Sebastian McCoskrie: Good afternoon, everyone. Thank you for joining Cliq Group's Earnings Call for the Second Quarter 2025, and we appreciate your continued interest in our company. My name is Sebastian McCoskrie, and I head Cliq's Investor Relations. I will be your host for today's results presentation and Q&A. As usual, Luc Voncken, our CEO, will kick off with Cliq's current state of affairs and an operational overview of the first half year and Q2. Then Ben Bos, our other management Board Member, will walk you through the group's financials. After that, both gentlemen will answer the questions you kindly sent in via e-mail this morning. Ladies and gentlemen, please take note of the disclaimer shown here and that this call is being recorded. The visual audio and/or transcription of this call may be published, including any of the data arising there from. If you have any objection, please disconnect at this time. So without further ado, over to you, Luc.

Luc Voncken: Thank you, Sebastian, and a warm welcome, everybody, from my side. Let's begin with a brief update on the important strategic developments and Cliq's current ownership structure. Ladies and gentlemen, we were informed by our payment service providers of significant developments taking place across the global digital payments ecosystem. These changes driven by new policies introduced by card schemes and acquire banks are currently seriously impacting our business operations, so much so that our ability to acquire new customers is materially restricted. Also, our ability to process payments for our existing customers is limited. These disruptions represent a major operational constraint for us. Consequently, we are at present unable to reliably quantify the full financial impact. The newly announced regulatory standards introduced by card schemes and acquiring banks have reshaped how services must be launched, reviewed and monitored. We are actively engaging with our payment service partners to gather further information that will allow us to assess the overall extent of our exposure and find viable solutions. However, based on what we know now, we expect these changes to have a material adverse effect on our sales over the remainder of the financial year 2025. As a result, we also anticipate a negative impact on EBITDA and on certain items in the balance sheet, particularly capitalized contract costs as well as on our off-balance sheet operational indicator, the lifetime value of the customer base. Given this increased uncertainty, and our current inability to assess the full financial implications, we have taken the decision to withdraw our previously communicated outlook for 2025. We will provide an update as soon as we have more visibility. We are working very hard to mitigate the impact and adapt swiftly to the evolving regulatory and payment landscape. While these developments are unexpected and challenging, we remain committed to safeguarding the company's operations and improving tweaking our business model accordingly. The latest news yesterday was of Dylan's decision to vote against their original proposal to our AGM in 2 weeks' time for a public partial share repurchase offer. Dylan's Media's decision follows our guidance withdrawal that I just explained and is based on the precautionary principle that the preservation of liquidity is the most responsible short-term course of action for Cliq. Dylan no longer supports the use of company funds for an off-market share buyback under the current circumstances. Taking into account Dylan's Media's updated position and the challenging business environment, Ben and I have decided that we will no longer consider a delisting of the company's shares in the foreseeable future. We shall continue to meet all relevant open market reporting obligations and thereby, we are currently reviewing the scope and frequency [Technical Difficulty] we are proceeding with plans to report our third quarter results in November, albeit in a more streamlined and efficient format. Ladies and gentlemen, I believe it's pretty meaningful to the overall context to show you clearly our current ownership structure. As of today, Cliq has approximately 6.5 million issued shares. The ownership is split roughly 3 ways: Dylan Media B.V. and members of the Management and Supervisory Boards jointly hold around 41% of the company's share capital. The remaining 49% is in free float. And last but not least, roughly 10% are held as treasury shares, which are nonvoting and nondividend bearing. We are in the technical process to redeem these treasury shares. Such a redemption would result in a corresponding reduction in the company's share capital. And after this reduction, Dylan would then hold around 46% of the outstanding share capital. Let's now move to the operational aspects of the quarter and half year. Over the first 6 months of 2025, market conditions remain tough. Above all, we maintained our profitability first discipline and halved the customer acquisition costs from EUR 54 million to EUR 27 million. Consequently, the customer base dropped to 600,000 as of the end of June, and group sales declined to EUR 98 million down from EUR 141 million in the first half of 2024. Our lifetime value softened to EUR 72, down from EUR 80 in the first 6 months of 2024. Nonetheless, EBITDA increased by over 30% to EUR 6.5 million with the EBITDA margin reaching 7%, up from 3% in the prior year first half. Our headcount further reduced from 132 to 109, also as part of our continued strategic cost streamlining. Quarter-on-quarter, our customer acquisition costs were reduced from EUR 15 million to EUR 12 million. Sales dropped marginally from EUR 50 million to EUR 48 million despite falling customer numbers. But EBITDA edged up from EUR 3.2 million to EUR 3.3 million with the margin improving to 7%. Overall, the second quarter was marked by further cost control and modest productivity gains, but also by difficult market conditions with significant churn as well as currency pressure from the weaker U.S. dollar. Allow me now to hand over to Ben, who will dive deeper into our financials.

