Welcome to webcast for Storytel's interim report January to September 2021. My name is Jonas Tellander, CEO and Founder of Storytel, and on my side I have- Sofie Zettergren, CFO at Storytel. Yes. Let's get started, jump into the highlights from the report. streaming sales up 19% in the quarter, Q3, year-on-year, with 20% with constant exchange rates. Subscriber base up 27%, a bit more. I think the best news of the quarter is Storytel book sales up 20% year-on-year and partly driven by the acquisition of Lind & Co, but also organic growth. The EBIT margin is 25% in the quarter, up from 16% a year ago. If you add this up, you arrive at the SEK 714 million net turnover in the quarter, which is 17.3% increase. We have a new Chairman in Stefan Blom, former Chief Content Officer and Strategy Officer at Spotify, who joined the board a year ago and now stepped into the chairman's shoes. We also have Joakim Rubin from EQT, who has now a, I think about 10% holding in Storytel, a new Director of the Board. It's a high-geared board that is ready to meet the future and create the future in the audiobook space. If you look at our net add subscribers year-over-year, we can see that since 2017, we've been able to increase the net add subscribers every single year. This year, we will not succeed with that, but we will not be much worse than 2020. Pretty much on par with 2020 net add subscribers. This is obviously below our expectation. Just wanted to show this slide to kind of demonstrate that we're not in a crisis mode. It's just that growth is a little bit slower than anticipated, but the same as last year. With that, I hand over to Sofie to walk us through the numbers in the report. Yes. As usual, we deep dive a little bit into the Streaming segment. Looking at the streaming revenue, we grow with around SEK 40 million from Q2, up to SEK 583 million in the quarter, SEK 447 million coming from the Nordic segment and SEK 136 million coming from the Non-Nordic segment. Average pay base is above 1.7 million. Looking at our Nordic segment, we continue to improve our ARPU level, which is, of course, very promising for the profitability, and it's driven by the price increase that we did in Sweden during the summer with 6% price increase, so SEK 10. The average paying base in Nordic was above 1 million, which is, of course, a huge milestone for us that we reached late during the summer. Looking at the profitability level, the contribution margin is very stable at 30%, positively impacted by Lind & Co, as Jonas mentioned, but also offset a little bit by higher content cost in some of the markets if you compare to the same quarter last year. Looking at the non-Nordic segment, we are actually able to improve our ARPU level also there, driven by a price increase that we did in Holland late in Q2. The average paid base is 700,000 paying subscribers. We see big opportunities in some of our markets. Basically, the top market outside of the Nordics, which is Poland, Holland, and Russia, where we, when we were here in the Q2 report, we talked about increasing our marketing investments, which we have done. That drives down the contribution margin to -30% in the Non-Nordic segment, and also has an effect, of course, on the overall contribution margin down to 16%, in the quarter. These investments has some effect, of course, in the quarter, but also long-term effect, given that a large part of the increased investment is spent on branding channels, which will drive unaided awareness, going forward. Yes. What else? Looking at the forecast for Q4, we provide you with a range this time. Average pay base is expected to reach around 1,790,000 paying subscribers. We expect the ARPU to be intact at 113, leading to streaming revenues of SEK 604 million-SEK 608 million. That brings us to the next slide, which is our full year targets. As you know, we provided a revised forecast for 2021 in Q2, which you can see in the middle column here. Looking at where we are with the Q4 forecast, we believe that our streaming revenue will come in at the lower range that we provided, so SEK 2.25 billion. The subscriber base, as Jonas showed on the net added graph, is a bit lower than we expected, also from Q2. This is mainly driven, I would say, by India, where the Indian government early this year removed recurring payment as a payment option, and that's of course very important for a streaming service like ours. We have some longer campaigns running in India which were supposed to convert to the second payment in September and October, and of course, when the recurring payment option is removed, that will not happen automatically. We saw a decrease in the subscriber base in India. That's one of the drivers. Since the ARPU level is so low in India, it doesn't have that big of an effect on the revenue side. As I mentioned, we are increasing investments in our top market outside of the Nordics, but also in Finland, which we're supposed to reach profitability during this year. We are prioritizing growth over profitability, and we do not see that we will reach profitability in these markets for 2021. However, the overall EBITDA margin we believe