Schibsted ASA

OSE:SCHA

Earnings Call Transcript 2021-Q1

[Jann-Boje Meinecke]

Good morning, everyone, and welcome to the presentation of Schibsted's Q1 results. My name is Jann-Boje, and I'm heading Investor Relations at Schibsted. Similar to last time, we will stream the presentation fully remotely from different locations. And as usual, Kristin, our CEO; and Ragnar, our CFO, will present our results and progress for the first quarter. [Operator Instructions] We will not present the disclaimer.And with that, please let me hand it over to you, Kristin. Go ahead.

[Kristin Skogen Lund, Chief Executive Officer]

Thank you so much, Jann-Boje, and a very good morning to everyone. I will start with a highlight before we have a closer look at the development for the quarter.And Schibsted started 2021 with a strong first quarter. And despite continued uncertainty and restrictions from the COVID pandemic, our underlying revenues grew 8% year-on-year in the quarter. All our segments, except Financial Services, are growing their underlying revenues compared to last year in the first quarter, and all segments are growing on EBITDA. The revenues are not just growing compared to last year, where, as we know, half of March month had a negative COVID effect, primarily in Finn and News Media, but the revenues are also increasing compared to 2019. Driven by this accelerated revenue growth, combined with cost savings, we achieved a strong EBITDA of NOK 594 million, which is more than double from the same period last year and 42% above pre-COVID numbers in 2019.But then it's not all about the numbers, and I would also like to highlight the Second Hand Effect report that we recently published together with Adevinta. And I'll tell you a little bit more about that on this next slide, where we have a look at our ESG achievements in the first quarter. The recently released Second Hand Effect report demonstrates the environmental impact of reuse and proves once again the importance of trading secondhand instead of buying new products.For Schibsted’s Nordic Marketplaces, we see an increase in secondhand trade during the COVID pandemic and, as a result, a positive environmental impact that has increased from last year by 8%. The total potential savings for our users was 1.6 million tonnes of greenhouse gas. This is more than 50x our own emissions in Schibsted in 2020.On the social side, we have started a project on how we should proceed from a focus on gender equality to diversity, inclusion and belonging. This is a complex and a long-term work, but we believe there is a huge potential in a diverse and inclusive workforce. And if we provide our leaders with the right competence and tools to build a strong culture of inclusion and belonging, we can release that potential, and we can nourish collaboration and innovation that in turn can turn into value creation for our stakeholders. And as a first step, we have started out by mapping out the current situation in Schibsted. And then I would like to add that the employee engagement survey in the first quarter shows a continued high satisfaction score among our employees.And lastly, we recently launched our sustainability report for 2020 as part of our annual report, where we are very transparent on how we delivered on our 2020 targets. And here, you will find our new targets for 2021, together with our more long-term ambitions on all our sustainability aspects.So let me then start with presenting the development of our businesses in more detail. And first up is Nordic Marketplaces. If you then move to the next slide, please, we see that before we look at the financial results here, I would like to highlight the recent listing developments in the job vertical, which is the main driver for the accelerated revenue growth in Nordic Marketplaces in Q1. And as you see from the graph in this slide, all countries showed a solid recovery within jobs in Q1, especially Norway and Finland. Listings in Norway were not only above Q1 last year but were actually experiencing an all-time high in the first quarter. And as you might remember from Q4, Sweden did not see the same recovery as we then saw in Norway. So we're very pleased to finally see a start of the recovery also in Sweden in the first quarter with volumes just slightly below last year. And looking at the start into Q2, these good listing trends have continued in April with high year-on-year volume growth for jobs in all 3 countries. And you will find listing development for our other main verticals in the appendix.But if we now look at the next slide, we will get to the financial results in Nordic Marketplaces. We see that underlying revenues returned to a 6% growth in the quarter. This is driven by the improvement in the job vertical, where Norway is the biggest contributor, in addition to a strong March month across all countries. This positive development in revenues led to a margin increase of 1 percentage point year-on-year. And let me remind you that the acquisition of Oikotie is included in the 2021 numbers and is affecting the growth positively. However, the 6% revenue growth presented in the left paragraph is the underlying revenue development, including pro forma Oikotie revenues in Q1 2020 and excluding currency effects.Looking at the graph to the right, you'll see that jobs is the biggest vertical in Nordic Marketplaces, and Finn is the biggest contributor within jobs as 23% of total revenues in Nordic Marketplaces