Earnings call transcript: Azerion Group's Q1 2025 revenue grows 7%

Azerion Group BV (market cap: €207M) reported a strong first quarter of 2025, with a 7% increase in revenue year-over-year, reaching €128 million. The company's stock showed a modest increase of 0.33% following the earnings announcement. According to InvestingPro data shows strong momentum with a 26.48% price increase over the past six months, suggesting growing investor confidence in the company's strategy. Subscribers to InvestingPro have access to 6 additional key insights about Azerion's financial health and market position. Looking further ahead, Azerion aims for medium-term adjusted EBITDA growth of 14-16%, driven by continued innovation and expansion in AI-related products.

Executive Commentary

Sebastian Usman, Chief Strategy Officer, emphasized the company's focus on AI, stating, "We expect more than 30% of our entire revenue in 2026 to be somehow AI-related." He also highlighted Azerion's commitment to democratizing AI infrastructure, saying, "We are really proud not to just provide the AI automation and intelligence in our own apps... but really to democratize the entire infrastructure."

Risks and Challenges

• Macroeconomic uncertainties may impact advertising spending.
• Seasonal fluctuations in the advertising market could affect revenue stability.
• The integration of recent acquisitions poses operational challenges.
• Competition in the digital advertising and gaming sectors remains intense.
• Dependence on AI-related revenue growth introduces technology adoption risks.

Q&A

During the earnings call, analysts inquired about the potential macroeconomic impacts on Azerion's business and the company's AI monetization strategy. Executives addressed these concerns by outlining their approach to balancing growth and profitability amidst uncertainties and detailing their ongoing M&A strategy to accelerate growth.

Full transcript - Azerion Group BV (AZRN) Q1 2025:

Operator/Moderator: Good afternoon, and welcome to Azerian Interim Financial Results Q1 twenty twenty five. After the speakers' remarks, there will be a question and answer session. If you would like to send a question through, please type it in the Ask a Question tab at the right hand side of the player. These questions can be sent at any time during the presentation, and they will be addressed after the live Q and A portion of the event. Thank you.

I'd now like to turn the call over to Sebastien Roseanne, Chief Strategy Officer at Azerian for welcome remarks.

Sebastian Usman, Chief Strategy Officer, Azerian: Yes. Good afternoon, everyone. Indeed, I'm Sebastian Usman, chief strategy officer at Azerion, and I'm here with my colleague, miss Julie Duan Fierre, our chief financial officer.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Julie Duan Fierre, Chief Financial Officer, Azerian: Hello, Duan.

Sebastian Usman, Chief Strategy Officer, Azerian: And we would both like to welcome you today's webinar to present Azerion's q one twenty twenty five interim results. Before we start, though, I would like to take a moment to acknowledge the disclaimer and our forward looking statements as well. Thank you. Let's please move on to the presentation. This has been a strong quarter for the company as we have continued to execute on our strategy and deliver long term profitable growth.

We delivered 7% solid revenue growth from the group, largely driven by the platform segment and resulting in a total revenue of 128,000,000 Since we got listed on Euronext early in 2022, this is the fourth Q1 in a row where we have delivered increased year on year revenue growth. And it's a similar dynamic for the adjusted EBITDA with, again, the fourth quarter Q1 quarter in a row with increased year on year numbers, thanks to almost 20% growth and 12,000,000 of adjusted EBITDA, mostly driven by strong performance in the platform segment, particularly through the integration of recent acquisitions we did in the last months, Golbak Austria, Polypres and the Monetizer, and also strong performance in AAA game distribution. But the metric I'd like to highlight most today is the EBITDA, which grew an impressive 68 to €8,000,000 and reflects our ambition to provide solid, stable and predictable growth. Commercially, we signed partnerships with over 80 new publishers, SSPs and DSPs, as well as signing major campaigns to promote globally recognized brands such as a one telecom in Austria, Avanti West Coast, and Othermal in Jean Jacques. Finally, we successfully started our first phase of Goldbach Austria integration, and we entered new partnerships with Huawei and SoundCloud.

