Acast AB (publ) ($ACAST)

Good morning, and welcome to Acast Earnings Call for the Q1 2026 interim report. Joining us today are our CEO, Greg Glenday; and CFO, Anders Hagg. [Operator Instructions] I'd now like to start by handing over to our CEO, Greg Glenday. Greg, the floor is yours.

Thank you, LP. Welcome, and thank you all for joining us today. I'm here with Anders, our CFO, now 4 months in and fully hitting his stride. In my section, I'll cover our high-level performance and momentum, and then Anders will take you through the numbers. We have been very excited about the momentum our strategic approach is generating in the marketplace. We've been working on this vital infrastructure for more than a decade, and it is now paying off. At Acast, we strive to be the best place for creators. Great creators bring very valuable audiences, valuable audiences attract brand revenue. Once we have the brand revenue, that attracts and motivates creators and so on. You can see how this becomes a self-fulfilling flywheel with Acast at the center. We like to think of Acast as the engine room in the middle of this infrastructure. We have 20 people around the world. We have industry-leading innovation and technology, and we have the best data around podcasting. All of that together powers this flywheel. We want to create an unencumbered relationship between creators and their audiences and advertisers. Creator choice, open ecosystem, no real editorial point of view, we let creators create. We focus on brand safety. Those are the principles underlying everything we do at Acast. So when I say the best place for creators, I mean everything from premium publishers like Ted, Lamont, Perfect Day or Slate, to huge independent shows all the way down to a large number of niche shows with passionate smaller followings. We don't have an editorial point of view that we force on them. We do advise our creator partners on best practices we've seen over the years, but we let them run their show, and we think that's really important. We deliver tools to create and monetize your show the way you want to. We believe in creator independence, we meet creators wherever they are to empower them, not control them. The result is every creator gets the same infrastructure and access to monetization options without losing what makes their show their own. Now how does that translate to our advertisers. The big name still pulled the demand, that's vertical sales where we do omnichannel, deep, authentic integrations with buyers and advertisers when they come to us looking for a household name show. But many times, we say to them, you're not actually looking to buy that show, you're looking to borrow their audience. So that's the power of Acast. We can then take niche audiences and unlock scale our reach -- our technology aggregates investable audience buys across hundreds of smaller shows that no other platform can monetize at this depth. For example, a dozen big shows may reach 5 million people. 500 niche ACAS shows can reach the same 5 million people. So when we put those 2 things together, we can go vertically deep with a bunch of shows and then go much further horizontal to buy across the audiences. From the audience seat, both deliver a one-to-one relationship with the brand. We package both into 1 buy. That's what we mean when we say by the audience, not just the show. Our sales motions cover the full spectrum from blue-chip omnichannel brand integrations to programmatic to self-serve automated. Acast has solutions that cover all kinds of advertiser needs, and that's amazing news for creators. Not long ago, the video conundrum was a dark storm on the horizon for the podcast industry. Today, video optionality is 1 of the most exciting work streams at Acast and within the podcast industry. 4 in 5 global podcast consumers both listen and watch. Of those consumers, they fall along this logical continuum. Some listen more, some watch more and the vast majority do both depending on the context. Everyone I know who loves podcasts, myself included, changes modality depending on the context. Sometimes I'm commuting on a train or exercising or doing tours or walking the dog or driving. That all leads to different listening habits. And it also depends on the context of the content. News or business versus pop culture or comedy or true crime. This is exactly what we mean by narrative influence. It's not audio, it's not video. It's a new mode, a consumer creator relationship that lives across formats. Why we're built for this. Our newly established video partnerships, which I will touch on in just a minute, gives the creators an open choice ecosystem. We made that years ago on the audio side, and now we're doing the same in video. Speaking of Creator Choice, we've worked hard to ensure that this applies to video podcasting too. We're in a unique position in that we have solutions for all the current major platforms, Spotify, YouTube and Apple. That made us the first fully platform-agnostic video and audio distribution monetization company in podcasting. Earlier this year, we were proud to be an inaugural launch partner for Apple's new video offering via HLS technology. Currently, we have around 90 shows live with video, and we have our first integrated advertiser campaign with Apple launching this quarter. On the Spotify front, they have a new distribution API that we are participating in between creators, publishers, and monetizing video on Spotify without switching hosts. YouTube, we have the U.K.'s largest premium video podcast offering. Over 20 of the biggest shows in the U.K. are already live and the U.S. is rolling out this quarter. From an advertiser perspective, this gives you a single gateway to premium audio and scaled video across every platform. The strategic flywheel is omnichannel, earlier bookings, larger bookings and a broad base. This is what global scale and pure focus actually looks like. We are a category of 1 the world's largest pure-play podcast company. Specialists, not generalists. Podcasting isn't an add-on for us. It's the entire business. We built Acast to be global, but we prioritize local expertise and execution. This illustrative example represents the competitors, our local managing directors compete with on a daily basis. Of the 60 or so companies on this slide, only 5 are in more than 2 markets and only 2 are in more than 3 markets. And over time, our business model has grown further and further from Spotify, which has made us much stronger partners with them. The creator benefit is 1 relationship with a worldwide audience plus revenue. Podcasting does not need a corporate suit to greenlight a show in every country. It's a meritocracy. A show from the U.K. can be big in the U.S. or Australia if the audience says so. We have a show in the U.S. whose second largest market happens to be Ireland, and we monetize the audience there as well. The advertiser benefit is a single point of entry to a fragmented global market for both brands and the big global advertising holding companies. All that to say, we are very confident in our position in the next phase of the podcast industry as it evolves. Our advantages took years to develop. Global scale, local execution, platform-agnostic distribution, creator control and choice, full spectrum sales motion from self-serve to blue-chip omnichannel buys, proprietary data and end-to-end technology trust across the industry. Network effects that strengthen every creator we add. These aren't separate USPs. These reinforce each other. That's what makes it hard to replicate. Our podcast road map approach is simple but very hard to replicate. We simply listen to our constituents, creators, their audiences and advertisers. Their desires, frustrations and ideas become a road map. We're obsessed with building or acquiring the tools needed to remove friction to make this flywheel spin throwing off more value to everyone involved. With that, let me move on to our Q1 highlights. Our momentum from Q4 carried straight into Q1. And we delivered 20% net sales growth and 31% organic growth when adjusted for FX and M&A. This consistency is the result of deliberate execution, not an accident. North America was our primary growth engine, up 43% organic growth year-over-year with meaningful contributions from Europe and other markets and the milestone of the quarter, this was our first ever profitable Q1 with adjusted EBIT of SEK 5 million at a 1% margin, particularly notable given that Q1 is seasonally the softest quarter in advertising. Looking at key events for the quarter. I've already mentioned our expanded video podcast distribution with Apple podcast. We also signed an exclusive ad sales distribution partnership with SLATE, 1 of the most respected names in audio journalism. This validates that the world's best creators choose Acast, and it expands our high-value content and editorial credibility in North America. We also added Perfect Day Media with a strong niche portfolio here in Sweden. This leads our long-tail monetization engine, the deep, loyal communities that advertisers want. I'll now hand it over to Anders for a financial deep dive.

