Schibsted ASA

OSE:SCHA

Earnings Call Transcript 2023-Q1

[Jann-Boje Meinecke, executive]

Good morning, everyone, and welcome to the presentation of Schibsted's Q1 results. As usual, Kristin, our CEO; and Ragnar, our CFO, will present the results and progress in the quarter. And at the end of the presentation, we will have a joint Q&A session, where also Christian, EVP for Nordic Marketplaces and Delivery will join.

[Operator Instructions] And with this, please let me hand it over to Kristin. The floor is yours.

[Kristin Lund, executive]

Thank you, Jann-Boje, and good morning, and welcome to everyone. Let me start with the highlights before we have a closer look at the development for the quarter. For Schibsted, 2023 started off with an underlying revenue growth of 1% in the first quarter, driven by Nordic Marketplaces and growth and investments. EBITDA was subdued by higher personnel costs, cost inflation and revenue mix, ending at NOK 423 million, down 12% compared to the first quarter last year.

Nordic Marketplaces made important progress in its transition to a new vertical-based operating model. This transition will unlock significant user and customer value over time as we presented at our Capital Markets Day in March. In the first quarter, underlying revenues increased by 6%, thanks to solid classifieds revenue growth across all verticals, except Jobs, while advertising was down due to the market headwinds.

EBITDA ended at NOK 420 million, which is 5% below last year due to revenue mix and increased costs from new hires last year. As outlined at our Capital Markets Day, our news media operations in Norway and Sweden were affected by continued pressure in the print business. Market headwinds in advertising and general cost increase in a high inflationary environment.

Despite continued strong double-digit revenue growth in digital subscriptions, underlying revenues in News Media decreased by 2% in Q1. EBITDA was breakeven above the issued trading update and was driven by better advertising performance in Norway at the very end of March.

We expect continued volatile and tough advertising markets in the short term, particularly in Sweden and need to constantly adapt our cost base to the reduced revenues. This is addressed by the announced cost program, which will accelerate throughout the year.

Growth and investments continued its upbeat trend across the portfolio from last quarter with underlying high single-digit revenue growth and improved profitability in all companies, particularly Lendo and Prisjakt. In line with the announced new strategy for Lendo, focusing on profit growth, operations in Finland, Italy and Spain were ceased, which will improve profitability throughout the year.

Looking ahead, my team and I will continue to seize the opportunities which arise in more uncertain times and adapt our organization to the current, more uncertain market environment with an increased emphasis on efficiency and cost control.

In this context, the successful transformation in Nordic marketplace is to strengthen our existing classified offerings and to accelerate the transition to transactional offerings is a top priority. And as outlined in our CMD in March, we will continuously explore and develop options to reduce our ownership in Adevinta in a value-creating way for all our shareholders. These options will continuously be discussed with our Board, which oversees this process.

Now let's have a look at our ESG highlights in the first quarter, and let's start with the environmental impact. We want to empower circular consumption through our marketplaces, and we are testing out several new business models. FINN in Norway is testing out a business model for refurbished electronics, where we buy mobiles, refurbish them through a partner and then sell them on our e-commerce site with a 2-year guarantee.

And following the launch in Norway last year, we have now also launched the car subscription service, Honk in Sweden, offering new forms of access to mobility instead of ownership with the potential to optimize utilization of the car fleet.

We are very pleased that people in the Nordics have realized that our marketplaces are part of the solution for the planet, and we are excited that FINN once again was ranked #1 overall in Norway in the Sustainable Brand Index '23 as it was in '22. This is Europe's largest brand study on sustainability and measures the perception of stakeholders on a brand's sustainability across industries.

Tori ranked #1 in the e-commerce segment in Finland as well, same as they did in '22. And then we're also excited that after several years in the top tier, FINN has once again received Norway's highest reputation score among all companies across sectors in Apeland's annual survey. Apeland believes that FINN has a unique position as an innovative and sustainable consumer service in constant development, and I guess we couldn't agree more.

Moving on to our societal impact. Schibsted has entered into a long-term strategic partnership with Diversity Index, and the index will be gradually implemented in our organizations. The Diversity Index is a tool used to give businesses an overview of its diversity, how well it is included and to what extent it is used for value creation.

