NIQ Global Intelligence plc Q3 FY2025 Earnings Call

Good morning, and welcome to NIQ's Third Quarter 2025 Earnings Conference Call. I would now like to hand the call over to Will Lyons, Head of Investor Relations. Please proceed.

Thank you. Good morning, everyone, and welcome to NIQ's Third Quarter 2025 Earnings Call. Joining me today are CEO, Jim Peck; COO, Tracey Massey; and CFO, Mike Burwell. Following Jim and Mike's prepared remarks, Jim, Tracey, and Mike will take your Q&A. As a reminder, our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release. Any forward-looking statements that we make on this call are based on our assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Also, during this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is available on our IR website. A replay of this call will also be available on our IR site. And lastly, just a quick housekeeping item. Posted alongside our 10-Q and earnings release, you'll find a supplemental file that reflects recasted financials related to our post-IPO legal reorganization. This includes a noncash mark-to-market adjustment on the Nielsen Media warrant for all historical periods prior to Q3 2025, where the instrument has converted to equity treatment. And with that, I'll now hand the call to Jim.

Thanks, Will. Good morning, everyone, and thank you for joining us. I'm very pleased to report that our Q3 results beat expectations across the board, 5.8% organic constant currency revenue growth, 21% margins, up 300 basis points, and $224 million of levered free cash flow, achieving most of our second half cash flow guidance in Q3 alone. We've raised our 2025 outlook, and we're heading into 2026 with momentum. Q3 is further proof that we are reaping the financial benefits of our multiyear transformation. In terms of revenue, EMEA and Americas grew 8.8% and 4.1%, respectively, on an organic constant currency basis, and APAC growth improved. Intelligence revenue grew 6.6% in organic constant currency. Intelligence subscription revenue, our version of ARR, also grew 6.6%. This was our sixth straight quarter of 5-plus percent organic constant currency growth and 6-plus percent Intelligence subscription growth. Activation revenue improved in the quarter, and our pipeline remains robust. On profitability, net loss and adjusted net loss improved while adjusted EBITDA of $223.7 million accelerated to 25% growth. We expanded adjusted EBITDA margin, and we're tracking to significant expansion in 2026. And with our strong Q3 performance, we now expect to be free cash flow breakeven on a levered basis for the full year 2025. The first step of what we expect will be a multiyear free cash flow inflection. As an important reminder, levered free cash flow in the first half of the year did not reflect the $100 million of annual interest savings we achieved as part of the IPO. Looking at high-level business performance. Aligned to our revenue growth algorithm, Q3 was driven by strong pricing as well as innovation cross-sell and upsell. In Intelligence, we're seeing continued strong adoption of our omnichannel measurement products such as eCommerce, consumer panel, and full view measurement, which contribute nicely to our growth. We're also successfully executing our proven integration playbook at GfK. Tech and Durables revenue has grown year-to-date, and we're aiming to accelerate further in 2026. In Activation, our AI-first BASES, analytics, and media products are growing rapidly, supporting 2025 revenue and bolstering momentum heading into 2026. Lastly, integrations of our Gastrograph AI and M-Trix acquisitions are going well, and we're penetrating new markets and converting new business. In short, it was a strong quarter. We're growing profitably and improving margins and free cash flow ahead of schedule. For the balance of my prepared remarks, I will address how AI is widening the moat around the NIQ ecosystem and improving our financial profile. We are not simply participating in the AI revolution in consumer data intelligence; we're leading it. Let me start by highlighting three key takeaways. First, AI widens the NIQ data moat. Today and into the future, AI models need the right data in scope, accuracy, and depth. Our data assets are vast and hard to replicate, are enriched, are proprietary, and span decades of consumer spend and behavior, and are updated constantly. Second, we are rapidly embedding AI across our solutions portfolio. We're also evolving the NIQ user experience to enable client speed to insights and further enhance our revenue growth. And third, we believe we are in the first innings of capturing significant AI-driven operating efficiencies and margin expansion. On my