Azerion Group N.V. (AZRN) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Azerion Interim Financial Results Q2 2024. [Operator Instructions] I'd now like to turn the call over to Umut Akpinar for welcome remarks.

Good afternoon, everyone. I'm Umut Akpinar, CEO of Azerion. I am here with my colleagues, Mrs. Julie, our newly appointed CFO.

Hello.

Mr. Sebastiaan Moesman, I'm our Chief Strategy Officer.

Hello, everyone.

And Mr. Ben Davey in his new role as Chief Investment Officer.

Good afternoon, everyone.

And we would like to welcome you to today's webinar to present Azerion's Q2 and H1 interim results. Before we start, I would like to take a moment to acknowledge the disclaimer and our forward-looking statements. Thank you. Let's please move on to the presentation. Let me start by saying we are incredibly pleased with how the company is getting better and stronger every quarter. Q2 has again shown our capability to grow our business while we are, at the same time, integrating and consolidating our activities into a single media platform. Our platform advertising revenue reached record Q2 levels as our premium games segment showed robust growth, resulting in a group revenue of close to EUR 139 million, an increase of 24% compared to Q2 2023, excluding the social card games portfolio, which we have divested in Q3 last year. Revenue from the advertisement platform grew 28% to EUR 105 million for the quarter compared with EUR 81 million last year. This was driven by improved direct sales and automated auction platform performance throughout. The integration of Hawk towards our single media buying platform, the creation of new strategic and commercial partnerships, improving spend in channels such as audio, CTV and digital out-of-home, increasing monetization of our exclusive partnerships and owned and operated content. Excluding contributions from social card games Q2 2023, total adjusted EBITDA increased by 20% (sic) [ 22% ] to EUR 17.5 million in Q2 2024 compared to EUR 14.4 million in Q2 2023. This was due to the improved top line performance of both platform and premium games segments mentioned previously. Cost savings and efficiencies from the integration of previous acquisitions and the successful launch of Habbo Hotel Origins. Our total operating expenses are down 13% in Q2 2024 compared to Q2 2023. Of course, again, excluding the social card games portfolio. This is a very significant step down in costs, showing our ability to optimize and integrate our activities into an increasingly cost-effective operation. We continued our focus to build and develop our advertising platform, rolling out new features and improving our technology stack, including the launch of Azerion Edge, a cookieless data monetization solution for publishers. And we took another important step in executing our strategy to build one of Europe's largest digital advertising platforms through strategic investment in Eniro Group, which we detailed in last quarter's presentation. I want to highlight a couple of projects that we worked on in Q2 and landed in July. Our partnership with Captify will help us empower brands in France and Italy by providing them with cookieless audience data from users' search behavior outside the walled gardens, together with our Azerion Edge product for publishers. We are well underway to provide alternative audience solutions to cookies across our entire platform. We also raised an additional EUR 50 million throughout the successful placement of additional bonds under our existing framework of EUR 300 million. Now I would like to hand over to Seb for some business and technology highlights.

Yes. Thank you, Umut. Yes. Our teams have worked hard in the last quarter to deliver advertising campaigns, improve our monetization capabilities and expand our engaged audiences through new partnerships. We hosted our first Azerion Annual Summit since COVID, bringing over 200 thought leaders together in Venice. We expanded our CTV inventory reach in France through the partnership with Stamp, a leading consolidator of television inventories. And we continue to launch new products and features in our premium games segment with the release, as Umut already said, of Habbo Hotel Origins and MyJackpot Journey, while adding more than 300 new games and 50 publisher partners to our casual games platform. In the last quarter, we continued to develop our digital advertising platform, connecting brands and agencies with audiences across the globe in a brand-safe environment. For example, we expanded our single media buying interface, adding more and more digital ad formats to allow buying across an increasing amount of publishers and formats from a single interface, making our teams more efficient while providing our advertisers with faster and easier insights. We also launched Azerion Edge, which embeds our first-party data for contextual and behavioral targeting through a cookieless solution. We rolled out dynamic creative optimization, which we are really excited about. This integration brings unique and localized advertising experience to digital audio, making use of generative AI into personalized ads based on the audience's location. And we integrated an AI-based yield management solution for publishers, allowing them to optimally monetize their content. And one more an AI-enabled optimization, we launched text-to-speech integration with publisher sites, which allows those publishers to translate articles into audio fragments, and that creates new exclusive inventory in which we don't embed digital audio advertisements. As you can see, while we already use machine learning for many years, the use of AI and generative AI is an efficient way to scale up otherwise very labor-intensive and therefore, unfeasible tasks, is increasingly part of our delivery to our partners. Finally, within the content division, we introduced several products that keep our owned audiences engage and active, which in turn allows us and the advertising teams to provide those audiences at scale to our clients and brands. So these are a selection of the advancements we made on our products and the tech stack to get better performance. And with that short summary, I'd like to hand over to Julie, who will take you through our financial highlights.