are coming from jobs in Norway. Hence, the recovery in Norway has a significant impact on the overall top line development in 2021.If we then move to Marketplaces Norway, revenue growth accelerated -- if you change the slide, please, revenue growth accelerated compared to last quarter, delivering 11% growth compared to Q1 last year. The growth was primarily driven by the previously mentioned improvement in the jobs vertical, especially in March. The revenue increase is driven both by growing volume, combined with improvements in the average revenue per ad. For example, Finn has a new self-serve portal for professional customers, in which it's easier to add upsell products upfront. And the sales department is also now working more data-driven, contacting customers based on the performance of their ads. And in numbers, the job vertical grew NOK 52 million year-on-year in Q1, and that equals a 34% growth.Now while Nettbil continued to grow well compared to Q1 last year, traditional motor revenues and real estate were affected by lower inventory levels and high demand similar to what we saw in Q4. This demand is resulting in more easily sold objects, resulting in less need for republishments and upsell products, which put some pressure on the ARPA. However, we have seen improved volume trends throughout the quarter.Similar to the previous quarters, the travel vertical is still negatively affected by travel restrictions, with revenues declining NOK 15 million year-on-year. Advertising revenues ended up 2%, below Q1 last year, due to slow start of the year, while revenues in March were increasing. And all in all, an improvement compared to the last quarter. The EBITDA margin ended at a strong 50% for the quarter, driven by the combination of higher revenues and cost savings from remote work. But let me remind you that we have started to ramp up investments again to ensure growth going forward, meaning that the margin we saw in Q1 is higher than what we expect for the rest of the year.If we then move to Blocket and Sweden, we will -- we see that we had another quarter with revenue growth. However, unlike the previous quarters, the revenue growth in Q1 is driven by a recovery within jobs and advertising. The growing revenues within jobs are driven both by volume that finally returned to growth in March. In addition to that, we see an increased ARPA from the new price and packaging model that was released during the autumn.And looking at motor, we see a slight decrease year-on-year due to lower inventory levels and high demand resulting in less need for upsell products, same effect that we experienced in Norway.On the cost side, temporary measures have dampened the cost increase, and combined with increased revenues, that leads to margin at 42%, which is in line with last year. If we then move to Finland, we see that the merger of Tori and Oikotie was successfully completed, and we are now moving from the integration phase to the growth phase. If you look at the financials, this graph represents the new combined company, including Oikotie in the '21 numbers driving the growth compared to last year. Focusing on the underlying development, including pro forma Oikotie revenues in 2020 and on a foreign exchange neutral basis, the first quarter is characterized by a good trend in classifieds revenue with year-on-year revenue growth driven by all verticals, except Generalist, where we see a slight decline.On the cost side, we have increased investments in marketing, primarily within real estate in Oikotie. We have also ramped up product and tech staffing to improve products and platforms in order to enable mid- and long-term growth. This is affecting the margin, leading to a flat EBITDA year-on-year in the first quarter, if we look at absolute numbers.Then on the next slide, before I move on to News Media, I wanted to highlight one product update as we have reached an important milestone for the transformation to next-gen marketplaces for cars in Norway. Not all of the elements, which you can see on this slide, are new, but effective Q1, private car sellers and buyers in Norway can now use the full end-to-end transactional process. And our numbers show that the whole transaction can happen in just 15 minutes, which we think is rather impressive. And I'll give you some more detail on how this works.So for a seller, the process starts with a price tip from Finn. You just need to enter the car registration number and the mileage, and then you get a realistic estimate of how much you should sell or buy your car for. Then, Finn will offer 2 ways to sell your new car -- sell your car. You can place the ad yourself on Finn or you can choose Nettbil to handle the entire sale for you in just a day or 2. If you choose Finn to capture the highest possible price, the next step is to use a digital contract template, and this is where the magic happens. Most of it is already prefilled out for you, and you just follow the steps in the process and you get access to insurance with a free trial period, digital payments on our platform with escrow, digital ownership change at the Norwegian Public Roads Administration, and a new electronic toll payment tag.And the whole process can be done and signed via your phone and verified with BankID, the safe identification also used by banks here in Norway. As a last step, your new car is now available under My Car. And with that, the car profile -- with that car profile, you get