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Good morning, everyone, and very welcome to our Q1 presentation today. My name is Mats Brandt, and with me here, I have our CFO, Johan Adalberth. As some of you may recall, I joined really as interim CEO in late January. Last week, I was appointed permanent CEO, effective May 20.
I'm, of course, very grateful for this confidence from the Board and energized by the opportunities ahead. And I do feel much inspired to continue working with our talented team on our transition to become an even more product user-centric company. And there are many possibilities within this going forward. We will look at some of the steps we have begun to take and some that we will be taking near term.
But before we do that, I want to acknowledge that I'm aware of that our shareholders have expectations to hear about and above all, see good traction on the route to growth in a more sustainable manner and to become a profitable company in not too long. I want to ensure you that we have begun to execute on this already and that we are aligned with a new strategic direction that was set out at the beginning of this year. And this is at the forefront of the leadership team and myself every day. We firmly focus on executing at a faster pace now and reducing some early indications of strength from actions we have made -- we have taken recently.
And next slide, please. So the digital transitioning is accelerating in the media industry. And with current dramatic changes we see in the world around us, we expect this to go even faster for several reasons. We do appreciate that uncertainty at large has increased a lot recently. But for us, we do expect this development to open up for even more opportunities to serve publishers and customers even better by extending our offering in several ways. This should increase user time spent on really as well as open up new business opportunities and eventually new revenue streams.
The shift in consumer reading habits based in our favor, expectations on easy access, great explorability and flexibility to access relevant content anytime and anywhere in a cost-efficient manner is guiding our product's development effort. With the strength in user experience and our unrivaled content, our strong partnerships globally for cost-effective distribution and a great user base already spread over more than 50 countries. We do believe that we are quite well positioned in an industry estimated to be worth $150 billion.
We have an ambitious and talented teams spread across our core markets, Germany, U.K., Sweden and now France, that we also will continue to develop and strengthen to further accelerate our execution capabilities. But now let's have a look at our progress during the first quarter. So next slide, please. We delivered a first quarter with solid growth and improved profitability. Total revenues increased 41% year-on-year, organic growth was 26%. Our subscriber base growth grew 17% to 465,000 compared to the same period last year. The reduced marketing spend has had an impact on the FPS growth in the quarter, and that was expected. And consequently, our organic growth slowed down somewhat in Q1.
As we communicated in the last quarter, marketing prices have substantially increased and to adapt and improve our unit economics, we have reduced our marketing spend and allocated investments to the markets with the best return, for example, in Germany, Austria and Switzerland. We have also adjusted allocation between channels for better efficiency. During the quarter, we have communicated the new strategic direction, which means a reduced and more selective spend on marketing, but equally important, also increased investments in product development.
Really must secure future long-term profitability growth by ensuring that we offer the best possible read experience at all times that in turn will lead to even better subscriber loyalty and more valuable users. So all in all, we think we're closing a good quarter where we continued to show good top line growth and further improved results.
Next slide, please. The new strategic direction implies that we shift our focus from heavy investments in user acquisition to a more balanced approach where we with better precision investing growth where we see that we achieve greatest return while also investing in product development. We have also initiated a cost reduction program that includes a decrease in the workforce with around 30 FTEs, including consultants. This restructuring is progressing well and according to plan. It's worth pointing out that this will not have any negative impact to our investments in tech and product development.
And lastly, we are now evaluating our price levels and have initiated price increases in some markets. We do see some early promising positive results from this change. With this initiative, we aim to improve our financials substantially and to increase our maneuverability to enable future essential investments.
Next slide, please. I have mentioned our increased focus on product innovation a few times as part of our new strategic direction and the importance of it on our path towards long-term profitability. We are rebalancing from primarily marketing-driven growth to a more product-driven sustainable growth. And that is why we are investing further to accelerate our pace in strengthening the lead user experience. We need a user experience that it's even more capturing and sticky and thus will increase user engagement, time spent on our app all this to increase subscriber lifetime value.
One of the things that we are focusing on right now is to expanding our offering with different types of audio content. During the quarter, we have developed prototypes as you can see on this slide and conducted promising user test podcast. The plan is to launch audio services such as podcasts to increase usage and customer loyalty as well as to become an even more -- even more attractive on the mobile. And thus also attract a younger audience in a more compelling way. Please note that these markups are just at only markups and the Guardian is just only used as an example for the prototypes here.
I much look forward to share more information about this exciting path and our progress with new offerings in coming calls. Now let's take a look at our progress in numbers at a greater depth. So with that, I would like to hand over to you, Johan.