We are dependent on the right data to drive this area in the right direction and the diversity index being based on continuous and extensive research can provide us with that data. We have just finished our first pilot company. And I have to say we're quite amazed of how useful this analysis is for where we should put our focus and resources in order to pursue our ambitions for using diversity, inclusion and belonging for increased innovation and value creation.

And the field of AI is developing very fast, and we have established a comprehensive approach to the topic. We have already launched some features within News Media that improve our products. And along with product developments, 500 of our employees have onboarded our AI Academy to understand the topic and identify possibilities for adaptation and innovation.

As an important part of the Academy, all participants also go through a module about AI-related risks and how to identify these.

Moving to governance. We launched our sustainability report, including our climate road map to 2040 at the end of the quarter. Here, you can read more about our ambitions for the coming year and our targets for '23. Last year, we renewed our code of conduct. And in the first quarter, we commenced a mandatory training course for all our employees.

And then lastly, as you know, we won the Nettbil case, and we are pleased that our arguments and views on market definitions in this case was supported by the Supreme Court. And now we can finally focus on business development and value creation in Nettbil.

All right. Let me then start with presenting the development of our businesses in more detail. And as usual, we start with Nordic Marketplaces. Looking at the financial results here, we see foreign exchange neutral revenues increased by 6%, thanks to solid classifieds revenue growth, primarily driven by Mobility and Real Estate in all markets and also solid growth in transactional revenue in recommerce.

This was partly offset by the job vertical and advertising revenues that continue to show a negative trend in all markets affected by the challenging macroeconomic environment. EBITDA ended at NOK 420 million, which is 5% below last year, and that's due to the revenue mix and increased costs from new hires.

As communicated at our Capital Markets Day, we will do the financial reporting along the vertical I mentioned from now on, and that will provide better insight into the underlying business drivers.

First out among our verticals is Mobility. And we will start by looking at the underlying classifieds revenue drivers in all markets. As Nettbil and AutoVex have different business models, they are not included in these KPIs.

For Norway, we see overall solid volume development for professionals, while we see a drop of 4% for private. Regular price adjustments drive positive ARPA development. In Sweden, the volume development was softer in Q1, mainly due to a significant drop in private volumes in March in line with the trend in the market. This is considered to be a temporary effect though as we see volumes recovering in April.

Professional volumes are down 4% this quarter. The positive ARPA development is driven by both regular price adjustments, price increases and upsell products. Denmark has a different business model where we monetize listings per day and I'm pleased to see strong volume growth in Denmark this quarter that combined with the price increases positively affects ARPA.

In total, Mobility is delivering a solid quarter with 10% revenue growth, driven by substantial growth in classifieds revenue. And I'm pleased that revenue growth is robust across all markets. Nettbil continued to show strong revenue growth. AutoVex is part of the reported figures in Q1. It's still early days, but the development is promising.

Mobility, together with recommerce has the highest share of advertising revenues in marketplaces and as such, was affected by the challenging advertising market across all our countries.

Advertising revenues declined 11% year-on-year on a foreign exchange-neutral basis in the Mobility vertical. Total cost increased year-on-year driven by the new hires last year, while EBITDA increased 5% compared to Q1 last year and that's driven by the revenue increase.

Then we move on to Jobs. We see an accelerated volume decline in all countries, although Easter had a temporarily softer effect for Norway on the volume declines that we had in March. ARPA growth in Norway and Finland resulted from both price increases and upsell products, while in Sweden, the ARPA growth is purely driven by upsell products.

And Jobs is the vertical that is predominantly affected by the challenging macroeconomic situation. Price adjustments led to a solid ARPA increase that softened the volume effect somewhat but the market headwinds, combined with strong comparables from last year, resulted in a foreign exchange-neutral revenue decline of 7%.

Norway is the leading revenue contributor to the Jobs vertical, representing more than 80% of the Classifieds revenue. And due to strong ARPA development, revenues in Norway decreased only by 4% year-on-year. EBITDA was impacted by revenue decline and cost increases from new hires during '22 and decreased by 14% compared to last year.

Then we move to Real Estate. In Norway, volumes are developing according to market expectations, and we see solid ARPA growth in Norway due to regular price adjustments on top of some effects from the new package models that we released in early '22.

