Hello, and welcome to Storytel's quarterly report webcast for the quarter Q2 2021. With me, I have our Storytel's CFO, Sofie Zettergren. Hello. Our Chief Commercial Officer, Ingrid Bojner. Good morning. My name is Jonas Tellander, CEO and Co-founder of Storytel. First of all, as you may have seen before, the clicker doesn't work. Anyway, this morning, we released the Q2 report. What Storytel is about is to make the world a more creative and empathetic place with great stories to be shared and enjoyed by anyone, anytime, anywhere. We are totally committed to this mission and we'll keep living this mission and vision till the end of times, basically. Because we think that stories should be heard, listened to, and should be told, and it's a universal need that we are here to meet. Looking at the hard numbers, the subscriber growth year-on-year is 29% in Q2, and the revenue growth is 19% in Q2. 22% with constant exchange rates, as the Swedish krona has been very strong lately. Some highlights from the report, which we have also released earlier some of this. Streaming sales up 22%. As I said, net turnover, including our books businesses, so we have book publishing businesses in Sweden, Denmark, and Finland, up to SEK 641 million from SEK 554 million in the year ago quarter two. We had an annual shareholders' meeting on May 4th. We signed an agreement to acquire the Finnish publishing house Aula & Company, and we also closed the transaction with acquiring Lind & Company on April 1st. We entered into a partnership where we announced that we will enter into partnership on making Storytel's catalog available on Spotify for Storytel subscribers. That's something we hope to release before the end of the year together with Spotify. Looking at the net add subscribers and looking at the forecast we just gave, basically, if you look at the year-on-year net cumulative net adds, starting on January 1st and ending December 31st each year, you can see that the net adds have been continuously increasing year- by- year from 2017 to 2018 to 2019 to 2020. Although the first six months have looked a little bit worse this year than 2020, we can see now that we have excellent pick-up during the quarter and expect to go above the net add curve from last year. I think that's fundamentally a pretty positive sign that we keep adding more net adds, more subscribers year-over-year. These are the two curves showing basically the Nordic business and the non-Nordic business. The Nordic business is growing at about 15%. The non-Nordic business, which is really where we have had great hopes to find exponential growth, it's not really performing as strongly as we were hoping earlier this year. It's still growing. It's growing at a healthy pace of 40%-50%, but it's not as high as we would've expected it. I hand over to Ingrid to walk us through the markets section. Yes. Very positively, we have passed the 1 million paying subscribers in our Nordic markets. As Jonas explained, continue to add subscribers and customers, and we're happy to deliver a positive service for our customers. When it comes to the outside Nordic, we are continuing to do local product market fit to find adaptation and growth in a healthy way. We have raised our prices both in the Nordics and outside, and also we have actually adjusted prices downwards in our Spanish market earlier this year. Yes. We continue to also launch new types of subscriptions. That's going to be a positive mix for us so that we can elaborate with that. Very positively, we launched the student subscription right before the summer, which we think is good for the student segment. Yes. Consumption is tracking against our subscriber growth. We added about 20% new consumption on our content. Of course, we continue to produce so that we continue to increase our catalog and our offering for our customers. That's up 40% from last Q2 2020. We also continue to invest heavily in interesting content, and we're very happy to announce the collaboration with the Conan Doyle Estate with Sherlock Holmes that's going to be released in the next year. Looking at product, platform, and partnerships, I think we're tracking well on the rating side in Google and on App Store. Approximately as before, the Net Promoter Score also still a strong one, not an outstanding excellent one, but a pretty good one at 32, 31. We also keep adding more payment integrations. Payment alternatives actually vary across the world. There's no global standard for that, so you need to keep adding local versions of payment options. One of this is Checkout.com that we added in the MENA region, which is starting to grow very nicely. We also announced an Apple Watch app where you can listen basically offline to your books in the Apple Watch. As I said before, we're expecting to launch a Spotify partnership by the end of the year. To end up this section, basically, if you look at the people, culture, sustainability part. This is something we've been very focused on for the past three years at least. We have sustainability reports added to our annual report, which I think you should read. What we did most recently is to actually instill a Sustainability Committee, which is linked to the Board of Directors just the same way as the Audit Committee. The purpose of this committee is to oversee Storytel's strategic sustainability work and support the Board in fulfilling its responsibility to specifically address the climate and environmental matters, human rights, labor standards, and anti-corruption practices. More of that in the future. With that, I hand over to Sofie to walk us through the numbers. Yes. Thank you, Jonas. Looking at the streaming top line and profitability, we continue to grow our revenues quarter- by- quarter, amounting to SEK 545 million in Q2 2021. Around SEK 423 million coming from the Nordic segment and SEK 122 million coming from outside of the Nordics. Subscriber base averaged more