access to things like information on how much your car is worth, easy access to a digital purchase contract, tailor-made offers for your car and possibility for safe and easy car sharing. So you can imagine from a commercial point of view, the next step is to try different ways of further monetizing along the process. So exciting developments there.And then, we move to News Media. One year after the outbreak of COVID-19, it is still an ongoing news event, and our users are depending on our brands to give them timely and correct information about the situation. Our brands are continuously finding new innovative ways of keeping our users updated on the situation, be it the overview of the number of people infected by COVID, the regulations that you need to follow or the status of vaccination, all on a local or a national level.The role all our brands are playing in creating critical, investigative and agenda-setting journalism as a result of the authority's strict actions during the pandemic is also highly prioritized and at the core of our social mission. And to be able to grow the News Media business, investing in quality content like this is essential. I'll get back to that in a couple of minutes, and I'm also very proud to say that we have -- we have won some major award for our COVID journalism recently, and I think that's well deserved.Okay, if we then look at the financials on the next slide. Thank you. News Media delivered another strong quarter. Digital revenues showed a strong growth compared to last year, which led to underlying revenue growth for the third quarter in a row. The solid top line is combined with significant cost reductions due to both the cost reduction program and cost savings due to remote work, leading to a strong margin of 11%. The execution of our cost reduction program is progressing well with estimated effect per the first quarter '21 of around NOK 260 million.If we then look at our main revenue streams in News Media, on the next slide, we first have subscriptions where total underlying revenues grew by 10% year-on-year in the first quarter. And as in previous quarters, digital subscription revenues continued to grow well. Strong volumes and growth in ARPU are contributing to the 26% increase in digital subscription revenues compared to last year.To succeed with continued growth in subscription revenues, investing in content is key. And we're very excited about our planned launch of a subscription-based podcast product across our brands, and we are proud to say that some of the most popular podcast creators in Norway will be part of this undertaking. In addition, we continue to experiment with different types of paid content. One example is the entertainment concept, [Foreign Language], that means not allowed to laugh at your cabin, that VG did and which has sold a record amount of subscriptions in a very short time.If we then move to advertising, I'm pleased to say that we, in the first quarter, are seeing substantial growth in digital advertising revenues in both Norway and Sweden, and that digital advertising revenues are back at 2019 levels. March is really standing out as a fantastic month for advertising revenues in Norway, showing that there is willingness to invest in marketing despite current COVID restrictions.Video, content and premium display contribute to the strong growth in both markets, and particularly, Aftonbladet and VG are performing well as they can cater for large advertising formats and deliver high reach. And we see high-impact premium display being very popular among advertisers.Then we move to Next, and we will start with Lendo, the biggest asset in Financial Services. Here, we see that Q1 underlying revenues ended up declining compared to last year. The decrease in revenues was due to lower revenues in Sweden and Finland compared to Q1 last year, while the other markets posted revenue growth. Sweden, accounting for almost 3/4 of Lendo Group's revenues, experienced an underlying 9% revenue decline compared to Q1 last year as banks continued to be more restrictive in their lending practices. Margins are better than last year as we invested less in international expansion and have focused on efficiency in our established markets. However, we have seen that unit costs in performance marketing channels have increased during the quarter due to increased competition in Sweden, and that is the trend we expect to continue. Looking at 2021 as a whole, we maintain our target on EBITDA investments for the geographical expansion. And then finally, we look at Schibsted Growth, and we see the positive momentum from Q4 continued into the first quarter for Schibsted Growth. Prisjakt, Schibsted Distribution and the marketplaces for services, MittAnbud, continued to experience increased activity levels and demand during the quarter. Schibsted Distribution new business showed strong year-on-year growth in the quarter with increasing e-commerce volumes driven by Helthjem and Morgenlevering. Helthjem Netthandel, the main part of new business, has delivered approximately 3.5 million parcels during the first quarter and that is an increase of 150% year-on-year. Also, Prisjakt showed a solid growth year-on-year driven by increased traffic and clicks. And in addition, advertising banner sales showed recovery and were back to growth in the quarter.And with that, I'm happy to turn it over to Ragnar, who will give us some more flavor to these financial figures.