In Finland, we're happy to see continuous healthy growth in volumes with stronger growth in rentals than for sales ad due to the macroeconomic environment. Price adjustments drive ARPA in Finland, while the mix of houses for sale versus rental ads neutralizes this effect in the quarter.

In total, Real Estate is delivering a solid quarter with 20% revenue growth, mainly driven by ARPA development in Norway. And Norway is still the foremost revenue contributor here, representing close to 80% of the Classifieds revenue. We continue to see good progress on key metrics in Finland and are strengthening our market position there.

And Casa is seeing solid growth in their main KPIs with growth in signing value being the most important to follow. EBITDA margin for the quarter ended at 30%, an improvement compared to last year. And the margin is impacted positively by the strong revenue growth, while cost increases from new hires during '22 softens the margin development.

And then lastly, of the verticals, we have Recommerce. We currently have a transactional model in Norway with Fiks Ferdig and in Sweden with Frakt med köpskydd. Two important key metrics to follow in developing the transactional model are the number of transactions completed on the platform and the average order value of the transacted goods. And if we start with Norway, we launched Fiks Ferdig in the summer of '22, and we are pleased to see that our users completed 376,000 transactions through our platform during the first quarter.

The number in transaction is somewhat lower than Q4 '22, and that's due to both seasonality and a focus shift from building volumes to monetization this year. The average order value is at solid levels of NOK 709, somewhat higher than we saw last year.

And then we launched the transactional model in Sweden late '22 and the number of transactions in Q1 is a good starting point. The average order value is higher in Sweden than in Norway and that's due to more electronic goods transacted on the Swedish platform, while the most significant contributor to the transactions in Norway comes from fashion.

For Recommerce, the main driver of revenue growth is the transactional business, and we continue to see substantial development in the transactional business model in Norway and Sweden. Total revenue growth for the quarter was 13%, and that's despite the removal of adding certain fees, insertion fees in Sweden in May last year. B2C revenues were growing across all markets, and I am particularly pleased to see continued growth in professional revenues in Finland and Denmark.

Recommerce together with Mobility has the highest advertising revenues in Marketplaces, and as such, is also affected by the challenging advertising markets across all countries. Here, advertising revenues declined 17% year-on-year. EBITDA for the quarter ended at a loss of NOK 86 million and a negative margin of 55%. This reflects the continued investments in the new business model and the impact of the cost increases from new hires in '22.

All right. We will move to News Media. And I think I'll have to start by saying that last weekend was a proud moment for both News Media and also all of Schibsted when Aftenposten for the second year in a row won the Scoop Award, which is the most prestigious award Norwegian journalist can receive for investigative journalism.

And in addition to this, VG received a diploma, and that means that VG have either won the main award or received a diploma for 7 consecutive years. And although this happened in April and not in Q1, I think I still want to highlight it as these are really remarkable achievements, and it proves that our news brands really produce journalism that's making a difference.

And as the media industry continues to evolve, AI is becoming an increasingly important tool also for News Media. Our news brands are currently exploring the possibilities of how AI can enhance their operations and better serve the users.

While there's no doubt that such technology can drive innovation and growth, it is also essential to approach it critically and consider how we could potentially pose a threat to the independent and authentic journalism that is at the core of our social mission.

Here are a couple of examples -- examples of what is developed and what some of our brands are working on right now. We have the Jojo app transcribing audio files into text, typically recorded interviews, and that has been saving our journalists thousands of hours since it was launched at the -- by the team of developers in VG only a couple of months ago.

And several of our brands are working on giving their users the option to get a short summary at the top of their written articles. These summaries are written by AI but will be subject to human control before they are published.

Financially then, we see that News Media was affected by continued pressure on the print profitability as paper prices are still high. The volume decline is accelerating and print advertising revenues continued to decline at a high pace. Furthermore, digital advertising revenues experienced a decline in Q1 due to market headwinds, especially in Sweden. However, thanks to resilient subscription revenues, total underlying revenues in News Media were just slightly below last year at minus 2%.

On the cost side, we saw an increase of 5% compared to last year. The main driver was, as mentioned above, higher print costs and increased costs from CPI adjustments. Effects from the cost program were limited in the first quarter of '23, but will accelerate throughout the year.

