Cint Group AB (publ)

STO:CINT

Earnings Call Transcript 2022-Q2

[Operator]

Hello, everyone, and welcome to the Second Quarter 2022 Results Presentation. My name is Nadia, and I will be coordinating the call today. If you would like to ask a question at the end of the presentation [Operator Instructions]. I will now hand over to your host, Thomas Buehlmann, CEO of Cint [Group]. Tom, Please go ahead.

[Thomas Buehlmann, executive]

Thanks very much, Nadia, and Good morning, everybody. It's a pleasure to be here to talk to you about our Q2 results. I mean, without kind of getting into the details, I mean, overall, we feel really good about our Q2 and equally optimistic about the future, but we will talk about that as we get into it. If we move to the next slide, I'm just going to spend a couple of minutes here because we do have somebody new here. So myself, you've met multiple times as you can as well. But as you know, we've got Britta as our interim CFO at the moment. So I think it would be helpful, Britta if you saw a few words about yourself and introduce yourself.

[Britta Mittler, executive]

[Yes, Tom]. This is Britta. Happy to be on the call and especially happy to be with Cint now. I have a strong background also with an investment banking. I have done a lot of interim CFO mandates and a couple of post-merger integrations and also IPO to companies. So really happy to be with Cint where everything is combined.

[Thomas Buehlmann, executive]

