Cint Group AB (publ) (CINT) Earnings Call Transcript & Summary

Welcome to today's Cint Group Year-End Report for 2021. My name is Jordan, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Tom Buehlmann to begin. Tom, please go ahead.

Thank you, Jordan. Good morning, everybody. It's a pleasure to be here again. If we go straight into it on the agenda slide, you've got myself and Joakim as the usual double act, if you like, that you're getting used to on these calls. In terms of agenda, a little bit of a fuller agenda than we've had in the past. We're obviously going to do a very brief recap about us, about Cint, because I know there's some new folks on the call. Then absolutely Q4 highlights, then the Lucid update is very important of course and the financial update with a summary and then we'll leave some time for Q&A. So perfect. If we go to Slide 4, please, and just start with our very brief overview. So many of you will be familiar with us, some not. So really we're the global software leader in the connected consumer insights or market research space. What we do is we effectively digitize what is still largely an analog and people heavy industry. We do have a large customer base. You can see bottom left hand side there, that number has crept up now to 3,100 B2B customers. I think we've added about 600 during the course of 2021 so we're pretty happy with that. And we do have very high degree of stickiness, bottom right there you can see net sales by customer vintage where almost sort of 65%, 66% of our revenue comes from customers that have been with us from 2016 so 6 years ago and more, which is great. Very large underlying market, 3.5 billion and so in terms of kind of runway to grow, it's plenty. It really is plenty. We don't worry about that. We are a cloud-based B2B software platform. We'll talk about that, explain that a little bit on the next slide. And in terms of our track record, I mean you'll have seen the announcement that went out a little bit earlier today, but very kind of solid year-on-year revenue growth. You can see that in the blue bubbles. So kind of in the -- comfortably in the mid to slightly upper mid-20s and then we've kind of accelerated that to kind of 35% in 2021. And as you can also see there, nice progression -- positive progression on the EBITDA line as well. And of course we'll talk more about both of those trends in the next couple of minutes. As you'd expect, a lot of focus on data security and privacy. I know there's some questions around the recent announcement of Google and Android. We'll definitely talk about that in the Q&A session. And then we are a very global business, very much so, we keep talking about that. It is important and of course with the Lucid acquisition, that's just reinforced that. So if we move to the next slide, you can really see -- I mean yes, definitely both us and Lucid definitely global insights platforms, lots of complementarity and similarity between our 2 businesses. You can see us there on the left hand side. We're really a B2B software platform that connects brands or customers who want to ask questions on the left hand side with respondents who have opted in to answer questions on the right hand side. And Lucid do very similar things there as you can see on the right hand side. We've got, as you can see there, a marketplace definitely, which is the one I've just talked about. We've got an enterprise proposition and both of those things are key drivers of our revenue going forward. We'll talk a little bit more about Lucid sort of in a dedicated section. So if we now just move on to the next slide and talk about our growth strategy and pillars. You will be familiar with that. It's definitely increasing share of wallet with our established insight companies and you'll see some data around that where kind of the number of B2B customers has grown, I think the 3-year CAGR is 25%, and our revenue has kind of exceeded that on a CAGR basis definitely. So we are gaining share of wallet. Important for us are the tech-enabled growing very fast indeed and ultimately I think that will be the future of market research as we see it at least in kind of in major share terms. And then new customer acquisitions, as I've said, I think we've added 600 customers during '21. I think during the year I said we wanted at least sort of 450 to 500. So we've kind of overdelivered on that, which is good and that stands us -- will stand us in very good stead for '22. And then of course we're never static and by combining with Lucid, we're definitely not static on the platform side. And equally, we've said we would do M&A when we did our IPO about a year ago and we've done 3 during the course of 2021. So again we're talking about it and we are actually doing it as well. So that's a very brief overview. If we now flip on to Slide #8 and really talk about Q4. It's definitely -- I mean some of you guys said it was solid in some of the early sheets that went out. I mean I definitely agree with that. I think we're very happy with this. We've got 42% almost organic growth and adjusted for currencies, it's -- I think it's a pretty respectable 28%. And then similar patent on the EBITDA where we've got an adjusted EBITDA margin of 19% versus 17.5% a year ago. So we're pretty good -- so feel pretty good about that at a high level. And then digging into the regions, all the regions contributed in Q4 and as did both our major customer segments that we generally talk about, which are the tech-enabled and the established. And again we'll talk about more of those -- each of those in the next section. And then of course a big focus for us was the acquisition of Lucid, very time-consuming and a big focus and kind of delivering these results while doing for us a very big acquisition again