Good morning all of you and welcome to our Q2 2026 reports. I am Anders Dahl, I'm the CEO of NEPA. Joining me on this call today is Edward Hargman, who is our VP of finance. The agenda for today is that we're going to give you a short update about who we are. We're going to walk you through the Q2 results and the commercial progress. Edward is going to give you a walkthrough of the financials and then we're going to say some words about the acceleration phase progress and priorities and we're going to talk a little bit about our products and our ai implementations that we have been working with for quite some time and also give you a summary of our outlook and priorities and then of course as always i hope that you send in questions for the q a towards the end of this call nepa is the leading we are the leading marketing intelligence company and we help global brands to make better marketing and growth decisions to return marketing data into actionable growth decisions and insights we track the brand health of close to seven or more than seven and a half thousand brands daily and we measure thousands of advertising campaigns annually across 50 plus markets we deliver insights to inside departments cmos marketing teams mostly on global consumer brands across the world so we serve more or less like the entire globe our core offerings combines brand tracking campaign evaluation and marketing mix modeling supported by advisory services high-end white glove services to our clients we combine continuous survey data based on real people's answers and on our interviews we mix that with business data
and we analyze marketing investments with technology and expertise to deliver recurring and product-based insights.
We are a global marketing intelligence platform that combines data, technology and advisory in a modern way. We have a strong presence in Northern Europe, commercial teams in the UK and US and we have our operations center based in Mumbai, India. As you have seen from the previous quarterly reports, we have been growing our recurring revenue base and we are also complementing that with product-based insights. As you have seen from the last 12 months more than 60 percent of our of our revenue comes from from subscriptions brand tracking is the largest platform the largest product we have and we've also launched a couple years ago now the continuous marketing mix modeling platform and we do ad tracking on an ongoing basis we also do consumer experience tracking and we also in some cases deliver a recurring data deliveries to our clients our ad hoc projects are mainly driven by campaign Evaluation and Campaign Pulse, which is the largest product in that category. And this stands for, and all the ad-op projects stands for close to 40% of our last 12 months revenue. Marketing Mixed Modeling is also served as an ad-op project, even if more and more clients are looking for a continuous marketing mix modeling to be able to use that in an ongoing basis, to pace and to work with the marketing investments and match that towards the ongoing reality that goes on outside of their companies we also have brand touch brand assets and category insights as ad hoc products that we serve to our clients and other key marketing inside products although the main focus is to continue to grow the subscription and the annual recurring revenue base in order to build a sustainable long-term business and that is also what we see in the market the biggest demand from our clients when they see they see an understanding of combined and brand tracking with performance marketing. Q2 came in with a strong recurring growth and then improved results. And on the continued growth in the recurring business, we see that AR increased by 16.4% year on year to 140 million, 0.9. The underlying subscription revenue increased by 14% and net revenue retention, i.e. we've been maintained our clients on a very strong base and shown declined also during the quarter. On the commercial development side, we see that AR bookings came in at 6.6 million compared to 10.5 for the quarter of last year, the same comparable quarter. And that was a very strong prior year quarter that included one large contract that drove those numbers into that. Q1 came on the other side in stronger than Q1 of last year. Total sales bookings declined by 12.5%, and that is mainly driven by the volatility in the market. The booking shortfall was concentrated in May, with fewer signed contracts limiting to some extent the revenue growth. And ad hoc demand remained volatile and continued to affect reported net sales and quarterly earnings. That is mainly driven by uncertainties in the market and we see that in many of those cases we don't have a no to those projects. they're still in the pipeline, but there have been some delays or moved out some of those ad hoc projects to later this year or maybe even in some cases in the next fiscal year. The hard work we have done and some of the kind of goals we set up more than a year ago, close to two years now, to improve our earnings and cash flow and one of those things is of course to have a cost base that is manageable based on our revenues. So you can see that clearly and adjusted EBITDA minus capex improved by 3.5 million to 1 minus 1.7 minus 5.2 gross margin increased by a 3.2 percentage point and the operating cash flow was positive for the quarter of 1.2 million. So corporate events the AGM re-elected the chairman and foreman and other board