Schibsted ASA

OSE:SCHA

Earnings Call Transcript 2020-Q4

[Jann-Boje Meinecke]

Good morning, everyone, and welcome to the presentation of Schibsted's Q4 results. My name is Jann-Boje, and I'm the Head of Investor Relations.Due to restrictions and to minimize infection risks, we will stream this presentation fully remotely at this time. As usual, Kristin, our CEO, will go through the highlights of the quarter and the development in our businesses. Afterwards, Ragnar, our CFO, will go through the financials in further detail. At the end of the presentation, we will have a Q&A session with a hard stop at 10:15. [Operator Instructions]Kristin, please go ahead.

[Kristin Skogen Lund, Chief Executive Officer]

Thank you, Jann-Boje, and welcome, everyone. So I'll start with the highlights. And Schibsted ended 2020 with a strong fourth quarter. Driven by a continued recovery after the contraction at the onset of the pandemic, our underlying revenues grew by 4% year-over-year in the quarter. And in addition to revenues returning to growth, cost savings led us to a quarterly EBITDA of NOK 665 million, which is an increase of 45% from Q4 last year. And the strong results in the fourth quarter resulted in a full year EBITDA above last year. And I have to say, back in March and April, we didn't think that would be possible. So we are very pleased about that. And furthermore, the Board is proposing a dividend payout of NOK 2 per share for 2020. So if we then move to Slide 4 with the overview, we can see that Nordic Marketplaces, they saw further improvements in revenue compared to the previous quarter. It's primarily driven by jobs in Norway, leading to total underlying revenues in line with last year after we've seen a decline for the past 2 quarters. EBITDA margin came in at 46% in Norway, which is in line with last year, and 44% in Sweden, which is above last year.And looking at News Media, which is the main driver for our EBITDA increase, we grew 5% in underlying revenues in combination with lower costs. And the revenue growth was driven by continued strong growth in digital subscriptions and digital advertising revenues that improved significantly compared to the previous quarter. In addition, we did receive government grants of SEK 26 million in Sweden, which affects revenues positively. And the execution of our cost-reduction program increased even further, and margin landed at 14% in the quarter or 12% if we exclude the government grants in Sweden.Lendo, the main part of Financial Services, was impacted by the second wave of COVID as banks have continued to be more restrictive in their lending practices. However, profitability improved slightly, and that's due to improved cost and marketing efficiency as well as lower expansion costs. And finally, Distribution and Prisjakt within Schibsted Growth had another strong quarter and achieved new all-time highs due to a good and strong quarter for online shopping. And as a result of higher revenues, EBITDA increased here as well. If we then look at Slide 5 with the ESG overlook, I have mentioned it earlier, but it is through our businesses where Schibsted has the highest impact on society and the environment. The best example of that probably is our contribution to savings in greenhouse gas emissions through secondhand trade in our Marketplaces, and that effect is many times higher than our own emissions. And the secondhand effect is something we are continuously working on. But of course, in parallel, we will work to reduce our own emissions, in line with the Paris Agreement as well, with at least 50% by 2030. Our main focus is to lower our emissions deriving from our printing and distribution operations and energy consumption related to our digital consumer brands. And according to [ PVC's ] climate index, Schibsted was 1 of only 4 listed companies in Norway that reduced its emission according to the Paris Agreement in 2020.We're also pleased to announce that we, together with other media companies and scientists from Bristol University, just launched a tool that will make us able to calculate the carbon footprint on our digital newspapers for the first time ever, and these calculations will be made for 2020. This is a groundbreaking tool because it hasn't existed before, and the first results will be shown in the upcoming sustainability report for 2020 that will be published in March.And on the societal side, I'm pleased to say that we now have reached the goal, which was set by the Board in December '17, of having a gender ratio of 60-40 in the top 3 management levels, and we now have 44% female managers in the top 3 layers of Schibsted.We have also launched a group-wide employee engagement tool, and we're happy to see that Schibsted employees scored 81 out of 100 on the engagement scale, and that positions Schibsted in the top 10 percentile high-performing companies globally in the cleaned cohort, so to say. And we're really proud to see these results, especially during a year which is strongly affected by the pandemic and leading to everyone almost working from home under somewhat difficult conditions.And for the governance part, we have, as I mentioned in the Q3 presentation, launched an investment policy for our next businesses and where sustainability is now included in the screening and acquisitions of potential investments. And the last point I would like to highlight is that we have increased and/or maintained our high level in our ESG ratings, and we are proud to be acknowledged as industry leaders in several ratings like -- by players like CDP and Sustainalytics and also several banks.Looking ahead then, one of our