Welcome to the Azerion Q2 and H1 2022 results call. My name is Anne Marie, and I will be your moderator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question- and- answer session. For those of you who are joining us via Zoom, if you would like to ask a question, please raise your hand by clicking the Raise Hand button at the bottom of your Zoom window. Once called upon, please unmute your audio to ask your question. Please be aware that no questions will be taken prior to the start of the Q&A session, but please do raise your hand and you will be given the right to speak when the time comes. Thank you. I'd now like to turn the call over to Atilla Aytekin, Co-CEO of Azerion, for his welcome remarks. Yes. Thank you. Hi. Welcome, everybody. My name is Atilla Aytekin. I am the co-CEO of Azerion, and welcome to our second quarter and half year results announcement. As you probably know, we are a result of a de-SPAC that occurred on February 2, 2022. Therefore, we have still two reporting lines, two reporting results. One is the prior SPAC vehicle, which is our NV now, and second is the prior business company, which is our BV now. Our aim is to merge as soon as possible these two entities into one entity. Today, we have reported NV and BV assets. All numbers here in this presentation are focused on the business performance, which is the BV. We are very happy to take questions if you like on the NV as well, of course, but today we will focus on the BV side. Ben and I today will take you through the highlights of our financial performance, and we'll do this presentation all together. If we start this quarter, we continued to strengthen our business model working with our customers and partners. Yeah, it's now visible. Just as a summary, Azerion is a platform where we monetize engaged audiences, where we connect the online audiences and products to our advertisers and consumers. We see a lot of resilience in our integrated business model in this quarter and this first half year. Why is our business model resilient? First, it is resilient because we have our exposure within the platform to our own content with our generating a lot of direct revenue by our own direct sales offices. Second, we are resilient because we have a good geographical spread. Finally, we are also resilient because we have a true vertical integration. We have one stack value chain in our advertisement technology connecting the advertisers to publishers. This quarter, we strengthened our product offering to consumers and advertisers. Let's look to that and let's have a look to our highlights on that. Let me first talk about how we are improving our products and services to our consumers, our customers. To our consumers, we launched successful partnerships with Love Island in our metaverse game Hotel Hideaway, which attracted about 3 million visits in just one month. We've also announced some partnerships for the NFTs in our other metaverse game, Habbo Hotel. Towards the advertisers, we are bolstering our mobile in-app technological, technical capabilities with the acquisition of Madvertise subsidiaries in France and in Germany. We are also stepping up our support to sports with the sponsorship of the Azerion Vrouwen Eredivisie. Why are we doing that? Because we believe that sports fans are a very engaged audience, and there are many synergies with our business model. That's why we are launching Azerion Fanzone for this. Finally, we have accelerated the integration of our previous acquisitions. We are also increasing our focus on cost to be even more resilient to any macro in the second half of the year. Now we'll come back to that in a moment. Go to the next slide. Moving to our Q2 results, we delivered another strong quarterly performance. As you see, our revenue almost doubled once again, and our adjusted EBITDA increased by 70% year-on-year. This growth was across our both segments, the platform and the premium games, and it is due to acquisitions we made, but also organic growth from our business. We have also actively optimized our gross margins and are high-grading our inventory of digital publishers. If we look to full half year, as a result of this, our half year performance was really strong. In the first half year, our revenue doubled with more than 100% even, and our adjusted EBITDA increased by more than 83%. As we look ahead for the second half of the year, we're pulling a few levers to protect and optimize our margins. Therefore, we are still right on track to deliver our guidance of at least EUR 450 million revenue this year. Let me now hand over to Ben for a closer outlook of our financial performance. Thank you, Atilla, and good afternoon, everyone. Thank you for joining us. Alongside the top-line growth that Atilla's talked about and a lot of the new business initiatives, as you can see, a number of which are super exciting, we're obviously at the same time having a very good look at our operational efficiency and making sure that we're managing those efficiencies as best as we think we can across the whole platform. Those measures really break down into three components. The first of which, and we talked a little bit about this, for Q1, is really putting our foot to the floor on accelerating the integration of our acquisitions. The second area of focus is really driving platform efficiencies, and then the third is the more run-of-the-mill focus on cost management. If we go back to the first of those three levers on the acceleration of our previous acquisitions, we have now, for example, in the U.K. and in France, brought together all