Interim Report Nepa AB (publ), Q2 2018

This is a translation of the Swedish interim report. If there should be any discrepancies, the Swedish language version governs.

SECOND QUARTER, APRIL – JUNE 2018

• Net sales increased by 18.0% to MSEK 64.9 (55.0)
• Gross profit increased by 25.3% to MSEK 48.8 (38.9)
• EBIT was MSEK -1.2 (-7.4)
• Earnings after tax was MSEK -1.7 (-7.5)
• Earnings per share was, basic SEK -0.24 (-1.05), diluted SEK -0.23 (-1.03)

FIRST HALF YEAR, JANUARY – JUNE 2018

• Net sales increased by 15.5% to MSEK 122.5 (106.1)
• Gross profit increased by 18.5% to MSEK 91.5 (77.2)
• EBIT was MSEK -6.3 (-12.1)
• Earnings after tax was MSEK -7.3 (-13.0)
• Earnings per share was, basic SEK -1.03 (-1.82), diluted SEK -1.01 (-1.79)

IMPORTANT EVENTS

DURING THE PERIOD

• Completed the last adaptations to be fully compliant to GDPR, the EU’s new personal data regulation.
• On May 31, the Annual General Meeting elected Dr. Annika Steiber, Ass. Professor in Management and Entrepreneurship at Menlo College, California, and Jan Carlzon, former CEO of SAS, as new board members for Nepa. Former board member Anne Roggeveen was not available for re-election.
• Nepa entered into a Marketing Mix Modelling partnership with Snapchat’s parent company Snap Inc.

AFTER THE PERIOD ENDED

• San Diego based video-game developer Psyonix selected Nepa as its provider of ongoing Brand and Advertisement measurement.

A WORD FROM OUR CEO 

I am incredibly proud and encouraged by Nepa’s momentum throughout the second quarter of 2018. In addition to strong growth (25% gross profit), we have taken several important steps towards the three objectives we communicated when we went public and raised capital just over two years ago.

1)    Invest in our product to further increase our scalability

Development of our Consumer Science Platform® has focused on improving our Customer Experience (CX) and Marketing Optimization (MO) products.

• CX Tracker was launched in the first quarter, a new application that targets mid-sized companies and companies that are in the early stages of their journey to improve customer experience. In the second quarter, we have closed multiple CX Tracker deals and built a strong sales pipeline.
• In the second quarter, Nepa and Snapchat’s parent company Snap Inc entered into a Marketing Mix Modelling partnership, further strengthening our Marketing Optimization product suite. This is the third major strategic MMM partnership in the last year – providing our clients with robust capabilities to invest with confidence in the changing media landscape.

Our product development has had positive effects on Nepa’s scalability and finances in the second quarter. We see that the relationship between our gross profit growth and pace of personnel investments improved for the fifth consecutive quarter. Gross profit grew by 25 percent while personnel cost grew by only 3 percent, showing a substantial improvement in the scalability of the Consumer Science Platform® over the last year.

2)    Invest in our UK sales office to further drive growth

We are very satisfied with the results achieved by the management and ownership structure that we installed in Nepa UK 18 months ago. While all markets contribute to our 25 percent gross profit growth, Nepa UK is our fastest growing market – growing gross profit 140 percent compared to the same quarter last year. The team in the UK has had tremendous success helping some of the world’s largest and best-known FMCG brands navigate the evolving omnichannel shopper journeys with our Path to Purchase product. ESOMAR, a leading member association for data, research and insight companies, invited Lindsay Parry, Nepa UK’s Managing Director, to speak at their annual Shopper Experience Seminar in Amsterdam in June on “Growing your brand through connecting the dots”.

3)    Invest in establishing Nepa in the USA to further drive long-term growth

One year after the appointment of Ken Peterson as Managing Director, we have formed a great US team, and posted strong growth with global and local clients. San Diego based video-game developer Psyonix recently selected Nepa as its provider of ongoing Brand and Advertisement measurement. Psyonix acts in a field where we see a strong potential for Nepa’s products. In the second quarter, we completed the move of our global marketing function from Sweden to the US to further strengthen our ability to drive awareness and create demand for Nepa’s subscription-based products. We have in the last quarter invested approximately SEK 3 million in the US market and see a continued strong growth in revenues and gross profit. 

EBIT for the second quarter was MSEK -1.2, an increase by MSEK 6.2 MSEK compared to the same quarter 2017. Net margins increased on all markets.

Fredrik Östgren

CEO

Headquartered in Stockholm and with local presence in Helsinki, Oslo, Copenhagen, London, Mumbai, New York, Miami and Denver, we help some of the world’s most reputable brands in more than 50 countries to optimize customer experience investments and get more effect out of their marketing and sales. Nepa has been awarded DI Gasell’s award for organic fast-growing companies in 6 of 7 years since 2011. The company is publicly traded at the Nasdaq First North Stockholm stock exchange since 2016. Erik Penser Bank is Nepa’s Certified Adviser.