So with that summary, I'd like to hand over to Julie for a more detailed look at our q one financial performance.

Julie Duan Fierre, Chief Financial Officer, Azerian: Thank you, Sebastian. Yeah. Let's start by looking at group financial highlights. As you mentioned, yes, we are happy with the quarter. It's our fourth Q1 in a row with year on year growth.

Revenue increased then by 7% at €128,000,000 In this first quarter of the year, which is the lowest one in the year seasonality wise, we are growing and driving synergies in eliminating redundant costs in the advertising platform. This drives significant adjusted EBITDA growth, which came in at €11,700,000 representing circa 20% year on year increase. Regarding the EBITDA, as we mentioned also, the quarter reached circa €8,000,000 up by 68% compared to the same period last year. Again, this consistent improvement in group metrics are driven by three factors: higher spend across the platform segment, and particularly this quarter in AAA game distribution increased profitability in both platform and premium game segments and benefits of integrating recent acquisitions. Now moving now on our segments in detail.

Platform. Our core platform segment is a combination of advertising platform in dark blue and triple A game distribution business in light blue. The whole platform segment generates revenue mainly by displaying digital ads in both game and general content, as well as selling and distributing AAA games. Basically, advertisers are serviced through two models. First, the direct sales, which involve a direct engagement between Asians commercial teams and advertisers of their agencies in the placement of digital advertisements.

And secondly, you have the automated auction sales, in which advertising inventory is purchased through the open market. In Q1 twenty twenty five, the total platform segment delivered €116,000,000 compared to €108,000,000 in Q1 twenty twenty four, an increase of nearly 7%, largely driven by AAA game distribution. AAA game distribution revenue in light blue generated approximately €24,000,000 in Q1 twenty twenty five, compared to €19,000,000 in Q1 twenty twenty four, a significant increase of 25%. This performance was driven by new releases and seasonal promotions. Notably, this March 2025 marked the highest revenue for AAA Care Distribution.

Regarding the total platform adjusted EBITDA, it amounts to €9,300,000 in Q1 twenty twenty five, an increase of 3%. Moving on to non financial KPIs presented in the right side of the slide. You can see here that we focus on the average digital ads sold per month. The seasonal impact of the advertising sector is clearly visible here. You need to look at those figures on a year on year basis.

The fact that the average digital ads sold per month decreased a little over 3% to £11,500,000,000 in Q1 twenty twenty five is reflecting an ongoing focus on our side on more premium and formats such as DOH and audio. Now let's have a look on our segments Premium Games. Premium Premium Games. A very good performance of the segment this quarter. Indeed, in Q1, total revenue amounted to circa €12,000,000 an increase of 10% year on year.

The revenue growth is driven mostly by strong performance from our social cash note titles. Regarding the adjusted EBITDA for the quarter, it amounts to €2,400,000 compared to 800,000.0 last year, an increase of 200%. This profitability increases and mainly explained by strong focus on margin as part of the commercial strategy and also ongoing operational efficiencies. On the operational KPIs on the right hand side, average daily active users, around 230,000 in Q1 twenty twenty five, slightly lower than Q1 twenty twenty four, mainly due to lower user acquisition spend and continued focus on our side on greater engagement with higher paying users. Indeed, as you can see with the Ardo, it increased by 21% year on year, which has been driven by improved spending in social casino and metaverse due to improved in game sales mechanism and the launch of Arbor Origins last year.

Regarding the average time in game per day, it continued to increase, with an average of ninety six minutes per day in Q1 twenty twenty five. So that's the review of the segments. Now I would like to focus on the operating performance and the operational efficiencies. In this chart, you can see the light blue line, which represents our FTE and that has been consistently decreasing year on year since the end of twenty twenty two. Personnel costs in Q1 twenty twenty five have decreased despite the addition of close to 100 FTEs from recent acquisitions from Gold Bar Austria, Produce Press and the Monetizer.