most important ambitions for 2021 will be to further incorporate diversity, inclusion and belonging in our culture and way of work. We firmly believe that there is a huge potential in having a diverse workforce, and given the right tools, our leaders can release that potential. And going forward, we will continue to periodically report to you on how we are doing on our ambitions and targets.We can then move on and look at the development of our businesses in more detail. We can jump straight to Slide 7 and start with the Marketplaces. As I mentioned earlier, the revenue development in Nordic Marketplaces has improved compared to the previous quarter, primarily driven by a recovery in jobs in Norway. And the acquisition in -- of Oikotie is included in the 2020 numbers and is affecting the growth positively. However, the flat revenue growth presented in the left graph, that is the underlying revenue development, excluding Oikotie and currency effects. And EBITDA margin is in line with last year.If we then go to Finn in Norway on Slide 8, you will see that revenues increased 2% year-over-year, and that is the first quarter in 2020 with growing revenues. All 3 verticals showed good development in the fourth quarter. Real estate and motor continued the good development, and both markets are characterized by an exceptional high demand. This high demand is resulting in more easily sold objects, meaning less need for republishment and upsell products, and that put some pressure on the ARPA.Looking at the job vertical, we saw a significant improvement compared to the previous quarters. After a very strong December, the job vertical ended up growing revenues year-over-year in Q4, which we are very pleased about after double-digit decline in the previous 2 quarters. These positive effects are somewhat offset by advertising revenues and particularly by the travel vertical that's still negatively affected by the market environment and travel restrictions, declining revenues year-over-year in those 2. Travel accounts for only 6% of Finn's revenue, if you look at 2019 figures. But as revenues declined above 80% for that vertical in Q4, the negative impact of Finn top line was obviously strong still. If you look at costs, Finn has started to ramp up investments again to ensure growth going forward. Margin ended at a strong 46% for the quarter, and that is in line with last year.If we then, at Slide 9, look at Finn's KPIs. The chart on the left illustrates the change in volume of new listings compared to the same month in 2019. This graph illustrates the strong improvements in job, and you see the especially strong December month in all 3 main verticals. Listings are supported by continued strong website traffic, which you can see in the graph to the right. All verticals beside travel has provided growth in visits compared to last year during the fourth quarter. Let's then move to Blocket, and we're now on Slide 10. Here, we also saw a positive revenue growth in Q4 after 2 quarters with decline. The growth is driven by continued good development in the motor vertical, and year-over-year revenue increase is still driven by an increase in the visibility product bump in addition to increased December listing volumes. As opposed to Norway, jobs in Sweden is still negatively affected by COVID-19, and we do not yet see any signs of recovery here. Also within advertising, the revenues continue to decrease year-over-year, although we see a slight improvement from the last quarter. On the cost side, hiring freezes and other temporary measures have dampened the cost increase, but we have continued to invest in product and technology capabilities, including transactional initiatives in early phase, examples of that being Blocketbetalning and Bily for cars and Blocketpaketet for our generalist section. And the combination of increased revenue and temporary cost saving leads to a margin of 44%, which is an increase from last year.If we then look at Blocket KPIs on Slide 11, motor listings had a solid quarter. And as in Norway, used car continues to be a shortage during Q4. But despite that, December car volumes outperformed last year, somewhat explained by later Christmas holidays in 2020 compared to last year. For jobs, we saw signs of recovery in late Q3. However, the negative volume growth remained unchanged throughout Q4. But remember, however, that motor is the most important revenue driver in Blocket, jobs is smaller, accounting for just around 10% of Blocket's total revenues. If you look at traffic, after ending the last 2 quarters on double-digit growth, Q4 was a quarter of stable and solid continued growth in traffic.Let's then move to Finland on Slide 12. I'm pleased to say that the integration of Oikotie and Tori is progressing as planned and the integration phase is now nearing its end. If you look at the financials, this graph represents the new combined company, including Oikotie, in the 2020 numbers, driving the growth compared to last year. If we focus on the underlying development, the fourth quarter is characterized by an improved trend in advertising with pro forma revenues, excluding currency effect, increasing 16% after 3 quarters with year-over-year decline. The job vertical has seen a recovery in Q4 with almost stable year-over-year revenues. And the good trend in real estate and generalist, they are continuing. On the cost side, we have increased investments in marketing, primarily within motor in Tori, and 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, and pro forma EBITDA declined year-over-year.If we then look at the KPIs in Finland on Slide 13, you'll see jobs