Positive signs in underlying core business

The Fourth quarter October-December 2014

  • A new strategy was launched, see page 2 for more information.
  • Net sales amounted to SEK 452 M (504). Excluding change related items, net sales were SEK 462 M (504), a decrease of 8% or 13% adjusted for changes in FX rates. More than half of the decline related to lower revenues from two pan-European customers and reductions in non-core business. Change related items referred to a SEK -10 M correction of the prepaid balance.
  • Gross profit, excluding change related items, was SEK 96 M (115), a decrease of 16% or 20% adjusted for changes in FX rates. Gross margin was 20.8% (22.7).
  • Operating costs excluding depreciation and change related items, were SEK 85 M (99), a reduction of 14% or 19% adjusted for changes in FX rates — mainly an effect of the headcount reduction at the end of 2013. FTEs at the end of Q4 2014 were 355 (449).
  • EBITDA, excluding change related items, was SEK 12 M (16).
  • A write-down of SEK -60 M in goodwill was incurred at year-end. Goodwill after write-down amounted to SEK 324 M.
  • Earnings per share, before and after dilution, were SEK -1.79 (-0.48).
  • Cash flow from operating activities was SEK -22 M (74), of which SEK -22 M was explained by changes in working capital.
  • Renegotiations with one major international client will have a negative impact on revenue in 2015.

The full year 2014

  • Net sales amounted to SEK 1,753 (2,001) M. Net sales, excluding change related items, were SEK 1,743M (2,001), a decrease of 13% or 18% adjusted for changes in FX rates.
  • Excluding change related items, gross margin was 21.7 % (22.7) and gross profit amounted to SEK 379 M (455), the latter was a decrease of 17% or 21% adjusted for changes in FX rates.
  • Operating costs, excluding depreciation and change related items, were SEK 339 M (380). Change related items were SEK -18 M (-22) and EBITDA, excluding these, was SEK 39 M (75).
  • A write-down of SEK -60 M in goodwill was incurred at year-end. Goodwill after write-down amounted to SEK 324 M.
  • Cash flow from operating activities was SEK -110 M (126) and was affected by a normalization of working capital.
  • Earnings per share, before and after dilution, amounted to SEK ‑1.95 (0.27).
  • The Board proposes that no dividend should be declared for 2014 (0.25 per share).
  • Matthias Stadelmeyer was appointed permanent CEO. A new CFO, Tomas Ljunglöf, was recruited externally.

Significant events after the period

  • Bertil Lundell was appointed as CTO. He has a strong track record in senior product development roles and is a member of the executive management team.
  • Tradedoubler finalized its Nordic regional structure and closed its office in Norway with limited costs.
  • The German technology company Adnologies was acquired to support the new corporate strategy. Acquisition investments and expenditures as well as the impact upon the Q1 results are expected to be limited.
FINANCIAL OVERVIEW, SEK M Oct-Dec 2014 Oct-Dec 2013 Change %2 Full year 2014 Full year 2013 Change %2
Net sales excluding change related items 462 504 -13% 1 743 2 001 -18%
Gross profit excluding change related items 96 115 -20% 379 455 -21%
Gross margin (%) 20,8% 22,7% 21,7% 22,7%
Operating costs excl. depr. and change related costs -85 -99 -19% -339 -380 -15%
EBITDA excluding change related items 12 16 -31% 39 75 -53%
EBITDA-margin (%) 2,5% 3,2% 2,3% 3,8%
Change related items³ -13 -22 -20 -22
EBITDA -2 -6 -61% 20 53 -68%
Impairment goodwill -60 0 -60 0
Operating profit (EBIT) -69 -22 -63 24
Net investments in non-financial fixed assets -7 -8 -17 -31
Cash-flow from operating activities -22 74 -110 126
Liquid assets incl financial investments, at period’s end 372 506 372 506
Net cash1, at period’s end 126 262 126 262
1 Current investment and liquid assets less interest-bearing liabilities
2 Per cent changes are adjusted for changes in exchange rates
3 Change related items during Q4 2014 relates to a one-off cost of SEK 3 M referring to the strategy launch and a one-time adjustment of the prepayment balance of SEK -10 M, reducing net sales. For further information regarding change related items see separate section in this report.


CEO Matthias Stadelmeyer’s comments on the fourth quarter 2014

“Underlying Q4 gross profit in our core business developed in line with the trend from recent quarters. Adjusted for FX-changes and change related items, operating costs in 2014 were SEK 58 M lower than last year and compensated for slightly more than half of the total gross profit decline. More than half of the gross profit decline refers to non-core business and the two large pan-European companies that left Tradedoubler during 2014.

We are continuously focusing on improving profitability and stabilising revenue of our core business through increased operational efficiency. We have made good progress on this during the quarter.

To ensure profitable revenue growth in the future, we launched a new business strategy in November 2014. With this strategy we will improve our core offering and build new functionalities to address a significantly larger market. As a consequence, expenditures within product development will increase significantly. The acquisition of the independent German technology company Adnologies is another important step in the development of our strategy. Their product portfolio perfectly complements our own.

We are making good progress on our journey to become the leader in generating smarter performance marketing results for our clients through traffic, technology and expertise.”

Presentation

This Year-end report will be presented at a teleconference on the 6th of February 2015 at 10.30 a.m. CET. To follow the presentation, please dial (SE) +46 8 566 426 96, (UK) +44 203 428 14 09 or (US) +1 646 502 51 20.
The presentation may also be followed via webcast using the link: https://www.tradedoubler.com/en/about/investors/reports-and-media/presentations/

Other

Tradedoubler discloses the information provided herein pursuant to the Swedish Securities Markets Act. The information was released for publication on the 6th of February 2015 at 08.00 a.m. CET. Numerical data in brackets refers to the corresponding periods in 2013 unless otherwise stated. Rounding off differences may arise.


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