is a testament to the team and also our kind of business model and go to market. So if we now move to the next slide and you'll be familiar with this format really that shows on the left hand side the net sales by customer segment. Again kind of this is on a yearly basis now because I think it's sensible to look at this on a yearly basis. You can see the key growth drivers are really being the tech-enabled and the Americas, almost 50% CAGR since 2018 and you can see that kind of the multiyear CAGR there on the tech-enabled on the left hand side comfortably above the more established. Now that sort of flipped around in Q4. If anybody wants us to talk about that, happy to in the Q&A. But fundamentally, the trend that we see here we expect to continue as we think about the future as well. In terms of the regions, we can maybe move to the next slide and look at that in little bit more detail in Q4. You can see here we've got all 3 regions growing very nicely indeed. We've got the Americas at plus 38%. EMEA now nudging just above 50%, which a lot of that is due to GapFish because excluding GapFish, I think it's 28 year-on-year. So still very, very respectable indeed. And then on APAC, we've got really good momentum and that continues to translate into kind of well into double-digit growth year-on-year. So broad-based growth is something that I've talked about in the past and I think that is important both geographically and by our customer segments. So pretty pleased with that. It's not a kind of blip in one area or one geography, it's really across the board. Business KPIs on the next slide, please, also positive very much so. I talked about the B2B customers moving kind of less to right 3,100. We've got the 25% CAGR since 2018 on B2B customers, which of course is superseded by our revenue CAGR. So we are definitely gaining share of wallet there, which is good. In terms of connected consumers, a nice uptick on that as well now for the year. And then of course yes, finally happy about that. We've reached 100 million completed surveys for the year, which is good and it's kind of a very nice psychological milestone for us. So that's kind of the Q4 update for us. If we now move to Lucid and slip on 2 slides to #13, please. I'll just talk a little bit more about the kind of Lucid also in comparison to Cint. This is the same slide as we saw previously, but focusing now on the right hand side on Lucid. I mean they are also a -- they have a software platform shown in blue there and again they connect B2B customers on the left with respondents on the right hand side and they do that in a very kind of automated and tech-enabled way, which is fantastic. So they are very similar to us, but -- and you can see that in terms of their net sales by region, very complementary because they are much bigger than old Cint was in the U.S., which is great because that's a great complementarity and conversely, we are much bigger than they are in EMEA and you can see that in their net sales by region. In terms of business areas, some of you may recall, they've got 3 that they talk about. They've got the software, which is effectively the platform. Services, they call that research as a service, which is kind of analogous to the managed services that old Cint also does. And then really encouragingly we've got the audience business, which is online ad effectiveness measurement, which has grown incredibly well during 2021 and we now have the full year numbers, it's plus 85% I believe and we'll see the numbers in a second, but growing very strongly and I think that's going to be a very interesting addition to our value proposition of the group as we grow forward. Now moving on to the next slide, please. 2021 performance for the Lucid Group overall. So again moving left to right. Revenue development plus 20%. I think that's very much in line with what we were expecting when we were talking about the deal last year. And I think it's interesting to break that down into the 3 segments, which is the second bullet point we've got here. So really we've got the software business, which is the core kind of platform growing at 30% which is fantastic; we've got the audience 84% -- I was wrong, it wasn't 85%, 84% year-on-year, but that is a little bit offset by a decline year-on-year on the services now. I mean the way I think about that is that fundamentally, we do want to move from services to software. In other words, from medium and high touch to low and 0 touch. So strategically this is absolutely the right thing for us to be doing. But nevertheless, we do need to -- we are keeping an eye on it and we do have some ideas on how to kind of be more managed about that transition rather than having too much year-on-year decline. But also Lucent had a lot of political polling in 2020 so if we kind of exclude that, it is overall the total company growing by 30% year-on-year, which is fantastic. Gross profit margin is very positive indeed as you can see here, well in the upper 70%s, which obviously is going to be very positive for the group as well. And then the EBITDA, again it's in line with our expectations. Lucid did some kind of strong COVID-related measures in 2020, which increased their EBITDA overall and margin and then went back into more investment mode. We're all familiar with kind of generally the pattern of U.S. investors and shareholders quite aggressive investment into growth and as a result of that, they had a 2021 EBIT margin of I think 11%. And of course now as part of the group, we'll be kind of working with that and adjusting that to what we want to do on a go-forward basis as part of the Cint Group. So that's a very brief update on Q4 and the Lucid Group. So I'm now going to hand over to Joakim, who will take us through our financial update.

