During the online Investors eMeeting Q3 about Icecat NV’s Q3 results we discussed also our outlook towards 2022. 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. The Investors eMeeting Q3 took place on Wednesday, November 17, 2021, at 16:00h (4 PM CET). Martijn Hoogeveen presented the progress made during Q3 and expected trends for 2022. Further, the board will highlight topics like the changing market, the competitive landscape due to acquisitions, opportunities, and risks for Icecat.
Please find below the recording, presentation, and summary of the meeting.
We had YoY an increase of 86% in datasheet downloads.Product data-sheet production was stable because the hiring process of editors was slightly more difficult in Ukraine during lockdowns, however, at the moment there is a positive trend again.The number of brand users in our Free Vendor Central (PIM) increased by 27%: more brands are directly adding data to Icecat or checking/adapting their data.The number of technical platforms using our data increased by 9%.The only negative figure – new user registrations decreased by 17% – is a post-lockdown effect because during lockdown new users’ registrations expanded by a lot. In fact, during lockdowns, new registrations almost doubled.
We acquired Autheos, a video syndication company, active mostly in Benelux. The impact on revenues is less than 1%, but it is still a strategic asset. A confirmation that we are able to dominate certain verticals. And it helped win a few more customers.Salsify acquired Alkemics in France. For us, Alkemics is a partner. It has a different role from pure PIM players.Working to get the new generation of connectors to Amazon (important to brands), and for example, locally working on a new integration with BOL.The PIM market is crowded. But the syndication market is less, and our database is still unique.
We have too many PIM tools due to acquisitions – cedemo, icecat, iceshop, syndy. Therefore, it is time to simplify. We call that project: ONE PIM. And take steps to phase out several platforms starting with the video games platform in France. A roadmap with more steps is defined. Every step will unlock a number of developers which is good because they are scarce. Furthermore, fewer platforms, means that our ecosystem becomes less complicated. Also easier for our sales.We started researching NFTs, and a new generation of blockchains that can almost work with no transactions costs. That is better for sustainability and more efficient and scalable. We research tokens to be able to advise customers but also to use it for loyalty applications. We believe that there is a place for blockchain but only the sustainable (Proof Of Stake) variants. Not Bitcoin or Ethereum in its Proof Of Work forms.
All remained in post, but we might have a change in January. The board’s opinion is that the DRs at NPEX are undervalued. Therefore, we think it is good to continue the employee stock incentive plan and we consider further options that improve liquidity and/or improve the supply/demand ratio. This is not an announcement yet, just a consideration.
Mostly unchanged, except supply chain disruptions that affect some of our clients.
It is a bonus program, staff gets a bonus with the requirement that this bonus is fully spent on the DR shares. They get no discount, it is just part of their bonuses, which are paid in this way in DRs. The elegancy is that we are not doing the transaction ourselves, so that reduces the risks of insider information. In many cases, the individual amounts are below the 5000 euro threshold for reporting transactions to AFM. In some cases, they are above but then the person should consider if they are an insider and if so then they should fill in the AFM form.
I think we consider all options. Buyback makes some sense. There is also still put option for less than 1% of ordinary shares related to Cedemo. They can execute it in the new year. We have enough cash, in any scenario. Not a problem. Buyback makes sense because it helps with liquidity and it reduces or changes a bit the supply-demand ratio. We don’t have tailored legal advice yet on how to do it. Therefore, we would like a lawyer to put it on paper to follow a proper procedure.
If we do it, we will announce it in advance so that you have time to take it into consideration. And dividends, that is an option too, actually. Until now, we did not spend all our cash reserves/profit-building cash reserves on takeovers or investments, and the cash is piling up. Then, even if you ignore the negative interest rate, one moment or the other that is a luxury problem, that we should resolve.
Yes definitely, but on the other hand there is an overheated M&A market and till now we were quite selective. We just took over 100% synergistic competitors and that worked out pretty well. Till now, we never made a bad decision. Syndy is stable, Cedemo is increasing a bit and the joint verticals are increasing a lot. We have a local team in the French market that can help with the integration and give a local feel which is very important in this particular market. We might need to become a bit more aggressive.
On the other hand, it should make sense. I like to see ROI, whether it is internal or external. And, if we do not have the creativity or the need to use the cash, of course, we should give it back to shareholders, and then it should be a meaningful amount in relation to the DR price. Basically, those are the considerations that we have. We did not make a decision yet, otherwise, you would know it.
