Verve Group SE ($VRV)

Welcome to the Platform Summit. So this second session is dedicated to the Verve Group SE, and I would like to welcome CEO, Remco Westermann, who will give us some insights about Verve's platform business, followed by a Q&A session. And with that, we're excited, and I hand over to you, Remco.

Thank you very much. I'm happy to be here. Yes, I would like to present the company and then afterwards, of course, give time for questions, I would start. I would go to the first page, give an overview of what we do or what our focus is. Let me start with our mission. Let's make media better. We think that in advertising, which is our core market, there is still a lot of money wasted that can be spent a lot better. And that's the reason that we have, let's say, are running this company and see a lot of potential in further growing it and helping advertisers to spend their budgets better as well as help publishers to monetize their inventory better. So that's the first one of our, let's say, core focuses is really enabling better outcomes for advertisers and publishers. With responsible advertising solutions, as mentioned, there's a lot broken in this segment. Therefore, there's a lot of other things happening. IDs are disappearing. So in that sense, we focus on making it really, yes, quality, good, effective advertising. And then we're focusing on emerging channels. There's a lot of channels where you can advertise, a lot of traditional channels like Linear TV, for example. But we're focusing on the channels where really eyeballs, where people are moving, which is mobile primarily. So we're very strong in in-app, but also CTV is one of our focus points. Coming to the next page. Yes, a bit of history. I started the company 13 years ago by acquiring a company from a subsidiary from Axel Springer, gamigo it was called, or still is called, sorry to say. Since then, we had a pretty nice development of the company, I would say, which I'm also proud of and really thankful with the great team that I have. So we started with a roll-up in game publishing, then we decided to go public. And as a public company, you need to show organic growth. Organic growth as a gaming company is super difficult. So we pivoted the company, and that was the reason that we renamed it to Media and Games Invest. We pivoted the company to advertising. We started that. And now, let's say, 6 years later, yes, we are an advertising company. We're successful. We have a CAGR -- revenue CAGR of 30%, an EBITDA CAGR of 36%, as you see here. So we really, yes, growing very nicely and happy with that and a lot more potential to go. Then on the next page, a bit more in detail what we are doing. On the left side, you see the advertiser. It's basically the advertiser that spends a budget on ads to sell products, to get its brand more known, which in the end also leads to selling products or to have other targets with the advertising. Then on the right side, you have the publisher. The publisher has its content. And on the content, there's, of course, advertising slots to make money or to enable the publisher to really run its business. We have contracts with those publishers. We technically integrated with the publishers. And at the moment, when you, for example, open a page, there's an ad on that page, and while you're opening the page, we get the signal because we technically integrated. We get some data with it, the size of the ad, for example, maybe a cookie, then we enrich it with data as much as we can. If there's a cookie, we can build a profile on it. And based on that profile, we send it then to the advertisers that we think that are suitable for it or that are most interested in it. And then there's a bidding process, highest bidder wins. So the advertiser is also technically connected with us or its agency. Highest bidder wins. When we have the highest bid, we render the ad and we show it at that space. So we have less than 100 milliseconds to do that because otherwise you would have an empty ad space that would not be good for anybody. And in that sense, that's the process. We serve 1 billion ads -- 1 trillion ads, sorry, per day -- sorry, per year. I'm saying it wrong. And I'm calling in from America. It's still a bit early here. Sorry for that. So yes, we do a lot of ads and there's a lot of technology involved. And that's maybe important to say, we are a technology platform, we are a technology company. So you don't see us. We are the ones in the background that help the advertiser to spend its money in the best way and help the publisher to monetize its inventory in the best way. Go to the next page. A bit about the value chain. So as already mentioned, you have the brands, the advertiser, then you have the agency. And then if you look at the money flow, it goes first to the demand side platform, which helps the advertiser, then you have the marketplace where the auction process takes place, and then you have the supply side platform where the publisher is connected. And then you have the publisher and, of course, the consumer behind it. In the end, an advertiser