members but there it goes to some declined re-election so he's not part of the board anymore and CTO Jacob Kofeld left to pursue new opportunities during the quarter. So overall a strong quarter that really shows a proof of the strategy that we laid out now I think one and a half close to two years ago with a strong focus on recurring revenues AR and also a cost control or a strong strong cost base but also much simplified operating business model. The AR growth shows very clearly in this picture from Q2 2025 up until now that we have a strong growth and a larger and better retained ARR base. And you also see that in the yearly ARR bookings that on the last 12 months, we are keeping the same pace as we did for the fiscal year 2025. But you also see the volatility and the quarterly ARR bookings on the slides, right, lower, left, lower parts that it goes up and down and in this case they're very much dependent on one large contract. So I'm happy with the development of the ARR growth but of course we would like to build this ARR base to a larger part of our ongoing business in order to be able to mitigate for the volatility in our ad-hoc business that is much more sensitive to macroeconomic impact. And the next slide, this shows that the AR growth is increasingly translating into underlying subscription. And there is, of course, a certain delay. And when we sign an AR contract, it takes some time before it shows up fully in our subscription revenues. So to continue to build this will create a much more sustainable and predictable financial model in the business for us as a company. And also from a client perspective, I think being a part of the client's ongoing business, and I'm going to talk a little bit more about that towards the end of this presentation, gives a much more valid position for us in our relationships with our client.
So with that said, I would hand over to Edward to dig a little bit deeper into the financials. Edward. Thank you, Anders. So I will first walk you through the financial progress during our acceleration phase that we have started. so the first point is the shift towards scalable recurring revenue and the error increased by 16.4 year-on-year during the quarter and here it's important to say that the extraordinary churn and contract phase outs from late 2024 and early 2025 have now passed through the comparable arr base so the reported and the underlying error growth figures are therefore aligned again which we are very happy with and q2 is also the final quarter in which we present underlying revenue growth separately so from next quarter it will be reported only the second point is our structurally lower cost-based operating expenses adjusted for items affecting comparability declined by approximately 14 year on year in the first half of the year and the cost programs completed during last year 2025 are now fully reflected in the cost base and numbers and at the same time we have retained capacity to support growth our priority is therefore to scale revenue approximately within the existing cost base rather than initiate further cost reductions and this combination of recurring growth and the lower cost base is translating into improved margins and earnings the gross margin in the quarter increased to 75.9 percent from 72.7 percent last year and this was supported by improved project profitability better data quality management that we have been working with over the past years and the refined supplier strategy adjusted EBITDA less capex improved by three and a half million year on year in quarter and looking at the rolling 12-month period adjusted EBITDA less capex was positive at 5.8 million and this is a significant improvement compared with the negative rolling 12-month result reported a year ago the lower chart also illustrates the remaining quarterly volatility we delivered positive adjusted EBITDA less capex in q3 and q4 of 2025 and in q1 2026 while q2 now was a negative minus 1.7 million and this mainly reflects the timing and size of some other projects and sales of ad hoc products rather than a change in the underlying recurring revenue trajectory our immediate priority is therefore commercial conversion we need to convert client interest into both recurring contracts and ad hoc products faster and more consistently and that is the key step in translating our stronger recurring revenue base and lower cost structure into sustained profitability so let me now also walk you through the q2 profit and loss in more detail subscription revenue was 34 million kroner up 14 on an underlying basis but down 4.2 percent as reported and this is the difference difference between the faced out contracts and extraordinary churn that we saw in and it was included in the comparative base last year ad hoc revenue from subscribers were broadly stable at 12 million and corresponding to an underlying growth of 0.4 percent and ad hoc revenue from other clients declined by four percent to 6.8 million and as a result total net sales came in at 52.7 million this represents underlying growth of 7.8 percent and the reported decline of 3.8 percent and the underlying figure better reflects the development of the current business after excluding this legacy contract phase outs and extraordinary churn but as i said earlier this will be the last quarter that we present the underlying figures gross margin improved by 3.2 percentage points to 75.9 percent and turning to operating costs we have adjusted the OPEX