Thank you, Mats. With that, next slide, please. Now we're on Page #6, financial targets. Just a quick walk-through of our financial targets that you may recall was slightly amended in the first quarter. It was the first target on revenue growth that was amended to 25% total revenue growth on a CAGR basis for the next 3 years, 2022 to 2024. As Matt's already shown, we delivered revenue growth in Q1 that was much above this target with plus 40% growth year-on-year. This is the highest year-on-year revenue growth figure we have shown as a listed company, although we saw some great contribution from the French acquisition. Our second financial targets, reaching a long-term gross margin of 35% remains, and I will soon show you that we are on track to deliver on these targets.
Our third financial target reaching EBITDA profitability by 2025 also remains. I will soon walk you through that we are on the right path also on this target. Next slide, please, Page #7. If we start looking at the top chart for revenues, we're pleased to show that we continue to grow our revenues. In Q1, total revenues was SEK 144 million, and this is up 41% compared to Q1 last year. The French acquisition contributed with some 15 percentage points but we still report a solid 26% organic revenue growth for the quarter, also plus 20% adjusted for currency effects.
ARPU, average revenue per user, was SEK 97 in Q1, up with SEK 6 compared to Q1 last year, where it was SEK 91. This was partly a currency effect, but also due to a changed market mix with higher ARPU in DACH and in France. On top of this, we expect to see a positive effect on our ARPU throughout the year when price increases come into effect. On the bottom chart, we see the number of full paying subscribers, FPS, as we say, that was 467,000 at quarter end.
This corresponds to the year-on-year growth of 17%. We acknowledge that the FPS number has reduced slightly compared to the year-end number. This is partly due to the shift in allocation of resources, but also an effect of our new strategic focus, which implies a somewhat slower growth pace than previously due to reduced marketing.
Next slide, please, Page #8. On this slide, we see sales figures for our core markets and rest of world combined. We saw good development in the DACH region, led by Germany, which continues to be our largest market with some margin. Net sales in Germany was SEK 49.4 million in Q1. This corresponds to 28.7% growth year-on-year, 24.2% adjusted for FX. Germany and DACH is a good example of a region where we continue to see good growth opportunities, and we will, therefore, continue to allocate significant resources here also in the coming quarters. Sweden and the U.K. progress well and continue to be important markets for us. Growth in Q1 was somewhat lower than in Germany, which was in line with expectations.
Sweden grew 8.9% year-on-year to SEK 25.6 million. U.K. grew SEK 19.7 million year-on-year to SEK 27.4 million. Adjusted for FX growth in the U.K. was 10.7%. Our latest market addition, France contributed with SEK 15.7 million in sales and we aim to launch in really to French users later this year. Growth in Rest of World remained favorable and revenue increased 42.6% compared to Q1 last year and totaled 27 -- sorry, SEK 22.7 million.
Next slide, please, Page #9. On the top chart, we show gross profit and gross margin. Gross profit was SEK 48.8 million, a strong increase by 44.2% compared to Q1 last year. Gross margin development was also positive with 34%, and we are only 1 percentage points away from reaching our long-term target of 35%.
Gross contribution. Now what is left after we have paid both publishers and for all marketing expenses that was plus SEK 19.2 million, which corresponds to a margin of 13.3%. Compared to Q1 last year, this is a significant improvement by almost 30 percentage points and marks the shift for our strategic focus in accelerating our path to profitability.
Next slide, please, Page #10. On this slide, we show adjusted EBITDA for the -- for the past 5 quarters. We're pleased to see this positive trend with 5 consecutive quarters with improved margins. For instance, look back at Q1 last year 2021, our EBITDA margin was down minus 53.2%. Now in this most recent quarter, adjusted EBITDA margin was more than cut in half with minus 22%, and we have not yet seen the effects of the cost measures that was communicated on 31 March. Back to you, Mats.
Thank you, Johan. Next slide, please. During the quarter, we initiated 30 new collaborations with publishers and welcome 353 new titles to really that includes several titles from Australia's largest niche media company, universal media company, plus Vogue in the Netherlands and national geographic history in Germany. We continue to broaden our portfolio of Dailies with the recent additions of 160 British regionals, such as the Liverpool Echo, Manchester Evening News and the Bristol Post. We focus on measures to increase time spent on our platform, as I mentioned, and adding newspapers does just that very well. We will, therefore, continue on this path as it also has a positive impact on discovering our broad offering of magazines. The dailies now represent every fifth open issue globally.
In markets such as Germany and the U.K., we see that newspaper reading has doubled and tripled, respectively, during 2021 compared to the previous year. Around 40% with both newspapers and magazine and we expect the numbers to grow as we continue to add more newspapers in combination with more precise marketing efforts. During '21, the average number of newspaper readers so used really on a daily basis increased by 28% compared to the average for 2020.