Ben Bos:

Member of Management Board: Thanks, Luc, and good afternoon, ladies and gentlemen. In the second quarter of 2025, we saw a modest yet meaningful stabilization in our strategic key performance indicators. For us, the highlights here in the EBITDA margin development, improving from 4% to 7% over the last 5 quarters. This clearly reflects our steadfast discipline on spending and indicates that our profitability first strategy is continuing to take effect despite the macro headwinds. Absolute sales level declined only slightly by 4% quarter-on-quarter, and thus, the business continued to stabilize sales notably and operate with leaner cost structures on the back of significantly lower customer acquisition costs. Importantly, the efficiency of our marketing, our new customer acquisitions improved with our marketing cost ratio marked better quarter-on-quarter. These improvements helped to offset revenue pressures from a challenging market condition environment. Regionally, the sales contribution remained largely consistent with prior periods. Quarter-on-quarter, sales in North America in the second quarter declined by 7%, solely due to the foreign currency exchange effect resulting from a weaker U.S. dollar. To give you the full picture, group sales in the second quarter dropped quarter-on-quarter by 4%. However, adjusted for the FX impact, sales grew by 3%. In Europe, sales grew sequentially for the first time again since Q4 2023, namely by 5%, thanks to a higher LTV in that region. But it's still tough in Europe, and we need to see conclusive proof before we can talk about the turnaround. In Latin America, our quarter-on-quarter sales growth accelerated again to 11%. As an aside, the sales composition by service remained focused with approximately 98% generated through bundled content services, our core product category. By the end of June 2025, our customer base stood at 600,000 compared to the 800,000 at the end of the first quarter. This reduction was driven primarily by the group's stronger focus on profitability than on sales growth, whereby the target CPA, the cost per acquisition was reduced, which led to less new customer acquisition. But notwithstanding this, the average lifetime value of a customer increased slightly to EUR 75 against the prior quarter, reflecting the successful acquisition of a higher value and just more profitable new customers in Europe. The income statement for the second quarter reflected a continuation of trends seen in Q1 with a slightly weaker top line but improved earnings quality. As just mentioned, sales declined quarter-on-quarter modestly by 4% to EUR 48 million, a drop caused by the effects, the weakening of the U.S. dollar in particular. But adjusted for those FX effects, our sales were up 3%. Our cost of sales, excluding the customer acquisition costs for the period, also declined sequentially by over 7%. That's more than a corresponding sales decline, which further underscores our cost discipline and overcompensated the higher operating expense of EUR 1.3 million, resulting mostly from strategic personnel cost cuts. Group EBITDA improved quarter-on-quarter by 5% to EUR 3.3 million, which translated to a stronger margin of 6.9%. Depreciation and amortization expenses increased moderately, which led to a decline in EBIT from EUR 1.6 million to EUR 1.4 million. Whilst the financial results and tax expenses remained broadly stable, net profit came in at EUR 0.5 million compared to the EUR 0.9 million in the first quarter. Consequently, basic earnings per share decreased from EUR 0.16 to EUR 0.09. Our income statement shows that while pressured at the bottom line, we continued our tight cost control and incremental margin expansion. Let's go to the customer acquisition cost. Our strong focus on profitability drove a further tightening of customer acquisition spend during the quarter. This reduction, while impacting year-on-year top line growth was a necessary step in maintaining financial discipline during difficult times. Total customer acquisition costs were reduced by 20% quarter-on-quarter from EUR 15 million in Q1 to EUR 12 million in Q2. This reflects management's decision to lower the target CPA in adherence to the group's profitability first strategy and in light of market volatility. Customer acquisition costs for the period were down by 10% from EUR 17.1 million in Q1 to EUR 15.4 million in Q2. And as you can see, the marketing cost ratio, the CAC for the period, the customers acquisition cost for the period as a percentage of total sales further improved from 41% in Q1 to 32% in Q2, confirming the improved marketing efficiency and more targeted approach to customer onboarding. Let's go to the favorite topic. Cash conversion and cash position. Ladies and gentlemen, one of the clear highlights of the second quarter was a strong cash generation. Operating free cash flow increased significantly from EUR 2.1 million in Q1 to EUR 6.8 million in Q2. This improvement was driven by a combination of a reduction in customer acquisition costs and a continued tight operational cost control as well as an incremental margin expansion and lesser corporate tax payments. Cash tax paid were EUR 2.8 million, which was lower than the EUR 4.8 million recorded in the first quarter. Investing and finance activities remained modest with only around EUR 0.5 million of cash outflow each during the quarter. At the end of June, our net cash position reached EUR 20 million, up from EUR 13.6 million at the end of March. This strong liquidity position provides a solid foundation for the second half of the year. The group's balance sheet remains robust and well capitalized, but might be strongly affected by the current situation going forward. As of June 30, total assets amounted to EUR 94 million compared to EUR 98 million at the year-end 2024. This slight reduction was mainly due to the continued decrease in contract costs, consistent with our shift towards lower marketing spend as well as a further amortization of our technical platform developments. We expect that the recent developments regarding the payments ecosystem will likely have a significantly adverse effect on our contract cost in future periods. And as already mentioned, cash rose sharply to EUR 20 million, whilst trade and other receivables decreased further. On the liability side, we continue to operate with 0 bank borrowings, further underlying the strength and simplicity of our capital structure. Deferred tax liabilities reduced to EUR 5.7 million and income tax payables were cleared completely during the period. Our equity increased marginally to EUR 73.3 million, resulting in an equity ratio of 78% compared to 72% at the end of 2024. Our lifetime value of the customer base totaled EUR 89 million at the end of Q2. But as Luc mentioned earlier, the significant developments in the digital payment ecosystems will also negatively affect this off-balance sheet operational indicator going forward. Ladies and gentlemen, while our top line remains under pressure, the underlying cost structures have improved. We will continue to balance growth initiatives with profitability discipline and will reassess our CAC investment levels in the second half depending on market conditions, digital product developments and customer response. The year 2025 has proven to be and will continue to be a demanding period for our business. To navigate these tough conditions successfully, we must focus on adapting to required changes in the digital payment ecosystem while maintaining strict cost discipline and cash flow management. We remain confident that we are able to get back on track despite the recent developments in this global payment ecosystem. So let's go to the Q&A. So thank you for your attention, and that concludes our presentation today. We shall now commence our Q&A session. So Sebastian, our first question, please.

