Welcome to Desenio Group Q2 Result Presentation 2023. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO Fredrik Palm and CFO Anna Ståhle. Please go ahead. Thank you. Welcome, everybody, to Desenio Group's Q2 Results Presentation conference call. So with me today, I have our new CFO, Anna Ståhle, who started working for Desenio on the 1st of August. So welcome, Anna. As always, we will start with presenting the outcome of the quarter, and the Q&A session will follow at the end. It's great to see that we're finally breaking the trend of negative growth. Net sales rose by almost 1% in the second quarter and amounted to SEK 184.5 million. At the same time, it's a signal of strength that the sales development looked similar across all our segments, except in North America, where the growth rate continued to rise. In North America, order intake increased by 29% compared to the second quarter in 2022. During the quarter, we continued to focus on increasing our efficiency in the operations, while at the same time increasing our efforts to strengthen our market position, market position, which I will comment more about on the next slide. In addition to improving efficiency in operations, we do also look at ways to optimize our capital structure. So during the quarter, we repurchased 3.2% of Desenio Group's own corporate bonds over the market for a nominal value of SEK 35 million. The purchases were made at an average repurchase amount of 70% of nominal value for a total amount corresponding to SEK 24.5 million. So as I mentioned in the beginning of this call, Anna Ståhle started working for Desenio 1st of August, and has already now taken the lead and finalized her first quarter, quarterly report, only three weeks after joining. So Anna is a great addition to our team with her broad experience from leading consumer companies as CFO, and in addition from sales and supply related roles. And since we report later than normal after the end of the quarter, in this report, we also report the sales development after the end of the quarter. So in July, net sales rose by 14% compared to the previous year to SEK 71 million, and this actually represents the highest net sales in July since the beginning of Desenio. So only during the pandemic year of 2020, the sales in July was higher. And this positive development continued well during August, where we, as of the 21st of August, so order intake increased by 12% compared to the same period last year. So profitability then. So during the second quarter, it was higher than the corresponding quarter in 2022. Also, excluding the extraordinary cost of almost SEK 11 million that was included in Q2 2022, and also despite higher marketing expenses. Admin and other was SEK 15 million lower in Q2 this year compared to last year, and that's due to the cost reduction program, which was initiated in Q2 last year. And we are in line with the the savings that we targeted. Cost of fulfillment decreased by almost from almost 35% in Q2 2022 to below 30% now in Q2 this year. And that is a result of the efficient distribution setup we have built. During the quarter, we increased our efforts to strengthen our marketing, market position, so marketing expenses were therefore higher than last year and amounted to 32% of net sales, compared to 29% in Q2 last year. We do this as we see great opportunities in the challenging market environment to leverage our size and the efficient operations that we have. The efficiency improvements paid off in the quarter. Adjusted EBITDA amounted to SEK 4.8 million, meaning that the Adjusted EBITDA margin increased year-over-year for the fifth quarter in a row to 2.6%. Cash flow from operating activities amounted to minus SEK 37.7 million, and that's mainly due to negative cash flow from operating activities of around SEK 17 million and reduced short-term liabilities of around SEK 21 million. In Q2 last year, we had positive cash flow effects from reduced working capital of around SEK 50 million, and that was extraordinary. That was mainly due to inventory reduction of SEK 23 million and positive net from changes in current receivables and liabilities of SEK 27 million. As of end of Q2, cash and cash equivalents amounted to SEK 124.3 million, compared to SEK 155.7 million at the beginning of the year, which is acceptable, I would say, considering that the second quarter is the weakest quarter we have in a year... To summarize, we grew in the quarter, gross margin was improved, the Adjusted EBITDA increased, but the operational cash flow was negative. Here, we analyze the impact of our work to decrease cost levels and increase efficiency. We see that the improved efficiency in fulfillment stands out with a positive impact of 5.2 percentage points, and that admin and other added another 2.7 percentage points. It's actually 8.6 percentage points, including the bottom cost of almost SEK 11 million in Q2 last year. But then marketing costs had a negative impact of 3.2 percentage points compared to Q2 last year. Now, let me comment more in detail on the development of the business in our markets. By looking at search trends in comparison to our sales development in Germany and the U.K., we can see that our sales continued to trend higher than the market search volumes, especially lately, up to the right in the graphs. This year's Q2 search volumes were on average in line with last year's, but slightly higher in the start of the quarter and lower in June. We believe that part of this is driven by weather, with Northern Europe, including the Nordics, had a very warm and sunny May and June with very little rain. However, coming into Q3, the search volumes pick up again. Comparing the Desenio Group to a few of our biggest competitors, we see that we, during Q2, slightly increased our share of voice in Germany and kept it in the U.K. In July, we gained share of voice in both markets. Again, this indicates that in this rather challenging market, Desenio Group defended our market shares. Our conversion rate for the Desenio websites was in Q2 this year, in line with last year, but less volatile, volatile between the months, more following the smoother 2019 monthly trend. Also, the traffic in Q2 was in line with last year, but on a more positive trend going