Fantastic. Very good. So in terms of agenda, we are obviously going to talk about Q2. Integration of Lucid, I wanted to give you an update on that because that's obviously very topical and very important. And then as usual, we're going to go through a more detailed financial update with summary and plenty of time for Q&A as well. And before we do that, I know the if we move to Slide #4, please. There are a couple of new folks on the call. There might be a little bit of a repetition for some of you, but just a couple of slides. So we really, in a nutshell, we are the global leader in connected consumer insights. What we do is we connect brands or companies on the left-hand side there at the top who want to ask questions with a whole bunch of consumers on the right-hand side who've agreed to answer questions and we do that in a very smart -- using very smart technology. That's basically us in a nutshell. In terms of operational KPIs, we have now done our best to combine those. We'll talk a little bit more about those in a couple of slides time, but you will see very nice upticks on our B2B customers, connected consumers and of course, also completed surveys. We'll delve more into that in a couple of slides' time. And then just by way of reminder, on the bottom right there, you can see how much of a -- 2 things that stand out there really. One is how global our business is in terms in terms of geographic spread, which is really important for our particularly multi-country international and global customers. And how much of the U.S. SKU we're now -- we've now gotten with our combination with Lucid, right, almost 60% of revenue now coming from the Americas. If we move to the next slide, just a very brief recap on our strategy, and I show that up again because it is repetition, but that's because we think we're doing the right thing, and we're planning to continue doing this. So I do want to just do a couple of minutes and refresh on that. So in terms of the red circles there moving left to right, a key part of what we're trying to do and we continue to do successfully is increasing the share of wallet with established insight companies. They are growing very nicely, as you may have seen in the reports that we released earlier today. They are tech-enabled, again, a key part of our strategy. They are kind of the long-term future of our industry, in our view, in many ways, and we are definitely hitching our wagon to those partners as well. New customer acquisition, really important, keeps feeding the pipeline, and we've had a very good quarter, actually, on new customer acquisition, which is one of the reasons for our optimism about the future. And then, of course, software platform, we can't stand still at all. We keep having to evolve and want to evolve that. So that's a big focus going forward for us as well. M&A, we've done a couple of transactions recently in terms of [Gafisa], of course, Lucid. So it is absolutely part of our thinking going forward. But for the time being, that is something that is not on pause, I would say, because we keep talking to folks and seeing what's happened in the marketplace, but not a priority, I would say, at this point in time. Just to recap on our financial targets, and I do reaffirm those. We're not planning to change those. We are very confident of being able to get to organic net sales growth of 25% in the medium term. And equally, and in parallel, get an EBITDA margin of 25% also in the medium term with no plan to pay any dividends. So with that, that's a quick recap on us. Let's move to the sort of Q2 highlights on Slide #7. And this is what we -- we're proud of this, right? So we've got net sales of EUR 23 million on a pro forma basis year-on-year, which is 18% on a constant currency basis. And then if you look at that on a -- for the first half of the year, that goes up to 21% on a constant currency basis, which is perhaps a true measure of how we're doing. What I would say is, I think those are really good results, in my view. If you think about Q2, in particular, last year, that was a mega quarter, and it really was on the back of kind of post-COVID recovery across a lot of our clients. So we're really pleased with the revenue momentum here. It's across the board. You'll see that coming through both in -- on the marketplace, which is our sort of core business and on media measurement. And we'll talk more about that kind of regional split in a couple of slides time. But very encouragingly, and I know there was some discussion around 12% or thereabout EBITDA in Q1. We're now at 17.7%, right? So I think you've done -- we've done a really nice job at bringing up the EBITDA compared to EUR 13.4 million at the same time last year on a pro forma basis. And really, it's a function of the scale benefits and the synergies starting to come through. And I do have a couple of slides on the synergies in particular. I know it's a point of big interest. And so I've got a couple of slides on that coming shortly. Integration update. It is definitely reaffirming the synergies of the EUR 40 million. And I would also say that we are ramping up faster on those than we had originally planned when we put the plan together back in September, October last year. And that really is because we're focusing very much on the OpEx side of things, which obviously is very much in our control. If we could move to the next slide, please. And here, we're going to look at net sales development, and this is on a pro forma basis. And really, I think the message here is in the black box at the bottom. It's positive in all segments, in all regions and in all customer types. And that to me is one of the reasons I'm optimistic because -- about the future because we have not yet seen kind of apart from perhaps a little bit on measurement. We've really not seen a kind of a dampening of demand, which is really encouraging. And as you can see here for Q2, very positive progress across both measurement marketplace across all 3 regions and across both customer types that we talk about. If we move to the next slide, then what we've now got is the operational KPIs, which are now including Lucid, right? So that was something we wanted to do is to combine those. What I would say is we've not restated backwards on a pro forma basis, right? So what you see here is kind of the black histograms are kind of Cint only or legacy Cint only, I should say, and then you've got the kind of the combo in the red bars on each of those. But -- so kind of over time, we'll get a good sense of progression. But really, I mean, it's a very nice picture. And it's, I think, again, one of the reasons that I'm optimistic is we continue to land B2B customers, which is important. We are expanding our kind of network significantly expanding our network of connected consumers, which we obviously need, in many ways, are sort of raw material and very important. And then the end product, obviously, is of those 2 connected consumers and B2B customers are the completed surveys. So it's -- I think to me, that says it's a strong evidence of current momentum and is very indicative of kind of the building blocks that we're putting in place to maintain that into the future. So if we could go on to the Slide 11, please. I do want to talk, as I've said a little bit about the integration. So in our view, we're ahead of plan, and we're starting to see the synergies ramping up from Q2. So just a recap, we had a hot bunch of integration work streams. We kicked those off very early in Q1 and we're starting really to get a sense of much tighter alignment between the 2 legacy organizations. I was earlier this week, just by way of [Annica] Barcelona, and we had an operations and commercial Summit. Obviously, all the kind of top bunch of people there and you could just sense it was face-to-face, which is really important. You could just sense sort of a much tighter alignment in terms of objectives, in terms of ways of working, in terms of kind of just getting on and focusing on the business than perhaps with a little bit more kind of uncertainty in the organization that we had in Q1, particularly. Now in terms of what are we going to do next? So we're going to start the functional operational level integration in H2, and that's obviously then aligning very closely with the 3-year strategic business plan that we discussed and got agreed with our Board a month or so ago. Importantly, and I do believe in this, we had a combined new mission, vision, and value statement that we've rolled out in the business, communicated in a whole bunch of workshops, and it was not just a top-down exercise, it was bottom up and then communicate it out. And that really is starting to see a good kind of evidence of that in the integration work and also just in the general sort of team building and how our folks are interacting. In terms of focus, a big part of what we're focusing on is this lead to cash process. So as you can imagine, 2 more or less equally sized businesses, different IT systems, different invoicing -- different all sorts of different accounting, obviously, IFRS and GAAP so harmonizing that, which is not yet done, but it's an absolute key priority is going to yield tremendous benefits both operationally in terms of efficiency, but also financially in terms of savings. So that is a big focus. We've done some very deep planning in Q2, and now we're going to kick that off now in August in [Ernest], if you like. Just a recap on the synergies and integration cost update. So we talked about an announcement EUR 40 million. We're definitely reaffirming that number at least EUR 40 million. And I would say we are ramping up faster than we originally expected. And this is by the OpEx, and I'll show you a slide on that on the next slide when we get to -- and the benefits from that we're starting to see in Q2, and we'll continue to do that. In terms of the nonrecurring integration costs, we did say about EUR 40 million. So far in H1, I think we've occurred about EUR 9 million. And the bulk of that is going to get taken in 2022. If we move to the next slide, we'll talk a little bit about the deep dive on the head count because this kind of gives you a little bit of view of a flavor, I hope, of how we're thinking about it and how we're taking action. So overall headcount has reduced in line with the synergy plan but earlier than we originally thought, right? So if you look at the sort of 3 bars, we -- the combo at close had about 1,050 total headcount. Then we spent a lot of Q1 was about setting up and communicating with go-forward combined or with the leadership appointed and the [L2] appointed and so on. So to give clarity to the employees as to what we're trying to do and the direction we're on a head and who they report to and all that kind of stuff really important. But in parallel, we had a significant focus on identifying and also actioning the initial OpEx synergies. And that was a combination of operational optimization, and we had some harmonization of processes and in some cases, obviously, some overlap. And you can see what the kind of the benefit of that was that we ended up at the 30th of June with a little bit over 80 people less than we started with at the combo. And so the reason I put this up is to give you a little bit of a sense of how we're thinking about the synergies and actually not so much talking about them, but actually doing it, right? So this is kind of -- hopefully, gives you a little bit of a flavor of how we're approaching that. And with that, Jonathan, I'm now going to pass over to you if we move to Slide 14 for the financial update.

