growth. So that’s what you see also in onboarding new customers.

But then if you look a bit deeper, we need to prove that we are really delivering value because we only make money if an ad is really sold. And that means that we have need to have the right targeting and an advertiser that buys the ad. And then we come into really, getting product improvements on the AI side, product improvements on the Idealist side, which are really driving, revenue and also performance there. So a lot of, yeah, investments in platform, in our product portfolio, and of course, also in showing customers that we do better than some of our competitors and by that gain market share. So in the end, it’s it’s not going by itself.

We need to prove that our, targeting is better.

Fiona Orford Williams, Analyst, Edison Group: Understood. Thank you. Second question is on CTV. Are you where you expected to be at this stage? And what are the immediate opportunities?

Remco, CEO, Verve Group: CTV is a very thanks for the question. CTV is a very discussed topic because the majority of the market is still a linear TV. And the whole market is, I would say, speculating when this big chunk of linear TV is really moving to CTV. It should, because it doesn’t make sense to have an ad that reaches all the people, all the, all the, let’s say viewers with the same message. I mean, with connected TV, you can individualize ads, you can bring into the household.

So it doesn’t make sense, but it’s super slow this whole move towards a CTV. So in that sense, we would have expected CTV to grow faster. But there will be a jump sometime, but nobody exactly knows when that will happen. And it will probably also not be one jump, but more gradual one, but you saw that, let’s say, forecast for the market is 14% growth, but there is much more potential CTV.

Fiona Orford Williams, Analyst, Edison Group: Yeah. Yeah. Understood. Okay. And my third question was on the DSP side.

Now your leverage is getting back in range, are you looking at potentially adding to it through M and A?

Remco, CEO, Verve Group: No, our main focus is really on organic growth. We have built such a strong organic, basis for organic growth, that we don’t want to jeopardize that. So yes, there is consolidation in the market. Yes. There are targets in the market.

And we make exceptions like we showed with the June group, but it has to be really spot on really for a very good rate. Otherwise, we would rather not do it because doing m and a, as we also know from the past, it also, creates focus on, let’s say the M and A cases and defocus on organic growth. So we would like to keep our focus on organic growth and we think we can grow faster organically now than by M and A.

Fiona Orford Williams, Analyst, Edison Group: Okay, lovely. Thanks very much, Remco. Thanks, Christian.

Remco, CEO, Verve Group: Pleasure. Thank you very much, Fionnuala.

Moderator: The next question comes from Edward James from Cantor Fitzgerald. Please go ahead.

Edward James, Analyst, Cantor Fitzgerald: Morning. Thanks for taking my question and congrats on the results. I’ve just got three, please. Starting with, in terms of the growth that you’ve seen and the acceleration growth that you’ve seen over the over the last twelve months, is there a particular customer segment which is driving that? You’ve already alluded to the fact that mobile games is not a large segment.

So I’d just be interested in if there is across sectors.

Remco, CEO, Verve Group: No. It is, let’s say, we’re working across all sectors and has also shown there’s no dependency on a single customer. But, I have to say, let’s say our strongest growth is in, how to say it in retail. If we look on the demand side, there we’re really able to, to yeah. How to say it, to grow nicely.

So the retail side, is with, over 50% of our demand side, the strongest segment. And then the second strongest segment on the demand side is digital and social brands, with 17%. So those are the strongest growth drivers, after that is entertainment with 10%. So retail is by far the strongest segment on the demand side.

Edward James, Analyst, Cantor Fitzgerald: Okay. Thank you. That’s, that’s, that’s pretty helpful. So, and then, just on in terms of the organic growth guidance of I think the term was meaningful double digit. Could you give us a bit of a steer in terms of what that means relative to the year that you’ve just had?

Should we take that as kind of low double digit mid teens? Or should we think of that more or less in line with the organic growth that you delivered in 2024?