into Q3. The same goes for the growth order intake, follows the pattern from last year and is in line with the traffic. As mentioned earlier in this presentation, the sales development looked fairly similar, similar across all our geographic markets, except in North America, where the growth rate continued to rise. In the Nordics and the core markets in Europe, order intake decreased by 1%, the rest of Europe decreased by 5%, but the rest of the world increased by 17%, and in North America, order intake increased by 29% compared to the second quarter last year. Here we see our customer highlights. We see that, our active, customers decreased as well as our traffic and orders compared to last year. All in all, this means that we continue to see a contracting market on which we defend our marketing, market position. So the sales growth that we had in the quarter primarily comes from, increased average order value, and, and that is also in, in its turn, primarily due to FX effects. I now hand over to Anna for the financial update. Yes, thank you, Fredrik. In the following slides, we will take a closer look at some financials. As Fredrik mentioned, net sales increased by 0.9% compared to Q2 last year. Gross margin improved from 83.1% in Q2 last year to 84% in Q2 this year. The improvement in gross margin in the quarter is driven by lower shipping costs and positive FX effects. Despite somewhat flat sales, EBITDA margin improved in Q2 compared to Q2 last year. Adjusted EBITDA margin amounted to 2.6%, compared to -4.6% last year. The improvement is, as Fredrik previously mentioned, driven by improved fulfillment and lower administration costs. CapEx in Q2 this year is in line with last year's investment levels. CapEx in Q2 this year of SEK 1.1 million is related to investments in our warehouse in the U.S. We see that the net working capital, -7% of the net sales for the last 12 months, was in line with Q2 last year. Both inventory levels and current assets, assets and liabilities have decreased. Our operating cash flow in the quarter was -SEK 37.7 million, which is further explained on the next slide. Here is a breakdown of the operating cash flow. The operating cash flow during the quarter was negative, with SEK 37.7 million. We had a positive adjusted EBITDA of SEK 4.8 million in the quarter. However, including the amortization of postage to our customer database, we are at a negative EBIT of -SEK 4.2 million in the quarter. The bond interest payment amounted to SEK 24.6 million. Non-cash items include the depreciation and amortization on fixed assets, intangible assets, and leasing assets, altogether positively affecting cash flow by SEK 17.4 million. The capital gain from the bond buyback of SEK 10.5 million is not included in the bridge as it doesn't affect cash flow. Paid tax in the period was SEK 6.9 million, and inventory levels were somewhat unchanged in the quarter. Changes in current assets and liabilities negatively affected cash flow in the quarter by -SEK 20.8 million, due to lower liabilities consisting of lower tax debt and in general, lower accounts payable as a result of lower sales in Q2 compared to Q1. So in summary, operating cash flow during the quarter was negative by -SEK 37.7 million, mainly driven by the bond interest payment and lower current liabilities in the quarter. I now hand back to you, Fredrik, again for a summary. Thank you, Anna. So to summarize the second quarter of 2023, the growth trend has been positive in recent quarters. We are back on positive growth in Q2, and we're entering the third quarter of the year with good growth. We operate a fully integrated business with an efficient web platform and distribution, data-driven design, and marketing. At the same time, we are aware of potential softer purchasing behavior ahead in light of the macroeconomic development. Times are still uncertain, I would say. However, there's no doubt that the Desenio Group is a well-managed company in our industry. We operate a fully integrated business with an efficient web platform and distribution, data-driven design and marketing, and we have highly competitive and competent employees. This means we can fully focus on the daily work by step by step, improving in several areas to increase sales and profitability in all markets, and especially in North America. Thank you for listening, and we are now more than happy to answer your questions. So over to you, operator. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Benjamin Wahlstedt from ABG. Please go ahead. Good morning, Fredrik and Anna, and welcome, Anna. So a couple of questions from me. First off, on marketing costs up slightly in the quarter, both year-over-year and sequentially, as a share of sales. Could you talk a bit about what might be driving this? And also perhaps say something about how one should think about extrapolating this into H2, please. Yes. So, as you mentioned, marketing spend in relation to sales was somewhat high in Q2 this year. We saw good momentum in Q1 and also in the start of Q2. Whereas, I would say, the demand or the search volume softened somewhat along the second quarter. We made a decision to maintain marketing spend. We see that we can take market share in a quite soft market, which of course, long term will be a gain for us. And also short term, I would say that coming into Q3 now, we can see that it was the right decision to keep the momentum. So that, that's why marketing spend was somewhat high in Q2. And looking ahead, it is not our intention to maintain such high marketing standards. All right. Could you perhaps also comment on the July conversion rate? I know that's up quite significantly from the trend, I believe. Is this a marketing mix or channel mix driven, or do you see any changes to consumer behavior that might explain this change, please? Okay, so then you look at the traffic numbers that you have estimated compared to the sales? No, no, no, I look at the, at the presentation, the, the line graph on- Oh, yeah. Yeah. Yeah, conversion rate is somewhat up. Yes, but it's also quite normal in the season that conversion rate goes up the second half of the year. A lot of the years it is slowest in June, actually. Yeah. Actually, let's go back to marketing one more time. Could