wants to reach the consumer, and this is the process in between. The process in the middle is often very inefficient with a lot of parties being involved. We are really big believer in making this much more efficient and having everything under one roof. So having the whole technology under one roof. That, of course, yes, makes a lot more possible. And you see below the money stream, so there's $100 that's, for example, the -- is being spent on media by the agency and on behalf of the advertiser. Typically, 20% of that goes to the demand side platform, 20% to the supply side and 10% for data and matching. So 50% of that goes to the publisher. That can be done more efficient. That means that everybody profits, and that's what we are aiming for with the company. Go to the next page. A bit of a profile of the company. Now, we work for advertisers and publishers. Ideally, every dollar or every euro that comes in from an advertiser, we run on supply where we directly integrated. That's not yet the case. So there's much more efficiency to gain there. We're now roughly on 1/3 on the demand side, so the advertiser side and 2/3 on the supply side. Ideally, we go to 50-50, but we're growing both sides. And so I cannot say when exactly we'll be there, but that's what we're striving for. Then geographically, yes, we are domiciled in Sweden, in Stockholm. We have already announced that we will be relocating to Ireland. That gives us a bit more opportunities to maybe in the future do a direct U.S. listing. Also, let's say, we are reporting euros, which is -- and as you see here, 76% of our revenues is in U.S., is in dollars, and 12% in Europe and 12% rest of the world. But with, let's say, doing our business in dollars with a weak dollar, we, of course, always showing a bit less in euros than what's really happening on our revenue side. And then below, I mentioned this early in the presentation, 95% of our revenue is mobile. That's where you have an individual person behind it because all the other screens, TV, et cetera, there's always more people, family looking in there. So we are super happy to be on the mobile side. Most of that is in-app, over 90% of that. And 5% is other, including also connected TV as the bigger part there. Yes, over 1,000 large software clients. It's customers doing more than $100,000 of revenue per year with us. We're integrated in over 65,000 apps. So that's where we serve the ads, reach over 2.5 billion consumers, and as mentioned before, 1.1 trillion yearly ad impressions that we are serving. So where we win it and where we also make the money. We only make money at the moment we win an auction and we serve the ad, then we take a certain percentage, as mentioned before, the 20% for the DSP, for example, for the service that we do. Go to the next page. How do we differentiate? Because it's a big market where there's a lot of parties also acting. As a European company, we saw very early in the phase that IDs are, let's say, disappearing. Apple is asking, do you give consent that your data are being used? 80% of the people statistically says no to that, and that means that the publisher has problems to sell inventory where there's no ID or no okay for the ID, those people don't know who they are targeting for. And that also advertisers normally don't like to buy that because they don't know who they target. We have developed various ways to cope with that, various technologies. And there's big advantage if you do this in a proper way. So you buy the inventory cheaper because otherwise they don't sell it. Our performance without IDs is almost as good as it is with an ID. And it has to do -- we built also on the contextual web profiles. We know what the intent is. Search intent, for example, is important. Are people looking for a car? What make of car? We integrated with LLMs, for example. And with those data, we're really able to target people in a very nice way. But overall, let's say, ID-less targeting leads to very good efficiency, and that's one of the reasons that we're growing faster than the market with this company, that we're really strong in this part of the business. We are also able to target with IDs, but this is really where we differentiate the company. Go to the next page. AI is very important in our business. And I don't know if you saw, but we also issued a press release today, and that's maybe not such a good or nice moment, but we let go quite some people this morning, roughly 50 employees that we let go. Yes, we see, let's say, a few things. First of all, our business has focused more on the U.S., so Germany is less of importance than that. But also, we see that with AI, we're really gaining a lot of efficiencies in this company and more to come. So in the future, we will, let's say, have less personnel in relation to our revenues. And that is partly reduction of revenues -- sorry, reduction of personnel, but partially also further, of course, growing or let's say, that should be the majority growing our revenues. So what do we use AI for? One, in our core bidding process. Who do we send the request