FAQ and Presentation Investors Meeting 2022 and H1-2023

By
FAQ Investors Meeting

During the online Investors eMeeting about Icecat NV’s 2022 results, we also discussed the H1-2023 figures. The board of Icecat, including CEO Martijn Hoogeveen, hosted this well-visited interactive online meeting for its investors in depository receipts (DRs; Dutch: “certificaten”) of Icecat shares via NPEX.

Please find below the presentation and FAQ during the meeting:

FAQ

What are the considerations for investing in Turkey?

Investing in Turkey aligns with our strategy to diversify our operations over multiple countries to guarantee the sustainability of our company. With Turkish colleagues and a developer team in Istanbul, we gain valuable local insights. The proximity to Ukraine enhances cross-border options for staff in war-torn Ukraine. Geographically, it’s a smart move to invest in Eastern European countries including Georgia and the Balkan. Turkey, despite appearances, offers relative stability compared to neighboring nations. Additionally, it provides a cost-effective environment for business operations.

Can you provide an approximate sales figure for the companies in competition with you? Are they comparable in size, or do they have a significant 10x advantage?

Yes, some of the companies we compete with are much larger than us, with approximately €100 million in revenue. Some others just have a few million euro revenues. However, it’s essential to highlight that the larger companies mainly focus on other activities. And that these numbers are guesstimates, as they aren’t publicly available. Notably, GFK and other mentioned companies [in our reports and presentation] are in the league of multibillion-dollar businesses, though more focused on market research. Typically, the content divisions, which directly competes with us, are comparable or smaller than ours. These are typically in the 1-20 million euro revenues range. It’s important to understand that while we compete with these companies, there’s not a 100% overlap in the offers. Some of our products complement each other. Therefore, direct comparison can be a bit challenging.

What are the key factors that influence the company’s decision not to commit yet to providing shareholders with a dividend?

Firstly, we continuously assess interesting investment opportunities, including the possibility of big acquisitions in our core business. Additionally, we see that it is effective to provide liquidity by buying certificates on the NPEX exchange as part of our Employee Stock Incentive Program (ESIP). This approach works well and is underpinned by the NPEX award as most traded stock. It provides comfort to new investors, as they know they can easily exit when they want. The one-time dividend decision during last year, led to a situation where the actual price is (regularly) above the ex-dividend initial listing price (10 eur – 0.38 eur = 9.62 eur).

These considerations collectively play a role in our decision making to offering a next dividend to our shareholders. We are committed to continue the purchasing as part of the ESIP program as it also contributes to liqduidity and (clearly) a kind of balance in supply and demand. For this reason, we don’t consider stock dividend as it might tilt the NPEX market towards over-supply.

How has the company’s dividend policy evolved over time, and what factors do you consider when making dividend-related decisions?

Initially, we saw ourselves as a growth share, and in the prospectus, we did not commit to dividends. However, over time, we’ve observed the stock price consistently below the introduction price. In conjunction with excess cash, this has prompted us to provide a one-time dividend last year.

The considerations are given in the question before. Like previous year, in case that we decide about dividends we will timely announce that.

Can you provide some insights into the development of your portfolio companies?

We focus our portfolio companies (minority investments) on showing positive growth combined with improving EBITDA and working towards profitability while growing. The aim is to achieve a positive cash flow, especially when they grow between 10% to 40%. In all porfolio companies we instigate rationalization/restructuring to improve the bottom line.

E.g., VirtuaGym’s business model primarily revolves around membership management and providing back-office services to gyms, generating recurring revenues. Overall, the company is performing well, and its business model aligns with their objectives.

What is the level of recurring revenues for Icecat, and what is the current level of churn with your existing customers?

Icecat’s recurring revenues are around 95%, which is considered very high. We actively strive to maintain this high percentage as our objective. However, one of our daughter companies, Iceshop, currently has a recurring percentage of 50%, which is far lower than our business norm. Therefore, we are diligently working to improve Iceshop’s recurring percentage and aim to raise it to the range of 80-90%, aligning with our overall objective in the company.

How would you define the nature of Icecat’s recurring revenues, and how does the contract duration affect the level of recurrence?

Icecat’s recurring revenues are based on contracts with a duration of 1 year and automatic renewal. Given the need for product data in the e-commerce value chain, the annual non-renewal percentage (churn) is 4-5% only. In other words, Icecat’s data services are a need-to-have not a nice-to-have for our clients.

Regarding churn, we currently experience a churn rate of 4%. This indicates a low level of attrition. Nevertheless, we are continuously working to reduce churn even further and maintain strong relationships with our clients to ensure the sustainability of our recurring revenues.

With a high level of recurring sales, one might expect higher organic sales growth. Where is your sales effort focused, and how do you plan to continue growing given the challenging market conditions?

Our sales effort is currently focused on corporate accounts as we believe they hold significant potential for organic growth. Among others, on corporate accounts in the US. However, corporate deals involve long to very long sales cycles.

While our recurring sales provide a strong foundation, we recognize the importance of expanding our customer base and generating new business. In the first six months, we experienced a promising 19% organic growth in invoiced amounts, which indicates positive traction. But, during the second half of the previous year, we saw almost a standstill in the e-commerce market, which continues to have some delayed impact (because of IFRS accounting rules). To achieve sustained growth, we have shifted our sales focus even more to corporate accounts, which not only involve longer lead times, but also more complex services.

Maintaining the very low churn rate is also crucial in our growth strategy. By retaining our existing clients and providing them with an exceptional service, we ensure a stable foundation while simultaneously pursuing new opportunities. As new business (invoicing) is expanding quickly again, we remain optimistic about our ability to grow during the whole of 2023.

Leave a Reply

Your email address will not be published. Required fields are marked *

Icecat xml

Open Catalog Interface (OCI): Manual for Open Icecat XML and Full Icecat XML

This document describes the Icecat XML method of Icecat's Open Catalog Inte...
 November 3, 2019
Manual

Manual for Icecat Live: Real-Time Product Data in Your App

Icecat Live is a (free) service that enables you to insert real-time produc...
 June 10, 2022
Manual for Icecat CSV Interface

Manual for Icecat CSV Interface

This document describes the manual for Icecat CSV interface (Comma-Separate...
 September 28, 2016
 October 4, 2018
LIVE JS

How to Create a Button that Opens Video in a Modal Window

Recently, our Icecat Live JavaScript interface was updated with two new fun...
 November 3, 2021
Addons plugins

Icecat Add-Ons Overview. NEW: Red Technology

Icecat has a huge list of integration partners, making it easy for clients ...
 October 27, 2023
Manual

Manual for Open Icecat JSON Product Requests

JSON (JavaScript Object Notation) is an increasingly popular means of trans...
 September 17, 2018
 January 20, 2020
New Standard video thumbnail

Autheos video acquisition completed

July 21, Icecat and Autheos jointly a...
 September 7, 2021
Manual

Manual Personalized Interface File and Catalog from Icecat

With Icecat, you can generate personalized or customized CSV or Excel files...
 May 3, 2022