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

Ladies and gentlemen, welcome to the Cint Group Year-End Report 2023 Conference Call. I am [ Shari ], the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Mr. Giles Palmer, CEO. Please go ahead, sir.

Good morning, and thank you for joining our 2023 and Q4 results presentation. Let's step into it. So if we go to Slide 2, the world's largest survey exchange, please? So I'll just changed the title here. This is a repeat slide from last time, but I just thought it would be clearer just to say what it is -- there's somebody not muted -- which is we are the world's largest survey exchange. We sit in the pipeline or the operational flow within a large piece of the market research industry. In order to do market research, you have to actually ask the market questions, and Cint has innovated this model -- this marketplace model of matching surveys, companies that want to get surveyed answered and the surveys to respondents. And we do it at extraordinary scale with 300 million people plugged in on one end and 4,000 customers doing, roughly speaking, 0.5 million surveys every day, matched through the platform. I mean, obviously, that changes on a day to day basis, but it's a large volume. And, it's a must have. Like, the role that Cint occupies, the place that Cint occupies in the market research landscape is a must have. So, I just wanted to make that clear. And the fact that it's large, I'm not just -- it's not, you know, size, so what? It actually does matter when -- in a marketplace business, because size means choice. Buyers come to where there's the biggest choice of supply, and one of our key strategic tenets is to continue to build out the volume and the diversity of our supply. And the suppliers come to where there's -- where there are the most buyers so that they get the best deal, the right deal, at the fair price. So I just wanted to make it very clear that this is not a vanity slide. This is important. Okay. Next slide, please. Slide 3. I'm, obviously, doing this on my laptop, so I'm just going to make sure that I'll check-in that we're on the right slide. Improved profitability despite continued slow sales. Yes. Look, my -- I hope that it's been clear since I took over on the 3rd of April last year that my, style is one of transparency, both internally and externally. So I'm not going to hide away from the fact that sales in Q4 were slow. They weren't where we wanted them to be. And this is particularly impacted by some of our larger customers who, in small number of cases, have gone direct to suppliers. We think that that's basically in the rearview mirror now, but I want to be very transparent about that. On the flip side, we've improved our margins over 2022 and our gross profit is on a constant currency almost flat year-on-year, which is for me the most important metric in terms of the top 2 or 3 lines. That gross profit line is [indiscernible]. Media management business is selling very, very well. We'll come back to this in a minute. And then again, what I've been saying since I took over is, consolidation of platforms, migration of customers is a massive priority along with quality has been my number one sort of priority. And that is on plan. That's going extremely well. We've moved over something like 10% of our managed service customers by the end of '23, and that is continuing at pace into '24. So that's our people using our new platform for our customers' work, and the internal feedback has been extremely strong. The margins on that work is actually ahead of what we were expecting. So the consolidation plan and phasing is going, if anything, better than I expected, which is great. But the summary is, it is on plan. And suppliers migration is deeply scoped and on plan as well. So what does supplier migration mean? It basically means that our panel providers are plugged into the new platform. Most of our panel providers are plugged into both the Cint and Lucid platforms, but a few are only plugged into the Cint platform. And the Lucid platform, from a supply side and API, is the foundation piece for the new exchange. So we're migrating a small portion of our suppliers, mainly outside of some of the smaller markets, so focusing on the small markets over to the new exchange, over the course of the first half of this year. And then the woohoo moment, it's certainly woohoo, I guess, is not a normal phrase to say on one of these sort of -- these sort of things. But it definitely was woohoo moment, was we launched internally our new platform. We'll unveil the name -- some of the some of the city names. But we're going to unveil the name in the in the coming months, internally and the team love it. It's taken a ton of learnings from years and years of developing this kind of software from both Cint and Lucid, and baked in all of that learning and all of that best practice into a new platform. We decided to do this in May '23. So we've gone from idea that we're going to create a new user experience, we're going to create a new front end in May, one month after I joined. I was like, right, this is what we're going to do, and the team have shipped it by the 1st of February -- they've shipped the first version, and we're going to start beta testing it. We have we have started beta testing it with some of our clients in February. So again, fantastic progress and a big nod to my R&D team who are absolutely killing at the moment. So Q4 figures -- next slide please. Q4 figures in brief, like I said, sales not where I wanted them to be. But we are in a transition