first point, today's consumer brands and retailers face a daunting and expensive reality. Consumer behavior is changing rapidly, and shopping data is exploding in volume and complexity. Identifying, collecting, and analyzing this data across a rapidly growing number of channels and touch points is more challenging and costly than ever. As generative and agentic AI reshape this competitive landscape, CPGs and retailers seek real-time granular insights so they can act faster and compete smarter. General purpose AI models alone are insufficient to extract meaningful signals from messy unstructured data and are not built to support high-stakes decision-making. Try asking a general-purpose LLM who sold the most chocolate during October 2025, and the result is incomplete, outdated, and inaccurate. This is because the accurate data simply isn't available in the public domain. But we have this granular data at NIQ. Through Discover, clients can click into sales data by day, week, location, which specific candy bar at what price point, sold through which retailer, why the consumer bought, what else the consumer bought, everything and more about that transaction. In our ecosystem, we harness advanced technologies and draw on decades of industry leadership to amass the global superset of consumer shopping behavior data, which is continuously updated with first-party data. Our data covers every dimension that matters to clients, including geography, channel, and category. We also believe our data is the most granular available anywhere down to the specific product SKU. This data moat is intentionally designed. Our data scale is vast, global and proprietary. Our harmonized data assets are extremely difficult and highly impractical to replicate. We ingest retail point-of-sale data from thousands of retail chains in over 90 markets and our robust industry reputation for data stewardship facilitates these exchanges. In traditional trade retail, our extensive network of field auditors and digitized collection methods enable us to cover consumer purchases with less technology for retailers in key developing markets, a feat unmatched by others. We also believe we have the most comprehensive digital commerce assets, offering the most detailed view of the digital marketplaces as well as the largest global e-receipt consumer panel. In fact, panels are a key area of focus and differentiation for us. We have collected decades of consumer shopping data from our panels, and we're investing to expand our panel footprint. By pairing the what the consumer bought from our leading measurement data with the why from our robust panel data, we are uniquely able to deliver clients a full view of consumer shopping behavior globally. In addition to the massive amounts of data we ingest, it's the rich data that we create that further enhances our moat. We generate a substantial layer of rich reference data and metadata, which includes tens of millions of product attributes, taxonomies, hierarchies, and harmonized product information across the 220 million items in our database. This includes brand, category, size, ingredients, packaging type, and more. Our rich layer of descriptive data enables NIQ to organize, analyze, and pair products at a granular level, making it possible for clients to uncover trends, benchmark performance, and make smarter decisions faster. This brings me to my second point: how our solutions drive clients' speed to insights and unlock new growth. NIQ data and insights power mission-critical client decisions across their enterprise, and our clients are leaning in. By Q3, users on our Discover platform grew 9%. Total data points consumed grew 29%, and the average monthly data consumed grew 39% versus last year. As clients increasingly rely on our data and insights, we're leveraging AI to deliver deep value. For example, NexIQ is our proprietary AI engine, which we purpose-trained on our 160 petabytes of global consumer and retail data. Unlike generic large language models, NexIQ understands the nuances of consumer shopping. This enables 10 to 12 times faster data processing than general purpose LLMs and with near-perfect categorization accuracy. NexIQ isn't just automation. It's NIQ Intelligence at scale, delivering real-time insights with unmatched precision and speed. Developed with partners like Microsoft, Snowflake, Google, and Intel, NexIQ is also the backbone of our AI-powered product suite, driving innovation across Intelligence and Activation products. We're building tools to transform how our clients make decisions from predicting winning product concepts in minutes to generating automated KPI narratives. NexIQ's integration into our ecosystem