And if we then take a closer look at our main revenue streams in News Media, we see that subscription's total underlying revenues grew by 8% compared to Q1 last year and digital subscription revenues continued to grow consistently with double-digit growth in all main news products, and the revenue growth was generally driven by both higher volumes and improved ARPU.

In addition, the solid growth in PodMe continues. The product is growing both stand-alone and through bundles. News Media's all access bundle in Norway that I talked about last time continue its positive development in the first quarter, and we are experiencing high demand for this product and good growth in the subscription base. Also, the [indiscernible] bundle was launched in Sweden early March, and is so far progressing very well.

Moving to advertising. We see a decline in digital advertising revenues. The macroeconomic conditions have a direct impact on investment levels and this is reflected in the development of the advertising revenues in the quarter. Particularly Sweden is affected by market headwinds with an 18% decline. However, a solid development in Norway with 5% increase, this is driven a lot by content marketing and that offsets part of the total decline.

Furthermore, the high drop in print advertising revenues continue, and this led to a total underlying revenue decrease of 8% year-on-year. And in spite of a challenging advertising market, the sales organization in Schibsted maintains a high activity level in both of our key markets, and we increased our market share in Norway, and we defend that share in Sweden.

News Media is affected by the unstable macroeconomic environment, and advertising revenues are particularly exposed. The uncertainty in the market is reflected in a higher degree of volatility, making it even more difficult to predict the development in advertising revenues in the short and medium term. News Media will thus continue to closely monitor the financial development and proactively consider the need for further preemptive measures going forward.

We then move to Delivery. In Q1, delivers good results for Delivery. Both revenue and volumes are increasing from last year, except for Morgenlevering, who had exceptionally high sales in Q1 last year due to the lockdown that we had then in January and February back then. The growth in Delivery Group was driven by Helthjem Netthandel, which grew 25% in the quarter, driven by increased volume in B2C combined with higher C2C volumes related to FINN's transactional recommerce offering, Fiks Ferdig.

Morgenlevering, on the other hand, saw a decline of 44%, driven by lower post-COVID volumes. EBITDA for the quarter is still negative, but with a strong improvement compared to the same quarter last year, and this is due to the increase in the core business, legacy and Helthjem Netthandel, both having positive EBITDA.

And then finally, we have growth and investments, consisting of brands like Lendo and Prisjakt in addition to other digital services where we either have a majority or a minority ownership. And we reported a solid quarter for growth and investments in the quarter despite the current macroeconomic situation. Total revenues grew 8% on a foreign exchange neutral basis driven by continued growth momentum across the portfolio.

There is continued good overall revenue growth in Lendo for the quarter, which I will cover on the next slide. Also strong quarter for Prisjakt with foreign exchange neutral revenues up 18% year-on-year despite the tough e-commerce market, especially in Sweden. There, the market actually dropped 38% in January according to [indiscernible] or barometer. Growth is driven by increased click volume and also higher earnings per click.

EBITDA increased 90% and margin improved by 5 percentage points compared to Q1 last year, driven by revenue growth and continued profitability focus in this business area. The previously announced exit processes for Lendo and Prisjakt are stopped due to the current market conditions.

Finally, Lendo continued its growth momentum with a foreign exchange-neutral revenue growth of 8% in Q1, driven by Sweden and Norway. The growth was primarily driven by a strong inflow of applications across countries and growth in new verticals like credit cards in Norway and business loans in Sweden. And as you know, we don't guide on future growth in Lendo, but I would like to point out that the conversion from loan application to revenues in unsecured consumer loans in Sweden fell towards the end of the quarter and if that persists, it will mean a downward pressure on the revenue growth.

EBITDA margin increased 3 percentage points compared to last year, driven by revenue increase and continued profitability focus. And Lendo has decided to focus on the Scandinavian markets and has ceased operations in Finland, Italy and Spain with Portugal to follow. The closedown of the first 3 markets is completed, but the effects on the financials is still limited in Q1, but will come later.

And with that, I'm very happy to give it to you, Ragnar, to cover the financials.

[Ragnar Kårhus, executive]

Thank you, Kristin, and good morning, everyone. I will start by giving some summary comments to the consolidated result for the group. Foreign exchange-neutral revenues ended 1% above Q1 last year despite a more challenging market caused by macroeconomic developments. In this context, group's EBITDA ended 12% below last year in the first quarter at NOK 423 million.