Thank you, Sebastiaan. Our Q2 Group revenue amounts to EUR 139 million, an increase of 24% year-on-year, excluding social card game portfolio divested in Q3 '23. This was driven by increased direct and automated auction sales and the integration of past acquisitions, including Hawk as Azerion's single media buying platform. Excluding social card games in Q2 '23, we have an organic growth of more than 11%. Adjusted EBITDA for Q2 was EUR 17.5 million, up by 22% compared to Q2 '23 on the same basis. Three key elements here to explain the growth. First, the improved top line performance of both platform and premium game segments. Then the efficiencies from the integration of previous acquisitions. And finally, the successful launch of Habbo Hotel Origins. Turning now to our results for the half year. Our H1 revenue amounts to EUR 258 million, an increase of 21% compared to H1 '23. This was mainly driven by the performance of our platform segments despite the loss of revenue contribution of the social card games portfolio. Excluding the financial performance of social card games in H1 '23, we have an organic growth of 10%. Regarding the adjusted EBITDA, it grew more than 39% year-on-year on the same basis, and this was mainly driven by 4 factors. Continued improvement of platform advertising revenue in H1, improved sales of AAA game titles in Q2 '24, cost savings and efficiencies from the integration of previous acquisition and improved premium game segment performance from the successful Habbo Hotel Origins released in Q2 '24. Now if we move to our segments. Let's start with Platform. Our Platform segment had a record Q2 with revenue of EUR 125 million in Q2 '24, up by more than 25% year-on-year. This was driven mainly by increased advertising platform revenue, especially in direct sales, automated auction sales, integration again of past acquisition and improved revenue from AAA games key sales due to a stronger publisher release schedule compared to the same quarter last year. Regarding organic growth, platform revenue has achieved 11% for Q2 '24 compared to the previous year. H1, platform revenue grew 24% compared to last year for the same reasons stated just now, and H1 organic growth amounts to 10% year-on-year. Regarding adjusted EBITDA, it grew to over EUR 14 million in Q2 '24, up by 6% compared to the same quarter last year. This was mainly driven by increase again, Direct and Automated auction sales, lower personnel costs due to operational efficiencies program and platform technology development resulting lower operating costs and benefit of scale. All of these 3 key elements offset in part by lower margin revenue from the Hawk acquisition and AAA Game distribution. Excluding some effects of foreign exchange, we had adjusted EBITDA increase by a little over 11% in Q2 '24 year-on-year. Regarding H1, adjusted EBITDA for the Platform segment amounts to EUR 23 million, an increase of 37%. Now moving on to nonfinancial KPIs presented in the second graph. Average digital ad sold per month amount to 12.1 billion in Q2, reflecting an ongoing focus on premier digital advertising format such as digital out-of-home, digital audio and drive to store. The average gross revenue per million processed ad requests was EUR 29 in Q2, as we continue to consolidate advertiser and publisher onto a single media buying platform. Now if we let's have given a closer look inside our Platform segments. Well, we broadly generate revenue from 2 sources: first, advertising, which consists of direct sales and automated auction sales and shown here in the dark blue bars in the chart; and AAA Game distribution, previously named e-commerce in light blue. In Q2, advertising revenue amounts to EUR 104 million, an increase of more than 28% compared to Q2 '23. Two key elements, Azerion direct sales contributed for 70% of platform advertising revenue compared to 65% in Q2 last year, with the balance provided by automated auction sales. And then Hawk, our integrated single media buying platform solution for advertisers contributed EUR 18.5 million in revenue in Q2, so a 28% increase. Now regarding AAA Game distribution, we generated revenue of EUR 20.4 million compared to EUR 18.3 million last year, an increase of 11.5%, thanks to more high-profile AAA Game releases that happened in Q2 '24 compared to last year '23. Now let's move to premium games segment. Please note that the financial performance here exclude contribution of the social cards game portfolio that we sold in August last year. The total revenue amounted to EUR 14 million in Q2 '24, increase of 15% year-on-year. This increase was mainly driven by the increased number of paying users in social casino due to new sales feature, improved performance from metaverse titles due to the release of Habbo Hotel Origins, and offset by the sales of Woozworld at the start of January '24. In H1 '24, revenue amounted to EUR 25 million, increased a little over 4%. Now regarding adjusted EBITDA, it amounts to EUR 3.4 million in Q2 compared to EUR 1.1 million last year, an increase of more than 200% due to product development across the social casino and other metaverse title, the release of Habbo Hotel Origins, improving metaverse title performance and the continuity of consolidation and integration programs. In H1 '24, adjusted EBITDA was a little more than EUR 4 million compared to less than EUR 3 million in H1 '23, an increase of close to 56%, sorry, compared to H1 '23, reflecting the previously discussed drivers in Q2 and partly offset in Q1 '24 by the social casino portfolio shifts in new user generation to mobile, which was higher growth potential over the time, but also higher transactions cost as compared to the web. Looking now closer to our operational KPIs for premium games in the second graph here. You can see that the average timing game per day remained significantly high at 81 minutes. The average daily active users in dark blue in the graph remain over 250,000 in Q2 '24, with focus on our side on retail engagement with higher paying users. Finally ARPDAU increased by 26% year-on-year, thanks to the improved in-game sales mechanics, features, events as well as the mentioned launch of Habbo Hotel Origins. To conclude on my side, let's have a look on the financial framework. First, we continue to show resilient performance in Q2 and over the last 12 months. The benefit of the strategies being implemented can be seen in the stability of our adjusted EBITDA margin for the group, now standing at around 30% for Q2 '24, excluding the contribution of social card game. Secondly, our cash flow from operating activities in Q2 '24 was EUR 6.7 million, and finally, our net interest-bearing debt stood at EUR 165 million as at 30 June. So let me now hand over to Ben to take you through some -- sorry, on ongoing integration efforts and concluding remarks.