Sebastian McCoskrie: Our first questions today are from Robert Pohlhausen at Astaris Capital Management and directed to Luc. Robert asks, I read the news about the payment issues, which is disappointing. Who is your payment provider? And what are these new standards?

Luc Voncken: Well, thank you, Robert, for your questions. Regarding the entity -- the identity of our payment service provider, we ask for your understanding that we cannot disclose the specific name publicly, of course. This is due to competition reasons and confidentiality obligations that we are bound by. Our focus remains on resolving these matters constructively and improving our payment infrastructure for the future. We are working hard to find a solution and are actively engaged with existing and alternative partners to secure continuity in our payment processing capabilities. As for the new standards affecting our operations, they relate to the implementation of Visa's acquiring monitoring program, named VAMP, which is scheduled to come into force on October 1, 2025. VAMP introduces stricter global requirements for acquirers and merchants with a focus on charge-back performance of fraud risk classification. In anticipation of these changes, some acquiring banks have reclassified certain merchant IDs, so called MIDs as high risk and have stopped processing transactions for them. This has affected our ability to process payments from a portion of our customer base and to acquire new customers. We are doing everything we can do to mitigate the impact and adapt swiftly to the evolving regulatory and payment landscape. While these developments are unexpected and challenging, we remain committed to safeguarding the company's operations and improving tweaking our business model.

Sebastian McCoskrie: Our next 3 questions are from [ Kun Binet ] at [indiscernible] for Ben. Kun asks, could you elaborate on what the impact is of the current restrictions to process payments from part of the existing customer base and what you exactly mean with it?

Ben Bos:

Member of Management Board: Thanks, Kun. When we refer to restrictions to process payments from part of the existing customer base. We mean that certain acquiring banks have in response to evolving card scheme standards, halted the processing of transactions linked to specific merchant ID associated with Cliq. So this has resulted in a portion of existing customers being unable to complete recurring subscriptions payments. This impact is currently being evaluated in close cooperation with our payment service partners. And we are actively engaging with alternative acquiring banks to restore full processing capacity as soon as possible.

Sebastian McCoskrie: How does the announcement regarding the payment standards affect the revolving credit facility of EUR 15 million of HSBC? Are there any discussions with HSBC regarding the renewal of the credit line or breach of covenants?

Ben Bos:

Member of Management Board: There has been no breach of covenants, and we remain fully compliant with all terms. The current facility is structured with minimal covenant requirements. So there is no immediate impact stemming from the development in the payment ecosystem. We currently hold a strong net cash position of over EUR 20 million and continue to manage our liquidity proactively. That said, we remain in regular and constructive dialogue with HSBC about our financing structure.