The revenue growth was driven by Nordic Marketplaces with underlying revenue growth of 6% and growth and investments. When you look at our EBITDA development, you can see from the graph on the right that it is primarily News Media that drives the EBITDA decrease compared to last year, down NOK 81 million in the quarter.

As Kristin mentioned previously, this is driven both by market headwinds in advertising and a pressured print business, combined with general cost increases in a high inflationary environment. Although we are very well on our way with regards to the announced cost program, the financial effects from this will accelerate throughout the year.

EBITDA in Nordic Marketplaces ended at NOK 420 million, NOK 23 million less than last year. The decline comes as a result of change in the revenue mix and new hires from end of last year in order to drive new business models and part will also support the transition to new vertical operating model.

EBITDA for delivery increased with NOK 10 million compared to Q1, while absolute EBITDA was still slightly negative in the quarter, driven by lower volumes in Morgenlevering.

In growth in investments, EBITDA increased year-on-year by NOK 26 million, driven by revenue growth in all main brands, whilst maintaining stringent cost control. And other headquarters had an EBITDA of minus NOK 48 million in the quarter against minus NOK 59 million last year. The improved EBITDA compared to last year is mainly due to lower consultancy costs.

We're looking closer at our income statement for Q1. Operating profit for the quarter ended at NOK 20 million, down from NOK 184 million last year. In addition to the EBITDA development I just described, the main reason for this development is an increase in depreciation and amortizations and other expenses.

The increase in depreciation and amortization is primarily due to the general increase in intangible assets from increased CapEx during 2022, high CPI adjustments on lease agreements and accelerated depreciation on certain platform components in Nordic Marketplaces due to the ongoing platform consolidation project. The increase in other expenses includes costs related to moving News Media's printing operations to a new printing facility in [indiscernible] the close down of Lendo operations in 4 countries and general headcount reductions.

Items below operating profit is to a large degree influenced by our ownership stake in Adevinta. Firstly, share of profit and loss from joint ventures and associates include Schibsted's share of Adevinta's results for the fourth quarter of 2022, adjusted for amortization of excess values and fair value differences.

Adevinta's Q4 result was highly negative due to an impairment and Schibsted share of profit ended at minus NOK 5.3 billion this quarter. Secondly, during the first quarter, we saw an increase in the share price of Adevinta, which led to a reversal of the negative share of profit as well as our partial reversal of impairment loss that we have accounted for in previous quarters; in total, plus NOK 7.3 billion.

And thirdly, the total return swap we entered into in Q4, so an increase in share price from year-end, leading to a gain of NOK 289 million in the quarter. In totality then, the net profit for the group ended at NOK 2.17 billion in Q1.

Our operating cash flow in the quarter improved with NOK 78 million compared to last year. The increase was primarily related to a positive effect from change in working capital, partly offset by reduced gross operating profit and increased tax payments.

Working capital in Q1 last year was affected by temporary negative liquidity effects related to implementation of a new group-wide accounting system. The implementation of this new accounting system was finalized in Q4 last year and is also the main reason for capital expenditures going down with 11% compared to Q1 last year.

And starting from this quarter, you'll find more information about CapEx and leases per segment included in Note 2 operating segments in our quarterly report.

Schibsted is in a very solid financial position. During Q1, we have reduced the interest bearing debt through purchases of own bonds maturing later this year of in total NOK 586 million. We also have a term loan of NOK 2 billion and NOK 1.8 billion of this loan has in April been extended by 1 year to May 2025. Schibsted had also a revolving credit facility of EUR 300 million. The facility is not drawn and secures a strong liquidity buffer going forward.

The facility may be further extended with one more year up until May 2028. In March, Schibsted also extended the duration of its total return swap agreement with underlying exposure to the 3% points in the Adevinta share. This rollover is done to increase term to maturity and thereby also increase the window of opportunities to finally terminate the tariffs at a more favorable pricing.

Our ongoing share buyback program targeting to buy back up to 4% of the total outstanding shares in Schibsted ASA at the amount of up to NOK 1.7 billion gave a liquidity effect of NOK 509 million in the quarter.

