NIQ Global Intelligence plc ($NIQ)

Hello, and welcome to JPMorgan's Technology, Media and Telecommunications Conference. We're delighted to help us kick off TMC. We are joined by NIQ Global Intelligence. Although NIQ returned to public markets just last year, the company has been a leading tech innovator in consumer intelligence for over 100 years now. NIQ has a vast data estate, which includes information from over 8,900 retailers in 88 countries, proprietary panels spanning 5.5 million-plus global shoppers, billions of consumer furnished e-receipts each year and critical product level reference and descriptive data on over 246 million SKUs spanning 10 billion-plus product. Joining us on stage this morning are Jim Peck, NIQ's CEO and Chairman; and Mike Burwell, CFO of NIQ. Welcome, Jim and Mike.

Thank you.

Thank you.

Just to start off, a note that if anybody wants to submit questions, you can do so via the platform. I have an iPad up here, so I will see those come in, in real time. If you're in the room with us, you may also raise your hand. So we'll try to make sure we leave some time for questions. So let's start off with Jim.

Jim, you've got a lot of experience leading public companies, especially tech companies in the public markets. How are you thinking about your business and the world that you operate in today?

Yes. So I guess I have been doing this for a long time now. The fundamental thing I look for in any company, but especially in our kind of company is the information we have and the insights that we have is it -- do they matter? Do they matter to our clients? And so clearly, they do, right? And clearly, they're unique. Clearly, they give insights that no one else can do. And our clients use them every day. So that's the next thing you look for. Are we relevant inside our customers' world? And we remain extremely relevant inside our customers' world, whether they're doing pricing, promotion, assortment, innovation, basically, all their decisions on how they're trying to interact with the consumer. And so we sit right in between the retailer and the consumer and the manufacturer of the brand in that nice little triangle, collecting all the transactions that are happening. So we really know what's being purchased. We really know what the products are. We really know what the pricing is. We really know where they're sold. We really know who's buying them. And that lets us help our clients understand what's happening, but we can also help them understand and predict the future. What happens if I change my price from A to B in this part of Brooklyn selling pizza sauce, we answer, you are likely going to get more share because your competition is not running promotion and pricing. So we can help them understand what's going on in their world and then predict the future. And so even in a world like today, where I am getting a lot of questions about the Middle East situation or other situations that are going on. And I think you said 100 years, even in the last 5 years, there have been a lot of things that have gone on in the world, and our business has remained strong because while those things are big problems for the world, our clients are still thinking how do I get consumers to understand what I'm able to offer them, how do I price it so that they'll buy it, what outlet are they trying to buy, whether it's e-com or in the store or even as it's coming Agentic commerce. So they're still fighting their battle every day trying to win with the consumer. And so our underlying business drivers are going very well are very strong. So activation is performing well. Intelligence is performing well. We let people know about our April results early because the trends are going very much in the right direction, and we feel good about our year. I would say when I'm sitting with clients now, while we are worried or they can be worried about a situation in the straight of her moves and how it's affecting them, what they're really thinking about, especially the bigger ones, is how they are going to take advantage of to win how they're going to take advantage of it better than their competitors to win how is agentic commerce going to affect them? How are they perceived by these different LLMs? How do the LLMs perceive them without anybody kind of watching. And we're built to play in that space. And so what I'm seeing happening is AI is opening up even more opportunities for us. There are more use cases opening up for us, and we're well positioned to take advantage of it.

Got it. So maybe we'll start with AI, and we'll come back to genic commerce momentarily. But you're definitely in an interesting spot. Obviously, I would expect your data to be the kind of asset that AI really needs to function well in your domain, which consumer intelligence, consumer product measurement. Where should NIQ be slotted or viewed in the AI beneficiary debate?