will come in at the higher range. - 6% for 2021, driven primarily, I would say, by the Books segment, as Jonas mentioned earlier, has a very strong quarter and a very strong year, both on the revenue growth side but also on the profitability side. With that, yes, I will give back to Jonas. Just very briefly on 2023, we still maintain our goals. We believe in the long-term opportunity of the audiobook market and organic growth together with M&A. We still feel bullish that we will come up to 30% revenue growth again. Before walking into Q&A, we'll talk about first product, and then we'll talk a little bit about content and last, sustainability. Starting with product, in the quarter, we could see that the App Store rating was about 4.6. It was 4.7 before, so slightly lower, and the same with Google Play. Same with Net Promoter Score, a little bit down. The reason for this is really we had some stability issues during the summer. This has now been resurrected, and it's been very stable in the recent months. We also have our Spotify collaboration that was announced in May. It's taken a little bit longer than expected to get that started, but we're really working through the user journey and making sure that the Spotify users can enable Storytel subscription and start listening to audiobooks. That will come and be launched sometime in the new year. Then we have Google Cloud Platform, which is the virtual platform that we are using now, and we have moved away from the legacy hosting fully. Finally, I would like to mention the algorithmic editorial recommendations in the service, which have made tremendous improvements in the recent year, and we are steadily increasing the personalization share of what people select in the service. This is proving that it improves engagement and hereby loyalty as well. Moving over to content, we launched the Glacier project early this year on 14 markets. On all those markets, Glacier went up to the top 10 position, and in six of those markets, actually, we held the top position. I think that was, you know, a good project where we could really demonstrate that we are able to run a large-scale project across multiple markets, and this is something you'll see us doing a lot going forward. We also completed acquisition of Finnish publisher Aula. Last but not least, again, we really feel that the Storytel Book segment is really powerful and strong. With the digitization of the book market, you can see that the unit economics and the profitability goes up for our Publishing units, and they are performing well on all the markets. This is our mission, to make the world a more creative and empathetic place with great stories. Moving over to sustainability, what we could see is that in Q3, we joined the UN Global Compact. We have a very strong commitment to ensuring that we enact responsible business practices. We're very excited about this on Storytel. We're also committed to the UN Sustainable Development Goals, and in particular, on the environmental side, it's gonna be around climate change and responsible consumption and production. We also set up a sustainability committee in the company, and that is attached to the board, and we held our first meeting in Q3 and looking really much forward to actually driving sustainability as a core strategic brand lever for Storytel. We believe fundamentally that books is such a strong and powerful way in media to help people to relax, slow down, zoom out from the screens, and enjoy themselves. Basically there we think we can play a very, very good role, in particular also since Storytel's business model and product is very much climate friendly as well. With that, let's move over to Q&A. Yes. We have our analysts ready. Should we start with you, Joakim? I see that you have a hand raised. Lovely. Good morning. We can start off with, I mean, these investments taken here to accelerate growth in Q4 seems to have fallen slightly shorter of expectations. Can you talk perhaps a little bit more about what's driving call it the lower conversion from marketing spend to subscriber growth here into Q4? Also what gives you confidence that this will accelerate into the next year? Yes, I can start, and then Jonas can fill me in. I mean, the markets where we are increasing marketing investments is primarily our top eight markets. It's the Nordic markets, and then it's Poland, Holland, and Russia. And as I mentioned, a lot of those investments are on different branding channels, above-the-line marketing, which is to build unaided awareness over time, which we can see a very clear correlation between unaided awareness and subscriber base in each market. When we looked at that during the summer, we could see that we have been underinvesting a lot in these markets. That is why we feel bullish to increase investments, but it will not convert to paying subscribers immediately, but rather over time. We do see some markets such as Poland, for example, which has had a really strong quarter. Yeah, I could just add, I mean, we haven't spent the full marketing investment we had anticipated, and in part this is because the ecosystem is kind of challenging