Welcome to the Readly Audiocast for Teleconference Q3 2022. Throughout the call, all participants will be in listen-only mode, so there's no need to mute your own individual lines. Afterwards, there'll be a question and answer session. Today, I am pleased to present CEO Mats Brandt and CFO Johan Adalberth. Please begin your meeting. Thank you very much. Good morning, everyone, and very welcome to this Q3 presentation from us at Readly. My name is Mats Brandt. I'm CEO. With me here, I have Johan Adalberth, our CFO. As an introduction, I'd like to quickly review the year so far with the purpose of bringing our Q3 performance in a greater perspective and a wider context. Slide number two, please. Since the beginning of this year, we have prioritized sustainable growth and to shift our focus to product-led growth. We delivered a quarter that gave us confidence that we are on the right track. Before we look into the numbers, I want to give you a quick overview of the initiatives that we have taken so far and that we will proceed with to ensure that we continue on this very good path. Later on, I would also highlight some of these areas in further detail. Firstly, we have now implemented the price increases with 20%-25% in almost all markets. It has generally been well accepted by users, despite a very challenging macro environment, the cost pressure that households endure. To put this in a perspective, it is the first time in 10 years that we adjust pricing. Further, we have not yet seen the full impact on revenues. We will continue to evaluate how we can further optimize pricing going forward in all markets. We continue to invest a lot in product and tech development to ensure that the shift to product-led growth will accelerate further. I will come back to this in more detail later as it is an important part of the strategic plan ahead. We continue to operate at a reduced marketing spend level with improved unit economics and focus. We are today more effective and efficient in selecting what channels and markets to prioritize for rate of return on investments. We're also becoming much better at leveraging the potential with partnerships, particularly in core markets. The launch of Readly in France means that we're expanding into Europe's largest magazine market, estimated to be worth $7.5 billion. We already have a good presence in France through our acquisition with Toutabo. We take the next step and bring the full Readly product into France. By that, France will become our fourth core market besides Germany, U.K., and Sweden. We put priority on selectively adding new titles and brands that bring the most value to our customers, both locally and globally. With that, let's dive into the numbers. Johan, if you would like to do that, please. The next slide, please. Thank you, Mats. We are on slide number three. I think this slide is great, as it captures our financial targets, revenue growth, and profitability on EBITDA level. First, let's take a look at the upper left chart on subscriber development. The third quarter ended at 447k FPS, and this is in line with the Q2 number. I want to draw attention to the fact that in Q1 and Q2 this year, we saw a net decline of 13k and 18k FPS respectively. Now in Q3, we've managed to stabilize our subscriber number despite the volatile external environment and also the significant price increases that Mats mentioned. Looking at the middle chart with revenue growth, we're pleased to conclude that we're seeing a growth in absolute terms compared to Q2, where revenues were flat. Revenues in Q3 were SEK 147 million, corresponding to a 24% year-on-year growth. ARPU, Average Revenue Per User, saw a significant uplift from 93 SEK in Q3 last year to 103 SEK now in the most recent quarter. Around half of this ARPU uplift was due to the price increases, and the rest was currency. I want to reiterate what Mats just said, that we have not yet seen the full impact of the price increases. Our revenue growth target of 25% is well within reach for the full year of 2022. If we look at the chart to the right, we see adjusted EBITDA for the past six quarters. Also here, we're pleased to show yet another quarter with improved profitability. For the first time since we listed, adjusted EBITDA is now better than the -10% margin, with Q3 adjusted EBITDA at -9.7%. I do think this positive trend with six consecutive quarters of improved profitability is convincing, and we are being very serious about reaching profitability latest 2025, in line with our financial targets. Next slide, please. Slide number four. On this slide, we see revenue contribution from our 4 core markets and rest of world combined. The DACH region continues to perform well, and Germany grew revenues by 14% year-on-year. We did see a positive FX effect from Germany, but at the same time, the price increases in Germany did not show its full potential in the third quarter, more is expected to come in Q4 and beyond. The U.K. grew 13% year-on-year, and U.K. was the first market where we tested and implemented the higher price point. This has had a positive effect on U.K. revenues in the third quarter. Sales in Sweden were affected by lower marketing spend. Also, Sweden was the last market to see the higher price point, which did not come into effect until October, i.e., did not contribute to revenue growth in Q3. Our long-term view on Sweden remains positive, especially now as we have further strengthened our content portfolio. We saw continued stable performance in France, which Mats will tell you more about soon. Sales in rest of the world grew 19% to SEK 23.1 million and constitutes 16% of total sales. Next slide, please. Slide number five. On the top chart, we see gross profits and gross margin for the past six quarters. Gross profit in Q3 was SEK 48.1 million. This corresponds to a margin of 32.7%. The slightly lower margin compared to previous quarters does not reflect our underlying efforts to improve the gross margin. While I do expect improvements in the coming quarters, we remain confident in reaching our