period. So let me just be clear, this is -- we're doing all of this with the background of consolidation and optimizing and bringing a ton of stuff together really inside the company. So it is extremely difficult time to be really driving that sales growth, especially as we're going to be migrating all of our customers to this new platform. So maybe not that surprising, but still a little bit disappointing for me. However, like I said, gross profit, almost flat year-on-year and really good gross margin and some decent profitability in Q4. Next slide please, Slide 5. It's the first time I put this slide in here, Media Measurement business. I thought I'd just draw it out, because it is a star in the kind of in the portfolio. The real reason I sort of wanted to bring out here is, A, a little bit of explanation, but also to sort of describe the diversity of the revenue line a little bit. The idea that, yes, the exchanges had a bad year, or the exchanges, the marketplaces had a bad year in '23, but we've diversified our revenue line. This is a very interesting product. The customers love it. It's very sticky. The margins are very high and the team that are working on it doing a great job. This this product, Media Measurement, was not affected by the integration. This was a Lucid product that has stayed on the Lucid platform and has been almost unaffected by the integration of Cint and Lucid. So it just shows -- I mean, you can't draw this absolute comparison side-by-side. But without the disruption of bringing 2 companies together, actually the fundamental underlying business in this particular instance is going very, very well. Next slide please, Slide 6. This was something that, obviously, I kind of stepped into this time last year. Quality was brought up by my predecessor as a big issue -- fraudulent responses and other things. This, alongside the consolidation, was my number one priority for the organization. Very tricky to, to nail quickly, because this is a historic thing. It's been building up over a number of years. It wasn't out of control, but it was definitely higher than we've seen historically on an average basis. So over the course of the last 9 months, we've worked hard to implement various different methodologies to reduce this and try and minimize it and it's been working. So broadly speaking, a little bit like kind of slowing a boat -- a big boat down. You put the anchors on and it takes a little while to slow down. This is what it kind of felt like with this work. But as you can see here, it was below 10% in the in the quarter, which was -- which is what I was hoping it would get to. So I'm very pleased with this. And again, kudos to the team that have been working on this. They've put in big shifts and made a big difference. So -- and the work does not stop here. As we said at the bottom, we'll continue to invest in our AI and machine learning and, to expand this into different use cases, improve our models. I'll just say a word on the Trust Score. This is a respondent level we're looking at. Patterns of behavior from each of the respondents as they respond to surveys. And with looking at a bunch of different heuristics and different data points, assessing how human they are effectively. And this is a model that learns over time, takes in a lot of different inputs, and is proving to be extremely effective at identifying nonhuman behavior when it comes to responding respondents. We're not going to publish how we do it, because we don't want to kind of allow sort of bad actors as it were to reverse engineer our technology. But at the same time, we're going to keep working on it and we're pleased with the results. So quality, happy with where we are, more to do. This will be less of a focus in these calls going forward. I'm not going to call it out really unless it's a problem. I'll be a 100% transparent about everything, as I like to be. But at the same time, within the boundaries of being sensible. But at the same time, this is no longer the issue that it was a year ago. Next slide, please. Slide 7. Like I said, the key focus for us is consolidate, integrate, migrate our customers, get everybody onto a new the new platform. And then if we go to the next slide, move to standardize, optimize, and innovate. Right? So with a very clear plan, everybody internally is totally clear on what it is. I relentlessly kind of reiterate it up and down the organization. I'm probably bored everybody in inside the company, but we all know what we're doing. And everybody understands the dependencies, and we're moving through this process together. So we are a long way down the road with consolidation now and now we're moving into the standardization and optimization phases where we're defining our KPIs, we're making sure our backend systems are all joined up and that they are recording the right data. And that data is going to the right people at the right time to make the right decisions, and that we're streamlining how we do things. We're deleting processes which are not necessary and driving the organization towards efficiency and improve profitability in order for us to put more resources into innovation. Next slide, please. That's it actually for me. A bit of a whistle-stop tour. Q4 summary -- actually there's a summary at the end. But broadly speaking, the energy in the company is extremely high. We had a global leadership off-site in Lisbon a month ago or so. And yes, it feels like a different place than it was in April a year ago. So I'm excited for 2024. Olivier, over to you with the financial update.

