Welcome to the Rugvista Q2 2023 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now, I will hand the conference over to the speakers. CEO Michael Lindskog and CFO Joakim Tuvner, please go ahead. Good morning, and welcome to our Q2 2023 earnings call. Hope everybody is having a great morning. It's myself, Michael, and Joakim here, as the speaker mentioned. We will start off as usual with a bit of a highlight for the quarter and the business updates to later on, go into the financial details, as well as a Q&A session. Let me kick it off, just some highlights for this past quarter, so Q2. I think we are very pleased, or we are very pleased to report that we continue to maintain a good profitability level. We have, during the quarter, also seen signs of increased consumer demand, which is promising, considering 5 very tough quarters on that area. For the profitability, I think us moving from essentially break even on EBIT last year to almost SEK 12 million this year is a great achievement, and that also represents an EBIT margin of about 9%, which is a significant improvement. Our net revenue in SEK increased to SEK 129 million, which represents about 6.5% increase versus last year. That was of course, partly driven by the by the currency effect, as, as net organic net revenue was at minus 1.5. We do see that the implementation and execution of our strategic initiatives are impactful. In terms of of growth, or growing consumer demand, I think we, we see that in some markets. It's definitely not a a sort of picture we-we're seeing across all markets, but there are some signs during the quarter that, that consumer demand is at least starting to recoup. As we've mentioned before, we continue to focus on cost efficiency, both on us, the major variable cost items in terms of gross, which impacts gross margin, and also our marketing efficiency, of course, where we saw a year-over-year improvements in both areas. We continue to maintain a very healthy financial position, both from a net cash perspective, as well as an inventory perspective. We also, and that's also after our dividend payout during the quarter. Finally, spoke earlier about the positive impact from the strategic initiatives. I'm very happy that our investment into improving the outdoor assortment, of course, paid off. We took or released rather, the new e-com platform we've been developing into 7 markets during Q2. Those markets also represent a, a, a significant share of our, our ongoing sales or total sales. Of course, we continue to maintain a, a very high customer satisfaction level. If we m-move into the business updates a little bit in detail, I think number 1, after like I said, 5 tough, challenging quarters, we are seeing growth in some of our strategic KPIs that are related to growth, both in terms of of order, orders, orders, number of orders, as well as the count of new customers that we've been able to acquire. Then, I think that's good, but should still be seen in light of the fact that consumer confidence is at low levels, although improving. As you can see here on, on the, on the chart we've used, we are starting to see that across some of our key markets, still at low levels, but slightly improving throughout the year. Moving over to our, our e-com platform, as you know, it's, it's really, three major components that we've been developing. Number one, the, of course, the new front end or the webshop that, that you as a end user would see. The, the second major component is what we call the content management system, which is where we publish and host all of the, all of the content essentially that you see on site. Then, of course, a, a new modern API layer, and which connects to our existing backend services. The, the platform is, is now live on the, on the markets you, you see on the chart. Of course, very important markets for us, both Germany, Sweden, UK, as, for instance, as well as France and Italy. So, major markets are now on the new platform. Of course, I think it's important to keep in mind, what the platform is expected to deliver for us, which is, of course, some of the basics in terms of improved load speed and all of the technical areas, and but also a, developed with a mobile-first user experience in mind. It's a platform that will enable us to localize content and other areas to a much larger degree, moving forward. It's also built to host and publish content, which, of course, in addition to indexation, which is all areas of SEO optimization. Then it's also, of course, a lot more modern and built for easy maintenance and further development. Moving forward, the plan is to continue to add features after, of course, we move the rest, the rest of the Rugvista business to the new platform, which is expected to happen during this quarter 3 of this year, of course. A little bit of a highlight in terms of our outdoor assortment. We showed last last quarter that we about doubled the doubled the selection within the within the subarea or subcategory, and we more than more than doubled the sales in that area. What we're seeing here is the share of, of total rugs sold from from from the outdoor subcategory, and it increased by about 150% or 1.5x versus versus last year. With that in mind, I'll leave it over to, to you, Joakim, to take us through some of the deeper financials. Thank you, Michael. Overall for