and it declined by approximately six percent in a quarter personnel costs were down 12.8 percent year on year and external other external costs declined by 32.3 percent and part of this reduction was due to items affecting compare comparability in 2025 and during the cost saving programs and part of it was offset by FX related items within operating other operating costs this quarter that had an unfavorable movement depreciation and amortization amounted to 3.2 million and this is a non-cash expense primarily relating to historical investments in product development and the current part development expenditure is recognized as an expense as incurred due on the pnl meaning that we are not building up a new capitalized development assets on the balance sheet. Adjusted EBITALS capex improved by three and a half million to minus 1.7 from minus 5.2 and cash generation also improved. Net cash flow was positive at 1.1 million in the quarter, a significant improvement from minus 18.9 million in Q2 last year, which also include the dividend payment of 9.7 million and the net cash position at the end of June was 17.3 million and in addition to that on the balance sheet date we had an undrawn credit facility of total 20 million so overall the quarter shows clear progress in underlying recurring growth gross margin and cost efficiency and the remaining challenge is to improve commercial conversion and reduce the quarterly earnings volatility caused by the timing and size of add-up projects. I will now hand over back to Anders to talk more about product development and our AI initiatives.
Great. So this underlying changes of our tracking platform is definitely one of the key components to be much more lean and standardized and scalable. So we are rolling this out in a successful way internally still not fully facing on the client side but it will definitely simplify the technology stack and standardize delivery and improve scalability in a very clear way and there's all it's also a much more consistent way of delivering not only tracking but other products things that have been released already during this this phase of our migrations of course new is new dashboards new features so there are a lot of things that are already facing clients in in a very positive way so i think normally we talk about new business and sales and branding but i would like to give a very big applause to our product team and our tech team that are doing a great job and our operations team that are seeing all those possibilities to improve the client experience this will also give us a much better platform to integrate our trinity offering to combine brand tracking campaign evaluation and marketing modeling in one unified platform. That is the new standard for delivering marketing insights to the market and will be. And it definitely links brand, creative and media investments to commercial outcomes. And we will build a bridge between brand and performance in a way that we are seeing so far when we present this to clients. It is a new way and it's a very impressive way. We have since one and a half to two years use AI in different steps of our way of automating data collection, automating parts of our work of crunching the data, in quality management and in reporting, and we will continue to develop that, but also in visible features to our clients so they will be able to use AI and agents in their work of exploring the data and working with the data. And that will definitely free specialist capacity within NEPA to be a little bit deeper into advisory and client-facing work. We already launched advanced marketing and modeling through machine learning and automation. And we can see that in real client cases that will impact ROI on those clients' investments. and we just launched I think a couple of weeks ago in Amsterdam a creative AI tool that is used to that have already shown the potential for a 40% reduction in cost per acquisition for a named client and you can read more about that on LinkedIn in our material. So that is the product that we're going to roll out across the board during the fall. All this is based of course on the demand in the market. We know that marketers struggle to connect data in regards to brand building and performance we know that more than 70 percent of marketers struggle to prove their roi to have a very clear financial language to talk internally to their internal stakeholders we will help them out we know that close to 70 percent of the market has struggled to balance performance and performance marketing and creative marketing and brand building we we help with our trinity offer to build a bridge between between those two sides of the marketing in the marketing toolbox. We know that more than 60% of marketers struggle to make sense of the data and use it to inform the marketing decisions. And that is also a new take we have taken with our clients, that of course we have our own survey-based data, we have our own methods and models, but we also use client data and macroeconomic data to help to kind of paint the whole picture of their investments and how to use those investments in a much better way. So combining brand tracking, marketing mix modeling and campaign evaluation we have created what we call the Trinity offer to our clients and this is the picture that I ended with last time and this picture makes me really excited because this shows that our traditional marketing insight tools combine them with the business