Yes. Thank you very much, Giles. Can we move to slide 10 please? So here you have like a comparison like between the different quarters, so between like the 5 quarters. So if we go like on the left, you will see that our net sales for the fourth quarter of 2023 were at EUR 72.3 million. So Q4 is seasonally our largest quarter in every last single year and 2023 was no exception. So what is the most relevant is to compare like Q4 2023 with Q4 2022. And as Giles said like earlier, we have a decline in constant currency of about like 6%. Our growth has been negatively affected by continued slow sales from the large -- from some large customer. In the middle, so you have like our gross profit and our gross margin. So our gross margin would fluctuate like generally speaking between 60% and 64%. In Q4 this year, we have seen what I think is like a record high gross margin of like -- almost like 64% due to increased focus on higher margin products. So this is really what we've done like in Q4 this year versus Q4 last year is to really focus on profitability and on gross profit rather than on revenue. On the right, what you can see is our adjusted EBITDA. So the first comment that I would like to make is, by far and large we are like a fixed cost business and so our costs are pretty steady. They are mainly like staff cost, but there is seasonality in terms of sales. So Q4 is always our strongest quarter in terms of profit generation. But this year with an adjusted EBITDA of EUR 15.2 million which is like 21% margin, we've reached a record high adjusted EBITDA. And this is coming from the improved gross margin that I mentioned like earlier, but also the ongoing benefit from the integration synergies and cost savings and ongoing like very strong cost control. So we've been able, like, to successfully mitigate the slow sales and deliver a record high adjusted EBITDA in Q4 this year. Moving to slide 11, where we have like a breakdown of the net sales by business segments, regions and customer types. So as Giles said earlier, it's a little bit a story like of 2 halves. So our marketplace was at EUR 54.6 million in terms of net sales, which is 17% lower than what it was in Q4 last year in constant currency. And again, this is due, like, to lower volumes and spend per customer. On the other side, our Media Measurement at EUR 17.7 million increased by 54% in constant currency compared to the same quarter last year, which is coming from higher volumes with existing clients and continued new clients gain. In terms of geographies, so Americas and North, I would say the U.S., is our largest geography which is quite normal like in our industry about like 50% of market research dollars are in the U.S. And so Americas is down like 2% in constant currency. What you need to know is that most of our Media Measurement business is in the U.S., not so much like in the other geographies. So we've seen some reduction of marketplace sales in North America, offset almost like entirely by the strong performance in Media Measurement. And the other geographies, so EMEA is down like 10% in constant currency and Asia Pacific is also down by 21% in constant currency. Now looking at the breakdown of our net sales by customer types, very much like consistent with what we've seen in the previous quarter. So we are doing better with the established insight companies that are down 5% versus the tech-enabled companies that are down 9%. So moving to the next slide please, Slide 12. So again, we have like an improved EBITDA due to higher gross margin and cost savings with like 21% in the quarter compared to 16.8% in Q4 last year. What I want you to draw your attention on is our integration cost. So what you can see -- which is a line items impacting profitability -- affecting comparability. So our integration costs are at EUR 14.2 million this year versus EUR 21.2 million last year and they will continue to reduce in 2024 to about like EUR 5 million. So -- and we won't spend more than EUR 40 million in total as we said like consistently in all our presentation. So which is going to help in terms of cash flow next year, because it's like EUR 10 million less cash outflows compared to this year. So moving to the next slide, Slide 13. So this one I think is interesting slide. So if we look on the left and focus like on the Q4, The first thing which is important to say is that financial covenants were met. That's the first element. The second element is that you will see that our operating cash flow before working capital are at EUR 16.3 million. So despite slow sales, operating cash flow was record high at EUR 16.3 million due to reduced NRIs, due to integration synergies, due to higher gross margin and cost containment measures. So we've done very well, I think, in terms of operating cash flow before working capital. In terms of working capital, you will see that there is like a negative of EUR 13.4 million, which has been mainly impacted by the reduction of accounts payable and I will comment about that like in the next slide. And our cash flow from investing and financing activities remains steady. They are almost like unchanged like compared to the previous quarters. If you look at the full year now, so you will see that our operating cash flow before working capital are EUR 21.6 million which compares to EUR 16.7 million last year. So that's pretty good, like, an increase. And again, despite slow sales and increased interest rates, operating cash flow have increased, which is attributable to lower corporation tax, reduced NRIs, integration synergies and cost containment measures. On the flip side, cash flow from working capital was impacted by the reduction of accounts payable. Accounts receivable have reduced following the slow sales, but they remain at a high level and from our perspective at a too high level. And in terms of like cash flow from investing activities and financing activities, I mean, they are really like steady. The only thing that you can notice is they were like higher in Q2 of 2023 due to the acquisition of the remaining minority shares of GapFish during the second quarter, which is a one-off. I mean, we have no longer any minority shares or any payments of that sort of to do like in 2024. So moving to the last slide of my presentation, Slide 14. So what you will see is that net working capital has increased and it has increased mainly due to the significant reduction of accounts payable. So if we look at the first line, you will see that our accounts receivable at the end of December were at EUR 96 million versus EUR 95.8 million like at the end of September, EUR 87.7 million at the end of June, EUR 84.9 million at the end of March. And this is like a reflection of the seasonality in our sales that you've seen like earlier. We have like much more like invoicing in Q4 than we had like in Q2 and in Q3 and a lot more than we had like in Q1. So it's perfectly normal that our accounts receivable are higher at the end of Q4 than they were at the end of Q3 or Q2 or even like Q1. If you compare like apples-for-apples, you will see that the EUR 96 million compares to EUR 104.5 million last year. So that reduced by 8%, reflecting the lower sales. Our reported net sales are down 7%. That being said, we do believe that we can do like a better job and continue and we should see some reduction of this accounts receivable in 2024. In terms of accounts payable, so what you will see is that our accounts payable are at EUR 42.6 million at the end of December versus EUR 66 million last year at the same period, which is a very significant reduction of 35%, reflecting the lower activity. So we have like reduced sales, we have like improved gross margins. So we are like paying less to our suppliers than we had like to pay last year in Q4. On top of that, we have reduced NII. We have like ongoing cost savings from the integration synergies and the cost containment measures. And we have reduced the backlog of payments to suppliers at the end of this year, which is the reason why our accounts payable are so much lower at the end of December this year than they were at the end of December last year. We are not expecting like this reduction of advance payable to continue at the same speed at least in 2024. So if there are like -- so I would say like higher gross margin, very strong EBITDA and strong operating cash flow mitigated by an increase like net working capital in a nutshell. So Giles over to you for the conclusion.