the quarter, our focus has been, apart from what Michael mentioned in driving and implementing our strategic initiatives, to deliver an improved bottom line. This is also what our numbers show. We improved our profitability substantially, although comparables were quite low. If we start on this slide, with the top line, our net revenue is up 6.5%. We have a strong tailwind from the depreciation of the Swedish krona. We are retracting 1.5% when we exclude the positive currency effect. As Michael mentioned, we saw an increasing demand as the quarter progressed and signs of continued increasing demand into July. For the business units, to the left in the slide, our largest business unit, B2C, is up 4.1%. Marketplace is another, which is mainly Amazon, is down 9.9%. B2B continue to perform well. Sales is up 26.9%. In quarter one, we mentioned specific customer types performing well, but in quarter two, we are growing across most customer types in these segments. In the table to the right, you can see the regional development in our B2C segment. DACH is performing as a business unit as a whole with a 4.2% increase. The Nordics is performing better, growing 6%, and also in light that this region has less currency impact with, of course, the Swedish market, but also the Norwegian weak krona, it has a better performance. The Rest of world, where the major part is rest of Europe, we are performing slightly below the B2C business unit. Moving on to gross margins. We have a good improvement of our gross margin versus a low comparable prior year. We improved 3.5 percentage points, and the main factors contributing to the increase are the price increase of previous year in Q3, the lower discounts in this quarter this year, a positive category mix, and also in the short term, the depreciation, depreciation of the Swedish krona. If you go to the segments, the margin increases in all segments, and the main driving factor is, of course, the price increase of Q3 of last year. Marketplace is another, with a small increase of 0.2 versus last year. Here, demand is focused on lower price points, which gives a higher cost in percentage terms for the freight. The B2B segment has a 0.4% increase versus last year. Here the customer mix increases more for the customers, which have a higher discount rate compared to prior year. B2C has a 3.8 percentage points difference versus last year. The main drivers are the same as for the whole, as this segment is so big. The price increase of quarter three, the lower discounts, the improved category mix, and the depreciation of the Swedish krona. Moving on to the big picture. From a profitability point of view, we have improved on more or less every line item we see here. I just spoke about the margin variances versus last year. The same explanations apply to the top line here, the goods for resale, 3.7 percentage point improvement versus last year. Bear in mind that the goods for resale percentage is not exactly 100% minus the gross margin, as the other income is included in the gross profit as well. In other external expenses, we have improved 1.8 percentage points. This is due to our focus on marketing efficiency, resulting in lower marketing costs. Personnel expenses are down from a high comparable in last year. We had one-off costs that were incurred relating to changes in personnel. In total, that's improvement of 2.5 percentage points versus prior year. In other operating expenses, we record the foreign currency effects on transactions and from the revaluation of assets and liabilities that we carry in foreign currency. This effect is positive this quarter versus negative in last year, and hence sums up to a 1.0 percentage points improvement. Depreciation and amortization is flat versus prior year. The bottom line is we reach an EBIT margin of 9.1%, a substantial improvement, and year to date, we are at 12.1%, close to 5 percentage points for the full year to date as an improvement. This is, as you can see, driven by our improved gross margin, improved marketing efficiency, and lower costs for personnel. Moving on to the balance sheet, starting with our biggest item there, the inventory. This is almost flat, a minor decrease versus the year-end and a minor increase versus the Q1 close. Here, during the Q2, we introduced a Never Out of Stock program for our top sellers, and this added up some inventory. We still have a target that you see in the right to the picture, to reduce our inventory to the interval 17.5%-22.5% of the rolling 12-month sales. We don't want to put too much urgency into reaching that, but we want to be ready when we are back to our growth targets and the peak season that we have ahead. We see our growth targets as more important than to optimize in the short term our inventory. We have the cash balance, we have the cash, we have a balance sheet to sustain that, and we generally see very little risk in our inventory, which we also have proven in the past. Last but not least, to cash flow and cash. Cash flow from operating activities was strengthened by the increased earnings, an EBITDA of SEK 14.8 million versus the prior year, SEK 3.3. The working capital changes were less than prior year, and the cash flow from operating activities ended up at -SEK 4.4 million. There are several working capital changes, but the major one is the decrease of the