Yes. So I guess there's this notion that's formed up that like black and white AI winners and losers and things like that. I can't disagree more that we're somehow on the wrong side of that equation. We're the beneficiary of a whole new set of use cases that can come up or that have come up. And not -- but let's go back one. Clients aren't saying, oh, now that there's AI, I don't need to understand pricing and promotion. I don't need to understand assortment. I don't need to understand what consumers are doing. I don't need to know the truth and the source of the truth. We still remain that. And AI just makes it happen faster. And like I said, we're in discussions with clients right now, and we call them the AI builders. These are the folks who have the capital. You'd expect the brand names. I won't say their names, but these are the folks who have the capital to build their infrastructure to link all their data sources together. And they realized more and more just how important we are to that infrastructure. So we're not just a data feed. We're also a semantic layer, giving them context for how the data all fits together. Our models help them predict the future. They're trying to build bigger and better models now that do things like link their innovation engine to their supply chain. And as they're building those POCs, they're saying, well, Nielsen IQ, we didn't realize you could make this happen really fast. And so we're working with partners in the infrastructure space like the Snowflakes of the world, let's call them, to do one part of that job. But our part of that job is, yes, to provide information and analytics but we're also providing context. And so we're just -- we're even tapping into new budgets, which I think is really important. Chief Insights Officer, Chief Marketing Officer, they know who we are every second of every day. The CEO, the CFO know who we are. But now the CTO is getting real interested because they have to take advantage of what's going on with AI. And to do that, they need their data structures to be done right.

And I'll just add, fortunately, 5 years ago, we saw a lot of this coming. We didn't know quite how it was going to work, and we invested a ton of money in our infrastructure to get our data right and to get our, let's call it, APIs. It's more complicated than that, but to get access to our data right to feed this new kind of way people or companies are using our data.

Got it. And maybe I'm editorializing here for a second, but it does seem like one of the things that gets lost in the sauce is that you have -- I mentioned the 100-year-plus history. There's a huge level of trust that your clients have in your data and how you collect it and how you present it. It's not gathered through one method. It's multimodal. And you can't web scrape to that. It -- it's just not physically possible.

It's not out there, okay? You just can't do it. And I guess there's bits and pieces, but I mean, I challenge anyone to go ahead and try. It's not going to work. And we have the source of the truth and it's $7.4 trillion of spending. We have one of the largest databases in the world. None of that matters other than that it's a lot. But what matters is it's relevant. It's the truth. And you could take an LLM right now and run it against whatever is out there and you're not going to get facts. you'll get answers, but you won't get the facts. And our clients need us to be right because if they make wrong decisions, it costs them millions and millions of dollars. And so I think we're the fuel that feeds AI. But of course, we're using AI in our own right and helping our clients just work faster. They're not working necessarily differently like, hey, we're not going to worry about pricing anymore. No, they have to worry about that. They just want to worry about it faster.

Got it. Got it. And so AI has been a big topic in info services land for Andrew Steniman and I and for our coverage companies like NIQ. But uniquely, you guys are sort of unique among our coverage companies and that you're very focused on the idea of Agentic commerce. So can you walk through what NIQ's right to win is in Agentic commerce? How does that play to your strengths? I know you guys like to use the tagline and you help them see the full view of customer demand. So how does Agentic and your sort of mission to help clients see the full view how does that enterprise?

So Agentic Commerce, the different LLMs are -- I'm sure you guys use these and you ask it a question, "Hey, get me a protein powder that has no peanut oils in it that is super clean and I want it now, right? Tell me where I can get it, right? And so what we're able to do is we understand the ingredients of all the products. We also understand derived attributes like this has got a clean label, verified clean label. This is heart healthy. And so we are able to tell the LLM what is in these products. We're also able to tell the brand itself, hey, this is how you're perceived by the LLM. So we understand what's the product. We understand what the consumers are doing. So we're able to inform the LLM, hey, this is -- these are the products. But guess what, these are the ones that are hottest for a male over 60 years old, who's looking for a protein shake in Boston, right? And so we understand what what -- who the consumers are that are actually buying. Of course, we understand all the price comparisons. And we also understand where you can fulfill the order, which is really important. You can't do that reliably, you're going to lose faith in the LLM and you're going to go somewhere else. And so we are already talking with these players about how we can fit in that transaction stream, right? And so we're not just telling them what's happened, we're also helping them fulfill. And so that allows us to take our place there. The other part of that whole infrastructure is the brands need to know what's working and not. And so we will continue to provide the measurement information that says, yes, this -- because you did this with this LLM, you actually got outperformed a different method of fulfilling your orders for your clients. And so that's what we've been doing for 100 years. But in this case, -- it's like a whole new revenue stream that we are going to tap into because it's that obvious that we should be playing in that transaction stream.