[Ragnar Kårhus, Chief Financial Officer]

Thank you, Kristin, and good morning, everyone. I'm pleased to give you some more details on our strong financial results in the first quarter.I will start with commenting on the consolidated result for the Schibsted Group. Underlying Q1 revenues grew 8% compared to last year to NOK 3.4 billion. Also, this quarter, EBITDA was very strong and more than doubling from last year to NOK 594 million, resulting in a margin of 17%.In the graph on the right, you can see that all business areas are contributing to the improved EBITDA. Similar to last quarter, News Media is standing out as the biggest contributor to the improvement, driven by the continued strong growth in digital revenues and cost reductions. For Nordic Marketplaces and Growth, EBITDA increase is primarily due to higher revenues, while the increased EBITDA in Financial Services is driven by improved cost efficiency combined with lower geographic expansion investments.Moving to the income statement. Operating profit for the quarter ended at NOK 346 million, an increase of NOK 229 million from last year. Operating profit was impacted by increased net other expenses of NOK 21 million, which mainly consists of transaction costs in connection with acquisitions of eBay Denmark and integration costs connected to Oikotie. In addition, amortizations have also increased year-on-year, and that is due to the acquisition of Oikotie. And this is also the main explanation for the increase in net financial items. The reported tax rate in the first quarter of 24% is quite close to the nominal tax rates in the countries that we are present.Loss from discontinued operations are figures reported by Adevinta, adjusted for the effect of not recognizing depreciation, amortization or impairment of assets in Adevinta. In addition, in this quarter, loss from discontinued operations also include a loss related to the Adevinta's disposal of the operations in Chile. Adevinta presented their results yesterday. So for more details on their results, please refer to their presentation available on their website.Then looking at our operating cash flow in the first quarter on the next slide. Thank you. It tripled compared to the first quarter last year, driven by the increased EBITDA and reduced tax payment in the quarter, partly offset by an increase in working capital. Our CapEx was NOK 20 million higher than last year due to increased investments within product and tech but also at HQ due to ongoing implementation of a new group-wide ERP system.Then looking at our financial gearing and targets. Looking at our leverage, it increased to around 1.7 following the acquisition of Oikotie in the third quarter last year that has gradually improved to 1.3 by the end of Q1 due to the strong EBITDA and cash flow. And our cash balance at the end of the first quarter was NOK 1.1 billion. A bond of NOK 600 million will be repaid at maturity, which is today, the 6th of May, and we will consider issuing a new bond later this year. To finance acquisition of eBay Denmark, we have signed a bridge loan facility of EUR 350 million. And following this acquisition, our gearing will increase at closing, as it looks now, to just below 3. We have received consent from our banks for a temporary waiver of our financial covenant from closing of the transaction until the bridge facility is repaid.I will end my presentation by giving you an update on our financial targets and policies. New at this time are our midterm targets for News Media. On the back of the good underlying trends and our strategy in News Media, we have updated the target by adding a guidance on annual revenue growth. And we expect revenues to grow low single digits in the medium term. We have also raised the EBITDA margin target from 8% to 10%, to 10% to 12% in the medium term. More positive sentiment is due to a more positive outlook on revenues, combined with the effects from the NOK 500 million through the cost reduction program. Please note, however, that both the top line and margin target assume a normalized advertising market and that this target is a range where actuals are expected to vary in the periods ahead. Looking at Nordic Marketplaces, we keep our medium- to long-term target to grow annual revenues by 8% to 12%. But based on the trends in Q1 and April, we expect the revenue growth to be close to the upper band of our target range in 2021. Otherwise, other policies remain unchanged.So then over to you, Jann-Boje. You will guide us through the Q&A.