showed a continuous recovery through the quarter, and also real estate listings increased further compared to the last quarter. Both verticals ended with strong December listing volumes, increasing year-over-year even within jobs. The recovery in listings is supported by strong development in traffic, and that accelerated further to a growth above 30% in the last 2 months. Please note that the traffic graph to the right, that shows the sum of monthly visits in both Tori and Oikotie. Let's then move to Slide 14 and talk a little bit about News Media. Strengthening our news positions by driving higher user engagement is an important focus for News Media. The last quarter of 2020 brought several news events that contributed to high-traffic to our sites and very high user engagements among our users. The COVID-19 situation is still an ongoing news event, and our users are depending upon our brands to give them timely and correct information on the situation. In addition, the U.S. election and also the natural disaster in Gjerdrum right outside Oslo were big news events, and all our brands are covering these events in their own way to cater for their main audiences.If we look at financials on Slide 15, News Media delivered another strong quarter. This was driven by a positive digital revenue development, which I'll come back to on the next slide, but that was combined with significant cost reductions and an addition of a received government grant in Sweden of SEK 26 million. The execution of our cost-reduction program of NOK 500 million increased even further, with estimated effect to 2020 now being NOK 180 million compared to the initial phasing that was assumed to be a materialization of NOK 100 million. In addition, we see generally lower cost levels in News Media due to remote and, to a large degree, more digital ways of working. And let me remind you that the revenue numbers shown on these slides are adjusted for the regional and local newspapers that were divested at year-end, and so they represent a like-for-like development. But the absolute amounts in Norwegian kroners are unadjusted.If we look at the main revenue streams then in News Media on Page 16, let's start with subscription to the left. You'll see underlying revenues grew by 9% year-over-year in Q4. And as in previous quarters, digital subscription revenues continued to grow well. Strong volumes and growth in ARPU are contributing to the 22% increase in digital subscription revenues compared to last year. And to further grow our digital subscription revenues, we are continuously developing our subscription products to cater for user needs and interest and thereby increasing ARPU over time. We're working with strengthening our value propositions, and investing in quality content is important to continue growing both the subscriber base and the revenues. And in addition, we will continue to experiment with different bundles and new types of paid products.If we then move to advertising, we see advertising markets in both Norway and Sweden continued to show significant improvement also in Q4, as you can see here on the right side. Print continued to struggle in both geographies, but we are pleased to see that the digital advertising market, particularly in the segment of large national advertisers, has continued to improve, and we see in both markets a growth in digital advertising revenues as a result. I would like to highlight that we continue to see good growth in the FMCG market in Sweden also in Q4. The launch of the TV channel Gudare has been a success, and the number of viewers has doubled since the summer. And the combination of Gudare with the food and beverage vertical in Aftonbladet gives a strong value proposition to advertisers within the FMCG segment.Let's then move to the third business area, which is Next. And here, I start with Financial Services and Lendo before I go to the Growth segment. We can then jump to Page 18 and look at Lendo where we saw that Q4 revenues ended up declining compared to last year if you adjust for currency. Sweden, which is our biggest market for Lendo, saw a decline in revenues. There is still growth in application volumes through our service, but the banks are still more reluctant to lend, that was the case pre-COVID. So that makes it harder to convert the applications into revenues. In Norway, we do see a small revenue increase, and Denmark continues to deliver good growth. Margin-wise, though, Lendo delivered another strong quarter. Cost efficiency and reduced investments in international expansion due to Poland and Austria are important explanations for the improved profitability. And finally, I can tell you that our soft launch in Spain is progressing as planned.Then finally, on Slide 19, we come to growth. And here, the positive trends beginning in March 2020 have continued as Prisjakt, Schibsted Distribution and the Marketplaces for services, MittAnbud, continued to experience increased activity levels and demand during the quarter. Schibsted Distribution new business shows strong year-over-year growth in the quarter with increasing e-commerce volumes, also boosted by both Black week and Christmas. Helthjem Netthandel, which is the main part of that new business, has delivered approximately 9 million parcels during 2020, and that is an increase of 135% for the full year. Prisjakt showed a solid Q4 growth year-on-year due to high-growth in traffic and clicks, with the same trend in e-commerce that we see in Schibsted Distribution and also by the boost from Black week and Christmas.So on that good note, Ragnar, I'll leave it to you to talk about the financials.