Thank you, Greg, and good morning, everyone. I'm now a few months into the role, and I have to say the business momentum you see in these numbers is real and consistent with what I experience every day inside the company. Let me walk you through the key financial metrics for Q1 2026. Listens came in at SEK 1.11 billion, up 1%. But as we said consistently, our focus is not just on volume, but it's on quality and value per listen. Average revenue per listen or ARPU reached SEK 0.58 in quarter 1 and that's the highest Q1 ARPU we've ever recorded and represents a 19% growth year-over-year. This reflects our continued success in expanding monetizable inventory improving sell-through and commanding premium pricing through integrated multiformat campaigns. Net sales reached SEK 645 million in Q1. And up 20% year-over-year. Organic growth adjusted for FX and M&A was 31%, continuing our strong growth trajectory. Q1 is seasonally the softest quarter in our industry. So this result reflects particularly strong underlying demand from advertisers. Growth was driven primarily by North America supported by solid contributions from Europe and other markets. Gross margin came in at 37%, delivering a gross profit increase of 20%, growing at the same rate as the top line. The Q1 margin was in line with quarter 1, 2025, and was just like then affected by lower margin in North America. Looking at our segments, we saw positive contributions across all segments in the first quarter. Europe grew by 16% with 23% organic growth. supported by strong performance in the U.K. While contribution profit in Europe increased, margins decreased slightly, partly impacted by the acquisition of Wake Word Studios. In North America, our momentum remained very strong, serving as a primary driver of group growth. Revenue increased by 43% organically. However, this was offset by a negative currency impact on the reported top line resulted in a reported growth of 26%. We also saw significant expansion in our contribution margin from increased operating leverage. Finally, other markets delivered 22% growth with 26% organic growth and contribution margins also increased year-over-year. Overall, this regional mix shows that we have strong double-digit growth across all regions while also scaling our cost base. At group level, adjusted EBIT came in at SEK 5 million, a 1% margin. This compares to a loss of SEK 26 million and minus 5% margin in Q1 2020. an increase of over 6 percentage points. And this is our first ever profitable Q1, a clear milestone and evidence that our operating model scales. On a last 12-month basis, our adjusted EBIT margin stands at 2%, continuing the steady upward trajectory we've been building throughout 2025. Operating cash flow for Q1 was SEK 40 million, including SEK 12 million in positive working capital movements. On a last 12-month basis, operating cash flow was SEK 73 million reflecting the genuine cash generation that comes with sustainable profitability. And we closed the quarter with a robust cash position of SEK 602 million giving us the financial flexibility to continue investing in our growth strategy. And I'll now hand back to Greg for closing remarks.