ensures that every insight is grounded in the most granular harmonized data available, giving NIQ a defensible edge in the market. And from this strong foundation, we're rapidly evolving our AI solutions. For example, version 1 of our Gen AI Copilot, Ask Arthur, has accelerated speed to insights by 40% across our omnichannel measurement and consumer panel data. In 2026, we plan to launch Arthur version 2, an intelligence research hub with predictive signals and analytic storytelling that can chat, anticipate, act, and summarize. Eventually, Arthur will be able to suggest NIQ products, data sets, and analyses based on client needs, enhancing our Discover software into an AI-powered cross-sell and upsell engine. We're also driving AI innovation throughout our Activation suite. For example, Revenue Optimizer is our AI-driven analytics solution, helping clients optimize pricing and manage trade spend for maximum profit. Precision Area uses AI data harmonization to segment countries into local markets by demographics and by retail data. This enables clients to find the needle in the haystack in terms of growth opportunities and investment optimization down to the granular neighborhood level. This year, we also launched two AI-first solutions, BASES AI Screener and Product Developer. These solutions seamlessly combine our leading global data assets with our advanced analytics offerings. With BASES AI, clients can now rapidly test, develop, and commercialize products that consumers want to buy. We're driving expansion and seeing strong early client adoption. BASES AI Screener is now live in 11 markets across 129 product categories. Client feedback has been overwhelmingly positive, and we've added 18 large clients since launch. With BASES AI Product Developer, 31 clients, including our largest CPG clients to SMB, tested 500 product concepts in Q3 alone. Unilever reported a 65% reduction in product development time, stronger innovation success rates, and accelerated speed to market, launching products up to 6 months sooner compared to traditional testing methods. And as showcased in our IPO roadshow, Brown-Forman used BASES AI to identify a winning Jack & Coke formulation, adapted for new markets and plan future line extensions. They reported a 350% sales increase, a 2.5 times sales velocity increase, and repeat consumer purchases that nearly doubled. So AI is embedded broadly across our entire product suite, supporting revenue growth and innovation. We believe we're well positioned to capitalize further in 2026 and beyond. Lastly, on my third point, artificial intelligence is a key driver of operating efficiency and margin improvement at NIQ. It helped us deliver better-than-expected margin expansion in Q3 and year-to-date, and it's laying the groundwork for continued expansion in the years to come. For example, we're harnessing agentic AI to automate our entire data operations workflow from acquisitions to coding to delivery. We're finding that the combination of advanced AI and operational expertise boosts efficiency, elevates data quality, and accelerates our innovation. Clients benefit from our ability to bring products to market faster and to expand into new markets. On the customer support front, our globally launched NIQ service suite now delivers dynamic, personalized, and contextual support powered by Gen AI. AI-driven support ticket routing and automated intelligence unlock faster resolutions and more seamless client experiences. Since launch, user engagement with Gen AI support tools has increased efficiency by over 40%. And our agentic customer success ecosystem is setting new standards for end-to-end client satisfaction. Across our corporate support functions, including HR, legal, and finance, we're deploying advanced AI and automation to streamline operations, enhance compliance, and unlock new efficiencies. In finance, AI-powered process automation has enabled us to standardize reporting, reduce transactional workloads, and deliver real-time insights for executive decision-making. In HR, intelligent analytics are helping us optimize talent acquisition and workforce planning, while legal teams leverage AI for faster contract review and improved regulatory compliance. In summary, we believe AI is a strength for NIQ on all fronts. It's a differentiator and a profitable growth enabler. We use it to turn global omnichannel consumer complexity into competitive advantage. We turn client questions and needs into client value. As we close out 2025, we are excited about what's ahead in 2026. We'll continue to lead in shaping and building the AI-powered future of consumer intelligence. With that, I'll turn it over to Mike to cover our financials.