We are continuing our actions and integrate our previous acquisitions and optimize our staffing levels. Now please have a look at the black line that represents revenue per FTE. You can see that our revenue per employee is increasing year on year, which shows the efficiency gain that we are setting. Indeed, per FTE grew from €117,000 in Q1 twenty twenty four to €128,000 in Q1 twenty twenty five. These figures are highlighted here in the white column.

This chart, as mentioned earlier, is also illustrating the seasonal aspect of our business as it shows the revenue growing through the years, starting in Q1 with advertisers starting the year conservatively before increasing spend in Q2 and reducing spend in the summer months and then finally investing heavily the holiday season approaches at the end of Q4. So to summarize, a good first quarter on our side. We are continuing our work to be able to demonstrate our capacity to deliver sustainable growth. After this focus on the figures, I would like to hand over to Sam for a strategy update.

Sebastian Usman, Chief Strategy Officer, Azerian: Yes. Thank you, Julie. I think this time around, we have a single focus on the on the strategy update. There's multiple things to say. We could talk about acquisitions and and the organic business, but this time, we'd like to pay attention to AI.

You have read this in the news recently, but we have launched Asurion Intelligence, and that's basically our play in in AI, and this is a topic I wanna discuss. Now I'm personally always a little bit careful with it because everybody talks about AI and and a beautiful future, but we have really been working in the last few months on making something, let's say, seriously fundamentally different than what we think others are delivering. So we'd rather rather draw your attention to that than anything else to start. Because of our advertising auction technology, Azurion has over more than a decade of experience in machine learning, algorithms, and high availability cloud services because, yeah, these systems need to cope with over half a million auctions every second. And you can imagine the amount of intelligence actually needed to not only execute those, but then then to do it smartly at the same time.

We've been working for the last months to build this platform and infrastructure that allows our clients and partners to use that experience for the benefit of their own business and success. We see a big need for independent solutions at this time, for cloud and AI solutions that reduce vendor lock in and improve cost efficiency. Azurion intelligence really offers a multi cloud solution, meaning a mix or a choice of global cloud providers. And on top of that, we built an AI infrastructure that offers access to both API models and ready to run applications. And I think that's yeah.

In the current times, it's important to be less dependent on a single vendor. So what does it mean to offer such an advanced, scalable, and agile AI infrastructure? I know everybody's talking about it, so I really want to bring this to life a little bit with a few videos for you. I'll start with two examples. In our media and digital advertising industry, there are many obvious areas where you can imagine AI will make a big difference for companies.

Think about, for instance, the the creation or the adaptation of advertising or the management of social media posts and channels. Maybe translating content, articles, posts, ads, etcetera. So I wanna take you through two of those examples. One example is the content creation engine that we have, where we let the AI help journalists, writers, influencers, and the likes to provide ready to run articles for their publications. We have created these applications for our partners and our partners can actually, yeah, basically use this from our AI platform.

You can see the video running hopefully, but think about a website like this. It's a gaming news website. We call brickgame. You can see the content. But it was our content automation engine that generated this entire website.

We use RSS feeds to scrape news from various sources, like you can see here a few, and then we prompt our AI to write articles about that news. We tell the AI how to behave, what an Azerian journalist would look like, how he thinks, and we make sure that the AI gets basically in the mood in a way that fits our style and culture, And then we also tell how the article should be built up within the website, like a structure with a lead in and and and then some summary, etcetera. And then we connect that engine which creates the article to the actual publication engine, WordPress in this case, the the content management system a lot of people use to host their websites. Then last, we integrate it with Slack in this case. So the owners get the notifications of the engine, and we schedule the agent to work on a daily basis, for instance.

So that means now we have the AI generating articles. It actually puts them in WordPress where you can then review your articles. And one once you're done, you can pick them up from the draft section of WordPress. And as a journalist, you can then start to edit, review, and finalize the articles. And once you gone through all of that, just, I don't know, marginally changing it or just fact checking whether everything went the way you wanted it to go, then basically you click on publish and the end result is there.

A complete website generated totally with AI where the journalists can do still the oversight. But you can imagine the enormous reduction in time and money spent on creating the content here. Just use the feeds of the news and the AI in your own words and styling will get increasingly better at creating content and articles for your for your publication. So this is one example of how this works. And let me let me take you through the second example here, which is our campaign orchestrator.