Thank you, Anders. Q1 was exactly what we set out to do. We delivered 31% organic growth in what is seasonally our softest quarter. We achieved our first ever profitable Q1 with adjusted EBIT positive and improving cash generation. The additions of SLATE and Perfect Day Media reinforce our content leadership and our video distribution now spans Apple Podcast, Spotify and YouTube.

Thank you, Greg and Anders. We will now start the live Q&A. [Operator Instructions] And the first few questions come from Andreas at Carnegie, who has posted a number of questions. So the sales organization has expanded and also the cost. Are you happy with the size of the sales organization now? Or should we expect further expansion to handle the market growth?

Great. I'll take that one. Yes and no. So I don't mean to be wishy-washy but we were really excited that revenue outpaced cost, and we think that will continue. One of the things we track that we don't report on is sales efficiency. So the same way we think about average revenue per list and we think about our salespeople and what they can handle. And as budgets get bigger, we're getting much more efficient on the sales side. So I think we will invest where we need to call on new advertisers -- but our tools and our sales motions really have led us to be much more efficient. So we think that's going to continue. So as revenue grows, we will invest in more people, but not at the same pace for sure.

Could you explain the various growth drivers per region, given that listens is more or less flat price, ad loads and sell-through rate must be the drivers. But is it different in different regions.

I'll take that one, too. Yes, I think it is different in different regions, but the general themes have been our go-to-market, we have everything from, as I mentioned, on the automated side, we go from self-serve to programmatic -- we have a hands-on direct response team and then a big omnichannel brand team. All of them are growing. It depends on the region and the advertiser is to where the demand comes from. But we also focus on average revenue per listen. So because that's going up, we're getting much more efficient. And it's not just adding more ads and commercials to popular shows. It's being able to sell shows further into our long tail. Audiences. This is essentially new inventory. It's inventory that's existed, but was low demand, and we're now turning it into high demand. So we're very excited about that. And then again, different regions because we have different ways to go to market, Australia is a very sophisticated programmatic market. So we're leaning into that. In the U.S., we have access to big budget decision makers. So when we think about the U.S., we think, more omnichannel and doing bigger 7 and 8 figure deals with advertisers. So it depends on the country, but we have a solution for all different types of demand around the world.