Thanks, Jim, and good morning, everyone. Q3 was another strong quarter. We exceeded expectations across the board and demonstrated a powerful free cash flow inflection, delivering most of our back half levered free cash flow guidance in Q3 alone. AI-powered automation is reducing manual effort and increasing efficiency across NIQ. This contributed to margin expansion in Q3 2025, and we expect it will be a margin driver in 2026 and beyond. We are raising our 2025 guidance. We believe this further demonstrates the mission-critical value we bring for clients and the embedded operating leverage in our business. Turning to our Q3 results. In Q3, organic constant currency revenue grew 5.8% to $1.1 billion, surpassing the top end of our August guidance. We saw particular strength in our EMEA segment with Intelligent Solutions driving renewals, value-based pricing, cross-sell, upsell, and expansion into new verticals. On an organic constant currency basis, EMEA grew 8.8%. From a product perspective, total Intelligence revenue grew 6.6%. Annualized Intelligence subscription revenue also grew 6.6%, our sixth straight quarter of 6% plus growth. Annualized Intelligence subscription net dollar retention and gross dollar retention remained strong at 105% and 98%, respectively, reinforcing the strength in our revenue growth algorithm. As Jim mentioned, Q3 Activation revenue improved to year-over-year growth, and our client pipeline remains robust. On expenses, total operating expenses increased $89.3 million or 8.9% on a year-over-year basis, driven primarily by a $50 million one-time stock-based compensation charge triggered by the IPO, which we previewed to analysts as part of our IPO process. This is the life-to-date catch-up related to pre-IPO equity awards. Other factors driving expenses included higher amortization driven by our Gastrograph AI and M-Trix acquisitions, as well as fluctuations in foreign currency exchange rates. It's important to note that outside of these aforementioned factors, OpEx growth remains modest and well below revenue growth. Net loss and adjusted net loss improved $16.1 million and $47.6 million on a year-over-year basis, respectively. We accelerated adjusted EBITDA growth to 25%, delivering $223.7 million for the quarter. We expanded adjusted EBITDA margin by 300 basis points to 21.3%. Profitable organic revenue growth as well as ongoing GfK integration and AI-driven synergies remain key drivers this year. Importantly, we remain firmly on track towards our midterm margin target of mid-20% that we shared during our IPO roadshow. We expect 2026 will be another year of significant margin expansion as revenue growth flows through and we drive AI-powered efficiency across the business. Turning to free cash flow. We delivered $224.4 million of levered free cash flow, achieving most of our back half 2025 guidance in Q3 alone. This was driven by higher adjusted EBITDA, lower interest expense, and significantly improved net working capital as we improved days sales outstanding by 7 days compared to Q2, well ahead of schedule versus our August guidance. I'll also note that Q3 working capital benefited from a vendor payment that we accelerated in Q2 in exchange for more favorable contract terms moving forward. For a better-than-expected Q3, we're raising full year 2025 levered free cash flow guidance to breakeven. This is an exciting inflection point for our business as we continue to improve and progress towards our steady-state profile in the coming years, up $20 million from our previous guidance midpoint. Full year breakeven implies a $225 million improvement versus 2024. It also implies $280 million of levered free cash flow in the second half of 2025, which is above the high end of our prior $245 million to $275 million range. As an important reminder, levered free cash flow in the first half of the year was burdened by our pre-IPO capital structure and did not reflect the $100 million of annual interest savings we achieved by deleveraging the balance sheet and repricing our debt. In fact, our strong Q3 performance triggered another interest rate spread step down, generating an additional $9 million of annual interest savings moving forward. Turning to our balance sheet. At the end of Q3, we had cash and cash equivalents of $446 million and $750 million of available capacity under our revolver for a total of $1.2 billion of available liquidity. On capital allocation, as I've mentioned before, as free cash flow ramps, debt repayment remains our top priority. At the same time, we continue to pursue accretive tuck-in acquisitions that complement our growth strategy. We are confident that our inflecting free cash flow and strong liquidity position enables us to simultaneously achieve our financial priorities. Now turning to our increased guidance. Based on our strong Q3 performance and favorable business dynamics, we're setting Q4 guidance ahead of what was implied at our August call. We now expect reported revenue growth of approximately 7% to 7.3%, organic constant currency revenue growth of approximately 5% to 5.3%, and adjusted EBITDA growth of approximately 25% to 26%. This implies adjusted EBITDA margin nearing 25% or 360 basis points of expansion on a year-over-year basis. On free cash flow, we now expect to deliver positive $55 million to $60 million for the quarter. This implies that for the full year of 2025, we expect reported revenue growth of approximately 5.1% to 5.2%, organic constant currency revenue growth of approximately 5.5% to 5.6%, adjusted EBITDA growth of approximately 22% to 23%. This implies adjusted EBITDA margin nearing 22% or 300 basis points of expansion on a year-over-year basis. And our expectation for breakeven levered free cash flow is a $20 million improvement versus the midpoint of our previously stated range. I'll note that margin expansion has exceeded our expectations in recent quarters. We attribute this outperformance to AI-driven operating efficiencies, including as part of our ongoing GfK integration. Heading into 2026, we're actively identifying additional AI-driven operational efficiencies across the business. In summary, it was a strong Q3, and we're excited about what's ahead. We're focused on closing out a strong 2025. We're in the midst of finalizing our plans for 2026, which we expect to be another year of mid-single-digit growth, strong margin expansion, and significantly increased free cash flow generation. We intend to provide more details on our Q4 and year-end earnings call tentatively scheduled for late February. Operator, we're ready to open the call for Q&A.