Sebastian McCoskrie: And lastly, did Dylan Media, by your knowledge, sell any of its shares in the last month? This is for investors a relevant question as the owner of Dylan is also a member of the Board of Directors.

Ben Bos:

Member of Management Board: Appreciate it Kun. And to our knowledge, Dylan Media has not sold any of its shares in Cliq in the past months. Dylan Media remains a committed long-term shareholder and with a holding of around 46% of the outstanding share capital, our largest shareholder.

Sebastian McCoskrie: Next up, a question sent in by [indiscernible]. Ben, Uwe asks, regarding your statement with the payment service providers, I understand that it's been early days to assess the financial impacts. Could you give at least a ballpark estimate on how huge the challenge is not only financially, but also in terms of subscriptions and number of payments or a time line when you will have further information and plan to resolve it? Will there also be an impact on future subscriptions since the last time when payment service providers changed the service scheme, our business was heavily disrupted. Do you see any further disruptions coming from the change this time? Or do you have a time line when you could assess the longer-term impacts?

Ben Bos:

Member of Management Board: Thank you. It's indeed still early days for quantifying the full impact of the recent developments with our payment service infrastructure. At this stage, we are actively working with our payment service partners to fully assess the situation. But we are not yet in a position to provide reliable estimates, neither in financial terms nor in specific subscription numbers or transaction volumes. As mentioned, a portion of the recurring payments from the existing subscribers cannot currently be processed. And new customer acquisition is also temporarily constrained in affected markets. However, this is not a full system disruption and many parts of our business remain fully operational. The degree of disruption will ultimately depend on how quickly we can either resolve the issue with the effected acquiring banks or successfully onboard new partners. We understand the concern, your concern, the market concern regarding potential future subscriptions. While it is true that previous changes to customer care tools in place, and the card scheme companies led to significantly higher churn rates. We are actively pursuing multiple risk mitigation strategies and corrective actions in parallel at this time.

Sebastian McCoskrie: Roland Pecker wrote, as a shareholder, I'm especially interested in the statement in the today announced Q2 highlights. Certain card schemes and acquiring banks are no longer allowing the processing of payments authorized by existing Cliq Digital customers. These new standards currently limit the company's ability to process payments from some of its existing customer base and to acquire new customers. What exactly does that mean? And why is that problem not solvable since other companies don't seem to have the same problem. How can credit card institutes deny by the customer authorized payment? This is a problem for over a year, which wasn't explained until now in detail by the management of Cliq Digital. Shareholders finally do deserve an answer. Luc, what do you answer, Roland?

Luc Voncken: Well, thank you, Roland. It's important to note that this does not imply customer authorizations were invalid or that card networks are arbitrarily rejecting legitimate payments. Rather acquiring banks have discretion on the card scheme rules to block transactions associated with merchant IDs, they deem noncompliant with updated program thresholds and even if the end user has authorized the transaction. While it may seem that other companies don't have the same problem, this is not entirely accurate. Many subscription-based digital service providers, especially those with multi merchant structures and international footprints have faced similar challenges under the evolving Visa MasterCard compliance regimes. However, the visibility of those issues can vary as companies respond differently based on the structure of the acquiring relationships, dispute ratios and operational complexity. As to why this issue has not been resolved yet, it's not a purely internal Cliq issue that can be fixed via product or process tweak. It requires coordinated action between our payment service provider, current and potential new acquiring banks and the card schemes themselves.

Sebastian McCoskrie: Ralf Marinoni at Quirin has the following questions for Luc. You explained that certain card schemes and acquiring banks don't allow processing payments authorized by existing customers of Cliq any longer. Is this the case for North America and Europe or North America only?

Luc Voncken: Well, thank you, Ralf. The current restrictions primarily affect Europe, where certain acquiring banks have stopped processing transactions linked to specific merchant identifiers associated with Cliq. But the restrictions will also affect the U.S. just to a lesser extent.

Sebastian McCoskrie: How important is credit card payment at present?

Luc Voncken: Well, credit card processing remains one of the most important payment channels for Cliq Digital subscription-based services. It supports 98% of the group sales and is deeply embedded in our customer journey. Any disruption to credit card processing, therefore, has a meaningful impact.

Sebastian McCoskrie: In this context, does it make sense to switch to alternative payment systems such as Apple Pay, Google Pay or PayPal? Or are there other alternatives?