Perfect. Thank you, Tom. And before getting into the numbers, I would just like to clarify that there has been no impact on the income statement from the acquisition of Lucid. However, the consolidated financial position and certain items on the cash flow statement does include Lucid. So with that, let's move to Page 16 and the financial highlights and here I will start with our Q4 highlights on this page and thereafter on the next page, we'll add it up to the full year. And as Tom mentioned at the beginning of the call, we are very happy to end the year on a positive note. We reported net sales growth of 42% taking us to EUR 44.8 million net sales. If we exclude the contribution from GapFish and look at the organic growth, it was 28%. Our gross margin declined slightly from last year to 50.8% as the gross profit amounted to EUR 22.7 million. Finally, and to your right, our adjusted EBITDA increased by 55% from EUR 5.5 million to EUR 8.5 million and showed a margin of 19%. Let's move to the full year on the next page. Starting to the left, our net sales grew during 2021 by 41% or 36% organically excluding the currency effects. That growth took us up to EUR 138.9 million of net sales. Gross profit grew almost at the same rate of 40% and the full year gross margin was 51.2%, which was more or less in line with the 51.9% the year before. Adjusted EBITDA amounted to EUR 25.8 million after a solid 58% growth during the year. The adjusted EBITDA margin improved during the year from 16.6% to 18.6%. If I move to the next page, we have included a more detailed overview of the operating expenses and a longer trend of our margin and a couple of comments to this page. First of all and as highlighted in the table to your right, we are happy to see that operating expenses in relation to net sales is continuing down. For the full year, as stated in the table, it corresponded to 32.6%. Second comment on this slide relates to the longer trend improved profitability as shown by the bottom graph. The 18.6% in margin for the last 12 months of full year 2021 is contributing another data point to the graph and we are continuing to see good development towards our financial targets of improved profitability. Next page, please. And for the ones that have listened to our presentation on the Lucid acquisition, you will remember our synergy targets. But as a reminder, you see on this slide that in connection with this acquisition, we identified EUR 40 million of run rate EBITDA improvement when fully ramped up. The drivers to this synergy number are threefold. So we have growth supporting synergies, we have COGS synergies and OpEx related synergies. And we will see these synergies start ramping up at the end of Q2 and onwards to being fully ramped up at the end of 2023. These synergies and the potential we see in the acquisition of Lucid made us revise our financial targets. From having been a Rule of 40 company, we have increased the bar and we now aim to be a Rule of 50 company instead in the medium term. We are increasing our targeted revenue growth from 20% to 25% and we are increasing our profitability target from 20% to 25%. The dividend policy is the same and that means that we have no intention to pay out any dividend to our shareholders in the short term. And with that, back to you, Tom, to summarize.

Great. Thanks, Joakim. So if we move to the final slide, really just to summarize the key attractions as we see it of both ourselves and the combo. Very massive potential in a very large underlying market. I think with the audience business actually expands the underlying market so I think that's a very good thing. And of course we've got structural shifts that benefit digital players like both old Cint and old Lucid and definitely therefore also the combo. We think we're both very well positioned in the middle of this value chain with very good offers. We've got the marketplace, we've got enterprise, we've got audience. So a very good and robust value proposition. We've got flexible business models and definitely now an even more global footprint, which is going to be very helpful for increasingly global customers as well. We've got both organizations poised for profitable growth and it's going to be a very, very robust combo from a financial perspective. And we of course do have tangible synergies that are going to drive very strong bottom line performance. We've outlined what our synergy targets are and if there are questions on that, I'm happy to take those shortly. So overall I think we feel very good about our Q4, we feel good about our 2021 overall and we feel very good indeed about our combo with Lucid and how that is starting out in the first few weeks. So overall, very optimistic and positive. So with that, Jordan, I'm going to pass back to you to moderate the questions, please.

[Operator Instructions] Our first question comes from Daniel Ovin with Nordea.

First question is on the gross margin. So I see that it's down a bit on a year-over-year basis and then I also remember that GapFish had kind of a positive impact on the gross margin. So perhaps can you talk a little bit about what are the drivers that are impacting your gross margin negatively and perhaps also if you expect this to continue over the next few quarters?

Joakim, do you want to kick off on that?