data points from our clients combine that with our platforms and our products we do we have the opportunity to talk to the clients in a so totally new way and to not just be a nice to have tool that they can present the news once, two, three times during the year. This can be an ongoing platform that client can use in their ongoing marketing work internally in their businesses. And this will also broaden our network within the client's organization, but traditionally talk to inside the departments and inside managers. We're the Trinity way of looking at their marketing data, our marketing or our products. We can talk to much more stakeholders within the company, within the clients company we can also bridge like i said before between brand and performance long and short-term marketing investments so this is really the underlying engine to to to create kind of the uh the growth that we are we are aiming to to accomplish with within nathan so for the outlook and priorities for the next upcoming six to twelve months uh we enter h2 in 2026 from a strong position built in H1 with a growing recurring revenue base and that revenue retention looks good and we of course continue to work with our clients to make sure that they stay a good gross margin about 75 which also is a good good kind of core component in our P&L of course one goal is to sustain recurring growth and to maintain a positive ARR momentum and growth and of course deepen our relationship with our priority clients and that goes kind of both ways with a strong AR booking strong AR momentum we do have the presence with our clients and it makes it easy for us to to kind of show the evidence that we we need to stay with the clients not for just one campaign one ad hoc part if we need to stay with them for a long time like Edward said before one other focus that we have been working with for quite some time now is of course improve commercial conversion professionalize the way that we go to market build our brand work with sales conversion etc and that is of course to convert clients interest into recurring contracts and be very focused on that and drive operating leverage of course components are to keep cause keep control of the cost but also to build this new technical platform and launch bits and pieces to be able to move from just operating tech into client tech scale trinity and ai it's that's number one priority for us in in in all our client discussions and that is of course to accelerate the tracking platform rollouts which we are on a good way to do but also to integrate decision tools like i said before that already to some extent launched in in new dashboards but to continue to develop that and show that for our clients and maintain resilience that ad hoc demand remains sensitive so with a strong arr base to make us less sensitive to the ad hoc volatility in the market and also to some extent the macroeconomic uncertainty in some of those decisions. So with that said, with that summary, I would like to say that we have ended the quarter in a good way. We are going into the fall with all these kind of priorities and ambitions and I am looking forward to the next phase of this discussion to answer the questions that are coming in. So please come in with questions and we will be back in a couple of minutes.
So we have received some questions in the chat that I will read out loud so we can take it question by question. So first one, have there been any new signed CMMM bookings in Q2? Yes, there has been.
Next one, you have had three consecutive quarters with NRR above 100% and these levels are in line with 2021 to 2023 should we view the current net revenue retention numbers as normal or what do we expect without major churn going forward we have seen quite low churn and that is of course to some extent or to a large extent driven by a lot of good work on our side but then you also go into those cycles where where there are rfps out in the market and we do we We have seen some RFPs coming in over the summer and into the fall, which is good, but there's also a good chance to win some of those and to lose some of them. So I wouldn't say that we have a new normal, but I would say that the process of working with mitigating churn is fundamentally much stronger now than it has been before. But there is always this kind of RFP movement going on in the market. so it's it's hard to say what it's it's the new normal but of course we would like the new normal to be in these levels has the departure of your vp of sales affected the q2 bookings no not i can't say that that is it that's a hard question to answer because what's the chicken and what's the air what's the egg of course is it market movements or is it just one person or two persons i think what we are aiming for now in and we have been aiming for that for the last say eight to 12 months is to recruit, have an ongoing recruitment of new business team member and salespeople all along the way. So I think we would like to even increase that a little bit more during the next upcoming six to 12 months to invest a little bit more in having a bit of a kind of, I wouldn't say overstaff, but a little bit more people in our sales and new business department to be able to kind of handle churn and changes in that market, but also to be able to handle leads coming in and the market opportunities that we see in the market. So I wouldn't say that we see a direct impact of the departure of VP of sales in Q2 bookings now.