financial target of 35% quite soon, despite this target is set for 2025. The lower churn shows gross contribution, which was SEK 25.3 million in Q3. This corresponds to a margin of 17.2%, and this is up 27 percentage points compared to Q3 last year and reflects our new strategic direction. Now back to you, Mats. Thank you, Johan. In the next slide, in the next few slides, I'd like to share a quick update on some recent developments and also discuss initiatives that we take and why we see these as being so important in our strategic direction. They all aim at driving user engagement and to attract and retain subscribers. Next slide number seven, please. We see large potential with developing new formats, new functionality and features, and the ability to better personalize the user experience. The leading theme here is to become a lot better at serving the right content in the right format at the right time. This is in focus for our product development. Product-led growth is more sustainable and can be leveraged substantially long term to improve key metrics such as conversion rates, engagement, churn, and return rates. As an example, every 0.1% improvement in churn equals roughly SEK 5 million in additional revenues on an annual basis, assuming current intake levels. Quite powerful. Our efforts to make Readly more relevant for mobile usage are ongoing. We already have mobile reading functionality on many articles that enables a more convenient experience. As a next step, we will introduce automated recommendations and mobile-friendly articles. The objective is to inspire increased mobile usage and to increase reading time. Our data shows that trialists who spend a lot of reading time with us are more likely to convert into FPS, full-paying subscribers. By providing mobile-friendly content discoveries, we also encourage subscribers to use Readly more frequently. In addition to supporting conversion, they should also have a positive impact on retention. Slide number eight, please. The entry into audio with podcast is a step on the path to offer new content in a new format. This will increase user engagement and enhance the title brand experience at large. Our podcast portfolio is steadily growing, and in the current test phase, we already see tens of thousands of listening sessions. The usage data provides valuable insight that is important for planning the next phase within audio, but it will also bring valuable insight to our publishers. We have increased the podcast visibility in the app so that more of new types of users can discover the growing catalog. As a result, we saw an increase with a factor of three during the month of September. 2/3 of the listening takes place on smartphones, and listening can easily be combined with other activities such as exercising, driving, or cooking. By making Readly relevant in new situations when users are on the mobile, we see a great opportunity to develop new user habits that will increase engagement time and have a positive impact on conversion and retention. Slide number nine, please. The width and the depth of the content is an important part of our product offering. We have a very strong content catalog that we continuously develop further. This quarter, we added 184 titles from 15 publishers, and in October, we also announced the addition of 80 titles from Disney. This substantially strengthens our children category and Readly's position as being the leading reading app for the whole family. The new content that was announced in recent months will further encourage frequent use and expand engagement time. We expect a positive impact from this on conversion and trialists and increased retention. Newspaper reading is becoming more popular. Today, every fifth issue on our platform is a newspaper. We are therefore very pleased to have added several newspapers, such as Svenska Dagbladet, one of Sweden's largest dailies. In Germany, our largest market, we have added 40 regional and local dailies. Readly subscribers now have access to seven national German papers and 52 regional titles. In the U.K., we provide 12 national and 166 regional newspapers. The monthly average number of newspaper readers who use Readly on a daily basis has increased by 23% compared to last year, and about 40% of our subscribers read both magazines and newspapers. To summarize, we are continuously strengthening our leading content portfolio. It now consists of more than 6,700 active publications, and that is something that really sets Readly apart from our competitors. Next, slide number 10, please. Partnerships continue to perform as a strong intake channel at low acquisition cost. We will continue to scale marketing partnerships, where we now have an even better process in place to ensure that we allocate resources in an optimal manner for growth. In parallel, we develop our offering through strategic reseller partners. Altogether, partnerships are expected to continue to deliver long-term, steady, and cost-efficient growth. During the quarter, we have launched 10 new partnerships and several strong performing campaigns with existing partners. We also scaled some partnerships across several markets. The cooperation with N26 Bank in Germany, Austria, Italy, and the Netherlands is such a great example. N26 is a mobile bank with 8 million customers in 24 markets. We have successfully run several new in-store activation campaigns to leverage also from offline touchpoints. To name a few, we have Tchibo in over 500 stores in Germany, McDonald's as part of their Monopoly campaign in the U.K., and with furniture company Jysk in Sweden. Altogether, partnerships with leading brands such as these have contributed with 30% of the total trialist intake during the quarter. Next slide, number 11, please. We're now in the final stages of integrating Toutabo, our French acquisition. We have recently made a technical release of the Readly app and are soon approaching 500 French newspapers and magazines in addition to our international portfolio. Some well-known titles are