operating liabilities, which includes the VAT payable, and that drove the main increase of working capital. Cash flow from investing activities is as before, mainly the investment in our new e-commerce platform, and that is on par with prior year. Net cash position at the end of Q2 happens to be at the same as prior year. It is down SEK 30 million since the year-end. Of course, a lot happened since then. Now in, on the first of June, we paid a dividend of SEK 31 million to our shareholders. Cash at the end of the period, you can't see that in this picture, but in the report it was SEK 104 million, compared to SEK 111 million prior year. All in all, we have a strong balance sheet, no interest-bearing debt to financial institution, and a good cash position. With that, I hand over the word to Michael to conclude before the Q&A. Thank you. So, so summary and a little bit of an outlook. I, I think the, you know, the key message we, we wanna convey here and, which we definitely believe in, is that we are very well positioned to continue to successfully navigate the current climate and then, of course, the rest of the year. We have performed from a financial perspective, quite well, so far this year and also especially, during Q2 compared to Q2 of last year with growth in our net revenue, so 6.5%, and a significant improvement in profitability, with SEK 12 million in EBIT during Q2, compared to essentially break even last year. That has, like we mentioned, been driven by the improvements across all of the different line items. We are also encouraged that we have started to see some slight improvements in the consumer demand in addition to the positive effect of our strategic initiatives that we have been working on. In terms of financial position, of course, very healthy balance sheet and inventory. We are well positioned to continue our efforts and rest of year, both from giving us flexibility across across all areas of the sort of commercial toolbox.... I'm also looking forward to the rest of the year, of course, where we have number one, implementation of additional strategic initiatives, further improvements into, into in our assortment, of course, but here near term is the new e-com platform that we'll be rolling out to the rest of the Rugvista sites. If you've happened to visit some of our sites during the last couple of days, we are also now actually live in Holland, Belgium, and Ireland on the new platform. That happened yesterday. That also is positive, so we're progressing on that. Then, of course, we in July, which of course, is after this this report's reporting period or, or close closing date, we did achieve organic net revenue growth, which which is which is promising. Keep in mind that the overall outlook for, for the fall is from a macroeconomic perspective, is still uncertain. July is typically the the smallest month within Q3 for us. Total demand typically increases towards the end of end of the quarter, but but at least a good a good early start to Q3. And with that being said, our focus right now, be it besides the strategic initiatives, is, of course, getting ready for for this year's peak season with with several improvements to our overall customer value proposition, and our commercial activity plan. With that being said, we open it up for questions. If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Benjamin Wahlstedt from ABG Sundal Collier. Please go ahead. Good morning, Michael and Joakim. Congratulations on a strong quarter. A couple of questions from me. First, relating to the new websites. You note that initial KPIs are promising for the converted websites. Could you give a, give a teaser or, or say something on, on, like, the kind of KPIs you're referring to here, please? Especially the engagement KPIs, and especially on the mobile side, I would say. Where we're seeing that people are engaging with our products, with the content that we have already and the various navigational features. That, of course, is resulting in some, let's say, lower bounce rate as one specific KPI. Perfect. Thank you. I note also the conversion rates, continues to get better, 0.94% in this quarter. Is this driven by the new website as well, or is it still, like, too early to tell or to make an impact, please? It's still a bit early, of course, as, as, traffic mix, plays a big poor part in, in the conversion rate and pricing and all of the, the other, elements, of, of the sort of overall consumer experience. The site, of course, is intended to make it easier for our users to find what they're looking for. Of course, as we do feel that we have a very appropriate and comprehensive selection of products across most different product types, we do expect that the conversion rate over time should increase if people are able to easier find what they're looking for. Thank you. To follow on, on marketing there, you previously mentioned that platform revamps or website revamps might mean that you have, like, a stronger... They have to lean, lean more strongly on, on paid traffic. Could you perhaps give us some idea of what these website revamps might mean in terms of added paid traffic costs or, or, or, or anything on that topic really, would be interesting to hear as well? Thank you. Yeah, I mean, with the, with the release of any major, new tech product, there will always be some challenges