Okay. Thank you, Julie. So during Q2 and into Q3, as we continue integrating and consolidating our past acquisitions, we've maintained our focus on cost optimization and operating efficiencies. Since we began our consolidation and integration in January 2023, we have made the following efforts. We've reduced the number of legal entities in the group by a total of 48 since we -- since the beginning of the period, including 8 since April to August of 2024. We've continued to reduce FTEs in Q2 and H1 2024, landing on around 975 FTEs as at the end of Q2 2024 compared to over 1,500 as at the start of 2023. As a result, combined with our improved revenue, we've also seen our productivity improve with revenue per FTE, as you can see in the chart, growing by around 54% as compared to Q2 of 2023. On the operational side, we have continued to simplify our group structure, reducing, as I mentioned, the number of legal entities in the group. That's a total reduction, therefore, of 50 legal entities as compared to the position in January 2023, that includes a reduction of 10 legal entities completed between April and early August of this year. In the past 18 months, we've also migrated a total of 9 hosting contracts onto our group arrangements with AWS and also reduced our office footprint by 24 leases over the same period. These efforts have continued to reduce our operating expenses in Q2 and H1 2024 as compared to the same periods of last year, with a reduction in FTEs remaining the main driver of that improvement. The recently announced strategic partnerships with Eniro and Captify should also provide the opportunity for additional efficiencies over time. So reflecting on the period's Q2 and H1 2024. We're very pleased with the progress that we've made across our platform business, with strong growth in advertising revenue and continued progress in the consolidation and integration of past acquisitions, all reflected in improved adjusted EBITDA. Our AAA game distribution business has performed consistently well, both this first half year and H1 last year. And excluding the social card games portfolio, our premium games business has shown top line growth and improved profitability in Q2 2024 as compared to the same period last year. We therefore believe that our strategy is delivering and that we are well positioned as we head into the important second half of the year. It's in this context that we're pleased to reaffirm our previous guidance. You can see that set up for you on the right-hand side of the slide. With our full year 2024 revenue expected to be in the range of EUR 540 million to EUR 560 million. And our adjusted EBITDA for the same period is expected to be in the range of EUR 75 million to EUR 80 million. In the medium term, we expect annual top line growth to be around 10%, and our adjusted EBITDA margins to be in the range of 14% to 16%. So overall, an encouraging quarter and first half year. And we believe we have a platform that's well positioned to continue its growth over the rest of 2024. So with that, thank you for listening, and I'd like to now open the line up for Q&A. So operator, please, can we go ahead and open up the lines for the questions.