[Ragnar Kårhus, Chief Financial Officer]

Thank you, Kristin, and good morning, everyone. I will give you some more details on our financials in the fourth quarter. So let's start with Slide 21. Looking at the consolidated result for Schibsted Group, we see that Q4 revenues grew 4% compared to last year on a foreign exchange-neutral basis to NOK 3.6 billion. EBITDA, as Kristin highlighted in the beginning, was very strong in the fourth quarter, growing 4% from last year to NOK 665 million, resulting in an EBITDA margin of 18%. As you see in the graph to the right, all business areas are contributing to the improved EBITDA, but it is primarily the improved revenues and cost reductions in News Media that is driving the increase. As mentioned, News Media received a government grant of SEK 26 million in Sweden in the fourth quarter, affecting EBITDA accordingly.Looking at Nordic Marketplaces and Growth, their EBITDA increases are both driven by higher revenues, while the increased EBITDA in Financial Services are driven by improved cost efficiency, combined with lower geographic expansion investments. On Slide 22, I think it's also worth looking at the full year 2020 when we present the Q4 results. The strong results in the 2 last quarters resulted in an EBITDA of NOK 2.1 billion in 2020, NOK 149 million above last year. And we also saw a slight underlying revenue decline of 3%. Despite the uncertainty and negative effects caused by the pandemic throughout the year, all operating segments experienced EBITDA growth, except for a smaller decline in Nordic Marketplaces due to the substantial revenue fall within particularly the travel and drug verticals throughout most of the year.We are very satisfied with ending the year with proven resilience in all other business areas, that we achieved solid financial results in the year characterized by high uncertainty. One year into the pandemic, our businesses are in good, and some in even better, positions, and we are confident that we are, by highly relevant to our customers, are well positioned for delivering on our stated growth ambitions.Going back to the fourth quarter on Slide 23. Our operating profit for the quarter ended at NOK 339 million compared to NOK 168 million last year. The operating profit was impacted by net other expenses of NOK 54 million, which is mainly due to transaction costs in connection with acquisitions of Oikotie and eBay Denmark, but also restructuring costs related to some headcount reductions in News Media. The reported tax rate is slightly above 16%. Taking into considerations nondeductible impairment loss and reassessment of deferred tax assets made this quarter, the underlying tax rate is stable at around 23%. Profit and loss from discontinued operations is net loss from Adevinta. Adjusted for amortization and depreciation for the period, Adevinta is classified as held for sale. This adjustment had a positive effect in the amount of NOK 550 million after tax in the fourth quarter. Adevinta presented their results yesterday, so please refer to their presentation for more details on the Adevinta results.Looking at Slide 24. Operating cash flow in the fourth quarter increased 18% compared to last year, driven by the stronger EBITDA, partly offset by increased tax payments in the quarter compared to last year. Capital expenditure was NOK 40 million higher than last year due to increased investments into product development, primarily in the Nordic Marketplaces and Next segments, but also higher CapEx in headquarter due to ongoing implementation of new refined ERP, treasury and HR systems.On Slide 25, you can see that our leverage, which increased around 1.7x following the acquisition of Oikotie in Finland in the third quarter, improved and ended at around 1.4x at the year-end. And the Improvement was driven by the strong EBITDA and cash flow results in the quarter. Our cash balance at year-end was around NOK 1.3 billion. To finance the acquisition of eBay Denmark we have signed a bridge loan facility of EUR 350 million. Following the acquisition, our gearing will increase, and as it looks now, to around 3x. We have received consent from our banks for a temporary waiver of the financial covenant from closing of the transaction until the bridge loan is repaid. And as informed about earlier, we also, in our agreement with eBay in connection with the Adevinta/eBay transaction, have an option to sell to the market up to 3% of our Adevinta shares to repay this bridge facility.Then looking at our financial targets and policies on Slide 26. Looking ahead, our financial targets are unchanged from the third quarter. Heavy raise -- in the third quarter, we raised our margin target in News Media to 8% to 10% in the medium term, and we maintain that. But please then remember that this target presumes a rather normalized advertising market going forward. Also in Nordic Marketplaces, we keep our medium- to long-term target to grow annual revenues between 8% to 10%.Looking at the start of 2021, uncertainty has increased somewhat short term on expected volume developments compared to the positive trends that we saw across all our businesses towards the end of 2020. This increased uncertainty is due to the stricter lockdowns from governments as a result of the new mutations of the COVID-19 virus that is now spreading. And as Kristin mentioned at the start, the Board is proposing a dividend payout of NOK 2 per share for 2020, which is in line with our dividend policy.And on Slide 27, on the final note, I'm very happy to invite you all to our Virtual Capital Markets Day on 11 March starting at 10 Central European Time where the group management team will give an update on our strategy and initiatives to drive further growth.That ends our presentation for today. And with that, I'll turn the call over to our operator, who will organize the Q&A session. So operator, please go ahead.

[Operator]

[Operator Instructions] We'll take our first question from the line of Silvia Cuneo from Deutsche Bank.

[Silvia Cuneo, Research Analyst]

I'd like to ask three questions. One is about jobs. As the business saw good development in the first quarter in Norway, and the number of listings improved in Finland, continued to be down in Sweden year-on-year, can you please highlight what are the differences among these markets to better understand why the recovery pace is not the same across the 3? And remind us of the different revenue models, like subscription-driven versus volume-driven.The second question is about your plans to develop the next generation of Marketplaces and expanding into new concepts. I'm sure you will talk about these more in detail at the CMD, but as these will be 2 of the 3 drivers of growth in the medium term, as you flagged in the outlook, can you please just share some more insights about what progress you are making in this direction and how the economics of the business could change?And then finally, can you please help us think about growth in digital subscriptions within News Media going into 2021? Growth accelerated in Q4, so just wondering whether it is sustainable. And how the subscriptions work in terms of the newer periods and market opportunity in terms of current user penetration that you see?

[Kristin Skogen Lund, Chief Executive Officer]

Okay. Shall I start and you can fill in, guys? Starting with jobs, frankly, we don't have a very good explanation why the development was so different in Sweden in Q4. We saw a slight uplift towards the end of the third quarter, and I think we had expected that to continue somewhat, which it didn't. It sort of flattened out, and Q4 remained flat. Macroeconomics and COVID sort of waves come and go at a bit -- at somewhat different paces in the different countries. That might explain some of it, but it is a bit strange. I think, though, it's fair to say that the uplift we saw in Norway is in December, and you saw the underlying KPIs there was quite exceptional. So you might need to, let's say, withdraw a little bit as an exceptional effect in Norway. But still it remains that the development diverged somewhat in Sweden and Norway, and I don't really have the good explanation for it.When it comes to next-generation Marketplaces, yes, obviously, a very important part of how we are investing and rethinking our business. We are working, I would say, especially within the car vertical where we in Norway now have the new concept of Nettbil, which is progressing really well. And we also have that launched in Sweden under the name of Bily. But also in our, let's say, general vertical, we have introduced new tools for contracts, for registrations, for safe payments, insurance, et cetera. So we are really facilitating that you can do this whole transaction online. And we are looking into how we can make that user journey even more seamless and where we can play a better role in a larger part of that entire value chain, which is the transaction of a car. So basically, lots of different initiatives along the whole value chain to boost that.And within generalist, of course, there is a big untapped potential in turning more of the shippable generalist categories over to a transactional model. And having a strong distribution business in Norway, we also see good synergies for making seamless customer journeys combining those. So that's an important area for us.And then you asked about growth in digital subscriptions. Well, they have continued to grow very consistently for a long time now, and we don't see a slowdown. And of course, the -- you could say the market is penetrated volume-wise in a way, but we see that there is so much more potential also in combining the bundles and being able to offer what the different customer groups are willing to pay for in even smarter ways. So I'm very optimistic on the growth of our digital subscriptions going also forward. I don't know if you like to add anything, Jann-Boje.