Yes, I can do that. So you're right, Daniel. GapFish typically contributes positively to gross margin, which has been the case in Q4 too. I mean we are quite happy with the range that we are trending in. We've said before that we are typically trying to be within the 50% to 53% range in gross margin. This quarter we've seen some continued pressure on the supply side as we talked about last time as for Q3 and Q4 too. So that's the slight pressure on gross margin from the supply squeeze. So that's probably the answer on the [indiscernible].

Okay. And is that a situation that you see also continuing now into 2022?

Do you want to comment on that, Tom?

I mean look, with the combo, Lucid does have a high gross margin given the way that they account for revenue and some of their product mix. So I think kind of from a reporting perspective, it will definitely improve as we said in our pro forma. I think from a kind of business operational perspective, we do see a lessening of the kind of supply squeeze that we talked about for the last couple of quarters so there's a reduction of that, which is a good thing. And so from kind of operationally, I think we'll still be within -- there'll still be fluctuation absolutely especially quarter-on-quarter, but I think we'll definitely be within the range that Joakim was talking about plus/minus a couple of percent points.

Okay, perfect. Then I have another question on the Lucid numbers. So what you now disclosed and if I remember correctly what you were guiding for in the end of October when you acquired Lucid, I think you talked about an adjusted EBITDA margin of $12.8 million and now it came in at $13.4 million so about 5% ahead for the full year. So I just wonder is that due to extremely strong Q4 for Lucid or is there anything else that you kind of recalculated? Perhaps you can share some more light on that.

Joakim, do you want to pick up on that one?

Yes. I think that it's more or less in line -- exactly in line with expectations so there's nothing in particular driving it. There is a slight change. As for Cint, they had transaction cost hitting their Q4 so when looking into the numbers and making adjustments taking all that out, there is a slight uplift. So I would say the forecast we gave in October compared to what we now are showing as the adjusted EBITDA is more or less exactly compared.

Okay. Great. Then just one final question and that's on future integration costs. So you have not really disclosed any estimate for that. Do you expect them to be so small or it's not even noticeable or is that something that you will disclose later on or do you have anything in mind on what they could land at?

I mean we're pretty ahead of the detailed plans right now as Joakim said.

Yes, exactly. There will definitely be integration costs. So as you know, I mean we are looking into it. There will be integration costs when it comes to the platforms, there will be integration costs when it comes to systems back-end and front-end systems, there will be other OpEx related integration costs too. So there will be integration costs. So it's not that it's kind of so small to be neglected, but we haven't really come with -- we are at the very end of assessing it, but we don't have it, but we will come back to that.

Okay. Great. Well, I thought maybe one final question also. I realize here that the established -- your established consumers or customers were growing now quite much faster than the tech-enabled and it used to be the other way around previously. So I just wonder is there any particular reason? Is there a kind of perhaps a pandemic effect or is there anything else to say about this?

So I mean you're right. There is a reverse of that shift although both are growing really nicely. What happened in end of last year was that -- so first of all, the established customers are generally much more seasonal than the tech-enabled and as you will remember, Q4 is always the biggest quarter for market research. There's a lot of kind of events in there like kind of Thanksgiving and Christmas and holidays around which brands want to do a lot of research. There's also an element of kind of spend it or lose it kind of behavior by some brands as well given they have a calendar year fiscal as well. So there's a number of things that kind of make the seasonality more acute for the more established players. And what happened in particular is that they had an amazing kind of resurgence during Q4 and the reason that's kind of positively impacted us is that in general, again this is directional, the established players do longer research kind of surveys than the tech-enabled as I think I've talked about in the past. That means that the CPI, the cost per interview, is higher and therefore the kind of revenue benefit for us kind of is very positive. So that's one. And then the second within that, I would say there's some very specific activities by the more established. So first of all, it was the first quarter where we started invoicing NPD. You might recall, that's one of the enterprise customers that we landed in the quarter last year so that's the first quarter of NPD. And secondly, Ipsos, again a very important to us established customer, is shifting a lot of their kind of business to buying via an API and we have a sort of high share of wallet within their API business. So those 2 things were kind of specific events to happen. So a combination of trends and specific events kind of flipped the general pattern that we've seen.

Our next question comes from Predrag Savinovic with Carnegie Investment.

Tom, I think that you mentioned it in your intro. But on the privacy part in Google, there has been quite a few discussions. First Apple introduced their changes, now Google said they will roll out certain changes as well to how they handle privacy. Maybe if you could spend some time in talking about how this might affect the business in Cint generally?