Got it. So look, it sounds like you guys have -- your strategy is in a good spot. Your product innovation, I think it's enough research from you guys to say that's in a really, really good spot. Mike will get to the financials in a second. But obviously, from the quarter -- the last few quarters you guys have had as a newly public company, those are in a really good spot and getting better every quarter. But the stock price is not. So how are you thinking about your stock right now? What's the Street sort of missing in your opinion?

Well, I don't -- can't put myself exactly in their shoes because I don't understand it. We're about to get to $1 billion in EBITDA, $1 of adjusted EPS, like these measures that we've traditionally used to drive value and multiples don't seem to be being followed, right? And so is it frustrating? Certainly, it's frustrating. Is it personal? Yes. This is our company. And I think that we're just going to keep performing. I can control and we can control what we can. We know we're going to execute. I think I said last time with Andrew, we're an execution machine. We're going to keep at that. We know that there are more and more opportunities opening up for us in this AI world that we feel really good about it. And we know that the core business is operating the way it should, both in activation and intelligence. So it seems to me that this is artificially something is happening out there where people are kind of waiting and seeing. And so what can we do there? Just keep performing.

Interestingly, the stock market may actually be a lagging indicator in this case. So Mike, I want to go over to you. You and the team, you covered a lot of ground on the earnings call late last week. We're only a few days removed from the call. So I just wanted to make sure that anything you wanted to convey or clarify to investors, key takeaways or other points of note that you just want to make sure that people came away with after sort of a -- you guys are very transparent with a lot of what's going on in your business, but just anything you want to drill down on especially.

Yes, I appreciate that, Alex. Yes. I mean I think -- look, I think our financial story is pretty simple. Ultimately, our financials are healthy and they are improving. And when I look at it, look, we've had 9 quarters of mid-single-digit growth overall. In fact, as Jim mentioned, when we look at April, our organic constant currency growth is already above what we delivered in the first quarter overall. So when I look at it, our overall client demand for both our activation as well as our intelligence solutions is very, very strong. And look, when I look at our overall algorithm, renewals, when we have our pricing and cross-sell and upsell that's actually happening is going very, very well. In fact, we see even more upside to it. Jim touched on Agentic commerce. When we look at win-backs, -- and what AI is going to do for us, we continue to see upside in terms of revenue growth overall for the business. The thing I'd really want to make sure I stress is there are a couple of points from the earnings call. And that is that our intelligence business is very strong. Why do I say that? We grew Americas at 9.3%, 9.3%, which is a market we have other competition in -- our APAC business was a little bit soft, but it was driven by 1 specific thing, and that is that China grocery retailers, we needed to improve coverage. We've gone and executed that. You're going to see that improve over the rest of the year. And also then we are subscription revenue. So when I look at intelligence let's look at the subscription revenue as part of intelligence. That grew 6% in Q1. When I look at that, that's almost $3 billion in revenue. When I look at the metrics, our NDR is sitting there at 104%, and our GDR is 99%. So we're getting price. We don't have much churn in that base that's happening overall. So at the end of the day, we executed well in the quarter and maybe just 1 last thing, Alex. When I look at our activation revenue, our activation revenue grew 5.3% in the quarter. Why? Our analytics business is strong. Our analytics business is what you saw drive that growth in the first quarter. We're comfortable with what's happening there. So at the end of the day, what we're doing is we're continuing -- as Jim said, we're seeing that revenue growth happen with our fixed cost base, and we're translating that into EPS, and we're translating that as an inflection point into free cash flow going forward.

Got it. That's super helpful. That's super helpful, Mike. So maybe I'll challenge you with one then. Sure. So you guys did raise your restructuring target for the year. You're going to do a little bit more -- get a little bit more savings out of that on a sort of a gross basis, but you didn't raise your margin yet. Can you walk investors through -- is that because maybe some of the flow-through Avens in '27 now?