This is the main reason for the increase in financial gearing. As it now looks, the program will be completed during the third quarter 2023. Schibsted has a well-diversified loan maturity profile and a significant cash balance. And as most of you are very well aware of, Schibsted's 28% ownership stake in Adevinta contributes to a very solid financial position for Schibsted.

I will end my presentation with some comments on our financial targets and outlook. I will underline that the presented targets are medium-term targets, meaning ambitions over a period of up to 3 years and that we do not give concrete guidance on the expected performance for the current year.

For News Media, the ambition is still that revenues should grow low to single digit and that the EBITDA margin should be in the 10% to 12% range. Like we said in Q4 -- in our Q4 presentation, News Media [indiscernible] this EBITDA range in 2023 and but the ongoing cost program should bring the margin back into the range in 2024.

As presented at our Capital Markets Day in March, we find it more insightful going forward to be transparent on our financial ambitions for each of the verticals based instead of Nordic marketplaces combined, as the mix of business models and the effects from macroeconomic developments varies between verticals and hence, also the revenue growth and margin developments.

Within Nordic Marketplaces, Mobility targets annual revenue growth in the 12% to 17% range and an EBITDA margin of 51% to 56%. Real Estate targets -- also targets annual revenue growth in the 12% to 17% range with an EBITDA margin of 42% to 47%.

For Jobs, the target is to grow revenues low- to mid-single digit, while keeping the EBITDA margin above 50%. For Jobs, it is important to notice then that this vertical starting point is an all-time high in revenues in 2022, and it is also the vertical with the most and clear exposure to the macroeconomic developments in each market.

Recommerce is in various early stage of its growth curve, and the traditional growth and profitability measures are, therefore, less relevant for this vertical at this stage. For eCommerce, we have the ambition to double revenues over a 3-year period while working to be EBITDA breakeven during 2025.

Then some short comments on the revenue trends seen so far in April. For Nordic marketplaces, we see underlying volume developments roughly in line with Q1 for Mobility in all markets. And it looks like houses for sale in Norway have picked up somewhat after Easter. However, we continue to see negative trends within Jobs in all markets.

And please remember then that we still have very high comparables until June where we -- which was the first month that we saw negative trends last year. We're also still seeing negative effects from market headwinds within advertising in Nordic marketplaces.

For News Media, we see continued solid growth in digital subscriptions going into the second quarter, while we have seen increased challenging advertising trends in April, being more down than in Q1. The timing of the Easter vacation might though have some influence on this, hence we need to see the continued trends into May to have more clarity in the actual trend line for advertising for Q2.

Looking ahead, we expect continued volatile and tough advertising markets in the short term and need to constantly sort of monitor and adapt our cost base to the revenue effects from this. This is addressed by the announced cost program. And as I said before, this cost program will have accelerating financial effects throughout the year.

And with that, I think we will go over to our Q&A session.

[Jann-Boje Meinecke, executive]

Okay. We start with a more general question here. There was a statement from the Tinius Trust on Schibsted Adevinta position recently. Can you provide some color what does it mean for your strategy? And also, does it Trust run under normal Norwegian tax rules?

[Kristin Lund, executive]

I don't know if I'm in place to answer about their tax situation. I don't know if you know anything about that around. But what I can say is that the Tinius Trust has always been a very strong supporter of Schibsted, and that note that they put out was intended as a sign of that type of support regarding our ownership in Adevinta.

We've had a very good dialogue with the trust after that, and I am convinced that we will find good solutions to our Adevinta ownership strategy that will be in the interest of all shareholders.

[Jann-Boje Meinecke, executive]

Then moving on to Nordic Marketplaces. Q1 margin came in at 33%. So the question is like, is it like a low for this year? Consensus currently is at 37% for the full year, how should we think going forward here?

[Ragnar Kårhus, executive]

As I said, we normally do not guide on the overall, let's say, expectations on Nordic marketplaces in general. But what I can say is that we -- in general, we think that the year will end sort of the margin in the Nordic Marketplaces will end closer to the 37% that you mentioned, then today 33%.

[Jann-Boje Meinecke, executive]

And then staying on the outlook for 2023 in general for the group? Is there like some kind of level which you can provide? Do you think that revenue and EBITDA can grow from here given like this quarter is low or how should we think for the full year following today's report?