[Operator Instructions] Our first question will be from Thomas Singlehurst at Citi.

So first question I had was just to sort of come back to the sort of underlying, underlying trends, if I can put it that way. I know you've hopefully sort of given us the figures sort of pro forma for the exclusion of the social card games. But then you've got -- I'm sure you've still got the Hawk acquisition coming through, which is at least partially captured in acquisition revenue. I suppose, do you think -- I mean is it fair to characterize that the underlying ad market is improving, and that's a tailwind? Or are you sort of seeing accelerated growth despite sort of a more challenged broader macro?

Yes. Thanks, Tom. That one, I'll perhaps hand to Sebastiaan just to give you that market context.

Yes. Tom, thanks for the question, Sebastiaan here. I think on the one hand, the advertising market is a result of the wider economy, and I will not go into a philosophy on what's happening in the world. But at the same time, within the current market, we still see that advertising in general is still becoming more and more digital. We've been saying this for a few years. So now suddenly, you see the outdoor advertising to be almost all of it digital. Connected TV is getting bigger and bigger. So within the current market for Azerion, there's still a big opportunity to grow in these, let's say, emerging formats within digital as advertising becomes more and more digital, more and more opportunities also open themselves up for us. So that is for us a positive. And then as we grow through Europe and become significant, we also see that we are ready then for any, let's say, economic uptick to be in our favor and then profit for in the future. Do you want to add something.

Just one thing perhaps to add to Sebastiaan's comment there. We've talked about in the past the importance of the Hawk acquisition and the growth that it helps us with, in particular, in some of the formats that Sebastiaan mentioned, CTV, audio, digital out-of-home and so forth. So I think it's also that exposure to those underlying sort of growth channels and segments that I think also we remain very positive about for the rest of the year.

I suppose the follow-on question is, you've had the sort of 1H sort of revenue beat sort of accelerating profile through the year. At this stage, you've decided to sort of call on the sort of financial guidance side in the sense that you've reiterated your guidance. And I know the fourth quarter is seasonally very significant, so that makes perfect sense. But should we read anything into that in terms of concerns about the broader market? Or is that just recognizing the fact that the fourth quarter is a very big part of the year and now is not the right time to sort of change the full year guide?