That's right. It does happen in 2017, but maybe just a couple of philosophical comments. Just to frame the conversation, I'll come back to your specific question. So look, Jim and I, in our past, have different public companies. We understand the importance of delivering on our promises. And we've been clear about driving that overall since we started the road show. And if we look back, we've exceeded the top end of our guidance on all metrics for 4 quarters in a row, right? So our goal is to continue to execute. As Jim said, we're an execution machine, and we're going to continue to be that. So look, as we think about guidance, we simply balance our recent overperformance with a dynamic backdrop and our -- that's our guidance approach. But equally, if you look at the incremental amounts we're talking about is $15 million. So I mean part of that is not all -- some of that will roll into '27. And to your point, that's the reason.

Got it. And you guys have traditionally had very high very quick payback period on your restructuring program. I think it's fair.

Really less than a year out.

Understood. So maybe we'll go down to sort of Brassac, we think free cash flow is the most important way to measure your business at this juncture. Was thin coming out the gate at the IPO or let's say, looking with a look back at the -- at the point of IPO, then you immediately sort of started gushing cash the front half of the back half of last year. Obviously, there's a seasonal dynamic, 1Q was net negative but was expected, at least for me, this year, it looks like you guys are really well situated again on free cash flow, just looking at the year as a whole. You're guiding for $235 million to $250 million. Walk us through exiting this year, looking to next year, how we should think about free cash flow inflection. And obviously, that sort of goes hand in hand for you guys with progressively continuing to delever. So how to think about those 2 dynamics?

Yes. So Alex, we've said at the IPO, we -- by the end of last year, we would get below 3.5x leverage. And we said by the end of this year, we'd be below 3x.Sitting here, we were below that at the end of last year. At the end of the first quarter, we're at 3.4x leverage. We have an absolute direct path to be below 3x by the end of this year. And in fact, if you look at it from a TTM standpoint, we're almost $130 million of free cash flow through the first quarter. What's driving that? What you see in the first quarter, as you rightly pointed out, you see the seasonality of it in terms of we pay our IT payments, our data payments and if indeed, were successful bonus payments in the first quarter -- so that's a traditionally low period of time, and then it builds through the rest of the year. With interest expense, we've refinanced all our debt. We're below -- we've reduced the run rate interest costs by $100 million for the business. Our EBITDA growth is continuing -- will continue to build, particularly traditionally, as you said, seasonality low point in Q1, high point in Q4 and restructuring normalization costs are really in the front half that will leverage themselves out overall. So we feel very good about the free cash flow of $235 million to $250 million that we forecasted for the year. And then as I said, if you look at it from a TTM standpoint, we're sitting there at $130 million through the end of the first quarter.

Got it. That's awesome. So we're going to take a quick break to see if there's any Q&A. It either comes in via the iPad here, or live within the room. And if not, I'll sort of dive into a few more specific points of question. All right. We're going to dive into some specific questions then. So one of the things that you guys do on your earnings calls is you speak to momentum that you have in core sort of solution sets that are -- should we say, you guys have substantively and deeply enhanced post Jim Peck, Mike Burwell, Hicar era. Can you walk investors through what the most sort of important products they should be watching and understanding and benchmarking your performance on the panel on demand, things like that.