Thank you, Olivier. Let's keep it short so we can get to the Q&A. I'm going to repeat myself, sort of what I've been doing internally. It's our mantra, repetition leads to great execution. We are proceeding with the product integration, customer integration. We're on plan. It's complex. There are going to be bumps in the road, but we've got some contingencies in there and my team is working unbelievably hard and I'm incredibly proud of them. So message to you guys, it's going well. The consolidation, standardization and optimization phases are in play, as is some innovation. We have pretty well stocked innovation projects, which I'm not going to talk about today, because, they're confidential, but it's not that we're not building for the future as well. It's just that the focus is on the consolidation and customer migration, and then creating efficiencies. And then final point, I said this that the -- in July, I'd only been in the roles for a few months. So it's a pretty bold statement for me to have made. But I -- when asked sort of about growth, I said, I think we can return to growth in the not too distant future with my words. Well, the not too distant future is probably now-ish with 6 months later. And I'm not -- obviously, not -- we're not giving guidance. But I'm reasonably comfortable with those words. So -- and it's going to be our focus. Obviously, I'm here to build an innovation-based, efficient growth organization. Obviously, there's a bunch of stuff that we talked about today to do first or get in place, but growth is going to be the focus increasingly over the course of 2024. And obviously, we need to -- we have debt in the business. We have EUR 120 million of debt and we need to make sure that we are profitable. We're servicing that debt effectively. We're actually building up our cash balance and derisking the business as well. So all of this is going on at the same time. I just want to make sure that you guys realize that we as a team are aware of it, we're on it. And, yes, that's the focus. So the final slide is, once we have got all of this stuff in place, we have solid fundamentals for long term growth. As I said, right at the beginning, looking back to the beginning, Cint occupies a necessary part of the market research process. And due to the significant transaction with Lucid a couple of years ago, it's not been in a position to really innovate around that position of an important place in the market research landscape. Increasingly, I think we're going to be able to do that, bring innovation and an expansive mindset into the organization throughout 2024. That's it for me. Let's move to Q&A. Thank you very much everybody.