Libération, GQ, Cosmopolitan, Maxi Cuisine, Public, and L'Express. We continue to add content at a high pace in preparation for the full commercial launch. In parallel, we're also releasing various product upgrades. We will expand our partnership network and run activations with French and international partnerships. HelloFresh, Huawei, N26 will be on board from start in France. Toutabo's all-you-can-read offering will continue to run in parallel while we work on migration of users. We are very excited, of course, to further strengthen our leading position in Europe by the Readly launch in France. By this entry, we'll also be able to offer international readers French content globally. Slide number 12, please. To summarize, our subscriber base grew by 3%. It has stabilized compared to Q2, which is a sign of strength during a period when we also increased prices and experienced a volatile macroeconomic environment. We delivered a quarter with strong profit improvements and good revenue growth of 24% year-on-year. ARPU has increased more than 10%. We have significantly improved EBITDA margins during the last six consecutive quarters. EBITDA is expected to be positive in 2025 at the latest, which is fully in line with our financial targets. All things considered, the transition to becoming a profitable company is proceeding well, and initiatives that we have taken during this year have started to deliver. Investment that we make in product development is expected to have an accelerating impact as we move forward into 2023. Thank you for listening. With that, let's open up for questions. Next slide, please. 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 your question has been answered before it's your turn to speak, you can dial at zero two to cancel. Once again, that's zero one to ask a question or zero two if you need to cancel. Our first question comes from the line of Derek Laliberté of ABG. Please go ahead. Your line is open. Thank you very much and good morning. With regards to the DACH region, pretty impressive performance here in the quarter. Did you sort of do any specific efforts here to drive this performance that we saw in Switzerland and Austria, or is it mainly sort of a continuation of a strong trend in the region? Thank you. Hello, Derek. Good morning. Thank you for that question. I think it's a great question you say. This really emphasizes our long-term commitment that we've had in Germany and the DACH region for many years. We launched in Germany back in 2014. I think this really makes us believe that we're on the right track and we're doing the right things because we've been working for long term. Newspapers is important. We've had that as a strategic focus area for quite some time now, and we're seeing that that is increasing average engagement time. We know since long that engagement correlates very well with retention. I hope that gives some flavor, long-term commitment and continuous engagement improvements. Okay. Yeah, absolutely. Thank you for that. I noticed that the gross margin was, albeit by a pretty small increment there, but was a bit lower than what it has been before. Sort of any specific drivers behind that? Yeah, thanks. I know I've been talking about gross margin improvements for quite some time. As I mentioned on the call here, you should not stare at the Q3 32.7%. We do have an underlying higher gross margin. We've added lots of content, but it does not reflect what we're gonna see, especially starting from 1 January next year. Perhaps also even in Q4, we will see an uplift. Over the coming quarters, I'm not at all worried about this. Sounds great. Also, I noticed in France that the Toutabo sales were down slightly here. What's driving this? Also if you could just remind us on the offering to the consumers, because through the Readly France platform now, the customers have full access, I suppose, to your full catalog in other languages as well, and vice versa. Is the French content now available across your other geographies? Yes. Hi, Derek. I wanna come back to what I was talking about in the presentation. We obviously have a presence in France already through the acquisition of Toutabo and through the ePresse solution. That has been sort of developing. Our main focus has, of course, been to preparing for what we had done just recently with the technical launch of the Readly product in France. That's a new thing here. The full commercial launch is yet to come. What that means is that, the ePresse solution is still in place and develops, but in parallel, obviously we're ramping up the Readly product. We're approaching close to 500 French titles now, both magazines and newspapers, and this is increasing at a relatively high pace. There will be a dual offering in France for a while. Our efforts, again, will be to really drive the growth within the Readly product. All right. Sounds good. Finally, from my side, you have this very exciting signing of the Svenska Dagbladet in Sweden. I was wondering if you could comment a bit, well, if you could comment on the effects so far on the subs intake and maybe the consumption or engagement in the current base from onboarding this title. Also if you could comment on how your hopes are for adding further quality content over the coming quarters in the Swedish market. Yeah. I mean, it's a major step in the offering on the Swedish market, absolutely. Back to what we were also discussing in the presentation, dailies drive frequency of use. We are pretty excited about that fact. We are entertaining discussions to expand the content also on the Swedish market, but nothing we can go into more detail here. In terms of numbers, there is nothing we can share or want to share at this early stage, but it's been well received, and there's been a lot of attention put to the fact that we added one of the biggest dailies in Sweden. In terms of adding quality content, I think what we've done in the last couple of months with the addition in the U.S. with Hearst and Dotdash Meredith, and not least Disney, that has a big impact in our markets, is