than 980,000 subscribers in the Nordic segment. As Ingrid mentioned, we surpassed the 1 million mark in the Nordic segment, which is very promising and a big milestone for Storytel. We continue also to have a very high ARPU in the Nordics, up from SEK 140-SEK 143 during the quarter, and also with very high profitability. Contribution margin 30% in the Nordic segment, positively impacted by the acquisition of Lind & Company, but also somewhat offset by increased content cost in some markets compared to the same period prior year. Very stable at 30%. In the non-Nordic segment, subscriber base averaged 643,000 subscribers. ARPU down slightly, but going up again in the Q3 guidance. We continue to have healthy gross margins in the non-Nordic segment as well. Since we increased marketing investments and continue to invest in many markets, the contribution margin is negative at 17%, pretty much in line with Q1. Taking a glance at the Q3 forecast, we expect streaming revenue to come in at SEK 586 million, and the subscriber base at 1,723,000 subscribers with a continued ARPU or similar ARPU as Q2, so SEK 113. If we go to the final slide, given the performance we have seen now in the first half year and also the Q3 guidance that we give this quarter, we revise our forecast for 2021 downwards. We expect streaming revenues to amount to SEK 2.25 billion-SEK 2.3 billion, equaling 20%-22% revenue growth. Although we do expect revenue growth year-on-year to go up in Q4, it will not compensate for the first three quarters. We still think it's very promising that it's going up in Q4. Subscriber base expected to come in at around 2 million subscribers, which is also, of course, a big milestone for us. The reasoning why we think that the year-on-year growth will significantly increase in Q4 is that we are increasing marketing investments in some of our top-performing markets where we see that the unaided awareness is still fairly low and the metrics looks good. We feel confident in increasing those marketing investments in the Nordics and also in Poland and the Netherlands, to name a few. That will have an impact on the EBITDA margin for 2021, given the revenue growth. We revise it to 6%-8% negative EBITDA margin from 0%-5%. Yeah, what else to say here? We could just take a quick glance also at the 2023. The midterm targets. We still see that the audiobook market is growing. It's growing exponentially outside or in the total audiobook market, and we have a very strong position to gain grounds, and we expect our revenue growth to increase in the next coming years. That's why we feel confident that we will still be able to pass 30% revenue growth with the organic growth that we see today. Then, adding new market launches, more partnerships, and also possible M&A. We continue to prioritize growth over profitability, although of course, it is important for us to also show streaming profitability on a local level. That's why we keep the goal to reach that within five years from launch. With that, we will hand over to Q&A session with the analysts. Let us see if there's any questions from the analysts. I see some hands raising from Joachim from DNB. Do you want to go first? Yes, please. Good morning. I hope you both can hear me. Can you perhaps comment a bit here on how we should think about the slightly lower subscriber intake guidance here with relation to the higher marketing spend? How much of the weakness we view described to LATAM and Spain is a function of, call it pandemic pull forward, et cetera, versus a function of sizing competition or saturation for that matter? We think that looking at the LATAM markets, I think looking back one year and what we expected to see from those markets, I think if they had grown as we expected, then we would have added a couple of percent to our overall growth rate. That's not what's happening now. They've been totally flat. We think that a lot is due to the economic conditions, rather than the specific audiobook market or competition is still incredibly immature markets. I think that's on the audiobook side. I think if I try to look back at how we have expanded in the past couple of years, we can still see if we look at the numbers that the Nordics and a couple of more markets have really been the locomotive of driving Storytel's growth. We are investing a lot in catalog and maybe a little bit too much in some markets in marketing, given how long it will take to actually help people understand what the audiobook is about. We're now starting to realize that those markets will take a little bit of time, in particular with the economic turmoil after COVID in the LATAM and Spanish markets. We think that we just have to bide our time and wait until the economic market climate picks up there. Other than that, I think what we're doing now, what Sofie explained, which is basically go into Netherlands, go into Finland, go into Poland, and ensure that we raise our unaided awareness is, I think, really the right way to go. Can see a very strong correlation between the unaided awareness and the penetration levels of 5% that we reached in the Nordic markets. Thank you. Derek, please go ahead. Thank you very much. I was wondering a bit, given the lower growth we've seen this year and some deceleration in subscriber growth in general, specifically in the non-Nordics markets. It seems like you're now referring more to a midterm target up to 2023 of a 30%-35% growth rate, which, if you're being picky, at least, is somewhat below the roughly 35% target you gave at the Capital Markets Day last year. Should we view this as sort of a slight change to the midterm guidance? In general, what's reasonable to expect over the years? If you can give any flavor comments on that would be very helpful. Thanks. If you look at it for the long term, we believe that the audiobook market worldwide will grow from SEK 40 billion to SEK 200 billion until 2030. We should have a 