in the, in, in the early phases and so forth. Then, of course, during quarter two, as those who... Most of you who follow e-commerce are aware that Universal, Google Universal Analytics was discontinued, and then the new tracking software, GA4 or Google Analytics 4, was introduced. That's also something that we, of course, impacted us and something we had to deal with during the quarter and so forth. I think in, in terms of, you know, ex- explicit things that has the potential to, to short-term negatively impact us when the domain is released, you know, includes certain things related to the to paid marketing and also some of the the indexation might not be up and running. There's always those type of things when, when it comes to a completely new URL structure, there's there's many and many things that needs to be changed from the sort of, yeah, old versus new, so to speak. Most of the times, those things go well, but, but, but sometimes, of course, there's, there are things that, that are a bit extra challenging and, and things that will, need to be fixed, and, of course, takes, takes attention and, has, has the potential to, to negatively impact the, the business, on a slight-- on a minor degree, of course, overall. But, that's, some of the challenges, one has to deal with. Yep. one, one final question from me. You mentioned that you see organic growth in July. Yeah. Are there any significant differences between between Q3 months in 2022 to take into account here? Are like comparable growth figures similar for all three months of the quarter, or how should we think about that, please? It's always a little bit difficult, I mean, because 2022 was versus 2021, which was, you know, a bit abnormal as, as well, right? Yep. With all of those things, weather has a tendency of during the summer period, have a lot slightly larger impact on retail, on retail sales in general and of course, to certainly us as well. What one can say is that during Q3, what we historically have typically seen is that the, you know, August is slightly bigger than July, September bigger than August. Yep. Perfect. Thank you. Those were all my questions for now. Thank you. The next question comes from Immanuel Janssen from Danske Bank. Please go ahead. Hey, good morning, Mikael and Joakim. Thank you for taking my, my questions here. Absolutely, I think we can start off with, looking at the, the, the growth within the B2C segment, where you're seeing growth in both in, in the DACH region and, and in, in, in Nordics. Is this the same pattern you have seen also in July within growth within these two areas, or, have you seen any pickup in any specific region as of lately? We'll, we'll, we'll comment on, on, on that potentially when we pre-present our, our Q4 in terms of the different, or Q3 rather, in, in terms of the different regions. Overall, I, I think what we can say is that in general, consumer demand is starting to recoup. We were able to achieve organic and net revenue growth during the month of July. Quarter three started off well. Yeah. Okay, fair enough. Thank you. Could you maybe give us, give, give us some flavor on, I mean, you have implemented, of course, some new, some new products to the assortments and also put in more effort in, into the outdoor segment, for example. Could you maybe give us some, some flavor of, of, of consumer behavior and what have, what has changed from a year ago when, when it comes to consumer behavior? What have, what have you seen so far? I think the, and if we start maybe with outdoor, of course, which is a very important subcategory during the summer months and an area where we have not historically had a sufficient assortment, undoubtedly. We for this season put in a significant effort in terms of improving that, both from a selection perspective, as well as, as driving traffic to those area or those seg to those product types. Overall, very successful. We have now, or we this year, were able to, to capture a significantly larger portion of, of that natural demand that exists for that type of product. category we put effort into, which is bath mats. There we also saw some promising early results during the quarter. It's still a very small area for us, but one that we a little bit more on the midterm see can be a good starting product for those consumers who don't know us and are a little bit potentially afraid to spend, let's say, 300-400 EUR on a first purchase and instead are able to spend 30, 40, 50 EUR and thereby having a good experience And we are establishing a customer relation, which we can, of course, leverage during, yeah, moving forward, so to speak. But overall, of course, like we've spoken about a little bit over the past year or so, that we are seeing a slight downward pressure in terms of consumer spending power, which was, which impacts our category mix and within the different sub areas, people have a tendency of seeking slightly low-lower price points to a certain degree. That's also why why the Rugvista Essentials collection or sub-brand has been a very important area of our assortment during the past year. Perfect. Thank you, Michael. That's, that's very clear. Just moving slightly ahead to the for the Q3 season here, and you're, you're stating that you are aiming to implement at least the the rest of the domains with the with the new e-commerce