Yes. Thanks, Tom. Look, I think you've actually correctly answered the question. As you say, the Q4 for our industry and obviously for us as well is a very important part of the year. And noting what Sebastiaan mentioned a little bit earlier, that clearly, there is a relationship between digital advertising spend and the macroeconomic. We feel that whilst, as you say, we've been very pleased with the performance in H1, it is in line with our expectations, and therefore, fed into our guidance at the start of the year. But given how important that last few months will be at the end of the year, we didn't feel that it was right at this stage to change that guidance. As a management team, we feel very comfortable with the guidance as it stands, but we didn't think it was appropriate at this stage to move it higher. But we're obviously watching those trends that you talked about in your last question very carefully. And we certainly believe that we're well positioned for growth during the rest of the year.

Fair enough. Third question. So I'm doing one by one. I've got one more after this. Cookie deprecation or lack thereof, does that materially change the picture either for this year or running into 2025?

Yes, I'll take that one again. Sebastiaan here, Tom. Yes, on the cookies, I think it was the, let's say, the technology of choice for a long time for different systems to be able to talk to each other and exchange information. And the whole advertising needs that data and that exchange as long as cookies are there, it is therefore a yes, long-standing and proven mechanic. But in the last few years, people also realized that there have to be new mechanics at the same time to either cover for a depreciation of the cookie or for environments where cookies are even not viable, for instance, in digital out-of-home there is a big, let's say, screen in the center of the city. And the people that are walking past those screens are obviously not leaving cookies behind. So there's a whole trend also that moves away from this specific technology to be used. So what we did is at the same time, we have raised, of course, the technology we had in the past. And we have been building many different solutions that allow us to do the same job basically without cookie. So for us, the moment that this totally gets turned off or whether it's tapered off, it really shouldn't matter that much, especially not in financial expectations.

Very clear. And then one final question, and I'll jump back in the queue. I mean, you've done a lot of work sort of sorting out the balance sheet, which is obviously very welcome. Can we just talk about the sort of -- you obviously focused very hard on operational efficiency and integration. I'm just wondering whether we should expect any sort of more M&A spend or whether we should think about that being at least relative to the group's history, a little bit more on the back burner. And not to anticipate the answer, but if there is interest, are there particular areas that you're focused on or gaps and capabilities?

Perhaps I'll ask Umut just to start with that one, and I might have a couple of comments at the end.

Yes. Very good question. I mean our focus on Europe is really delivering results, but we see quite serious opportunities in the coming periods, let's say, where we are really working very hard on. And I think it really helps that our platform is productive and efficiency so that -- because that's how M&A is working, and that's how we are building our platform. If we buy things, we should be able to integrate them because we are an integrated platform. And now we are very, very, very far, and you could say, finished most of the work, we are now really also looking to the opportunities in Europe, and they are there. And that's also -- yes, I would say the new role of Ben, Chief Investment Officer, working very hard and maybe it can be a little bit more concrete or...

Yes. I mean so, I think that definitely sets the context, Tom. And -- but what I think you have seen over the last few months is us using a number of different partner structures. So we touched on during the main presentation, the strategic partnership with Eniro and that's a good example of taking a minority state, working very closely with the management team at Eniro, servicing their SME client base with an enhanced advertising product and also helping the company as a whole with their technology strategy, which we're able to really help drive because of the integration that Umut has just touched on. So I would certainly expect us to be looking at more of those types of opportunities. We also have the Captify partnership where we work very well with Captify generally and there was an opportunity to work very closely with their teams and bring them into us as it were the Azerion operation in France and Italy. So again, not sort of full-scale M&A but a really, I think, very sympathetic partnership where their teams came across to us. And so I think for the rest of the year and into 2025, we do see that range of opportunity that we've talked about before, enterprise deals, doing some good commercial partnerships, but at some scale. Sometimes, we'll support those minority interests, and we really do see opportunities in that space. And then at the other end of the spectrum, in a market which is growing and evolving very quickly, we do continue to see, as Umut mentioned, really quite interesting sort of more wholesale M&A opportunities, and we'll be very disciplined on how we go after those, but we are nevertheless sort of very interested in some of the opportunities that they present. That's great. And thanks for your questions, Tom. Okay. Operator, could we move on to the next question, please?