15% share of that at least, which is SEK 30 billion compared to SEK 2 billion today. To get to that, we need to grow at an average of somewhere between 25%-30% annually. If that's going to happen right now, or it's going to happen in a couple of years from now, I think the average for this time period needs to be the 25%-30%. Yes, you're right. We have revised 35%, moved it down a little bit to 30%-35%. I think that's just a way of us saying that, listen, we understand that we're not delivering on our promises right now. If you look at the revenue growth at Storytel has been 20% now for, I think, five quarters. That's no change. The question is just why can't we deliver this increased growth rate that we were expecting and jump from 20% to 30%? We're not seeing that right now. I think that probably we have not the right mix of markets that can contribute to that totally, because we're very heavily tilted towards the Nordic region with 78% of the sales there. We need to add these non-Nordic markets to a greater extent. Which they are going to be that's going to contribute this additional 15% growth? We're not entirely clear on today, but we think that 25% growth end of year is what we can deliver. Until 2023, we should be able to up that a couple of notches to 30% at least with possibly additional markets. Maybe more mature markets, possibly with M&A as well, and also with an intense focus, I think, on partnerships. We don't know what a partnership with a Spotify,or any other big player can entail. But we think that it's a good path to pursue, and we're going to do that. It's very clear. Thanks. Stefan from Pareto, we can't see your picture. But I believe you have a question, right? Yes, absolutely. [audio distortion] The audio is not good. We can't hear you at all. Stefan, we can't hear you. [audio distorton] of the customer. Stefan, we can't hear you. Perhaps if you have a question, Stefan, you can send it in through text. We can't really hear you. Joachim, please go ahead with your next question. Thank you for that, Sofie. I think that with regard to your 2021 revised guidance, as I understand, it's fully organic. It does not include what the potential upside you might see from the Spotify partnership or M&A for that matter. On the medium-term target, is that also entirely organic or does that entail more strategic investments or for that matter, also M&A. In order to deliver on the 30%-35% growth rates, can you talk a bit about what the investment needs to be taken to achieve that as opposed to what you have done already through the past couple of quarters? Yeah. Looking at M&A, as you say, we haven't done any streaming M&As that are adding significant additions to our streaming revenue growth. If we were to do one that would add maybe, I don't know, SEK 100 million, SEK 200 million to our top line. That would be a one-off effect and wouldn't help us in the following years. I think what we have done, I think that's what Sofie explained, is to really go through our allocation on marketing investments and ensure now that we allocate those to the markets where we feel that we have best payoff in the near term, and where we have possibly under-invested historically. Those are a couple of our, basically our top eight, top nine markets, where we now see that we should intensify our focus because these markets are nowhere mature yet. There's still a lot of room for growth. On the partnership side, we have some local partnerships in different markets. I think we are now in a position in the audiobook world where we can go out and find a good, interesting agreement where we can work with some of the bigger players, either on the telco side or on the streaming side, or in other ways. I think that's what we're now realizing we should have done this a lot earlier, and now we're going to be very aggressive on that front as well. Well, big things follow. Thank you. Let's do every other question, I guess. Derek, do you have another question? Absolutely. Thank you. Just to continue on the path here, I think that given the estimate now for the third quarter and also the lowered guidance for the full year, this still implies clearly a rather hefty acceleration in the fourth quarter. Could you comment a bit on which markets you expect will contribute here, and also why this increase or acceleration will come at this particular point in time? Is it about marketing investments that you're putting in now in the third quarter and also the upcoming in Q4? Are there also other parameters here in terms of the timing? Great question. Ingrid will respond to that. Thank you. Yes, I think we will see basically two effects. One of them is our year-long investments in new subscription models to really be much better at the local product-market fit. We have so far enjoyed a very loyal subscriber base in many of the newer markets that are the first curve or the first movers, basically in the consumer segments in audiobooks. I think with the Light product that we have launched, as well as the Select product, we have now an opportunity also to reach much wider audience. That's why we feel more secure that the Q4 will take off. I think especially we can mention a couple of countries like Turkey, India, and continuously good efforts in Russia. The second one is, of course, the marketing investment, which is also something that this year looks worse on the EBITDA side. We do quite a lot of large investments in countries where we feel that we have good traction, but maybe we have diverted our marketing efforts to every country rather to the countries where it would bear most fruit. Talking about what Sofie said about continuous investments in the Nordics and especially Northern Europe. Thank you. Joachim, please go ahead. Thank you. Perhaps coming back to the Nordic markets, which is obviously despite having reached a quite or not perhaps mature, but a maturer state, but still being able to grow at