both on Google and also with Apple's data privacy changes early this year means that the conversion from digital media investments on Facebook and also on Google for that matter tend to be a bit more expensive. So we had to be a bit more mindful about you know how to invest and really learn how this change will play out over time. Yeah. Really, good comment. Then to remember as well, one reason why we see a lower subscriber growth in Q4 is also due to India, where we haven't increased our investments, but that's rather due to this recurring payment option being removed by the Indian government. Should we go to Carnegie? Dennis, this is your first earnings call. Shoot with the question. Thank you. First of all, I would just like to follow up on Spotify, and what are your own views from this sort of long-term conversion potential? Also if you could perhaps add some more comments on the engineering consideration that you mentioned. Also, I mean, given that you now mentioned that the launch is expected during the first half of 2022, I mean, instead of Q4, it seems like it could be launched during the second half of H1. What's your thoughts about that? No, I think as both companies are very committed to get this going, and obviously Spotify is a much larger company than Storytel, and what they're doing is launching this open access platform and it's, I think, taking some time to really get that in order, in order to be able to launch something on a large scale. I think that's very much driving it. In terms of conversion, the time plan and you know really hoping for Q1 to happen, but don't want to commit to that. That's why we say the first half of the year. Then looking at the conversion that we can expect from this partnership, it's way too early to say. We really need to see how exactly people discover audiobooks within the Spotify apps and, you know, the conversion into actually starting a Storytel subscription or at least linking the accounts to Storytel from Spotify. You know, I think it's a good way to just ensure we have a bigger ecosystem to tap into, and I think we'll be doing a lot of that going forward. All right. Thank you, Dennis. Derek, do you have a question? Thank you very much. Yeah, I'd like to follow up on the growth terms there. Obviously you mentioned in the last quarter that we would see an acceleration or pickup in growth in Q4, and now we unfortunately have some of these temporary effects not making that happen basically. You mentioned that you are confident into next year. Could we get some feeling here of do you expect growth to really accelerate early in 2022 or is it more of a back end 2022/ 2023 that will really sort of kickstart growth, accelerate growth again and make you reach the 2023 target? Any flavor you could provide there would be very helpful. I mean, with the current business we are running and with the kind of question marks we have around the digital marketing in particular, you know, I think we are on a level now where we are growing naturally organically at 20%, to be frank. You know, any improvements to that need to come from good news basically coming out of either that the marketing starts to take off, that India, I think they're already bringing back the actually the recurring payments. I think that's gonna help us there. You know, it doesn't provide that much revenues in the short term. Also from partnerships, being I think a lever and on top of that, obviously, you know, we haven't made any M&A that has contributed to Streaming in 2021 and, you know, within our target of 30%-35%, we do capture also potential M&A opportunities. I think we'll just have to wait and see. If it's front loaded or back loaded, can't really say. Gotcha. Thanks very much. Great. Thank you, Derek. Should we go to you, Stefan, from Pareto? Thank you. Follow up on the guidance here. I mean, the slide with the financial targets has been around for a while, so I would like to go into the details here about the CAGR assumption for streaming revenues, 30%-35%. Do you maintain that? In my view, that's the base here for this is, you know, it could be as long back as 2019, but say it's 2020 and we have this revenue growth of 20% in 2021. That implies like, you know, 35%-40% streaming revenue growth in 2022, 2023 to reach this target that you have communicated earlier and similar sort of growth rate on subs. I would like some clarity on how that is that the right way to interpret the guidance? If so, what needs to happen? It's such a dramatic increase from the current growth rate. Yeah, I think I touched on that on the previous question in a way, that I think, you know, both partnership and M&A and also external factors, that we're hoping will be kicking in and make the digital marketing a lot more effective going forward, I think will really help. But we will need a couple of those, you know. I think non-organic events to happen in order to reach, as you say, the 35%-40% in 2023. Yeah, I think maybe just to add on to what Jonas says. I mean, those targets were provided on our Capital Markets Day in 2020, and it's based basically on the fact that the audiobook market during