demonstrating quite well how we selectively now really go for very strong brands and strong content that has both a local appeal and a global appeal. Local appeal is exemplified with all the regional papers we have added in the U.K. and in Germany. Great. Thanks for that. Those were all my questions. Thank you. Thank you. Our next question comes from the line of Alexander Bottemanne of Premium Invest. Please go ahead. Your line is open. Hello, everybody. Thank you for your presentation, and congratulations to the many positive developments. I wanted to ask you regarding the other sales revenues. The development has been very positive until Q2 this year, and revenues are down in that line of business. I wanted to ask you know, what positions does it entail, and how does it affect the overall margins? So the gross margins. Yeah. Thank you. I think I heard that you were referring to other operating income correctly, if I was wrong, and this mainly refers from other types of revenues from the French acquisition of Toutabo, which is not a digital all-you-can-read. There is a small print business. We have also credit users which are not on the all-you-can-read subscription level, you could say. That's what it comes from to a very large extent. Of course, it impacts gross margin. On the other hand, I mean, our core focus is on the all-you-can-read service. Okay. Thank you very much. That was all from me. Thank you. Do we have any other questions on the line, operator? No. I have no other questions. Thank you. Thank you. Back to operator, please. Perhaps we lost our operator. I think that was all then. Mats, maybe we should say thank you for today. Yes. Shall we give 30 seconds for the operator to have a chance to come back? Yeah. Let's give 30 seconds. Yeah. It could be a technical or it's probably a technical issue of some sort. Apologies for the delay. There is one further question on the line. It's from the line of Rasmus Engberg of Handelsbanken. Please go ahead. Your line is open. Hello? Yes, hello. Rasmus, I believe. Yeah. Hi. Thanks. Hi. A bit, was a bit confusing there. Yeah, I was just wondering, firstly, on a kind of a long, longer-term perspective, when do you think you will be cash flow break even as opposed to EBITDA break even? Well, firstly, I wanna put into the context that we are investing a fair bit into products and tech development because we expect that that will be the key driver as we move into the next year. That of course has an impact on how fast we'll get to a positive EBITDA. Yeah. I agree with Mats. I mean, of course, we don't make that kind of prediction. I mean, our financial target is in EBITDA level. Looking at the past, we've seen a positive working capital situation for us, and that comes from paying publishers. I mean, after subscribers have paid up. We have said that the 2025 mark is for the EBITDA. Maybe that should be some also pretty good indication. Also you are very well aware of the loans that we've had to the venture debt provider. They are coming to an end now within a month or two. That's gonna help slightly as well. Overall, we have a quite pure balance sheet I think. It should go pretty much well in line with the EBIT figures, also considering the working capital. I hope that gives you some flavor even though I cannot make any special predictions. Very good. Thank you. In the short term, you stabilized your full-paying subscribers a bit sooner than I had anticipated. Are they stable now or how do you think about them going forward? Are we on a kind of stable level for now? I think the key message here is that we are confident that we are on the right track with investing so much more in product for the reasons that I just talked about. We're of course humble about that in this market situation, one shouldn't take anything for granted. I wanna reiterate again that given the fact that we have reduced marketing substantially, we have increased prices and the very tough macroeconomic environment, we're actually quite pleased coming out with a stabilized FPS number. Yes. Definitely. Our ambition ahead is of course much higher than being stable. Yeah. Just on the final there, you touched upon the price increases having a gradual impact. For kind of the price increases you have done now, for how long would they sort of impact your ARPU, you think? I mean, given I guess B2B contracts and similar or whatever it is that kind of delays the impact on your ARPU. Yeah. As you say, I mean, the price increases affects the B2C business. I mean, B2C is what we mainly do, even though we also have a B2B business, not least in France. Also partnerships, I mean, FPS coming from partnerships, that's something that is not affected, I mean, in this first stage of the price increases. I think major takeaways are more than 50% of subscribers are on a higher price point. Actually, quite a bit more than that because in-app was already on the higher price point. In-app, we don't touch at this stage. The normal web traffic that has been hit by the higher price point. Overall, the vast majority is now on the higher price point, and it will help us, I mean, going forward, and this will also have a positive effect from Q4 and beyond. I think, again, it's worth reiterating that it's the first time in 10 years we do a price increase. We think there are ways to develop this further. As I mentioned, we're looking at how we can optimize pricing in markets going ahead. Yep. The increases you have done now sort of you will have an effect in the fourth quarter, but will it continue into Q1 and Q2 as well, or how quickly does it impact? Is it sort of done by Q4? Yeah, yeah. Of course, it impacts, I mean Q4 and beyond. Okay. This will help us also in 2023. Great. Very good. Thanks. That was all for me. Thanks. Thank you. Thank you. There are no further questions on the line at this point, so I'll hand back to my speakers for the closing comments. Great. Thank you all for listening. Just to sum up, we are very pleased with the quarter we've just been presenting. Thank you very much. Thank you.