[Jann-Boje Meinecke]

Yes. Thank you, Ragnar. Quite a lot of questions coming in here this morning. So let me just start maybe with the first one, guidance for News Media. At the CMD in March, you didn't change the guidance. Now you changed it to a higher margin and included a target for revenues. What has changed? Why do you introduce that now?

[Kristin Skogen Lund, Chief Executive Officer]

Ragnar, you can do that one, please?

[Ragnar Kårhus, Chief Financial Officer]

I think it has been important for us to, let's say, to have a better visibility in the ongoing trends. So that is one of the reasoning. And then we also worked quite thoroughly with the management in News Media to sort of look at sort of the expectations for both this year and for next year. So it's, in short, building a little bit more confidence in the trends that we have seen over the last 3 quarters.

[Jann-Boje Meinecke]

Very good. Then going to Nordic Marketplaces. We've seen like an acceleration of revenue growth now in the end of the first quarter. Can you give some color on what has happened in April, the start of Q2? How are volumes trending, both in Norway and Sweden here?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. As I mentioned, we see the continued strong growth in jobs in all 3 markets, that continues in April. We also see good volume trends in both motor and real estate.

[Jann-Boje Meinecke]

Very good. Then maybe more to the financials. I mean looking at EBITDA for the first quarter, it was very strong, more than doubled from Q1 last year. But it's also because the costs have been not growing so much. I think they're up 2% year-on-year. How sustainable is it? Or let me frame it differently, like, what should we expect when it comes to costs when people will go back to the office after the summer or during the autumn? Have you an estimate or an idea of how this will impact costs here?

[Kristin Skogen Lund, Chief Executive Officer]

Yes, do you want to do that one, Ragnar?

[Ragnar Kårhus, Chief Financial Officer]

Yes. I will not sort of give a precise guidance on exactly sort of how it will influence the margins, but it's correct that sort of, let's say, the present mode of operation sort of carries lower costs as we're not in the office. So we expect some increased costs when we are back in a more normal situation. But that said, we also expect, for instance, traveling costs and so on to be at a significant lower level than before due to the fact that we have learned to work more digitally. So some increased costs we expect but not also 100% back to the levels that we sort of had of overall costs were prior to the pandemic.

[Jann-Boje Meinecke]

Very good. And maybe we can just stay with costs a little bit. I think the report states that News Media is on track with a cost program of NOK 500 million. Could you just tell what is the status? How much of this NOK 500 million have you reached so far?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. So by the end of the last quarter, we had reached NOK 180 million, and we delivered another NOK 85 million in Q1, meaning that we have now delivered a total of NOK 265 million. And we are definitely on track to deliver the NOK 500 million by the end of 2021, as we have previously communicated.

[Jann-Boje Meinecke]

And then maybe staying with News Media a little bit, I think, like, during the quarter, especially digital development has been very strong. Looking at print, I mean, at what point print margins will be negative? And when the margins for the print will be negative, would you consider shutting down print and just focus on digital? Can you elaborate a bit on that?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. I think we will be able to, let's say, prolong the profitable life for print because now, of course, with the success that we see in e-commerce distribution, that will have a positive, let's say, scale effect on the cost of distributing newspapers. And there's also a potential to significantly increase our efficiency around print. When a lease expires in a couple of -- 3 years' time, we will have the possibility of doing that in a more cost-efficient way. So we believe that we will be able to run print with profitable margins for many years to come actually due to those changes coming.

[Jann-Boje Meinecke]

Good. Again, another question on News Media. Digital advertising has been quite strong in Q1. I think the growth was positive in Q4, accelerated even in Q1 and seems stronger than the development for advertising in marketplaces. Do you have an explanation like why is there a different dynamic between these 2 segments for the advertising business?