When you run advertising campaigns, there's a lot of work going into the orchestration and operation of the ads and what is called a DSP. It's a platform for the demand side. You need to think about strategize and operationalize your campaigns in systems like this. Our campaign orchestrator assists users and clients with both the ideation phase, chatting about targets, budgets, the running time, the optimal channel mix, resource allocation, etcetera. And that in the end, basically gives you the brief, the the whole program that should be implemented in the system.

So again, with AI, you can chat about what kind of campaign you want, and normally with the client, you would get a brief like this. But now with the AI, you can really have him help go through the objectives, audience analysis, etcetera. The thing is, even if you have the AI create the briefing, then the next step is to activate the campaign like this in your system. And so if you have your media plan like you see on screen now where there's a different allocation between video gets a hundred k or digital out of home gets 50 k, then you still need to activate that in a system. And our campaign orchestrator that doesn't just help you set up the campaign, but it can also really add the campaign.

And you can see that happening here. Once you agree with the AI on what kind of campaign to set up, it will actually create the campaign in our systems and thereby reducing also massively the operational work. So there you have two examples. One is creating content, and the other one is helping the buying systems to be much more efficient. And you can imagine the time savings here for operators, but also the future of this for small and medium sized businesses.

It will be as easy to operate a hundred thousand euro campaign or a 20,000,000 visitor website as it will be a €250 campaign, making the whole platform viable for increasingly smaller clients and publishers on a self serve basis. Okay. So I hope those two examples bring to life a little bit better how AI can help companies in our industry because I hear a lot of people talking about AI, but really showing how it could actually help a specific client is is often absent, but I hope this gives you a little bit of insight. And so we have a whole marketplace with different apps in this space. We took the whole idea one step further though.

We think we can support our clients and partners on an even more fundamental level, providing AI as a service. That means not just the tools I just shown, which work for your business, but also the infrastructure for our partners to build their own tools, to automate their own business. So let me show you this with the third video. Our platform allows access to many different models, and just like ChatGPT, you could chat with this platform, type hello like like we do here, and then you get an answer like, okay, how can I help you? And this is the typical chat box.

However, we want to provide the technologists, the developers, and the AI experts to be able to include AI in their own application and business. So what you would do then is you would set up an account with the Azurion AI. You could, just with other providers, buy tokens on a pay as you go basis. So you create a whole account and you make sure that you're basically ready to go. Then you create what they call an API token, which means that you're basically creating an access, a pipeline into our AI infrastructure to be used by your own system.

And then, basically, you have the computing power ready. And if you use, for instance, the NA then as a workflow innovation platform that you see here, then you go there, you build your agent, and you then link the agent to our fundamental platform through the API key that you just pull, basically. And so you use the same logic and the same language as you would with chatting to ChatGPT and including them, but now it's the Azirian platform. And once you connect it, you can then integrate our compute power basically in your own agent and business. Very similar to using platforms like OpenRouter or Replicate.

So this might sound a bit techy, but we are really proud not to just provide the AI automation and intelligence in our own apps like the DSP or the content creation, but really to democratize the entire infrastructure for use by our clients and partners. The platform allows for independent development and our media publishing experts with their ready to run apps and agents allow for super fast integration of AI in your media business. So basically, best of both if you want. We provide the platform so people can create independent applications and really integrate it in their own, I don't know, finance, media systems, email, what have you. But at the same time, we are in the media and publishing business, so we can help those kind of clients really well also with existing tools that we build to make their business better.

We expect a lot from this project, not just for ourselves. We I think we expect more than 30% of our entire revenue in 2026 to be somehow AI related, but I also think that many non advertising related customers will start using our platform because it's just a generic access to independent compute power. At our scale, we really believe we have a very competitive, high quality and scalable solution here and we will invest significantly in this new business line and of course keep you updated about our progress in this space. Okay. So that was on the AI.