[Jonathan Kurzner, executive]

Perfect. Thank you, Tom. So on Page 14, the financial highlights. And for the ones that have listened to us in the past, you will recognize this slide. But this quarter, we have put some more data on it. It looks a little bit messy maybe, but just explain why and what before we dig into the numbers. So you will see that the black bars here on this page represents our reported numbers. That means that the 2021 numbers is legacy in and the amount of [indiscernible] whilst the 2022 numbers also include Lucid. The dark red bars in the same graph represents Cint organic and Lucid, which is probably more interesting for the like-for-like private performance. That is also what we call the pro forma numbers. So now the numbers, and there will be some repetition from what Tom mentioned already. But firstly to you left, we delivered net sales of EUR 73.2 million in the second quarter. And if we translate that into pro forma numbers, we saw a 28% growth year-over-year with good contribution from all businesses and all segments. Secondly, our gross profit was EUR 46.2 million in the quarter, which corresponded to a 63.1% gross margin. This is an improvement of 1.8 percentage points from last quarter Q1 this year, but more or less unchanged to last year on a pro forma basis. Then thirdly, to your right, our adjusted EBITDA was EUR 13 million for the quarter, and the margin was 17.7%, which again is a good uptick from the previous quarter was 12.1%. On a pro forma basis, we improved the margin from 13.4% to 17.6%. Let's now move to the next page and really a bit deeper into the profitability analysis. Here, we have our usual slide with a more detailed P&L and the longer trend of our margin. A couple of comments to this page. First of all, and as highlighted in the table to your right, we can conclude that the adjusted total net operating expenses is more or less the same in this quarter compared to the last quarter, which is in line with our plan to manage more revenue with more or less the same cost base this year. This is good and a sign of scalability. We internally and you should, of course, look at this over a longer time period, too, and we expect the last 12 months ratio to come down over time, again as a proof of the scalability -- this is also the main reason for the margin expansion this quarter. Total integration costs this quarter was EUR 5.2 million. It is slightly higher than Q1 this year, but our forecast of around EUR 40 million is unchanged, which means that it will increase slightly in the second half of the year. The last 12 months adjusted EBITDA margin increased from 16% last quarter to 16.5% in this quarter. Next page, please. On this slide, we have our cash flow statement, which now is clean from transaction-related disturbing items that we talked about last quarter, but there obviously is still a burden, call it, from the integration cost. A couple of key takeaways on this slide. So first, I highlighted on the right-hand side, the operating cash flow before changes in working capital was EUR 6.4 million. And then from this, we take away EUR 7.5 million of changes in working capital, which mainly is driven by higher accounts receivables. And the ones that follow us, know us will remember that our business is tying up working capital as we grow. But in the integration work, we are looking into ways of getting more efficient in our processes, and we aim to see some improvements going forward. Operating cash flow was then consequently negative at EUR 1.1 million, but a clear improvement from the first quarter this year. We ended the year with almost EUR 50 million of cash and net debt of EUR 71.7 million. With that, back to you, Tom.

[Thomas Buehlmann, executive]

Thank you, Jonathan. If we just move to the final slide, I mean, you have seen this before. But similar to the strategy section, I really do believe that these are the key things that are driving -- helping to drive our business. In terms of the massive underlying market, we still, even with the combo, have probably 10% or so market share. So plenty of room to grow. And the structural shift towards digitization is continuing and it's accelerating. It accelerated during COVID. Who knows what's going to happen macroeconomically and macro politically in the future over the next year or 2. No idea. But what I do know is that the structural shift will continue. I really, really believe that, and we will benefit from that. We're very well positioned at the very center of the value chain. We really are at the essential part of the quality of research came because we're providing respondents, which is exactly what brands and market research companies want. I think we have, especially now in the combo, complementary and additive alerts with definitely more global scale, as you can see in a number of connected consumers that we now have access to. And as we -- I would say proudly said over the last few minutes, I mean, we are delivering profitable growth, right? We are definitely delivering profitable growth. We plan to continue doing so. And then in terms of the synergies, it's been a little bit of talk so far. I get that. It probably made sense during the -- when we did the initial pitch in October, but I also understand that the proof of the pudding is when we start delivering them. But I hope you get a sense now that we are starting to deliver them. And as I tried to explain with the head count slide, how we are thinking about that. So overall, pleased with our Q2. So happy from kind of management and Board perspective on that and equally optimistic about the future as well. And with that, Nadia, I'm going to pass back to you to -- for questions, please.