We'll take our first question from Alexander Hess at JPMorgan.

NIQ exceeded its guidance at a time when many of your CPG clients have been paring back their expectations for their calendar years or fiscal years, at least those that we follow. Can you walk us through the general trajectory of your clients' wallet of trade, R&D, marketing, sort of that wallet that you're able to capture share of? And then what you guys are doing that's specifically increasing your share of wallet, which feels like sort of where you're at and what the trajectory is right now.

Yes, great question. It lets us explore a lot of questions that other folks might have. And I'll start off by saying, as you know, whether things are going really well or things aren't going so well for our clients, they really need our mission-critical services. So in good times, they need us more for innovation; maybe in bad times, they need more to help them understand where they want to spend their money and where they're going to get the most bang for the buck, and that's holding true right now. And of course, we have a lot of new innovations that are part of our growth strategy that are increasing our share of our clients' wallet as they're on their own journey for growth. And so as you know, Tracey worked at one of the biggest manufacturers in the world, and I'm going to turn it over to her to give her perspective from kind of a client's perspective.

Yes. Our clients are at various stages. Some are leading the way with innovative solutions. If you analyze the market and the performance of our clients, those achieving the most success and demonstrating the best innovation are the ones collaborating with us through our BASES AI Screener and BASES Product Developer. We're assisting them in getting their innovations to market more quickly with our new AI products, while also guiding them on which innovations to focus on. If something is successful, we advise them to increase their advertising and trade efforts; if it’s not performing well, we help them reassess and reallocate their resources. Regardless of whether they are growing or facing challenges, we are essential to their decision-making processes. Among our top customers, eight out of fourteen are experiencing mid- to high single-digit growth, with some even achieving double-digit increases. However, some clients are facing more difficulties due to internal changes such as new CEOs, restructurings, or divestitures, which often lead them to focus inward for a while before they can refocus on growth. We're witnessing positive momentum as these clients emerge from their internal transitions, and we anticipate even greater performance from those who are now re-engaging with their innovation and growth strategies. It’s important to note that among consumer packaged goods clients, those that are growing are the ones experiencing success. They are actively seeking our assistance to optimize their growth performance, which is where they see the return on their investment in our services.

We'll move next to Manav Patnaik at Barclays.

Jim, I appreciate all the detail on the AI debate. I think that was really important and helpful. I just had a follow-up about the data acquisition. Could you talk about the data you obtain? How much of that data do you purchase from others, and how much do you collect on your own? I know you mentioned adding your context, but I was hoping you could clarify where the data originates from.

We gather data from an extensive range of sources, totaling in the thousands, but I'm not going to specify any percentages. A key advantage for our business lies in the difficulty of collecting such a vast amount of data in the way we do. Retailers provide a significant portion of this data, along with additional information from a large network of individuals who visit stores, utilizing AI technology to assess sales trends in regions like India, Latin America, and Asia Pacific. Furthermore, we have some of the largest consumer panels worldwide supplying their e-receipts, allowing us to understand their demographic information. This data is constantly refreshed and requires significant cleaning and contextualization to suit our clients’ needs. This process, which we refer to as coding, involves a lot of metadata to ensure our database operates effectively with the help of AI for our clients. It's not as simple as someone just purchasing data and applying AI like ChatGPT to generate insights. For instance, during Halloween, I examined chocolate bar sales in the U.S. and immediately discerned real-time sales trends, such as which clients were leading the market and why. These insights included sales performance by region and the effects of pricing strategies on sales volume. Such detailed, specific information cannot be gleaned just by running an AI tool over publicly available data; it requires an in-depth analysis that our clients rely on for critical decisions, as inaccurate information could lead to significant financial losses. Moreover, we prioritize the accuracy of our data, conducting extensive testing to ensure that our AI tools and analytics deliver the right outcomes. With the advent of AI, we have the opportunity to develop innovative solutions more efficiently and at a lower cost, enabling us to address client needs more effectively. Our access to data empowers us to innovate rapidly and get those solutions into the hands of our clients. Finally, data stewardship is crucial for us. We need to ensure we handle data responsibly and technically safeguard our clients' information from unauthorized access. This is another important factor that strengthens our business model.

Got it. That's super helpful. And then just a follow-up, Mike. You talked a little bit about, I think you were planning for '26. I missed that part a bit, but just early thoughts into this momentum continuing into next year and how we should think about the kind of prior numbers we had?

Yes. So I think the numbers that you've had are still makes sense, Manav. But look, when we announce at the end of February, we'll give you guidance in terms of looking at what '26 is. But we're excited about the momentum that we're seeing, right, in terms of what's happening from a revenue standpoint and the launch of both of our AI activities in terms of what it's doing to drive revenue as well as what it's doing for us in terms of coding and margin improvements as well. So I'm excited to be able to give you more of that preview. I guess I just think we're continuing to move in that direction and momentum. And I guess I look forward to giving you that update when we get through Q4 and update you at year-end in terms of what we look like for '26. But nothing further at this point other than like where we're trending.

We'll move next to Ashish Sabadra at RBC Capital Markets.

Just wanted to focus on EMEA in particular, where we've seen some really material acceleration in growth. I was just wondering if you could drill down further and talk about what's really driving that robust growth in Europe in particular.

Sure. In Europe, our Panel on Demand service offering is performing exceptionally well and is being widely accepted. Customers can use Discover to get an overall market overview as well as consumer panel information, allowing them to understand both what was sold and the reasons behind those sales. This integration is particularly powerful across the markets in EMEA and has been received very positively. Tracey, would you like to add anything?