[Operator Instructions] The first question comes from the line of Charles Brennan, Jefferies.

Can I just ask one on your comments in the prepared remarks that some of your largest customers have gone direct to suppliers? What was the rationale there? And you said it's largely behind you. Does that mean they're coming back to your platform? And then when we think about your comments on growth, are you implying that we could see growth in Q1 of this year? Or have we got to see an annualization of those large suppliers, large customers moving away from you and is ultimately a second half '24 return to growth?

Thank you, Charles. So, I think there's a few questions in there. Why do large customers go direct to the big buyers? Price, it's pretty simple. But it brings complexity into their whole workflow. The whole -- the beauty of Cint is that with all of the supply in one place, a buyer can effectively rely on the platform to go from supplier-to-supplier and get their surveys fulfilled effectively quickly for the right cost. If you're -- if let's say, you've integrated with one supplier and you go there first, because you're avoiding, commission and you only get half of your 1/4 of your surveys fulfilled, then you have to come to Cint -- then you come to Cint and you get the remaining 3/4 fulfilled. You have an aggregation job to bring it all together, and it adds time and it adds human resource, and so on and so forth. It's it is inherently ineffective or, inefficient. So that's that -- so what do we do about that? Well, the real answer is, we want to make sure that we're sharing -- the right solution is to have an aggregated supply side. It's just the most efficient way. But we need to make sure that the economics are fair for everybody, and that's on us. Right? We probably could've looked to that in the past. So I think pricing or the economics of the platform, something that especially as we get to a unified platform, is an opportunity for Cint to actually think about think about the economics, think about pricing in a more subtle way. So that's the first answer. The second was, like, is that -- are they coming back? It's, no is the short answer. It's once a large customer has decided to go directly integrate with a large supplier, then that's a big commitment and it's not something that's going to be reversed in months. It's probably more like a year or 2 years, unless the economics are changed. Because as I said, the -- it's a pain in the ass to have to go to lots of different sites. That's -- this is problem that Cint been solves. And then, the final point, growth in Q1. Yes, possibly. I'm not guiding. Right? But, the comparables are a ton easier than they were this time last year. So it's certainly well within the realms of possibility.

Can I just ask a follow-up? It sounds like you can encourage customers to stay by accepting lower economics. When we think about the P&L going forward, should we assume that we're back into a phase where we get revenue growth, but there's gross margin dilution?

No. I don't want you to assume that, because it's not just as simple as, one small set of customers with one small set of suppliers. The flip sides to a little bit of disintermediation is that we're less reliant on fewer larger customers, the customer base is still very large and more diversified if you like from a revenue perspective. And there are different models that we are able to bring into the market from a commercial perspective both from suppliers, buyers, partners. So pricing is a little bit more subtle than that and we will balance it and we will make sure it's fair for everybody. But no, it's not something that I'm thinking is a gross margin issue.

The next question comes from the line of Predrag Savinovic, Carnegie.

I'm going to continue on same kind of growth topics. On a gross profit level, on a constant currency basis, your growth is quite flattish in Q4. And given the difference in mix, the measurement doing quite well, on a gross profit level then, organically, should you be able to post growth already in Q1 then? Thanks for this mix shift.

Same answer. We're not guiding, but, I'm -- yes, we -- could we be able to rather than should? Yes, we definitely could be growing in Q1. Not saying we're going to. But, yes, like I said in the presentation, returning to growth is a focus. Will it happen in Q1, will it happen in Q2, Q3, or all of the above? Time will tell, but, it's something that is a focus for me. Now it I would say that the timing of that return to growth is not that critical right now because of the consolidation work that's going on. We've got a ton of work. I want predictable mechanical, if you like, growth. I want to understand that the machine is working extremely efficiently and that when we invest in a certain area, we can -- with a good degree of confidence, expect results to come back. And it's difficult for me to do that right now until we've consolidated and migrated. So I'm less personally [ focused ] about the time at which we come to growth. I'm more personally focused on the logic of growth and how we're constructing an organization which is predictable and allows me to allocate capital and resources to where they will be most productive.

I think that's fair. It's a great answer. I will, however, try to ask it a little bit differently then, and I might be annoying here, but take Media Measurement then. Is there a reason to assume that Media Measurement should have a slower trajectory in the first quarter or is it typical -- typically quite a recurring type of sale you have there? And if you could also remind us on seasonality in the market between Q4 and Q1, generally?

Well, there's 2 different points there, right? Know, the seasonality for Media Measurement, definitely Q4 is the biggest quarter. Companies spend a lot of money in the run up to Christmas in their advertising budgets. And Media Measurement, Impact Measurement is very much tied to ad spend. So for sure, Q4 is a bigger quarter. But that doesn't mean that, that the comparable, the year-on-year growth numbers are -- well, that that's, obviously, slightly independent of the seasonality. Do I expect Media Measurement growth to slow? Well, as a percentage, of course, it's going to slow as it grows. But, the flip side to that is that Media Measurement has really historically been very U.S. focused and we're just rolled -- beginning to roll it out more into different markets. It takes a while because there's a bunch of different integrations that need to happen, with the advertisers to make sure that the whole system works really, really well. But there's a there's a significant opportunity for the global rollout of the Media Measurement business.