a quite attractive level. What you have seen in the past couple of quarters, if anything, is a slight contraction on the contribution margin side, although you have initiated some price increases, which I would have thought would have come down greatly on the contribution profit side. Can you talk a bit about what is driving the incremental margin here in the Nordics, if it's competition or if anything? Thank you. Yeah. I can answer that question. What we have seen, as Ingrid showed in one of the slides, is that the consumption continued to increase. It increased quite hefty in Q1. We can't comment on specific agreements, but we have seen that the content cost in some of the Nordic markets have increased in Q1 and Q2 compared to the same quarter last year. We expect, of course, to come back to the levels where we were in 2020. Then we saw, as I said, a positive effect also from Lind & Company, which came into the group 1st of April. We continue to have a good internal share of consumption, which is an important metric for us. Then, of course, we have four out of five markets being profitable in the Nordic segment. We have Finland, which is still on the path to reach profitability. They have a lower contribution margin, of course, given the marketing investments. That also has an effect on the total contribution margin in the Nordics. Understood. Just to follow up on that, can you talk about what is driving the slightly higher content cost in Norway and Finland? Is this a function of higher royalties or renegotiate the royalty agreements? What can we expect here for the coming, say, year? Yeah. As the audiobook market matures, of course, the different incumbents and ourselves are having discussions on what reasonable levels of payments can be. We had this situation in Sweden a couple of years ago with Bonnier, where we had the conflict basically for a couple of months, then we solved it. I think that we have ongoing discussions like this on a couple of the markets where the audiobook market starts to become interesting as an alternative to the physical book market. Therefore, temporarily, I think that these worsened margins can happen. Yes, it's content cost right now. We're just working to find a good balance there. Roger that. Derek, please go ahead. Thank you. I had a question on, I think it was during this quarter here, the publishing house Egmont bought Bonnier's share of Cappelen Damm, which you basically co-own the Storytel Norway business with. We've also seen Bonnier acquiring a majority, I think it was, in the Strawberry Publishing company. I was wondering, what's your view on this and sort of the dynamics of, I guess, the Norwegian audiobook market going forward in light of this? Is this in any way affecting your ability to acquire content such as Strawberry, which I assume have some pretty attractive content in the country? Good question, Derek. Storytel's market position in Norway is very strong. We have a very high market share there and keep growing. Looks like we'll have an amazing summer there. We also raised prices recently. Basically, looking at the content side of things, we have a joint venture with Cappelen Damm, which is the by far biggest Norwegian book publishing house with, I think, a 40% market share. We've had that since seven years back. It's a great collaboration, where we've been equally interested in investing in the audiobook market. They are producing the content, basically. We're providing the platform and the service, and are working jointly on the board. I think that what changes now is that the ownership of Cappelen Damm changes from being both Bonnier and Egmont 50/50 to being only Egmont now. It's not something that directly affects the collaboration there. We just need to ensure that we have a good working mode on the Board there. Then, also are well connected, of course, and talk to Egmont's management team and have a shared view of the future. Yeah. Since we don't do any books more or less in Norway, it doesn't really affect us as such. Gotcha. Thank you. Yes, Joachim, please go ahead. Yes. Can you say anything more? It's been a couple of months now since you first presented or announced the partnership here with Spotify. Is there any more incremental information that you can provide? I fully understand that, okay, you can't perhaps elaborate too much on the economic details of the arrangement. How this will really allow you to fuel growth, perhaps even above the targeted midterm growth rates here. Is this to be seen as a way for you to drive or accelerate growth at a very, say, low subscription acquisition cost? Perhaps if there's anything more to it that you want to delve further into. You can think of it as, I think Spotify's vision with their open platform is to become what I think they call it a singular audio platform. Basically, I think you can view it as an, I don't know, App Store for audio or a Google for audio. That we will have a place there. Hopefully a prominent place with a good collaboration, but that's too soon to say. The target is still to announce or to release this to customers by the end of the year. The focus is entirely on making sure that we have a great user experience in terms of discovering the content on Spotify and then feeling attracted enough to start listening to the content and using a Storytel subscription or signing up for a Storytel subscription to do it. In terms of when we could expect any further details on this? You mentioned that, okay, later this year. But is that more tilted towards the Q4? Is there anything in terms of when this open access platform, with you on it, will actually launch? Yeah, I think the teams are working towards a deadline sometimes in Q4, but can't be more specific than that. Thank you. Derek, do you have another question? I do. I have a question on, I think it seems like you've been a bit more active with the price adjustments or rather price increases