of our ad sales capability under the Azerion U.K. and the Azerion France brand. At the same time, in those jurisdictions, we've also now brought together the best of the technologies that were previously being implemented. We've combined those technologies where appropriate, and as a result, we're really bringing together now that combined engine, that platform that we talked about in Q1. The second thing that we have done is really thought hard about our ability to use those analytics to drive those platform efficiencies. If you move to the middle bucket of the measures that we're taking, this is really all focused on optimizing margins. There are a number of different ways that we can do that, but two that for me are particularly important are generating more volumes through our direct sales teams. These are teams that we have in the local jurisdictions across Europe who are building relationships with key advertising partners, working strategically with them to then deploy those advertising budgets into the network. That can mean to, of course, our own platform content or indeed the content of third parties and partners. That particular contribution from the direct sales team represents about 47% of revenue in Q2 of 2022, whereas it was 35% in Q2 of 2021. We're very pleased with that progression. The second thing that we're doing, we've added some new operational KPIs into our disclosure today to help you all think about that, is we're really now focusing on the distinction between our programmatic operation and where we are able to provide publisher monetization services, which bring real added value to our publisher community. I'm gonna come back to that when we discuss the platform in just one moment. Moving on to the third measure, which is an increased focus on cost management. Obviously, as we look out into the macro, we need to make sure that we're ready for whatever the world brings, and that includes being obviously disciplined on our cost base. It starts with improved MI data analytics. Obviously I will be with the team very focused on central cost, but also looking at return on investment type metrics to make sure that where we do deploy cost spend within the organization is delivering the very best return for our businesses. If I now move onto the financial performance, I think this slide we can move through quite quickly. It's as summarized by Atilla. The key thing for me though is it really does, to my mind, bring out the resilience of our business model. We've continued to strongly grow our revenue, and as we've said, that's been driven by a combination of previous acquisitions and organic growth. At the same time, our adjusted EBITDA has also increased steadily. In particular, as we'll come to in a moment, a strong contribution from our premium game segments in relation to adjusted EBITDA. If we turn perhaps to a bit more detail on the platform, at the headline level, again, we've doubled the revenue there. Perhaps before I dive in, let's just remind everyone what does our platform actually represent? This is the integrated operation which now has within it all of our advertising capability and technology. It has all of our casual game distribution capabilities. Those are the free-to-play games that we talked about, over 17,500 titles in this part of the portfolio. It's our e-commerce operation. All of that integrated within our technology platform. It is that that has doubled its revenue, again, as a result of acquisitions and organic growth. What are the sorts of softer things that we look for, operationally? Well, one of the key things we've talked about in the past with you is user engagement in our casual game portfolio. If more people are spending more time engaged for longer in our, free-to-play games, that provides more opportunities, of course, to work with advertisers to position their advertising into those formats. From that perspective, we're particularly pleased to see an increase in the average time spent per day in our, casual game portfolio to 18 minutes, whereas last year that figure stood, closer to 13 minutes. That for us is a significant improvement in engagement. At the same time, when we think around the topic of margin, we also need to think about volume versus value. One of the metrics that we give in our disclosures is all about the average revenue that we generate from what we call 1 million ad requests. Think of it in this way, a request to find an advert to be placed into a particular piece of content actually is a cost. What you want to actually be doing is presenting us as a set of opportunities where you're maximizing the revenue rather than just having as many potential opportunities to advertise with a cost that's running until you've actually sold the ad. What we do now is we focus very much on the value and not just the volume. We've given you the metric Q2, EUR 6.20 per million ad requests, which we think is a good performance and marks very, very well to past metrics. Let me move on to the final part of our discussion on platform, which is this distinction between what we now call our advertising auction platform. Think of that as the technology that clears all the advertising through the exchanges. That's our auction clearing process, programmatic advertising. At the same time, as we talked about, we provide value-added services to our publishers. That can include how to drive a campaign, the timing of the campaign, which exchanges to use. The margins in that part of the business are significantly higher than the exchange business that we have on the auction side