Release Date: November 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Verve Group SE (XTER:M8G, Financial) reported a strong 45% revenue and EBITDA growth in Q3 2024, marking it as the strongest quarter of the year.
- The company achieved significant organic growth of 31%, driven by ID-Less solutions and Fullscreen ads.
- Verve Group SE has a strong presence in the US advertising market, with 80% of its revenues coming from the region.
- The acquisition of Jun Group has accelerated organic growth and is expected to bring further synergies in 2025.
- The company has achieved a high client retention rate of 96% and a net dollar expansion rate of 8%, indicating strong customer satisfaction and growth potential.
Negative Points
- There was an increase in purchased services and other operating costs, which raised concerns about future cost management.
- The company experienced a one-time amortization related to a mobile game that did not meet expectations, highlighting risks in their gaming segment.
- Despite strong growth, the EBITDA margin only increased slightly from 29% to 30%, indicating potential pressure on profitability.
- AxesInMotion, a part of Verve Group SE, underperformed in terms of revenue growth and EBITDA contribution.
- The transition of CFO roles may pose short-term challenges as Paul Echt steps down and Christian Duus takes over.
Q & A Highlights
Q: We saw an increase in purchased services and other operating costs. Is this due to seasonality, and how do you expect this to develop?
A: The increase is partly due to scaling up Fullscreen and video ads, which have lower margins, and rollout costs for the ATOM technology. These factors contributed to slightly lower gross margins, but they are already significantly contributing to EBITDA.
Q: Can you provide more details on the impairment made, given there are no further games in development?
A: The impairment was related to a mobile game that did not meet expectations and was shut down. This is a one-time effect, and no further amortizations from new game developments are expected.
Q: Could you elaborate on the recent patent recognition for ATOM?
A: We received a US patent for ATOM, which focuses on on-device targeting without IDs. This patent strengthens our market position and protects our technology from competitors.
Q: How is the Jun Group acquisition contributing to growth, and what are your expectations for 2025?
A: Jun Group is showing strong organic growth post-acquisition, with initial revenue synergies already visible. We expect significant synergies in 2025, particularly from upselling CTV supply and expanding into new markets.
Q: Can you discuss your growth investments and personnel expenses?
A: Personnel expenses are slightly down due to the integration of Jun Group. We are hiring more salespeople, but this takes time. We plan to continue investing in growth while maintaining a balance between revenue growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