And then on OpEx, is there reason to believe that this will change dramatically between quarters? It's quite solid this quarter. It's been reasonably stable in the last quarters as well. Is that something we should assume also going forward?

Yes.

Yes. I think the OpEx will -- I mean, should continue like there is potential for further reduction as we consolidate, standardize and optimize at all levels. There is still potential for further reduction.

Okay, nice. And then finally, we need to talk a little bit about cash flows. Historically, when you've had a slump in cash flows, maybe for the same reasons for working capital swings. In a negative way, you've been able to point us to we see a reversal effect in the next quarter or so. Could you give us something of that flavor right now to say well we see near term...

Yes, yes, I can. I think I don't know if we could go back to Slide 13 to have like the number under our eyes. Is that possible? Okay. So I don't know if you have, like, Slide 13 like in front of you. But if you look at like what happened like in 2023, I mean, we had operating cash flow of like EUR 21.6 million before like working capital, so -- which includes interest, which includes like corporation tax, which includes NRI. So I think that our operating cash flow will remain like strong in 2024. There is no reason why it shouldn't be the case. I think interest rates will remain at a pretty high level. So we've not like assumed any reduction of interest rate. And corporation tax, because of what we've done with the legal entity rationalization, we should be able to use the accumulated tax losses on the U.S. side. So we should see like a continued like reduction of corporation tax. So the EUR 21.6 million that we are seeing this year, I don't see any reason why this would not like remain like very strong in 2024. If you look at what has happened like in terms of working capital, we have, I would say, stabilized the situation in terms of accounts receivable, but we've not like clearly like improved it. And I mean, if we do the right thing, there is no reason why we shouldn't be able like to reduce our like accounts receivable in 2024. And the main driver in 2023 of -- is like negative change in working capital was a reduction of accounts payable. If we continue to cut our costs, if we continue to reduce NRI, I mean, we should see some further reductions of accounts payable. But very unlikely that it would reduce as much, because I mean we see like a reduction of EUR 25 million of accounts payable in 2023. I mean, we won't see like a reduction of EUR 25 million in 2024. I mean, there is no way this is going to happen. And in terms of investing activities, I mean, it should remain steady. So we won't have like -- we don't have any minority shares to buy. So we'll have like -- we won't have like this EUR 2.5 million that we had like in Q2 this year and financing activity should remain like more or less the same. So if you look at what has happened in 2023 and do some extrapolations like 2024. I mean, there is no reason for this cash flow not to improve like in 2024.

The next question comes from the line of Daniel Thorsson, ABG.

I have a question regarding the market environment here in 2024. I mean, all of us know that it is a very intense sporting event here. We have lots of elections worldwide as well. How much of coming back to growth in 2024 lies in your hands regarding the things that you talked about, Giles, here specifically versus a market recovery growth? And the reason why I'm asking is that we got your customer here and peer, Ipsos, coming out with a pretty flat growth guidance for 2024 yesterday evening. So I was a little bit curious if you expect the market to recover in terms of growth in '24 to support you or not?

Yes. I would say, very cautiously optimistic, is sort of the temperature check on that. I'm surprised Ipsos came out with that, given the amount of the work -- the amount of work they do with governments. And as you say, the number of elections are happening this year. I'm expecting a significant amount of traffic. We're already seeing it from -- for polling. It tends to be lower price. They tend to be sort of short 30 second [ GenPop ] cheap surveys. So it's not driving Q. It's not going to be -- it doesn't -- even if the volumes were to go up by 20%, it wouldn't drive the revenue by 20%, let's say, as an example. But, if you ask me, coming back to the essence of the question, how much of the growth potential is within our control versus the market? I think this year probably more market, but as we go through Q3, Q4, we have launched new platform, which as I said is looking really good. And as we land some of the innovation initiatives that we're working on, I think increasingly, it will move towards within our own control. So, yes. I've said it in the presentation. We -- I want to get this company back to growth. So that's the focus.