in your different markets of late. I was wondering if you'd just give a general idea of the different rationales behind this, if it's a better catalog or a loyal customer base or what it might be? Yeah, just that and sort of the outcome and effects of this so far would be really interesting to hear. Thanks. I can start and then Ingrid can fill in. Basically, yes, we have seen over the years that as we keep investing in a much, much better service and content catalog, we see that people get improved access to very strong audiobooks and are more than willing to pay for that. You have to compare to the rest of the book market, where books are typically priced even higher. In the Nordic region, I think there's a big appetite for great stories written by amazing authors. What we do is just to ensure that, I think that's priced adequately, and we can see that from the churn numbers and the loyalty that typically entails our price increases that this is the right thing to do. It's good for the author community, it's good for the publisher community, and the customer gets a very good experience and good value for money. I think we can maybe complement with the fact that we also have adopted our subscription models. So that in some of the markets, we also launch a Light product, which is consumption up to a specific figure of number of hours. That ensures that the people who are just new to the service or are not such a high-consuming segment yet can still enjoy the service at a reasonable price. That's how we elaborate also with that in those markets that we try to increase the prices and to ensure exactly what Jonas said, a healthy contribution to the publishing market and, of course, the authors and creators. Sounds good. Okay, Joachim, back to you. Yes, just the final one for me. When it comes to the Free tier or the recently launched offering in Brazil, obviously it's you comment here that, okay, the subscriber or the number of customers that have enrolled is quite sizable, to say the least, but still there have been slight slow conversion here. The numbers you mentioned in conjunction with the Q1 results were slightly more encouraging than your commentary as of now. Since you are talking about elaborating this tier also in other markets, perhaps what do you need to be seen to get further confidence in this model? When would you perhaps believe it is fair to actually start including these subscribers in your subscriber numbers for Storytel Group? Yeah, thank you. Good that you pointed that out in terms of how the subscriber of the free product is going in Brazil. What we have done is really to launch in a very immature audiobook industry in Brazil. Together with the publishing community, we have actually launched a product that would entail that people would find this product and start listening to books. It's been quite interesting to see how the free community have listened to different audiobooks in relation to our paid subscriber base. The consumption is quite different, actually. Our Free subscribers are finding content which are much more well-known and kind of old stories, whereas the community that are paying for the service is finding much more newer content. I think what we're doing here is really to try to understand how these different subscriber bases or consumer bases are functioning and how they use the service, how they interact with us. Of course, what we need to see is that people will find also the newer content and be willing to pay for it. This is what we will continue to elaborate with, together with our Brazilian team. Possibly also launch it in maybe one more pilot market to see how that could add to the flavor or bouquet of different subscription services that we have, or models. Thank you, Ingrid. Okay, Derek, did you have a final question perhaps? Yeah, I have a final one and it was just on the sort of marketing activity currently and for the upcoming quarter. You mentioned, was it Poland and Netherlands? There are more markets that you would be heavily tilted against. Also if you could say something about how much of this spend is related to a more general brand awareness, and h ow much is more of a sort of direct conversion character? Thank you. Thank you. Over the year, we've actually worked very closely with our online partners in terms of marketing efforts to implement the Center of Excellence for performance marketing. I think that has sort of tilted our efforts a little bit more against the performance marketing bouquet of marketing. Of course, that needs to be a balance between the performance marketing versus brand building. What we have in the plans now is to refocus a little bit of those effort or strengthening the efforts to also continuously build the brand long term, because we see that that's important. People know about audiobooks. They know about Storytel. We also have been increasingly focused on talking about the content in our performance marketing, whereas maybe we also need to divert some of the investments to build the continuous Storytel brand to help the unaided awareness. Thank you. Good. Thank you so much for tuning in. This, of course, has been a hard webcast for us. We're not super happy ourselves that we can't meet the future guidance that we set up before. On the positive note, we are performing as we have been in the past. We actually think that the Q4 performance will increase from 20% to 25% top- line growth. That's our target, at least. We haven't added any M&A and frankly in our 35% long-term guidance. Of course, M&A is a part of that equation and could possibly come up going forward. We do look at the business now and see how can we create some short to midterm growth, and not only have a focus on these very long-term immature audiobook markets. There needs to be a balance, and our target is to ensure that that balance results in a 30%-35% top- line growth. Thank you for tuning in, and till next time.