[Kristin Skogen Lund, Chief Executive Officer]

It has a little bit to do with the type of environment that you have. For example, the fact that travel is very low and somewhat affected and things like that. But I would -- and it also has a little bit to do with how programmatic advertising is distributed, et cetera. But I would say that, in general, I would give credit to our News Media for having been able to create a very good environment for contextual advertising, for video-based advertising and also different premium formats that are easier to run in a media setting than in a marketplace setting. And in Sweden, for example, Aftonbladet has made a huge effort of diversifying their content to accommodate more, let's say, branded goods marketing, and we really see the effect of all of this. Also some new formats that have been introduced that have been successful.

[Jann-Boje Meinecke]

Good. I hope that answers the question. Then maybe one more on News Media before we go to Nordic Marketplaces. News Media hasn't seen like strong growth when it comes to digital subscriptions now in Q1 and over the last quarters. Can you comment a little bit, like, on the balance between, like, volume and ARPU, what is really driving that growth here in News Media currently?

[Kristin Skogen Lund, Chief Executive Officer]

Yes, it's a very good combination of both and especially in our -- in VG and Aftonbladet, we are nowhere near exhausted on the volume side. The example I gave of this entertainment concept that sold a lot of subscriptions in a short time period. Of course, that comes also with some degree of churn, but it's very -- it's really valuable volume in the sense that it's basically new and young subscribers that we get a new customer relationship with in terms of subscriptions.So there is strong growth on the volumes side. And in addition to that, we are constantly becoming better at bundling and upselling current subscription. So it's a nice mix of the 2. And I would like to add that we are quite confident that we will be able to continue that positive trend going forward.

[Jann-Boje Meinecke]

And I think you answered a little bit on that one, but looking at, like, the development, growth with this churn, is it like a change in trend which you've seen currently? Or is it rather stable?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. No, churn is actually very stable. And also given the fact that we increased quite a lot in subscriptions in relation with COVID, et cetera, we see that the churn levels are very stable, which is a good thing. And also, let me remind you that the cost of achieving a new subscriber is almost 0 because we basically upsell on people already being on our media sites and then we upsell them to subscription. So we don't pay anyone externally to attract those subscribers. It's important to remember that when we talk about churn.

[Jann-Boje Meinecke]

Good one. Then again, like I said, Nordic Marketplaces, a couple of questions. Maybe first one on Finland, if you can explain a little bit like what is going to be the short-term strategic objective or objectives here for the year? And how should we think around margin for Finland in 2021 and maybe also going forward?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. I can start, and you can maybe supplement me on that, Ragnar. So in Finland, we have an ambitious agenda, and there are many things we want to achieve. We want to grow our position and our ability to monetize in the verticals. Further down the road, Finland is also a candidate for going for a transactional model in Generalist, but it's not our first priority right now. We're focusing on the verticals. And we see that we have good momentum in both increased classified revenues, and we have very strong growth in traffic and ads in Finland, which is a good fundament for that future growth. When it comes to margins, we are in a growth phase and in an investment phase. We need to invest more in product and tech. I think we have signaled that all along. We knew that when we took over Oikotie, that, that would require some investments in product and tech. So we have not the focus on margin in the short term. We will have the focus on growing revenues and strengthening our position in Finland.I don't know if you want to add anything on that, Ragnar?

[Ragnar Kårhus, Chief Financial Officer]

No. I think that's quite precise.

[Jann-Boje Meinecke]

And maybe a question for you, Ragnar. I think you mentioned today that for Nordic Marketplaces, you expect that revenue will be at the top end of the range, 8% to 12% this year due to the rebound from COVID. Is that like underlying reported? I suppose it's related to FX neutral. Is it FX neutral? Or is it like reported growth which you were referring to?

[Ragnar Kårhus, Chief Financial Officer]

That is the underlying organic growth rate that we expect to be in that range -- or that level.

[Jann-Boje Meinecke]

Very good. I think over the last quarters, we've got many questions on Helthjem. What is happening with that asset? Now we saw the listing a couple of weeks ago. I think Ole Jacob at the CMD was, in his introduction, like, rather firm, I would say, that it's up for discussion that we spin off Nordic Marketplaces. But I think given, like, the substantial valuation of Helthjem above Nordic Marketplaces, is it something which the Board is reconsidering? Can you comment on that, Kristin?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. The Board is not reconsidering that despite the Helthjem development.