Yes. Clear answer. And then secondly, I know you already talked quite a lot about it here and Olivier was very clear on cash flow items, et cetera. For me, it sounds like Q1 has a pretty good possibility to show a good cash flow given the level of accounts receivables and a strong invoicing in Q4. Is that something we should expect, strong cash flow in Q1?

I mean, we have...

Do you want to comment on that, Olivier?

Yes. So I mean like, in principle, I would say yes. I cannot say like anything else, because we are like a fixed cost business. We -- I mean, we have to pay like the interest and we'll have to start reimbursing some capital at the end of like Q1. But apart from that, yes, we have a fixed cost business. And what we are going to collect in Q1 is what we've invoiced like in November and December last year where I mean our revenue and our invoicing was much higher. So like in principle, like Q1 is a positive quarter like in terms of cash flow. Where Q2 is more challenging, because in Q2 we have to pay the annual bonuses and also our cash inflows are much lower, because they are based on the lower level of activity in Q1. So this is always like a very interesting first half, because Q1 is in principle our strongest quarter in terms of cash flow and our Q2 is our weakest quarter in terms of cash flow.

[Operator Instructions] The next question is from Fredrik Lithell, Handelsbanken.

Sorry, I had a bad line in the beginning, so this might be a bit of a repetition for you. It has cleared up now, so I hear you well and clear right now. Hopefully, that will stay. On the on the top line, I heard you discussed, large clients changing their habits a little bit or maybe only one large client. So it would be interesting for me and to hear if you could clarify the trends in the market with what large clients are up to and how their behavior might change. So that's the first one. The second is on gross margin that has clearly improved. I'm not really sure I've seen the level of gross margin you had in this quarter before. Is this also an effect of changes coming from that these large clients not really driving the traffic in the same way? So is there an element of price or gross margin per message from large or small clients would be interesting to hear. So let's start with that.

Okay. Thank you. I'll take the last one first. No, I don't think so. I think it's just discipline -- internal discipline of making sure that our pricing is right and we're not -- yes, and also the sort of natural mix of moving to high margin products or an increase of high margin products. So I think it's just good discipline, frankly, as well as product mix. On the first one, I think it actually lines up with an earlier question around the timing of impact of this intermediation from larger customers. We're talking about things that maybe happened in April, May last year that are still having effect on a year-on-year basis in December. So it wasn't necessarily in quarter that this happened. It was it was previous quarters and if it's just showing up on a on a comparable basis. So where one of our large customers is integrated directly with one of our large suppliers in February '23, that will still be seen in December, right? So that's really what we're talking about. And my view is that, that is some mainly in the rearview mirror, in terms of -- and that cost, the comparable side of that will start to fall away Q1, Q2. And by Q3, I think, it will be negligible, and maybe even before that. Obviously, we don't see this specifically. We're not kind of told about it, but obviously, we see in the transactions. And then the other thing was, like, a big customers changing their behaviors. Well, look, I don't think you can lump all big customers into one bucket and say they all behave in one way. Some of them are doing pretty well and we're growing really well with them. Some of them are, having a bit of a having a struggle, and they're reducing. And some of them have decided to kind of disintermediate in some markets. So it's a bit nuanced, to be honest. And, yes, I can't I can't I can't really give you a good answer to that question because they're not the same.

That's fair enough. Can I just have a second question then, Giles, when we talked in connection...

That's actually your third question. But yes, if you can.

Okay. Sorry. I can go back in line. That's fine.

No, no, no. Go ahead. Go ahead. Go ahead.

Okay. Now I just wanted to hear you -- you talked in connection with Q3, you talked about broadening the scope of your set of products and services that you provide and you talked about survey tools, like what SurveyMonkey is doing. And you may look at that as an area where you could expand and offer that to your clients as well. Is that how -- is that thoughts? Or are you hardworking on that to broaden your scope?

There's a whole bunch of different areas where Cint can, not just broaden, what we can give and do for our clients and potentially create new revenue streams, but also improve the flow, the end-to-end flow of the process for the entire market. And offering a service was one of them. And there are others. So we're not -- like I said in the report, we're not -- we have we have started innovation projects, they're across the board in a bunch of different places. I'm not commenting on what we do -- on what we're planning to do or when or whatever, because it's internal, it's confidential. So, so I'm going to take the sit on that one.

There are no more questions at this time.

Great. Well, listen, thank you everybody for turning up and listening to, Olivier and I today. And, I wish you a happy rest of February. And, we'll see you next time.

Ladies and gentlemen, the conference is concluded.