Have you had enough sales capacity in Q2 to handle all inbound requests? Yes. How should we view the departure of your CTO and VP of sales? Are departures like this cost savings in the short term or does the recruitment process cost as much as the salary?
I wouldn't say that anyone, always when someone resigns or we do see change in the position, there is an underlying ongoing discussion in the organization all the time. How can we, how can we do better? How can we improve? So every time things like this happen, even before those things happen, we've worked with organizations to see how we can improve. So at this point, we have such a strong team in product and tech, so we don't have a recruitment process ongoing right now for a new CTO, for example, because we see that we haven't been handling that in a good way. But we are hiring other positions within those departments. So I wouldn't say this is just a cost saving. It's more of a reflection of how can we do things in a different way? How can we empower people within the organization? And how can we hire maybe a different type of talents in the future? So that's an ongoing improvement process that reflects our way of kind of handling those if there is a resignation, for example.
Just a clarifying question here. You're currently hiring a VP of sales. Does that mean that the VP of sales who started in June has left NEP already? Or is it a different role you're hiring for?
He left over the summer, and that was his decision, and he probably felt that he got a better offer or something else, but I think, yes, we're hiring for a new VP of sales. Luckily, that decision was taken very quickly, so we have a good chance with the recruitment process we had before that. Good names in that process, and good names are coming in right now, so we will hopefully very quickly be up and running with the new VP of sales. And we also have a strong organization behind and underlying in the sales department in general and also in client success. So there is a strong backbone of people that can support in situations like this, but he came in in June and he left in July. So his impact was not very strong in that sense.
So luckily we can be able to kind of handle that very quickly. okay next question your headcount did increase in q2 compared to q1 what new roles were added and i can answer that one directly that this is a metric with full-time equivalents so the net marginal effect is basically from part-timers parental leaves and replacements starting earlier or leaving later so it's no any net new addition additional roles added between the quarters next one is what drove the improved cash flow was the addition of customers who pay in advance a significant driver yes part of it was advanced payments but also part of it was some larger supply invoices with due dates after the quarter end that we last year received before the quarter end next one is you haven't talked about any medium or long-term ambitions in a year when do you think you will have enough predictability to start talking about the future and any update on when we can expect analyst coverage and the capital markets day and i can answer that we are on track with analyst coverage to be initiated during the fall and so hopefully we'll get some more text and analysis out in the markets for investors to read next question is ad hoc sales came in a week in q2 how much spare capacity do you have do you still have capacity to handle between 25 to 30 million krona in a quarter like q2 yes we have a limited capacity maybe for the 25 to 30 million but of course if we 20 to 25 million for sure but we don't want to of course we want to push the arr so long term i think moving to arr is of course the way we want to go same question then for arr would you be able to handle 10 higher arr from core products without significant opex increases Yeah, some of those are replacement on the sales side and more salespeople.