I am not sure about these amounts. Those were the trades, also announced in De Telegraaf: shares of a former CCO sold via an OTC deal. Icecat was not part of this transaction, so we have limited insight into those dealings. Indeed a concern, but maybe a bigger concern is what are the new investors (12) going to do: do they want to cash out, or do they want to stay? And, how much liquidity is there. This is something we consider if we do buyback and we want to adjust the supply range. It is not unrelated to this.
We have multiple entities (BVs), and we can use the tax breaks that are available per BV. Another slightly bigger question is can we use compensable losses in Syndy etc, a considerable amount, we will ask for advice. We also have a 100% daughter in Estonia, where there is a 0% profit tax regime, so some of our costs go through Estonia (editor, developer hires), which gives a little profit tax advantage, only to the degree that you want to keep the profit in the company. If you do dividend sharing from the entity in Estonia you have to pay profit tax. At the same time, we still have WBSO, an R&D status, which gives a lower tax bracket for around 30% of our profit, currently a 7% rate. Our CFO can verify the exact numbers. The whole mix reduces profit tax a bit.
We had said in the past that the 20 million euro revenue level makes sense regarding uplisting. But, also remember the accountant problem. We want one of the big 4 accountants. At first to understand us and have enough time for us. We do not want to be in a situation in which we have a listing and are not being able to deliver annual reports in time with the needed approvals.
Regarding liquidity: for Fastned the impact of uplisting was big. But, at the same time, I first want to use all the instruments that we currently have to improve our situation. It is not a problem in itself for the business if the stock is lower, but we do not like it for the investors of course.
Now the real hotspot is Minsk, Belarus. Our Estonian director is Belarussian, one associate of him in another business (unrelated to Icecat), is put in a KGB prison in Minsk. An eerie situation. He cannot do anything. And as we know him, it feels very personal. Regarding Ukraine, it is more armor clattering. That is my interpretation. The team there is comfortable. There are many immigrating from Belarus to the Baltics or Ukraine. Ukrainians receive them with open arms. Ukraine is a good place at the moment, different from what one reads in the news.
When the war was hot in eastern Ukraine, there was a lot of uncertainty. During the Maydan revolution, people were shot and our staff was distracted although nobody was harmed. Everything continued operating. It was just a little square kilometer in the center of Kyiv which was a disaster that gave a lot of unrest. And, also the war in the East was limited to a few provinces.
Sadly enough, the moment that the Dutch plane went down, suddenly Ukrainian colleagues could relate to us again. Before they felt left alone. The COVID period had a bigger impact because one colleague died of COVID, not a very old one. Typical for the region, people do not trust the government, refuse the vaccine, and many of our local staff got COVID, but luckily most are young and healthy. Currently, we employ his wife, helping the family by providing employment, directors there feel very strongly about doing things like this. Another unfortunate premature death: one colleague passed away earlier this year while swimming under unclear circumstances.
Currently, the mood is good. We are hiring in the rest of the CIS region as the Ukrainian labor market is overheated. Especially for developers and project managers. There was always a big demand for developers but it is new that project and account managers are hunted away as well. For that reason, we changed a bit in tariffs, fees and we are recruiting recruiters. Ukraine is in good mood, but geopolitics is unstable and Russia will take care that it will “never” become stable.
We continue being innovative and have increasing ambitions for continuous growth. At the moment, we have 3 different areas of focus. The catalog operation is the biggest revenue generator. On the other side, the platform business – PIM – is a multi-billion dollar market. And, although the traditional PIM market is overcrowded towards A-brands, PIM+syndication offers opportunities. There, we position ourselves with a freemium business model with an open catalog and we expect continued fast growth.
Another track is that we are focusing lately on monetizing rich content: videos, enhanced product stories for marketing, 360 degrees images, etc. Retailers can easily integrate these multimedia assets into their websites. Continuously, there are new retailers adopting this. The advantage for brands is tracking traffic on those product pages. Again, a big market that we are addressing. Additionally, we are focusing on R&D to see what else we can bring to the market unrelated to what we are doing today, to find another niche that can grow fast.
In conclusion, Google Meet is a bigger success as a format for investor meetings than an in-person meeting in the office. We might do it quarterly as the questions are very helpful.
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