[Ragnar Kårhus, executive]

I think in general, I would say that if you look at sort of the results that we presented today and the margins that we have seen from the various verticals in Nordic marketplaces, that and sort of also then sort of looking at the targets ambitions that we have for the midterm, then sort of it indicates that we expect sort of margins to improve for sort of the different verticals over time as a general remark on that.

[Jann-Boje Meinecke, executive]

And going to Mobility. Sweden, so like an ARPA increase of 23% in the first quarter, what is really driving that? Is that increase and is it different from previous quarters?

[Christian Halvorsen, executive]

Yes. It's a combination of several things. First, we did -- we have done several price adjustments. We did one in the summer last year, and we did another new CPI adjustment at the beginning of this year. in addition to some increases in some subcategories. And then there's also been a continuous uptick in the use of the bump product in Sweden. So that in total has contributed to that ARPA improvement.

[Jann-Boje Meinecke, executive]

Maybe a question for you, Ragnar. HQ costs were lower in Q1 at NOK 48 million losses. Is this like the new correct run rate going forward or is it still like roughly the NOK 65 million, which is an average for last year?

[Ragnar Kårhus, executive]

I think it's difficult to be sort of very concrete on that. We expect the cost to be somewhat lower than you saw in average for last year sort of on a quarterly basis for this year.

[Jann-Boje Meinecke, executive]

Okay. Then 2 questions on the cost program in News Media. First one is like can you provide some more color on the phasing in Q1? And then the question is like, if advertising and revenue trends in News Media would stay under pressure, is there flexibility to further increase cost reductions in that segment?

[Kristin Lund, executive]

Right. Yes. So as I said, the effect of the program will accelerate throughout the year. The effect in Q1 is around NOK 35 million, and we think it will be around NOK 100 million for the first half, indicating that acceleration. And as I also said, we are proactively monitoring the development, especially within advertising. And we will make necessary adjustments if that is called for. For the time being, we believe that the right focus is to execute on the program we have in place, but we are -- we will be open to look at this if we see that the market develops for the worst.

[Jann-Boje Meinecke, executive]

Then going back a little bit to Adevinta. A couple of questions here, which I will combine a little bit. The first one is can you remind us, please, on the options which you evaluate for the Adevinta stake going forward? And second is like is the distribution the most likely option which you would prefer or would you like to raise some proceeds for your balance sheet before the distribution?

And then the last one here, there's a comment, your main shareholder Trust went out and said a conflicting message that Schibsted should stay as a long-term owner, not distribute the shares. Should we think that the management with today's comments say that they will ask Adevinta stake in [indiscernible] way, how should we read this together?

[Kristin Lund, executive]

Yes. I mean this is obviously a topic that is of very high importance to us. And I also believe it's important to maybe separate a bit about what will be our strategy and what will be our tactics to pursue that strategy and the tactics could affect the timing of certain things. But to mention the options. I mean there could be several options, but the 3 ones we lined out at the Capital Markets Day in which I still -- will stay there.

It is some sort of structural solution, which could maybe imply that we would get some sort of premium on the stake, which would be attractive. And if that is not feasible, it is, of course, an option to pursue sell-downs over time. And then I think it will be very important what strategy will lay out for how to handle the proceeds from such a strategy.

And then the third option is to spin the shares either fully or partially. And we could also do combinations of these 3 options. So that's the way we looked at it. And that -- the way we look at it, and that has not changed. And we are obviously in very close dialogue with our Board on this issue, which is of such great importance. And I think what I can say is that we will -- we should have a clear communication in place in due time before the lockup expires in October.

[Jann-Boje Meinecke, executive]

And maybe also related to this, I mean, the Schibsted [indiscernible] shares seem still relatively low in comparison to Adevinta. How should we think about selling a further 3%, which you're free to do until October going forward?

[Kristin Lund, executive]

I would just say that we are aware that there is, let's say, an arbitrage opportunity in the fact that Adevinta trades at higher multiples than we do. And then as I said, these are things we are working on as we speak, and we will communicate to the market when we are ready to do so, what options we choose to pursue.

[Ragnar Kårhus, executive]

I can also comment on that. As I said in the ongoing share buyback program sort of that -- sort of it most likely runs through Q3. Of course, the timeline on the existing program is also partly reflecting the liquidity in the Schibsted share and [indiscernible] and the opportunities we have for ongoing share buyback programs.