Remco, CEO, Verve Group: Yeah. We don’t want to give a guidance yet on it, but as already indicated, the market is growing double digits, 10% plus. And, yeah, we are really extremely well positioned to gain market shares on top of that. So, yeah, I would like to stick to our midterm guidance of 20% to 25% growth. And, as you have shown as we have shown and as we have seen in the past, we are able to grow faster than that, but I wouldn’t promise it now.

Edward James, Analyst, Cantor Fitzgerald: Okay. And then just finally, just in terms of the margin outlook, I mean, on one hand, as you’ve already said that you’ve you’re investing to take market share and accelerate growth, particularly given the backdrop within kind of Idealist Solutions being really positive. On the other hand, the Dune Group kind of annualization into numbers will be helpful from an overall margin perspective for the group. So should we should the base case be that margins are flat as you continue to prioritize growth over margin expansion? Or should we expect there to be some level of operating leverage as we go forward?

Remco, CEO, Verve Group: Yeah. We will see both sides of it. If you look at the margin, I mean, getting bigger will, let’s say, make our margins better. Getting more vertical, so between advertising and supply gives us the possibility of margin expansion. Getting better on the targeting side gives us possibility of margin expansion.

On the other hand, if we want to gain market share and also overall in the market, I would expect at a certain point, the market is consolidating, so there would be a bit more pressure on margin. So that’s that’s basically two things. And then further investing is also, I think, very important. We want to further invest in growth. So, yeah, I would like to refer there to our midterm guidance, which is 30% to 35% EBITDA margin.

And we increased that, that target. And that’s all had to do with the June Group acquisition indeed, because we had a target of 25% to 30% after June Group acquisition. We increased our target to 30% to 35% EBITDA margin with a 20% to 25% EBIT margin. And if you look on the full year, 24%, we were on the 30% EBITDA margins on the low side, fourth quarter, we were at 34%, so on the high side. So we will be in that range, and further, yeah, every extra dollar that we make, we will invest in also further growth, on the sales side, on the product side, etcetera.

Christian, CFO, Verve Group: May I also just add on that point? I think just it’s important to take in seasonality of the business through different quarters. So as I showed in the numbers, we typically increase the margin across the quarters. So I think just be aware of seasonality and how that would affect Q1, Q2 and so forth going forward.

Remco, CEO, Verve Group: Yes, good point.

Edward James, Analyst, Cantor Fitzgerald: Thanks.

Remco, CEO, Verve Group: Any more questions, Edward?

Edward James, Analyst, Cantor Fitzgerald: That’s all.

Remco, CEO, Verve Group: Okay. Thank you very much. The next

Moderator: question comes from Christophe Genl from Inderes. Please go ahead.

Christophe Genl, Analyst, Inderes: Hello, Renko and Christian. It’s Inderes. Please two questions from my side and start with the recent news around Applovin, divesting its app portfolio. So given that both you and AppFlowings have emphasized the competitive advantages of third party data from own apps to enhance AppSec capabilities, so how should we think about Verk’s own mobile apps going forward? Do you still see them as a strategic advantage?

Or should we anticipate a similar move?

Remco, CEO, Verve Group: Yeah. Your line is difficult to hear, but if I got it right, the question is how important are our own mobile apps for, let’s say, our future growth. Is that correct? Okay.

Christophe Genl, Analyst, Inderes: Yes.

Remco, CEO, Verve Group: Yeah. Yeah. Let’s say we still have our games for 20, that’s what we started with. We have XEMotion as a game studio, which, especially, Extreme Paradox Simulator is a game with over a billion downloads. So that’s that’s really strong.

But our own, let’s say, apps are really very small if you look in the total supply that we have. So they’re really they hardly play a role anymore. Where they still play a role is for testing our SDKs for improvements on the technology side. So in that sense, it makes sense to have a bid there, but the strategic value, if you look on on, how to say, ad supply or also on on, yeah, data is very, very small. And, that’s the thing that also at Glavendive just sold their games portfolio, as they announced.