Yes, absolutely. I mean overall our view is that we are well positioned to operate and lead in this environment. So that's kind of the one liner and there's sort of 3 elements within that. So first of all, what they call it it's called the privacy sandbox. So call it by its proper name. The privacy sandbox, it's not new and it's been evolving for several years. Now Google has said in terms of their overall approach that they're going to take a thoughtful approach and to try and balance 2 things. First of all, make sure that the privacy sandbox does indeed protect the privacy of consumers and their right of choice. But also at the same time, Google wants to preserve the measurement needed to support the overall ecosystem. So they're going to be definitely thoughtful about it and I'm sure they have been in the past and they'll continue to do -- to be that. So first of all, it's not new and I think Google will continue to be thoughtful now. The reason I think we're going to be in good shape is fundamentally our platform is opt in by default. That means survey takers opt into the supplier and they opt in consent to share their information with Cint. So that's a sort of fundamental principle and it's been like that forever for many years. So that's a good thing. And secondly, our identity graph is built on first-party connections. So it's not third-party connections, it's first-party connections and that's going to -- that solution is going to allow us to continue to connect with media exposure in a privacy friendly manner and without kind of having a reliance on a single identifier. So for those 3 reasons, we think we are going to be well positioned to continue to operate and succeed in this environment.

Fantastic. And a follow-up to that. There are of course competing technologies to what Cint delivers and given what you said here, that's also -- the gut feeling we have, it doesn't really expect your business. But relative to competing technologies, you should be even better out, right or wrong? Can you reason around that topic also.

Just to make sure I've understood the question. When you say competing technologies, what are you -- who or what are you thinking of?

I would say other ways to gather consumer insights without people's consent be it social listening or some kind of enterprise feedback management and measuring whatever is done on different platforms, et cetera, which is unconsented.

Okay. So what we do is we make a distinction between quantitative data, which is things like social listening, point-of-sale data, payment card data, things like that; and qualitative data, which is what we collect. So some of the quantitative data may be collected without the consumer being aware. They're increasingly moving to kind of consent there as well. But the quantitative data, which is things like social listening and point-of-sale data and maybe geolocation data and so on, is really important and brands do use that for Insight. But what it tells them is what the consumers are doing not the why. So for us, we're going to be -- continue to be very focused on the qualitative data, which is the why. So we provide the why to the what and we see those as very complementary data sets that the brands can use to gain deeper insights around their consumers. And within the qualitative, I mean as I said and as you know, we are definitely opt-in by default and we'll continue to be that. I like to make sure that we're fully compliant and secondly, that the consumer is fully aware of what their data is being used for. Does that help?

Yes. Then on the organic growth here, it's quite a strong figure on a post comparable. Would it be reasonable to assume that you can reach your revenue guidance already in 2022 for example given this momentum.

It's a good question. So I feel very positive, but I don't want Joakim to press the red mute button, so because we [Technical Difficulty] No, look, I am very positive and I'm positive because I mean all the fundamentals that we've talked about. We've got very -- we're going to have a much bigger marketplace in the combo, we're going to have the kind of Lucid bigger customers to go and talk to about the old Cint enterprise proposition and then we've got kind of audience measurement overall, which is growing both phenomenally well within Lucid standalone and will grow I hope very well as well and we're planning to kind of when we kind of unleash the Cint sales force on that as well. So those are all very positive trends and we're working really hard to harvest those as much and as quickly as we can. On the other hand, we do have a for us very sizable integration to get right as well. So we are -- some of us are a little bit more introspective and externally focused. But we did 3 acquisitions last year and we did deliver good results. I really expect that we'll be able to deliver very good results this year as well while still doing the integration. So without kind of committing to a number, I'm very optimistic.

And just a final question to Joakim on cash flow for the quarter. There are a few one-offs in the P&L, which of course impacts the cash flow profile, then you have some working capital aspects from Lucid also impacting. Can you reason a bit around cash flow in Q4 when adjusting for these things that are extraordinary, so to speak.

Yes, of course. It's a little bit messy based on the have we now consolidated Lucid in the quarter so I get that. But I mean the starting point for us is the operating profit and loss and within that, we have the nonrecurring items so transaction related cost. So if you want to kind of clean that out, that's probably the first thing you need to do. Then when it comes to the working capital, the kind of reported number include payment on transaction costs for Lucid. So what happened was that the kind of sequencing was that we closed the acquisition and we then acquired the balance sheet. Within the balance sheet, there were payables related to transaction which were paid out after we closed, but they were then quoted as changes in working capital in our P&L -- going into cash flow, sorry. So those are probably the 2 main items you need to consider when you work it backwards to get to the kind of unexpected cash flow.