the past 10 years has been growing at a CAGR of around 20%, and we expect it to grow with a CAGR of 15%-20% also in the next coming 10 years. We have around 5% of the total book market today, and we believe that that percentage will increase over time, given that we are not present in the U.S., for example, which stands for around 50% of the total book sales today. I think we have a very strong, solid base in the Nordics, but naturally, that growth rates are declining year by year because of the large penetration, even though there is still room to grow. We're still growing 15% in the Nordics. Then we have these new markets, which is pretty immature. We have LatAm, we have APAC, et cetera, where we have a good footprint, but it will take longer time than we anticipated when we had the Capital Markets Day. I think what we need to add now, what Jonas mentioned is how can we grow with partnership. How can we grow more through M&A. How can we also look into more mature audiobook markets where the growth rates are higher. We are already in Germany, for example. How can we make sure to leverage on that growth potential, but also other markets where we're not present in today, which are more mature than the markets we are in. Then it's the top markets outside of the Nordics, which will contribute mostly in the next coming two years, I would say. That is Poland, Russia, Holland, Turkey, et cetera. Yeah, just a follow-up there. I mean, the lowering of the subscriber base in 2021 is, you know, it's north of 300,000 subs. If you could give some color on what has happened, basically, because it's quite a big revision. Yeah, I mean, it is. It's a huge revision. I totally agree with you. I think we touched on it, you know, those kind of explanations regarding some of the low ARPU markets like India, also actually, you know, Russia, where we had high expectations of a low-priced subscription that hasn't really materialized yet. The market is growing well, but it's on the unlimited, more pricey subscription primarily. We have the entire LatAm region, which has been in a standstill completely for the past 18 months. We had high hopes to have, you know, at least 100,000, I would say, growth in all those markets, Brazil, Mexico, you know, Spain, also actually Italy and Colombia in 2021, and it's been standing totally still. It's very disturbing. It's, you know, in part from external factors, but also maybe because we've been a bit too optimistic around the speed at which we can get people to start consuming audiobooks. You have to remember that the Nordic markets are unique there. Even when we compare to U.S. or U.K. or Germany, I think we're at least twice as high in terms of penetration in the Nordic markets. It's just a question of timing. I think the fundamental interest of listening to stories is there. It is there all over the world, but we don't find the real match yet as to ensuring that people, you know, start to talk to each other about this and start to enjoy it instead of doing other stuff with their phones. Thank you. All right. Thank you, Stefan. Should we go back to DNB, Joakim? Thank you for that, Sofie. Coming back to the fact that, okay, obviously, you are outgrowing the global audiobook market opportunity right now, with even at, call it, 20% streaming growth. With that being said, can you say anything about, I mean, there's a lot of, I mean, other audiobook services who are increasingly targeting this global opportunity you allude to, and we have seen the players such as Audible and Kobo also launching this unlimited tiers as well. With that being said, can you just update us here on what you think about, I mean, your large subscriber base, especially in comparison to the Nordic competitors here, but how that builds sustainable, call it moats or barrier to entry over time with on the content side, improved UE, et cetera, and then, yeah, and how sustainable those moats are in your view? Yeah, sure. It's a great, you know, question on the long-term strategy. As I say, possibility for us to actually create good barriers to entry in more markets than the U.S., than the top eight markets we're in today, where actually I think we're a clear market leader on five or six of those at least. For this, you know, bigger markets, how can we succeed there when there's already competition in place? I think that the content game and the content bets that we're making. I mentioned Glacier before. Those type of content bets, I think are very important. Also, we can see that, you know, with our global, not global footprint, but at least we're very international business in the audiobook segment, we find it easier and easier to acquire really interesting assets such as Sherlock Holmes, for instance, that we did recently. The same, I think, spills over to commercial partnerships where, you know, Spotify is a great start and a great partner, but I think there's more similar and other partners that we haven't really tapped into. We have a lot of the telcos that we only really work with Telia on a systematic basis today, and I think there's a lot more to take there. I think being, you know, first mover