of the platform. We've now broken that out for people to look at. We believe it is a very important part of understanding our model because by definition, the closer we're working with our publishers, the closer we're working on the demand side through our direct offices with the advertisers, the more value we're providing and the higher the margin will be from that combined business. Finally now moving on to the premium game segment. Just a reminder as to what sits in that. This is all of our premium content where our revenue is generated from our partners, players, customers ultimately spending within that gaming format. We have, as you know, a number of social casino titles and a number of metaverse formats, where our players effectively socialize with each other in fun game formats. Very pleased to see the performance there again, the near doubling of revenue. An important contributor to that, of course, was our WHOW Games acquisition, as well as organic growth. In particular, also improved performance from our Governor of Poker three format, with a particular amount of effort being done by the team. Great work actually in terms of driving and enhancing the user experience through that game format. It's the premium games that has actually given us the biggest boost to our adjusted EBITDA. You can see there a near doubling. Again, reflecting the benefits of the WHOW Games acquisition and the social jackpot portals that it brings with it. Same metric as we talked about on platform. We do keep a close eye on the average time in game per day. Very pleased to see that, staying robustly at 80 minutes per day. Two other metrics we've talked about in the past. We've continued to see a settling of the daily active users at around 567,000, as compared to 693 in Q2 of 2021. But at the same time, that's been partly offset by a very strong performance on the average revenue per user, which you can see now sits about EUR 0.40, as compared to EUR 0.34 in Q2 of 2021. In combination, we're very pleased with the way that the quarter has developed. I'll now hand back to Atilla to talk a little bit about what next and to summarize with our overarching view on strategy. Yes. Thank you, Ben. If I may recap on key messages before going to Q&A, three bullet points. First, it is a delivery in Q2 and H1 which was very successful. We are on track to grow more organically and inorganically. Second, we increase the focus on efficiency, cost, and integration of acquisitions. Finally, we reconfirm our guidance of at least EUR 450 million revenue for this year. I think these are the key messages we want to have for the first half year for H1. Okay, I think we can go now to Q&A. Okay, we will now move into our Q&A session. For those of you who are joining us via Zoom, if you would like to ask a question at this time, please raise your hand by clicking the Raise Hand button at the bottom of your Zoom window. Once called upon, please unmute your audio to ask your question. To start, we would like to take our first question from Thomas Singlehurst. John? Oh, I'm sorry, John Singlehurst. John, please unmute. Hi there. Yeah, it's Tom, actually. Hey, Tom. Yeah, yeah, hopefully you can hear me, but that's fine. Thomas Singlehurst is good. A few questions. Thank you for the presentation. First one, can you talk about advertising revenue just more broadly? I'm interested in how circular it is in the sense that how much of advertising on your platform is advertising on games for other games? And I'm just trying to work out what this then means for cyclicality. Is there anything that you can tell us about sort of more recent sort of trends in terms of demand for advertising and sensitivity to what appears now to be quite a sort of rapid deterioration in the macro outlook? That was the first question. Second question was user numbers both for the platform and the premium games piece. I mean, you talk about settling. I guess there's also a degree to which there's some seasonality. I'm not overly worried about it because, as you say, the monetization rates are pretty robust and the engagement appears strong, but can Can you just give us a little bit more clarity on what's driving the sort of user numbers and where you expect it to trough out? Then very finally, I'm conscious it is an open-ended guidance, so it's a bit unfair to pick you up on this. Given there is, you know, the very strong performance in the first half, there's relatively robust trends, there's a positive impact, I think, on balance from FX. I'm interested in why you chose not to move up your revenue guidance at this stage and put a sort of a higher lower threshold, if that's the right way of putting it. Thank you. Okay. Thank you, Tom. Shall I kick off on those? Yeah. Right. Just to play back your three questions. On the first of those, which is really all about our mix of advertisers by sector. Look, I guess the good news from our portfolio perspective is we're actually, I think, Tom, well-diversified across the sectors. Actually when you look back to COVID times, which obviously had impacts on different sectors at different times, what we actually saw was a very interesting rotation of those sectors as we both went into COVID and then obviously emerged at the back end. While the percentages obviously vary, quarter to quarter, half to half, I think it is fair to say, from memory that we have significant, and I'm talking, double digits, sort of, mid to high teens at the larger end, I think, of contributions from sectors that would be generally classified as, auto, travel, gaming entertainment