Next slide, please. We continue to build and expand our network of commercial partners to drive cost-efficient growth and wide distribution to strengthen our brand and reach. During the quarter, we launched 20 new partnerships, including Curry’s, U.K.'s largest electronics retailer, Wizz Air, Shell and SJ, where really will be available free of charge and trains our redigest function. Wall Street Journal's member club WSJ Plus also launched a new exclusive offering that gives members access to Readly in 2022. In terms of expanding partnership across market, Tchibo is a great example, a leading retail coffee chain in Germany that has been successful and is now expanding into Austria and Switzerland.
The next slide, please. So finally, just to summarize, we delivered a good quarter with a total revenue growth of 37% and for the fourth consecutive quarter, we improved the results. So we are definitely following our path towards profitability. Germany, our largest market by far, continues to deliver very well, and we see great potential for further growth in this high potential and important market, which is why we will continue to focus resources to Germany in the coming quarters. Other markets, which accounted for around 70% of the total revenues in the quarter, also performed well, with particularly strong growth in Austria, Italy and Switzerland.
We have communicated our new strategic direction with focus on accelerating our product development to enhance the user experience in several ways. Finally, we believe firmly that we are well positioned for good growth ahead. We have a leading position already in major markets in Europe and are supported by strong consumer trends, such as higher demand for sustainable and trustworthy reading options and external factors such as rising paper prices and distribution costs for publishers.
In summary, money market dynamics are at play to our favor and the digital shift in the magazine and newspaper industry is accelerating faster than ever. I much look forward to work with the really Board, the leadership team and all staff to ensure I will accelerate in execution in accordance with the strategy to deliver great shareholder value going forward. And with that, we would like to open up for questions.
Next slide, please.
[Operator Instructions] Our first question is Derek Laliberte of ABG.
My first question, I'd like to ask on the FPS decline Q-on-Q in the quarter, I was wondering if you could elaborate a bit more on this, where this took place? Was it in Sweden and mainly or basically where do this occur and for what reasons?
Yes. And firstly, to put it in perspective, it's less than 3% decline, but yet a decline. But I think more importantly, it was expected as we reduced our marketing spend dramatically to the tune of SEK 20 million in the quarter. So we're actually positively surprised, so to speak, that the impact hasn't been greater. And -- what's even more important to highlight is that this makes room for investing for the coming quarters. I mentioned the product development efforts that we're taking. And we expect the growth to come back.
Sounds really encouraging. And on the price increases that you mentioned here lately, what are you planning for this year? And are you basically apologize if this is mentioned, but are you planning price increases across all your markets during this year or how should we view that?
Yes. And before I'd like to add as an answer to the -- your previous question there, Derek, that it's important to note that on revenues, we are growing. But back to this question then, yes, we do see absolute opportunities to raise price points. And to put it in a perspective, we haven't raised prices for almost 10 years, and we have gone from 40 to 7,500 titles. So 1 can argue we've been systematically lowering price in a way. But being humble to the changes around us and that it's been a lot of discussions about the sensitivity on subscriptions of various formats, we are humbled to the challenge, but we do see strength that there is a willingness among users to want to pay for quality content.
So we feel somewhat confident in this. And it will have, of course, as I mentioned before, a quite powerful impact on our financials.
Great. Great. And finally, on the partnerships. I mean, you had a really I think, impressive development with the tons of partnerships throughout the years here and also a lot of exciting one signed recently, is there a particular one that you would like to highlight in terms of expectations for subs contributions of the latest ones and which would you say are your top partnerships right now?
I think yes, but to be fair to everyone that won't be mentioned, I won't. Just to reiterate what you said that -- it's been -- it's a key strategic growth path for us because it's a very powerful and cost-effective way to grow. But without naming a company and maybe a little bit more answer your questions, the travel sector, airlines and trains are quite important here.
Our next question is Kristoffer Carleskär from Handelsbanken.
First of all, congratulation Mats on being named the permanent CEO of Readly. So first, I would like to build on what Derek asked about the FPS decline, right? You say that it was kind of expected in Q1. And on the back of that you are spending less on marketing this year. Should we expect -- I mean, a flattish rate going forward or even a decline on the subscriber...
Kristoffer, I mean, as Mats said, there is a lack of visibility out there. And as you know, we don't provide any forecast. But I mean we do expect a slightly slower growth pace ahead. And this is, of course, a result of the new strategic shift that was communicated in Q1. So without giving any forecast, you can expect slightly slower growth pace ahead. But still, as Mats reiterated, we continue to grow our revenues. And I mean that's the most important thing. So even though we've become a perhaps slightly more [ seen ] company, we continue to focus on top line revenue growth. That's what matters in the end.