to? What kind of price do we put in there? ATOM has mentioned there that, let's say, an Anonymized Targeting On Mobile device, which we're really good at, as mentioned before, the ID-less targeting. So that's all things where we use AI for targeting purposes, so for our core process. But we also unlock a lot of efficiencies with, for example, the regional sales efficiencies. We have, how to say, really optimized our sales teams. And we see that we get, yes, 10x more efficiency per seller if you really automate around the person everything. And yes, there's also disruption that's based on AI. With AI, we can build a lot of cool tools for advertisers that really help us to help them much better and also get more part or bigger part of the value chain. So those are a few examples. Because of time, I won't go in every detail, but yes, AI is super important for us. There's different tools, and it's really, yes, how to say it, fascinating and great how fast this is developing. I think it's the biggest disruption that the world's going through since quite some time, and the disruption is very fast. If we see how tools like, for example, a Claude are developing and each next version is so much better. So we see really a lot of efficiency gains. And yes, in my view, we are only at the start of that. Going to the next page, talk a bit about numbers. The conservative outlook. We did some acquisitions last year. We had last year in 2025, we had also some issues by doing the platform integration. Company is running really smoothly. We're still investing a lot. That's also to be said, but we're expecting EUR 680 million to EUR 730 million of revenues for 2026 with EUR 145 million to EUR 175 million EBITDA. We are saving money, as said before, with AI, probably more than we, let's say, expected that we would be doing. But let's see how we continue there. But also, we further investing. There's over 4,000 midsized agencies in the U.S. So we're further building up our sales teams because talking to people, meeting people, that's something that AI doesn't do. So in that sense, we are really making sure that the good product that we have, that we can better sell that. As mentioned before, the U.S. dollar-euro relation is, of course, important, so we put that at a certain fixed point because that's very difficult to project, of course. But yes, important point here. Then going to the next page, online -- all the financials, everything is, of course, online available. This is because of the short session and pretty short presentation. So only going through the headlines here. Then coming to the key investment highlights. Why should you invest in this company or why are we a cool company? Yes, we have built in 6 years really a leading ad tech platform. We're one of the top 20, top 30, depends a bit on the definition, platforms in this market, which is called the open internet. So outside of the Googles, Amazons and the walled gardens, which is in the U.S. an estimated 130 billion market, still with a lot of parties in there. We are strong in the privacy-first advertising, as already mentioned. But just going through the different points, we have built strong position in this fast-growing overall market, but especially in the market segments that are the fastest growing, which is mobile in-app. Then privacy first, mentioned that first-mover advantage, we really see that our investments in this are really paying off. End-to-end, as already mentioned, cutting the middleman, making sure that you have more transparency by doing the technology on both sides, demand side and supply side, which case makes just the whole thing more efficient. But even more important, you can really have much more transparency in it for both of the sides. Then attractive financials, proven M&A, as mentioned already before, strong revenue CAGR, strong EBITDA CAGR. And we're running a combination between organic and nonorganic. We did over 40 successful acquisitions overall and are further looking carefully around us. We have leverages on the high side, so at the moment more into really focusing on organic growth. But there are also opportunities that we might take in the future. Short term, it's really focused on organic growth and seeing that we bring this company further and continue our strong growth path. Near-term catalysts, valuation discount to quality. I mean the share prices for mid-cap, small caps are not great or the valuations are not great. We're looking into changing our domicile. We're also discussing or looking into changing our reporting into U.S. dollars, which would make us much more comparable to our U.S. peers. There's almost no peers in Europe. So in that sense, that makes it much more relevant, especially having 75% of our revenues there. And I would invite you all, of course, to participate in our Capital Markets Day, which will be for the first time in the U.S. We will do it in New York and looking forward to that. But participation is, of course, possible in person but also digital. That brings me to the end of the presentation and to the possibility to ask questions.