Next question is from Wim Gille at ABN AMRO.

I got a couple of questions. I think if we look at the first half, proper good development in the underlying results, yet the let's say, one-offs were a bit higher than anticipated. Now in the past, you spoke about how your restructuring efforts are coming to an end, which is also visible, but can you also give us a bit of feeling on how to look at the acquisition-related spend in the adjustments? Whether we should see that taper off for the rest of the year? And then moving to the cash flow in the first half of 2024, I think there was a cash out of about EUR 20 million or your net debt increased about EUR 20 million, it was about EUR 7 million for Q2. If I did the math correct, and obviously, we need to start generating cash along the way. I know given the seasonality that Q4 is typically a big quarter. And I also note that we have -- sorry, EUR 12 million hopefully coming through from the escrow accounts in for the social card games. But how would you look at the cash flows in the second half of this year to bring that net debt number down again from the current levels? And the third question, the last question that I have is, I looked at the country split that you provided on Page 20 of the report. And I noticed a significant drop in your revenues in United Arab Emirates from about EUR 25 million last year to EUR 5 million this year. And I was just wondering where all the other countries are growing? Well, Ireland is down a little bit, but there's a significant drop in United Arab Emirates. Is that like a reallocation from an accounting perspective of the revenues? Or is something happening in that region?

Okay. Well, thank you very much. So we'll take those questions each in order. I'll pick up the first one. I think Julie is going to pick up the cash flow question, and I'll come back on the country split. So the first question was, broadly, how do we see the outlook on acquisition expenses. And in your question, you correctly summarized the sort of the other part of the answer to that question, which is restructuring, we obviously have been talking about for a little while. And as you rightly say, we saw a reduction in that restructuring cost in Q2, sort of signaling from the original program that we're basically done. We will keep that obviously under review for the rest of the year because we obviously have to keep assessing where there are efficiency opportunities. But as things currently stand in a similar way on acquisition expenses, that really relates to, obviously the acquisitions themselves and then the ongoing integration. That, again, is slightly lagging the restructuring components because we have to close down systems or integrate systems or migrate contracts, there's a slightly longer duration of that. But to your point, if we were to do any further M&A activity or sort of substantive partner activity, you would expect that number to be reducing over the course of the second half of this year and obviously into next year. And then the only swing factor on that coming back slightly to Tom's question, is if we end up doing more activity with partners, be it M&A or something just short of that, you may well then see an uptick in that number. But obviously, you'll see the event alongside it, so you'll know roughly what to expect at this stage. So that's the answer to the first question. And your second question was on cash flow and how we sort of think about conceptually cash flow for the rest of the year, and you already partly noted the sort of the importance of Q4. So I'll just hand that over to Julie.

Yes. Thank you, Ben. Yes, regarding the cash flow, so what we can see in the Q2, the net increase in the cash and cash equivalents is EUR 2 million. But as you mentioned, for the H1 is a negative [ EUR 0.9 million ]. It's mainly explained by the EUR 6.5 million that we invest and also the one-off settlement that we had. But you tell it true, the main, let's say, cash flow and our activity are coming from the last months of the year. So we expect an increase in our cash generation. But perhaps also just mentioned that in Q2, the net cash provided by the operating activities positive by EUR 6.7 million. So -- and regarding your last question on the escrow regarding the sales [indiscernible] so you're right. So this is -- this should come in during the next days. We have not been aware of any issue -- a potential issue, but this is something that is just processing as of today.

Thank you, Julie. And then on the third question, related to the country split, and thank you for spending the time to go into the detail. Yes, so that relates to effectively flows within the e-commerce, now called AAA game distribution. You can generally have sort of large partner contracts there. And obviously, sometimes it's tied to the nature of the game release as well. And it happens that in particular, there's been lower activity in the UAE and actually higher activity in Germany. So some of that Germany uptick that you can see as compared to the same period last year is both in premium games and also in some of the AAA Game distribution activities. And obviously, just given the nature of the flows there, that can move around a little bit. But -- as I say, the big picture, coming back to how AAA Game distribution has performed, we've been really pleased because last year actually it performed very well. And at the moment, H1 to H1, it's right up alongside itself. So although there's been a change in the geographic mix, the overarching performance is actually very similar to what was already a good period last year.