[Operator]

[Operator Instructions] And our first question today comes from Daniel Ovin of Nordea.

[Daniel Ovin, analyst]

Congratulations on a very good Q2 report here. My first question is around the overall macro weakness that we're seeing. And you also mentioned in the report that you feel that you think you will be resilient. But maybe you can elaborate on whether you have seen any weakness in any region or in any business segment? And also following up on that, I mean, you have been around since 1998. So perhaps you have some notice on what has happened in previous situation where you have seen macroeconomic weakness? That's my first question.

[Thomas Buehlmann, executive]

Sure. Thank you, Daniel, and thanks for attending this morning. So in terms of -- I mean, in terms of the macro, in terms of macro situation, a couple of things. So I said this in the past, I would say 3 things. First of all, I mean, brands still needs to have questions answered, right, whatever is happening. And in some ways, turbulent helps us, as I've said in the past. And we are in very -- perhaps increasingly some would say, turbulent times. But that just increases the need for brands to ask questions of their consumers of their competitors, consumers and so on. And that's something that's a pattern we saw during COVID and in previous kind of macroeconomic sort of downturns as well. So one is turbulence brief uncertainty, uncertainty breeds -- drives the need for questions. So that would be number one. Secondly, I would say, we definitely are targeting some demand synergies between the combo, right? And though on the demand side, OpEx, we've done -- I think we've done pretty well. On the demand side, we're starting to see those, but we're very, very early. So they will come. I'm convinced that we will get the demand synergies. The second sort of related to that, the other thing is this is a midterm year in the U.S., right? And historically, particularly the legacy Lucid side has been very strong in terms of providing respondents and very quick dipstick for the midterms, right? And so I mean that for this year, in particular, makes me confident for the back end -- for the back half of the year. And then finally, and you said that, right? So none of us can predict what the future holds, and past performance is not a guarantee of future success. Absolutely not. Nevertheless, we have been around for quite a long time. And I would say our track record of weathering storms is pretty good. And so those 3 things combined do make me confident about the future. Now in terms of your specific question, have we seen any kind of short-term weakness. What I would say is on media measurement, as I said in the written report, a little bit, that has started. It's also, I would say, our product line or our value proposition that is most closely linked to advertising spend, obviously, because it measures advertising spend or advertising effectiveness, whereas the bulk of our business is also research, right? That's opinions about things. So it is perhaps the most advertising spend exposed product line. But I don't think it's going to have a material impact for this year overall. In terms of -- you asked about regions, no, nothing that's cropped up. There's -- in general, we had a couple of softer weeks in some regions at the end of June. And the first week in July is generally very quiet, particularly in the U.S. for obvious kind of holiday reasons. But since then, we've had really substantial pickup in week 2 and 3 in July. So I would say from where we're sitting. And the other thing I would say is Ipsos, who released their quarterly results, I think a day or 2 ago, had a really good Q2 and H1 overall, right? And they're big and important clients of us. So there is I think I remain optimistic. I really do. I mean, I can't predict the future, obviously not. But I would say we're optimistic, but not oblivious, right? So yes, we're being thoughtful. Yes, we're obviously looking at the indicators and looking at kind of both on the demand side and another indicator that we learned was very important was how quickly clients are paying, particularly during COVID. We have the DSOs creeping up a bit. So we're monitoring stuff carefully. So we're keeping a close eye on things. But so far, I remain very optimistic. Does that help, Daniel.

[Daniel Ovin, analyst]

Yes, that's very helpful. Actually, you came into the next question I have slightly there actually, and that was on the account receivables, and they seem to be up quite significantly even if you adjust for the acquisition and you look at the last 12-month pro forma sales, if I calculate, it looks like they were up like it from 22% to 36%, something like that. And I then wonder if that is due to Lucid more reporting only commission sales and since reporting the full sales? Or is there anything else in that measure that we should be aware of that drives this increase?

[Thomas Buehlmann, executive]

No, I'll let [indiscernible] speak to that in a second, but -- or you are okay? So but in -- sorry, go for it.

[Jonathan Kurzner, executive]

No, sorry, I interrupt you. I was going to comment on it. Do you want to go...

