Welcome to the Desenio Group audiocast with teleconference Q2 2021. Today, I am pleased to present CEO Fredrik Palm. For the first half of this call, all participants will be in listen-only mode, and afterwards, there'll be a question-and-answer session. I'll now hand the floor to Fredrik. Thank you very much, operator, and welcome everybody to Desenio Group's Q2 results presentation conference call, and a special warm welcome to new shareholders. The number of shareholders actually increased by more than 80% during Q2. As usual, the presentation materials are available on our website, and the Q&A session will follow at the end. Page two, please. Performance in the second half of Q2 was, as communicated on July the 8th, a disappointment. Still, I feel confident that the slowdown seen is temporary, caused by the abnormal effects when reopening societies. We now see Q3 moving towards more normal seasonality and customer behavior, and we're still well-positioned to capture huge growth opportunities that lie ahead, and our medium and long-term targets remain intact. I will go through many of these things in more detail in a few minutes, but before I do that, I would like to quickly just give you an overview of Desenio, our story, and the investment case. Next page, please. Desenio is today the leading online provider of affordable art. We have successfully established ourselves in 36 countries, with the latest country being Greece. That really shows that our tech-based, data-driven strategy and innovative and unique product offering sets us apart from competition. The expansion has been done while at the same time growing the profits and generating significant cash flows, which demonstrate the attractiveness of a strategy and business model. As I mentioned, we are in a great position in the market to really capture the enormous growth that lies ahead. Next page, please. Now, let me turn to the Q2 performance. Net sales increased by 5%, and organic sales growth was negative 28%. Active customers were at the same time up 79%. Gross margins were at 81.1%, and adjusted for Poster Store, the gross margin for Desenio only was 82.5%. Adjusted EBITDA landed at 11.7%, and that's mainly impacted by lower sales. Next page, please. Q2 net sales increased by 5%, as I said, to SEK 266 million, organic growth was - 28%. We guided for negative organic growth already in our Q1 report on the back of very challenging comparisons and reopening effects. However, as communicated in our market update July 8th, the sales performance in the last five weeks of the quarter were strongly impacted by greater than normal seasonality due to the ease of COVID-19 restrictions. Therefore, it's tough to truly compare against the previous year since the strong results of Q2 2020 benefited from COVID-19-related restrictions such as lockdowns. If we dive into the U.S. development. The recruitment of local team is still ongoing. It's still a bit delayed due to the travel restrictions, but we hope to sign a general manager for the U.S. during Q3. The U.S. sales have followed the European trend. Since the underlying growth is much higher than average, we have actually 49% growth in the U.S. in Q2, and while only then a - 10% organic growth. For July, U.S. showed 58% growth, and we're back on positive organic growth already in July. If you then look at the gross margins, they were 81.1% and then 82.5% adjusted for Poster Store. The reason for this is that the sourcing synergy effects have not reached its full effect yet. We also had higher than normal campaign activity during the period in order to generate more sales. In addition to that, we also had some extra costs for environmental certificates and also somewhat higher freight costs from Asia. I can mention here that to mitigate the somewhat higher freight costs and also somewhat higher material costs for wood, we have increased pricing of frames with approximately 10% across the board on average from mid-July. The lower sales volumes in Q2 have impacted adjusted EBITDA, which ended at SEK 31 million, with a margin of 11.7%. As I mentioned, margins in particular were boosted by restrictions and lockdowns in Q2 last year. I'll explain why it was not only the top line, it was also the margins. We relocated a warehouse in the end of Q1 last year, and we couldn't ramp up our warehouse operations fast enough to cater for the COVID-inflated sales volumes. We actually had to put the brakes by running no discount campaigns during the majority of Q2, and also cut down on marketing. For example, we cut influencer marketing Q2 last year by 50%. Running no campaigns means that we had higher average order value, and that makes all cost lines below that more efficient, such as fulfillment and marketing, which were all lower relative to sales. I think it's easy to understand when bridging the margin difference from Q1 this year. The adjusted EBITDA margins in Q1 was 22.7%. Due to the lower volumes in Q2, the difference was roughly, well, first the gross margin, 1.2 percentage points. Fulfillment, 0.5 percentage points, and that's because the majority of costs in fulfillment are variable with sales, but we have some fixed elements there. Then we have the operational marketing, and when I say operational marketing cost, I mean that's excluding the amortization of the Poster Store customer database, which is around SEK 8.3 million per quarter. Excluding that, the actual marketing spend we had in the quarter, that's another 2.8 percentage points. Then Admin and other, excluding one-offs, that's actually the largest difference. That's 5.9 percentage points compared to Q1 this year. The reason for that is, of course, that we have a fixed cost base here of around SEK 43 million-SEK 44 million. In short term, that's fixed. With lower sales volumes, the relation to sales is higher. Next page, please. Again, we have successfully expanded our customer reach. We're now active in 36 countries, active customers increased by 79% to 3.5 million. Site visits, though, increased, well, only by 3% to 22.5 million, and