Certainly. There are two significant factors affecting our EMEA region. First, our GfK acquisition had the greatest impact on our technology and durables sector. We made that acquisition in 2023, and while it initially hindered our growth in 2024, we have managed to turn things around this year, which has contributed substantially to their growth. Additionally, as Mike mentioned, our consumer panel business is growing by over 20% in EMEA, largely due to our panel on demand service. When we acquired GfK, we had to divest our panels in Europe, and we could not compete with YouGov until the fourth quarter of last year. Since then, we have accelerated dramatically in the consumer panel space by building our own panels and significantly increasing their size. Many clients have benefited from this expansion. The primary reason for this growth, as Mike pointed out, is our panel on demand service, which integrates measurement with our RMS solution, allowing clients to see both what happened and the reasons behind it in one place. For example, a client experienced a drop in sales for a chocolate product due to stock shortages. Using our measurement tools, they identified this issue, and upon restocking, they discovered customers had switched to other brands, affecting their penetration and loyalty. This comprehensive data is available on a single platform, which sets us apart from competitors that require navigating multiple systems. We are securing a lot of business in EMEA, especially because our integrated approach allows us to combine measurement and panels effectively. This is also making our RMS clients more efficient by simplifying their supplier management, resulting in cost savings and enhanced information flow.

That's great color. And then maybe just on the Activation side. Again, you've seen some improvement there in the third quarter, but fourth quarter tends to be the seasonally stronger quarter for Activation. I was just wondering the kind of visibility that you have for Activation revenue in the fourth quarter. Obviously, your fourth quarter guidance was really strong, but any incremental color on the Activation side?

Yes, we are witnessing strong momentum in our Activation business, particularly in Q4. Clients are eager to utilize their budgets. It may seem surprising, but they tend to spend their budget during the fourth quarter. They have a clear understanding of their business direction and what they can allocate. Therefore, we have great visibility into our pipeline and feel confident about the Activation business. It showed growth in Q3, despite facing challenging comparisons from last year. Our Activation performance in Q2 and Q3 of the previous year was robust, and we anticipate a solid Q4 for that segment.

We'll take our next question from Andrew Nicholas at William Blair.

This is Tom Roesch on for Andrew Nicholas. I was wondering if you could provide color on your pipeline in the fourth quarter and exit the year across Intelligence and Activation and just kind of the visibility you have into both as well.

Yes, this is Jim. We have significant visibility into our pipeline. I want to ensure I'm addressing your question since we just discussed Activation. In both Intelligence and Activation, we manage our pipeline actively every day. It's highly predictable, as you're aware. The variable aspect, which I believe you're referring to, including new wins or projects, is very clear to us. I want to allow you to ask a follow-up question because I am not sure if there is something specific behind your inquiry that you're trying to explore.

Yes. I want to maybe focus on like new wins. Are you seeing those come in during the fourth quarter like thus far? And kind of what are you projecting as you go into 2026?

We are currently concentrating on several priorities. Our goal is to ensure all our various price increases are prepared for 2026. We are also making significant efforts in activation as the year concludes, especially since our clients are allocating their budgets. We aim to finalize those efforts and feel optimistic about our progress. Additionally, as contracts with our clients expire, we are seeking new opportunities and working to enhance our innovation projects and product offerings. We believe we have strong momentum, which has been developing since last year and is expected to carry into 2026.

And then for my follow-up, I was wondering if we could double-click on the SMB market and just kind of what the health of the end market is, especially given all the tariff noise? And then also if you have any color on the growth you saw in the quarter there?

Yes. So on the SMB market for the smaller clients, we grew 20% in '24. We're growing 20% year-to-date in '25, very strong market for us. There's a big market out there that we've got the opportunity to activate against. We're winning against our competition, taking business in that space and also creating lots of new clients. It's a high churn business. They go in and out of business. And many of them go from small to then become bigger clients as they grow their business. But we're very, very happy with that part of the business, like I say, double-digit growth.

Next, we'll move to Jeff Meuler at Baird.

Can you comment on the sustainability or runway for growth in Panel on-demand just as you anniversary the relaunch in EMEA? And if you can comment on how adoption is going forward in other geographies or if they require more of a displacement sale.

Go ahead, Tracey. No, go ahead.

We have significant potential for growth. Although we are the largest player in RMS retail measurement, we are not yet the largest in panel. There is still plenty of opportunity in various regions around the globe. EMEA experienced strong growth due to previous competition restrictions. With those restrictions now lifted, we expect some decline in growth but not significantly. The market is enormous, and our competitors cannot offer both services like we do. There is a long path for growth worldwide.

Okay. And then on the AI-driven margin improvement narrative, I just want to see if we can better tie that to what we're seeing in margins on a geographic basis because if it was more AI-driven, I wouldn't expect the margin expansion to be so concentrated in EMEA, and I'd expect more in the Americas, if you can comment on that. But I think you were making a point that AI tools were helping with GfK synergies or something to that effect, if you could provide more perspective on that.

