Good afternoon, everyone, and Welcome to this live video interview with Zinzino. My name is Niklas Elmhammer from Carlsquare Equity Research. We are very pleased to be joined today by the CEO of Zinzino, Dag Bergheim Pettersen. Please remember that the chat is open, so please submit any questions that you have. Good afternoon, Dag. Great to have you here with us. Thank you for having me. Zinzino released its Q1 report today. Could I please ask to start you by you going through the highlights of the report? The highlights, I think, is for number one, it's the growth that we had with this quarter. 59% is quite a bit if you compare that to last year. I think the profits are about what we expected and what we have promised the market. In general, we are pleased with that. That is the simple stick to that report. Yeah, and congratulations on the strong growth. What is the explanation for the growth acceleration in the recent quarters? Have there been any recent enhancements to pricing or revenue model that could help explain that? I think there's not one single explanation to explain it. Parts of it, I would say, are long-term work. We have acquired three, four, five different businesses the last three, four years. That has been an accelerator somehow that we have had growth, underlying growth, organic growth, so to speak. Last year, we bought a company called Xelis in France, for instance. For a year, we have had pretty good growth in France. That has been good. We have had a lot of different initiatives when it comes to the marketing and the way that we have, I would say, done our promotions. The bundle of things and the way that we have established ourselves in different markets. Of course, the last quarter, we also acquired through Chapter 11, Zurvita, an American company. That added some growth. I would say the underlying things is that we've done a lot of good things over many years, and then that pays off a little bit for the last, I would say, six to nine months on the growth side. The revenue model is basically the same. Is that right? The revenue model is basically the same. We have lots of customers in different markets, and we have established ourselves in lots of markets. I would say some of them are doing amazingly good, it takes time to build a market. Some of them have been established maybe three to four to five years ago, and now we see some return on that investment. There is no change in that perspective. The way that we have promoted, the way that we have continued, and of course, we are also in a space where I think we have an edge. One of the things that we are offering is a test-based nutrition. I've said this before. We started that kind of trend 13 years, 14 years ago. We bought a company that was a science-based company from Norway, and then we offered a product in combination with that. We can see now that people are more aware of their own health than ever maybe before. I think the pandemic caused some attention to that. The wellness space and personalized nutrition and test-based nutrition, which we offer, is trend-based. That is also part of the explanation that we are in the front foot when it comes to offering these things to people. I think that the awareness in tons of different markets is there because of, yeah, you see a lot of different things, increase of different things. Like, for instance, people are gaining weight, as you know. People want to take care of themselves. You can see that the world is in a huge change. Through COVID, you learned a lot about what kind of vitamins and minerals you needed, maybe the lack of D-vitamin. What are these things that do we have an offer for the population and for the consumers? Okay, I got it. Favorable trends in the macro environment. That one part, it's the promotion, it's the product, it's the edge that we offer, everything that we've done the last decade, plus the trend, just to be accurate on that. Thank you. Regarding your revenue model, you have this subscription-based revenue. I guess many of our viewers are curious to learn about recurring revenue. How much is that growing, your subscription business? Our subscription business is constantly growing. We are measuring this in many different ways. We have a large database of customers now, over 500,000, I would say, who are buying frequently. We have 80% of the revenue comes, I would say, more directly from consumers who are not necessarily on a subscription, but they are buying products pretty frequently, every third, every fourth month. It is a little bit depending on in which markets they have the subscription. We have, of course, all the data on that. In some markets, unfortunately, you cannot have a subscription model the way that we think of that in Scandinavia. What we want to do is to become the Netflix of test-based nutrition. We want all of our customers to have some benefits being on the subscription, and we offer that. When we are calculating the revenue for the next upcoming month, we have pretty exact numbers of what kind of revenue we will have on the customer base that we have. That matters when it comes to the way that we are purchasing products, manufacturing products, put stock in our warehouse. It makes our life extremely easy because that's also part of the question here. Can you calculate what kind of revenue you will have in May, in June, July, and August? Are those customers staying? Are they happy? Are they unhappy? Are they churning? Are they referring us to others? All of these things I can answer pretty good on and say, yes, we have a fan base of customers who are constantly buying products. Okay, that's very helpful. Looking at your geographical markets, in absolute terms, North America and Central Europe has grown by the largest amount