Yes. So I guess in the here and now, we talk about the full view. And that's -- that's a simple way for us to convey both internally and externally who we are relative to what we want to know about the consumer. We want to know the full view, the most holistic view of shopping behavior globally. And in the last 5 years, that still means the shift to e-com and really making sure that we have complete coverage globally in that space. So our e-com products have grown I think it's 33% recently, and we're just -- we're very much at the beginning innings of that cross-sell, upsell. Why? Some clients didn't believe they had to think about that. But now there's much more commerce even going on and not things that normally aren't e-com related. And so we're -- they're saying, okay, I better get with the program here, right? And so that's 1 thing. And then our Omni product, which is really both understanding what's selling, but understanding through what channel and then having demographic information. It's primarily a U.S.-based product that's also selling very well not only to brands, but also to retailers. This is the omni shopper. Consumer pain, omni shopper consumer panel, all part of the full view. And then in addition to that, there's a module that looks at Amazon that is very unique in that we're able to get very granular information and integrate it in with our overall data -- point-of-sale data and clients really like that, of course, right, because it's so granular and can help them understand exactly what's happening, including other retailers for that matter. So those are really an important set of products, not only in the U.S. but globally. And where the magic happens is those really are nice on their own, but when you integrate all the information together. So customer. Here's what's going on in this market. Here's what's sold. But now we're overlaying and here's who bought it and here's why. So we know that, I guess, continuing with this example, we know that you're losing share in Brooklyn and your pizza sauce, and it's because you are losing every male who is over 50 years old and you're losing them because a new brand just came out and people are shifting to that brand. And by the way, they're also selling products that are related. So there's a bundle of products happening. So then, of course, the customer can react to that. our customers can react to that. And so having what's happening and why it's happening really matter. So I think those are the important -- some of the important solutions for now. The other important solutions are the beta launches of our kind of chat capability and our analytics capability within our Discover platform, which are going over quite well. I think equally important, our clients really get. We need that, okay? But we also need something where you're helping us build our infrastructure, which I referred to, the AI Builder. That's super exciting. -- because it's now. And how long it's going to take to implement that's kind of in the hands of our customers, but we're in the middle of 5-plus proof-of-concepts on how we can help them organize their own information, help them build the infrastructure with partners and how they can start having access to our information and even more in different ways. -- which isn't part of their current pricing isn't part of their current contract. So those are new avenues for growth. So I would keep my eye on that.

Hope you don't mind if I raise a point for you, but it's interesting to me that you have the -- you guys are sort of 1 of 1 in measuring consumer retail measurement globally -- and then on the panel, you really are also 1 of 1 in providing both point-of-sale retail measurement and consumer panel information from sort of 1 source of truth, right? There's separate panel providers, separate measurement neither at your scale, but there are other providers. And then you're the only people who provide panel on demand. So you can go into the Discover platform which is what I just and there and go into this is or what have you and really do that. And there is -- people often ask me about the competitive set, and they say, what a certain point, it really is just -- and I go if you need certain kinds of answers, and you really need to dig into it, especially the global framework.

It's the 2 things combined where you're saying -- the example I gave with the simple example around the Brooklyn pizza sauce. That's really important. And that -- to know that and to know it like really quickly is exactly what our clients want, and they want it fast and they want it at scale. And again, back to instead of them having to ask for it, which in the past, you would do because it's just the sheer time it would take to cull through all this data to try and pick up what you think they're thinking. Now with AI, you can more quickly deliver them. Here's what you should be worrying about. You don't even have to ask, here's what we should be worrying about. And so that's the direction we're going. And the reason we're in beta mode is we got to be right. This is a really important point. We can't -- and no one can implement things that are -- if you give the -- like you can be confident, but if the answer is not right, clients are going to find out really fast. And so we've released this in beta mode, so they can start understanding and get -- help us make sure we're training things correctly. And there's a lot of excitement about it.

That's a -- that's awesome. So maybe 1 thing that all these solutions have in common is we're talking predominantly about your intelligence business and particularly the subscription side, which has really, really robust retention, net and gross dollar numbers, and there's clear momentum there. But there are -- that's about 2/3 of your business. You have about another 1/3 of your business that is both sort of more intelligent solutions sold, I don't want to say piecemeal, but not on an annualized subscription basis. And then you also have the activation business. Mike, maybe you can walk us through sort of how the revenue dynamics work in those 2 businesses and how somebody should think about the recurrent nature of those solution sets those solutions?