There are no further verbal questions at this time. I'll now hand over to Ben Davey for written questions.

Thank you very much. So we have been receiving, and thank you for these, some written questions as well, which we'll always try and address one way or another through the course of the presentation. And so if I turn to the first one that I can see in front of us. The first question, which I think comes from one of the sort of market commentators. So thank you for that. I assume that the platform's turnover has increased by 25%, but the EBITDA result only increased by 6%. Please can you explain the difference. So perhaps, Julie, would you like to take that one?

Yes. Thank you. So yes, as you mentioned, by the increase by 25%. We are very pleased with the platform top line growth. As mentioned earlier, the adjusted EBITDA growth in Q2 was influenced by the business mix. So strong revenue growth in lower-margin areas, including Hawk and AAA Game distribution. And we had specific to Q2 '24 an effect on the foreign exchange. If we exclude this foreign exchange impact, platform adjusted EBITDA growth was 11% compared to last year.

Okay. Thank you, Julie. The next question that's come in. Despite the increase in the EBITDA result, the operational loss and net loss have increased in the second quarter, please could you explain the movements. So thank you for that. I think it's -- I'll take that one. I think it's important to put that in context. So the operating loss was EUR 1 million higher in Q2 '24 but actually EUR 1 million lower for the whole of H1 2024 as compared to H1 2023. So I think that's important context. And for Q2, the operating loss movement was mainly driven by the one-off settlement referred to earlier in the discussion. And as you can see from that press release, if you exclude the one-off settlement, the operating loss for Q2 would have been approximately EUR 0.9 million. In other words, it would have been a reduction in operating loss of about GBP 2 million as compared to Q2 of 2023. In addition, the results in this quarter also impacted by an adverse FX movement that, again, Julie previously discussed. Just talking to the second part of the question which is on net loss, i.e., the bottom of the P&L. The results for the period at that level were also impacted by an increase in interest costs. Now while the market interest rates have remained relatively elevated for a while now, currently, the market analysts do expect cuts in interest rates in Europe and the U.S. before the end of the year, which if that were to happen, would obviously help reduce our interest costs. So it's something that we keep a close eye on, but that hopefully explains for you the differences in the positions. Okay. So moving on to the next question. Why does Azerion place a strong emphasis on the adjusted EBITDA result but pay less attention to the development of the operational and net loss? So thank you for that question. Julie, perhaps you'd like to pick that one up.

Yes. So on our side, it's important to manage the whole P&L. And so clearly, attention is paid to all parts of the P&L. At the same time, part of the judgment is when to invest in the growth of the business, which may not translate into net profit in the short term. So it may even sometimes increase net losses for [indiscernible]. So Azerion is a growth technology company in fast-moving and innovative digital advertising market, and we have seen attractive opportunities, as mentioned by Umut, to continue that growth. So for the time being, we've been investing in that growth, while at the same time, simplifying consolidating and integrating our business to reduce the cost as you saw. We believe that progress is currently best tracked and reflects in adjusted EBITDA. But yes, we'll consider additional performance measure over time.