Our next question comes from Daniel Thorsson with ABG.

So my first question is on the underlying Lucid EBITDA margin. We knew it's going to be around 11% for 2021. You say that that was a result of your aggressive investment profile. How should we think about that underlying number going into 2022 if we exclude the synergies you're trying to reach? Will we see it be around 11% in Q1, Q2 here and the total margin that you will deliver will be the margin just shy of 20% that you have with the 11% here or should we expect that to go up to some 15%, 16% similar to 2020? What's your strategy for Lucid underlying here?

So I mean -- Joakim should chime in as well. So the approach that we're taking is we're not thinking of these businesses now as separate on a go-forward basis so we're doing a combined budgeting -- budget planning exercise. Within that, we're being pretty aggressive on the synergies that we talked about earlier. Now the kind of external facing the sort of public targets we've said is we're not going to have any synergies sort of for H1 to start accruing as of kind of Q3 effectively. But as you would expect, I mean we're being pretty aggressive on some of the cost avoidance and OpEx side of things to try and get ahead of the curve. And so no, I wouldn't think of those as kind of being a mathematical weighted kind of EBITDA margin for 2022. We want to be more kind of aggressive than that.

Yes. And that works for H1 as well excluding the synergies. Sorry, but just to add some more nuances to it. Just to take you a few steps back. To start with, I mean Lucid operated on a 5% to 7% and 8% EBITDA margin in the past and have had that kind of priority. I think we talked about this when we announced the transaction. They have been back around to where they used to be. Now when we are integrating Lucid and Cint into one company, what we wanted to do now in this report, we want to follow up and show you what Q4 and 2021 actually looked like for Lucid standalone. But as Tom said, we are right now very close and tightly together and integrating and the idea will not be to show Lucid numbers and Cint numbers as kind of standalone in the future, but we are merging the P&Ls and we will show you one P&L where the starting point will be to add Lucid with Cint, but then we have the synergies and other work that is going into that. And then we also have the financial targets and the objective we're getting to the 25% EBITDA margin in the medium term.

That's clear. Second question regarding the B2B companies, you added around 600 in 2021 here. And when we look at your customer list today or a year ago and you basically cover all the big tech-enabled and established inside firms already as well as a bucket of strong brands. Which customers did you really add in 2021 to get a feeling on the onboarding of customers today and what's potentially left to grab in the market in terms of sizable customers?

I think there's loads less. I mean if you just look at the overall spending, I mean the market for third-party sample is 3.5 billion and even in the combo, we have a very modest market share. So there's still a ton to go, number one. Number two, I mean you'll know this from all companies. Just having a logo doesn't give an indication of how much they spend with us. So we've been growing share of wallet substantially on many of our B2B customers, I mentioned Ipsos specifically. I mean they were doing -- I think kind of revenue in Ipsos on particular API that I was talking about more than doubled during 2021 so which is very positive. And also NPD, again something I talked about earlier, I mean that was not an enterprise proposition that we were working with them on prior to the signature. So this is all kind of incremental revenues. So I think we both have loads of new logos to go for as well as working on share of wallet. I mean to give you some idea, the last time we looked, which was I think a little bit more than a year ago so it is dated data, I think we had something like 600 or 700 invoicing points in the U.S. This is Cint standalone. And if you look at any kind of published market research directory in the U.S., I mean there's over 5,000 market research companies. So now of course we don't want to work with all of them necessarily because they might be a little bit too small, but nevertheless to give you some sense, there's still plenty, plenty of runway to go after. So I don't worry about growth opportunities at all.

That was very clear. My final one is on future potential competition from other players with large customer-specific databases. I saw for example a very similar survey request coming from LinkedIn the other week offering a few U.S. dollars to complete a survey or alternatively give the money to charity. Is this something they source from your platform or have they for example developed an own competing solution to yours?