With our full year 2024 net revenue at just over 5,551,000,000, the closing of several partnerships in the last few months, subsequent bond issue last year, the opportunities we see coming this year and also the AI, our full year '25 net revenue is expectation is unchanged in the range of approximately 600,000,000 to $650,000,000, with the annual growth thereafter in the medium term expected to be approximately 10%. Adjusted EBITDA also unchanged, expected to be at least EUR 85,000,000 with annual adjusted EBITDA thereafter in the medium term expected to be in the 14% to 16% range through further integration, synergies, and scale effects. So, yeah, there you have it. A little bit of an update on the numbers and our biggest project at this time, the AI, as we go through the rest of the of the year. So with that, I think it's time to hand over to our head of investor relations, Andrew Buckman, for the q and a.

Andrew Buckman, Head of Investor Relations, Azerian: Thank you, Seb. Operator, before we start, can you please repeat the instructions for q and a, and then we can get started.

Operator/Moderator: Absolutely. Thanks, Andrew. We will now move into our q and a session. If you would like to send a question through, please type it in the ask a question tab at the right hand side of the player. I will now hand over back to Andrew Buckman for written questions.

Andrew Buckman, Head of Investor Relations, Azerian: Thank you. So our first question that's coming is about economic strategy. So I'll just read it out, and then I'll hand over to Seb to answer. So could you give any color on the development to Q2 so far? And if you see any significant impact from the increased macro uncertainty?

And how will you balance and prioritize growth, profitability and M and A in a potentially more cautious spending environment?

Sebastian Usman, Chief Strategy Officer, Azerian: Yes. Let me unpack that a little bit. So I think most of this question is given the I'll turn it around. Given the increased uncertainty, how do you think that implicates the Azerian business? Right?

Well, first, I think, and I I've read this many times in the past few weeks, the actual effects insofar as they will be coming are still out there. We don't have immediate results or effect on the business right now, so all we can do is think about how ongoing uncertainty will affect our business. In general, what you see is advertising relies also on a certain predictability. If markets know things are going to be amazing and fantastic, then instantly companies start to advertise for their products because they see opportunity. While when things are uncertain, then also the let's say the advertising budgets become uncertain.

There's a a little bit of this we see in the automotive area right now, but not a lot elsewhere. And it's of of course, as soon as things are clear, it doesn't really matter which way they go. Clarity means resuming business. So right now, because we are also everywhere and we're heavily European based as well, I think the benefits and the dangers are somehow still offsetting each other. And I don't think there's going to be a big impact in our numbers as we see it right now, which is also why we stuck to our initial guidance.

We might be affected somewhere, but then we might actually get some benefits of that elsewhere. As for instance, in the AI business, if companies are increasingly concerned about independence and let's say not just single American cloud alternatives for instance, then actually that business in our case can can thrive. And at the same time, if advertisers are thinking, yeah, I'm not going to spend on a certain topic in a certain market because of that, that could also be detrimental. So I think in all, it will probably offset, but we'll know more especially after the second quarter. And then balancing and prioritizing growth profitability and M and A, I think actually where the market now finds themselves in a bit of an unclarity, I think since we listed in 2022, this was actually we listed almost at the same moment as the Ukraine war started.

We, as the Syrian, have been coping with quite a few uncertainties for a while, and we have been balancing growth and profitability all that time. So if as you can see through the graphs and the presentations we made in the last few years even, you can see that we are super, let's say, focused on increasing the profitability while also increasing the revenue. So you can see these graphs of revenue slowly going up and also the relative cost that we make to get that revenue in to go down. So always focused on the profitability, because when we get there, then of course you have everything in your own hands. And then at the same time, the m and a often is to accelerate the growth, and we're always looking for opportunities there.

We raised another hundred million last year, which also comes with a pretty high interest cost. So we need to put that money to use and grow our business with it. So that's the other part of the strategy, basically. On the one hand, we're always trying to make sure that we're cost effective and increasing the profitability. On the other hand, there's a lot of money that we need to deploy and want to deploy to grow the company at the same time.