Great. The gross margin is always weak in Q1 and then improves for the rest of the year. Any reason to see things differently in 2026? And can you explain why the industry has this pattern during the year?

Yes, I'll take that one. Thanks for the question, Andreas. So I mean, it might seem pretty obvious, but I mean margin is affected by country mix and product mix. There were some countries and products have higher margins, some lower -- and North America has slightly lower margin due to higher competition. So as the market grows, it will have an increasing effect on group gross margins. As we also said during the call or the presentation, though, is, I mean, quarter 1 is seasonally the softest quarter, and our cost of content also contains some element of fixed cost -- and as a result, this will also have an effect on our gross margin then so seasonally in Q1. So those are 2 other factors impacting Q1 and what you can think about margin going forward.

You have a net cash position of SEK 600 million. Why is the finance income -- excuse me, income not higher given the large net cash position?

That's another good question. And to be honest, I think so far, our main focus has been on the business and to make sure that we are profitable and drive profitability. But going forward, of course, we'll be focusing on sort of all different lines of the P&L, improving all metrics.

The pace in activation of R&D looks to have increased. Can you explain the reason for this?

Yes, absolutely. So if you look at the video partnerships that we announced in Q1, our product and engineering teams with similar resource to last year, handled the heaviest workload we've ever had at Acast. We're really proud of the fact that we've kept pace with Spotify, YouTube, Apple. These are big organizations with really sophisticated engineering teams, and we were able to keep pace and build these products with them in Q1. So very proud of the pace of R&D, and we're excited about, again, changing the industry is not easy. And if we can do it in an efficient way, we're pretty excited about that.

And then we have a few questions from Derek at ABG. How sustainable is this ARPU uplift? And what are the main drivers, pricing mix, targeting, programmatic?

I can start -- so I mean -- at the Capital Markets Day in April last year, we did say that we believe ARPU could double over time, so through average ad load and sell-through rates. And we've gone from SEK 0.44 in 2024 and to SEK 0.57 in 2025 and now 0.58 in quarter 1, 2026. So the trajectory is where we want it to be. SP-11 But maybe you want to add some color to that.

Yes. I think the reason that we're excited about the ARPU growth is that -- and I've mentioned this the last 2 quarters, we're not turning our backs on download and listens, but obviously, the industry has gotten much more sophisticated. So I think years of downloads and listens as kind of the proxy for podcasting. We just talked about HLS video and uploads and there's all kinds of ways that our creators reach the audiences. So the idea that we're only focused on listen, that's going to change over time. We're going to have to find a way as an industry. We're working really closely with all the industry orgs, some of our competitors and partners. We have to get more sophisticated in how we think about these audiences. It's not just RSS listens, there'll be HLS, there'll be video. None of that is currently in our listens numbers. So our audience number that we report is just listened. So we think as that grows, it's it's something that we're watching and -- but listen, is very directional. It's not a very sophisticated measure of audience.

Great. And any change in the mix between host reads and programmatic or preproduced ads?

Yes. We don't report on the mixes every country and every region is different. I mentioned that there are markets that are more sophisticated with programmatic. There are markets that, for instance, in the United States, 1 of the great things about our self-serve portal is that there are small ad agencies in Tennessee or Ohio that a company like ours maybe wouldn't send a salesperson to visit them. But we can activate them through our platform and our access to self-serve. So we think every market is different. We treat them differently, but we have 4 or 5 different sales motions that work depending on the demand in that market.

Great. And how would you describe demand visibility today versus a year ago? Are booking cycles getting longer?

