Interim Report Nepa AB (publ), Q2 2017

DEVELOPMENT AND LAUNCH OF ACTIONHUB® IN THE USA – FIRST LARGE CLIENT SIGNED.

SECOND QUARTER, APRIL – JUNE 2017 

• Net sales increased by 9.3% to MSEK 55.0 (50.3)
• Gross profit increased by 0.3% to MSEK 38.9 (38.8)
• EBIT amounted to MSEK -7.4 (5.6)
• Earnings after tax amounted to MSEK -7.5 (4.3)
• Earnings per share amounted to, basic SEK -1.05 (0.65), diluted SEK -1.03 (0.65)                           

FIRST HALF YEAR, JANUARY – JUNE 2017 

• Net sales increased by 16.7% to MSEK 106.1 (90.9)
• Gross profit increased by 11.5% to MSEK 77.2 (69.3)
• EBIT amounted to MSEK -12.1 (3.6)
• Earnings after tax amounted to MSEK -13.0 (1.1)
• Earnings per share amounted to, basic SEK -1.82 (0.22), diluted SEK -1.79 (0.22)

IMPORTANT EVENTS 

DURING THE PERIOD

• Nepa was selected to become partner in Facebook MMM Partner Program as one of the first companies globally and the first one headquartered outside of the USA. The partnership gives Nepa direct access to detailed data of all advertising campaigns on Facebook, Instagram and Audience Networks and will further strengthen Nepa’s ability to help clients increase return on media investments.
• Ken Peterson hired as MD for Nepa USA. Ken is formerly COO for Ipsos Loyalty North America and has a wide network in the important retail industry.
• Simon Hay, former CEO of dunnhumby and Anne Roggeveen, professor of marketing at Babson College, Boston, USA, elected as board members of Nepa.
• Annual General Meeting decided on employee stock option program directed to seven key employees in the USA, the UK, and Finland.

AFTER THE PERIOD ENDED

• A new version on ActionHub® with increased functionality was launched in August. The first contract in the USA, with a global retailer, was signed the same month.
• Increased sales representation in the USA, where we now cover Miami and Denver, in addition to the New York office.

A WORD FROM OUR CEO 

Our primary focus during the second quarter of 2017 has been on developing our products. We have developed our marketing optimization products further to commercialize our new partnership with Facebook. We have also put great efforts into developing ActionHub® further to suit US companies.

The ActionHub® now covers the entire customer experience. To help our clients in their challenge of transforming gigantic data flows into something they can use in their day-to-day operations, we focus on developing ActionHub® so that the right data is distributed to the right person at the right time. Nepa distributes in a format the end user can understand and take actions on and that is connected to a financial impact. We believe in making ActionHub® available for the personnel working close to the customers. This enables our clients to establish a data-driven decision making at the fingertips of their organization and achieve higher returns.

During August, we launched several updates in ActionHub®, e.g.:

• Closed-loop-feedback, a new functionality providing recipients (e.g. store managers and department heads) information regarding customers who have had a negative store experience. This allows these recipients to provide customers instant feedback and take actions to approve the customer experience.
• New functionality in the Outside draw application provides the store manager with an immediate understanding of which actions need to be taken to attract consumers from local competitors.
• Real-time dashboard provides the recipient the ability to monitor the user experience in their store or department in real time and analyze which actions need to be taken to optimize return.
• Using data from Facebook, we can simulate the impact of different marketing mixes (i.e., different investments in media channels) on brand value and sales.

In early August, the new functionality in ActionHub® was launched. It was well received, and we are already implementing it for our first major American client. Parallel to the launch we have expanded our sales representation in the USA to Miami, Florida and Denver, Colorado.

The second quarter net sales increased 9.3 percent to MSEK 55.0, during a period of organizational focus on product development and US launch.

Second quarter gross margin was slightly lower depending on slightly higher data costs. Combined with the fact that we in the second quarter of last year had high gross margin, our gross profit is not growing at the same rate as the revenues. For the rest of the year we predict that sales and gross profit will grow at the same rate.

Compared to the second quarter of 2016, Nepa has substantially higher personnel costs due to planned investments within our product organization and for the expansion in the USA and in the UK. EBIT therefore amounted to MSEK -7.4. However, we show increasingly strong net margins on the Swedish market and client orders during the late summer are back to normal.

With several new product updates we are now in an exciting and intense sales period equipped with an enhanced product offering.

Fredrik Östgren
CEO

Nepa is one of the fastest growing companies in Swedish history, enabling organisations to improve their business performance by becoming customer centric at their fingertips. By merging behavioral data with customer feedback data in our ActionHub® platform, our clients can turn the voice and the footprints of the consumer into financial KPI’s and provide it to the right stakeholder in real-time.

Nepa serves some of the world’s most reputable brands in 50+ countries with local presence in Denmark, Finland, India, Norway, Sweden, the UK and the US.

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