globally in the audiobook space or one of the two first movers globally on the audiobook space actually helps us to capture some of these opportunities on a more international level. Thank you, Jonas. All right. Thank you, Joakim. Let's go back to Carnegie. Dennis, do you have another question? Thank you. Yes. Could you just provide some comment on the Nordic market performance during the quarter and in specific on if there are certain markets that currently are performing stronger and if there are any markets that are more challenging as of currently? Yeah. As I mentioned, I mean, the Nordic markets are growing with 15%. I think that's pretty much according to expectations, but we have seen maybe slightly lower intake now in early October. I think it's not specific for Storytel, but rather for all streaming services. One external factor, as Jonas mentioned, could be the Google redirect that was removed in October, but it could also be just seasonality effects. I think overall, during the first nine months of 2021, the Nordic markets has performed really well, with over 1 million paying subscribers on average, high profitability, and especially the Book segment also adding to both the overall growth of the company, but also the profitability level, which you can see on our EBITDA during the quarter, which was quite much better than expected. Maybe on some markets, I mean, we are the market leader in all markets in the Nordics except for Finland. I think Denmark has had a really strong summer despite very high competition. I think there are, like, 10 players in Denmark right now. That's very promising, I think, that we are able to keep that position and be able to continue to grow while we have also migrated all the customers to one of our platforms. I think in Finland, as I mentioned, we have increased our marketing investments, and we can see that we're performing according to expectations in Finland, but of course we would like to have a stronger position and be the market leader eventually. Okay. Thank you. Thank you. Derek from ABG, did you have another question for us? Thank you. Absolutely. I was wondering about the market entries. You're at, I think, 25 markets now. That's in line with the target for this year, but you're aiming to reach 40 markets in 2023. I get that you certainly understand that you reiterate this target here, but should we view this as the target's really sitting firm or are you perhaps considering maybe focusing more on your efforts on the current markets, this 25 because the 25 to 40 does imply, I would think, quite a bit of resources and a big ramp-up in next year and the year after that? Thank you. Yeah. No, I think that's a great valid question, Derek. I think that under our current modus operandi, we would start up offices and recruit people locally in every single market we're in, and that's what we've done historically. You can also see that I think we have the same number of offices that I think Netflix and Spotify has around the world, and obviously that may not be super sustainable. I think there are different ways to ensure that the Storytel service can reach a customer in different markets. You know, with that in mind, I think, yeah, we still believe that the number of markets we say for 2023 is probably reasonable, but it would not mean that we would open up local businesses in 20 more markets. I think just to add on to what Jonas said, I think it's quite interesting that, yes, we are in as many markets with a physical, like, footprint as Spotify, but when I look at the different markets, it's pretty much the same markets. I think we have chosen the markets rightly, and we have a good base to grow from those markets. Yeah. Makes a lot of sense. Thank you. Joakim, I see you raise your hand. Let's have another question from you. Just a final one, sorry. Can you say anything? I mean, it's early days still, but I mean, there have been some quite significant recruitments on the, call it, commercial leadership side, as of late and also with EQT joining in on the board. Anything that you can tell us about, call it, any nuanced shift to strategy? Yeah. I mean, I think we've been able to very successfully recruit two really top high-power people on the commercial side, Alexis Gresoviac for the international markets and Nelson Missier for the European markets. From before we have Åse Ericson as Head of Nordic. I think they are really good individuals, very strong leaders. I think it's still too early to talk about. I mean, Nelson hasn't started full-time yet, but Alexis has and is, you know, starting to develop his strategy on how we can ensure that this, you know, international markets that we are kind of struggling with getting growth in, that we will work smartly. I think with his gaming background he is well positioned to exploit on the mobile side that we're on. I think that's very exciting. We also have two other recruitments, Head of Tech and Head of Product in Mark Pasternak and Johan Ståhle who are also, I think, making a really big impact on the tech and product organizations and now are formulating a product strategy and, you know, ensuring that