Yes, absolutely. One of the things I'm excited about is even 3 years ago, our company and podcasting had very little visibility out into the future. You didn't -- we were kind of booking quarter-to-quarter, and there wouldn't be much second half revenue booked. And again, we don't give guidance, but we see big advertisers Obviously, they plan earlier. The more sophisticated the brand, they've got their year plan. So we're able to tap in, especially being global at the holding companies we can tap into that demand earlier and start building programs that make a lot more sense with research and insights. The more time you have, the more sophisticated your campaigns can be, which obviously are going to be larger.

Great. And we have a question from Richard Kramer. How might a potential merger between iHeart and Sirius impact Acast would there be an opportunity to work more directly with either of them.

Yes. In fact, I spent almost 20 years of iHeart. We have a lot of friends over there. We work really well with Sirius. We're sort of partners, more than competitors with both of them. I think Sirius has done a really, really good job in the marketplace. They don't have any local radio station licenses. So 2 very different businesses. Neither 1 of them, podcasting is not the largest part of either 1 of those companies, but they both do a good job, and we partner with them. So I'm excited to see. I think it's -- to see what happens in the marketplace. But -- we don't really comment on -- I'm not really sure what's going on whether the rumors are true. But I think a satellite company with digital assets, local market radio, I could see why that would make sense. But again, I'm reading about it just like you are.

Great. We have a question from Bernd at Barclays. Can we expect a similar M&A contribution for the full year of '26 than we've seen in Q1?

Sure. I mean, I'll start, but Anders has the purse strings. The way we think about it, we've got our strategy and whatever is going to get us there quicker. If it's build it, we'll build it. If it's buy it, we'll buy it. If it's borrow it, we'll borrow it. So we don't -- we're really agnostic to how we solve our problems and whatever is the best thing for ACAS and our shareholders is how we're going to approach it. So Certainly, we talked about the cash we have on hand, and we want to make sure that we're using that efficiently and as a great ROI for the company.

Yes, nothing to add.

Great. Roughly speaking, how are you thinking about steady state contribution margins in each region?

Yes. I mean if I start that one, then I mean if we look at Sweden, for example, I mean, we have a very healthy margin level here given our strong market position and gross margin structure. In the U.K., yes, we are market leading and also good margins, although it's slightly different competitive dynamics than Sweden. So I think -- I mean, the big opportunity margin-wise is to bring sort of the North America and the rest of Europe up to sort of U.K. and Sweden levels going forward.

We have a question from Peter. You are stating that North America is the key factor behind the lower gross margin in Q1, same as Q1 2025. And -- could you please give some insight on the dynamics in North America as we are seeing EBIT margin of 13%, up from 4.1% Q1 2025.

Yes. Thanks, Peter. Good question. as you say, I mean, we also see very much evidence of our scalability also in North America, and that goes across the board. And contribution margin has increased, thanks to that scalability even though the gross margin was lower. So I think -- we continue to expect good scalability across the business, including North America. As Greg was talking about before, I mean, yes, we might want to invest in sales resources, but we should we should be able to grow revenue faster than we have to invest in OpEx.

Peter has another question. Could you please share some of your plans for Wayward Studios. How are you going to leverage the acquisition and make it profitable?

Sure. I'll start. We're really excited about the German market. We've been investing there. WeWork gives us a very similar playbook, obviously, different language -- when we bought Wonder Media at the end of 2024, our goal is to assimilate them into our sales process beyond just the content that they create. And that worked so well for us that, again, they're an English language solution that when we found Water, we said, oh, this is the same thing. This is a studio that can help us build bigger campaigns with brands across Germany, decision-makers there, branded content, all of those things. So as we're building that, we're becoming much more efficient and we want to follow the same playbook we did with Wunder Media that became ACAS creative studios. We are doing the same thing with Wakad in Germany. And frankly, I feel like it's ahead of schedule. They've really hit the ground running and the assimilation has been very smooth.