here. Could you comment on the dynamics in these so-called core markets? I would say that the Central European market has been just fantastic for many years now. I think that one of the things that we are offering, I mentioned this before, so I'm going to hold up. If you can see this, this is our BalanceTest, so you can measure 11 fatty acids. We have offered that for now 13 years, 14 years. We still have not taken an analysis or a test on the German population less than a percentage. The dynamics you're talking about are, of course, we are growing fast, we're doing good. In nominal numbers, we're super happy. It is also just a start for us. I mean, we can grow with the same pace in Germany and in the region around Germany for probably a decade without any problems if we are just doing our job. That is pretty crazy if you think about that trend-wise. In the U.S., the U.S. population does have a higher need for food supplements and tests. We can see that in the results that they are probably, when they are taking the test, I would say, I would say that they are failing the test in a much higher grade than Europe in general. The U.S. needs some solutions that we can offer. The dynamics you're talking about, of course, the U.S. has been growing. It's the second largest market after Germany. The U.S. has a huge potential both in the population, the way that they need our supplements, and the test-based nutrition. I mean, I believe that the U.S. and Germany will be competing on being number one by the end of this year, but it's going to be a tight race. Still, Europe is our home base, I would say, so it's still number one. I am happy to see the development in the U.S.. One of the reasons why we acquired Zurvita and added that to Zinzino was to have more distribution power in the U.S. because we know that that market needs, on our side, more attention, I would say, because it has even a larger potential than Germany with the population and the need for food supplements. Okay, thank you. We have a question from our audience regarding Zurvita, as you mentioned. How is the integration going, and was Zurvita profitable in Q1? It's a little bit early to say about the profits. I just have a coming out of Chapter 11. We've never done this before, so we've learned a lot of new things. It was a challenge, but we came through it, I would say, landed on our feet pretty good. Zurvita is a good addition to Zinzino. Distribution power, they have some strong products, they have a lot of fan bases on their products, and they have now been, I would say, fully integrated into Zinzino. We are doing some small adjustments and closing some of the things from Chapter 11 the next month. It's a little bit too early to say if it's profit for quarter one. The good thing, though, is that we have been able to acquire that company and also a smaller company in between this meeting and since Chapter 11, and we are profitable. We are able, when we have found a model of acquiring companies or assets in a way that is beneficial for us, for their customers, and for their partners. Of course, that is a big part of, I would say, our success the last decade. If you look at Asia or you look at Europe, we have done a lot of asset deals, to put it like that, which we have announced. Okay, and regarding the U.S., a current topic for many companies is trade wars and tariffs. How do you see the impact on your U.S. operations? I think every company needs to have a buffer. They need to be okay with changes. In our case, it's just living through these changes and trying to maneuver and steer the ship as good as you can. I think that the tariffs, everything will be negotiated. I think that the U.S. is going to try to find a model that works for them and the rest of the world. I think you've seen some of those changes already. The main product that our company that we bought in the U.S., they are manufacturing that in the U.S., so that does not affect us that much. Of course, if the tariffs go too high, we need to adjust our prices and be just ready to put that further on, unfortunately, to our customers. Plus, we need to be adjustable on our cost side and be smart in how we are maneuvering in a tariff landscape. I think my point is that we have been dealing with this in tons of other markets the last decade. This is not a new thing. In Turkey, in India, in China, in Malaysia, in many other countries, even Norway, we need to be able to switch around and change and be adaptable to a situation. The ability to be flexible and change has to be good in our company. The tariffs could be like the tariffs will be. Okay, thank you. We have another question from the audience. I guess we touched upon that. What percentage comes from subscriptions? How is the growth compared to last year? I think if, well, I covered that, but it's a little bit different from market to market. You can say that 60%, 65% of the revenue comes from subscriptions, from customers, but you can say 80% comes from frequently bought products. We do not differentiate too much on that. We have a large chunk, like 75%-80% of the revenue, we know already what's going to be in May based on the model that we have. That gives us a lot of flexibility and makes it easier to forecast production needs and all those kinds of things. We're happy with those numbers. If there is an increase from last year, yes, it is. That's clear. In terms of profitability, we saw stronger profit growth this quarter. What level of, I mean, growth initiatives should we expect going forward? I mean, your investments in recent years have obviously paid off in terms of growth. We have a long-term strategic plan. We want to grow, and we are growing faster than what we have promised the market. We are just keeping the gas