[Thomas Buehlmann, executive]

No. What I was going to say it is something we're very focused on and will be again sort of going forward. But Jonathan or Britta, do you want to pick that one up?

[Jonathan Kurzner, executive]

Yes, maybe I can go in and just give a technical explanation, Daniel. I mean, first of all, I think you are on it because we have on the Lucid side, as you remember, a big portion of that business is recognized on a net revenue basis. So if you continue to -- but they are processing, as you say, they're processing the payments for suppliers and customers so we are [indiscernible] -- what we are doing in our report in the notes is that we are then giving you total consumer spend. So that's kind of how to grow up the Lucid volume. And if you drive or run the net working capital over that total consumer spend KPI, it's not that dramatic. It's actually in line with the previous quarter's growth.

[Daniel Ovin, analyst]

Okay. Perfect. That's what I just suspected, actually. But also, one question then also on the gross margin. So it seems like on a pro forma basis, you're not talking about it being flat on a year-over-year basis. And if I'm right, in Q1, it was actually down a bit. And I wonder, have you taken any measures here either on price increases? Or have you been in negotiations with panels on supply prices or anything like that? Have you basically -- have you taken any measures to help the gross margin? That's my last question.

[Thomas Buehlmann, executive]

I mean, yes, if I start, I think what you -- what we talked about last quarter in Q1, we had a lower gross margin on legacy [scene], which was driven by the investments we made in the supply -- then I think I mentioned them, too, that we saw that and then we managed gross margin up a bit towards the end of Q1, but we still ended that quarter with a lower than last year gross margin. This quarter, we have continued to stay a little bit more close to it and managed a little bit more capital. So on the legacy [scene] side, we are now back up again today. So we ended Q1 on the higher level, and we maintained that level during Q2, so that helps.

[Daniel Ovin, analyst]

Perfect. That was all my questions.

[Operator]

And our next question comes from Predrag Savinovic of Carnegie Investment Bank AB. Predrag, Please go ahead, Your line is open.

[Predrag Savinovic, analyst]

Thank you, operator. Well done this quarter. I'll follow up with a few questions on the same topic as Daniel initiated with income, you say in the report that the market is more stable, growth path is more sustainable generally. And I guess you kind of hint that we should see organics in line with this quarter for the rest of the year, please [level out] if that's the case. And then the other question here is what makes you say this? So you gave the Ipsos example, but are you seeing your business become the visibility increase further? Are you seeing the market generally or business environment is less volatile. Any certain contracts you have that gives you this confidence? I'll start there.

[Thomas Buehlmann, executive]

Hi, Predrag. So it's -- no, I wouldn't -- I don't think our visibility is any greater. I think the visibility is the same that we've had in the past. But the kind of the fundamentals of our growth, which is a -- all the established clients still spending money. Yes, they continue to do that, are the tech-enabled guys growing as we would expect them to do, yes, they are. And then the key part of that, of course, is how is our new biz activity in happening because, generally speaking, when things get a little bit tougher economically, it tends to be that the new business becomes a little bit more challenging because customers tend to spend money in a way that to people that they are familiar with in general. That's what we found at least. And our new business activities are really very, very good right now. We're landing, we're landing new [no-gos], new customers at a very good rate now. Is there a guarantee there we're going to spend a lot of money in the quarters to come, as I've said in the past? No, it's not a guarantee, but it's a good indication that people are still open to kind of doing different ways of accessing respondents. So I would say those things make me -- do make me kind of confident and optimistic about the future.

[Predrag Savinovic, analyst]

Great. And then to Jonathan, can you break down the cash flows? There is a big sequential improvement here from Q1, but we're still in negative territory when it comes to free cash flow, as should be expected. We know that cash flow is tilted for Cint and Lucid as well, as you previously said. But if you can give any flavor or comfort in this for the remainder of the year, is there anything you can say in terms of the cash flow profile for the remaining 2 quarters?

[Jonathan Kurzner, executive]

Yes. If I start, I think you're right. I mean, we see an improvement from Q1 to Q2. The one reason for that is because we now leave the transaction cost behind us. And as I mentioned, it's now more clean in a way. Then EBITDA as such, I mean Q2 and Q3 are bigger quarters and Q4 will be the biggest quarters, as we've said in the beginning of the year, too, due to the seasonality. So we have that in mind, and then we see the working capital and we have started a few initiatives there. And then you have the integration costs that will continue to burden the operating cash flow. But yes, there should be an improvement, and it should be more clean going forward.

[Predrag Savinovic, analyst]

Okay. Fantastic. And then a final question also on accounts receivables. These have been growing, and there have been other companies in our universe lately where there's been a question on the health of accounts receivables when the balance sheet has been expanding. So I wonder if you could give a reason a bit on these items on your balance sheet. You gave a comment there in terms of how they will convert to cash flows. But generally, in terms of the health of these bad debts, any comments about in payments, which are overdue, and so on.