platforms. Can you maybe give us some flavor on what, what the main risks are here for, for the upcoming Q3 results? Is it related, as you mentioned, to increased costs for, for paid marketing, or how, how should we view, like, the main risk with implementing the, the rest of the, the, the rest of the e-commerce platforms to the new domains? Yeah, and. The rest of the domains. Yeah, understood. I think first first week or so, there, there's always a little bit of a risk that the the paid the paid channels go into or the campaigns go into a little bit of a learning phase, which in the, with the algorithms, which of of course, typically means that the the marketing spend efficiency during the during the learning phase is is slightly lower. So, so that I would say would be from that area, the the main risk. I I think keeping in mind, though, we we are live on on seven domains already. Those domain- domains, of course, had a priority order, and, and let's assume that that priority order was based on importance for us. So we are already on a a bulk of the the significant portion of the Rugvista business on the new platform, and during the summer, have gone through the the learning period for those for those domains. Okay, perfect. Thank you. That's very clear. Maybe a last question from my side. Can, Can, can you give us some saying on, on market shares in, within the different regions? You, you're growing in, in, for example, in, in Belgium and also in the Nordics. Are you, are you maintaining market share or gaining or how should we view it? Like we've said before, I think it's very difficult, since the to give a very certain answer to that question, as the data transparency within our categories is very limited. What we can see, of course, is some indications from our partners in terms of total category volume, et cetera, on on sort of consumer interest within our our sub product type. From those indications, I would argue that we are overall maintaining a good market share position. Okay, perfect. Thank you very much, Michael. That was all from me for now. Thank you. As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Rebecka Gustafsson from Carnegie Investment Bank. Please go ahead. Hi, good morning, Michael and Joachim. Thank you for taking my questions. I would just like to, to follow up a little bit on the conversion rate question here earlier. You, you wrote in the report that the website visits decreased by some 19% during the quarter, but at the same time, both number of orders and also number of new customers improving quite, quite significantly. This even though you've worked with the, the cost efficiency on the marketing side, should we think of this as an effect primarily related to the platform rollout, or are there any other explanatory factors right now that, that you see that could explain these figures? Absolutely. If we, if we talk about Q2 platform, of course, impacts to a certain degree for those markets which has the new platform. Also the other main thing to keep in mind is the traffic mix. Not so much paid versus unpaid or earned, but within the paid area, we have throughout the last last year done with the focus on cost efficiency, of course, a part of what that means is reducing or eliminating spend in in-off some channels, which on a, let's say, a CPC level, might be relatively inexpensive, but results in a very, very low conversion rate. Of course, thereby being very in not being efficient overall. Throughout the year, we've or the past 12 months, we've been reducing or eliminating in that type of spend, and that's also part of the reason why we're seeing improvements in the conversion rate. Okay, perfect. And also a question on the strong growth in the B2B segment. How come it's so much higher than the B2C in the quarter, would you think? Also, it would be interesting to just hear your view, looking a few years ahead, do you think that the B2B segment over the longer term would, would, yeah, do you expect it to grow as a share of the group over time, please? Yeah. I mean, it's still a relatively small portion of our business, but... It has been performing well. If we think of Q2, Q2 last year, that, I mean, that was right after the macroeconomic and geopolitical unrest, that, that started to emerge during the end of Q1. It affected the different business units a little bit differently, of course, and also throughout 2022, to be fair. I think explicitly what we have been doing to drive our B2B area is more focused approach in terms of who we are trying to reach. We've improved our overall customer proposition for that customer type, and those, and then put in a little bit of extra personnel resources. So those efforts are paying off on the mid to long term or beyond. Of course, in many product categories, B2C and B2B are of similar size. So of course, there's a lot of potential within the B2B space. If one had, those product types, which were, ideal for a B2B customer in terms of public spaces, et cetera, then that hasn't, been, historically our focus, but, but of course, we continue to evaluate opportunities, and if we see that we can, deliver something that, is, is better than what's out there, today, we, a lot of times will, will try to do that. Perfect. Sounds good. Thank you so much. I think I'll stop there. If I can run. Thank you. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions. We have two written questions. One second here. The first question relates to most positive and negative portion of the new e-com platform on a daily basis. I think, I think the positive is, is internally, of course, we, we, we see that the new platform for our, our, our, our users is a great improvement for the user experience, the ability to browse our assortment and also be inspired by a significantly better content experience. That all of those areas are still very much in sort of in the, in the, in the starting phase, of course, in terms of our ambition level. The overall project is, of course, something that many different functions internally have worked on. Seeing that, all of that work over the past couple of years starting to come to fruition, fruition is of course, satisfying. Then in terms of a potential negative, I mean, it, I wouldn't call it necessarily negative, but of course, it is extra work that needs to be done for across many different functions in terms of preparing the release of the new platforms. So, we're all working hard, I guess, is the short story. Shall I read out or? Yeah, second, all right, just the second question relates to benefits in shipping costs from the new platform and whether that is already seen in our operational, Yeah, day-to-day operations as well as financial numbers. I think the short story is, is yes. There's still a fair amount of of work remaining in terms of optimizing our costs for deliveries to and from customers, but the Ingrid platform is definitely a very strong enabler for that ongoing effort. Shall I read out the question maybe? Mm-hmm. The second question from Axel here is, "Has the switch from Google Universal Analytics to GA4 had any effects to your KPIs? The conversion rate and number of orders from visits, it seems to have increased significantly in Q2 against previous highs. What is driving this?" That's the first. For Q2 numbers, which are captured based on the Google tracking infrastructure, which of course is session count, that is during Q2 still based on Universal. We for Q3 and moving forward, we'll have that KPI based on the GA4 count of a session and user. So far, in our financial reporting, it hasn't had an impact. The, like we mentioned, before in terms of the, the conversion rate, that-that's more a, optimization of, of traffic mix and of course, a, those, those, those domains with the new platform has had a, a better user experience, during part of the quarter as well. Axel had a second question, but that was also asked by Benjamin. The last question we have here, it's in Swedish, so has the change from Google Universal Analytics to GA4 had any effects on your KPI, on the conversion rate, number of orders, number of visits, et cetera, compared to prior year? Is that driven by the new platform? And, and, and again, the, the answer for, for Q2, the, the answer on, on that, in general would be that the switch from GA Universal to GA4 has, has had no impact on our reported numbers. The... It's a traffic mix, which is driving the, the conversion rate increase, in addition to, to, of course, trying to send traffic to, to better land entry pages, and other things that is part of, of cost optimization. And, and then, of course, the, the new platform being available to some of the customers during part of the quarter. I think the potential in the platform is from a technical perspective already proven, I would argue, but it's still very, very immature in terms of many of the features that are currently live. Improving and building on this platform, it will be something we do over the next couple of years, for sure. It is version 1.0, and we're coming from a platform that, you know, has supported our business for 5+ years, at least. Expecting from, that we will from day one get to, exactly the same level of maturity, on the new platform, of course, is not realistic. Good. The last question here is, you mentioned promising KPIs, around the new platform. I think we or you replied to that from Benjamin's questions, right? Yeah. Priorities moving forward in terms of the development, we mentioned, of course, in the report a little bit around the, or in the materials we produced a little bit around the checkout. The current checkout phase of the user experience is still on the old platform. We're iframe it in this, kind of the short, easy explanation, in terms of how it is on the new. Yeah, on those domains that actually have the new platform. The checkout step is still based on the old infrastructure. That the checkout completion rate is typically a KPI that one works with within e-commerce, which is an extremely important KPI. And of course, we, we intend to, intend, intent with the, with the new, checkout is, of course, to, to improve that, checkout completion rate, through, through various means. That was, the final question. Excellent. Unless there is anything else, we would like to thank for everyone's attention, the continued support from, from all of our shareholders and, and of course, from, from myself. Thanks to, to the team, for, for all of the, the hard work that we continuously do, and then as lays the foundation for us, being able to, to execute on now on everything that we do. Wish everybody a great continued day, hopefully we'll see you back for our next earnings call. Thank you.