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Schibsted ASA (SBBTF) Q2 2024 Earnings Call Highlights: Navigating Growth Amidst Market Challenges

GuruFocus News
·3 min read

  • Group Revenue: Increased by 3% year-on-year to NOK2,525 million on a constant currency basis.

  • Group EBITDA: Ended at NOK546 million, up 1% year-on-year.

  • Nordic Marketplaces Revenue Growth: 7% on a constant currency basis.

  • Classifieds Revenue Growth: Up 13% driven by higher revenue per ad and transactional revenues.

  • Advertising Revenue Decline: Decreased by 14%.

  • Mobility Revenue Growth: 7% on a constant currency basis, with Classifieds revenues up 15%.

  • Transactional Revenues in Mobility: NOK90 million, a 16% increase year-on-year.

  • Jobs Revenue Decline: Overall decline of 2% on a constant currency basis.

  • Real Estate Revenue Growth: 16% driven by higher ARPA and expansion of transactional rental model.

  • Recommerce Revenue Growth: Increased by 17% on a constant currency basis.

  • Net Profit: Ended at approximately NOK6.7 billion in Q2.

  • Special Cash Dividend: NOK18 billion paid out as part of the special cash dividend.

  • Cash Flow from Operating Activities: NOK180 million, down from NOK354 million last year.

  • CapEx: NOK174 million, down 13% from last year.

  • Net Cash Position: Approximately NOK6 billion following transactions.

Release Date: July 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Schibsted ASA (SBBTF) achieved a 3% year-on-year increase in group revenues for Schibsted Marketplaces, reaching NOK2,525 million.

  • The Nordic Marketplaces segment delivered a 7% revenue growth, driven by a 13% increase in Classifieds revenues.

  • The Mobility vertical reported a 15% growth in Classifieds revenues, primarily driven by ARPA increases.

  • The Real Estate business demonstrated resilience with a 16% revenue growth, driven by higher ARPA in Norway and expansion in Sweden.

  • Recommerce revenues increased by 17%, driven by the transactional business model, particularly in Norway and Finland.

Negative Points

  • Advertising revenues declined by 14% year-on-year, impacted by volatile markets and macroeconomic factors.

  • The Jobs vertical experienced a 2% overall revenue decline due to market challenges and increased competition in Sweden and Finland.

  • Total costs increased by 5% compared to Q2 last year, driven by investments in new business models and technology platform transitions.

  • The Growth & Investment segment saw a 13% revenue decline, affected by macroeconomic factors and reduced demand.

  • Schibsted ASA (SBBTF) plans to reduce its workforce by about 250 positions as part of organizational changes to improve profitability.

Q & A Highlights

Q: Can you expand on the behavior of agents in Norway's real estate market and any regrets about the overhaul of packages in January 2022? A: Agents with ownership in Hjem.no are downgrading packages to reallocate marketing funds. We believe in the strength of our position and expect these downgrades to be short-term. Regarding HONK, we shut it down due to unfavorable trends and profitability challenges in the market. (Christian Printzell Halvorsen, CEO)

Q: What is the status of the 250 FTE reduction plan? A: We announced the reduction before summer and have started consultations with employees and unions. Implementation will begin in September and continue into Q4. (Christian Printzell Halvorsen, CEO)

Q: Could you provide more details on cost savings and the impact of media divestment synergies? A: We are focusing on cost efficiency across the organization. The second quarter saw dis-synergy effects, with up to half of the impact due to synergies. We expect some noise in HQ costs in the second half of 2024. (Per Morland, CFO)

Q: What is the long-term portfolio strategy for Schibsted? A: We aim to be a focused marketplaces company centered around four core verticals: Mobility, Real Estate, Jobs, and Recommerce. We will evaluate our assets to support these verticals and consider potential acquisitions within the Nordics. (Christian Printzell Halvorsen, CEO)

Q: How do you plan to address the competition in Norwegian Real Estate and the potential unbundling of FINN from marketing packages? A: While unbundling would be ideal, it's challenging to change the market structure. Strengthening our relationship with home sellers is strategically important, and we are evaluating options to enhance our position. (Christian Printzell Halvorsen, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.