[Britta Mittler, executive]

It is where we're closely monitoring. So far, we do not see any issues on this. But yes, especially given the macroeconomic environment, of course, it is the watch-out area. But as I said, we set up a new process. So we are on top of those I don't see the risk [Technical difficulty].

[Predrag Savinovic, analyst]

Okay. That's great.

[Operator]

And our next question comes from Viktor Hogberg of Danske Bank. Viktor, Please go ahead, you line is open.

[Viktor Högberg, analyst]

So just a brief question on the gross margin. I don't know if you mentioned this, but we could calculate maybe from the report backwards? Or if you could help us with what the gross margin and the EBITDA margin in most was in Q2 that will be very helpful.

[Jonathan Kurzner, executive]

[indiscernible] Yes, I think you probably [scan back that] out from the report. I mean we are internally not talking about it and not following up on the performance in that way any longer because we look at the companies as one company now. And we also see -- I mean, we'll see even more so volume shifts and so on between companies and legal entities. So it's getting more and more difficult to follow up on the company since the company does [shift] kind of basis. But probably you can figure out on the report. I don't have it in front of it [indiscernible].

[Viktor Högberg, analyst]

Okay. We'll do that. And also with growth comparable now in Q3 versus what you have now in Q2? And with your previous discussion with Predrag, you slowed down in the media measurement in the end of Q2 in overall [maximum] uncertainties. Would you say that it's possible? Do you have the foundation to accelerate growth in the second half over the 19% you presented now in Q2? Is the foundations there to do that? I heard you mention new logos and so forth. Do you say -- would you say that it's possible to accelerate? Or would this be a level that you would be happy with maintaining?

[Thomas Buehlmann, executive]

Hi Viktor. So look, we generally steer away from quarter -- from quarterly predictions or quarterly guidance. I am going to -- I'm going to stick to what I said earlier, which is very confident to get to the 25% in the medium term and very happy with current momentum.

[Viktor Högberg, analyst]

Okay, [delighted right now].

[Operator]

And our next question comes from Daniel Thorsson of ABG. Daniel, Please go ahead, Your line is open.

[Daniel Thorsson, analyst]

The first one is on realized synergies in this quarter. Did we see any decent contribution in June or maybe already earlier in the quarter that -- or did we really not see that much at all, and we should expect much more in Q3 here? What's the timing of it?

[Thomas Buehlmann, executive]

Well, I mean, you saw the headcount kind of evolution. But in terms of the actual kind of impact on the P&L, Jonathan, do you want to say a couple of sentences on that?

[Jonathan Kurzner, executive]

Yes. I mean what we said in Q1 and what we saw now in Q2 was that the effects of the integration plan and synergy plan say a little bit faster than we originally expected plan. So yes, we saw impact in Q2. It was mainly than on OpEx side and people related at the slide try to illustrate. We don't have any specific numbers to give you in Q2 and then Q3, Q4, but we have the at least EUR 40 million, right? And we also have the let original split between OpEx growth and COGS buckets where we say that the OpEx is going to be at least EUR 21.6 billion, I think we had on the side, right? -- of course I should probably not guess. So yes, we see the OpEx, we see it come through Q2, it will increase in Q3 and Q4. But it's getting more also as you said, I mean, getting more and more based in a way into organization into kind of performance. So it's more and more difficult to isolate the synergy effects and compare them to the plan. I mean we have now a joint plan, and that's the one we are delivering on if that makes sense.

[Daniel Thorsson, analyst]

Yes, absolutely makes sense. I think my question related to kind of the timing where you saw the headcount decrease in Q2. Was it happening like the first, second week of April? Or was it happening end of June, which then obviously cost less or higher synergies realized in Q2, although we see the same effect in full Q3. [That was one question].

[Thomas Buehlmann, executive]

I think the [indiscernible] it's kind of evenly distributed in the quarter. So the numbers we put on the slide was the end-of-quarter headcount number. You have the averages to mentioned in the report, but yes, it's kind of evenly distributed. [Technical difficulty]. No, there wasn't a big sort of event inside the company. No, it was done by department and over-time during the quarter.

[Daniel Thorsson, analyst]

Excellent. Second question on the B2B customers. The data they provided us with now combined Cint and Lucid for 1,660. How was that in Q1? Do you have that number? And can you say something on the new customer onboarding in Q2. So kind of what was the net increase here in the quarter?

[Thomas Buehlmann, executive]

Do we have those numbers, Jonathan? I don't have them in my head.