Luc Voncken: Well, of course, we are actively evaluating additional payment options, including Apple Pay, Google Pay and PayPal. These methods could play an important role in diversifying and strengthening our payments infrastructure, especially in markets where credit card coverage is less stable or where we face restrictions on the current merchant identifiers. However, integration time lines and regulatory compliance vary across partners, of course, and regions. So we are approaching this step in a parallel with restoring core credit card functionality. And our long-term goal is to create a more resilient and diversified payment setup.

Sebastian McCoskrie: Dylan Media holds 25% of Cliq's share capital. And together with members of Cliq's Management and Supervisory Boards, 41% of the company's share capital are held. Do you know what Dylan Media plans with its share package?

Luc Voncken: Well, as of today, we have no indication that Dylan Media intends to change its shareholding in Cliq Digital. Together with the members of the Management and Supervisory Board, this group represents around 41% of our total share capital. And as always, any changes to major shareholdings would be subject to statutory disclosure requirements.

Sebastian McCoskrie: Our next questions are from Stein [indiscernible]. He asks, Luc, could you give an update of the Fit for Future program?

Luc Voncken: Yes, of course, I'm happy to provide an update. The Fit for the Future transformation program was essentially concluded in the first quarter of this year and is now hardwired into how we operate. It enabled us to streamline our organizational structure, reduce personnel costs and shut down legacy systems. And as a result, Cliq is leaner, more focused and better aligned with our profitability first strategy. That said, while the foundations are in place, the productivity gains we are targeting have not yet fully materialized. And some early signals are encouraging, but they are not yet consistent or scalable. So while the formal program has ended, we do expect to continue fine-tuning our organization as we push for greater efficiency and structural competitiveness.

Sebastian McCoskrie: Could you give more color on this vague statement? The background of such rejections are significant developments in the digital payments ecosystem driven by newly announced worldwide regulatory standards introduced by card schemes and acquiring banks. Is this related to certain players in the industry like Worldline?

Luc Voncken: Well, as previously mentioned, this primarily concerns the global tightening of fraud and dispute thresholds by card schemes, especially Visa Mastercard as part of structured programs, which affect specific needs. These programs require acquiring banks to proactively screen and act on merchants that are trending toward our exceeding predefined risk thresholds. And even if transactions were previously authorized by the customer. So really, this affects many players in the market.

Sebastian McCoskrie: What is the recommendation of the members of Cliq's Management and Supervisory Boards in the function as a shareholder of Cliq concerning the proposed share buyback?

Luc Voncken: Well, the original proposal was made upon request of Dylan Media. And giving their percentage of shareholding in Cliq, we presume that this resolution will not pass at the upcoming AGM as they will vote against a repurchase program. As members of the Management Board, we are currently primarily concerned with the developments announced on August 5, 2025, and their impact on our financial position. In light of those developments, we understand Dylan Media's move to no longer pursue to repurchase program. As announced yesterday, we currently no longer follow a strategy to delist the company.

Sebastian McCoskrie: As members of Cliq's management are also involved at Dylan Media, how are the potential conflicts of interest handled? With all the strange moves, first tender offer, then no tender offer, but share buyback, now no share buyback anymore, it feels that minority shareholders are missing some pieces of the puzzle.

Luc Voncken: Well Stein, the Management Board remains fully committed to transparent communication. Rest assured that the Management Board and the Supervisory Board of Cliq Digital AG remain fully committed to the fiduciary duties to act in the best interest of the company and all its stakeholders. This responsibility guides every step we take, especially regarding decisions of strategic significance for the company. All potential conflicts of interest of a Board member were disclosed to the other Board members and adequate measures to deal with the conflict were discussed in each individual case. All relevant conflicts of interest were handled in accordance with the law.

Sebastian McCoskrie: And our last question today came in from Dr. Peter [indiscernible] for Luc. On the 14th of July, the FTC's Click-to-cancel rule went into effect can you specify the impact on Cliq's business, please?

Luc Voncken: Of course. Thank you, Peter, for that question. We were all aware of the Federal Trade Commission's Click-to-cancel rule. The regulation largely formalizes existing U.S. requirements for clear and simple cancellation processes aiming to prevent the necessary barriers for customers, which we have also in place already for several years. As previously communicated at the beginning of last year, the standards had already begun to influence the market and thus. In 2024, we already observed elevated churn levels across all regions, driven by tightened refund and cancellation practices in anticipation of regulatory changes.

Ben Bos:

Member of Management Board: So ladies and gentlemen, this was our last question for this afternoon. Should you have any further questions, please reach out to Sebastian. Thank you for joining our second quarter 2025 earnings call today. Have a great day and all the best.