So I think 80% of the business to be exact, Alex, is the subscription. Thinking about them is 3- to 5-year contracts with annual escalators that are included in those contracts. So those pricing contracts are set up that way. And as we talked about, when you look at our GDR, I mean, our churn level is less than 1%. And that 1% is really SMB businesses that get sold, bought, come in, go away. It's very low churn rate. So our renewals are very high. It's a very sticky subscription business. And as you said, in 90 countries in terms of when we're operating. When we look at our activation business, a lot of that is very sticky, too. It's the same clients of that remaining 20%, almost 80% of that is the same clients buying similar services every year, there are only 1-year contracts that are in place. So there's a stickiness to even our activation business. And when you look within the activation business, we think about a couple of dynamics that are happening there. So 1 is our -- Jim talked about our -- some of our AI products solution sets that are out there. But our AI base screener, when your base is a very well-known brand in the marketplace in terms of thinking about innovative new products now with BASES AI Screener, -- we're able to help clients think about those products very quickly in terms of what they want to introduce to the marketplace. And we're getting a lot of acceptance and the rate of that, and that's flowing through on that activation revenue, that 5.3% we talked about in terms of first quarter. But also our -- when you think about our analytics solutions are very powerful, particularly when you link them back with the insights that we have from our measurement business, and being able to do those analytics faster, as Jim said, on the fly, and we've seen that demand being very, very strong. So I guess that's what I'm trying to break down just to maybe just kind of summarize back. When you look at our revenue base, 80% of it, 3- to 5-year contracts with annual escalators that are in place. Other 20% of that 20%, 80% of that is very sticky, same clients buying similar services year in and year out. And then within that, 1 last click, you've got innovative new services that are happening, particularly as it relates to AI base screener as well as what's happening in the analytics front.

That's really thoughtful. So we're going to give.

Just a point that I wanted to make really we -- so we sit on this very granular data. And when we give insights to our clients, it's at a kind of a summarized level because you just possibly can't give them every little piece of information. And so when they get the answer, that's a point in time. But they need to know every -- they need updated information constantly, what's going on, what's going on? And they have to reach back into our world to get back to the granular data. So it's not like they -- once they get access to data, then like Okay, now we can just run our own analytics, and we don't need Nielsen IQ anymore. That's just not the case because they don't have access to that granular level data. And the reasons they don't are partly technical, just to sheer amount -- and partly, that's the way our partners want it. They have really trusted relationships with us. They don't want all that information revealed to the world in any form. And so they're like as long as it's operating within your context of your business, Nielsen IQ were good, but don't give it away, right? Don't give it out. And so there's structural I guess, guardrails that make it impossible for clients to say, we don't need you anymore, right? And so that's why our analytics lives on.

Awesome. So we're going to open it up to the audience 1 more time, see if there's any last minute questions. Please. We have a gentleman on the right.

Okay. So you've been public for almost a year, right? When we talk to your clients, they all talk about how important you are in the ecosystem and how important you are to them. When we look at your financial performance, right, you've delivered or exceeded on basically everything that you've told the market. Yet AI has happened, Investors have sold first and figured out later. And so when we look at your performance, right, and what you've accomplished and what your clients say, it's a real dichotomy from what the market is doing. And so in a minute, -- like what is your sales pitch to an investor as to why they need to own NIQ stock? And what's the long-term value creation path that everyone is missing?

Yes. So First, you nailed the thing right up front. We've been with our current investors. We've been with analysts. If you talk to our clients, and they're telling us now more than ever, your clients are telling us how important the information and insights you provide them are to the way they run their business. And so we continue to be well positioned in the most meaningful part, some of the most meaningful parts of their business operations. They're not changing the way the things they need to do. They're changing the way they do it, and our information is right there to enable them. And that's going to create this and sustain the steady growth curve that we have. And AI will unlock even more for us. So that's going to be a tailwind. And so we believe we should see our revenue accelerate over time because of AI because there are specific use cases that are not that are not in our numbers today, that are going to happen. And so we're in good shape there. And we know from our clients that we're in good shape, they know even more, given the context we provide them to run their business how important we are. And then you take the other parts of AI. So I talk about our margins. We're on a march to 25%, then it's going to be a march to 30%. We're a company that is very ripe to get more and more efficient with the use of AI. We understand how to use it. We need to use it right. And so you're going to see both, I think, our top line be steady, but accelerating and you're going to see our margins expand and you're going to see our cash flow continue to get better. So all the metrics are in place for us to continue to operate. Not to mention that we're absurdly low end as far as what we're trading as our multiple. It's -- I can't really even process it to, frankly. But I can do this, I can control it, I can control -- and you have a management team and a group of people and a team of people at Nielsen IQ who get it and we're going to deliver for investors. We're going to deliver for clients, and that's what we can control. So that's why I would put my dollars into NIQ.

I think that's a great place to wrap it up for the day. All right. Thank you guys so much.

Thank you,

Mike and Jim. Thank you so much for your time today. Hello, and welcome to JPMorgan. I don't need to understand what consumers assortment