customer orders grew by 13% to 526,000 orders. Customer satisfaction remains very high in line with Q1. More customers have chosen Desenio as their destination point for affordable art, which shows that our continuous efforts to deliver best-in-class experience pay off. One thing that I think we do well is that we have a very strong creative process, and we are creating new unique in-house art, and that continued during Q2. With the trend tools we use and our data-driven creative approach, we launched several successful design drops during the quarter. For example, Ocean Breeze and Stay Golden at Poster Store, and Studio Zest, a new colorful photo collection at Desenio. The in-house design studio we have also launched an art collection including five different design themes in close collaboration with Desenio's ambassadors from Sweden, Germany, U.K., the Netherlands and France. Next page, please. As you can see too in the graph to the left here, Desenio is capitalized with a very limited need for CapEx investments. Cash flow for the second quarter is normally the weakest for the year. 2020 was again an exception due to COVID-19, but historically, cash flow in the second quarter has been around zero. We carry payables for periods of considerably higher sales levels, which means higher levels of VAT and accounts payables. Due to lower than expected Q2 sales, this had an extra negative effect in Q2 this year. Cash flow in Q2 was impacted negatively, mainly by a SEK 12 million increase in inventory, and that's a direct result of lower than expected sales in the period. We had SEK -61 million change in current liabilities, of which SEK 41 million is lower accounts payables and SEK 28 million are ordinary VAT payments. We ended the quarter with a net debt position of SEK 970 million. Next page, please. Page eight. If we now dive a bit deeper into what happened in Q2 and how the start of Q3 is traveling. As you know, we saw a deep dip in demand and sales from the last week of May. We actually saw stable conversion rates throughout the dip, so it was a traffic issue. Both demand and sales trends look more positive in July, and the current trend seems to take us towards more normal seasonality during the second half of Q3. Next page, please. Page nine. These graphs show brand search volumes on Google in Germany as an example. This is then from the top left, it's Desenio, Poster Store, Juniqe, Wayfair, Westwing, and then in the bottom right, that's the search volumes for the keyword poster, which is the most important keyword for us in Germany. The graphs are indexed individually, which means you can't really compare them in absolute numbers, but it's to compare the trend for each brand's search volumes. I did this really to illustrate the patterns that are still very similar between the different brands. All brands experienced a dip in late May that continues throughout June. In July, this is something very interesting here. In July, there is a difference between affordable art-focused players such as Desenio, Poster Store, and Juniqe, and players with a broader selection of furniture and interior design such as Westwing and Wayfair. The recall is actually stronger for the pure play affordable art players such as Desenio, Poster Store, and Juniqe, as you see in the graphs. Next page, please. Page 10. If we put the graphs together, it looks like this. Again, very similar index search volume development with stronger recall for affordable art pure players such as Desenio in July. Next page, please. Page 11. These graphs shows, the top graph is the conversion rate for all Desenio websites, and the bottom graph is sessions or traffic for all Desenio websites. As you can see here, the conversion rate has been fairly stable over the period, meaning that the website is still performing as it should, and visitors are still ordering the products. Then the lower graph, as I said, that's the traffic to websites, and that's really what has been affected during Q2. The traffic usually decreases in Q2 from Q1 due to seasonality. Q2 is normally our low season. Again, Q2 last year, 2020, was very special when traffic increased due to lockdowns and other COVID-related restrictions. For Q2 this year, we expected negative organic traffic growth compared to the previous year, but not to the extent that we have seen. Next page, please. Page 12. This year, 2021, started with strong order intake, as you can see, that black dotted line. As you all know, we took a deep dive in Q2 due to reopening of societies accelerating the normal negative seasonal trend. We see a positive trend for July, and that continues and accelerates in August. Next page, please. Page 13. If we look at July, which is the only full month we have so far in the third quarter. July net sales is trending upwards, and this is for Desenio only, since all the graphs has been Desenio only. This is also Desenio only. July net sales trending upwards with being 23% higher compared to June. As a comparison, this number, well, the increase from June to July was in 2017, 8%, 2018, 7%, 2019, 28%. That was special because June that year was lower than normal, and that's why we had a much stronger July. The reason for that was weather. If I remember this right, in June 2019, there was a heat wave throughout Europe. That also, I think was quite severe in some countries. As you know, 2020 was a very special year with Q2 being very strong. We actually saw a decline from June to July last year. We have reported sales growth of 6% in July and negative organic growth of 22%. As a comparison, in June, the organic negative growth was 45%. It's only half of that in July. July, much better than June, but still clearly affected negatively by the easing of restrictions and opening of societies. From the second week of August, the positive sales trend is considerably stronger and more robust than in July. We're back on organic growth month to date, and it currently looks like we're moving towards more normal customer behavior going into the second half of the quarter. After the