[Jann-Boje Meinecke]

Very good. Then maybe 2 smaller questions, I would call it. One is like, any progress on the Nettbil? And what is your strategy if you're not allowed to keep that asset?And the second one, when it comes to the Shpock trademarks, are you controlling them in the Nordics? Or is it something which sits with Adevinta today, which would basically be sold to the new owner?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. On Nettbil, we should have a ruling during the month of May. So we are eagerly awaiting that. And we are very hopeful of a favorable ruling. So we are, so far, we don't want to focus on the alternative for Nettbil.And when it comes to Shpock, we have no plans. I think also the brand sits with Adevinta and will be -- we will not be involved in Shpock in the Nordics in any way going forward.

[Jann-Boje Meinecke]

Thank you. Then margin-wise, I mean, Finn was quite strong with 50% in Q1. Sweden was flat with 42%. What should we expect for the year going forward, Ragnar, maybe also Q2?And then also, like what Kristin presented, when it comes to next-gen products and the progress we made on cars, is that impacting the margin this year in Finn?

[Ragnar Kårhus, Chief Financial Officer]

Normally, we do not sort of guide or give any particular comments on the margins as such. The margins in the second quarter are strong. And in the -- also, in Blocket, we will sort of ramp up the investments somewhat in the next quarters, particularly focusing on, let's say, the transactional side, both on the Generalist and probably also to strengthen the car vertical. So I think you must expect some added investments into product and tech in Blocket.The second question, what was that, Jann-Boje? Can you repeat it?

[Jann-Boje Meinecke]

The second question was maybe related to that. I mean, Kristin presented the progress on cars in Finn with like end-to-end solution. I mean are these initiatives impacting margin this year for Finn? Or are these costs taken, basically?

[Ragnar Kårhus, Chief Financial Officer]

On the car transactional in Finn, those -- let's say, the development costs are, to a large extent, sort of already taken. So now it's more about probably also doing some -- you could also see some higher cost on marketing or other service. So that is part of it. So that is sort of common -- probably will also be a part of the cost base of Finn going forward. But the focus in Finn on sort of product development will probably -- will then be on other features and other verticals.

[Jann-Boje Meinecke]

Great. Lendo question here. I think we highlighted in the report that there's increased competition for Lendo in Sweden. Can you comment like what is happening? Why is the competition increasing? And what is your planning going forward? And maybe also like, if competition has increased, are you still positive about the case? Or have you changed your mind about Lendo of what that means going forward?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. I think the main reason for the increased competition is that 2 of our competitors were merged and then taken over by a new owner with ambitious plans. And basically, what we see is that there's more competition for the key search words. So the price for that is -- has increased. And we expect that to continue for a while going forward. But we believe -- we are a strong believer in Lendo. And I think the fact that competition is increasing is just a testimony to the fact that this is an attractive market. And we are set to win that competition and continue our progress with Lendo.

[Jann-Boje Meinecke]

And I think related to that -- I mean the players which required were Advisa and Sambla in Sweden, like you said, by private equity. But what makes you comfortable that Lendo will be the winner going forward? Like what is the difference here? If you want to comment on that.

[Kristin Skogen Lund, Chief Executive Officer]

Because we have a strong position, we have a strong team, we have a lot of experience. We have made some mistakes with Lendo that we have drawn great learnings from, so we don't have to repeat those mistakes. And I say -- I would also say that we have very good expansion possibilities. We are experimenting now with new products.We have launched a secured car loan concept in Denmark. We have the PSD2 license, which opens up for new product opportunities. We have success with Lendo for small business in Sweden. And as you know, we are cautiously expanding geographically now mostly working with Spain after having seen good success and momentum in Denmark for a while now.