[Jonathan Kurzner, executive]

Yes, I do have them. But it's almost a same if you look at negative pint because you saw that in Q1 because it was seen only in Q1. In Q2, we saw on the Cint slide. Now again, we don't want to talk about Cint and Lucid, but I mean you could assume a similar kind of intake on the Cint side.And then we have looked at the Lucid, so rest is Lucid contribution actually of overlaps.

[Daniel Thorsson, analyst]

Okay. So underlying Cint is trending around the 100-ish B2B customer intake in the quarter and then Lucid kind of -- their underlying case something around that? Is that similar 100-ish as Cint is doing in the quarter or much less or much more?

[Jonathan Kurzner, executive]

No, I can't say. I'm afraid. But you're right on the Cint side, we said in the past and you've seen the historical numbers that we have added roughly EUR 500 million a year. [Technical difficulty]. I think that's what we are heading to. And then honestly, I don't have the number for Lucid. Tom, do you want to give a flavor or do you know?

[Thomas Buehlmann, executive]

No. I mean, I think it's -- as you said, right, it's very hard to -- because right now, we're not selling as Lucid anymore, right? So -- we haven't been in for 6 months. So it's -- and the sales teams were combined very early on in relatively early on in Q1. So it's -- I think that's going to be very hard to isolate.

[Daniel Thorsson, analyst]

Yes, yes. I'm not after the isolation. I'm more after the total increase of your B2B customers in the quarter. And I guess that's maybe then around 125 million to 200 million, I guess, but I don't have the Q1 figures. So that was kind of the...

[Thomas Buehlmann, executive]

If I had to sort of estimate, I think that feels right.

[Daniel Thorsson, analyst]

Excellent.

[Operator]

And our next question comes from Charles Brennan of Jefferies. Charlie, Please go ahead. Your line is open.

[Charles Brennan, analyst]

2 questions from me. Firstly, one for you, Tom. You called out the midterms as being one of your reasons for optimism for the second half of the year. I was just wondering if you can size the potential benefit from that and whether that gives you an organic growth headwind as we go into '23? And then secondly, can you just talk about the OpEx plans going forward, it sounds like for the second half of the year, you're assuming the OpEx ticks up modestly. But how do we think about that in 2023 to support your growth ambitions? And I'm asking, particularly in the context of consensus expectations that I think have got you at a 23% EBITDA margin next year. So already within a whisker of your midterm targets.

[Thomas Buehlmann, executive]

Let's start with the OpEx one. So yes, I think you're right, modest uptick for the rest of the year because we do need to invest selectively for future growth. But as we've seen kind of on both a sort of stand-alone basis pre-combo and also now, we are increasingly getting the benefits at scale. So -- so I do think we do need to invest selectively, and we will do that because it's important to be able to continue growth, the primary areas will be products and commercial, I would say, but not that and we will see the benefits of scale as we continue to see the benefits of scale as we think into the future.

[Charles Brennan, analyst]

On balance, do you think that means that consensus expectations for 23% margins next year feel about right? Or do you think we're being too ambitious in the extent of cost constraints into '23?

[Thomas Buehlmann, executive]

I don't want to answer that. So... No, no, I was going to say this was the red button [one] -- so yes, we are not going in -- we are not going into specifics on this year or next year. So we stick to the midterm guidance of 25% growth. And obviously, that's a journey now from now to that, but we feel confident about that due to scalability and synergies [wise]...

[Charles Brennan, analyst]

And on the size of the benefit from midterms?

[Thomas Buehlmann, executive]

Yes, so the ban. So again, we don't want to size it specifically, but it's enough to make a difference. If you look at the Lucid data from '20, Q4 '20, I mean they had a nice uptick. And I would expect that to be similar this time around.

[Operator]

And our next question comes from Fredrik Lithell of Handelsbanken.

[Fredrik Lithell, analyst]

I have 2 of them, if I may. The first one is to go back and talk about your gross margin that in the traditional Cint below 50% in Q1. And at that point in time, we had some discussions around it. And you have good demand, but in some cases, you lack supply and thereby, you had to pay up a little bit. How do you address that going forward? Maybe Tom, on a strategic level, how do you intend to build the connected consumers base in order for you to be able to meet demand at all times. So that's really the first question. And then the second one also maybe Tom, you commented in your CEO speaker in the report about your new infrastructure that is part of the synergies or sort of the integration between the 2 companies. What do you intend to -- are you building a fully new technical platform, a [new engine] for all? Or is there a lot of integration between 2 platforms? So if you could put some color on that, would be great.