for sure, wider retail and consumer, and then supply to industrial. Those are the sort of from memory, sort of, the top five of those sectors. The mix does change, to your point, depending a little bit on the macro, demands and the advertising spends and patterns. We actually see a very diversified mix of sectors and certainly no overexposure to any particular sector within our advertiser mix. Just to double down on that's also helped by the fact that with RR we have very strong relationships with the global media houses, so they cover the global advertising budgets, and those are very important partners for us as well. That's on the first question. On the second, which I think was the user numbers question and how do we feel about it. Look, I think you did partly answer the question, Tom. You know, we do see, we think, you know, the final settling of COVID. I mean, it's difficult to call when that happens, but we can see the numbers have now, we think, aligned. We would think that they bottomed out in terms of the influence of COVID. To your point, I think at this particular stage in the year, it is more about seasonality. You can look back at patterns both for ourselves and others, and where obviously through the summer period, you do expect some quieter interactions. Which is why we're quite interested to the point you also made to see our engagement times actually staying very strong. Where our players are playing, they are playing for longer. On the premium game side where they're playing, they're actually spending more as well. We do think those are offsetting effects, and obviously we're now through and into what is at least traditionally a buoyant part of the year in terms of the end of Q3 and into Q4. We're gonna keep a very close eye on the numbers, but we feel that seasonality, to your point, was very much a factor in those numbers as well. Your third question was, why not move the guidance up or down? Well, look, we had a long think, and we are, as we said, retaining the previous guidance. We're on track to deliver that at least EUR 450 million of revenue. In terms of the day-to-day, you know, we've emerged from the summer period, and we are seeing, again, at this stage at least, type of seasonality effects that we've just talked about. It would be crazy for us not to be aware of obviously the macro environments as well. We have a whole series of scenarios in our minds, and with that in mind, while we remain very confident in our overarching position and the day-to-day as we see it right now, we don't want to be moving our guidance. We wanna make sure that we keep it under review, and as we did with you last time around, we'll come back at the next quarter to give any updates on what we're seeing in the industry and in the markets. So I think those are all three of your questions, Tom. Very clear. Thank you. Thank you. Yeah. Perfect. Thank you. Okay. Our next question is from Matthew Walker from Credit Suisse. Matthew, please unmute. Thank you. Can you hear me okay? Yes. That's okay. Hi, Matthew. Hey there, guys. Thanks for taking the question. The first one is, in 2022, can you reach the high teens margin for adjusted EBITDA? That's the first one. The second one is, on the net debt, you helpfully provided a bit of a reconciliation for the N.V. numbers versus the B.V. numbers in the press release. One thing that just struck me was that there wasn't that much change in net financial debt. There was a little bit between the two entities, but not that much. When you look at the net loss, there was a very significant difference because of the EUR 107 million listing costs. I guess my question is, when you crash NV and BV together, how does that EUR 107 million of listing costs get accounted for? Is it cash? Is it non-cash? Maybe you can provide a bit of color. Finally, you know, organic growth, I know you're not sort of specifically calling it out, but you were looking for about 20% organic growth for this year. How are you feeling about that number now? Because it felt to me like even excluding any key track positions at the beginning of the year, you could have got to the EUR 450 with 20% organic growth. I guess to Thomas's question, does that mean you are, given you have made some acquisitions, does that mean that you're slightly edging down the organic growth targets? Or does it just mean that you're still confident of that target, but you're just being cautious? Okay. We're good in the same. Thank you. The first piece was on the adjusted EBITDA margins. Thank you again for your questions, Matthew. Look, just a reminder, this is going back obviously to the end of last year, but the guidance that we talked about was a gentle acceleration of adjusted EBITDA margin in the short term. I think I remember conversations with a number of you where we weren't able to be more specific, but I think we did make it relatively clear that we weren't talking about a one-year situation. We're only in year one of what we've discussed in the past is short term. The key point I think though, coming back to your question is, look, we remain very committed to that move over time to high teens that we discussed. I think it's a question of when, not if. Obviously we need to keep a close eye on the environment. We need to keep a close eye on our cost base. We also need to keep a close eye as we've talked about, I think in the past, Matthew, on the business mix. We've had strong growth in our platform, which, you know, ultimately we think is very good news. As we've observed in the past, obviously they bring with it a lower adjusted