Great. Another question from Bernd to Barclays. What percentage of your revenue today is programmatic? And where do you think it can go over the midterm? Do you find that programmatic revenues tend to be incremental?

Yes. This has been -- I've been answering this question for 15 years across lots of different channels. But programmatic is fairly misunderstood in podcasting. I think a lot of people, especially smaller companies, think of it as it's either live reads and everything else is programmatic. For us, we think programmatic is a big chunk of what we do. I think it's especially programmatic guaranteed. We have large advertisers that actually work with our salespeople on campaign. So it's a direct sale, but then they book it programmatically. So -- we think programmatic will continue to grow. I think it's an important part of the industry. We just want to make sure that it doesn't commoditize podcasting. I think 1 of the beautiful things about podcasting is how unique it is and how well it works for brands, but you have to be thoughtful about it. And I think sometimes programmatic can be a little bit to transactional. So we're really excited about things like programmatic guaranteed, our global partnership with Magnit last year. It was -- we did that for a reason. That's a long-term partnership. So I think it's growing, whether it grows at the same pace, faster or slower, depends on the region, but it is 1 of the growth areas for us for sure on the revenue side.

Another question from Derek. Are there specific advertiser categories or verticals that stood out positively or negatively in Q1?

Yes. That's another thing we don't break out, but I can tell you as we start to crack a category, advertisers are -- there are advertisers that lead from the front and then there are advertisers that are fast followers. So I think you'll see once we've cracked telecom, then you see competitors coming in, pharmaceutical has been growing, we have -- there's several categories, entertainment, I think, obviously, podcasters are tastemakers and entertainment is a word-of-mouth marketing segment. So the idea that entertainment, new movies, having them talk about it on a podcast has been really, really good for the entertainment category. So I'm excited about automotive, pharmaceutical, insurance, finance, there's pretty much every category has increased curiosity and demand in podcasting. So again, if ACAS is a proxy for podcasting, we think we're in really good shape.

Another question from Bernd to Barclays. On Listens, you said your focus is not just on volume, but on quality. Apart from less commercial content that you have discontinued -- can you give us a sense of underlying growth for your core portion.

So we have -- as we evaluate content, we have a couple of ways to do that, and we've got some proprietary analysis that we do. But we essentially create a contextual scorecard for content that how sellable, how much demand is there, how brand safe is it? How much demand will it pull in, meaning how much will this piece of content make the phones ring for us rather than us having to proactively sell -- so as we look at acquiring content, I think we've gotten really good at figuring out what makes sense for us and how we can monetize it and really derisking that whole process of holding your breath and hoping that the content becomes valuable.

Great. And a question from Richard. [indiscernible] video podcast inventory cannibalize audio and what video -- what might it do to CPMs and ad pricing?

So no, I don't think. I think very additive. The way we think about our creators, some of them will want video, some of them won't. Some of them want to push video, some of them need to push video. So we're really excited. This is just going to be a complete expansion of audience and inventory. So CPMs will be higher. The market will change. We love the idea of blended modes that an advertiser can do a campaign with us, that is going to have audio or video in it, depending on what the consumer is doing. So this is a whole new era for the marketplace. And I think again, we're locking arms with partners like Spotify and Apple and we literally are blazing this trail together in the industry. So we're really excited about it. Obviously, video has higher CPMs, audio slightly lower. But I think our CPMs have been creeping up because it's efficient and it works, and we can prove that it works. So you get what you pay for, and we certainly don't want to be a race to the bottom. I don't think podcasting is commoditized, and we're going to make sure it stays that way.

Okay. Great. Just check if we have any more questions. Right. I think that concludes the Q&A. Thank you to everyone who has listened in. The next upcoming quarterly report is our Q2 report, which will be released on July 23. And you're, of course, welcome to join us for that presentation. In the meantime, you can follow us on investors.acas.com to sign up for our press releases, our news and our financial reports, follow us on our Acast newsroom and of course, listen to our results as a podcast. Thank you, and goodbye.