Third quarter – a period of lower activity

· Long-term investments reduce short-term results
· A few companies in the group have performed worse
· Many new customers give good hopes

Third quarter July 1–September 30, Group

• Net sales for the period amounted to SEK 326,549 thousand (SEK 298,921 thousand), which corresponds to an increase of 2%.
• Gross profit (Agency income) decreased by 2% to SEK 16,924 thousand (SEK 17,309 thousand), the gross profit margin also decreased to 24,8% (26,0%).
• Operating profit before depreciation and amortization EBITDA decreased to SEK -2,330 thousand (SEK 1,811 thousand).
• The EBITDA margin for the period decreased to -3,4% (2,7%).
• Profit after net financial items for the period amounted to SEK -4,643 thousand (SEK -653 thousand).
• Net earnings per share after tax amounted to SEK -0,28 (SEK -0,04).
• Cash flow from operating activities amounted to SEK 3,090 thousand (SEK -11,906 thousand).
• Equity as of September 30, 2024 amounted to SEK 37,777 thousand (SEK 47,418 thousand).
• Cash and cash equivalents as of September 30 amounted to SEK 11,559 thousand (SEK 5,596 thousand).

Period January 1–30 September 2024, the Group

• Net sales for the period amounted to SEK 326,549 thousand (SEK 298,921 thousand), which corresponds to an increase of 8%.
• Gross profit (Agency income) decreased 3% to SEK 54,738 thousand (SEK 56,555 thousand). Gross margin decreased to 24,7% (27,6%).
• Operating profit before depreciation and amortization EBITDA decreased to SEK 770 thousand (SEK 7,127 thousand).
• The EBITDA margin for the period decreased to 0,3% (3,5%).
• Profit after net financial items for the period amounted to SEK -6,076 thousand (SEK 223 thousand).
• Net income per share after tax amounted to SEK -0,36 (SEK 0,02).
• Cash flow from operating activities amounted to SEK 1,863 thousand (SEK 7,820 thousand)

Important events July 1–September 30, 2024

• Thinc Collective receives an assignment for Neckermann Nordic, the Nordic arm of the German tour operator Neckermann Reisen.
• Thinc Collective launches a new agency, Thinc Experience. The agency is led by Thinc Collective, BANG Agency and Charlotte Bergman.
• BANG Agency wins the assignment as advertising agency for Coop Butiker & Stormarknader AB. The assignment includes strategy, concept development and creative work for Coop's retail operations.

Important events after the end of the period

• BANG Agency wins assignment for Business Region Stockholm with an estimated sales value of SEK 50 million during the period.
• BANG Agency renews agreement with the Swedish Armed Forces at an estimated sales value of SEK 30 million per year during the period.

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 

In the third quarter, sales increased 2% to SEK 68,1 million (66,6), agency income (gross profit) amounted to SEK 16,9 million (17,3) and EBITDA decreased to SEK -2,3 million (1,8).

The third quarter is for many industries a period characterized by lower activity as a result of holiday times and will also be a kind of interim period for us. Despite winning more new customers than we did in previous years, sales increased slightly compared to the previous year while earnings decreased. The effects are mainly linked to a few of the group's companies, where both efficiency improvements and intensified sales activities have begun. Basically, it is postponed or delayed customer assignments that have affected the development in the quarter. Assignments that have now started and are laying the foundation for a stronger fourth quarter.

In addition, investments such as the new Stockholm office, new global networks and new customer projects (start-up work initially takes time and resources) have affected the margin and the result decreased despite slightly higher sales.

The Market and the Thinc Collective
We and our entire industry have been affected by the fact that weak demand has continued longer than expected in 2024 and that the market is relatively unpredictable due to the current economic situation linked to global issues such as unrest in the Middle East, the war in Ukraine, etc. We see improved customer interest during the autumn, which, however, is dependent on the major issues in the world not worsening the economic situation for our customers.

In an entrepreneurial company that outperforms the market in terms of market attraction (Institute for Advertising and Media Statistics), there is a tendency to hold on to talented employees when it is noticed that the market is on the decline.

Thinc Collective is quick to take cost measures when necessary but also vigilant in order to be able to deliver on new, large assignments. Therefore, we have waited with major measures. We have customers on the way such as Coop, the Swedish Armed Forces, Neckermann Nordic, Pressbyrån and many more and will need the capacity. Instead, we have invested in the development of new and own products within, among other things, various projects for the Digital Solutions business area and in the Jetty SaaS system.

Digital Solutions, led by Fredrik Strauss, is developing services within AI, technology and automation in collaboration with the UK-based Mission Labs (see previous press release). The services will be launched in 2025.

2024 is a year of consolidation for Thinc Collective. Many new companies on board initially cost money even if turnover grows. This applies to everything from the investment in Stockholm, packaging work on the group's common services, but above all, working through and realizing the full potential of our new acquisitions and collaborations such as BANG Agency, LikeHouse, Granath and The Mission.

Thinc Collective's model, applicable to basically any service-based area, stands strong even in a recession. Connecting entrepreneurially driven companies in a model that retains the entrepreneur, the drive and the desire to develop has proven to work well. We are doing slightly worse in 2024 compared to what we hoped, but according to statistics from, among others, IRM and the Swedish Media Agencies, much better than the rest of the industry, which is a good indication of a successful concept.

Our immediate future
The near future consists of hard work. The customers and the new assignments are in and all capacity is needed to complete the assignments, which will likely be reflected in better development during the fourth quarter. At the same time, a major change is taking place in the service sector, where digitalization in the form of AI is taking great strides every day. Thinc Collective is well ahead in development and can now begin to reap success through our comprehensive concept and can attract customers we were previously unable to reach, such as Neckermann Nordic. Our group-wide procurement team has set the shape and increased activity and the number of quotes sent through several new collaborations between the group's companies. We are looking forward to the future.

Anders Wallqvist, CEO
Gothenburg in November 2024