[Jann-Boje Meinecke]

Great. Thank you for that. Going back to Nordic Marketplaces. I think revenue growth has accelerated now in Q1, like we said before. Can you expand a little bit. Is it volume-driven? Is it like ARPA-driven? If you can comment a bit on that?

[Kristin Skogen Lund, Chief Executive Officer]

On the what, the profitability of Lendo?

[Jann-Boje Meinecke]

No, the -- sorry, maybe it wasn't clear on the revenue acceleration in Nordic Marketplaces. What is driving the recovery here which we've seen in the first quarter?

[Kristin Skogen Lund, Chief Executive Officer]

The recovery in revenue in Marketplaces? Yes. Well, it's very much driven -- as I was clear about, it's very much driven by the recovery in jobs in Norway and being such a -- quite a substantial 23% of the total portfolio when you see that strong growth in a vertical like that, that affects the whole area. So that is the main explanation. But we have -- we saw a good increase in momentum throughout the first quarter. So several factors, but that's the one main explanation.

[Jann-Boje Meinecke]

And I think it was -- regarding the question here, is it volume or ARPA driving the growth, I think it is difference a little bit from vertical, I think, like you highlighted in your presentation, Kristin, In Norway for jobs, the team has also worked on new initiatives to drive ARPA. So it's a combination of both. But I think if you go to the appendix in the presentation, you also see that the volume development in the first quarter per vertical, really see an uptick in volume in the other verticals in Q1, which is the main driver, I would say, except maybe drops in Finn.

[Kristin Skogen Lund, Chief Executive Officer]

Yes. And we can also mention that we have a new price and packaging model in Sweden that's proven successful that we launched in the autumn, and that's giving us good effect now.

[Jann-Boje Meinecke]

And going to transactional services a little bit. You presented today private solution forecast in Norway. So the first question is here, could this be replicated for professionals to use it also for that segment? And the second question is like when it comes to Generalist transactional services, I think Adevinta reported some updates here. Do you have any news to share?

[Kristin Skogen Lund, Chief Executive Officer]

Not so much. I mean, it's a high priority, and we're working on it. And main focus on Generalist transactional actually being Blocket now more as our pilot. And I would say we're progressing well, but it's a lot of work, high focus, but I think it's a bit too early to report any news on it.

[Jann-Boje Meinecke]

Then we've got some pushback here on your comment from the Board. You said we're not considering listing Nordic Marketplaces. I don't know if you can elaborate more why the Board is not reconsidering that one, looking at like creating value?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. Well, I think I should be careful speaking for the Board of Schibsted, but I believe that there were a lot of discussions leading up to the decisions back in 2018 when we decided to keep the Nordic Marketplaces within Schibsted and not spin them off together with Adevinta. I believe that decision was made for the long term and that temporary market conditions that we see now is not going to shift such a fundamental decision that was made back at that time. That's my interpretation of it, and then I should be very careful speaking on behalf of our owners and the Board.

[Jann-Boje Meinecke]

And there's one more question currently in the Q&A feed, and that is, again, News Media podcast subscriptions. Do you have any information on the price point you're aiming for? Or is it too early to comment on that one?

[Kristin Skogen Lund, Chief Executive Officer]

It's too early to comment. But as I hope you could understand, we're excited about this opportunity and the signings that we made in all the top-notch podcasters basically joining this effort. So it's going to be an exciting road ahead for the podcast. So hopefully, by the end of this year, we will be able to show you something.

[Jann-Boje Meinecke]

Yes. And currently, there are no more questions in the Q&A feed. So I suggest to wait maybe just like 5, 6 seconds if a new question pops up. And I think, otherwise, we can just round it up here.No, I think it seems like you covered all questions here. So thank you, Kristin and Ragnar and also everyone for taking your time. I don't know if you have some closing remarks Kristin, before we switch off?

[Kristin Skogen Lund, Chief Executive Officer]

No, just thank you all for good questions and therefore your continued support. And that I think we have a good momentum as the results show, and April is looking good. So we are excited about the future here on our end.

[Jann-Boje Meinecke]

Great. Thank you so much.

[Ragnar Kårhus, Chief Financial Officer]

Thank you.