That's great. Thank you, Julie. On to the next question. The price of Azerion shares has moved and certainly went down early this morning. Obviously, it's moving a lot during the course of today. Compared to a year ago, the price is also more than 40% lower. How does the Board assess the discrepancy between the financial performance and the appreciation of investors? Perhaps I'll take that one. Look, obviously, as a management team, we cannot comment specifically on our own share price. But what we can do is to commit to delivering as strong a performance as we possibly can quarter after quarter. In addition, I think what we can do is continue to resolve and clear and simplify as much as possible our legacy structure, the litigation and indeed other historic investor concerns. So a good example from last year was, of course, the refinancing of our bond at the time. And addressing those investor concerns and cleaning up the legacy and simplifying the structure, I think, is another very important part of our strategy. And then the final piece is to just spend more time with investors, commentators such as yourselves and analysts, explaining our business model and ultimately why we believe we're well positioned to take advantage of the market opportunities that we see in front of us. So in that context, we believe we've delivered another strong quarter and half year results. And we very much look forward to engaging with the market and all of you after the presentation today with any follow-up questions and thoughts that you have. And then there's another question. Is there anything else to report about the AFM investigation? Is that investigation still ongoing? So just to confirm, there is nothing more to report on the AFM investigation at this stage. But obviously, we would provide any update if there were any material developments. We have another question. Thank you for that. Can you please explain in a little bit more detail what Azerion Edge is?

Yes, I can. So Azerion Edge is a product that a publisher installs on their website basically and then starts to build audience information out of the behavior of people that are on the website at that moment. So people are searching for something and they're clicking on certain articles that build a profile on behalf of the publisher, which is then used by our auction system to broadcast a certain audience type to the potential buyers. So we're not using cookies there, but we are helping the publishers to provide potential advertisers with a more detailed view on what type of person is actually visiting the website at that moment. And of course, the more information on that particular audience, the easier it becomes for the advertiser to decide whether or not to place an ad there. So it's all about collecting audience information without the use of cookies.

That's great. Thank you, Seb. And I think it's probably just looking, there's just one final question, I think, probably is for you as well. What is the impact of artificial intelligence on digital advertising? And how is Azerion positioned to capture these benefits?

Yes, absolutely. I think it's -- it's now the artificial intelligence is, of course, the buzz word. For years, we've been talking about machine learning and machine intelligence here. And that's because in our environment, we need to process such a vast amount of data that simply doing it with people is unfeasible. So if you think about our auction system, that auction system needs to run an auction to allow everybody in the world to decide whether or not to place an ad at a specific time on a website or in an app. There's hundreds of thousand people or companies and advertisers joining that auction to make that decision, all kinds of data and certainly they have to make that decision happen. It needs to happen in about a millisecond. And we do, on average, more than 250,000 of those auctions every second of the day. So that's such an astronomical amount that you need machines to help you. So we've been for years using machine learning and intelligence. Now that in the new times, artificial intelligence is more about the generative AI as people see it. So what we are now implementing, and I think I mentioned a few of the examples earlier in the presentation. So what we're now doing is using the generative AI to add, let's say, the capabilities where normally we would have to have a lot of people, but now we can use the AI to actually substitute that. As an example, the audio AI that we created was the following. Imagine you have a supermarket in France, and you're in hundreds of cities. Now you might want to show an ad or let people listen to an ad in Spotify saying, yes, you need to come to the closest Carrefour, which is at a certain address. Now in the old days, we would have to record with a person and thousands of ads with people saying, yes, please come to something in France. And it has to be done over and over again, manually. And now with the generative AI, we can have the base of the ads come to Carrefour, and we have the AI then add all the local addresses in the local language in the same speech added to the advertising. And then placing it close to where the people are, makes a much bigger impact than if you just do a generic ad. So artificial intelligence for us really plays into where we see the opportunity of making the ads and the experience for the user even more personalized, but where it was previously unfeasible to do it with people because it would just take too much time. But we are investing heavily in it. And you can see in the presentation already, I mentioned 3 or 4 things where AI is really helping us to become more effective and efficient.

Yes, that's great, Sebastiaan. Thank you very much for that. And look, I think just generally, we see real opportunity here. We've also got a long history of working in the fields of, in particular, advanced machine learning, and we see very much the benefits of artificial intelligence as an ongoing theme. That is the final question. So thank you very much, as ever for everyone joining today. Very much appreciate your time and engagement. Very much look forward to following up with anyone who has further questions, or would like a meeting, and please do get in touch. Otherwise, have a very good rest of the day.