[Silvia Cuneo, Research Analyst]

And can I just -- yes, just a quick follow-up on the jobs side. Can you please remind us how the revenue model works in terms of subscription- versus volume-driven in the different markets?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. You want to do that one, Jann-Boje?

[Jann-Boje Meinecke]

Yes. I mean, in general, if you look in -- I mean Finn is the biggest one here, right? But also Blocket Bostad had like per ad model, so it's not a subscription model like you see in other markets by competitors. And then also, I saw the development in 2020, right. It's maybe a bit more volatile, and it really reflects the development of the market development in the specific countries, which then improved throughout 2020, yes.

[Operator]

[Operator Instructions] We'll take our next question from Lisa Yang from Goldman Sachs.

[Lisa Yang, Equity Analyst]

The first one is on News Media as well. I mean the growth has been, I guess, really impressive in the last 2 quarters. So I'm just wondering, like, do you think we're at the point where this business can actually sustain positive growth going forward as well, like 2021 and beyond? Whether we've sort of reached a point where the mix is now favorable and you made the sort of right changes to, for instance, your digital advertising systems? Any color there would be really helpful. And just actually on news, the government grant that you booked for Q4, should we expect more grants going forward? Or that was just for the second half? The second question is related to Finn. You obviously did much better than your guidance of 45%, and you did around 47%. And you actually gave the margin guidance for Finn last year. So I'm just wondering if you can give us a bit more color in terms of how you think that margin for Finn could evolve in 2021. Should we see basically further margin improvement if the top line recovers? Or is there any sort of investments or costs are coming back which could potentially put pressure on that margin?And the last question is on advertising. I'm just wondering why the advertising performance in Nordic Marketplaces, especially in Sweden, is actually doing much worse than in the News Media segment, because I thought like overall like advertising trends should be more or less consistent across the board. So I'm just wondering, is there anything structural there? And how do you see the impact of the future privacy changes?

[Jann-Boje Meinecke]

You're muted, Kristin.

[Kristin Skogen Lund, Chief Executive Officer]

So classic, I'm sorry. To start with -- to the -- your question on media, Lisa, yes, I think, as I said on the last question, I'm very optimistic about user revenue and digital subscriptions. When it comes to digital advertising, I believe we still need to be a bit cautious on that one because it is volatile. And history has shown us that transparency is not the best, and things can change quite rapidly, and sometimes for no good reason. So I want to be a bit cautious still on digital advertising. However, I have to say that our organization is working really well with it. We have launched several new products that's gaining good traction. We have become much better at using data in a good and safe way. We have become better at contextual advertising. And I believe that the awareness of the attractiveness of having that type of, let's say, premium advertising channel that we represent, especially these days with a lot of issues around context, et cetera, I think that's improving. So I'm also optimistic in terms of advertising, but I want to be a bit more cautious on that given the visibility of it.I also need to give credit to our News Media division that their operations and just their excellence in execution is really quite fantastic, both on the editorial side and in terms of building both advertising and user business around that and with a very strong cost conscious. So I think we are -- at least that division is in the best hands to be able to execute going further.And finally, on that note, really, what we need to do is to be able to better capitalize on the huge digital footprint that we hold within that division and the force of innovation in new formats and to young user groups, and for example, what we're doing now with live pictures and with podcasts, et cetera, I think all these things will also help us find new growth going forward.When it comes to government grants in Sweden, that's obviously out of our control and out of our hands to see what the government decides to do further. But I think it's fair to say that, with the mutation of the virus, the COVID situation at least has not improved. So maybe that might be a background for the government thinking it's the right thing to continue that type of support. But I'm guessing, I do not know that. And we haven't received any clear signals about it yet. So -- and then on the Finn margin, yes, I mean, obviously, having the growth coming from the job vertical is a boost to margin, given that the job vertical is maybe the most efficient, let's say, high-margin business of everything we do within the Finn space, so that helps. And if we see a continuation of that recovery, that will also help margin. At the same time, I need to say that we have -- we do now allow for some more investment in Finn. As you know, we did slow down after the onset of the pandemic, and it is really important that we do not lose momentum within product and tech in Finn, especially at this time where it's so important to manage to transition over to more transactional models, and that will put some pressure the other way on margins. So I don't think I can be much more specific than that, Lisa. And then I would like to -- or the last one was on advertising. Then I think you need to take into account that what -- that the branded advertising, on Finn especially, is often related to the travel vertical. And of course, travel with the restriction has been a completely dead market. So I think some of the explanation has to do with the type of advertising that has been in the different channels. And where we see the strong growth now on our media platforms is mainly stemming from the national more sort of branded goods advertisers, and they are not as prevalent on the Marketplace platforms. So you find at least some of the explanation there.