I can't speak to LinkedIn specifically. But what I would say is I mean we do think about companies with large respondent or potential respondent or membership pools as potential competitors. That's absolutely correct. LinkedIn will probably be more business type people I would imagine. You can also think about possibly Facebook or Google, both having enormous respondent pools. The reason that we think that they're not necessarily going to go into direct competition with us is the following. So first of all, the addressable market they're going after is small compared to their core business, 3.5 billion compared to what Google and Facebook are going after is tiny and what we do is quite complex. So we think from an economic point of view, it's not necessarily that attractive. The second point really important is GDPR. So whatever we do or whatever anybody does kind of with customer data does need to be GDPR compliant and what we provide is GDPR consent engine as part of our platform and as part of our workflow. So kind of the GDPR compliance piece is for us very important. And we don't want to think about negatives, but it is possible to get I think up to 4% of global turnover fined. So obviously we're not thinking that's going to happen. But if you're a Google or Facebook, that's a massive number potentially as a fine if there is an alleged infringement. And then finally, it's the breadth of respondents. So if you go to LinkedIn for example, you might get business spoke or people with a kind of a business mindset because that's why they're registered on LinkedIn. What we get with the Cint Group combo is a very, very broad customer base and respondent base. So in terms of having impartiality and a representative sample set, we do feel that from -- if you're after B2B customers, that's kind of second to none. Does that help, Daniel?

Yes, absolutely. Just a follow-up on that. Can we rule out that LinkedIn for example has joined your platform as a panel owner on the supply side?

It's not an -- I don't know, but I can check. But I mean from our point of view, we'd be delighted to have them as a panel partner on our platform, absolutely. So if you have any good connections there, we'll be delighted. So because we would profile a respondent as we normally do, we'd apply the Cint taxonomy as we normally do and of course we'd provide them with a revenue share as well and everything that every questionnaire would be LinkedIn branded as well. So we think our kind of panel value proposition is strong and if they were to join, we'd be very happy.

Our next question comes from Viktor Hogberg with Danske Bank.

So a lot of good questions already asked, but trying to get some more flavor on Lucid and the audience segment growing 84%. Could you help us with what to expect there because products were recently launched and they're coming from a low base the fastest-growing segment. Could you help us with how would the mix might look in the next year or maybe in a couple of years especially with the managed service segment declining or stabilizing?

So what we expect is the marketplace, which is analogous to our platform, to continue growing very nicely because it's a very similar value prop to what we have. As I said earlier or trying to say earlier, I do want to get more of a handle on the services side of Lucid and have more of a kind of a managed transition from services to software. I think the fundamental migration, as I said, is a good thing and we do want to do it. But I'd rather do that in a more kind of controlled way. And then the audience business, I am very optimistic about and it is very early days. I think they had something like $27 million of revenue in 2021. So yes, it is a small base, but it's now getting a little bit more sizable. The reason I'm optimistic about that is twofold. Yes, the commercial team is obviously going to be much bigger in the combo to be able to sell it. But more fundamentally is we have a much bigger supply pool that we can kind of tap into. So we're going to have not just the Lucid respondents, but the old Cint respondent as well. And that's the bit that excites me is because that's where we'll be able to have a higher match rate and be able to particularly outside the U.S. I think get a lot of commercial opportunities on the back of the combo. Now in terms of specific numbers, we can't comment on exact numbers because otherwise Joakim will again to be on his red button. But I'm definitely excited about this and personally spending significant time to understand and kind of help shape the plans for the future growth of that segment.

Okay. So speaking of the supply side and also the demand side, if we would adjust for the overlap of the Lucid and the Cint platforms in the number of consumers and the B2B customers, what would they be? We have them on a gross basis. What are your best guess on potential overlaps?

We're just doing that exercise now -- [Technical Difficulty]. I don't want to guess. But we are doing that exercise because you appreciate preclosing, we weren't allowed to have insight into each other's customer list on both the demand and supply side. So we're just doing that exercise now. But I mean fundamentally, I would -- I mean if you look at the revenue, which again is not a perfect indicator, but nevertheless it is a proxy. I mean if you look at the revenue split of old Cint versus old Lucid, I mean it is very different in terms of geography. So I don't think it's going to be substantial.

Okay. On both sides, both demand and supply side of Lucid.

Definitely on the demand side. The supply side we're digging into at the moment.

Okay. And speaking of Lucid, could you help us with the seasonality. Of course audience growing faster than services declining or stabilizing potentially and the marketplace seems to have or should have the same drivers as Cint, maybe different geographic exposures you talked about. But the seasonality, should it mirror Cint now in 2022 or anything special to think about when thinking about the revenues from Lucid in 2022 on a quarterly basis?

It's a good question, Viktor. Joakim, do you have a good answer? I don't have the Lucid historical seasonality in my hand.

So I mean I would say generally, Viktor, you can assume that it's the same seasonality as we've seen. So Q4 is the strongest -- typically the strongest quarter and then it's [ tapered ] over the other quarters similar to Cint. I would use that as something.