pedal on speed and trying to take all the good initiatives without being neither bold or crazy bold, nor too afraid. What we're trying is trying to balance the initiatives in a good way. We just launched a new platform e-commerce model for China, extremely important for us. We think that China is going to be a profitable and good market for us. We've been testing the last three, four years. We are now establishing ourselves in the Philippines. We have a lot of initiatives in Latin America, both in Chile, Peru, and Brazil. We see a large growth in the market of Taiwan, and we just opened New Zealand. Japan and South Korea are markets that we are looking at. And then we know for sure it's going to take time to grow this market. But we have patience among the shareholders and among the management, the owners, and the board. We are looking long-term on all of our investments, not like quarter for quarter. Of course, it's important, but the importance would be to keep this on a long-term strategic basis. Okay, great. There is a question from the audience regarding the gross profit margin, which was lower in the first quarter. You mentioned remuneration costs and bonuses related to the high growth. What is sort of the underlying development for the margin, and should we expect lower margins if you keep growing this fast? I think one of the reasons why we set the bar at the level that we did when we were talking to the market that we will have a certain percentage, 10% of the EBITDA, is just to show the market that we will continue to invest in new markets, but also new technology and new products, and maybe also the acquisition. Of course, some of the acquisitions cost money, so you need to, that's an investment, which is paying off now in growth. Of course, it costs some money, but I think we are okay with the level of profits that we have. We could probably have changed that model and have a lower pace of growth, and that would have been easier for us than to earn more money, focusing more on the costs. We think that we have a possibility now, and that is to continue the growth, and then our margins will be following by the scale. We have been improving this for many years now, and I think that's going to be the truth. If you have the same conversation three years from now, I'm pretty sure that we are still in a growth space as a company. Thank you. Last week, you announced China as a new market where you plan to expand with a cross-border social e-commerce model. Could you elaborate a little bit on your approach to the Chinese market? The Chinese market is pretty regulated. It's a very technology-based market. It's an interesting market. It's soon, maybe, the largest economical country on the planet. There is a raise, so to say. I think the awareness of health is pretty high on the Chinese market. In China, you can probably find three different models. This is a model that has been proven to be really functional. It's very integrated with their WeChat program, which is a hybrid between YouTube, WhatsApp, and payments and everything. Everything is connected in that. It's a proven model, and we've been working on this for a couple of years now, so we're super excited and happy. If it's going to be turning out to be exceptional over the next quarters, that would be a pleasant surprise. We have patience to make sure that we are having China as one of the booming markets for the next, I would say, five years. Let's see. It is going to be a lot of adjustments before we are perfect in the Chinese market. We know a lot from being in Asia now, five, six years in a row. We have a lot of experience in what is working and not working. We are still in a learning mode, but I think we will get it. We see the traction in Taiwan has been exceptional the last year. That has been really fun and excitement and gives us a lot of confidence that we will be doing good in China over the next years. Yes. Regarding the Asia-Pacific region, I mean, your growth has picked up significantly in recent quarters. What is behind this development? What kind of products are driving sales here? It's the same products that we have everywhere in the world. It's the BalanceTest and the BalanceOil. That's the number one thing for us. We see India has been growing pretty fast. Taiwan has been growing. Malaysia has been growing. It's coming from constant work over many years. There's nothing really exceptional other than we are having some traction now, finally. Like we spent a lot of years in many markets, and the U.S. took us maybe eight years to really have traction in the U.S.. That is what's behind it, I would say. Good distributors, good, I would say, corporate management in Asia is doing good, and a good offering, good products. Okay. Another question from the audience. Will you launch a new test in 2025? Yep. That's happening. That's one of the big targets. We've been working so many years for this. The team with the doctors and the scientists, they're working crazy hard on this. I just came from a meeting a couple of hours ago where we were discussing this. It's a lot of excitement. Later this year, I guess in quarter four, it will be revealed and launched. That's going to be fun. That's going to be fantastic. Not only for Zinzino, but maybe also for the people who are taking the test. Okay. Thank you, Dag, for bearing with us and taking all the questions. It's been very helpful and enlightening. Do you have any closing remarks? Nothing else. Thank you for watching. Thank you for listening. And thank you for all the support that everyone that I know is watching us for Zinzino. I can feel that giving us tailwind, so that's nice. Thank you for having me. Okay. Thanks again. Thanks everyone for watching, and hope to see you soon again.