Thank you so much for your presentation, Remco. So ladies and gentlemen, we are now happy to take your questions if you have. [Operator Instructions] So with that, let's take a look. By now, we have no virtual hands and no questions, so it seems Remco explained everything very clear. But maybe a question pops up or a topic what you're interested in. And then we have the first question from [ Mr. Sterner ]. So he would like to know, you have a target for 150 sellers in 2026. How many do you have right now?

That's a very good question, and I don't have the answer here. I mean we're tracking this number, but we are good on the way. We are, let's say -- I don't have the exact number, but we are roughly halfway now. And maybe an explanation to that, it's difficult to hire sellers in Q1 because people get their bonuses or their commissions from last year. So at the moment, we have an extremely well-filled pipeline. So the number now is maybe, let's say, 50% doesn't sound too much yet. But there's a lot of, let's say, sellers in the pipeline. And this Q2, Q3 are very important quarters to really hire the people. You want to hire good sellers, and good sellers get commissions. And yes, we understand that they don't want to leave that or let it go by switching jobs in Q1. But we have a well-filled pipeline and are confident that we are going to meet that number. But as already also earlier said, maybe to add to that, adding sellers doesn't mean that you're immediately making money. The problem is that it needs to ramp up. And we see really that, let's say, good sellers sometimes start making their own salary or earning their salary back after 6 months, but it's more safe to go from 12 to 18 months. And also some sellers just -- even though we have a strong selection process, don't function as well as we would like them to. So we need to let them go and then you need to replace them and start all over again. But yes, as mentioned, we do this because there's a lot of agencies in the U.S. and you need to meet them to talk to them. And even though we build efficiencies in part of our processes, the real human contact to an agency is still required, still needed, and therefore we also didn't change that target. I hope that answers the question. Thank you for asking it.

And in the meantime, we received the second question in our chat. So [ Mr. Jacobi ] wants to know what were the reasons you decided to move to Ireland instead of Germany. Mainly taxes?

The reason that we decided to move to Ireland, thanks for the question. Yes, we originally started as a German company, then we moved to Malta. That was, let's say, for investors not so much liked, but that was the way we did the listing. It was some kind of reverse listing. That's the reason we went to Sweden from Malta. In Sweden, however, we have one big difficulty that you cannot do a direct listing in the U.S., and that's the same problem actually from Germany. If you want to have real shares in the U.S., there's only a few countries in Europe that allow that. One of them is Ireland. And we also had to look at the current listings that we have in Europe, which is Sweden and Germany listings that we want to keep. And with those, let's say, there is only -- that's even further limiting the number of countries where you can go to, and that's the reason we came to Ireland. So Ireland has the big advantage that you can report in dollars, that you can do a direct listing in the U.S. and still keep all the advantages that you have in Europe. Taxes was not one of the reasons, and even though we, of course, tax-checked, that taxes is not an issue here.

Maybe Remco, if I may add something. This is Ingo Middelmenne, Head of Investor Relations. So if you look at the landscape in Europe, basically having a full listing in the U.S. at the same time as multiple full listings in Europe is only possible for a couple of months, actually. So Euroclear came out with the news about a year ago that this is possible, and we're actually the first company to maybe proceed with the full listing. And of course, if you relocate the company to fulfill a full dollar reporting with the potential to also show U.S. GAAP reporting, then the possibility of a full U.S. listing is, of course, has been one of the keys to doing this decision. So the main reason is really the settlement possibilities of the orders, which is currently only possible from Europe.

And then we have a follow-up. So the question is, but do you expect a change in tax rate from the move?

Thanks for the question. No, we don't expect a change in tax rates. We probably have some advantage from that. We don't expect -- let me rephrase it. We don't expect a negative effect from it. We most likely will have some positive effect.

And now I do not see any further questions. So ladies and gentlemen, if there's anything you're interested about, just let us know. But it seems everything appears to be answered. So with that, we would come to the end of this Platform Summit slot. Thank you very much for your interest in Verve, and I wish you all a lovely remaining day. And Remco, I hand back once again to you for some final remarks.

Yes. Thank you very much and thank you all for participating in this call. And if there's more questions, we are, of course, happy to answer them. I hope I was able to really show what this company is doing, how strong we are. And I know it's not always easy for investors because there's not many comparable companies like this in Europe. And what we're doing is special, especially also this ID-less targeting. But it's a big market. It has a lot of potential. And yes, we enjoy doing it. And now with AI, as already mentioned, we have a lot of possibilities, additional possibilities to further grow this company. So I'm enjoying it a lot. And I'm at the moment actually in Miami. We are at a big advertising fair here, and we'll go to the meetings here. So thank you all very much, and happy to talk also individually, of course.

Thank you. Bye-bye.