Positive trend in agency revenue and record-high EBITDA in 2023 – dividend increased

• We are outperforming the industry* and that is due to a strong foundation. The business model works!

• AI is now part of Thinc's nervous system. Who better to control AI in communications than competent communicators?

• We are now investing in Stockholm and building a large office in the same way as in Gothenburg.

Fourth quarter October 1 – December 31, Group

• Net sales for the period amounted to SEK 93,951 thousand (SEK 108,020 thousand), which corresponds to a decrease of 13%.

• Gross profit (Agency income) increased by 11% to SEK 21,897 thousand (SEK 19,805 thousand), the gross profit margin also increased to 23,3% (18,3%)

• Operating profit before depreciation EBITDA increased to SEK 5,316 thousand (SEK 3,999 thousand)

• EBITDA margin for the period increased to 3,3% (2,4%)

• Profit after net financial items for the period amounted to SEK 540 thousand (-14,707 thousand). The previous year was affected by a non-cash flow impairment of capitalized development costs of SEK 20,000 thousand.

• Net earnings per share after tax amounted to SEK -0,09 (SEK -0,86)

• Cash flow from operating activities amounted to SEK 17,526 thousand.

• Equity as of October 31, 2023 amounted to SEK 46,986 thousand (SEK 51,243 thousand)

• Cash and cash equivalents as of December 31, 2023 amounted to SEK 17,531 thousand (SEK 20,192 thousand)
 

The period 1 January – 31 December 2023, the Group

• Net sales for the period amounted to SEK 93,951 thousand (SEK 108,020 thousand), which corresponds to a decrease of 11%.

• Gross profit (Agency income) increased by 19% to SEK 78,452 thousand (SEK 67,306 thousand). Gross profit margin increased to 26,2% (20,0%).

• Operating profit before depreciation EBITDA increased to SEK 10,254 thousand (SEK 6,900 thousand)

• EBITDA margin for the period increased to 3,4% (2,1%)

• Profit after net financial items for the period amounted to SEK 763 thousand (-14,707 thousand). The previous year was affected by a non-cash flow impairment of capitalized development costs of SEK 20,000 thousand.

• Net earnings per share after tax amounted to SEK -0,07 (SEK -0,90)

• Cash flow from operating activities amounted to 10,827 (10,199 thousand SEK)

• The board of directors proposes a dividend to shareholders of SEK 0,25 (SEK 0,20) per share for the financial year 2023
 

Important events October 1 – December 31, 2023

• Nowa Kommunikation wins assignment for the Swedish Election Authority regarding media strategy and purchasing ahead of the elections to the European Parliament. Nowa estimates the sales value at approximately SEK 12 million.

• Nowa Kommunikation wins the contract for event carpentry for the City of Gothenburg's City Environment Administration. The assignment will be carried out together with its sister company ProdekorThe estimated total value is approximately SEK 12 million.
 

Important events after the end of the period

• Nowa Empower invests and opens a subsidiary in Stockholm

• Thinc begins collaboration with media agency LikeHouse with option to become a partner

• Löfbergs, together with the Thinc company Context Media and the communications agency +1, won gold in the prestigious advertising competition 100-wattaren

• Thinc Collective acquires an additional 14% of Safir Communication

• Nowa Kommunikation wins a contract for the Swedish Transport Administration for communications and advertising. The sales value is estimated at approximately SEK 20,5 million annually for two years with an option for a further two years.
 

The CEO has his say:

Positive trend in agency revenue and record-high EBITDA in 2023 – dividend increased
The communications services market and the economic situation have challenged us and the industry even in the last quarter of the year. That is why I am very proud that we can present a quarter with 11% organic growth in agency revenue (gross profit) and an increased EBITDA margin to 3,3% (2,4%). This means that we continue to increase our market share and that we have thereby come one step closer to our goal of being perceived as the leading communications agency in the Nordics.

Overall, this results in a 2023 with sales of SEK 299 million (326), agency income of SEK 78 million (67) and EBITDA of SEK 10,2 million (6,9), which is the best year in terms of results in Thinc's history. In addition, the current cash flow was strong at SEK 10,8 million (10,2) for the full year and we can therefore propose to our Annual General Meeting a dividend of SEK 0,25 per share, which is in line with our dividend policy.

Developments in 2023
In addition to our sales and margin focus, we have had time to delve even deeper into our core values ​​and benefits internally, that is, to let everyone take part, have a say and contribute to our development. This kind of consolidation is important at regular intervals so that growth has time to take hold, the culture is strengthened and any adjustments in plans can be made.

We have not only taken the time to thoroughly explore and learn about AI, but we have also successfully implemented the latest technology with skill. From going through the research and learning stages, the use of AI has now become self-evident to us. For Thinc, AI represents a source of new innovations and a groundbreaking way to develop communication.

It is in no way contradictory to what we do in general, our customers' trust in us, or our pricing model. After all, who better to guide AI in communications than competent communicators?

Our work with margins
I insist on talking about our work on profitability. Our persistent work on cost awareness, added value, upselling and streamlining is visible in our results. This work allows companies to charge more and more for increasingly efficient work.

We create margin improvements through disciplined work with goal management, coaching, joint work conferences and much more. We are persistently and step by step moving towards our margin goal. But we do not forget to reinvest. Training, work environment, control systems and, as now; a new large office in Stockholm, are equally important components for the margin and thus the result to stand the test of time. In addition, synergies are added for each new company that is added to the group and which can thus share overhead and central functions with all our companies.

Our pro bono work
Our core values thoughtfulness, make a difference and to be passionate are important to us. This is expressed in many ways. We have a very good and increasing employee satisfaction rate, we mostly work on issues that help create a better society and we take the time to help others who need help. An example of this is that we support the organization Build up Nepal where entrepreneur Björn Söderberg and his wife Bina Shrestha, who is also the founder and co-owner of the Thinc company Websearch, is rebuilding house after house and village after village after earthquakes in Nepal. With a unique method, they contribute to creating a sustainable society in a very tangible and practical way. Thinc loves this and contributes not only with funds but also by having been on site. Please help us help them!

Our immediate future
If 2023 was the year of consolidation, marginal work and culture building, our goal is that 2024 will be a year of technology and sales work.

Technology is both AI application, that is, the use of existing tools, and the continued development of our own systems and platforms. Thinc is increasingly moving into the product category to the extent that not everything we sell is pure services. We also package our offering in technology and products. This could be the Jetty system, proprietary modules for CMS systems, training platforms and more.

By sales, we mean that our incentive program, which was launched in 2023, has now found its shape and has a clear focus on sales. Sell as in training internally, as in product to sell and as in goals for the organization. Organic growth has always been high, but it is easy to increase 25% when you have a turnover of one million kronor. It is more difficult when you have a turnover of one billion kronor. Sales will therefore always be a very important focus.

The Thinc company Empower has started a subsidiary; Empower Stockholm where a number of entrepreneurs with their own, successful companies are joining forces and coming together under a common flag. We have also signed an option agreement with the media agency LikeHouse, which with its focus on B2B and Greater Stockholm gives us another piece of the puzzle for a focus on growth. Otherwise, it is precisely a new office in Stockholm where our companies gather that accounts for much of our focus in 2024. With premises that, just like in Gothenburg, have large meeting spaces, space for events, rooms for workshops, a studio and this central location in the middle of Stockholm, we have now found a home in the right shape and it will be seen.

Anders Wallqvist, CEO
Thinc Collective AB

* Swedish Media Agencies report Jan -24; -3,4% for 2023. IRM report Dec -23; -2,5% Q3 2023.