Yes. I want to discuss AI broadly, and then Mike can elaborate on EMEA. It's clear that AI is relevant to our company as we are fundamentally a data company. We collect data for traditional trade, guiding people in stores on where to go and what to look for. Our recognition capabilities are constantly improving, leading to enhanced efficiency and better data collection, particularly in emerging markets. Additionally, AI plays a role in how we code and prepare data for online use, which constitutes a significant cost. Like many companies, we are leveraging AI to increase efficiency in HR, finance, legal, and other support functions. We're also improving our efficiency in software coding. You are starting to see this translate into margin expansion, and I expect to see even more growth in the coming year. Over the past six months, we've had important insights on utilizing AI for greater operational efficiency. Our team is becoming highly proficient in leveraging AI to drive results, and this focus will be reflected in our outcomes, which you are already beginning to see.

And to expand on your comments, Jim, regarding the GfK business, we have concentrated on its integration, with the largest segment of that historical business located in EMEA. A significant factor driving margin improvement has been this integration. Additionally, to reiterate Jim's point, our operations have become more efficient in coding, which positively impacts our margins. We are also leveraging AI to enhance our coding and customer success initiatives. As we increasingly integrate AI into our customer support, these improvements are translating into operating efficiencies that contribute to our margins.

We'll move to our next question from Wahid Amin at Bank of America.

In your prepared remarks, I think you mentioned strong pricing and up or cross-sell within the quarter. Is there anything in particular that contributed more in this quarter or region specific? I think last quarter was called out a bit, but any commentary there would be helpful.

Yes. I'm going to reiterate our revenue algorithm. The pricing remains consistent, contributing about 2.5% to our growth. Additionally, the new capabilities we refer to as innovation also contribute around 2.5%. This is balanced by our efforts in cross-selling and upselling. It's important to highlight that our e-commerce and consumer panels, particularly with Panel on Demand, are performing exceptionally well and have significant growth potential ahead. Our small and medium-sized business segment operates like a well-oiled machine, maintaining a steady flow of new clients, largely through telephonic sales. We are aware of all new market entrants, allowing us to demonstrate how we can deliver value. We already understand the value we provide, and this consistency will keep progressing month after month and quarter after quarter.

Got it. And then on the region-specific, Americas has sort of come down a bit on organic growth. I know it faces difficult comps. But is there anything you're seeing from a client perspective where you're a bit more confident on the go-forward basis of that region?

Yes. So the biggest reason is the comp. So in Q3 last year, we grew 9% in the Americas. So the biggest reason for the slight deceleration is just that comp year-on-year. It's an easier comp in Q4. We're not seeing anything specific related to clients. That part of the business is also very strong. I would say some of the launches happened a little bit later. So we recently launched our Panel on Demand in the U.S. later than we launched in Europe. So that big omni shopper panel, we moved to 500,000 consumers. That was only recently launched in the U.S. So I expect to see an acceleration as we go into Q4 and into next year as that product really takes hold and people see the benefit of that much larger panel because it's a massive difference you can get much more granular in your understanding of the consumer, where they live, what they're doing, then how bigger your panel is. So expect to see that continue, but nothing out of the ordinary, seeing good pickup of our new solutions on full view measurement, whether that be e-com or our Costco and Amazon Reads. We're starting to see some really nice momentum there and in particular, momentum on the activation side of the business with BASES Innovation AI Screener.

We'll go next to Shlomo Rosenbaum at Stifel.

I just want to start out a little bit just getting a little bit more granular, if you could, on the status of the GfK integration. It looks like the top line growth is really moving in the right direction, which is frankly usually the hardest part. Could you talk a little bit about what's going on in terms of the operational side and margins? How much of the margin expansion is because you're outperforming the top line versus the efficiencies you were trying to get? And where are you operationally? There was just also like a comment about the integration driving a higher AR, DSO over there. Maybe you can kind of talk about that as well. And then I'll have a follow-up.

Sure, Shlomo. Maybe I'll start off here. When you think about it from a revenue standpoint, you may remember when we talked about it at the IPO time frame, we said that the strategy was going to be rinse repeat similar to what we had done with NIQ. And we knew the playbook, and we were going to continue to execute it, and Tracey alluded to it in her comments, and that's a playbook we've been running. We've gotten discipline around our service offering, discipline around our contracting process and making sure we're exceeding clients' expectations overall and making sure pricing is flowing through the same algorithm that Jim commented on when you think about it in terms of price, what we're doing in terms of end markets and what we're doing in cross-sell and upsell activities. That algorithm is in place and operating and driving top line for the legacy GfK business. And look, I look at it roughly a couple of hundred basis points in terms of being driven through that. When you look at it from the back office side, I really feel good as the back office is getting principally done. Ops is going to be complete through next year. And we're continuing to drive margin through that. So I think about half of that margin improvement that you're seeing from us is coming through the GfK integration. So the top line is obviously helping that, but we had anticipated that, and we're delivering it through the bottom line overall. So look, we're very pleased with where we are, what's going on and how that business is performing. And as I say, it was the same playbook we pulled out and executed and have been driving.