[Jann-Boje Meinecke]

And I think one big explanation for -- please go ahead, Lisa. That's fine.

[Lisa Yang, Equity Analyst]

So I just wondered if you can maybe also comment on if you're expecting any impact from the changing, like the cookies and all those things. Like any impact on the advertising?

[Kristin Skogen Lund, Chief Executive Officer]

Yes. Yes, look, I mean, that is a development that we are following very carefully. And we do have quite a lot of first-party data, which means that we are maybe a bit less vulnerable to some of that than other players. And we are working hard to improve the contextual advertising business, which is also a way around it. But look, I mean, it's happening, and it's happening quite fast. We're following it very carefully, and we're doing everything we can to minimize negative impact from that.

[Operator]

We'll take our next question from the line of Miriam Adisa from Morgan Stanley.

[Miriam Anuoluwapo Adisa, Equity Analyst]

Just a follow-up again on the News Media margins. Just wondering how we should think about the cadence of margins in the short term, and how quickly some of those temporary cost savings will return. So should we still expect margins to be above the 8% to 10% range this year? Should we see sort of the fourth quarter as an indication for what margins may look like for this year, at least?Then secondly, on the ARPU development in classifieds. You mentioned some of the difficulty of upselling in motors. Just wondering how you're thinking about the contribution to growth this year from pricing and upselling. And perhaps if you could comment on some of the pricing conversations you've had so far for this year and how you're approaching that. And then finally, just on Finland. Just wondering how we should think about the margin trajectory there and when we should expect synergies to come through. Should we expect that there'll still be quite heavy investment into product and marketing this year? Or is there the potential for synergies to come through this year?

[Kristin Skogen Lund, Chief Executive Officer]

Okay. I'll give it a go, and then, Jann-Boje or Ragnar, you can fill me in on this. When it comes to News Media, I think these days it's very difficult and dangerous to make much projections, I'll start by saying that. But things look good into the first quarter, and advertising is holding up. So I think it's fair to estimate that also the first quarter will be strong. Whether it will be as strong is hard to say. But I think continued strong development, at least in the first quarter. And I don't dare really to predict anything beyond that. When it comes to your last question on Finland, as I said, we've been focusing very much on the integration work, which is now into the final phase, meaning we will be able to focus more on the go-to-market from now on. And we are in an investment phase. It's quite clear that we need to improve both the capabilities on the product and tech side there and make more differentiating features to our different offerings. But we do have good developments. I believe one really important thing is gain share and, hopefully, become #1 in the real estate market. So that is a priority. And as you know, within Tori, we have this year invested quite a bit in improving our offering towards the car dealers, and we have seen good traction on that. So hopefully, we will be able to continue growing the motor segment organically somewhat through the Tori efforts. And then, of course, we also have jobs and generalists. So a lot of good underlying KPIs in Finland, as you saw the strong traffic growth. I think the organization is really tuned on and the developments and things are happening fast. But 2021 will be a year of investment. So I would watch maybe the revenue more than the EBITDA for 2021.On -- okay, now I forgot your question about the pricing. Maybe you can do that one, Jann-Boje.

[Jann-Boje Meinecke]

Yes. I think, overall, in the end, I think there's no change when it comes to our pricing strategy for our Nordic Marketplaces. Like you saw, like volumes are coming back. And over the last years, like, upsell has become more and more important for the business, and we're working on these initiatives. And you saw, for example, in Q3 and Q4 results of that, we have a higher share on that going forward. At the same time, one thing which has happened I think in the end of Q3 and also into Q4 is that the motor vertical has quite a hot development, meaning like there's super high demand for cars in 2020, meaning that inventory actually in both Norway and in Sweden is so high that there's not enough supply. And that means basically an upsell for the market verticals. Maybe not so much needed in Q4 in comparison maybe to the start of 2020, and we just have to see how that continues. But it doesn't mean that we don't have the relevant products or that we have a bad position. It's just it's going so fast and turnover is so high that it's not needed. I think that's the comment I can have.

[Operator]

[Operator Instructions] We'll take our next question from Annick Maas from Exane BNP.

[Annick Tonie Maas, Analyst]

My first question is on M&A. Now that we've integrated almost entirely your previous acquisitions, where do you still see a gap where you could fill it in with a bolt-on? And also, if you could maybe comment on how the competitive landscape has changed since 2016 when you last tried your Hemnet deal? My second question is on Nordic Marketplaces. If you could just comment on the Q1 trends you are seeing here, if there's any big distortion versus what you've seen in Q4?