EBITDA margin. That puts a little bit of a slowing on the margin, notwithstanding it's good for the business. You know, I think the way we look at it is, at the top line, the revenue forecast we've recommitted to. Come back to that in a minute. Adjusted EBITDA, we remain as a team very focused on that as a delivery. It's a question of when, not if, and that will be partly reflecting how the rest of the year plays out and some of the macro environment that we've talked about as well. The second question was net debt. One thing I will immediately address for you, the EUR 107 million is non-cash. There's probably a conversation to be had outside of this call. Otherwise I risk boring lots of people with lots of accounting tech stuff. Big picture, this is a reflection of the accounting value or assumed value of the listing. It's a non-cash item. It goes through retained earnings, but doesn't ultimately create an asset on the balance sheet. I think I'm very happy to follow up with you on this separately, Matthew, but it's a non-cash item. When you put the two companies together, we've consolidated the numbers for you. Obviously, that's what we've done in these reports. As you rightly point out, there is a reconciliation, which again, I'm happy to walk through outside of this call. The main difference actually, as you can see, is there's obviously the NV cash, some extra cash of EUR 9.8 million that sits at the NV. You can see that in the numbers, in the cash and the cash equivalents numbers. There is slightly different treatment of a couple of items, shareholder loans and SAR obligations, which are settled out of NV shares now. Those are effectively moved to NV. Other than that, if you think about it, the NV is ultimately a cash company with a smallish central cost item, and the vast majority as a result of the operating performance sits in the holding BV numbers. They will become one if we formally legally merge the companies. That's the second of your questions. The third I think came back to just more generally organic growth and confidence in end of year. You're quite right. I think when we talked about it in the past, we've talked about an organic growth rate of in the order of about 20%. You know, we haven't been too specific quarter to quarter, but if you look at the overall movement of the business, we think we're still in that sort of zip code. It feels like we're still very much on track around that sort of organic growth. One of the things that we do have, and we talked a bit about this in the past, but as we integrate more now, it's going to be more and more difficult to distinguish between organic growth and acquisitions. I mean, if you just think of the two examples that I gave, which are actually taking the Inskin, Sublime, and Collective brands in the UK and ultimately putting them in and under Azerion U.K., merging their technologies, at what point does that become organic versus acquisition? Because essentially our ability to track these acquisitions becomes, you know, virtually nil. At the same time, that's, I'm sure, exactly what you as analysts and investors want us to do, which is actually bring the benefits of these acquisitions into the organization more quickly now, which is what we're doing. You know, at a high level, we think the growth is in line. As I said, I think in answer to Thomas's questions, while we remain confident on our delivery of the at least EUR 450 revenue, at the same time, we don't wanna get ahead of ourselves. It's a complex world out there, and therefore we just remain confident but committed to keeping that under review as we move into Q3 and beyond. Okay. Thank you very much. Thank you. Thank you very much. Moving on. Our next question is from Wim Gille from ABN AMRO ODDO BHF. Wim, you may unmute and ask your question. Hi there. Can you hear me? Yeah. Hi there. We can hear you. Hi there. Yeah. A very good afternoon. I got a couple of questions. Within the presentation, you mentioned that you have a couple of specific targets that you're working on. One of them is the increase of sales through direct sales, so currently about 46% of your business, if I'm not mistaken, and it used to be 35% last year. Can you give us a bit of feeling what the gross margin difference is between direct sales and programmatic sales? Can you give us also a bit of a feeling on how far you can stretch this 46%? Is there more room to go there? The second question is, the cost savings initiatives that you mentioned, can you make this a bit more tangible? What kind of numbers are we talking about? Are we talking about meaningful amounts of savings? Is it savings in absolute terms or is it just more, you know, getting more efficient so that you have more room to grow? What should we think about in terms of those cost savings? And also, can you give us a bit more. It's a tangible initiative. You mentioned AI and some other data stuff. You know, are there also kind of restructurings going on and what have you? A few bookkeeping questions. You have recorded EUR 16.1 million in de-SPAC costs for the second quarter. Why do you still have cost of de-SPAC process in the second quarter? What's the guidance for the remainder of the year? Is it all done now or should we expect more of these type of one-offs throughout the second half of this year? If I'm not mistaken, you also did a private placement around EUR 10 million. Can you give us a bit more color on why you did a private placement? Why raise money? That's basically the question here. All right. I think Atilla and I will probably divide those between us. I