[Jann-Boje Meinecke, executive]

I think we mentioned in the report, but there's also like a follow-up on the EBITDA News Media, which seems better than the trading update provide the CMD. Can you just recap again what is driving this improvement over the last weeks?

[Kristin Lund, executive]

Yes. Yes. So I think the thing is that right now, the advertising market is very -- is exceptionally volatile, I would say. So the -- our ability to predict is difficult, very short booking cycles. And what happened at the end of March was that we had Easter one week earlier than last year, and we saw that there was a surge in advertising volumes right at the end of March, ahead of Easter. And this effect was stronger than we had anticipated, and that's pretty much what makes up that improvement that we saw in March.

[Jann-Boje Meinecke, executive]

Then Christian, going back to Mobility. Revenue growth was strong, but margins were down in the quarter. And you mentioned report headcount growth, how should we think going forward? Is it like operating leverage or are there still like ongoing investments here in that business, which will keep margins under pressure going forward?

[Christian Halvorsen, executive]

Yes. So the background for the margin development was a combination of things. It was addition of new employees last year, some increased marketing into new models and also the fact that we added AutoVex into the portfolio this year. And as we said before, I think the...

[Kristin Lund, executive]

AutoVex having low margins.

[Christian Halvorsen, executive]

Yes, yes. And as we've said before, we added quite a lot of resources last year. And now into this year, we have kind of entered a new phase where we are much more cautious on adding new resources and instead focusing on utilizing the people we already have in the new Nordic structure in a more effective way. So that is also going to affect cost development going forward.

[Jann-Boje Meinecke, executive]

Looking at Recommerce losses went up or jumped in the first quarter. Can you provide some more details behind this increase? And how should we think about this going forward, the losses in Recommerce?

[Christian Halvorsen, executive]

Yes. So I don't think -- I would be cautious of kind of looking at the development in a single quarter in Recommerce. We have said that we aim for breakeven sometime in '25. So that's the kind of the target we're aiming for. This year, we are focusing much more on the monetization part of Recommerce. So that's what I would keep in mind.

[Jann-Boje Meinecke, executive]

Can you share some comments on Nettbil, the performance in the quarter and also your plans going forward to entry, for example, in Sweden? You've done that before, then you stopped you due to the court case. What's your plan going forward to rolling out Nettbil?

[Christian Halvorsen, executive]

Well this C2B segment is obviously very interesting to us. We've said that very clearly in the Capital Markets Day. That's why we also acquired AutoVex. So of course, we are looking into the opportunities of taking that model also to the other countries that we are present in. But it's too soon to disclose any concrete plans on that.

[Jann-Boje Meinecke, executive]

Looking at jobs listing volumes will ease as a comparison will ease from June, where numbers started to go down last year. To what degree could that help going forward on the top line growth in the Nordic Marketplaces? Do you have any view which you can share here?

[Christian Halvorsen, executive]

Well, we have big 2 concrete, but it's a correct observation. The first half of last year was an exceptionally high volume period and it started to soften in June last year, and that weakening happened throughout the second half of the year with some acceleration in Q4. So of course, this year, that is going to make the comparables easier for Jobs when we come into the second half of the year, particularly in Q4.

[Jann-Boje Meinecke, executive]

And then coming back to Recommerce, do you still expect that losses this year will be low in comparison to last year and that you will breakeven in 2025?

[Christian Halvorsen, executive]

Sorry, can you say again?

[Jann-Boje Meinecke, executive]

Do you still expect that Recommerce losses will be lower this year and do you still aim for the target to be breakeven in 2025, given the current trends?

[Christian Halvorsen, executive]

Yes. We are still aiming for breakeven in '25. And what we're focusing on this year is the monetization. So it's kind of the unit economics for Recommerce and also looking into kind of how we have a structural cost base that drives profitability in this segment.

[Jann-Boje Meinecke, executive]

Okay. So far, if no additional questions, I would just like wait a couple of seconds. No, I think we're done here with the Q&A then.

[Kristin Lund, executive]

Thank you.

[Christian Halvorsen, executive]

Thank you.

[Ragnar Kårhus, executive]

Thank you.