Okay. And before the next question I had is just to go through the sequential margin trends in the Americas and APAC, they were down a little bit. And is there a seasonal impact, a mix issue or anything else about that? And also, if you could just put a bow on the last answer, just to comment a little bit about that AR, DSO comment that was in the press release about GfK, what that was about?

Sure. When I look at what's been happening on the GfK side, we're continuing to see margin improvement. Regarding the DSO, when we integrated the two systems at the end of Q2, we encountered a brief timing issue with cash collection. We were attentive to this integration, and you observed improvement in Q3, which was largely driven by a reduction in DSO of 7 days that I mentioned. GfK is continuing to enhance that bottom line. So, Shlomo, let me know if I addressed your questions adequately.

Yes. Just on that GfK one, there was just some kind of comment about DSO going up a little bit on GfK. That was the only thing I was just wondering if there's some lag that's still going on a bit.

Yes, that was the Q2 and really not at all when only seeing working capital as you're seeing in the numbers really flow through in a very, very positive fashion.

Okay. Okay. So then we're fine on that. And then if you could just finish up on the sequential margin trends in the Americas and APAC, and if it's seasonal mix or something else?

When looking at the APAC margins, we are continuing to invest in better coverage, which is driving that area. We briefly mentioned EMEA, and regarding North America, as Tracey pointed out, you faced slightly tougher comparisons affecting revenue flow. Consequently, considering our fixed cost base, there was a minor impact on margins. However, when evaluated as a whole, we feel positive about our margins and are committed to achieving a 300 basis points improvement over the previous year, along with over 60 basis points improvement from Q2 to Q3. We will keep focusing on enhancing margins moving forward, as noted in Manav's question.

We'll take our next question from Jeff Silber at BMO Capital Markets.

I know it's late. I'll just ask one. I hate to nitpick here, but when looking at gross margins, you didn't have a lot of gross margin expansion on a year-over-year basis, and we've seen that play out in prior quarters. Was there anything specifically going on this past quarter in terms of mix or anything else?

No, nothing specific. I mean we tend to manage the business really looking at EBITDA margins in terms of thinking about it in total, but there's nothing that I would call out or that was unusual, Jeff, to make sure to call out to you.

And we'll move next to Jason Haas at Wells Fargo.

The fourth quarter guidance does imply a decel on an organic basis from 3Q to 4Q despite the compares getting easier. Your commentary sounds pretty positive on how the business is trending. So I was just curious if there's any factors to think about that could be driving that decel in 4Q?

Yes. As you know from our guidance last quarter, we are confident in our growth strategy, and we're committed to achieving or exceeding the targets we've set. There isn't anything systemic indicating a slowdown. We're being cautious as a new public company, and we want to build a solid track record. We're managing a diverse portfolio across various regions and initiatives, so we feel comfortable with our current outlook. You can expect us to maintain this approach moving forward.

Okay, that's great and very helpful. As a follow-up, I wanted to inquire about a comment in the prepared remarks regarding your expectation for significant margin expansion next year. I understand you're not providing guidance for next year, but could you share the reasoning behind that comment? Are you indicating that there are no one-time benefits in this year's margins, suggesting that this is the appropriate run rate? Could you also clarify this year's margin to help us understand what's one-time and what isn't?

All right. I'll let Mike explain this year's margins. Our statements are intentional when we say something like that. With ongoing synergies from the GfK integration expected to come into play next year and improvements in operational efficiency, we anticipate AI will start to make a contribution now and will continue to increase. We are confident that what we are doing will facilitate that. We'll be able to discuss this further next year during the same call. Mike, would you like to elaborate?

Yes, Jim, I would like to add to your comments. We have been discussing achieving mid-20s margins in the midterm. We are continuing to see AI, as Jim mentioned, having a significant impact. We understand that the synergies from GfK are responsible for two-thirds of the margin improvement and organic revenue growth, as we previously discussed, with an improvement of 50 to 100 basis points. Therefore, we are consistently driving margin enhancements, and we expect this trend to continue.

And that concludes our Q&A session. I will now turn the conference back over to Jim Peck for closing remarks.

Yes. So thanks, everyone, for joining us. We look forward to continuing our journey with you and with our clients, with all the people who work for NIQ who do such an amazing job and of course, with our investors, and we'll see you in February.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.