think maybe in and around the private placement that ties quite nicely to some of the M&A strategy discussion. Right. Wim, first of all, thank you for your questions. I think I got them all. I'm sure you'll pick me up if I missed any. First one was related to the increased focus on direct sales. And can we help understand a little bit around the margin behavior as between that and programmatic? Well, look, first of all, on the programmatic, I can't be too specific, but of course, what we're really doing there is providing a mass market exchange technology service. Generally speaking, when you look across the market, you know, the margins around that will typically be in the zip code of mid-teens. That might be a sort of reference point for you. When you're looking of course at direct sales, it totally depends on the nature of the relationship, what value you're providing. At one end of the spectrum, you're literally sitting alongside your advertising client, really helping to manage that campaign from end to end. Or there are sort of more simple ways of basically helping the client go into the dashboards and the systems that we offer to ultimately become a sort of self-directing client. There's lots of service that we provide in between. What I would say is, as a result, you know, certainly if you're the fuller end of the direct sales, you are at a sort of reasonable multiple of the types of margin that I've just indicated in the programmatic space. In terms of the 46%, is there more to go? Look, we think so. We've really committed to what we believe are high quality brands and sales teams in each of the key European markets. I think we're seeing very much that the scale that we're developing in these key markets brings its own synergy, its own volume. You have client overlap, of course, but you also bring significant additional clients. I think it feels to us as a team that there's more to go on the 46%. Cost initiatives, you know, how specific have we been? We're not at this stage giving specific guidance on numbers around cost initiatives. To your point, there is both a sort of analytics and proper management and due management aspect. There are also some specific measures. We do touch on in our longer form reports that's published. We have taken a restructuring charge, and that related to about 3% or so of the workforce. You know, we are very much a business that is still in growth mode, but we're also aware that we need to make sure we're cutting our cloth for the future macroeconomic possibilities. That does involve us making sure that we continue to manage our principal lines of cost, which, as ever with a business such as ours, is predominantly HR and technology. To answer your question, there are a number of specific initiatives. Some relate to the merging of the technologies we've touched on. Some relate to headcount management, which we've touched on. And then it's just really related to central office cost. We invested to become a listed company, and it's our job to make sure we manage those. Perhaps I hand over. Oh, sorry, there's one more question for me and then over to you, Atilla, which related to the de-SPAC costs, which is a very good question. Again, this is set out in the material. EUR 16.1 de-SPAC related expenses described. The answer as to why Q2 it was effectively to match all of the relatively complex accounting treatment that flowed from the de-SPAC transaction itself. This is not something that will be, at least as far as we're aware, continuing to contribute to the cost line in the future. These are one-off de-SPAC expenses. We've taken them and now aligned with the rest of the de-SPAC transaction effects, which we summarized, obviously, lots of detail in our disclosure today. That should now, I think, be regarded, Wim, as something that is very significantly now dealt with. Then I think the final area of questions related to private placement and, you know, deployment of capital. Yeah. Yeah. Thank you. Well, I think first, I will make a bridge to our continuation of our M&A strategy. In the background, let's say our measurements of cost efficiency, the focus on cost in light of the challenging macro environment. That's why we choose to be a little bit more conservative instead of using our present cash. We said, "Okay, let's go forward and do this equity raise to support the small acquisitions and, especially the asset deals," buying customer books. For example, we did our last one was the Madvertise subsidiaries in France and Germany. They're still very attractive for us to move forward. Still, we want to have a certain line of balance in the back of challenging macro environments and continuation with the whole of our acquisition strategy. The acquisition strategy, we continue because we remain very active. We have a very strong pipeline. Each time we in each communication we have, we continue sell. We may go to the market and raise some equity tickets. That is also in the back of that. Yes. I think this was the last questions. If there are Yes. At this time, Atilla, there are no more questions at this time, Atilla. You may go to your closing remarks. Well, thank you very much. I think we are very enlightened and very happy to do this announcement. What we said within this challenging market, we have a very resilient business model. Very happy and very proud to announce this almost doubling of the revenue and especially increasing the gross margins. Thank you very much for listening to us, and see you back on the third quarter announcements further on within the year. Thank you very much.