Andrew Buckman, Head of Investor Relations, Azerian: Great. Thank you, Seb. So I think we've got a question that's come in for Julie about financial performance. So could you please comment on the working capital development in the quarter and the negative trend in cash conversion? Also, when should we expect this to normalize during 2025?

Julie Duan Fierre, Chief Financial Officer, Azerian: Yes. Thank you for the question, Christian. Yes, If we look on the cash from operations, you are right. It's negative for €13,000,000, which includes roughly circa 10,000,000 from financial interest. So you may remember that we tapped two times the bonds last year for an amount of 100,000,000.

So basically, we ended last year with a cash position of €90,000,000 And as I mentioned, there are different ways to invest for the future, could be acquisitions, assets, but there is also low hanging fruits on specific partnership when you accelerate payments. Like we did in q four, we continue investment in long term relationship with future partner. That's why you see a negative working gap this quarter. Of course, we are spending only if we have interest to do it because I said they are lowering in fruit on specific partnership, but at a certain point, this will stop. So free cash flow and working cap are expected to normalize end of twenty five.

Andrew Buckman, Head of Investor Relations, Azerian: Great. Thanks, Julie. So this one for for Seb. So thanks for the information on Azure intelligence. Can you give us some details on what the near term monetization prospects are?

Sebastian Usman, Chief Strategy Officer, Azerian: Yeah. I think it's it's it's much in line with what I just presented. So what we see is a lot of people talking about AI and also having a good idea about what it might mean in the future. But what it can do for them right now is often a little bit, yeah, elusive. So when we provide both the platform and the tools, what we're also trying to do is really accelerate the business that we have with our partners in our industry because of our knowledge and the platform at the same time.

If we were just to offer a platform, people will probably not know exactly what to do to build their own apps. And if we just have an an AI tool to improve our media buying, for instance, then, yeah, if we could provide it to our clients as it is right now, but that would not be life changing. What we see here is that I think in the next half year or so, we'll see a lot of publishers and a lot of advertisers come to us to say, okay, we've seen the let's say that that that broadly accessible platform, how can you help me improve my business? How can we run my publishing on your cloud? How can I infuse AI into my whole publishing business to make it more cost efficient?

How can I use your AI to, for instance, create the more dynamic ad campaigns? So just imagine people are selling running shoes and you have this beautiful movie shot in South Africa of someone running for the mountains. Then to have the AI change that person into some someone who's more like the person who's watching the ad or the environment where the person is running to be more in the city where the ads are displayed, those are interesting opportunities. And in the past, it would be super expensive to do so, but with AI, can help them. So really helping the our our our own industry publishers and advertisers to implement AI in their own work stream.

That's, I think, where the near term monetization prospects are.

Andrew Buckman, Head of Investor Relations, Azerian: Great. Thank you, Seb. And I think the the last question for today is another strategy question, sort of more focusing on m and a. So can you tell us more about your m and a strategy for the rest of 2025?

Sebastian Usman, Chief Strategy Officer, Azerian: Yep. So in general, we've always been working with m and a because we can decide to build something over the next two years and then deploy it in a certain market. Market, it would take a lot of time and money to do so. But time is going really fast in in the digital space and we can see the opportunities around. Europe is still fragmented, meaning there's companies starting, for instance, in our AI space and they're starting in a in a small country with a great idea.

But scaling up is not easy for them, and then we say, okay, actually, what you're building can accelerate us very quickly and you as well. So let's do it together and then move forward. Same goes with publishing and other aspects in our business. So our m and a strategy from that point of view is unchanged. And also because to my former point, if you raise a hundred million extra like we did last year, having that money in the bank obviously costs interest.

So we're also looking to deploy that money smartly to make more than the interest rates in the end. Right? So we are always looking for interesting high yields, easy to integrate companies that that can accelerate us and our clients further. And so that will happen also in the course of this year. We will be looking for and striking deals with interesting partners.

Great.

Andrew Buckman, Head of Investor Relations, Azerian: Thank you, Seb. And then on that, that was our our final question. So on that, I will hand back to the operator.

Operator/Moderator: This concludes today's call. Thank you, everyone, for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.