[Kristin Skogen Lund, Chief Executive Officer]

Okay. Annick, look, on the M&A, we believe that -- we believe there are exciting opportunities still in Finland for further consolidation, and we are very carefully scrutinizing that market. And as you know, we haven't even closed Denmark yet. But once we get going in Denmark, I think we will probably find interesting opportunities there as well. So we are excited to get started there, hopefully soon, to look at that.When it comes to Hemnet, so on the regulatory side, you're absolutely right, we were denied to acquire that back in 2016. What has changed since then is that we haven't had real estate for sale on Blocket for a good while. We stopped that a couple of years ago, and we now only have a rental offer. Whether that is something that the regulatory authorities would then acknowledge as a different situation is probable, but hard to tell. So you never really know, but at least that is one thing that has changed. When it comes to Hemnet, I think we will have to see how the current owners decide to proceed. And it both needs to be available, and it also needs to be at an attractive price. But I think it's no secret that it is an asset that would fit very well into our portfolio. But anyway, we will just have to see about that.And then finally, the outlook for Nordic Marketplaces. No, I would say also with the Nordic Marketplaces, things are a bit more volatile than normal. And as I already said, I mean, I do think that the quite extreme boost we saw in December might not necessarily continue at that same level, but we have seen sort of a steady recovery over the last months. And we hope that this will stabilize more and more as we progress. And we are also -- we're working very hard within our own organization to compensate for any shortfalls with upsell products and different new offerings that help boost value to our users. So we are doing everything we can to compensate as well.

[Operator]

We'll take our next question from the line of Marcus Diebel from JPMorgan.

[Marcus Diebel, Research Analyst]

Yes, congratulations for these results. Again, it's encouraging to see that digital subscriptions are really continuing to grow. The questions I have, one is for Kristin in regards to M&A. I understand your comments on the previous question. My question is more in regards to leverage. How far would you go if the right targets would arise? If you can help us on the kind of like leverage ratio that you would aspire post Denmark, that will be quite helpful.Second question is on C2C and the opportunity from transaction services in that vertical. Adevinta yesterday at their presentation, which I'm sure you followed, was indicating quite a meaningful opportunity in this regard. I mean what are the kind of like low-hanging fruits on U.S. side? I mean particularly when it comes to Finn, how much you see additional opportunity in this regard from also implementing relatively similar services in C2C? And then thirdly, if you can just comment more shorter term. It sounds like the trends that you were showing in terms of motors and also recruitment, they are more or less growing at the same rate in January, February. What are the latest developments? That would be quite helpful.

[Kristin Skogen Lund, Chief Executive Officer]

Can you repeat that last thing about motor, please?

[Marcus Diebel, Research Analyst]

Just the latest trends. You gave the indications of the development and strong rebound in trends in December. And I just wondered, if we just go in now into January, February, obviously, we had some more tightening in lockdown measures. But is this trend kind of still ongoing at the same pace as in November, December? Or is there any form of a slowdown? That's more a question shorter term.

[Kristin Skogen Lund, Chief Executive Officer]

Yes, yes. No, so I'll start with the motor. So motor, I would say, is -- December was a bit exceptional, as I also mentioned, because there is a general situation that the inventory levels are really low and the markets are quite hot, which is not always an advantage for us because it means less demand for relistings, right? So I would say, treat December is a little bit -- that was sort of a boost, but the underlying trend is okay is how I would describe it.And then when it comes to C2C, yes, let me say that I think it's very encouraging what especially Leboncoin is achieving within transactional in the Adevinta sphere. Very happy to see that development, and it's -- that's a great inspiration to us as well.Within the C2C space on our generalist sites, we do see a good potential for developing our transactional business. And I would say that goes just as much for Blocket as for Finn, actually. And as mentioned, we are working now to make these customer journeys as seamless as possible. We are trying to find out how to best position it within the different categories because you have a lot of different categories. It doesn't work as well for a sofa as it works for a phone, for example. So you need to have different approaches given the different types of categories that you have within generalist. Very important to get in place the smooth payment, escrow, delivery services, et cetera, so that's another thing that's going on. And the potential here is quite large. I mean the gross amount being traded through our channel is absolutely huge. And if you get into a model where you get even a very, very small part of that as a transaction fee, it can become a very interesting business, however, mind you, with a different margin profile than what we currently have. So that's also part of the picture. And it's going to take us some investments to get there, but this is very high on our agenda.And then the last question, was that on leverage? Yes, I could answer that, but maybe this is a good opportunity for you, Ragnar, to say something.

[Ragnar Kårhus, Chief Financial Officer]

Yes. So I can give a short comment on that. As I said in the presentation, the leverage -- we have a leverage for the time being around 1.4x, and it will increase around or close to 3x when we have done the -- or closed the eBay Denmark acquisition. I think the way we have financed eBay Denmark sort of coming to an agreement with the banks on sort of bridge financing sort of shows that we have some sort of additional flexibility on -- around the leverage, the actions of -- level on the leverage. But -- and on -- in addition to that, we have in agreement with eBay also an opportunity to sell down 3% of the Adevinta shares to reduce the bridge loan. So yes, we have some flexibility, but I will also say that over mid- to longer term, it is clearly our policy that we will stay in the range of around 1 to 3x, but sort of with some added flexibility around sort of the timing of particular acquisitions and so on is probably the right answer to that.