But also, I know if you saw that today, we had an ad for building out the data science team. And I think a lot of the delivery teams that we do have today are also doing a lot of sales work. So in general, investing more in sales and be much more structured when it comes to driving sales, the work that we have done now for one and a half years. So just continue to do that in a professional and structured way. And you can also see that one of the main reasons why we have been growing ARR significantly for the last one and a half year is that we do have a very focused and structured way of approaching the sales process. And with the main focus of driving ARR and building the platform foundation with our clients. So continue to invest. Maybe, like I said before, overinvest a little bit for some times in salespeople and also marketing is, of course, our way to go because there is a fluctuation in the market and we need to manage that in a proper way next question is when did you release the new brand tracking platform and where have the freed up resources post the release been deployed yeah the full release we understand that before is towards the is towards the later or the beginning of 2026 that would be the full kind of operating platform but there are already bits and pieces that have been released and in sort of the new platform like new dashboards and other features and of course we are using and we all we have
already seen that we have released resources to go from kind of the old operating platform to to developing new features like ai and and different ai tools so we will continue to release bits and pieces underlying operational improvements and use those resources to develop for client tech next question is what is the reason behind the opex increase quarter on quarter it's partly because of personnel costs varying due to different vacation schedules it's also because of the part of it of the cto departure and the remaining OPEX are basically effects quarter on quarter. Next question is, what's your hiring plan for H2? And what's the view on pipeline ad conversion of the pipeline going into H2? So maybe start with the hiring plans for H2.
The hiring plan, like I said before, we're going to continue to build on the acceleration operation base, i.e. to invest more in marketing and a new business talent in the business, but also to build the fundament for continuing to deliver high-end advisory to really being able to launch the next generation of marketing tools. And that is, of course, on the data science side and deliver side.
So we don't have any fixed numbers of this is the way that these are the number of people who are going to hire but these these are kind of the focus areas of where we are looking for for talent to really continue to to grow the business then we have a couple of questions related to each other so i think we'll take them together it's on was there a second part of that first question yeah i'm coming to it now okay on the third side it's um yeah you're right that may was weak in terms of sales do you have any more color and why has it also happened in march this year have you seen any stabilization since may and then clarify on pipeline conversion and what is done on the side side to actually drive conversion going forward but one thing but driving conversion
is of course a very kind of uniform standard standardized way of working to really make sure that you're measuring your pipeline in a proper way you're you're honest to yourself when it comes to evaluate if this is going to be a deal or not setting the right expectations so so and i think we have for the last one and a half year we have been much better to kind of being disciplined when it comes to working with it with the pipeline the thing that we have seen from from those two specific period that was mentioned in the question is that we have seen that a majority of those cases were driven by uh by delays and timing instead of sales instead of a instead of a no thank you we don't want to go with you guys or we lost it to someone else uh in in the early phase i think it was in march we had a couple of travel travel companies and companies that were highly impacted by the situation in the Middle East. So it's mostly timing in many of those cases. Some of those clients actually came back in June. So we closed some of those deals in June that were actually kind of a wait and see early in the spring. And the majority of those deals are still in the pipeline. It's not because we are naive and think that they will just show up, but we have actually real evidence that we are still in the game with them and then hopefully we can close some of them in q3 and or in q4 but it's especially on the ad hoc side and in some cases in in the in the ar side this year and even to some extent large year year have been we've seen a lot of those kind of wait and see and timing due to uncertainty and the overall macroeconomic situation and the good sign the good thing with the pipeline for the fall is that it looks it It looks strong, but it also looks strong in the background of the strategy that we are driving. There is a lot of ARR businesses in the pipeline. There is a lot of discussions that I went pretty far. And then there are also some interesting RFPs in the mix. So in general, an evidence to the structured way of working, but also the focus on the recurring revenue types of deals.
I think we've covered most of it there are very similar questions from several people so I think we've covered most of them and most of the themes so at the moment no more questions so to wrap this up I think thanks again for listening in and to summarize from my perspective I think we have been delivering on some of those core promises that we made a couple of years ago, actually, to work with the cost side, simplify our operating model, tweak and work in a much more efficient way with marketing and sales work. I think on the product side, we are in a very strong position. I think our message is going through and we are being invited into RFPs on the size that is fairly large. That means that we have kind of sent the message that is very clear when it comes to especially our Trinity product or our Trinity offer. So good confidence and thanks a lot to all the people in our company that have done a tremendous job of continue to transform and accelerate this business into the next phase. I thank you all for listening in today and all the shareholders for supporting us and believing in us. So thanks a lot and talk to you soon again. Have a good day.