we have the best ways of working and get, you know, efficient payoff for our quite significant investments in tech and product. We have 200 people working in those teams. Really wanna make sure that we are innovative, that our product actually translates into some product leadership and also some moat that Joakim alluded to before. I think that's what you should expect from Storytel. That's where we were in the past, and that's where we wanna be in the future. Have a product that really is compelling and creates loyal customers that spreads the product, talks about Storytel because of the great experience. Very clear. Just any comments on what you think EQT brings to the table? I mean, obviously, they have a very clear view on the opportunity of the audiobook market, and that Storytel is well-positioned to be a global leader in that market. I think that's really why they came in. It will be all about ensuring that we can, in an effective way, deploy capital and get good growth that translates into shareholder value also over time. Thank you. Thank you, Joakim. Stefan, please go ahead with your next question. Yes. I'd like some guidance on how to think about sales and marketing as one cost item and then investments in content for 2022 and how that could. I mean, perhaps not a specific guidance, but imaginary or sort of how the EBITDA margin can develop over the next couple of years. Yeah, I mean, as you saw, during this quarter, we increased our marketing investments as a percentage of sales with, I think, 8 percentage points if you compare to the same quarter last year. It's around 30% of sales. What we see now is, as I mentioned, that we have a low unaided awareness in some of our top eight markets where the metrics looks good. We see that we have underinvested and that we want to increase our unaided awareness. In the long term, we believe that we will not just do this through increased marketing investments, but rather through our partnership strategy and creating a more buzz around the service. Of course, the content will be an important pillar towards that goal and our Storytel Original. You will see increased investments in these high-profile Storytel Originals and big characters, basically. Today, we are investing around between 7%-8% of sales in content, which we activate in our balance sheet. I think Spotify or Netflix, they invest like 50% of sales, which is not our target, because we need to spend also a lot on marketing. We need to find a good balance of course. Definitely we want to increase that over time. Yeah. No, I totally agree. I think that, again, with our international footprint today, we are very well-positioned to acquire those assets, the really strong story assets that are out there, and where, you know, new stories could be created, built upon those universes. This is something that we will be doing a lot of going forward. It's super exciting. We have a number of different of those discussions going and hope to be able to announce that soon. Okay. Thanks. Thank you, Stefan. Derek, please go ahead with your next question. Oh, thank you. I just had one question on what's the current outlook for more M&A basically. If you could say something about whether it relates mainly to Publishing or more outright Streaming services, since you've done both kinds of acquisitions in the past. Thank you. I mean, fundamentally, you could say that, on the Streaming side, a good way to acquire someone is because it would give us access to a new market. It could also be because we're ill-positioned in a market and wants to assume the market leadership position. Typically, to get access to a new market. Whereas on the Publishing side, it would more be to look at a market that, where the book market is becoming more and more digitized via the audiobook and we are a strong actor in that market, then it makes a lot of sense for us to also acquire and own publishing units. Thank you. Thank you, Derek. I don't see any more hands. I believe this was the final question on the Q&A. Jonas, any final remarks? No, but thank you for tuning in again. Bear with us. This is a long game, a really long game. It takes time to develop a market. You have to remember that the Nordic audiobook markets, which are super strong now, they've been around for like 15-25 years. Started with a tape cassette back in the days. You know, we're also, you know, in the Nordics, a population that is really well-positioned to benefit from the digital evolution, starting with, I don't know, home PC in the 1990s and then with very strong mobile networks, a very highly educated population. That's not the case all over the world, and that's why it takes a bit longer. We are there, we are producing content, we understand what it takes to win the market, and we'll keep investing. Now we're backed by really strong and good investors, and I think we have a board and a leadership that is set to take us really to the next phase now. I don't know if it's a third or fourth phase in Storytel's historical development, but at least it feels like a new, fresh start. Great. Thanks for tuning in see you next quarter. Bye for now. Bye.