And so in that sense, our games are strategically not as important as they used to be when we started this. I hope that answers your question.

Christophe Genl, Analyst, Inderes: Yeah. Absolutely. Thank you. And another question from my side. So you’re currently quite early on expanding your audio capabilities and offering, And with audio maybe being one of the most untapped areas in digital advertising, could you just shed some light on how you’re thinking about investing and scaling in this area going forward?

Remco, CEO, Verve Group: Yeah. Audio is an interesting market. It’s still pretty small, but if you look at consumer time spent on audio and especially also on podcast, that’s increasing a lot. So in that sense, we like areas where there is strong growth and where they also are not yet or let’s say where there’s room for innovation, let me say it in that way, and audio is certainly one. So where we’re really seeing very good results is on podcasts, helping people with podcasts, publishers that do podcasts, in getting more, listeners, but also in, let’s say, monetizing, of course, their ads then.

And, so so that’s a very interesting growth area and it’s small in in the total, so you don’t see it in the total numbers yet, but it’s absolutely a future growth area that we like to further focus on.

Christophe Genl, Analyst, Inderes: Alright. Thank you. And that’s all for me.

Remco, CEO, Verve Group: Thank you very much, Kristin.

Moderator: The next question comes from Joerg Frey from Warburg Research GMBMBH. Please go ahead.

Joerg Frey, Analyst, Warburg Research: Hello guys. Thanks for the presentations and elaborate answers already. So just some housekeeping at first, you mentioned the ten million to fifteen million interest expense savings from refinancing. I presume that on an annualized basis and what’s your timeline when you that you are eyeing for refinancing? And then secondly, the Trade Desk (NASDAQ:TTD) has in its conference call, they spoke a lot about their view that Google is about to exit the open Internet and the potential of that.

And of course, there’s clear potential for you in Ideal Solutions. Do you see anything else that we should bear in mind regarding the potential that has for you?

Remco, CEO, Verve Group: Thank you for your questions, Jorg. I would Kirsten, can you answer the first one on the interest and the bonds?

Christian, CFO, Verve Group: Yes. Yes. So I can confirm that the SEK 10,000,000 to SEK 15,000,000 is on an annualized basis. I will not talk specifically on timeline, but we can say that we have engaged advisors to test interest in the market. So I think from that, you can also see that it’s, you can make your own mind on what would be a potential timeline.

Joerg Frey, Analyst, Warburg Research: Okay, understood.

Remco, CEO, Verve Group: And then I would take your second question, Jorg, that’s about the changes in the market. Yeah, TTD is, was referred to in the lead opportunities by Google leaving certain segments. I’ve learned one thing, it’s always you need to really see what’s really happening. There’s a lot of rumors, there’s a lot of stories in the market. There’s also a lot of things happening.

I mean, the Department of Justice looking into Google, but we have also the TikTok case, for example, in The US. We have, how to say, Gen GPT and so changing the search landscape dramatically. So there’s a lot of changes happening. But overall, we talk about a huge market and we feel very comfortable in our mobile, and CTV audio and digital out of home segments where we see strong growth and if there’s extra windfall profits from people exiting stuff or so, that’s great. But I think with our ideal solutions with our current positioning, we have so much growth opportunities already that it would only add on top of that.

So I’d see it positively and everything that gets extra potential for us is of course welcome. I I hope that answers your question or I try to answer it as good as possible.

Joerg Frey, Analyst, Warburg Research: Yes. Well, yes, of course, it already helps that you, are confident to generate a substantial double digit organic growth. So everything else we take is icing on the cake, so at least from my side.

Remco, CEO, Verve Group: Like to especially thank our investors and our partners, our clients for their trust. And I would also like to thank the team. They have done an awesome job in 2024, very passionate, very good. And also looking forward to 2025 to continue our strong track of growth. So thank you all very much and also happy of course to do one to ones and to go further into detail if needed.

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