you talk a bit about where you are spending your marketing euros in terms of markets, please? I assume a fairly large share of this is spent in North America. Could you say anything about the difference in marketing ratios between markets or anything really on the geographical marketing spend, please? Yeah, we, I mean, we don't share numbers exactly what we spend in each market, but in general terms, you could say that in markets with higher growth, we also spend more marketing in relation to sales, and of course, that goes for North America. So the marketing spend in North America in relation to sales is higher than average, which I guess is no surprise to anyone. And the more mature markets where we have higher volumes like Germany, also Sweden, marketing in relation to sales is somewhat lower. Yep, loud and clear. I was wondering if you would also like to comment on current liabilities down SEK 20 million sequentially. What is hiding in this figure, please? It is a quite natural movement coming from Q1- Q2, so going from a quarter with higher sales to a quarter with lower sales. Basically, we pay our suppliers in Q2 for the purchases we made in Q1 with high volumes. Then it's also tax related in this quarter. All right. Perfect. And then, one final question from me. You mentioned that you are actively working on evaluating your balance sheet. Could you elaborate this, including maybe the options being discussed or anything on that topic, really? Yeah, I mean, we... The bond we have now with the current development of the market and the company is, of course, a bit heavy to bear at the moment. So we have for a while discussed different options and ways forward. We know that the balance sheet needs to be improved, so we get a better balance between equity and debt. So there are, there is, of course, a few different ways of doing this. It's a topic that we discuss a lot in the management of the board. And when, if, and when we come to some conclusion that involves any changes, we will communicate that. All right. Thank you very much. That was all I had for now, please. Or thank you. Thank you. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. All right. Meanwhile, we have one question here in writing. It's also around cash flow, working capital. Q2 cash flow was weak as a result of lower short-term liabilities. Working capital swings between quarters are normal, but it would be very helpful to get understanding what working capital change we should expect for the full year. That's correct. It swings a bit naturally between quarters with different sales patterns of volumes in different quarters. But I mean, normally, historically, going out of each year, we have negative working capital around, well, seven, 10, around 10%. We don't expect anything different going forward. The next question comes from Rebecka Gustafsson from Carnegie Investment Bank. Please go ahead. Good morning, Fredrik and Anna. Thank you so much for taking my questions. So starting off, it was nice to hear about the strong current trading figures for August, and also that you see a positive traffic trend going into Q3. However, you do mention continued uncertainty on consumer behavior overall for the coming quarters. But if hypothetically sales were to improve ahead, I'm curious to hear about, since you've worked a lot on lowering your OpEx and the cost control for several quarters now, how sort of sustainable would you say that this OpEx savings are, and how large a share of the savings that you've been able to do as a result of lower sales volume, please? Okay. So, we understand you correctly, you wonder if we can maintain OpEx at these levels even though we're increasing sales? Yeah, pretty much. I understand that it's not maybe the same level, but I mean, the savings you've been able to make, how large a share is of that is possible to maintain and how much is volume driven, so should bounce back if volumes were to increase? Yeah, it's of course many ways to see this. Just, what do you say? Mechanically, you could say that with more orders, there are some OpEx that is related to that, customer service, for example. More orders, more customer service. And then from another angle, as the company grows, most of the time you need maybe more senior management, especially in the new markets like North America. So, of course, OpEx will grow with the company, but we believe that we will have leverage. I mean, OpEx will not grow at the same pace as sales, hopefully, we grow going forward. And if you look at the recent year, we did reduce our staff by 27% in head count, or FTEs, a year ago. And now going out of Q2 this year, we're actually down 28% in FTEs. So we have maintained it or even increased a little bit. Yeah. Okay, good. And also, since you're mentioning the U.S., so yeah, the U.S. rollout continues to add high percentage growth. Could you just give us an update on how large the U.S. is as of now in percentage of sales and also your current focus areas here associated with the rollout, please? Yeah. So we, we don't communicate exactly North America and U.S., but, but you can assume that the rest of world is to-- the vast majority is North America, so US and Canada. Okay. Yeah. Okay, Good. I think- Oh, sorry. Focus areas. Did you ask about the focus areas in North America? Yeah, exactly. Yeah. I mean, we have the good setup. We have a fulfillment center working well and ready for more sales. We have a small but very competent organization. And what we're doing now is really step-by-step improvements to every angle of the business, from the website to you know shipping options to of course marketing, where we continue to build a brand with different activities, the same way we've done in every market in Europe. Right. Perfect. Well, that's all for me for now, so I'll get back in line. Thank you. Thank you. Thank you. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Oh, sorry, operator. I think we lost you for a while there. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Okay. Thank you very much, operator. Thank you everyone for your time and questions today. As usual, please don't hesitate to reach out, should you have any questions or requests. Speak soon again, I hope, and stay safe. Thank you for today.