Yes. Signifies to stay on that topic. So you continue to absolutely grow your revenue. But I mean, if you're losing subscribers, it makes the route towards that 25% annual revenue growth target to be trickier. So could you please help us understand then how much of that growth is supposed to come from subscriber uptake and how much is supposed to come from price increases? It sounds very much tilted towards price increases.
Price increases will be a natural way going forward. As Mats said, I mean, there is an increase in wellness pay in general with added lots and lots of more great content. So price increases, yes, will be important. But I mean, as you say, naturally, I mean, for subscribers will eventually mean slightly lower revenues. But I mean, we continue to focus on building top line revenue growth. And I mean long term, of course, we do have strong measures to continue to grow in a more sustainable and organic way. Short term, we might see an effect, of course, as you say, because, I mean, people are more cautious. We see this throughout. It's not only us. But I think we see here that we continue to grow our revenues. So that's the most important thing ahead.
And I would like to add that also that 1 of the key KPIs we are looking at is the engagement time with us. And as that continues to increase, we will, of course, improve the quality of the customer base and the value of the users. And we're also thinking that this will have a bit of a viral effect as well. But we're humbled to do the challenges, but we feel confident in the direction we set out.
Great. And if I may ask on the marketing investments, we saw them come down to around SEK 30 million in the quarter. And I don't know if I heard it correctly, but founded, Mats, if you mentioned it, you mentioned like a run rate of SEK 20 million that [ somewhere ] maybe I misheard that one. But I guess we can expect the SEK 30 million to come down a bit further in the coming quarters, right, on a quarterly basis. Is that correct?
Yes. If I may answer that, Kristoffer. I mean the SEK 20 million as we referred to was the year-on-year change. I mean we saw some SEK 50 million in marketing expenses in Q1 2021. Now we saw some SEK 30 million. I think we should keep in mind here that, I mean, the new strategic shift here in the quarter, maybe that came into full effect end of February, which means you have a full January and also a good portion of February that was more than the older strategic direction. So I think it's natural, as you say that Q1 is not fully reflecting our new strategic shift ahead. Q2 will be even more sharper, if I may say so. So slightly lower marketing spend. And we, as I said also, the cost measures that was communicated. That was the last day of the quarter, 31 March. So that's yet to be seen in -- especially in H2.
Right. And just on the cost savings, I mean you have said H2, but should we expect anything in Q2 or is it how do we need to wait for until Q3 on those?
I think you'll see something in Q2. I mean, as you know, it takes a bit of time to cut down. I mean there are negotiations that there are -- it's a natural lag when you do these cost measures. So a small impact in Q2, but I think especially in Q3 and beyond, you will see these effects.
Great. And I mean we know that you have this new strategy focusing on the [indiscernible] the right subscribers and in my view, seems unlikely that you will expand to new markets. But on the flip side, should we expect it to actually exit markets to focus resources on the core markets you have?
No. Not at all. We are a growth company, and we are definitely looking to expand into new territories as we move on, but it will not be a value per se just to put out another flag there, so to speak, will look for where we see opportunities and grab them and then be systematic about going after profitable growth. But we are shifting with a heavier focus on our core markets near term. And that's simply because we see there is great potential there, and we see synergies between the different type of reach we have there, anything from acquisition marketing partnerships.
Got it. And if I may, on Sweden, we have seen the growth slow significantly over the past 2 quarters. What's behind that, is that increased competition? And is there a clear route to change the cause of that.
I think Sweden continued to be an important market for us. It is our home market, the first market where we launched the service -- looking at the addressable market size, I mean, the penetration we have is about [ 15% ], which is high. So I think for us, it's more natural in Sweden to look at pricing and see some maturity there ahead, but it continues to be a focus for us in the long term. Although other markets, perhaps short term and midterm, we will be more in the focus.
And if I could just add to that we are entertaining a number of dialogues to strengthen the offering in Sweden as well.
Got it. And final 1 for me, sorry for a lot of questions here. I mean we -- we have heard a lot about your new strategy, and you mentioned something about new revenue streams might pop up, right? But we also know that you have a couple of adjacent services in real insight and BD ads. So maybe you can just talk to us about how they fit into your new strategy?
Yes. Well, to mention one of the areas where we look at maybe not directly answer that last part, but I am elevating that we do have some business to business, so to speak. And it's early days, but we see promising results there, and we think the affordability there is different. It's a different business logic and mechanics [ to it ], but it looks promising. When it comes to specific products and services that we do offer they will be evaluated all the time. And they will play a role depending on the markets and the publishers we're incorporating with. But more than that, I don't want to go into specifics here and now.
[Operator Instructions] We're getting no more questions. Thank you.
Thanks very much. Bye-bye.
Thank you.