Okay. And also just final question. I think the nonrecurring items here in the transaction cost in Q4 of EUR 17 million or EUR 18 million were a bit lower than what you communicated in connection with the transaction announcement in October. Is there anything yet to come in Q1 in the P&L to adjust for or was that it for the transaction, you took it all in Q4 -- I'm not talking about integration cost but the transaction?

Exactly. I was going to say that. The transaction cost is taken in full. There are a split between P&L and equity treatment of it. The total number, I mean cash out should be fairly in line with what was communicated in October. I think it's a little bit lower. We had -- as you can imagine, we had estimated the transactions and the actuals came in a little bit more. So you shouldn't expect anything more to come on that I believe.

Our final question comes from Charlie Brennan of Jefferies.

Can I continue on the Lucid line of questions and in particular, can you talk about the revenue momentum in the fourth quarter? I think when you announced the transaction, you were expecting revenues north of $123 million. They've come at $121 million. That's only a small delta, but that delta is obviously all come in the fourth quarter. And then can you talk about the likely outlook for '22 at Lucid? I normally expect acquired companies to run pretty hard into the transaction date and then growth to fade once the transaction is concluded. When I listen to you talking about trying to deemphasize some of the services, is it realistic that we should expect organic growth in Lucid to abate this year before reaccelerating?

Charlie, so I'll start and then I'll let Joakim chime in as well. So I mean yes, you're right. In a lot of transactions, they run hard into it and then there's a bit of kind of foot off the gas. I don't expect that to happen with us because we have already combined the commercial team. So we've got a -- I don't want to talk about old Cint and old Lucid necessarily, but it's the ex Cint Head of Commercial who's running the combo commercially and we've integrated the sales teams. We've got a kind of combo leadership team the next level down and we're in the process of allocating accounts. We've got -- in the process of rolling out a kind of a unified commission and bonus scheme on the commercial side and that's been communicated to customers. They know who their single point of contact is or primary contact. So in terms of momentum, I think we've deliberately chosen to be pretty quick with our especially commercial integration to try and minimize exactly what you said, which is a little bit or lot of -- potentially lots of momentum. But so no, I don't expect that actually on a kind of overall basis. The bit that I'm thinking about a lot and we're all thinking about a lot is of course the services bit because I never like to see year-on-year declines. And so perhaps a bit that we're all focusing on to and we do have some I think very good hypotheses and some good ideas to kind of action over the next quarter or 2 on that specifically on the services.

And is there anything you can say specifically about the fourth quarter because it was obviously a couple of million light of where you wanted it to be? I would normally expect you to be conservative when you give these numbers. What happened in Q4?

Joakim, do you have the specific numbers there?

No. We don't have a lot of nuances on that. I mean there is also on the services and software there's a migration so Lucid has been working on moving customers over from service to software. Then also what that typically also means is that you lose -- now it's getting a little bit technical, but you lose gross revenue on the services side and you get net revenue because there are different revenue recognition principles. So maybe if there's a big drop -- there could be a big drop on consolidated top line, but it could be kind of a positive move in any case because you're migrating customers from service to software. It's some of that, but I mean overall it's not a big loss or a big deviation from what we expected and it's nothing that we worry about more than the general concern around the services and how we now are addressing that with the team.

Perfect. And just lastly for me, is there anything you can say about the net retention rates both in Cint and Lucid as we stand today that gives us comfort about the growth momentum into this year?

So the Lucid numbers we're just pulling together because they measure them slightly differently. But on the Cint side, I mean I think we have said recurring sort of loyalty we measure as a customer who spends once a quarter. That's been in the sort of 96% for several years and then on the -- [Technical Difficulty] 97% even so it's even upticked a little bit. So no change on the old Cint side. The Lucid side, we're just kind of trying to get comparable numbers and we're able to share those kind of in due course.

We have no further questions on the phone line. So I'll hand back for any closing remarks.

Thanks, Jordan. So thank you all. A little bit longer this time, but I really appreciate your time and your interest. I hope we have been able to answer your questions satisfactorily. But just to recap, overall we're happy about Q4. We're very happy about 2021 overall having delivered very good results and 3 acquisitions. And as I said and tried to give a flavor, I mean we are very optimistic about 2022 as well both in terms of business results and the integration that we are going to be doing in parallel. So thanks again for your time and look forward to speaking in due course.

This concludes today's call. Thank you for joining. You may now disconnect your lines.