[Thomas Buehlmann, executive]

Yes, sure. I'll take the second one first. So what I meant by the infrastructure investment was the lead to cash project that I mentioned earlier today as well. So -- we see a lot of -- inevitably, as expected, quite a lot of inefficiencies with 2 companies understandably doing the sort of lead to cash process very differently. And that's underpinned by history, by different pricing models, different accounting rules with the GAAP versus IFRS and so on. So for being able to standardize that on a -- from a process and technology perspective, I think it's going to be hugely beneficial, not just for us, but also for our customers. And so that's what I meant by the infrastructure investments. So it's primarily the lead to cash. And then -- so does that help?

[Fredrik Lithell, analyst]

Yes, yes, absolutely. Absolutely.

[Thomas Buehlmann, executive]

And then in terms of supply strategically, yes. So it's -- there's a couple of strands to the supply. So first of all, to make sure we have enough supply strategically. So first of all, there is a technology work-stream to optimize as much as we can, what we call the yield management and yield management is the conversion rate of when a consumer gets asked to respond to a survey and the ratio that -- or the percent that actually complete it, right? So that's a certain percentage. And by increasing that percentage, we can obviously, with our existing connected consumer base do more surveys, right? So that's a technology and kind of an algorithm focus, which we absolutely have, number one. Number 2, we are in very active discussions with our existing supply partners, particularly the larger, more professional ones to get a larger percent of their total available supply. And that's commercial strategic type discussions and negotiations. And then thirdly, we have a dedicated supply sales team whose only job is to go and find new supplies globally. So that is -- and we're in the process of beating that team up quite substantially now. We're able to do that on the back of the combo since we've got some really good people now, and we're going to lock them out and focus them on dedicated new supply sales effectively. So that's the -- those are the 3 trends that we are investing into.

[Fredrik Lithell, analyst]

Yes. So a follow-up on that -- on the third part, you say there, do you see yourself as more forward-leaning today than maybe 2 years back in terms of your sales department recruiting new panels to beef that up. Is that a more active work today than 2 years ago?

[Thomas Buehlmann, executive]

Yes, I would say that, definitely. -- and it needs to be, right? So because the -- first of all, we're leaving money on the table when we can -- when we can't complete surveys. I mean, that's frustrating and irritating. And in a world that seems to be an ongoing basis, supply constrained, it's something that we just need to do. So yes, I think we are focusing on it more. And then the final piece, I would say, is obviously M&A. It's not a priority, it's not a kind of primary focus area, but we did buy [Gafish], and that was for reasons of building out our supply in the dock region. We are kind of considering that as an option further M&A, considering that as an option as a possibility, but we think we've got some very good operational levers that we've just talked about before we start doing that.

[Fredrik Lithell, analyst]

A final follow-up on all this discussion then. I mean, in a new world of inflation, can you raise your prices on to your B2B customers and in that way, improve the metrics for your partners and that may open up more supply? Is that -- would that work?

[Thomas Buehlmann, executive]

So it needs to work, right? I mean we've had low or zero inflation for a long, long time. So this is for us as a business. I would say it's -- this is new territory. And then for us, as the industry, I think it's new territory. But I can definitely say is we have started those discussions with some partners. You might recall that we generally have annual contracts that lock in sort of pricing and volumes and so on, but they're not all January to December, they kind of renew at different times of the year. So as they renew, we're absolutely having those discussions as indeed, our market research partners are having with their brand and clients as well. So -- but it is a new territory for the whole industry, I would say, but it absolutely needs to happen, and I think it will. And when it does, then obviously, as you say, the respondent we'll get kind of more -- probably get more rewarded for doing the surveys, which is hopefully going to unlock more supply as well.

[Operator]

[Operator Instructions] And our final question at the moment comes from Sarah Söderblad of SEB.

[Sarah Söderblad;SEB;Analyst, analyst]

I just had a quick follow-up on the accounts receivables. When you say that you started the new initiatives already, do you think that we'll see the effect of that in Q3 already in terms of collecting payments? Or what sort of time-line do you see in front of you? And also sort of secondly, when looking at the breakdown of the accounts receivable in the annual report of 2021, the maximum over the category was about 10% of sales. So I was just wondering, are you confident in your ability to collect these in the near term? Or can you -- and can you say anything about what half that ratio during H1?

[Britta Mittler, executive]

Yes. As I said, we were in the process of aligning the processes between Cint and Lucid on this. We started close monitoring of it. We are confident to connect -- and the aging structure is something we are improving currently. So I'm very confident that we will really have an improvement of the crush conversion cycle in there. And as I said, we are also not really commenting on exact impacts in the next quarters, but there will be an impact.

[Operator]

We currently have no further questions. So I'll hand the call back over to Tom for any closing remarks.

[Thomas Buehlmann, executive]

Thanks, Nadia. So thank you all for attending this morning. We've certainly enjoyed talking about our business and giving you a little bit more color. Thank you for your continued interest and for following us. And we look forward to speaking to you again over the course of the next month.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect your lines.