[Marcus Diebel, Research Analyst]

Yes. Maybe as a follow-up, I just think about it, given current developments in the M&A market in Scandinavia, it's a bit of a timing issue it appears, given Denmark, which will boost your leverage and maybe, at the same time, a good opportunity might arise. So the question is would you be willing to, in the short term, accept a leverage ratio of well above 4x or close to 5x if good opportunities arise. Obviously, leverage will come down again, but given the timing, you would be happy to lever up short term a lot if the right opportunity arises. Is that how to read your comments?

[Ragnar Kårhus, Chief Financial Officer]

I think it's correct to say that we will -- we are willing to go somewhat above. 3 to 4x is sort of the level that we have in the policy. And as we also said that we have sort of -- as long as we have a drawing on the bridge loans, the banks have waived the financial covenants, so they will not sort of come back in place until we have repaid the bridge loan. So that's the answer to that.

[Operator]

We'll take our next question from the line of Eirik Rafdal from Carnegie.

[Eirik Rafdal, Research Analyst]

A lot have been answered, just two very quick ones at the end here. Kristin, you mentioned Nettbil in Norway. Can you just give the kind of quick regulatory update on Nettbil in terms of kind of where they [indiscernible] there? And the final one is on Blocket, which grew margins year-over-year. And you note that some of the cost savings are temporary. And you've been flagging previously that [indiscernible] investor. Just kind of how we should think then on Blocket entering the new year as well would be very helpful.

[Kristin Skogen Lund, Chief Executive Officer]

Yes. Okay. Your line was a bit bad, but I think your first question was the status on Nettbil, right? Was that correct?

[Eirik Rafdal, Research Analyst]

Yes.

[Kristin Skogen Lund, Chief Executive Officer]

Yes. Okay, yes. No, so -- okay, so we filed a complaint to this commission that sort of oversees the competition authority, and that was filed in December. And we had a response from the competition authority. So that is now with that commission, and we expect a ruling from them within probably some 2, 3 months' time or something. So that's what's happening now. And while they are doing their deliberation, there isn't really anything going on outside of that, of course.And then when it comes to Blocket, I mean, look, Blocket is in a -- I think Blocket has a lot of good things going. It is important to keep investing in capabilities in Blocket, but we're also trying to stay very focused and not do too much at once. And they have some strong priorities that they're focusing on, and I think they're progressing well with it. And I'm very encouraged by their results in 2020 overall, given the difficult circumstances. I think it's great to see that they continue their growth in the motor vertical and that they've been able to maintain the momentum that they've had there, and of course, it's a very important part of their overall business. I'm excited to see what they can achieve in terms of transactional journeys on the general side -- generalist side in addition to motor. And they also have progress on the Casa Concept within full-service rentals. Although it's still quite small numbers, the progress is good. And jobs. I mean I wouldn't rule out jobs. This has been a hard year for jobs, but also here, Blocket has actually increased and improved their offering quite a lot product-wise. So I think when our -- when the macro trends turn, they will be in a good position to capture a good size of that recovery coming their way.

[Operator]

We have one more question from Andrew Ross from Barclays.

[Andrew Geoffrey Ross, Research Analyst]

Mine is just a follow-up on Marcus' question on M&A and to ask the exact details of the lockup restrictions on Adevinta. So my understanding is that you can sell up to 3% to fund Denmark. But can you break the lockup to sell more should a bigger deal come on the horizon for you over the next couple of months? Or can you not do that, and then you would need to borrow against the Adevinta stake essentially? Would be helpful to get into a bit more detail on that.

[Ragnar Kårhus, Chief Financial Officer]

So in short, we are sort of -- we can sell up to 3% after the lockup period, but we are not in a position to sort of directly sort of break the lockup as such. So that's not an opportunity in the short term. So if we are going to sort of pursue attractive M&A opportunities that sort of are challenging, let's say, our financing capacity or challenging the thresholds that they have in the banks, then we need to sort of find a solution together with the banks. And that is sort of the frame -- the opportunities that we have.I think and just also -- then we sort of reiterate that sort of then we draw on the bridge facility connected -- related to the eBay Denmark transaction, then we have a waiver from the banks on the covenants until that loan is repaid, meaning that, that covenant, as such, is not sort of a threshold for some flexibility in the time to come.

[Andrew Geoffrey Ross, Research Analyst]

That's helpful. And could you just remind us how long the lockup is for on the 3% to fund Denmark, like when might you sell the Adevinta stake in Denmark?

[Ragnar Kårhus, Chief Financial Officer]

We have a lockup of 3 months from the sort of closing of the transaction. And after that, the -- sort of so there is a 15-month period where eBay has a right of way if they want to sort of sell out of the -- sell out some of their shares. But in parallel with that, we have the opportunity then to sell the 3%.

[Kristin Skogen Lund, Chief Executive Officer]

And we have sort of a carve-out for the 3% with no restrictions.

[Operator]

[Operator Instructions] It appears we have no further question at this time. Please go ahead.

[Jann-Boje Meinecke]

So then that concludes our Q&A session for today and the presentation. So from my side and also the whole management team, thanks very much for joining, and talk to you soon.

[Kristin Skogen Lund, Chief Executive Officer]

Thank you.