market fluctuations caused by COVID-19 related lockdowns and lockups, we are convinced that the new normal post-COVID shopping behavior will support Desenio Group's continuous growth with trend and affordable art has a role. The main reason why we think that is that people will spend more time at home than before the pandemic. Next page, please. Page 14. This then brings me to our strategic highlights and the Poster Store acquisition, which we closed on December 16th. Poster Store generated net sales of SEK 340 million with an EBITDA of SEK 69 million in 2020. The integration of Poster Store is continuing well in line with the plan. We still expect annual synergies to be approximately SEK 50 million, of which we will realize approximately SEK 25 million already this year. The plan is that both companies will continue to operate under their respective brands as they expand across Europe, the U.S., and Asia. This acquisition was strategical, and I see significant opportunities to share best practices in things such as marketing, curating affordable and great-looking art that customers love. Desenio Group continues to attract driven top talented people. In May we recruited Kristian Lustin as Chief Financial Officer, and he will be joining us during the fall. Kristian is presently CEO and former CFO at RNB Retail and Brands, listed on Nasdaq Stockholm. In June, we also welcomed Cecilia Marlow. She's an experienced and growth-oriented consumer expert. Sarah Kauss, she is American and the founder of the very successful Europe-based company, S'well. They are new board members. All these recruitments will bring much experience and strategic and operational competence to the group. Being a fast-growing company with operations, as I mentioned, in currently 36 markets, the Desenio Group continuously improves our logistics and customer service. Next page, please. As we have mentioned and also press release earlier this year, a new logistics center in Bor in Czechia is under construction. Starting in Q4 or Q1 next year, the center will initially handle deliveries to Europe's markets outside of the Nordic region. We expect short lead times for the delivery, less environmental impact, and reduced logistic cost with this strategic initiative. We expect to our main markets in main Europe, one to two days shorter lead times. The salary cost in Czechia is approximately 30% lower than Sweden. Rent per square meter is again around 30% lower than compared to Sweden. We expect postage cost reductions of 5%-15% for larger European markets compared to what we have today shipping from Stockholm. Next page, please. Page 16. If you look ahead, I still see a perfect match of a vast, very fast-growing market and our outstanding business model that has proven its strength for more than five years of uninterrupted strong growth. The global market for affordable art and frames is estimated to be approximately EUR 15 billion. Online specialists such as Desenio take market shares. After the market fluctuations caused by COVID-19 related lockdowns and lockups, we're convinced that the new normal post-COVID shopping behavior will support Desenio Group's continuous growth. The main reason is that we think people will spend more time at home than before the pandemic. As communicated on July 8th, we have changed our short-term targets due to the weak Q2 performance. We maintain the targets that we communicated in July. The Q2 performance in particular should be seen in the light of Desenio Group's track record, where we have grown sales from SEK 28 million in 2015 to close to SEK 1.3 billion pro forma in 2020. That is a CAGR of 115%. Also to put Q2 in perspective, and compare it against Q2 2019, Q2 2021 was up 70% from Q2 2019. Our persistent medium-term targets are to deliver an annual organic sales growth of approximately 30% while maintaining our adjusted EBITA margin of approximately 25%. Long term, we expect to reach up to 30% adjusted EBITA margin. Our goal is clear. We intend to maintain and grow our position as the leading online provider for affordable wall art in Europe. We see significant room for continued expansion in Europe, but we're also making inroads to the U.S. as well as Asia. We continue to invest in new and innovative ways to build even deeper relationships for the customers on existing markets across Europe, U.S., and Asia, while preparing expansion into new markets. While still early days, the opportunity to accelerate the U.S. is very exciting. I want to take this opportunity to thank you all on the call for your interest in Desenio Group and for the support that you're providing during our Nasdaq listing process. It means a lot to us. That concludes our commentary on the results, and we'll now be more than happy to take your questions. Over to you, operator. Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Johan Brown of ABG. Please go ahead. Your line is open. Thank you. Good morning, Fredrik. A couple of questions from me, and I'll take them one by one. Firstly, regarding the organic growth in August, we see that it's clearly improving. Has this been lumpy in terms of growth rates or are growth rates continuing to improve week by week? Yeah. That's correct. The first few days of August, we saw trading at approximately the same level as July. After that it has improved, the trend is definitely pointing upwards. Great, thanks. Regarding margins on this growth, how expensive has it been to return to organic growth again? If we compare to what we saw in June, the margins are considerably better. In Q2 and June in particular, we had high marketing costs in comparison to sales. That looks much better now in Q3. Great. Also, another question on this current trading topic as well. Are there any differences in the geographies that are worth mentioning? Any typical geographies that are driving this one? What I've noticed recently or during the summer is that, I think weather is affecting us more than normally. Normally, good weather equals lower sales and opposite. When it's raining and cold, people spend