Sales and profits grow in the quarter

• Sales and profits are growing

• Investments create the basis for continued growth

• Market growth up during June-July

Second quarter April 1–June 30, Group

• Net sales for the period amounted to SEK 326,549 thousand (SEK 298,921 thousand), which corresponds to an increase of 19%.
• Gross profit (agency income) decreased by 4% to SEK 18,642 thousand (SEK 19,497 thousand), and the gross profit margin also decreased to 24,2% (30,2%).
• Operating profit before depreciation – EBITDA – increased to SEK 2,199 thousand (SEK 1,112 thousand).
• The EBITDA margin for the period increased to 2,9% (1,7%).
• Profit after net financial items for the period amounted to -53 thousand SEK (-1,169 thousand SEK).
• Net earnings per share after tax amounted to SEK 0 (-0,07 SEK).
• Cash flow from operating activities amounted to SEK 4,792 thousand (SEK 17,904 thousand).
• Equity as of June 30, 2024 amounted to SEK 53,557 thousand (SEK 52,661 thousand).
• Cash and cash equivalents as of June 30 amounted to SEK 6,277 thousand (SEK 17,286 thousand)
   

The period 1 January–30 June 2024, the Group

• Net sales for the period amounted to SEK 326,549 thousand (SEK 298,921 thousand), which corresponds to an increase of 11%.
• Gross profit (agency income) decreased 4% to SEK 76,453 thousand (SEK 78,452 thousand). Gross margin decreased to 24,7% (28,3%).
• Operating profit before depreciation – EBITDA – decreased to SEK 3,099 thousand (SEK 5,136 thousand).
• The EBITDA margin for the period decreased to 2,0% (3,8%).
• Profit after net financial items for the period amounted to SEK -6,076 thousand (SEK 907 thousand).
• Net income per share after tax amounted to SEK -0,08 (SEK 0,06).
• Cash flow from operating activities amounted to SEK -2,205 thousand (SEK 5,455 thousand).
   

Important events April 1–June 30, 2024

• Nowa Kommunikation wins assignment from Region Skåne. The company estimates the value at approximately SEK 9 million annually over a four-year period.
• Thinc introduces the new Jetty X, the next generation of event tools.
• Thinc is starting a collaboration with the advertising agency Granath. The plan is for the collaboration to lead to ownership cooperation, as the parties have agreed on a letter of intent to become co-owners.
• Thinc Collective secures contract with Happy Homes Sverige AB through subsidiaries Nowa Kommunikation and Context Media, regarding media strategy, media brokerage and advertising services, worth a total of SEK 8 million.
• Thinc Collective acquires 30% in the communications agency BANG.
• At the Thinc Collective Annual General Meeting on May 23, it was decided to pay a dividend to shareholders of 25 öre per share.
• The City of Stockholm has chosen to renew the contract for Nowa Kommunikation regarding advertising agency services. The agreement is valid from June 4, 2024 for two years with the possibility of extension for another two years. The estimated volume of the framework agreement is SEK 30 million per year.
• Context Media is recruiting Mats Ståhl as a new partner and project manager at the Stockholm office.
• Nowa Kommunikation wins an assignment for the Swedish National Board of Obligation and Probation at an estimated sales value of SEK 22 million during the contract period from June 25, 2024 and two years onwards with the possibility of extension for another two years.
• The new share issue carried out in connection with the acquisition of shares in BANG has been registered with the Swedish Companies Registration Office. After registration, the number of shares in the company amounts to 17,064,005 shares and the share capital amounts to SEK 18,770,405.5.

Important events after the end of the period

• Thinc Collective secures strategic and tactical assignment for the launch of German tour operator Neckermann Reisen in the Nordic market.

Seasonal variations

Sales vary across quarters. Subsidiaries' sales fluctuate throughout the year in line with total media and communications investments in the market, with historically the second and fourth quarters being the strongest periods.

CEO has the floor 

The second quarter is turning upwards

The second quarter of the year breaks the trend from the first quarter. We are growing both in terms of sales and in earnings compared to the previous year, despite the recession.

Thinc is developing positively and has a clear growth plan. It describes, among other things, that the structure and business in the subsidiaries must be strengthened and developed. The market has slowed down more in 2024, which has negatively affected our gross margins. Through diligent structural work combined with sales growth, we are nevertheless maintaining our EBITDA.

During 2024, investments have been made that enhance Thinc's offering, profiling and long-term perspective. Such as investments in a new Stockholm office, strengthening business area advisors, productization of platforms at the subsidiary. KKM, creation of subsidiaries to focus on the Stockholm market for Context Media and relaunch of the Jetty system as well as various other initiatives. Taken together, these investments have created a base for further growth.

It is pleasing that during the quarter we generated a total turnover of SEK 76,8 million compared to SEK 64,5 million in 2023, which corresponds to a growth of 19%. Our agency income (gross profit) is SEK 18,6 million (19,4) and EBITDA is SEK 2,2 million (1,1). Particularly pleasing is the improvement in the EBITDA margin from 1,7% last year to 2,9%.

The Market and Thinc

The forecast for the rest of the year has been compiled and despite the decline in the market during the first half of the year, the group's companies and therefore I are confident in delivering according to our growth plan.

According to the Swedish Media Agency's report published on August 13, market growth and media investments have turned around during the summer and were very high during June–July, which is in harmony with the image Thinc has. We hope that this development will continue for the rest of 2024.

For Thinc, 2024 is a year of consolidation and working with margins. This applies to everything from the investment in Stockholm and packaging work, but above all to working through and getting the full potential out of our new acquisitions and collaborations such as BANG, LikeHouse, Granath and The Mission.

Developments in our various business areas

AO Performance continues to be strong and is growing with new contracts. Context Media shares responsibility for the new customer Neckermann Reisen, Nowa Kommunikation wins additional procurements such as the Swedish Transport Administration and even if the margin decreases slightly in a recession, there is no slowdown in sales growth.

AO Digital Solutions is moving forward in terms of development and solutions, such as co-ownership in AI Get It; an initiative to use AI to facilitate access to the web for people with disabilities. The initiative has received USD 125,000 in support from Social Tides and Google, who believe in the project. The launch of the new generation of Jetty has also been successful. A large number of customers have tried it during the summer with very good results and praise. The more traditional services such as programming and web have decreased slightly during the year.

AO Strategy has a two-fold development where Safirs development has stalled somewhat due to a reduced number of IPOs, something that affects the entire industry, but where Empower growth through the start of the subsidiary Empower Stockholm. Insight company Habermax has reversed the downward trend in recent years and is developing better and better.

AO Creative decreases slightly towards 2023. Experience shows that the creative industry is the one that suffers the most during a recession but also the one that grows back the fastest and with the highest margin when the economy turns around. None of the companies are doing badly but have a slightly lower occupancy rate than the previous year. The exception is FAB Agency, which has grown significantly compared to previous quarters.

Our immediate future

2024 will not only be a year of technology and sales work, but also a year of margin work. Thinc now has 133 employees, three new agencies and new global partnerships, all of which will lead to increased margins and profits, but it takes time and perseverance. The base is now in place. Now we are shifting out and up.

Anders Wallqvist, CEO
Gothenburg in August 2024