more time indoors and shop more interior design. This summer, it's been quite consistent, very hot weather in Southern Europe. Southern Europe has not performed as well as Northern Europe, luckily our largest markets are in Northern Europe. Yes. Great. The last question from me regarding the new warehouse down in Europe, how large a share of volumes do you think you will be able to move down to that one? You mentioned the salary trends and postage costs are lower. I guess what I'm looking for is the fulfillment ratio on an order in Germany, for example, before versus after the new warehouse is live. Yeah. I think it's still too early for us to communicate exactly how much volumes is on and when, because we're not going to be in a hurry to push volumes to that new warehouse. We do it in a safe manner. With that, if everything goes according to plan, I would say that first half of next year, we will have considerable volumes outside of the Nordics in that warehouse. I'd rather come back later to communicate more about that. Yeah. That's great. Those were all my questions. Thank you very much, Fredrik. Thank you. Currently, we have one further question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one now. Next question comes from the line of Kristofer Liljeberg of Carnegie. Please go ahead. Your line is open. Yeah. Thank you. My question also related to the trading statement and particularly slide 12. If you have organic growth now, as you said in August, does that mean that sales in absolute terms are back above the level you had in April and May? It seems so if I interpret that graph correctly. That's correct. Of course, we only see in the first half of August so far, but it looks like the trend supports what you say. Okay. Also, you talked about the larger impact from weather than before. Is there a risk here that the improvement you have seen now in the very last week, maybe in better sales is driven by colder and more rainy weather in the Nordics? Could we say if you have seen an improvement in Southern Europe as well? I think generally in Q3, and that will probably also be the case this year, is that weather development is in our favor because fall is coming in Europe and people spend more time indoors and care more about home decor. The weather factor in Q3 will be in our favor as it always is in the season. Of course, certain days or certain weeks, it could be spikes in that trend with worse weather or better weather. That could affect us short-term, yes. Okay. Is that what you think you have seen now? It seems to have been a pretty sharp improvement in the very last week here in August versus before. Yeah. That's correct, but it's also normal. Just to explain a bit the seasonal effects on us is that in Q2 we know that spring is coming with better weather and higher temperature sometime in Q2, but sometimes it's early and sometimes it's late. The same with Q3. Sometimes fall or the fall weather comes early, and sometimes it's late. When the sales trend gets stronger in Q3, that depends a lot on when the fall is actually coming. To answer your question, we have seen in parts of Europe weather going from very warm to rainy as we have, well, here in Stockholm today, and that helps our sales short-term, definitely. Okay. Very clear. Thank you for that. Thank you. We've had one further question come through. That's from the line of Emanuel Jansson of Danske Bank. Please go ahead, your line is open. Thank you very much. Hello. I have some questions regarding the marketing costs. Where do you expect the marketing ratio to be in the future? Why don't you see a bigger effect on the top-line numbers? Yeah. I don't want to speculate in future marketing spend levels. Why don't we see a larger top-line effect of the marketing spend we had in Q2? Was that the question? Yes. I think the reason for that is the lockup or reopening effects that we have seen that in many of our large European markets, for example, U.K., who actually had quite strict lockdown, they went from that to opening up societies. Similar to France and similar to the large cities in Germany, that all happened from end of April to end of May. With that, people went from being inside to going outside at the same time as spring was coming, when summer was coming, which also normally has a negative effect on our sales. The lockups really accelerated that normal negative seasonal effect. That's why we had difficulties attracting customers, even though we tried hard with more marketing, with more campaigns. I think a large difference now, well, a bit in July, but in particular now in August, is that now customers respond to the activities we do with marketing and campaigning. Okay, perfect. Could you give me some idea of what the marketing cost or the ratio was in 2019, year-on-year or the full year, at least? Yeah, in 2019 it was around 20%. About, okay. Perfect. Just one last question on the search index development, why do you think the pure players has been a better upward trend lately than those players with a broader assortment? It's a good question. Without any deep thoughts around that, I think that selling affordable art or maybe more buying affordable art, you can be more spontaneous and react faster than if you buy more expensive and also larger pieces of home decor furniture. I think with lower item values as we have, people can react faster both ways. Yeah, sounds fair. Thank you very much. Thank you. Thank you once again. If there are any final questions, please dial zero one on your telephone keypad now. Since we've no further questions, I'll hand back to Fred for the closing comments. Right. Thank you very much, operator. Thank you everyone for your time and questions today. We'll be hosting virtual digital roadshows over the coming days. We look forward to speaking with as many of you as possible during this time. Please don't hesitate to reach out to us with any questions that you may have. We have a unique story to tell. Thank you for your time and for your interest. That's it for this call today. Goodbye for now.